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 Ashford Hospitality Prime, Inc. v. Sessa Capital, No. 16-10671 (Dec. 16, 2016, unpublished).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).