Contractual ambiguity is easily the #1 issue, in commercial cases, where thoughtful judges disagree. An example appears in Barrios v. Centaur LLC, where both the district court and the Fifth Circuit concluded that a maritime contract had two conflicting “escape” (i.e., “other insurance”) clauses. The district court found ambiguity, but the Fifth Circuit applied a Louisiana rule that “when faced with two escape clauses threatening coverage, courts must find them ‘mutually repugnant’ and make both policies liable for the claim” on a pro rata basis. No. 23-30892 (Nov. 15, 2024).

Texas Tribune v. Caldwell County affirms the right of public (and with it, pres) access to pretrial bail hearings, noting, inter alia:

Public access to bail hearings helps ensure, for example, that courts act fairly and justly in setting bail.46 When courts hold private proceedings, “[t]hey can . . . avoid criticism and proceed informally and less carefully.” Allowing public access encourages adequate preparation and, in turn, precision by the court. These assurances lead to “enhance[d] public confidence in the process and result” of the justice system.

The opinion also provides a sleek example of the “citational footnote” writing style that I believe significantly enhances readability. No. 24-50135 (Nov. 15, 2024).

A recent en banc vote produced an unusual 9-9 tie (and thus, affirmance of the panel opinion) because a senior judge sat on the relevant panel:

The majority opinion in National Center for Public Policy Research v. SEC found that a challenge to an SEC rule about the contents of proxy ballots was not justiciable, noting, inter alia:

     “[C]onsider the chain of assumptions the Center’s theory requires. First, we must anticipate that third-party companies uninvolved in this litigation will choose to exclude the Center’s measure in their proxy materials. We must do so mindful that many companies have since opted to include the Center’s measure without SEC intervention.   

       Next, we must assume the same third-party companies will base their exclusion decision on the same grounds as Kroger and seek SEC staff advice. No matter that at least thirteen independent reasons exist for excluding proxy statements, or that the SEC staff is under no obligation to offer its advice if requested.

     We must further assume that the SEC will issue the same no-action letter sent to Kroger, disregarding that staff advice is limited to each ‘particular instance.’ If SEC staff issues the letter, we must also infer that the third-party companies will ultimately follow through with their initial decision and exclude the proposal from their proxy materials.”

No. 23-60230 (Nov. 14, 2024) (emphasis added); accord FDA v. Alliance or Hippocractic Medicine, 144 S. Ct. 1540 (2024) (“The doctors have not shown that FDA’s actions likely will cause them any injury in fact. The asserted causal link is simply too speculative or too attenuated to support Article III standing.”). A dissent characterized thematter as one capable of repetition yet evading review.

Last Friday I received the inaugural “Lawyer’s Lawyer” award from the Dallas Bar Association, described by President Bill Mateja as a lawyer who “eats, breathes, and sleeps law” in comment and public thought about it. (Next to me is Courtney Marcus, filling in for Glenn West, who also received it.) Many thanks to Bill and the DBA, and to readers of this blog: longtime or new; enthusiastic or not!

Classically, judicial opinions consist of dicta and holding; the process of distinguishing the two and applying the correct rule of law in a specific case is the essence of the common-law method. A variant on that classical model sometimes arises in cases on remand from the U.S. Supreme Court, when the panel discusses that Court’s mandate; an example of which appears in the remand of NetChoice LLC v. Paxton, No. 21-51178 (Nov. 7, 2024).

The appellants in Legacy Recovery Servcs, LLC v. City of Monroe tried mightily, but was unable to persuade the Fifth Circuit that it had appellate jurisdiction over an order that partially granted and denied motions to dismiss.

The appellants argued that the ruling was an appelable collateral order. The Court saw otherwise, holding that the order did not “conclusively determine the disputed question” because it dismissed some claims while retaining others. Exercising jurisdiction over such an order risked encouraging piecemeal appeals that would require the Court to review the same intertwined claims multiple times.

Also, the issues resolved by the district court were not “completely separate from the merits of the action.” The dismissed and retained claims were based on the same statutes, and thus interwoven with the issues left  before the district court.

Lastly, the Court held that the order was not “effectively unreviewable on appeal from a final judgment,” pointing out that if the appellants’ concerns were valid, the Court could vacate the judgment and order a new trial after final judgment. No. 24-30211 (Nov. 6, 2024).

