On October 1, the term of Hon. Priscilla Owen begins as Chief Judge of the Fifth Circuit. The Court’s official press release provides background information. Every best wish to Chief Judge Owen in this important position.

In Simmons v. Pacific Bells LLC, the Fifth Circuit reversed a summary judgment against a Taco Bell employee who claimed he was retaliated against for going to jury duty. In particular –

He raised specific facts indicating that his termination for tardiness may have been pretextual. First, Simmons was tardy less often than other coworkers, yet those coworkers were not terminated and did not suffer adverse employment action. Second, he was never once warned about his tardiness prior to his termination. Third, Simmons demonstrated that some of his tardiness resulted from Pacific Bells’s business practices. Fourth, he was terminated immediately following his jury service. Fifth, the individual who told Simmons to lie recommended his termination and was present for it. Sixth, the individual who terminated Simmons stated in an email that she had “several different routes I can go with his termination. . . . I want to focus on [his] excessive tardiness.” In sum, the timing of Simmons’s termination, combined with the arguably pretextual rationale for his firing, could lead a reasonable jury to conclude that he was fired as a result of his refusal to lie to avoid jury service.

The Court declined to address a related issue about the scope of the “interested witness” doctrine in summary-judgment practice. No. 19-60001 (Sept. 27, 2019) (unpublished).

The Fifth Circuit (minus the two Mississippi judges, who are) voted to take en banc the difficult voting rights case of Thomas v. Bryant, No. 19-60133 (as revised, Sept. 3, 2019), which also presents important issues about justiciability and appellate procedure. At the panel level, all three judges wrote opinions.

The district court held a jury trial on whether Gilbert Galan had notice of Valero Energy’s (his employer) arbitration program.  Valero called the arbitation program “Dialogue”; the jury charge asked whether “Valero prove[d] by a preponderance of the evidence that it gave unequivocal notice to Gilbert Galan, Jr. of definite changes in employment terms regarding Valero’s Dialogue program[,]” Additionally, an instruction said that the “sole issue in this trial is whether Defendant[] Valero . . . notified plaintiff of the arbitration program and its mandatory nature.” Galan objected that the question did not have the word “arbitration”; “[h]is point is that the jury could have concluded Galan knew about the Dialogue Program as a whole, but not the part of it requiring arbitration.” The Fifth Circuit found no abuse of discretion in denying that request, especially given the instruction accompanying the question. Galan v. Valero Services, Inc., No. 19-400753 (Sept. 23, 2019) (unpublished).

The 600Camp blog celebrates its birthday this week, and invites you to join the festivity with some shrimp remoulade; here’s the recipe from Galatoire’s so you can spice up your week!

Another discovery dispute in litigation about governance of the airport in Jackson, Mississippi (a previous proceeding involved a mandamus proceeding related to the deposition of the governor’s chief of staff) arose from subpoenas to several legislators, who asserted legislative privilege in response. The Fifth Circuit found that the plaintiffs lacked standing (“The plaintiffs cite no precedent supporting their theory that Jackson voters have a right to elect officials with the exclusive authority to select municipal airport commissioners”), and that this issue was properly raised even during an interlocutory appeal of a collateral order: “[E]ven nonparty witnesses refusing to comply with a discovery order may challenge standing . . . because ‘the subpoena power of a court cannot be more extensive than its jurisdiction.'” Stallworth v. Bryant, No. 18-60587 (Aug. 21, 2019).

Cleveland v. Bell was a wrongful death claim, asserted under 42 U.S.C. § 1983, which turned on the allegation that a prison nurse was indifferent to the decedent’s calls for help. The trial court denied qualified immunity to the nurse and the Fifth Circuit reversed: “[W]e find no evidence that . . . Nurse Bell subjectively ‘dr[e]w the inference’ that Cleveland was experiencing a life-threatening medical emergency. The record contains statements from Nurse Bell indicating that she thought there was nothing wrong with Cleveland and believed he was faking illness.But nothing suggests that these statements reflected anything other than her sincere opinion at the time. Even if we construe her statements in the light most favorable to Plaintiffs, they are insufficient to establish that Nurse Bell knew how serious the situation was.” No. 18-30968 (Sept. 13, 2019) (emphasis added).

A surprisingly subtle problem can arise under secction 2.316 of the UCC when a party urges a role for implied warranties, even though the parties’ agreement contains express ones. A comment to that section advises: “The situation in which the buyer gives precise and complete specifications as to the seller is not explicitly covered in this section, but this is a frequent circumstance by which the implied warranties may be excluded.”  In Baker Hughes v. UE Compression, the Fifth Circuit found such a situation when:

. .. this Agreement included 18 single-space pages of Baker Hughes’s Specification and a 21-page responsive set of specifications comprising UE’s Quote. Baker Hughes ordered exactly what it required in the boosters. Other contractual provisions cited above confirm Baker Hughes’s ultimate responsibility for the design, its duty to supply technical information, its ability to modify specs during the fabrication, and its right to approve any drawings or specifications prepared by UE

Mo. 17-20709 (Sept. 12, 2019) (Our firm’s state-court brief on the topic in an unrelated case shows some of the potential complexities about this UCC issue.)

The Flying Dutchman is a mythical ship that forever travels the seas, unable to find a port. Conn Appliances, Inc. v. Williams presents a similar tale about a dispute involving a retail installment contract. Williams sued Conn in Tennessee, realized that he had an arbitration agreement in his contract, and then dismissed his suit in favor of arbitration in Tennessee (the clause required arbitration “near his residence”). Williams won; he filed suit in Tennessee to enforce the award while Conn filed sued in its home state of Texas to vacate it (the clause allowed confirmation in “any court with jurisdiction”). The Fifth Circuit agreed that Williams was not subject to personal jurisdiction in Texas, and affirmed the dismissal of that action. Conn protested that it was not subject to jurisdiction in Tennessee, and the Court observed: “[E]ven if the Western District of Tennessee is not the proper forum, the lack of jurisdiction over Conn in another forum does not mean that the Southern District of Texas has personal jurisdiction over Williams.” No. 19-20139 (Sept. 4, 2019).

