In a reminder of the surprising complexity that can surround litigation about a party’s standing to bring a claim, in Intrepid Ship Mgmnt v. Malin Int’l Ship Repair, the Fifth Circuit noted a source of potential confusion about the applicable procedure: “Although a dismissal for lack of standing is appropriately judged under Federal Rule of Civil Procedure 12(b)(1), which allows a court to make limited findings of fact, the parties have argued this case under the standards applicable to ordinary summary judgment motions. Compare Lane v. Halliburton, 529 F.3d 548, 557 (5th Cir. 2008) (explaining that the district court can resolve disputed facts as necessary to decide a challenge to subject atter jurisdiction), withInt’l Marine LLC v. Integrity Fisheries, Inc., 860 F.3d 754, 759 (5th Cir. 2017) (applying de novo review to summary judgment cases, explaining that “[s]ummary judgment is appropriate when ‘there is no genuine dispute as to any material fact.’”)”. No. 16-41074 (Oct. 11, 2017) (unpublished).
In a 2-1 decision, the Fifth Circuit found that Ezekiel Elliott failed to exhaust remedies within the NFL’s dispute-resolution process before filing suit, meaning that the federal courts lacked subject matter jurisdiction over his complaints. A dissent found a sufficient question about the adequacy of the process to justify the exercise of jurisdiction under the relevant authorities. NFLPA v. NFL, No. 17-40936 (Oct. 12, 2017). While of enormous interest to Cowboys fans, so far as arbitration goes, the opinion is centered on issues unique to collective bargaining agreements.
As a counterpoint to the recent case of Boerschig v. Trans-Pecos Pipeline, which rejected a mootness challenge in an injunction case about a condemnation (reasoning that the court could still “order that Trans-Pecos return Boerschig’s land to its precondemnation state.”), there is Dick v. Colorado Housing Enterprises, LLC, which found a request for an injunction became moot after the allegedly wrongful foreclosure occurred (rejecting “Plaintiff-Appellant[‘s] assert[ion] that because the Defendants-Appellees were the successful bidders at the foreclosure sale, this court can order them to cancel or rescind the foreclosure sale.”) The distinction between the two rests on case law unique to foreclosures, which the Dick panel used the Fifth Circuit’s “rule of orderliness” to organize and apply. No. 17-10357 (Oct. 4, 2017).
Total Gas, the American subsidiary of the large French energy concern, sued for a declaratory judgment that FERC could not impose certain penalties under the Natural Gas Act. But while FERC had begun an administrative proceeding against Total, that case had to proceed through several more steps before any penalty would be assessed. Accordingly, the dispute was not ripe for adjudication. The “step by step” analysis of ripeness in this case appears to be of general applicability to other cases involving conditions precedent. Total Gas v. FERC, No. 16-20642 (June 8, 2017).
Moore sued the Governor of Mississippi, alleging that the presence of the Confederate battle flag in the Mississippi state flag (right) violated Moore’s rights under the Equal Protection Clause. The Fifth Circuit affirmed dismissal on standing grounds, distinguishing cases involving the First Amendment’s Establishment Clause because of the distinct injuries addressed by the two Constitutional provisions. The Court concluded: “The assumption that if [Plainitff] had no standing to sue, no one would have standing, is not a reason to find standing.” (citations omitted). Moore v. Bryant, No. 16-60616 (March 31, 2017).
Sessa Capital, a hedge fund, supported the election of certain directors to the board of Ashford Prime, a hotel business. Ashford’s management rejected their applications, contending that they were incomplete. Litigation ensued, in which Sessa sought an injunction against the June 10, 2016 board election. The district court denied relief; Sessa appealed, and a motions panel of the Fifth Circuit denied an interim stay.
Since that election proceeded, mootness became an obvious appellate issue. The Fifth Circuit noted that “Sessa did not ask the district court to stay the [June 10] election,” and also “never sought the invalidation of the shareholder election in the district court” — requests that, had they been made, could potentially have kept the dispute alive. To the contrary, the Court observed that “Sessa repeatedly made a tactical decision to seek only prospective relief. When the district court contemplated pressing the reset button by staying the shareholder election and allowing Sessa to resubmit the questionnaires, Sessa vehemently opposed this solution.” Accordingly, the Court dismissed the appeal as moot. Ashford Hospitality Prime, Inc. v. Sessa Capital, No. 16-10671 (Dec. 16, 2016, unpublished).
