In Fontenot v. Watson Pharmaceuticals, a long-running products liability and medical malpractice case about a transdermal pain patch, plaintiffs sought to add nondiverse health care providers to the case after removal. No. 12-30711 (June 10, 2013). The district court remanded pursuant to 28 U.S.C. § 1447(e). The Fifth Circuit dismissed for lack of appellate jurisdiction, concluding that a remand for lack of subject jurisdiction was unreviewable under Thermtron just like a jurisdictional remand under 1447(c), and noting that all other circuits facing the issue reached the same conclusion. The Court also found that the joinder ruling that led to the jurisdictional issue was unreviewable as a collateral order.
A dispute about guaranty obligations related to the purchase of a blimp was removed to federal court. The district court granted a motion to compel arbitration, stayed the case, and administratively closed it. McCardell v. Regent Private Capital LLC, No. 12-31089 (June 7, 2013, unpublished). The Fifth Circuit reminded that administrative closure does not create a final judgment, and thus dismissed for lack of appellate jurisdiction over the interlocutory appeal.
In Miller v. Raytheon Co., the Fifth Circuit affirmed liability for age discrimination and affirmed in part on damages. No. 11-10586 (revised, July 30, 2013). Among holdings of broader interest in civil litigation, the Court: (1) affirmed the verdict of liability, noting: “Considered in isolation, we agree with Raytheon that each category of evidence presented at trial might be insufficient to support the jury’s verdict. But based upon the accumulation of circumstantial evidence and the credibility determinations that were required, we conclude that ‘reasonable men could differ’ about the presence of age discrimination”; (2) reversed an award of mental anguish damages because “plaintiff’s conclusory statements that he suffered emotional harm are insufficient”; and (3) rejected a challenge, based on the Texas Constitution, to the statutory punitive damages cap in the TCHRA.
In Wellogix, Inc. v. Accenture, LLP, LLP the district court entered judgment for the plaintiff — $26.2 million in compensatory damages and $18.2 million in punitives, after a remittitur — in a trade secrets case about software to make oil exploration more efficient. No. 11-20816 (May 15, 2013, revised Jan. 15, 2014). Affirming, the Court: (1) reminded, in the opening paragraph, of the deference due to a jury verdict; (2) detailed the sufficient evidence before the jury of a trade secret, of its inappropriate use by the defendant, of damages, and malice; (3) rejected Daubert arguments about the scope of the plaintiff’s computer science expert’s testimony and the material considered by its damages expert; and (4) affirmed the punitive damages award because it was less than the compensatory damages and the issue of “reprehensibility” was neutral. The Court also analyzed aspects of the relationship between trade secret claims and the patent process. Footnote 4 of the opinion provides a useful guide to the federal courts’ treatment of a “Casteel problem” in Texas jury submissions.
The original lawsuit in Comer v. Murphy Oil alleged tort claims against several oil companies about the effect of global warming on Hurricane Katrina. The district court dismissed the claims in that original suit on standing and political question grounds; then, after a Fifth Circuit panel initially reversed in part; the appeal was dismissed after recusals made en banc review impossible after a vote to grant review by the full Court. In this new case, the plaintiffs refiled, the district court dismissed on the grounds of res judicata since its original ruling was not affected by the appeal, and the Fifth Circuit affirmed. No. 12-60291 (May 14, 2013). The Court reviewed the policies behind the doctrine of res judicata and declined to create an equitable exception to the doctrine for this case.
While of limited precedential value because it uses “plain error” review, Ward v. Rhode touches on the role of websites in personal jurisdiction. No. 12-41201 (May 3, 2013, unpublished). Plaintiff alleged that the defendants placed a false “Scam Alert” about Plaintiff’s debt settlement services on a website. The court observed: “The [Defendants’] website is interactive to the extent that it allows users to post their opinions about the debt-counseling services that they have used. However, it neither allows users to purchase products online, nor sells subscriptions to view its content. Therefore, the nature of the exchange of information is not commercial.” (citing Mink v. AAAA Dev. LLC, 190 F.3d 333, 336 (5th Cir. 1999)). Accordingly, it was “not clear or obvious” that the website’s interactivity with Texans and the commercial nature of that interaction was sufficient to establish jurisdiction.
