The Court released a revised opinion in National Rifle Association v. Bureau of Alcohol, Tobacco, Firearms & Explosives, a gun control case of broad general interest that has grown in social significance since its original release in October of 2012.  No. 11-10959 (revised April 29, 2013).  A thoughtful opinion rejects a Second Amendment challenge to restrictions on handgun purchases by 18-to-20 year-olds, noting: “considerable historical evidence of age- and safety-based restrictions on the ability to access arms . . . .”  The Court rejected challenges to the standing of the NRA as an organization to sue on behalf of members with personal interests in the dispute.  This case was found to control in a later dispute about a similar law, NRA v. McCraw, No. 12-10091 (revised May 22, 2013).

Continuing a series of opinions about mortgage servicing, the Fifth Circuit addressed an “incoherent and rambling” challenge to an assignment through the Mortgage Electronic Registration System (MERS) in Martins v. BAC Home Loans Servicing, No. 12-20559 (April 26, 2013, unpublished).  Notwithstanding its criticism of the argument presented, the Court firmly adopted the position of “[n]umerous district courts” that the “show-me-the-note” theory — under which only the holder of the original wet-ink signature note can begin a nonjudicial foreclosure — is not valid in Texas because “foreclosure . . . enforces a deed of trust, rather than the underlying note.”  (citing Wells v. BAC Home Loans Servicing, 2011 WL 2163987 (W.D. Tex. Apr. 26, 2011)).  The Court went on to reject a challenge to the adequacy of the price paid at foreclosure (92% of the most recent appraisal) and an estoppel-based challenge to a failed discussion of a HAMP modification.

The plaintiff in RBIII, L.P. v. City of San Antonio sought damages after the City of San Antonio razed a property without providing prior notice.  No. 11-50626 (April 23, 2013).  After a jury trial it recovered $27,500 in damages.  The Fifth Circuit found that a key jury instruction on the City’s defenses “improperly cast the central factual dispute as whether or not the Structure posed an immediate danger to the public, when the issue should have been whether the City acted arbitrarily or abused its discretion in determining that the Structure presented an immediate danger.”  Accordingly, “[b]ecause this error in the instructions misled the jury as to the central factual question in the case,” the Court reversed and remanded for further proceedings.   The Court’s analysis summarizes how federal courts address the issue of harm in erroneous jury instructions that the Texas Supreme Court has engaged in the Casteel line of cases.

The defendant in R&L Investment Property LLC v. Hamm alleged fraudulent inducement into a land sales contract, and the plaintiff responded that a ratification occurred when the defendant signed a modification of a related lien note and deed of trust.  (April 19, 2013).  The Fifth Circuit agreed with the plaintiff, following the principle that “instruments pertaining to the same transaction may be read together . . . as if they were part of a single, unified instrument.”  Because the defendant not only executed the ratification, but received the benefit of the related bargain, its claim for damages was foreclosed.  (citing Fortune Production Co. v. Conoco, Inc., 52 S.W.3d 671, 678 (Tex. 2000)).

Creditors sought to assert state law tort claims that had at one point belonged to a bankruptcy estate.  Wooley v. Haynes & Boone LLP No. 11-51106 (Apr. 18, 2013).  The Fifth Circuit found that the reservation language in the reorganization plan was too vague to satisfy the requirements of the Code as to these claims: “Neither the Plan nor the disclosure statement references specific state law claims for fraud, breach of fiduciary duty, or any other particular cause of action. Instead, the Plan simply refers to all causes of action, known or unknown. As noted, such a blanket reservation is not sufficient to put creditors on notice.”  The opinion reviews the handful of Fifth Circuit opinions that establish the guidelines on this basic topic in bankruptcy litigation, and contrasts with another recent opinion that found a set of avoidance claims had been properly reserved.

Smyth, a partner in a bankrupt entity, complained that the bankruptcy court had no jurisdiction to authorize the sale of claims he sought to assert individually. Smyth did not obtain a stay of the sale order, however, rendering the appeal moot: “When an appeal is moot because an appellant has failed to obtain a stay, this court cannot reach the question of whether the bankruptcy court had jurisdiction to sell the claims.”  Smyth v. Simeon Land Development LLC (April 18, 2013, unpublished).