Cotton v. Certain Underwriters at Lloyds, a dispute about payment for wind damage from Hurricane Isaac, presented an issue about who was entitled to sue. The Fifth Circuit reminded that “‘Standing’ . . . is a label used to describe different things in the law.” One use is “whether a party has a right to sue under a contract.” That use, which presents “an issue of ‘contract interpretation,'” is “entirely distinct from ‘standing’ for purposes of Article III” and its jurisdictional consequences. No. 15-31005 (Aug. 1, 2016).
Litigation about the failed drilling of an oil well led to insurance litigation under Louisiana’s Direct Action Statute. The district court granted summary judgment to the insured as to its insurers’ duty to indemnify, and the Fifth Circuit reversed, finding that the indemnity issue was not yet justiciable: “[I]t is readily apparent that ‘facts can be developed’ at trial that would support a finding that at least some of [the insured’s] conduct related to the failed directional drilling project triggered coverage under the relevant policies. Beyond the already existing testimony . . . [the insured] points to a number of witnesses who were not deposed but who could testify at trial on relevant issues such as subcontractors, surveyors, and consultants.” Solstice Oil & Gas LLC v. Seneca Ins. Co., No. 15-30874 (July 21, 2016).
The Texas Package Sales Association, a trade association of alcohol sellers, moved for relief under Fed. R. Civ. P. 60(b) from a longstanding injunction against the enforcement of a residency requirement for sales permits. The Fifth Circuit concluded:
- While not a plaintiff in the original litigation, TPSA had intervened in it, and could challenge the permanent injunction; and
- TPSA had standing as an organization to sue about the requirement; but
- Subsequent Supreme Court opinions about the Commerce Clause did not create an intervening change in the law that would justify Rule 60(b) relief original litigation; and
- TPSA had not adequately placed at issue the alternative ground for the injunction, based on the Privileges and Immunities Clause.
A dissent would not have found that TPSA had standing to sue, characterizing its suit as an effort “to substitute itself . . for the state authorities” with jurisdiction over the applicable law. Cooper v. TABC, No. 14-51343 (April 21, 2016).
The plaintiffs in Wendt v. 24 Hour Fitness USA, Inc. complained about several violations of the Texas Health Spa Act in the form membership contract of 24 Hour Fitness. Noting the specific remedies provided by that Act, the Fifth Circuit held: “We agree with the district court that Plaintiffs suffered no injury-in-fact. 24 Hour’s alleged violations of the Act did not harm Plaintiffs in any way. To the contrary, 24 Hour gave Plaintiffs exactly what they paid for: access to a gym. Plaintiffs therefore lack Article III standing, and the district court
properly dismissed the case.” No. 15-10309 (April 13, 2016).
A clear disability — a child rendered incompetent by a debilitating medical condition — gave rise to complicated standing and capacity issues in Rideau v. Keller ISD, No. 15-10095 (April 5, 2016). The child, the beneficiary of a trust established in his behalf as a result of the incident that caused his condition, sought damages from his school district for mistreatment by his special education teacher. The Fifth Circuit found that the child had standing to seek recovery for his home care expenses, notwithstanding “[t]he existence of a third-party payor in the form of a trust created by a prior tortfeasor.” The Court then agreed with the defendant that Texas law gave the bank who administered the child’s trust the exclusive right to file suit for other damages, and not his parents. It concluded, however, that this problem had been cured by the bank’s ratification of the parents’ action under the rarely-applied but very practical Fed. R. Civ. P. 17(a)(3). (I congratulate my LPCH colleague John Guild on his work for the plaintiffs in this case.)
NiGen alleged that the Texas Attorney General systematically sent harassing letters to retailers, warning against stocking its “amino acid building blocks” product. At least as to future activity by the AG, the Fifth Circuit found that NiGen had standing to complain and could allege a claim for injunctive relief to enforce federal law under Ex parte Young: “None of these cases sought, like NiGen’s, to lift a yoke of alleged unconstitutional conduct from the plaintiff’s own shoulders.” NiGen Biotech, LLC v. Paxton, No. 14-10923 (Sept. 23, 2015).