The insurance policy said: “Whenever any Assured has information from which the Assured may reasonably conclude that an occurrence covered hereunder involves an event likely to involve this Policy, notice shall be sent to Underwriters as soon as practicable . . . ” Ins. Co. of N. Am. v. Board of Commissioners of the Port of New Orleans, No. 12-30705 (May 1, 2013, unpublished). Clarifying an earlier opinion (and mandate) about this notice provision, the Fifth Circuit held: “[T]he duty of coverage is triggered for each underwriter who receives notice under the policy. . . We do not, however, hold the converse of this conclusion. In other words, we do not hold that all underwriters under the policy must receive notice as a condition precedent to a duty of coverage being triggered for any individual underwriter under the policy.”
In Versata Software v. SAP America, the Federal Circuit affirmed jury verdicts that will likely lead to a judgment in excess of $400 million. That Circuit’s review of a verdict is “reviewed under regional circuit law,” as to which the Court observed: “The Fifth Circuit applies an ‘especially deferential’ standard of review ‘with respect to the jury verdict.'” (citing Brown v. Bryan County, 219 F.3d 450, 456 (5th Cir. 2000)). In affirming the award for a reasonable royalty, the Court quoted the recent case of Huffman v. Union Pacific R.R., which discussed “inference on the basis of common sense, common understanding and fair beliefs, grounded on evidence consisting of direct statement by witnesses or proof of circumstances from which inferences can fairly be drawn.” 675 F.3d 412, 421 (5th Cir. 2012). (Huffman is nominally about the causation requirements of FELA, but its analysis easily extends to other basic Daubert issues.)
The plaintiff in RBIII, L.P. v. City of San Antonio sought damages after the City of San Antonio razed a property without providing prior notice. No. 11-50626 (April 23, 2013). After a jury trial it recovered $27,500 in damages. The Fifth Circuit found that a key jury instruction on the City’s defenses “improperly cast the central factual dispute as whether or not the Structure posed an immediate danger to the public, when the issue should have been whether the City acted arbitrarily or abused its discretion in determining that the Structure presented an immediate danger.” Accordingly, “[b]ecause this error in the instructions misled the jury as to the central factual question in the case,” the Court reversed and remanded for further proceedings. The Court’s analysis summarizes how federal courts address the issue of harm in erroneous jury instructions that the Texas Supreme Court has engaged in the Casteel line of cases.
Smyth, a partner in a bankrupt entity, complained that the bankruptcy court had no jurisdiction to authorize the sale of claims he sought to assert individually. Smyth did not obtain a stay of the sale order, however, rendering the appeal moot: “When an appeal is moot because an appellant has failed to obtain a stay, this court cannot reach the question of whether the bankruptcy court had jurisdiction to sell the claims.” Smyth v. Simeon Land Development LLC (April 18, 2013, unpublished).
An assignment of royalty interests for a continental shelf project had this “calculate or pay” clause: “The overriding royalty interest assigned herein shall be calculated and paid in the same manner and subject to the same terms and conditions as the landowner’s royalty under the Lease.” The parties disputed whether the clause simply required calculation of royalties in the same way as the government’s royalty, or allowed suspension of the assigned payments during a period when the government’s royalty right was suspended. Total E&P USA, Inc. v. Kerr-McGee Oil & Gas, No. 11-30038 (revised June 20, 2013). Applying Louisiana law, the majority found the clause ambiguous on that issue, and further reasoned that at the time of contracting, legal principles that eventually became settled and could resolve the ambiguity were not yet settled. Noting that no cross-appeal was taken, the Court reversed a summary judgment and remanded for consideration of extrinsic evidence. A succinct concurrence noted an additional reason for finding ambiguity based on the grammar of the clause. A dissent took issue with the majority’s analysis of other contract provisions and applicable law, and would have affirmed summary judgment about interpretation but reversed as to reformation for mutual mistake. Both the majority and dissent endorsed consideration of extrinsic evidence, for different reasons and purposes — a general topic which recurs with some regularity in the Court’s contract opinions.
