Realogy Holdings Corp. v. Jongeblood offers several practical tips about litigating a noncompetition agreement:

• Oral findings of fact at the hearing can satisfy the requirements of Fed. R. Civ. P. 52, when the “oral findings together with [the] written order nonetheless give us ‘a clear understanding of the factual basis for the decision'”;
• Testimony about confidential information given to the employee established the Texas-law requirements about adequate consideration for a noncompete, even when the employer did not make an express promise to do so at the time of contracting; abd
• After an unsuccessful appellate challenge to a preliminary injunction that enforces a noncompete, it can be appropriate to ask the trial court to “when determining the term of any injunction, to reweigh the equities . . . in light of the time that has passed during the pendency of th[e] appeal.”

No. 19-20864 (April 27, 2020).

The Fifth Circuit allowed a “John Doe” summons to proceed, requiring a law firm to disclose certain client entities. After reviewing authority nationwide about such warrants, the Court concluded: “[D]isclosure of the Does’ identities would inform the IRS that the Does participated in at least one of the numerous transactions described in the John Doe summons issued to the Firm, but ‘[i]t is less than clear . . . as to what motive, or other confidential communication of [legal] advice, can be inferred from that information alone.’ Consequently, the Firm’s clients’ identities are not ‘connected inextricably with a privileged communication,’ and, therefore, the ‘narrow exception’ to the general rule that client identities are not protected by the attorney-client privilege is inapplicable.” Taylor Lohmeyer Law Firm PLLC v. United States, No. 19-50506 (April 24, 2020).

As reported by The Verge on April 24, Microsoft Word now auto-corrects the use of two spaces after a period at the end of a sentence. The battle, such as it was, should now be considered over. This influential article in Slate explains why the one-spacers – while correct during the era of typewriters, which made every letter and space the same size – have been wrong since the early 1990s and the widespread availability of proportional spacing in modern word processing software.

In Jacked Up LLC v. Sara Lee Corp., the plaintiff’s expert “seems to have assumed
that the projections in the Sara Lee Pro Forma were correct and then extrapolated lost-profits figures.” But the record also contained a detailed explanation by the defendant’s marketing director about why “the assumptions in the pro formas are merely
elaborate guesswork by the business and sales teams” until there are actual product sales. Accordingly, the Fifth Circuit affirmed the exclusion of the expert under a basic Daubert principle: “Expert evidence that is not ‘reliable at each and every step’ is not admissible.” No. 19-10391 (April 3, 2020) (unpublished). (citation omitted). (LPHS represented the successful appellee in this case.)

The relator in United States ex rel Porter v. Magnolia Health Plan “allege[d] that her former employer, which contracts with the Mississippi Division of Medicaid, is violating the False Claims Act by using licensed professional nurses for tasks that require the expertise of registered nurses.” The Fifth Circuit affirmed dismissal: “Plaintiff-Appellant’s first amended complaint makes no specific allegations regarding the materiality of Magnolia’s alleged fraud. The contracts between Magnolia and MississippiCAN do not require Magnolia to staff care or case manager positions with registered nurses, and they contain only broad, boilerplate language requiring Magnolia to follow all laws.” No. 18-60746 (April 15, 2020) (unpublished).

Sun Coast Resources Inc. v. Conrad, No. 19-20058 (April 16, 2020), involved a challenge to an arbitration award. The challenging party did not agree with the Fifth Circuit’s decision to proceed without oral argument, and filed a motion seeking an oral argument. It was denied and the Court’s explanation is instructive:

• “Sun Coast’s motion misunderstands the federal appellate process in
  more ways than one. To begin, the motion claims that ‘oral argument is the
  norm rather than the exception.’ Not true. ‘More than 80 percent of federal
  appeals are decided solely on the basis of written briefs. Less than a quarter
  of all appeals are decided following oral argument.'”;
• “Sun Coast suggests that deciding this case without oral argument would be ‘akin to . . . cafeteria justice.’ The Federal Rules of Appellate Procedure state otherwise. They authorize “a panel of three judges who have examined the briefs and record” to ‘unanimously agree[] that oral argument is unnecessary for any of the following reasons”—such as the fact that “the dispositive issue or issues have been authoritatively decided,” or that “the facts and legal arguments are adequately presented in the briefs and record, and the decisional process would not be significantly aided by oral argument.””; and
• “[A]nother tactic powerful economic interests sometimes use against
  the less resourced is to increase litigation costs in an attempt to bully the
  opposing party into submission by war of attrition—for example, by filing a
  meritless appeal of an arbitration award won by the economically weaker
  party, and then maximizing the expense of litigating that appeal. Dispensing with oral argument where the panel unanimously agrees it is unnecessary, and where the case for affirmance is so clear, is not cafeteria justice—it is simply justice.” (citations omitted and emphasis added in all the above quotes).

The fast-paced litigation about access to abortion during the COVID-19 pandemic produced a strong statement about government power (including the power of the administrative state) during a health crisis: “The bottom line is this: when faced with a society-threatening epidemic, a state may implement emergency measures that curtail constitutional rights so long as the measures have at least some ‘real or substantial relation’ to the public health crisis and are not ‘beyond all question, a plain, palpable invasion of rights secured by the fundamental law.'” In re Abbott, No. 20-50264 (April 7, 2020) (orig. proceeding) (quoting Jacobson v. Commonwealth of Massachusetts, 197 U.S. 11 (1905)). The opinion has gathered national coverage from diverse media outlets such as CNN and Reason.

