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 v. U.S. Dep’t of Housing & Urban Devel., No. 14-20523 (July 22, 2015, unpublished).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.
The Fifth Circuit released a slightly revised opinion in Excel Willowbrook LLC v. JP Morgan Chase Bank, No. 12-20367 (revised April 24, 2014), a dispute about the FDIC’s rights upon assigning the assets of a failed bank. Of particular interest is the new footnote 34, which observes: “[T]he continued vitality of prudential ‘standing’ is now uncertain in the wake of the Supreme Court’s recent decision in Lexmark International, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014). See id. at 1388 (‘[A] court . . . cannot limit a cause of action . . . merely because “prudence” dictates.’).”
Payne sued Progressive Financial for violations of fair debt collection statutes, seeking statutory damages, actual damages, attorneys fees, and costs. Payne v. Progressive Financial Services, No. 13-10381 (April 7, 2014). Progressive made a Rule 68 offer of $1,001 in damages and fees to the date of the offer, to which Payne did not respond. The district court reasoned that Payne had not pleaded a basis to recover actual damages, and that the unaccepted offer mooted her claim for statutory damages because it exceeded the amount she could recover. The Fifth Circuit reversed, finding that the district court’s analysis of the actual damages claim conflated jurisdiction with resolution of the merits; accordingly, Progressive’s offer was incomplete because it did not address actual damages. A footnote reminds that a complete Rule 68 offer can moot a case, and that the Court did not reach the argument that the offer was incomplete because it did not include post-offer fees and costs.