A 2-1 panel decision about an issue of federal-officer removal produced a close vote against en banc review, broken down as follows:

Even the most enthusiastic perspectives about federal-court jurisdiction have limits, as shown by Lowery v. Texas A&M Univ., a discrimination case filed by a college professor:

“Professor Lowery says that he is ‘able and ready’ to apply for lateral positions at [Texas A&M] University. But he never submitted an application to substantiate his interest. That fact is fatal in this case because there is little evidence that submitting a job application would be a futile gesture.”

No. 23-20481 (Oct. 30, 2024) (emphasis added).

Repub. Nat’l Comm. v. Wetzel  held that a Mississippi statute, allowing absentee ballots to be received up to five days after Election Day, is preempted by federal law, which mandates that all ballots must be received by Election Day. The court emphasized that the term “Election Day” refers to a singular day. Slate’s Mark Stern offers some provocative commentary about the potential impact – or lack thereof – of this ruling. No. 24-60395, Oct. 25, 2024.

In a per curiam opinion joined by eight judges, the Fifth Circuit held in Tesla v. NLRB that an NLRB decision about unfair labor practices by Tesla would be vacated and remanded for further proceedings:

We hold that Musk’s tweets are constitutionally protected speech and do not fall into the categories of unprotected communication like obscenity and perjury. And the Board does not dispute the general rule that it (like every other part of the Government) is powerless to delete protected speech.

But nine other judges didn’t join that opinion. As detailed below, Judge Haynes concurred in the judgment only, and eight judges joined a dissent. So what the NLRB is supposed to do on remand is not entirely clear.

Crosswell v. Rodriguez involved the sufficiency of a RICO pleading. The Fifth Circuit emphasized a RICO enterprise “must exist for purposes other than just to commit predicate acts,” which means that  “accusing a group of defendants comprising one natural person and a collection of legal fictions as undertaking a set of acts together, without providing any detail as to how they acted together, fails to provide a factual basis from which to plausibly infer the connected structure of an association.”

Here, while the plaintiffs’ allegations described a stand-alone set of events, the Court held that no allegations plausibly supported the theory that these transactions were part of a repeated and continuing scheme involving the defendants. No. 23-20535, Oct. 17, 2024.

In X Corp. v. Media Matters for Am., the Fifth Circuit granted a stay pending appeal of a a district court’s discovery order compelling Media Matters to disclose its donor information, citing First Amendment concerns.

The Court emphasized the loss of First Amendment freedoms, even for minimal periods, constitutes irreparable injury, and that the public interest is better served by avoiding the risk of a chilling effect on association, as “First Amendment freedoms need breathing space to survive.” The Court also noted the breadth of the discovery requests, proportionate to the needs of the case, and the risk that disclosure of the requested information could lead to harassment or intimidation of Media Matters and its donors. No. 24-10900, Oct. 20, 2024.

In Ultra Deep Picasso Pte. Ltd. v. Dynamic Indus., the Fifth Circuit addressed the critical issue of where a bank account can be garnished in an “in rem” proceeding grounded in admiralty law. Applying the general principle that the property must be found within the district where the trial court is located, the Fifth Circuit concluded that a bank account is located where its funds can be withdrawn — a standard that requires the physical presence of the bank or its branches within the district.

The court rejected the argument that it’s enough to have jurisdiction in the district over the garnishee bank. In rem jurisdiction “rests on the attaching court’s jurisdiction over both the garnishee and the property to be attached.” Because the garnishee bank didn’t have a branch in the district, but only a “representative office” with limited authority, the garnishment failed. No. 23-20357, Oct. 18, 2024.

Last week I touched on one significant copyright holding from UMG Recordings v. Grande Communications Networks. In that case, the Fifth Circuit also addressed the calculation of statutory damages under the Copyright Act.

Specifically, the Court held that statutory damages should be awarded per compilation (e.g., an album) rather than per individual work within the compilation. The court emphasized that the plain language of the Copyright Act mandates that “all the parts of a compilation or derivative work constitute one work” for the purposes of statutory damages.

