Malin Ship Repair sought to attach boat fuel (“bunkers” in admiralty parlance) of defendant OSA, and thus gain personal jurisdiction over OSA in a Texas federal court.  As of the attachment date, OSA had taken delivery of the boat and the fuel on it, but had not paid for the fuel or been invoiced for it.  Under the UCC, title would have passed under delivery.  Under the common law, the answer turns on the parties’ intent, and the Court concluded that “the parties contemplated a credit transaction.”  Thus, title had passed to OSA and the attachment was sufficient to confer personal jurisdiction under the applicable admiralty rule.  Malin Int’l Ship Repair & Drydock v. Oceanografia, S.A. de C.V., No. 15-40463 (March 23, 2016).

Alleging that a toe joint implant did not work properly, Flagg sued “Manufacturing Defendants” (who built the implant) and “Medical Defendants” (who surgically installed it in Flagg’s foot.)  The Manufacturing Defendants were diverse from Flagg,  a Louisiana citizen, while the Medical Defendants were not.

Affirming the district court while reversing the panel, an 11-4 en banc opinion holds “the plaintiff had improperly joined the non-diverse defendants because [he] has not exhausted his claims against those parties as required by statute.”  That Louisiana statute requires review by a “medical review panel” before suit is filed against a health care provider; the Fifth Circuit concluded that pursuant to it, “there is no doubt that the state court would have been required to dismiss the Medical Defendants from the case,” as no such review had occurred at the time of removal.  A vigorous dissent raised questions about the Court’s standard for analyzing claims of improper joinder, as well as whether this kind of state statute (“a non-adjudicative, non-comprehensive, waivable process since concluded in this case”) was a proper foundation for an improper joinder claim.  Flagg v. Stryker Corp., No. 14-31169 (March 24, 2016) (en banc).

In another case that defly manuevers around the thorny Erie issues presented by state anti-SLAPP laws, the Fifth Circuit reminded that Louisiana’s law imposes a burden that “is the same as that of a non-movant opposing summary judgment under Rule 56.” (applying Lozovyy v. Kurtz, No. 15-30086 (5th Cir. Dec. 29, 2015)).  The Court assumed the law would apply, but noted: “We do not conclusively resolve today whether Article 971 applies in diversity cases.”  Block v. Tanenhaus, No. 15-30459 (March 7, 2016).

Peter Romero, among the multitudes sued for fraudulent transfers by the receiver for Stanford International Bank, argued that limitations had run because the receiver had not sued within a year of when the transfer “was or could reasonably have been discovered by the claimaint.”  The receiver offered detailed proof about the overall timetable of his work, its substantive scope, its geographic scope, and the condition of the relevant documents and electronic records.  An accountant corroborated his account.  This was sufficient information to sustain the jury’s finding in favor of the receiver (on a question using a specific date, unlike the standard Texas PJC submission).  Janvey v. Romero, No. 15-10435 (March 16, 2016).

Lalo sued for injuries he suffered while riding in an 18-wheeler driven by Estrada.  Castle Point Insurance sought a declaration about its coverage obligations.  The Fifth Circuit, applying Texas’s “eight corners rule,” found that the district court erred in applying a “work-related injuries” exclusion to Lalo because his “state-court complaint contains no allegation that Lalo was an employee of [the trucking company]; nor does it contain sufficient factual allegations to classify Lalo as an employee.”  As to Estrada — again, not specifically alleged to be an employee — the insurer had a duty to defend (and potentially, to indemnify) because the evidence might establish him to be an employee.  (This is Lalo’s Petition — notably, while he never directly claims to be an employee, he does allege the defendants’ “[f]ailure to furnish Plaintiff with a safe place to work” and their hiring of “[n]egligent co-workers like Defendant ESTRADA — vividly illustrating the importance of the specific words used in pleading allegations that bear on insurance coverage.)  Castle Point Nat’l Ins. Co. v. Lalo, No. 15-10224 (March 17, 2016, unpublished).