An appeal in a dispute between the Iraqi oil ministry and the Kurdistan governmental authority (“KRG”) ended in dismissal for mootness, after the tanker with the relevant oil “weighed anchor . . and . . . sailed to Ahkelon, Israel[.]” (The ship at issue, UNITED KALAVRYTA, appears at right and is presently underway in the Black Sea.) The Fifth Circuit rejected several arguments by the KRG that the dispute remained live, including:
- Any request in the complaint for a declaratory judgment was merely ancillary to the claim to recover the tanker under admiralty law;
- No claim for interest remained because the Ministry sought to recover the oil, not money damages;
- The “such other and further relief” clause at the end of the complaint was not a pleading for money damages; and
- “[H]ypothetical future shipments do not prevent the dispute regarding the Cargo at issue here from being moot.”
The Court also rejected a request by the KRG for vacatur of the lower court’s decision, noting in particular that “the KRG mooted this appeal through its voluntary decision to discharge the Cargo in Israel. In so doing, the KRG severely weakened its argument for equitable relief.” Ministry of Oil of the Republic of Iraq v. Kurdistan Region of Iraq, No. 15-40062 (Sept. 21, 2015, unpublished).
McGowan successfully sued his employer, Tractor Supply Co., for over $8 million in damages after a severe workplace injury. In the meantime, TSC’s umbrella carrier sued TSC and another carrier for a declaration about coverage obligations. The district court dismissed for lack of standing, and pursuant to its discretion under the Declaratory Judgment Act. The Fifth Circuit reversed; its principal holdings were: (1) under Texas insurance law, this sort of suit is justiciable after a liability determination at trial, and does not require exhaustion of appellate remedies; (2) the issues and parties were different in the two actions; and (3) the declaratory judgment suit was filed after the state case and otherwise showed “no indication of procedural fencing.” Ironshore Specialty Ins. Co. v. Tractor Supply Co. 14-51164 (Aug. 25, 2015, unpublished)
Hooks sued Landmark Industries, the operator of an ATM, as the representative of a putative class alleging that Landmark failed to give proper notices under the Electronic Funds Transfer Act about withdrawal fees. Hooks v. Landmark Industries, Inc., No. 14-20496 (Aug. 12, 2015). Pursuant to Fed. R. Civ. P. 68, Landmark offered $1,000 (the maximum allowable statutory damages) and costs and fees “through the date of acceptance of the offer, as agreed by the parties, or to be determined by the court if agreement cannot be reached.” Hooks did not accept it, and the district court dismissed, finding the action mooted by the unaccepted Rule 68 offer.
Sidestepping the thorny question of whether this offer was “complete” under Rule 68, the Fifth Circuit reversed. It reasoned: “[i]t is hornbook law that the rejection of an offer nullifies the offer,” and expressed concern that “[a] contrary ruling would serve to allow defendants to unilaterally moot named-plaintiffs’ claims in the class action context — even though the plaintiff, having turned the offer down, would receiver no actual relief. This holding places the Fifth Circuit in the minority of a 6-3 circuit split on the issue of whether an unaccepted offer of judgment can moot a named plaintiff’s claim in a putative class action.
Plaintiff challenged a proposed development plan as violating the Fair Housing Act. Defendants argued “that because the planned redevelopment is both inchoate and designed to be mixed income and to attract a variety of tenants, [Plaintiff] can only speculate as to whether, if redevelopment proceeds, it will deprive her of the social and economic benefits of diversity,” and thus lacked standing. The Fifth Circuit disagreed, finding that her “asserted injury would be concretely felt in the logical course of probably events flowing from an unfavorable decision by this court: (1) HUD approves the already-pending plan for redevelopment; (2) redevelopment occurs according to the approved plan; [and] (3) segregation and minority- and poverty-concentration occur in [Plaintiff’s] neighborhood as specifically anticipated in several expert reports contained in the record.” The Court distinguished Clapper v. Amnesty International, 133 S. Ct. 1138 (2013), a recent case about the Foreign Intelligence Surveillance Act, as “depend[ing] on a long and tenuous chain of contingent events[.]” McCardell v. U.S. Dep’t of Housing & Urban Devel., No. 14-40955 (July 23, 2015).