Appellant sought review of an attachment order on the M/V OCEAN SHANGHAI. Appellee moved to dismiss the appeal, as the parties had settled, and the boat in question had left the jurisdiction (near the coast of Latvia as of the date of this post.) Farenco Shipping Co. v. Farenco Shipping PTE, Ltd., No. 12-31154 (March 4, 2013, unpublished). Appellant responded by asking for vacatur of the attachment order. Recognizing that this request raised the novel question of vacatur of an interlocutory order rather than a final judgment, the Fifth Circuit found no “exceptional circumstances” in either the parties’ settlement or the order’s potential collateral estoppel effect that would warrant its vacatur. With respect to the settlement, the Court observed that as a general matter: “Settlements are frequently made under difficult circumstances, and often represent the least bad of several bad options; this does not make such settlements involuntary.”
A federal jury awarded $4 million in compensatory damages for a car wreck. The district judge interpreted the award to include $2.2 million in noneconomic damages, and then reduced that portion of the award to $1 million because of Mississippi’s statutory cap on noneconomic damages. Learmonth v. Sears, Roebuck & Co., No. 09-60651 (Feb. 27, 2013, revised March 20, 2013). The plaintiff challenged the cap as violating the Mississippi Constitution’s jury trial guarantee and separation of power provisions. The Mississippi Supreme Court declined to answer certified questions about those issues. The Fifth Circuit found that the cap did not violate the Mississippi Constitution. The Court declined to consider an argument that the Erie doctrine prevented the district judge from segregating the verdict as a matter of state substantive law, finding that the point was not asserted timely and was thus waived.
Knoles v. Wells Fargo presented a rare encounter between an eviction and the Rooker-Feldman doctrine. No. 12-40369 (Feb. 19, 2013, unpublished). The borrower lost a forcible entry & detainer (eviction) matter at trial in JP court and on appeal. The borrower then sued for damages, Wells removed, and the borrower unsuccessfully tried to get a TRO about possession from the federal district court. The district court denied relief based on the Rooker-Feldman doctrine about federal review of final state court judgments. The Fifth Circuit found that it had jurisdiction over the interlocutory appeal pursuant to 28 U.S.C. § 1292(a)(1), even though the appeal was nominally from a TRO, because the relief at issue was “more in the nature of a temporary injunction in fact, though not in name.” The court deflected an argument about mootness to hold that the order sought a federal injunction against a final state court judgment in violation of the Anti-Injunction Act.
A manufacturer of ship propulsion systems contracted with a ship operator, who in turn contracted with a shipbuilder. The manufacturer and the operator had a sales contract (with an arbitration clause), and the operator and the shipbuilder had a separate contract. VT Halter Marine v. Wartsila North America, No. 12-60051 (Feb. 8, 2013, unpublished). The component manufacturer and shipbuilder had dealings as part of the overall relationship but did not have a direct contract. The shipbuilder sued the manufacturer for supplying allegedly defective parts. Its breach of warranty claim, derivative of the operator’s rights, was conceded to be arbitrable. The tortious interference claim, however, could only be arbitrated under an estoppel theory since the shipbuilder was not a party to the manufacturer-shipbuilder contract. The district court’s order was not clear about the basis for ordering arbitration of that claim, and the Fifth Circuit remanded for resolution of whether estoppel applied. The Court reminded that while orders compelling arbitration are usually reviewed de novo, an order compelling a third party to arbitrate under an estoppel theory is reviewed for abuse of discretion (citing Noble Drilling v. Certex USA, 620 F.3d 469, 472 n.4 (5th Cir. 2010)).