An accounting firm successfully defended against a malpractice claim by relying on Mississippi’s “minutes rule,” under which “Mississippi courts will not give legal effect to a contract with a public board unless the board’s approval of the contract is reflected in its minutes.” After losing a summary judgment, the plaintiff (a county hospital) “attempted to submit additional evidence into the record to prove the existence of a professional relationship with Horne—namely, minutes from the board’s regular session meetings on January 19, 2011 and March 16, 2011, as well as minutes from the board’s executive session meetings. . . . The Medical Center admitted, however, that this evidence was in fact not new at all—the Center had access to its own minutes throughout the proceedings. It nevertheless sought to excuse its tardiness on the ground that the minutes became relevant only when the district court granted summary judgment to Horne.” (emphasis added). The district court rejected that explanation, and so did the Fifth Circuit. Lefoldt v. Horne LLP, No. 18-60581 (Sept. 6, 2019).

The full Fifth Circuit engaged the boundaries of the administrative state in Collins v. Mnuchin. A 9-7 majority of the en banc Court found that the FHFA (the regulator of Fannie Mae and Freddie Mac) was structured unconstitutionally; a different 9-7 majority found that the appropriate remedy was a go-forward restructure of the agency rather than the unwinding of a significant, previously-ordered financial transaction. (If the below is hard to read in your browser, just click on it to see it full-sized).

Four Republican appointees joined the majority on remedy, two of whom–Judges Owen and Duncan–had joined the majority on constitutionality.

Among the various concurrences and dissents, Judges Ho and Oldham concurred to emphasize the significance of the case to other administrative agencies, while Judges Costa and Higginson dissented on the basis of the plaintiffs’ standing.

The diverse approaches of the Republican-appointed judges underscore the frequent observation on this blog that the term “conservative” is a broad umbrella for different perspectives on distinct aspects of the apparatus of government.

The question in French v. Linn Energy LLC was subordination; the analysis reviewed the Bankruptcy Code’s policy goals: “Section 510(b) serves to effectuate one of the general principles of corporate and bankruptcy law: that creditors are entitled to be paid ahead of shareholders in the distribution of corporate assets.” The Court reviewed this issue: “whether In this case we decide that payments owed to a shareholder by a bankrupt debtor, which are not quite dividends but which certainly look a lot like dividends, should be treated like the equity interests of a shareholder and subordinated to claims by creditors of the debtor,’ and concluded that they should be. No. 18-40369 (Sept. 3, 2019).

A securities-fraud class action lived to fight another day in Broyles v. Commonwealth Advisors: “The district court erred in deciding that plaintiffs lacked standing under Delaware law to bring a direct action against their investment advisers rather than initiating a derivative action in behalf of the hedge funds that the advisers had assembled and managed for fraudulent inducement purposes. The investor plaintiffs adequately supported their motion for partial summary judgment demonstrating their Article III standing with appropriate evidence of their injury-in-fact that arose :immediately upon their purchase of the falsely overvalued securities; were induced and caused by the defendant advisers’ fraudulent advice and solicitations; and likely will be redressed by a favorable decision on the merits.” No. 17-30092 (Aug. 28, 2019).

Conservative thinkers frequently express skepticism about the administrative state, and in particular, the Chevron doctrine about judicial deference to it. A powerful counterpoint to that line of thinking, and an equally orthodox part of conservative philosophy, appears in the Fifth Circuit’s recent opinion in Center for Biological Diversity v. EPA, which found a lack of standing to challenge an EPA discharge permit and reminded: “’For the federal courts to decide questions of law arising outside of cases and controversies would be inimical to the Constitution’s democratic character.’ It would improperly transform courts into ‘roving commissions assigned to pass judgment on the validity of the Nation’s laws’ and agency actions. In our Government, there are entities that address environmental issues outside of the case-or-controversy constraint. This Court is not one of them. As Judge Sentelle put it many years ago: ‘The federal judiciary is not a backseat Congress nor some sort of super-agency.’“ No. 18-60102 (Aug. 30, 2019) (citations omitted).

“Incentive alignment” is a well-known business concept; in law, various types of fee arrangements are often employed to align the financial motivations of lawyer and client. The law is also wary of incentives for injustice, especially when the finances of the justice system become muddled with court procedure. A recent Fifth Circuit opinion joined the list of the clearest examples of such misalignments:

• Tumey v. Ohio, 273 U.S. 510 (1927), which found a due process violation when a “liquor court,” which prosecuted violations of the state Prohibition Act, allowed the mayor to serve as the judge and convict without a jury. If the mayor found the defendant guilty, some of the fine paid would go towards the mayor’s “costs in each case, in addition to his regular salary”; an acquittal, on the other hand, meant no money to the mayor;
• Brown v. Vance, 637 F.2d 272 (5th Cir. 1981), invalidating the statutory fee system for compensating Mississippi justices of the peace because those judges’ compensation depended on the number of cases filed in their courts (thus incentivizing them to rule for plaintiffs in civil cases and the prosecution in criminal ones to encourage more filings); and now
• Caliste v. Cantrell, No. 18-30954 (Aug. 29, 2019), finding a due process violation “[w]hen a defendant has to buy a commercial surety bond, [and] a portion of the bond’s value goes to a fund for judges’ expenses . . . [so] the more often the magistrate requires a secured money bond as a condition of release, the more money the court has to cover expenses.”