HUD suspended a mortgage lender from doing business with the government; after some litigation, HUD withdrew the suspensions. In the meantime, the lender had appealed the district court’s ruling that upheld the suspensions, and argued that it was not moot after the withdrawal. The Fifth Circuit disagreed, finding that the requested declaration that the suspension was unlawful is “no longer embedded in an actual controversy about the appellants’ legal rights.” The Court rejected arguments based on the “voluntary-cessation” and “collateral consequences,” emphasizing the specific posture of the lender’s situation with the government and the specifics of the regulatory environment. The Court also rejected an argument based on the past economic losses, noting that the lender was not seeking damages and could not under the applicable statute. Allied Home Mortgage Corp. v. U.S. Dep’t of Housing & Urban Devel., No. 14-20523 (July 22, 2015, unpublished).
In a 2-1 decision, the Fifth Circuit has denied the federal government’s request to stay the district court’s injunction against key elements of President Obama’s immigration policy. Texas v. United States, No. 15-40238 (May 26, 2015). Judge Higginson’s dissent concludes that the issues before the Court are nonjusticiable. Judge Smith’s majority (joined by Judge Elrod), made these key points:
- On standing — “Texas’s forced choice between incurring costs and changing its fee structure is itself an injury: A plaintiff suffers an injury even if it can avoid that injury by incurring other costs. And being pressured to change state law constitutes an injury,”‘
- On the statutory merits — “[E]ven granting ‘special deference,’ the INA provisions cited by the government for that proposition cannot reasonably be construed, at least at this early stage of the case, to confer unreviewable discretion,” and
- On the APA issue — “But a rule can be binding if it is ‘applied by the agency in a way that indicates it is binding,’ and the states offered evidence from DACA’s implementation that DAPA’s discretionary language was pretextual.”
At issue in North Cypress Medical Center Operating Co. v. Cigna Healthcare was a basic aspect of the structure of a “preferred provider” insurance program. Under the many policies at issue, “in-network” providers receive more reimbursement than “out-of-network” ones, as an incentive to seek treatment in-network. With respect to the portion of the bill as to which patients had responsibility, certain providers provided “prompt pay” discounts. Insurers disputed whether they were then still responsible for the entire billed amount, or should have their responsibility reduced by a corresponding discount. The Fifth Circuit found that the patients, and thus the providers to whom they assigned their claims, had standing to litigate about this situation (reversing a district court ruling to the contrary). It also found that ERISA preempted state law claims about these issues, that limitations applied (without tolling) to compulsory counterclaims by insurers that sought affirmative relief rather than recoupment, and affirmed the dismissal of RICO claims by the provider. The litigation seems likely to continue, and to produce more issues about complicated and significant ERISA and procedural points. No. 12-20695 (March 10, 2015).
Superior MRI Services sued for tortious interference with contract; the defendant argued that Superior lacked standing because it never acquired rights under the relevant contracts, and the Fifth Circuit agreed. Superior MRI Services, Inc. v. Alliance Imaging, Inc., No. 14-60087 (Feb. 18, 2015). The record showed that P&L Imaging, a bankruptcy debtor, listed “MRI service agreements” on its schedule of assignments to Superior, with an assignment date of October 1, 2011. Superior, however, did not exist as a legal entity until November 28, 2011. No evidence showed that Superior ratified the contract after its formation, and the Court was unwilling to accept Mississippi’s approval of Superior as a vendor as evidence of a ratification. The Court distinguished the recent case of Lexmark, Int’l v. Static Control Components, 134 S. Ct. 1377 (2014), as relating to another aspect of the standing requirement.
Mabary withdrew money from an ATM machine. While she received an on-screen notice about a $2.00 fee, the machine did not have a posted external notice about the fee — a violation of the Electronic Funds Transfer Act at the time. After amendments to the EFTA that eliminated the Bank’s liability (if applicable), the district court dismissed Mabary’s claim and denied certification of a related class. Mabary v. Home Town Bank, N.A., No. 13-20211 (Nov. 5, 2014). The Fifth Circuit reversed, holding: (1) Mabary had Article III standing as a result of EFTA’s definition of injury, even though she did receive a form of notice; (2) a Rule 68 offer of proof to her – precertification – did not moot her claim; and (3) EFTA’s amendments did not fall within the exception to the general presumption against statutory retroactivity. A dissent took issue with the standing holding as “respectfuly, silly stuff,” reasoning: “Mabary cannot show that she suffered a cognizable injury in fact, so she can sue only if the existence of her statutory cause of action sufficed to satisfy Article III.”