This conclusion means that when multiple songs from the same album are infringed, the copyright owner is entitled to only one statutory damage award for the entire album, not separate awards for each song. The Court rejected the district court’s approach, which allowed separate statutory damages for each individual song. In so doing, the Fifth Circuit noted that many of the works in question were registered as compilations, with certificates of registration indicating notations such as “collective work” or “compilation of sound recordings.” No. 23-50162, Oct. 9, 2024.

In UMG Recordings v. Grande Communications Networks, the Fifth Circuit held that an internet service provider materially contributed to copyright infringement, by continuing to provide internet services to known infringing subscribers, without taking basic measures to prevent further infringement. As potential safety measures, the Court noted that the ISP could have terminated the accounts of repeat infringers (a measure that Grande had previously employed) or required infringing subscribers to contact the company to maintain their services No. 23-50162, Oct. 9, 2024.

In La Union del Pueblo Entero v. Abbott, the Fifth Circuit stayed an injunction against a Texas election law, emphasizing that the injunction was issued just three weeks before voting was set to begin–and after Texas had already started issuing mail-in ballots for the 2024 general election.  A concurrence focused solely on the issue of timing and did not address the merits issues that the panel majority also reviewed. No. 24-50783, Oct. 15, 2024.

The 2008 financial crisis produced a bumper crop of Fifth Circut opinions about basic issues involving home loans, because diversity jurisdiction drove much of that litigation into the federal courts. While (thankfully) there are far fewer cases about those issues now, the Fifth Circuit still writes in that important area, most recently in Couch v. Bank of New York Mellon, holding:

• Clock for foreclosure. “The Couches contend that [CPRC] § 16.025(a) and (b) require mortgagees to file suit and sell within four years to preserve the lien. Texas courts disagree. Section 16.035(a) ‘does not require that the actual foreclosure occur within the four-year limitation period, but rather, requires only that the party seeking foreclosure “bring suit … not later than four years after the day the cause of action accrues.”‘”
• Clock for adverse possession. “[T]he adverse possession clock did not start until the Bank acquired the property at the constable’s sale. The Couches have not adversely possessed the property for a sufficient period of time under any of the potentially applicable periods.”

No. 24-10297 (Oct. 11, 2024, unpublished).

The Fifth Circuit said “enough” as to a district court’s aggressive oversight of the Texas foster-care system, vacating a contempt order and requiring reassignment of the case on remand. Capturing the flavor of the opinion, towards the end of the section on reassignment, the Court said:

However, as a general rule of law federal judges are not allowed to become permanent de facto superintendents of major state agencies. Horne v. Flores, 557 U.S. 433, 453, 129 S. Ct. 2579, 2597 (2009) (“[T]he longer an injunction or consent decree stays in place, the greater the risk that it will improperly interfere with a State’s democratic processes.”); United States v. Mississippi, 82 F.4th 387, 400 (5th Cir. 2023) (“Micromanagement, enforced upon threat of contempt, does not reflect the principles of comity” in prison context.). Nor, under the federalist structure created by the Constitution, is it appropriate for federal court intervention to thwart the state’s self-management, where the state is taking strides to eliminate the abuses that led to the original decree. Horne, 557 U.S. at 448, 129 S. Ct. at 2593–94 (“Federalism concerns are heightened” where “a federal court decree has the effect of dictating state . . . budget priorities.”). Nor are federal judges even suited, by training or temperament, to manage institutions, personnel, or the provision of vital state services, even if counselled by monitors.

M.D. v. Abbott, No. 24-40248 (Oct. 11, 2024).

In RSM Prod. Corp. v. Gaz du Cameroun, S.A., the Fifth Circuit reversed the district court’s decision to vacate a revised arbitral award that reduced the damages awarded from $10.5 million to $6.5 million. The Court held that the arbitral tribunal had the authority to correct “computational errors” in its initial award and to determine what constituted such errors under the International Chamber of Commerce Rules, which the parties’ agreements incorporated. Applying the highly deferential standard of review for such issues, the Court held that the tribunal “arguably construed the parties’ contracts” when it issued the corrected award, even if it made a mistake in its interpretation.