In the district court, Bank of America won and Fulcrum lost.  Fulcrum appealed.  The Fifth Circuit noticed that the pleadings identified Fulcrum as “a limited liability company organized and existing under the laws of the State of Nevada.”  As that allegation does not in fact establish Fulcrum’s citizenship, the Court asked for amendment pursuant to 28 U.S.C. § 1653 (“Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts.”)  In response, Fulcrum alleged that is members were from Georgia, Nevada, New York, and North Carolina.  Because Bank of America is also a citizen of North Carolina, and because “we find no evidence in the record, and Fulcrum has cited none, supporting Fulcrum’s recent assertions that it is a citizen of North Carolina,” the court remanded for the purpose of discovery and findings on the citizenship question.  Bank of America v. Fulcrum Enterprises LLC, No. 14-20532 (March 18, 2016, unpublished).

Garza moved into her mother’s house after her mother died intestate in 2013.  In August 2013, Garza filed an application to determine heirship as to the house.  In October, Wells Fargo foreclosed, having refused to speak to Garza about the note since she was not the borrower.  In December, Garza was awarded a 50% share of the property.  In January 2014, Wells Fargo began eviction proceedings.  The Fifth Circuit agreed that Wells Fargo had not violated section 51.002(d) of the Texas Property Code (passing on the question whether it provides a private right of action), as the statute only requires notice to “a debtor in default.” Garza v. Wells Fargo Bank, No. 15-10426 (Jan. 28, 2016, unpublished).

The issue in Gross v. GGNSC Southaven, LLC was whether two nursing home residents had granted powers of attorney that authorized a third party to agree to arbitration on their behalf.  The Fifth Circuit concluded that (a) Mississippi law allows proof of an express OR implied agency relationship, even in this context, and (b) testimony of the alleged agent is relevant to whether an implied agency relationship exists.  Accordingly, it reversed the denial of the defendants’ motions to compel arbitration for further proceedings.  No. 15-60124 & 60248 (March 14, 2016).

The panel majority in Torres v. SGE Management, 805 F.3d 145 (5th Cir. 2015) decertified a class action about the operation of a multilevel marketing program.   The full Court has now granted en banc review of this important decision about a significant area of the economy.

A class sought damages from attorneys involved in Allen Stanford’s business affairs.  The Fifth Circuit, reversing the district court, found the claims barred by attorney immunity under Cantey Hanger LLP v. Byrd, 467 S.W.3d 484 (Tex. 2015): “Plaintiffs alleged that, in representing Stanford Financial in the SEC’s investigation, [Attorney] Sjoblom: sent a letter arguing, using legal authorities, that the SEC did not have jurisdiction; communicated with the SEC about its document requests and about Stanford Financial’s credibility and legitimacy; stated that certain Stanford Financial executives would be more informative deponents than others; and represented a Stanford Financial executive during a deposition. These are classic examples of an attorney’s conduct in representing his client.”  The Court rejected the “fraud exception” relied upon by the district court, and among arguments for other exceptions, rejected the argument that immunity only extended to litigation as not having been raised below.  Troice v. Proskauer Rose LLP, No. 15-00500 (March 10, 2016).

Ayoub v. Chubb Lloyds Ins. Co. of Texas confronted a “scattershot and somewhat redundant” endorsement to a homeowner’s policy, “unlike any policy language addressed in Texas case law that we have seen.”  The endorsement dealt with personal property. The district court granted summary judgment for the insured, concluding that the “actual cash value” described in the endorsement could not be proved with the insured’s affidavit about replacement cost.  The Fifth Circuit disagreed and reversed, noting that the Texas Supreme Court has acknowledged that “personal effects have ‘no market value in the ordinary meaning of that term,'” meaning that “[t]he trier of facts may consider original cost and cost of replacement,” among other evidence.  No. 14-51301 (Jan. 28, 2016, unpublished).

