In Illinois Central Railroad Co. v. Guy, the Court reviewed a jury verdict that two lawyers had improperly induced a railroad into settling asbestos exposure claims. No. 10-61006 (May 29, 2012). The Court rejected jurisdictional challenges that were based on the Rooker-Feldman and Burford doctrines, finding sufficient distance between the facts of the case and the underlying state court proceedings. Op. at 14, 16. The Court also found sufficient evidence of affirmative acts of concealment, and due diligence by the railroad, to toll limitations, Op. at 20, although a dissent argued otherwise. Op. at 27 (“I would reverse because doing nothing is not due diligence.”). The Court rejected a waiver defense, distinguishing the defendants’ cases as arising when a fraud plaintiff accepted a benefit after it knew or should have known of fraudulent inducement. Op. at 25.
Monthly Archives: May 2012
In a significant case applying Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 130 S. Ct. 1758 (2010), the Court vacated a class arbitration award as exceeding the arbitrator’s authority. Reed v. Florida Metropolitan University, No. 11-50509 (May 18, 2012). The Court found that the “any dispute” and “any remedy” clauses in the parties’ agreement did not authorise class arbitration, acknowledging a different conclusion by the Second Circuit in Jock v. Sterling Jewelers, Inc., 646 F.3d 113 (2011). Op. at 19-22. Before reaching that result, the Court reviewed the applicable AAA rules and concluded that they allowed the threshold matter of class arbitration to be reviewed by the arbitrator. Id. at 8.
The plaintiff in Patrick v. Wal-Mart alleged: “Defendants have engaged in a continuing pattern of bad faith . . . [and] have among other things, unreasonably delayed and/or denied authorization and/or payment of reasonable, neceessary and worker’s comp related medical treatment, as well as permanent indemnity benefits, as ordered by [the state agency].” No. 11-60217 at 11-12 (May 17, 2012). The Court found that this allegation “invokes three potentially cognizable theories of liability,” but was “devoid of facts to make it plausible” under Twombly — the pleading “fails to identify the specific time or nature of such wrongs . . . [and] does not identify by date or amount or type of service, any of the alleged bad-faith denials and delays . . . .” Id. It found no abuse of discretion in not allowing further amendment, noting “repeated failure[s] to cure deficiencies . . . .” Id. at 12-13 (quoting United States v. Humana Health Plan, 336 F.3d 375, 387 (5th Cir. 2003)).
The plaintiff in Bowlby v. City of Aberdeen alleged a denial of procedural due process and equal protection rights as to the handling of her license to run a snow cone stand in a particular location. No. 11-60279 (May 14, 2012). The Court applied Twombly and Iqbal to find that she had not stated an equal protection claim, reminding that a pleading should have “facial plausibility” from its “pleaded factual content” and not offer only “labels and conclusions or a “formulaic recitation of the elements of a cause of action.” Op. at 17 (noting “no allegations regarding the types of businesses . . . the size . . . where they are located, or what laws and regulations they have violated”). The Court found an actionable due process issue and rejected a challenge to its ripeness, both under a specialized test for constitutional claims and under “general ripeness principles.” Id. at 14-15 (requiring a claim “fit for judicial decision” as to which delay “would cause . . . further hardship”).
From the first third of 2012, here are 5 commercial litigation cases from the U.S. Court of Appeals for the Fifth Circuit worth knowing:
1. Unenforceable arbitration clause. A clause in an employee manual, which could be amended by giving appropriate notice, was illusory and not enforceable. Carey v. 24 Hour Fitness, 669 F.3d 202 (5th Cir. 2012).
2. Personal jurisdiction. The defendant’s 55 transactions in Mississippi were not sufficiently related to the claim to create personal jurisdiction. This was the Circuit’s first jurisdiction case since two major Supreme Court cases in 2011. ITL International, Inc. v. Sonstenla, S.A., 669 F.3d 493 (5th Cir. 2012).
3. Sufficient causation evidence. A thorough opinion finds that expert testimony was not needed in a personal injury case, but even then, the evidence of causation was not sufficient. Huffman v. Union Pacific Railroad, 675 F.3d 412 (5th Cir. 2012).
4. Business Torts Damages 101. The defendants’ acts were not actionable in fraud, did not amount to fraudulent inducement, but did support liability for misappropriation of trade secrets. Bohnsack v. Varco, 668 F.3d 262 (5th Cir. 2012).
5. Statute of Frauds 101. Sufficient evidence to satisfy the Statute of Frauds is different than what may establish contract liability. Preston Exploration Co. v. GSF, LLC, 669 F.3d 518 (5th Cir. 2012).
The Court will rehear en banc the case of Access Mediquip v. United Healthcare, decided by the panel earlier this year, which presents a sophisticated question about when ERISA preempts certain misrepresentation claims.