A mortgage servicer sued two individuals, alleging a conspiracy to defraud; the defendants argued that the servicer lacked standing because the notes in question were not properly conveyed. The case settled during trial, and as part of the settlement “the parties stipulated to several facts, including the fact that the Trusts were the owners and holders of the Loans at issue.” An agreed judgment followed. BAC Home Loans Servicing, L.P. v. Groves, No. 13-20764 (Nov. 3, 2014, unpublished).
The defendants then moved to vacate under FRCP 60(b), arguing that the plaintiff lacked standing. The district court denied the motion and the Fifth Circuit affirmed. It first noted that “the court will generally enforce valid appeal waivers, [but] a party cannot waive Article III standing by agreement . . .” Further noting that “parties may stipulate to facts but not legal conclusions,” the Court held: “That is exactly what happened here. [Defendants] conceded facts that establish [plainitiff’s] status; thus, the district court appropriately reached the resulting legal conclusion that [plaintiff] has standing.”
“Those who prefer to hunt deer without the use of dogs (still-deer hunters) complain that
dog-deer hunting is disruptive and unsportsmanlike. Adjacent landowners complain that dog-deer hunting leads to shooting near houses and from roads, fights between dog-deer hunters and landowners, roads being blocked by dog-deer hunters, dogs running across private property, and trespass. Dog-deer hunters defend the practice based on its history as a traditional method of hunting in Louisiana dating back to the colonial period.” The plaintiffs in Louisiana Sportsmen Alliance, LLC v. Vilsack sought to enjoin the U.S. Forest Service from banning dog-deer hunting in the Kisatchie National Forest. The Forest Service won on the merits in the district court, and for the first time on appeal, argued that the plaintiff organization lacked standing. Expressing vexation: “The district court was ill-served by the Forest Service in this regard, because the Forest Service never argued that the Alliance lacked organizational standing until this appeal,” the Court nevertheless considered the issue because “Article III standing is a jurisdictional requirement that cannot be waived,” and then dismissed the appeal because the plaintiff association had not shown its standing to bring suit. No.13-31260 (Oct. 28, 2014, unpublished).
The Fifth Circuit and the district court agreed that the plaintiffs/appellants in Mboho USA, Inc. v. Okon had served “abusively excessive, repetitious, and burdensome discovery requests.” No. 13-20449 (Oct. 10, 2014, unpublished). But, the Fifth Circuit found that the district court had acted too hastily in dismissing the case entirely, noting:
(1) the plaintiff, a foreign entity, was not foreclosed from suing in Texas simply because it is not registered to do business there;
(2) one of the appellants had legitimate documents from the Nigerian government authorizing him to bring suit in the US or Canada;
(3) an earlier dismissal in state court for lack of subject matter jurisdiction was not preclusive as to another court with jurisdiction; and
(4) as to one of the claims, plaintiffs were entitled to an opportunity to respond before it was dismissed sua sponte.
The Fifth Circuit has now resolved the challenges to BP’s Deepwater Horizon settlement, as follows:
1. In October 2013, in three separate opinions, First Panel remanded for more fact findings as to accounting issues about the settlement.
2. In January 2014, in a 2-1 decision, Second Panel affirmed the settlement over challenges based on Rule 23 and related standing issues.
3. In March 2014, satisfied with the results of the remand, First Panel affirmed the mechanics of the settlement in a 2-1 decision.
4. On May 19, 2014:
A. First Panel denies panel rehearing, concluding in a 2-1 opinion: “In settling this lawsuit, the parties agreed on a substitute for direct proof of causation by a preponderance of the evidence. By settling this lawsuit and agreeing to the evidentiary framework for submitting claims, the claimants did not abandon their allegations of Article III causation.”
B. Second Panel also denies panel rehearing, also in a 2-1 opinion, noting its “complete agreement” with the denial of panel rehearing by First Panel.