The Court rejected RSM’s argument that the tribunal exceeded its powers by reconsidering the merits of RSM’s claims. Distinguishing RSM’s authority, the Court noted that the ICC rules allowed this tribunal to correct any “clerical, computational or typographical error, or any errors of similar nature contained in [the] award.” The Court emphasized that “[t]he potential for … mistakes is the price of agreeing to arbitration” and that “[t]he arbitrator’s construction holds, however good, bad, or ugly.” No. 23-20583, Sept. 19, 2024.

Quoted in a provocative new article in Mother Jones about the Fifth Circuit, I point out that it’s the venue of choice these days for administrative-law disputes.

Hon. Jennifer Walker Elrod has taken office as the new Chief Judge of the Fifth Circuit, succeeding Hon. Priscilla Richman. The Texas Lawbook has a good story on this “changing of the guard” for this critical leadership role. The new Chief tells the Lawbook:

“I believe that we are all in this endeavor together to uphold our Constitution and try to follow the rule of law and this enterprise works best when everyone gets to participate and have their say … And we can learn from each other if we’re all at liberty to engage. … I also believe iron sharpens iron … by learning what others who think differently believe, and what the basis for that belief is, that can help you to better reinforce your view, or perhaps, to change your mind.”

Cure & Assocs., P.C. v. LP Fin., LLC addreses whether nonsignatories to an arbitration agreement can be compelled to arbitrate under state-law equitable estoppel principles. The Fifth Circuit held that these nonsignatories could be compelled, because they  received direct benefits from the contractual relationship between the two signatories. Specifically, the Court noted that one of the nonsignatories was formed specifically to facilitate one signatory’s business with the other, sharing clients, employees, and office space. Under both California and Texas law, a nonsignatory can be compelled to arbitrate if it “deliberately seeks and obtains substantial benefits from the contract” with an arbitration clause. No. 23-40519, Oct. 1, 2024.

If you enjoyed my article in the Cornell Law Review Online earlier this year about the party-presentation principle, hopefully you will also enjoy a new article of mine in the Texas Law Review Online. Examining cases from the 2023-24 Supreme Court term, it considers whether “originalism” and modern economic theory can comfortably coexist.

Dwyer v. United Healthcare Ins. Co., No. 23-50439 (Sept. 19, 2024), vitalizes the technical and often defense-favoring framework of ERISA benefits litigation, challenging virtually all material points–factual and legal–put forward by a plan adminstrator in its handling of claims relating to a serious anorexia case. On the facts, the opinion proceeded as follows, pointing out numerous inconsistencies between what the administrator contended and what the record, in fact, showed:

Unsurprisingly, given all three judges’ discomfort with the Fifth Circuit precedent that dictated the panel holding in Abraham Watkins v. Festeryga, that case will be considered by the en banc court. The issue, as summarized by the panel majority, is this:

Edward Festeryga, an attorney embroiled in a dispute with his former law firm, wants this case heard in federal court and contends we have appellate jurisdiction over the district court’s remand order because waiver is neither an issue of subject-matter jurisdiction nor a defect in removal procedure under 28 U.S.C. § 1447(c). We agree, but our 40-plus-year-old precedent provides otherwise, holding that a waiver-based remand order is jurisdictional under § 1447(c) and thus unappealable under § 1447(d).

While no longer in the academy, the capable Rory Ryan offered this insightful analysis of this case on X.

In TIG Ins. Co. v. Woodsboro Farmers Coop., the Fifth Circuit identified fact issues that precluded summary judgment in an insurance-coverage case.

A key is whether damage to certain grain silos was “property damage” under a CGL policy. The diistrict court concluded that damage was due to defective construction. The Fifth Circuit credited the insured’s evidence that wind and weather caused the silos’ metal parts to degrade, bend, and fatigue. This evidence, including testimony from an inspector who saw the damage, supported the insured’s argument that the damage was not merely cosmetic but a “harmful change in appearance, shape, composition, or some other physical dimension to the claimants’ property.”

The Court also noted a fact issue about whether the damage occurred during the policy period, emphasizing that under Texas law, “occurred means when damage occurred, not when discovery occurred,” making it irrelevant that the damage was first observed after the policy period expired. No. 23-40435, Sept. 20, 2024.

