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No. 24-10297 (Oct. 11, 2024, unpublished).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

Dickson v. Janvey, a dispute about the scope of an anti-litigation injunction, offers two basic reminders about the process of separating holding from dicta:

• Not discussed, likely not holding. “[W]e have previously held that a district court’s power over a receivership enables it to enjoin third parties or non-parties from pursuing certain claims involving the res of the receivership estate. But our statements in those cases implicated the equitable remedies available to the district court and not its jurisdiction. No one objected to personal jurisdiction in those cases, likely because any such objection would have been frivolous. But even if there were a latent in personam defect in those cases, our silence could never be construed as an implicit holding.” (citations and footnotes omitted).
• Not necessary, likely not holding. “Hall suggested in dicta that federal courts may enter in rem injunctions in aid of a previous in rem judgment.  It is unclear to us what the Hall court meant by this dicta.  But … the Hall court’s reference to an ‘inrem injunction’ was unnecessary to its decision. Federal jurisdiction in that
  case was not in rem. So the court’s in rem discussion was nonbinding dicta.” (citations omitted).

No. 23-10726 (Aug. 9, 2024) (Enthusiasts of dicta-holding distinctions will recall that courts have discretion whether to give effect to obiter dicta–an unnecessary but thoughtful statement–under the circumstances of a particular case.)

Gibson, Inc. v. Armadillo Distribution Enterprises, Inc. presented a trademark dispute about the iconic “Flyng V” electric guitar; the appellate issue was the admissibility of evidence about third-party use before 1992–five years before the relevant party acquired the rights to the relevant marks. The Fifth Circuit held that the district court’s time limit wasn’t justified by Fed. R. Evid. 403 or the applicable trademark law, concluding that it was potentially probative as to whether the mark was “generic” and thus deserving of any protection under trademark law. No. 22-40587 (revised August 8, 2024) (applying Converse v. Int’l Trade Comm’n, 909 F.3d 1110 (Fed Cir. 2018)).

The issue in Gibson, Inc. v. Armadillo Distribution Enterprises, Inc. was the admissibilty of evidence about third-party use of an alleged trademark. After concluding that the trial court erred in excluding that evidence, the Fifth Circuit considered whether the error was harmful. To illustrate that concept, the Court discussed a helpful general case on that issue, Bocanegra v. Vicmar Services, 320 F.3d 581 (5th Cir. 2003), which it summarized as follows (citations omitted):

In Bocanegra v. Vicmar Services, Inc., a pedestrian was fatally injured when he was struck by a streetsweeper on the median of a highway. On the eve of trial, the pedestrian’s estate sought to introduce evidence demonstrating that the driver of the streetsweeper was impaired by the use of marijuana a few hours prior to the fatal collision. Citing Rule 403 and the Daubert standard, the district court granted the driver’s motion in limine and excluded the driver’s expert testimony and an admission from the driver that he had smoked marijuana a few hours before the incident. … On appeal, this court determined that the district court’s “reliance on Rule 403 as another basis to exclude [the relevant expert] testimony concerning cognitive impairment resulting from [the driver’s] ingestion of marijuana” constituted an abuse of discretion. This court further held that the error affected the pedestrian’s substantial rights because “the jury was not presented with a complete picture of what happened on the night in question.” This court concluded that the pedestrian’s estate was left with no means of countering the driver’s argument that he “reacted reasonably and did the best he could under the circumstances.”

No. 22-40587 (Aug. 8, 2024). From there, the Court concluded that the exclusion of the third-party use evidence in the case at hand prevented the jury from getting a complete picture of the alleged trademark’s use. PREVIEW: I have an article coming out in the Texas Law Review Online this fall that uses the metaphor of a “complete picture” to analyze the past SCOTUS term’s cases about the use of history.

I take the reins in this Bloomberg article today about the U.S. Chamber of Commerce choosing to file lawsuits about administrative-agency rules in Texas / the Fifth Circuit.