The appellant in All Plaintiffs v. Transocean Offshore (the MDL relating to Deepwater Horizon) challenged an order requiring him to submit to a psychiatric exam and supply medical records as part of the procedure. No. 12-30237 (Jan. 3, 2013, unpublished). Following Mohawk Industries v. Carpenter, 130 S. Ct. 599 (2009), the Fifth Circuit held that the collateral order doctrine did not allow appeal of this interlocutory discovery order. Any erroneous effect on the merits of the case could be reviewed on appeal of final judgment, and even if that review was “imperfect” to remedy the intrusion on his privacy interest, the harm was not so great as to justify interlocutory review of the entire class of similar orders. A concurrence noted that while mandamus review was theoretically possible, this party had not requested it as an alternative to direct appeal, and had not made a sufficiently specific showing of harm to obtain mandamus relief.
Demahy v. Schwarz Pharma, Inc. involved the aftermath of the Supreme Court’s reversal of the Fifth Circuit in Pliva, Inc. v. Mensing, 131 S. Ct. 2567 (2011). No. 11-31073 (Oct. 25, 2012, published Dec. 27). Pliva held that federal law preempted state laws that would require generic drug manufacturers to change a drug’s label. Id. at 3. The plaintiff’s counsel sought relief under Fed. R. Civ. P. 59(e) from the rulings of the district court after remand from the Fifth Circuit, principally arguing that Pliva impliedly overruled a line of Louisiana authority. The Court affirmed the district court’s denial of relief, finding that the plaintiff’s argument stretched Erie too far and that its mandate had been properly interpreted and applied. Another recent case in the “expanding cohort controlled by Pliva v. Mensing” is Morris v. Pliva, Inc., No. 12-30319 (Feb. 14, 2013).
The plaintiff in Smith v. Santander Consumer USA received $20,43.59 in damages for violation of the Fair Credit Reporting Act. No. 12-50007 (Dec. 20, 2012). The Fifth Circuit agreed that damages were not recoverable solely for a reduced line of credit, but found sufficient other evidence about harm to the plaintiff’s business and personal finances to affirm. Enthusiasts of appellate arcana will find it interesting to compare the Court’s analysis of a general federal verdict under the Boeing standard with the Texas damages submissions required by Harris County v. Smith, 96 S.W.3d 230 (Tex. 2002) (applying Crown Life Ins. v. Casteel, 22 S.W.3d 378 (Tex. 2000)).
Paddle Tramps Manufacturing made wooden paddles with the emblems of several fraternities, a group of 32 fraternities sued to enjoin it for trademark infringement and unfair competition, and the company defended with unclean hands and laches. Abraham v. Alpha Chi Omega, No. 12-10525 (revised Feb. 7, 2013). The district court entered partial injunctive relief after a jury trial found for the company on the defenses. The Fifth Circuit affirmed the instructions given, finding that the appellant’s arguments about unclean hands conflated elements of trademark liability with elements of the defense and that the laches instruction fairly handled the concept of “progressive encroachment.” The Court also found sufficient evidence to support the “undue prejudice” element of laches, although calling it a “close question,” and found that the district court properly balanced the equities — especially injury to the alleged infringer — in crafting the injunction. The opinion discusses and distinguishes other cases denying relief in related situations. Professor Rebecca Tushnet further analyzes the case on her intellectual property blog.
A series of clerical errors led an insurer to overpay a $710,000 settlement by $510,000. National Casualty v. Kiva Construction, No. 12-20217 (Nov. 12, 2012). The insurer sued for breach of contract and “money had and received”; the insured counterclaimed for bad faith in the initial handling of the settlement. The Fifth Circuit affirmed the district court’s summary judgment for the insurer. The Court’s straightforward, unpublished opinion offers two cautionary notes — first, while the settlement agreement did not specify a time for payment of the full amount, a Lousiana statute did so specify (although the insurer complied), and second, the Twombly standards are not in play when the district court obviously considered evidence outside of the pleadings and said in its order that the counterclaims failed “based on the undisputed facts.”