In Favre v. Sharpe, a Hall of Fame NFL player contended that another Hall of Fame player defamed him during a TV broadcast. The Fifth Circuit affirmed the dismissal of the defamation claim, reasoning:

Sharpe’s statements–in response to facts widely reported in Mississippi news and specifically in the just-released Mississippi Today article–could not have been reasonably understood as declaring or implying a provable assertion of facts. His statements are better viewed as strongly stated opinions about the widely reported welfare scandal. 

No. 23-6010 (Sept. 16, 2024).

An old adage cautions that “house guests, like fish, begin to smell after too long.” So too with exotic arugments about jury-trial rights, fueled by the Supreme Court’s vindication of such rights in an SEC enforcement action in SEC v. Jarkesy.

Specifically, in In re Abbott, Texas sought mandamus relief to compel a jury trial in its dispute with the United States about floating obstacles in the Rio Grande, arguing that the U.S.’s claim was analogous to a common-law claim for ejectment. The Fifth Circuit rejected that argument … because it isn’t:

Even if we did agree that this suit concerns competing claims over the rights to “possess” and “exclude” from the Rio Grande, it is no mere garden-variety dispute about “sticks in the bundle of rights that are commonly characterized as property.” … The only appropriate analogy for a [Rivers and Harbors Act] claim that has been presented by the parties is abatement of a public nuisance or  purpesture. As the United States points out, there is a long tradition of equitable suits to clear obstructions upon public highways.

No. 24-50620 (Sept. 20, 2024).

In Keck v. Mix Creative Learning Center, LLC, the Fifth Circuit affirmed summary judgment for art studio that used the plaintiff’s copyrighted artworks (image of dogs) in online art kits for children. The Fifth Circuit found fair use, because the studio’s use of the artwork was transformative and did not harm the market for the plaintiff’s works; as the district court had observed, the studio “drew on Plaintiff’s art not for its inherent expressive value but for what it, accompanied by materials and instruction in art theory and history, could teach students.”  No. 23-20188 (Sept. 18, 2024).

Nat’l Infusion Center Ass’n v. Becerra returns to the issue of standing in administrative law cases–a topic where the Fifth Circuit has had an unfortunate track record before the Supreme Court. The majority holds that the that the National Infusion Center Association has standing to challenge the “Drug Price Negotiation Program” established by the Inflation Reduction Act, noting procedural and economic injury.

As to economic injury, the Court held: “NICA has shown that at least one of its members’ drugs will be subject to the Program, that the Program will lower the price for that drug, and that the lower price will lead to lower revenue for the member that administers the drug.” Critical to this holding–and the distinction of recent precedent about probabilistic future injury–was the majority’s conclusion that:

“predicting a profit seeking business’s response to changing economic incentives simply requires determining the direction in which the incentives are changing. Because the third-party decisions in NICA’s theory are guided by basic economic rationality, NICA has ‘thread[ed] the causation needle’ …”

(emphasis added). A dissent emphasized that NICA’s members do not have a concrete interest in profiting from Medicare reimbursements, as the statute does not entitle them to a profit, and that the complaint was filed before HHS announced the drugs selected for negotiation–creating tension iwth the rule that standing must exist at the time suit is filed. No. 24-50180 (Sept. 20, 2024).

Fittingly for a Friday, 600Camp celebrates its thirteenth anniversary of reasonably faithful reporting, comment, analysis, and meme-making about business-related cases in the U.S. Court of Appeals for the Fifth Circuit. You can celebrate by making some bread pudding with this classic recipe from Galatoiires, the grande dame of New Orleans Creole restaurants.

Occidental Petroleum Corp. v. Wells Fargo Bank, N.A. presents an Erie case, governed by Texas substantive law, as to whether the parties formed a contract. No. 23-20318 (Sept. 18, 2024).

The Fifth Circuit held that Wells Fargo was judicially estopped from arguing that a contract was not formed. Under its precedent: “Judicial estoppel ‘prevents a party from asserting a position in a legal proceeding that is contrary to a position previously taken in the same or some earlier proceeding.’” (emphasis added).

But as a matter of Texas substantive law: “[J]udicial estoppel applies only if the successful representation arose in a different case or, at most, ‘in another phase’ of the same case. … By contrast,  “[c]ontradictory positions taken in the same proceeding may raise issues of judicial admission but do not invoke the doctrine of judicial estoppel.”  Fleming v. Wilson, No. 22-0166 (Tex. May 17, 2024). (emphasis added).