The owner of technology for identifying promising sites for gold mines sued an engineering firm for misusing its confidential information.  Target Strike, Inc. v. Marston & Marston, Inc., No. 12-50221 (April 17, 2013, unpublished).  The Fifth Circuit found it appropriate to exercise jurisdiction after dismissal of the federal claim, when the claim had been litigated for an extended period and the timing of the remand motion seemed tactical “when the judicial tide appeared to turn . . .”  (That holding contrasts with a recent opinion that found an abuse of discretion in not remanding a case once all federal claims were eliminated at an early stage of the proceedings.  Enochs v. Lampasas County, 641 F.3d 155 (5th Cir. 2011) (citing Parker & Parsley v. Dresser Indus., 972 F.2d 580 (5th Cir. 1992))).  The Court went on to find the plaintiff’s claim time-barred because the sites were known to the plaintiff and the defendant’s activity was public.

Hari Aum LLC v. First Guaranty Bank examined how Louisiana law handles documentation about a mortgage securing future indebtedness.  No. 11-31218 (April 16, 2013).  Article 3298 of the Civil Code recognizes such mortgages so long as basic requirements are satisfied. Articles 1839 and 3338 require the filing of certain instruments in the public record for them to have full legal effect.  The Court concluded that a pledge and a modification to the original mortgage did not need to be recorded “as long as these alterations did not exceed the total indebtedness under the pre-existing [mortgage], which they did not.”

A lawyer’s letter making a settlement offer contained a paragraph accusing the other side of giving a witness money for favorable testimony.  The accused party then sued for defamation.  In Lehman v. Holleman, applying Mississippi law, the Fifth Circuit affirmed that such statements are absolutely privileged from liability because they are “plainly related” to an underlying judicial proceeding.  No. 12-60814 (April 15, 2013, unpublished).

The plaintiff in Hyde & Hyde, Inc. v. Mount Franklin Foods LLC asserted conversion claims about certain packaging equipment, based on an alleged assignment as part of a settlement agreement.  No. 12-50675 (Apr. 15, 2013, unpublished).  Applying Connecticut law, the Court  distinguished between assignments of claims involving property damages as opposed to personal injury: “When a tort is committed against a person, the injury is fixed to that individual; when a tort involving property occurs, the harm is claimed by whoever owns or has the right to the property at issue.”  Id. at 8.  While concluding that Connecticut thus allows assignment of conversion claims,  the Court found that general language in the agreement about “all” of the other party’s “rights and interests in the equipment” was not sufficient to make an assignment as it did not “describe the assignment of claims ‘with such particularity as to render [them] capable of identification.'”  Id. at 9.

Arbitrators awarded a videogame developer a perpetual license in certain intellectual property.  The district court vacated the award on the ground that the award went against the essence of the developer’s contractual relationship with the game publisher.  Timegate Studios, Inc. v. Southpeak Interactive, LLC (April 9, 2013).  The Fifth Circuit acknowledged that the FAA’s deference to arbitrators reaches its boundary if they “utterly contort[] the evident purpose and intent of the parties” with an award that does not “draw its essence” from the parties’ contract.  Here, particularly in light of the arbitrator’s findings about the publisher’s intentional wrongdoing, the Court found the license “was a permissible exercise of the arbitrator’s creative remedial powers” even if it was not wholly consistent with the parties’ contract.  The Court reviewed cases about arbitrators who exceeded their given authority and found them inapplicable to this situation: “Timegate committed an extraordinary breach of the Agreement, and an equally extraordinary realignment of the parties’ original rights [was] necessary to preserve the essence of the Agreement.”

The Court released a revised opinion in Hornbeck Offshore Services LLC v. Salazar, which reversed a finding of civil contempt against the Department of Interior about the deepwater drilling moratorium after the Deepwater Horizon incident.  No. 11-30936 (Nov. 27, 2012, revised April 9, 2013).  The new opinion is streamlined to answer concerns of the original dissent; a revised dissent acknowledges those revisions but still expresses concern that “the majority opinion’s approach may give incentive for litigants creatively to circumvent district court orders.”