The plaintiff in Lozano v. Bosdet did not serve a British defendant within the 120 days of Fed. R. Civ. P. 4, or a later extension by the district court. No. 11-60737 (Aug. 31, 2012). The Fifth Circuit, noting “that statutory interpretation is a ‘holistic endeavor,'” applied a “flexible due-diligence” standard to find that dismissal was not warranted, especially since a refiled suit would likely be time-barred. Id. at 7, 9. The Court aligned itself with the Seventh Circuit and rejected different readings of Rule 4(f) in the international context by the Ninth Circuit (unlimited time) and Second Circuit (120-day limit excused only if service is attempted in the foreign country), noting that it did not wish to require “immediate resort to the Hague Convention or other international methods.” Id. at 5-6.
In National Union v. American Eurocopter, a contribution suit arising from settlement of claims about a helicopter crash, a Hawaii district court found no personal jurisdiction and transferred venue to Texas. No. 11-10798 (Aug. 27, 2012). The appellant challenged that ruling, and the Fifth Circuit held that it lacked jurisdiction over that issue. Id at 4 (quoting 28 U.S.C. § 1294, defining appellate jurisdiction as reaching “appeals . . . [f]rom a district court of the United States to the court of appeals for the circuit embracing the district”). On the merits, the Court affirmed a dispositive choice-of-law ruling for Texas law, noting a Texas choice-of-law provision in a relevant contract, a rough balance between the place of the accident (Hawaii) and the defendants’ headquarters (Texas), and the relatively weak interest of an out-of-state insurer. Id. at 5-7 (noting Beech Aircraft v. Jinkins, 739 S.W.2d 19 (Tex. 1987)).
Appellate jurisdiction over bankruptcy matters can become murky (as discussed in this 2009 CLE paper) because finality is not always obvious. In an appeal from an individual’s bankruptcy case, the Court reminded that the test is whether a district court order is a “final determination of the rights of the parties to secure the relief they seek” or a “final disposition ‘of a discrete dispute within the larger bankruptcy case.'” Sikes v. Crager, No. 11-30982 at 3 (Aug. 16, 2012) (quoting Bartee v. Tara Colony Homeowners Ass’n, 212 F.3d 277 (5th Cir. 2000). The district court’s finding that the debtor’s Chapter 13 plan was not made in good faith “involve[d] a discrete dispute within her case” and created jurisdiction.
Roman v. Western Manufacturing examined a $1mm-plus verdict about severe injuries from a pump malfunction. No. 10-31271 (Aug. 17, 2012). After review of the standards, id. at 5 (“It is not our charge to decide which side has the more persuasive case.”), the Court found that two qualified mechanical engineers met Daubert even though they lacked extensive experience with “stucco pumps,” declining to “make expert certification decisions a battle of labels.” Id. at 7. The Court also rejected technical challenges to the type of pump reviewed by the experts and the plausibility of their factual assumptions about its operation, id. at 13 (“There was certainly contrary evidence, but that was for jurors to weigh.”), as well as sufficiency challenges about the inferences made by the jury. Id. at 16-17. Additional challenges were found waived under Fed. R. Civ. P. 50. This opinion is the latest in a series of thoughtful cases about Daubert after the 2009 decision in Huss v. Gayden.
The bankruptcy court in CRG Partners v. Neary awarded a $1 million fee enhancement for a “rare and exceptional” result in the Pilgrim’s Pride bankruptcy. No. 11-10774 (Aug. 10, 2012). The Trustee objected, arguing that Perdue v. Kenny A. ex rel Winn, 130 S. Ct. 1662 (2010) — a case rejecting a comparable enhancement under 42 U.S.C. § 1988 — impliedly overruled older Fifth Circuit authority that allowed them in bankruptcy. The Court carefully reviewed Perdue under the “rule of orderliness,” a set of principles that guide a panel’s fidelity to older panel opinions, and found Perdue distinguishable factually and for policy reasons. Op. at 22-25. The Court reminded that it had recently reached a similar conclusion as to the effect of Stern v. Marshall, 131 S. Ct. 2594 (2011), on magistrate jurisdiction.