The question whether judicial estoppel is substantive or procedural, and thus whether Erie applies to a federal court’s choice of law about that matter, is not addressed.

In Century Surety Co. v. Colgate Operating, LLC:

• The parties’ contract required Colgate (an oil well operator) and Triangle (a consultant) “to purchase indemnity insurance with limits the lesser of (1) ‘not less than $5 million’, or (2) ‘the maximum amount which may be required by law, if any, without rendering this mutual indemnification obligation void, unenforceable or otherwise inoperative.'”
• Clause 2 referred to a potential legislative restriction on indemnity agreement that didn’t come to pass.
• The district court say Clause 1 as setting a ceiling but not a floor on the indemnity obligation, but the Fifth Circuit saw the clause as setting both: “At heart, Century’s position assumes that Colgate set out a $76 million dollar indemnity obligation without clearly saying so in the contract by virtue of policies that Colgate acquired years after it had entered into the [contract].”

No. 23-50530 (Sept. 10, 2024).

28 U.S.C. § 1782 allows foreign parties to petition U.S. federal courts for assistance with discovery. When a district court rules on such an application, the Fifth Circuit expects an explanatoin:

… the district court’s order denying Paramo’s motion to quash is plainly deficient because it does not meaningfully engage with any of part of the § 1782 inquiry. Indeed, it does not engage at all beyond a barebones reference to “the Motion, the Response, the record and the applicable law.” And the Banorte Parties’ contention that the ruling is salvageable because “the district court referenced and analyzed the relevant factors” in its initial order granting § 1782 assistance is unavailing because, even there, the court did no more than recite the applicable factors. Had the court analyzed the factors, even summarily, either in the instant order denying Paramo’s motion or by reaffirming substantive analysis articulated in granting the initial § 1782 petition, this would be a different case.

Banco Mercantil de Norte, S.A. v. Paramo, No. 24-20007 (Aug. 28, 2024).

In Tesla, Inc. v. Louisiana Automobile Dealers Assoc., the Fifth Circuit addressed Tesla’s challenges to Louisiana’s automobile dealership regulations, which prohibit manufacturers from selling directly to consumers and performing warranty services for cars they do not own.

• Due Process. The Court found that Tesla had plausibly alleged a due process violation. The Commission’s composition, with members who are direct competitors of Tesla, created a “possible personal interest” that could bias their decisions, which was sufficient for the Rule 12 stage.
• Antitrust. From there, the Court vacated and remanded the dismissal of Tesla’s antitrust claim, noting that the due process ruling fundamentally altered the grounds on which Tesla’s alleged antitrust injury was based. Tesla’s allegations of exclusion from the market due to the Commission’s actions could constitute a plausible antitrust injury.
• Equal Protection. The Court affirmed dismissal of Tesla’s equal protection claim, concluding that preventing vertical integration and potential abuses of market power were legitimate state interests justifying the regulations.

A dissent saw matters differently, focusing primarily on the due-process claim and its reliance on board structure. No. 23-30480, August 26, 2024.

In Reule v. Jackson, the Fifth Circuit affirmed that a plaintiff lacks standing to challenge procedural rules, when those rules apply to meaningless substantive activity. A group of plaintiffs, declared as “vexatious litigants” under Texas law claimed that the procedural requirements thus placed on them by Chapter 11 of the Texas Civil Practice & Remedies Code were unconstitutional. The Court held that they lacked standing because their real grievance was with the original court orders declaring them vexatious, not with the officials who enforced those orders. Even if the procedural requirements were lifted, the plaintiffs would still face dismissal as a substantive matter. No. 23-40478, August 19, 2024

Shinsho Am. Corp. v. TransPecos Banks, SSB concluded that TransPecos Banks authorized HyQuality to sell its inventory, including the steel at issue, free of TransPecos’s security interest as allowed by section 9.315 of the UCC. This decision was based on the understanding between TransPecos and HyQuality that selling inventory was essential for HyQuality’s business operations, and that the proceeds from these sales would not be used to repay TransPecos’s loans directly. The proceeds were intended to be reinvested into the business, a practice TransPecos encouraged to avoid violating SBA rules and to support HyQuality’s ongoing operations. No. 23-20520 (Aug. 19, 2024).