In Kingdom Fresh Produce, Inc. v. Stokes Law Office LLP, the Fifth Circuit tended the garden of the obscure but important Perishable Agricultural Commodities Act, a Depression-era statute designed to defend vulnerable sellers of perishable produce from sharp dealing.  To do so, PACA creates a “trust fund” obligation for produce buyers; here, a bankruptcy court authorized the payment of special counsel from monies in a debtor’s fund.

Three fee applications were at issue.  As to the first two, the Court found that the district court had not granted leave to appeal and thus did not have jurisdiction to uproot the bankruptcy court’s rulings.  “With these jurisdictional issues peeled away,” and after “a bit more paring” of the remaining issue, the Court held that “PACA’s unequivocal language requires that a PACA trustee—or in this case, its functional equivalent—may not be paid from trust assets ‘until full payment of the sums owing’ is paid to all claimants.”  Nos. 14-51079 & 14-51080 (March 11, 2016).  (Readers’ Note: 600Camp will publicly recognize the blog reader who finds all of the vegetabilia in the well-written opinion.)

Justice Blackmun famously declared, “From this day forward, I no longer shall tinker with the machinery of death.”  Callins v. Collins, 510 U.S. 1141 (1994).  In less dramatic fashion, in the 9th appeal from a ruling about the administration of the Deepwater Horizon settlement, the Fifth Circuit has declared: “If the discretionary nature of the district court’s review is to have any meaning, the court must be able to avoid appeals like this one which involve no pressing question of how the [BP] Settlement Agreement should be interpreted or implemented, but simply raise the correctness of a discretionary administrative decision in the facts of a single claimant’s case.”  In re Deepwater Horizon, No. 15-30395 (March 8, 2016).

Rowell v. Pettijohn confronted the surprisingly subtle question of whether a Texas statute, which proscribes surcharges by merchants for credit-card purchases, violates the First Amendment.  The panel majority concluded that it did not, as “prices, although necessarily communicated through language, do not rank as ‘speech’ within the meaning of the First Amendment.”  A dissent saw matters differently: “[T]he Texas law does not regulate the difference between prices . . . .  All that it regulates is what merchants can tell customers about their prices.”  Other circuits have also reached different conclusions about similar statutes in other states.  No. 15-50168 (March 2, 2016).

In the latest of a long line of cases about arbitration clauses in employment documents that the employer can amend at will, the Fifth Circuit reversed the grant of a motion to compel arbitration in Nelson v. Watch House Int’l, LLC: “Here, the Plan provides that Watch House may make unilateral changes to the Plan, purportedly including termination, and that such a change ‘shall be immediately effective upon notice to’ employees.  Watch House’s retention of this unilateral power to terminate the Plan without advance notice renders the plan illusory under a plain reading of Lizalde [v. Vista Quality Markets, 746 F.3d 222 (5th Cir. 2014)].”  The opinion details recent cases about a “savings clause” in employee manuals that limit the power to change as to present disputes, following the analysis of In re: Halliburton Co., 80 S.W.3d 566 (Tex. 2002).  I am interviewed about this line of cases in this Legal News Line article.

In Dodds v. Terracon Consultants, the Fifth Circuit accepted an interlocutory appeal about whether a terminated employee had a Sabine Pilot claim when he also had a statutory remedy.  After oral argument, the Court decided that the appeal had been improvidently accepted, as there was a fact issue about whether the employee had actually been fired for violating the law. An adverse finding on that issue would moot the legal issue.  The Court also noted that certification — a possible resolution of the federal appeal — is only available “if the certifying court is presented with determinative questions of Texas law.”  No. 15-20313 (Feb. 17, 2016, unpublished).

The Texas anti-SLAPP law (the “TCPA”) imposes a number of deadlines that can fit awkwardly with federal practice.  The panel majority in Cuba v. Pylant concluded that when no hearing is held on a TCPA motion as required by the statute (hearings being common in Texas state practice but not in federal court), appeal-related deadlines that start from the hearing date do not begin to run.  A dissent said: “Applying an Erie analysis, I conclude that the TCPA is procedural and must be ignored.”  Nos. 15-10212 & -10213 (Feb. 23, 2016).