In the context of a denial of en banc rehearing, a concurring and dissenting opinion disputed whether an issue of charge error in an employment case had been preserved below. Nassar v. UT Southwestern Medical Center, No. 11-10338 (July 19, 2012). The exchange echoes a similar one in the recent en banc case of Jimenez v. Wood County, 660 F.3d 841 (5th Cir. 2011).
The plaintiff’s counsel in Mick Haig Productions v. Does 1-670 served subpoenas on Internet service providers (ISPs) about the alleged wrongful download of pornographic material. No. 11-10977 (July 12, 2012). The district court found that the subpoenas violated orders that it had made to manage discovery, and imposed significant monetary and other sanctions on the lawyer. Op. at 4-5. The Fifth Circuit found that all of the lawyer’s appellate challenges were waived — either because they were not raised below, or were raised only in an untimely motion to stay filed after the notice of appeal, and thus were waived. Id. at 5. The Court declined to apply a “miscarriage of justice” exception to the standard waiver rules, stating that the lawyer’s actions were “an attempt to repeat his strategy of . . . shaming or intimidating [the Does] into settling . . . .” Id. at 6.
The Court briefly revisited personal jurisdiction in an unpublished opinion, ITL International v. Cafe Soluble, S.A., No. 11-60360 (rev’d June 7, 2012). The case arose from a dispute between Mars, Inc. and a Latin American distributor, closely related to the dispute at issue in the recent case of ITL International v. Costenla, S.A. The Court followed the same analytical framework, finding that the defendant’s contacts with Mississippi were not sufficiently related to the dispute to create jurisdiction. It concluded by reminding that a dismissal for lack of personal jurisdiction should be without prejudice because it is not on the merits.
Bepco v. Santa Fe Minerals presented the appeal of a remand order, which was based in part on a contractual waiver issue (reviewable) and in part on a timeliness issue (not generally reviewable). No. 11-30986 (March 15, 2012). While the timeliness issue was arguably not presented within 30 days of the removal, the Court held: “Whether a removal defect is not raised by a plaintiff in the motion to remand, or is raised more than 30 days after removal, does not matter. . . . [W]hat does matter is the timing of the remand motion.” Op. at 8. Because the motion itself was timely, and thus satisfied the statutory time limit, and because the remand order relied on a permissible statutory ground for remand, the Court dismissed the appeal for lack of appellate jurisdiction. Id.
While the Fifth Circuit rarely addresses a “rear-ender” car crash case, it did so deftly in Fair v.Allen, No. 11-30467 (Feb. 3, 2012), in which the appellant sought reversal of a $38,000 judgment. With no Daubert issue presented, the Court reviewed the conflicting testimony of medical experts and found it sufficient — under both Louisiana state law and the Federal Rules — to support the verdict and judgment. The specific issues are unlikely to recur soon, but the framework of the opinion is a good illustration of a basic sufficiency review.
In a case of considerable practical importance as to litigation about arbitration clauses and appellate procedure generally, the Fifth Circuit addressed a party’s motion for a stay of district court proceedings during an appeal about the arbitrability of the matter in Weingarten Realty v. Miller. The Court acknowledged a significant circuit split as to whether a notice of appeal automatically stayed district court decisions during an arbitrability appeal, with one school of thought (two circuits) holding that a case’s merit is a distinct matter from whether it is arbitrable, and another school (five circuits) holding that a notice of appeal automatically stays district court proceedings for efficiency reasons. Op. at 3-4. Recognizing that this issue turns on the application of Griggs v. Provident Consumer Discount, 459 U.S. 56 (1982), and its holding that a district court may adjudicate matters not involved in the appeal, the Court concluded that under prior Circuit precedent a notice of appeal did not create an automatic stay. Op. at 7. The Court went on to review the motion under the general four-factor test for a discretionary stay during appeal, and again declined to order a stay, primarily because it believed the movant had a low chance of success on the merits under the contract documents and the doctrine of equitable estoppel. Op. at 7-8.