In Arms of Hope v. City of Mansfield, the Fifth Circuit examined when a case becomes moot during an interlocutory appeal. The Court distinguished between the mootness of the entire case, on the one hand, and the mootness of the specific issues presented in an interlocutory appeal, on the other.

Here, because the City of Mansfield amended its ordinances about “Unattended Donation Boxes,” the issues on interlocutory appeal from a preliminary injunction no longer had practical significance.

Citing U.S. Navy SEALs 1-26 v. Biden, the Court explained that when an interlocutory appeal becomes moot, it doesn’t stop the lower court from dealing with the remaining issues. Although the new ordinances didn’t completely address all concerns, the Court determined that these issues should be resolved by the district court rather than through a moot appeal. No. 23-10656, August 21, 2024.

In Kansas City So. Rwy. Co. v. Sasol Chemicals (USA), LLC, the Fifth Circuit addressed whether “track” in a lease agreement included the track that forms part of the switches.

The district court found the contract ambiguous because “track” was not explicitly defined to include or exclude switches.

The Fifth Circuit disagreed, noting that dictionaries define “track” as the continuous line of rails on which railway vehicles travel. “Switches,” as movable rails, are part of the track infrastructure. From there, the Court noted that throughout the lease, treating “track” and “switches” as mutually exclusive would lead to absurd results, such as gaps in maintenance obligations, liability allocations, and safety requirements.

The Court acknowledged the parts of the lease relied upon by the district court, which referred to “track infrastructure, switches, and tracks,” but reasoned that while these terms are sometimes listed separately, that doesn’t mean they were mutually exclusive. The separate references likely reflected the need to address different components of the railyard in detail. No. 23-10048, August 20, 2024.

The great Sherlock Holmes story The Hound of the Baskerviles took place on the English moor. The Fifth Circuit case of Diamond Services Corp. v. RLB Contracting, Inc., No. 23-40137 (Aug. 16, 2024), also involved a promlem of mooring:

Restaurant Law Center v. U.S. Dep’t of Labor presents a case study in review of an agency regulation after Loper-Bright:

• 29 U.S.C. § 203(t) says, in relevant part, that a “tipped employee” means “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.” (emphasis added).
• The Labor Department regulation implementing that statute focused on the amount of time, during the work period, that the employee engaged in tip-eligible activity; in summary: “An employer may take the tip credit for tip-producing work. But if more than 20 percent of an employee’s workweek is spent on directly supporting work, the employer cannot claim the tip credit for that excess. Nor can directly supporting work be performed for more than 30 minutes at any given time. An employer may not take the tip credit for any time spent on work not part of the tipped occupation.” (footnote omitted).
• Without the Chevron backstop, that regulation was invalid because it didn’t fit the statute’s unambiguous terms: “'[E]ngaged in an occupation in which [the employee] customarily and regularly receives more than $30 a month in tips’ cannot be twisted to mean being ‘engaged in duties that directly produce tips, or in duties that directly support such tip-producing duties (but only if those supporting duties have not already made up 20 percent of the work week and have not been occurring for 30 consecutive minutes) and not engaged in duties that do not produce tips.'”

“In short, as to supporting work, the Final Rule replaces the Congressionally chosen touchstone of the tip-credit analysis—the occupation—with one of DOL’s making—the timesheet.” No. 23-505762 (Aug. 23, 2024).

In Mission Pharmacal Co. v. Molecular Biologicals, Inc., the Fifth Circuit reversed the district court’s conclusion that a contract was “unambiguously silent” about certain reimbursements.

The case turned on the term “chargeback management.” The Court emphasized that the contract contemplated credits being issued to wholesalers, which undermined Molecular’s argument that Mission unilaterally assumed that obligation without contractual support:

“[F]aced with the question of whether the meaning of chargeback services includes reimbursement from Molecular, the fact that one answer leads to a harmonious contract, while the other leads to a dissonant one, is informative in determining the meaning of the term.”

No. 23-50321 (consolidated with No. 23-50446), August 16, 2024.

Mieco LLC v. Pioneer Natural Resources USA, Inc. involved a dispute over a natural gas supply contract affected by Winter Storm Uri.