Contractors who worked on a bankrupt hospital project disputed their relative lien priorities.  First National Bank v. Crescent Electrical Supply, No. 12-10386 (April 5, 2013).  The threshold question under Texas law was when work was “visible from inspection,” and was not “preliminary or preparatory.”  (citing Tex. Prop. Code §§ 53.123 and 53.124 and Diversified Mortgage Investors v. Lloyd D. Blaylock General Contractor, 576 S.W.2d 794 (Tex. 1978)).  In affirming the district court’s reversal of the bankruptcy court, the Fifth Circuit credited a stipulation by a party that was signed by counsel of record for another company, noting this was a “unique circumstance[],” where “the parties’ interests were significantly aligned and [the] party did not have record counsel of its own . . . .”    The Court also found that the force of the stipulation overcome later testimony by the party’s president, when he admitted that the company had not yet obtained a permit at the time of its earliest work.

Wagner v. BellSouth Telecommunications underscores a recent holding that a reduced credit rating is not enough to establish damage under the Fair Credit Reporting Act. 12-31080 (April 5, 2013, unpublished).  The opinion also reminds that to recover mental anguish damages under the FCRA, a plaintiff must offer “evidence of genuine injury, such as the evidence of the injured party’s conduct and the observations of others,” and to demonstrate “a degree of specificity which may include corroborating testimony or medical or psychological evidence in support of the damage award.” (quoting Cousin v. Trans Union Corp., 246 F.3d 359, 371 (5th Cir. 2001)).  The Court also reviewed basic limitations principles under the FCRA and its Louisiana state analog.

Two unpublished cases offer nuts-and-bolts insight on pleading requirements.  A pro se copyright infringement complaint failed when the plaintiff “[d]id not plausibly allege that the defendants copied any original work of authorship by her.”  Richards v. BP Exploration & Production, No. 12-30508 (April 3, 2013, unpublished).  A qui tam suit under the False Claims Act failed to allege fraud with sufficient particularity.  The Court noted that while Fed. R. Civ. P. 9(b) applies to FCA claims, its application there is “context specific and flexible,” and a plaintiff can plead with enough particularity “without including all the details of any single court-articulated standard–it depends on the elements of the claim in hand.”  Nunnally v. West Calcasieu Cameron Hospital, No. 12-30656 (April 3, 2013, unpublished) (quoting United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 189-90 (5th Cir. 2009)).

The employee in Klein v. Nabors Drilling signed an Employee Acknowledgement Form that agreed to resolve disputes through the Nabors Dispute Resolution Program, describing the Program as “a process that may include mediation and/or arbitration.”  No. 11-30824 (Feb. 26, 2013).  The Fifth Circuit reminded that the basic legal framework asks: (1) is there a valid agreement to arbitrate? and (2) does the dispute fall within the scope of the agreement?  Here, the parties did not dispute that they had a valid agreement, or that Klein’s age discrimination claim was a “dispute” within the meaning of the Program — the novel issue was whether the parties agreed that arbitration was mandatory.  The Court carefully reviewed the Program and found that while it “preserve[d] options for nonbinding dispute resolution before final, binding arbitration,” it clearly stated that it “create[d] an exclusive procedural mechanism for the final resolution of all Disputes” and thus required arbitration of Klein’s claim.

Teta v. Chow involved a WARN Act claim asserted by a putative class in bankruptcy court. No. 12-40271 (March 29, 2013, revised April 19, 2013). The Fifth Circuit began its review by comparing the rules for adversary proceedings, which automatically adopt Fed. R. Civ. P. 23, with those for a class proof of claim, which would not automatically implicate that rule.  Applying Rule 23, the Court agreed that factors unique to the bankruptcy process can be considered in certification of a class by a bankruptcy court, but remanded for additional explanation by the district court on the issues of numerosity and superiority.  A dissent would simply reverse the denial of class certification.