Third of three posts this week about Illinois Tool Works v. Rust-Oleum; in addition to reversing two damages awards, the Fifth Circuit reversed a finding of Lanham Act liability for a lack of evidence about materiality. Citing prior Circuit precedent, the Court held: “If misleading claims about something as vital to pizza as its ingredients were not necessarily material, a misleading claim about how long a windshield water-repellant treatment lasts was not, either. Moreover, though Illinois Tool Works asserts that consumers want to know how long these products last, it does not substantiate this assertion with evidence. So this argument fails.” No.19-20210 (April 9, 2020).

The Fifth Circuit’s recent opinion in Illinois Tool Works v. Rust-Oleum, also rejected the plaintiff’s award of damages for corrective advertising, holding:

“Illinois Tool Works has never even asserted that it plans to run corrective advertising. It did not say what the advertising might consist of, offer a ballpark figure of what it might cost, or provide even a rough methodology for the jury to estimate the cost. Damages need not be proven with exacting precision, but they cannot be based on pure speculation. . . . Illinois Tool Works . . . argues that it was not required to show that it ‘needs’ the award, and that its 40 years of goodwill and tens of millions of dollars spent on advertising, coupled with RustOleum’s expenditures, support the unremitted amount. . . . [I]t  does not explain how its decades of goodwill and past advertising expenditures show a loss or justify compensation in any amount. These bald facts lack inherent explanatory value. So these arguments fail.”

No. 19-20210 (April 9, 2020).

Illinois Tool Works proved at trial that Rust-Oleum engaged in false advertising about the parties’ competing water-repellent products. The Fifth Circuit reversed the judgment as to disgorgement (among other matters), reasoning:

“Illinois Tool Works failed to present sufficient evidence of attribution. It cites nothing that links Rust-Oleum’s false advertising to its profits, that permits a reasonable inference that the false advertising generated profits, or that shows that even a single consumer purchased RainBrella because of the false advertising. 

Illinois Tool Works argues, however, that three things show that RustOleum benefitted from its false advertising: witnesses testified about how important the advertising claims were to Rust-Oleum, tens of thousands of people saw the commercial, and RainBrella was placed on nearby shelves in the same stores as Rain-X. None of this shows attribution.” Illinois Tool Works v. Rust-Oleum, No. 19-20210 (April 9, 2020).

In Golden Spread Electric Co-op v. Emerson Process Management, the Fifth Circuit affirmed the dismissal of business-tort claims under Texas’s economic loss rule.

Golden Spread, a public utility, contracted with Emerson to provide “a new, customized control system” for a steam turbine generator. During testing of the new system, the software installed by Emerson issued a mistaken command that caused the turbine to overheat and become damaged.

The Fifth Circuit reviewed Golden Spread’s claims in light of two policy considerations identified by Texas cases in the area.  First, “[p]urely economic harms proliferate widely and are not self-limiting in the way that physical damage is ….” Second, “the risk of economic harms are better suited to allocation by contract” because the parties “usually have a full opportunity” to negotiate such risks before finalizing a contract.

The Court’s reasoning may prove relevant to future lawsuits involving business issues arising from the current COVID-19 crisis.

Feeling salty about the handling of a AAA arbitration, Texas Brine (not a Louisiana citizen) sued the AAA (not a Louisiana citizen) and two Louisiana-based arbitrators in New Orleans state court. The AAA was served with process and immediately removed the case, before the two Louisiana citizens were served.

The Fifth Circuit held that such a “snap removal” was permitted by the plain text of the removal statute, noting that the “forum defendant rule” only applied once an in-state defendant was served. (In relevant part, 28 U.S.C. § 1441(b)(2) says that a civil action “. . . may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” (emphasis added)).

The Court declined to find that this situation produced an “absurd result,” noting the Second Circuit’s observation that: “Congress may well have adopted the ‘properly joined and served’ requirement in an attempt to both limit gamesmanship and provide a bright-line rule keyed on service, which is clearly more easily administered than a fact-specific inquiry into a plaintiff’s intent or opportunity to actually serve a home-state defendant.”  Texas Brine Co. LLC v. AAA, No. 18-31184 (April 7, 2020).

The arbitration clause in Bowles’s employment contract had a provision delegating to the arbitrator, “any legal dispute . . . arising out of, relating to, or concerning the validity, enforceability or breach of this Agreement, shall be resolved by final and binding arbitration.” Bowles argued that disparity of bargaining power during her contract negotiations amounted to procedural unconscionability. “Bowles’s challenge to the Arbitration Agreement as procedurally unconscionable was a challenge to the Agreement’s enforceability, not to its existence. For that reason, under the delegation clause in the Agreement that sends all enforcement challenges to an arbitrator, the district court correctly referred this challenge to the arbitrator.” Bowles v. OneMain Fin. Group, No. 18-60749 (April 2, 2020).

“For a generation, the State of Texas and a federally recognized Indian tribe, the Ysleta del Sur Pueblo, have litigated the Pueblo’s attempts to conduct various gaming activities on its reservation near El Paso. This latest case poses familiar questions that yield familiar answers: (1) which federal law governs the legality of the Pueblo’s gaming operations—the Restoration Act (which bars gaming that violates Texas law) or the more permissive Indian Gaming Regulatory Act (which “establish[es] . . . Federal standards for gaming on Indian lands”); and (2) whether the district court correctly enjoined the Pueblo’s gaming operations.” Unfortunately for the tribe, the Fifth Circuit found that a previous opinion conclusively settled these issues in favor of the State of Texas. The opinion also discusses the proper scope of injunctive relief for such a situation. Texas v. Ysleta del Sur Pueblo, No. 19-50400 (April 2, 2020).