Pioneer Natural Resources invoked the contract’s force majeure clause to excuse its failure to deliver gas during the storm. The clause defined force majeure as an “event or circumstance which prevents one party from performing its obligations,” and specified that the event must be beyond the party’s reasonable control and not due to its negligence. The clause further required the party to be “unable to overcome or avoid” the event “by the exercise of due diligence.”

The Fifth Circuit upheld the district court’s conclusion that “prevent” does not mean performance must be impossible, but can also include a significant hindrance or impediment. That said, the Court reversed summary judgment on whether Pioneer exercised the necessary “due diligence” to mitigate the storm’s effects. The clause required Pioneer to make reasonable efforts, and the Court identified  factual disputes about whether Pioneer could have purchased spot market gas to fulfill its obligations, leading to a remand for further proceedings. No. 23-10575 (July 16, 2024).

In the high-profile Dallas case challenging the FTC’s new rule about noncompete enforcement, Judge Ada Brown ruled for the plaintiffs in all respects. Ryan LLC v. FTC (N.D. Tex. Aug. 20, 2024). The opinion sidesteps nagging questions about the propriety of a nationwide injunction by focusing on the plain terms of the Administrative Procedure Act:

In Canadian Standards Assoc. v. P.S. Knight Co. the Fifth Circuit resolved a copyright case about the reproduction and sale of Canadian model codes involving the Candaian electrical, propane, and oil-pipeline industries. Each of the relevant codes was fully incorporated into Canadian law in those areas.

The Court held that once these model codes were enacted into law, they lost their copyright protection under U.S. law, referencing its earlier decision in Veeck v. Southern Bldg. Code Congress, Int’l.  The Court also rejected CSA’s efforts to distinguish Veeck, noting that the legal principle–incorporation into law means a loss of copyright protection–applied equally to the Canadian context. 23-50081; Aug. 15, 2024.

The Fifth Circuit addressed a range of trademark-related claims about a group of restaurants in Molzan v. Bellagreen Holdings, LLC, and reversed the grant of a Rule 12(b)(6) motion to dismiss about them.

• Trademark infringement. The plaintiff adequately alleged that the defendants kept using his “Ruggles” trademarks after the termination of their license, creating a likelihood of confusion. Specifically, the Court noted that the use of the “Ruggles Green” trademark in subdomains and redirections to the Bellagreen website. These actions made it “facially plausible that the Bellagreen Defendants were using the Ruggles and Ruggles Green trademarks and that use was creating confusion on the internet.”
• False advertising. Statements on the Bellagreen website, suggesting that Bellagreen was formerly Ruggles Green, and that the quality of food had not changed since 2008, could mislead consumers into believing that Bellagreen was still affiliated with the original Ruggles Green restaurants. The plaintiff’s allegations about these matters thus stated plausible claims.
• Trademark dilution. The Court affirmed the dismissal of the federal dilution claim but reversed the dismissal of the state-law claim. The Court recognized that while the “Ruggles” mark may not be famous nationwide, the plaintiff sufficiently alleged that the mark was famous within the Houston area.

No. 23-20492. Aug. 12, 2024

Dickson v. Janvey clarifies the limits of a district court’s power to issue a global bar order. The Fifth Circuit held that the district court overstepped by attempting to enjoin foreign liquidators—who were not subject to its personal jurisdiction—from pursuing claims related to the Stanford Ponzi scheme in Switzerland. As the Court noted, “no in personam jurisdiction, no injunction,” rejecting the idea that a court’s in rem jurisdiction over a receivership estate could justify expansive orders against parties beyond its reach. No. 23-10726 (Aug. 15, 2024).

The Kobayashi Maru was an impossible test used by Star Trek’s Starfleet Academy to challenge cadets. The plaintiff in Zaragoza v. Union Pacific R.R. Co. faced a similarly difficult challenge with the Ishihara test for color-blindness, leading to a dispute whether he should have been allowed to continue working as a train conductor. The Fifth Circuit held that limitations on his claim had been tolled:

“Zaragoza was included in the Harris class, as pled in February 2016 and as initially certified in February 2019. Therefore, his disability discrimination claims were tolled from the time they accrued until he asserted them, as an individual claimant, with the EEOC in March 2020.”

No. 23-50194 (Aug. 12, 2024).