A summary-judgment affidavit can clarify, but not contradict, prior testimony. In Keiland Construction LLC v. Weeks Marine Inc., the Fifth Circuit described an example of permissible clarification;

     For instance, Weeks stated in its certified discovery responses that it found Keiland’s rates for its project manager and superintendent to be “excessive.” Moreover, Hafner testified that “the project manager, superintendent, and estimator are overhead people and shouldn’t be included in the [actual] cost at all.” And Hafner—at trial and in his affidavit—testified that he could not calculate the costs because of “discrepancies” in the claimed costs. So he simply hypothesized an “hourly rate . . . that [he] believed could be justified.”

     Keiland fails to show how, in any of these particulars, Hafner’s affidavit “impeaches,” rather than “supplements” or “explains,” the previous testimony.

No. 23-30357 (July 25, 2024) (footnotes omitted).

Escobedo v. Ace Gathering, Inc. invovlved “Crude Haulers,” who are “drivers of large, 18-wheeled tanker trucks who drive to producers’ oil fields, load crude oil onto their trucks, and then transport that oil on public roads and highways to an ‘injection point’ on a pipeline.”

While that activity is conducted within Texas, the pipelines carry most of the oil to customers and markets in other states. The question was whether the drivers were engaged in “interstate commerce” within the meaning of the Motor Carrier Act of 1980.

While the pathway to the present legal standard was not free from detours, the standard itself is clear–“purely intrastate transportation rises to the level of interstate commerce when the product is ultimately bound for out-of-state destinations, just as the crude oil was here,” and no evidence suggested that the oil “came to rest” at a storage facility to potentially end its interstate journey. No. 23-20494 (July 31, 2024).

Examples of contract ambiguity don’t come along every day, so they deserve careful study when they do. Keiland Construction v. Weeks Marine found ambiguity because of tension in a contract between Section 5, titled “COMPENSATION”:

This language was followed by a schedule of lump-sum prices for various services. The other clause was Section 9, titled “TERMINATION FOR CONVENIENCE, which said in relevant part:The Fifth Circuit agreed with the district court that the combination of these two provisions produced ambiguity: “Keiland’s reading, that the sections required compensation for pre-termination work on a lump-sum basis and post-termination work on a cost-plus basis, is plausible. But so is Weeks’s, namely that Section 9 operated to convert all compensation due Keiland to cost-plus upon termination—particularly given that Section 9 specifies payment for 21% of costs “for overhead and profit associated with Work through the date of termination.”  No. 23-30357 (July 25, 2024).

American Warrior v. Foundation Energy Fund provides a useful reminder that “finality” can mean different things in different settings:

AWI’s position elides the distinction between “finality” for the purposes of appealability and “finality” for the purposes of res judicata. These are related, but separate concepts. Thus, “finality for purposes of appeal is not the same as finality for purposes of preclusion.”

… Just as new facts or circumstances may warrant the modification of an injunction on behalf of a party that previously failed to obtain relief or modification, new facts or circumstances may also warrant an order modifying or lifting a bankruptcy automatic stay for a party previously denied relief. Res judicata does not tie a bankruptcy court’s hands to prevent the protection, disposition, or sale of estate property by lifting or modifying the automatic stay as changed conditions warrant.

… [P]arties may appeal the denial of a lift-stay motion, their failure to do so immediately does not prejudice their ability to obtain stay relief later, when the legal and factual landscape of the bankruptcy case changes.

No. 23-30529 (Aug. 1, 2024) (emphais removed).

The party-presentation principle made an appearance yesterday in the “buoy case,” United States v. Abbott.

The specific issue is unique to this case, but the level of generality at which the Court identified the problem is of broader interest. Cf. United Natural Foods, Inc. v. NLRB, 66 F.4th 536, 556 (5th Cir. 2023) (Oldham, J., dissenting) (“Does anyone think that, when a party presents legal question X for decision in federal court, a federal judge is somehow disabled from reading any case, statute, regulation, or other authority not cited in the party’s brief? Of course not. We are duty-bound to understand the legal questions presented to us—even when a party presents a question less than perfectly.”).

(To learn more about this elusive but important principle, you can read my recent article in the Cornell Law Review Online).