After an underwater tether chain broke, expensive oil production equipment sank to the bottom of the Gulf of Mexico, and Petrobras America sued the chain manufacturer for over $400 million.  The key issue was whether admiralty law applied – creating a serious problem for Petrobras under the economic loss doctrine – or whether Louisiana law applied by operation of the Outer Continental Shelf Lands Act.  The Fifth Circuit found that the OCLSA applied, that its choice-of-law provisions were not waivable, and that Louisiana law controlled: “Here, expressed in general terms, a component failed on an underwater structure . . . and caused the structure to fall into the sea floor.  Such an incident does not have the potential to disrupt maritime commercial or navigational activities on or in the Gulf of Mexico.” Petrobras America, Inc. v. Vicinay Cadenas, S.A., No. 14-20589 (March 7, 2016). (A later supplement clarified the limted scope of the waiver holding.)

The financially unfortunate City of New Orleans, saddled with a “just above junk” credit status, hired Ambac to provide insurance for its municipal bonds.  Ambac’s AAA rating slipped after the 2008 financial crisis, causing New Orleans to incur tens of millions of dollars in additional debt service and refinancing costs.  The City sued Ambac on several legal theories for not maintaining a high credit rating.  The Fifth Circuit affirmed their dismissal: “[T]he resolutions that the City so heavily relies upon show only that the City purchased a bond insurance policy from a highly rated insurer, which, at the time of issuance, lessened the perceived credit risk of the City’s bonds.  Any alleged representation by Ambac to provide a larger credit enhancement is foreclosed by the clear language of the Policy.”  New Orleans City v. Ambac Assurance Corp., No. 15-30532 (March 2, 2016).

The receiver for the affairs of Allen Stanford assigned some fraudulent transfer claims to a committee of creditors.  The defendants moved to dismiss, arguing that while a federal court may hear the claims of a federally-appointed receiver, it may not hear those brought by his assignee.  The panel majority, noting that “[n]either side of this dispute has cited any controlling cases” on the point, found that the district court did not “clearly and indisputably err[], if it erred at all,” because the point did not have a clear resolution.  A dissent would have heard the case, observing: “It is unfortunate that the [defendants] should be forced to litigate this case to conclusion, if they can afford it, before resolving this difficult and novel jurisdictional issue.”  In re American Lebanese Syrian Associated Charities, No. 15-11188 (March 3, 2016).  This exchange echoes several others in recent years about mandamus and the balance of power between the trial and appellate levels of the court system. (Thanks to 600Camp friend Jeff Levinger for flagging this one.)

Yesterday’s “Above The Law” blog offers this entertaining exchange between a recent Fifth Circuit petition for rehearing — written in part as an imaginary exchange between lawyer and client about the rehearing process — and the Fifth Circuit’s response: rejection by the panel in a short opinion that was also written as an exchange of dialogue. (Thanks to 600Camp friend Cynthia Halatyn for sending along the link.)

The Gagosian Gallery – for reasons not explained in the opinion, but doubtless interesting ones – wanted to display a work of art that featured a tower of 101 identical gold bars.  For approximately $3 million, it contracted to buy the gold from Stanford Coins and Bullion (“SCB”), owned by the now-disgraced Allen Stanford.  SCB in turn contracted with Dillon Gage, a wholesale gold supplier, to ship the gold directly to the gallery.  SCB forwarded payment to Dillon Gage, who applied to a balance that the gallery had with Dillon Gage as a result of unrelated transactions.

Before the shipment was made, however, the Stanford empire collapsed.  When the dust settled, the gallery sued Dillon Gage, alleging that it was a third-party beneficiary of its contract with SCB.  The case went to a jury trial and a verdict for Dillon Gage, and the Fifth Circuit affirmed, finding no error in the jury instructions and sufficient evidence to support the verdict.  Page 5 of the opinion details the facts, which offer a classic illustration of the roles of knowledge and industry custom in determining contract liability.  Pre-War Art, Inc. v. Stanford Coins & Bullion, No. 15-10033 (Feb. 29, 2016, unpublished).