The en banc court has ruled for Texas in the ongoing “border buoy” dispute, with a breakdown of votes as follows:

Airlines for Am. v. Dep’t of Transp. illustrates how the issue of interim appellate relief stays (rimshot) in flux. The panel majority said:

Several airlines and airline associations seek a stay pending review of a recent Department of Transportation (“DOT”) Rule that regulates how airlines disclose fees to consumers during the booking process. Finding the Rule likely exceeds DOT’s authority and will irreparably harm airlines, we GRANT the requested stay and EXPEDITE the petition for review.

A third judge would have taken a more staid approach:

No. 24-60231 (July 29, 2024).

In 2022, the Fifth Circuit held that the CFPB’s funding was “double insulated” from Congressional review, and thus violated the Appropriations Clause of the Constitution.

In a recent 7-1 opinion by Justice Thomas, the Supreme Court reversed and held otherwise. Notably, “double” or “doubly” appears nowhere in the Supreme Court’s majority or concurring opinions. The Court held that “an identified source and purpose are all that is required for a valid appropriation.”

Now, Consumers’ Research v. FCC, a 9-7 en banc opinion from the Fifth Circuit, doubles down on this line of argument, holding that the method used to calculate a “universal service fee” for the communication industry is unconstitutional as a “double-layered delegation” of power. The dissent observes that “Congress has provided the FCC with an intelligible principle that sufficiently delimits the FCC’s discretion based on the established universal service principles.” No. 22-60008 (July 24, 2024) (en banc).

28 U.S.C. § 1447(d) says: “An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise.”

But under the Supreme Court’s Thermtron precedent, that statute is read in concert with § 1447(c), such that § 1447(d) “’only prohibits appellate review of … remand orders … specified in neighboring subsection 1447(c).’ Thus, to the extent a district court remands a case for lack of subject-matter jurisdiction (e.g., non-diverse parties) or a defect in removal procedure (e.g., missing the 30-day removal deadline), we cannot review that order on appeal.” (citation omitted).

In Abraham Watkins v. Festeryga, the district judge remanded a case after finding that the removing party waived the right to remove by active participation in stae-court proceedings. Thus, the question for the Fifth Circuit was: “whether the district court’s remand order in this case … is a specified ground within § 1447(c) and thus barred from our review under § 1447(d) or a discretionary ground outside § 1447(c) and thus an appealable collateral order ….”

The panel held that it was bound by Circuit precedent from 1980, which held–albeit obliquely and vaguely–that state-activity waiver was a 1447(c) ground about jurisdiction and thus unreviewable. A concurrence recommends en banc review of that precedent.

The plaintiffs in a challenge to the FAA’s “watch list” were unable to bring claims about the effect of that list outside of the airport-security context. The Fifth Circuit reasoned that they lacked standing for such claims:

Although it is possible the Plaintiffs could be injured if their alleged placement on the Watchlist adversely affects them during a traffic stop, firearm purchase, or license application, they have not demonstrated that such injuries have occurred or are “certainly impending.” 

(citation omitted). The court rejected Plaintiffs’ capacious  argument that “once an agency’s power is called into question by a plaintiff who has suffered [an] Article III injury, courts consider the full range of the agency’s asserted power, even if the plaintiff has not been harmed by every aspect of the agency’s congressionally unauthorized actions.” Kovac v. Wray, No. 23-10284 (July 22, 2024).

Matthews v. Tidewater, Inc. rejects a challenge to a forum-selection provision that required dismissal of a Louisiana toxic-tort case in favor of England. The plaintiff, a Jones Act seaman, argued that the dismissal contravened the public policy enunciated in a Louisiana statute about litigation fora, but the Fifth Circuit disagreed.

The present case, as did [a prior case], involves a plaintiff who is not a Louisiana resident and an international employment contract requiring litigation in a foreign forum. We also stress Matthews’s lack of connections to Louisiana. Matthews worked for Tidewater, Inc., a Delaware corporation, and Tidewater Crewing, Ltd., a Cayman Islands corporation. He filed suit for injuries sustained outside the United States while servicing Egyptian oil wells in the Red Sea. Further, just as the [earlier] court observed Section 23:921A(2) protects Louisiana citizens from being forced to litigate their case in a foreign forum. Matthews is not a Louisiana citizen and has scant, if any, connections to Louisiana. He, therefore, is not the object of the statute.

No. 23-30305 (July 17, 2024) (citation omitted).