Recent orders about conducting trials during the pandemic highlight the different procedural structures of the state and federal courts.

In the state system, the Texas Supreme Court recently released its seventeenth emergency order about when and how jury trials may resume. (An order, incidentally, that I got from the txcourts.gov website, which shows progress in returning that site to normal after the recent hacker attack.)

In the federal system, the recent order in In re Tanner reminds of the considerable district court discretion about such matters: “[T]he district court has given great consideration to the COVID-19 issues addressed by Tanner. . . . [W]hatever each of us as judges might have done in the same circumstance is not the question. Instead, as cited below, the standards are much higher for evaluating the district court’s decision” for purposes of a writ of mandamus or prohibition. No. 20-10510 (May 29, 2020).

On June 2 at 2 PM, as a guest of the DBA’s Appellate Law Section, I’ll review several Dallas Court of Appeals opinions in commercial cases since June of last year, when I made a similar presentation. This one will be online, so please register in advance on the DBA’s website! The PowerPoint will be posted after the presentation.

The original party to an oilfield-services agreement assigned its rights to Motis Energy. Motis sued on the agreement, lost, and sought to avoid the agreement’s attorneys-fee provision. The Fifth Circuit ruled against it: “Motis is a nonparty to the Agreement. But Motis embraced the Agreement by seeking to enforce its terms. Motis’s argument–that it did not embrace the entirety of the Agreement because it was assigned the right to Motis-DI’s claims, not the entire contract–lacks merit. When a plaintiff sues to enforce a contract to which it was not a party, the Supreme Court of Texas has held, as have we, that the plaintiff subjects itself to the entirety of the contract terms.” Motis Energy LLC v. SWN Prod. Co. LLC, No. 19-20495 (April 28, 2020) (unpublished) (emphasis added).

Katherine P. v Humana Health Plan, an ERISA dispute about hospitalization to treat an eating disorder, turned on a specific criterion: whether “[t]reatment at a less intense level of care has been unsuccessful in controlling” the disorder. The Fifth Circuit found a fact issue, noting:

“[T]here is evidence in the administrative record that suggests Katherine P. satisfied that requirement. For example, in her last appeal Humana, Katherine P. provided a declaration describing her history of failed treatment. In it, she listed past failed treatment regimens, including outpatient treatment. Her mother likewise provided a declaration making essentially the same point. Furthermore, Katherine P.’s physicians said she was ‘unable to follow a weight gain meal plan and to abstain from symptoms of purging and restricting while she was at a lower level of care.’”

(citations omitted). The court also noted evidence cutting the other way:

Her same declaration, for example, shows that she participated in an eight-week intensive outpatient program in late 2010 that failed due to external trauma—not because the treatment was ineffective. And Humana noted that the 2010 treatment was her most recent course of treatment prior to her admittance to Oliver-Pyatt about a year and a half later. A factfinder could therefore conclude that Katherine P. failed to show that she met [the criterion].

Katherine P. v Humana Health Plan, No. 19-50276 (May 14, 2020).

The COVID-19 crisis has required the courts to deftly juggle conflicting, and important, interests when asked to review emergency regulation. A good summary of such a balancing exercise appears in First Pentecostal Church of Holly Springs v. City of Holly Springs: “Our sole appellate jurisdiction in this case rests upon denial of an injunction implied from the choice by the district court not to rule in an expedited fashion. After briefing, it remains plain that the court is being requested to enjoin a shifting regulatory regime not yet settled as to its regulation and regulatory effect, such as the apparent acceptance by the Church of the Governor’s regulations. That settlement is best made by the district court in the first instance. Lest we in error step upon treasured values of religious freedom and personal liberties we stay our hand and return this case to the district court for decision footed upon a record reflecting current conditions.” No. 20-60399 (May 22, 2020) (emphasis added).

I spoke today, virtually, to the Texas Bar CLE’s 33rd “Advanced Evidence and Discovery Course,” which would have been in San Antonio. My topic was proving up damages in a commercial case, and I focused on ten specific issues identified in recent Texas and Fifth Circuit cases. I also showed off some smooth hand gestures, as you can see above. Here is a copy of my PowerPoint. The Bar staff did a terrific job with the A/V logistics and I look forward to doing another program with them soon.

In long-running litigation about liability for hotel occupancy taxes, the Fifth Circuit’s prior mandate said that “plaintiff-appellee cross-appellant pay to defendants-appellants cross appellees the  costs on appeal to be taxed by the Clerk of this Court.” The Court held that this language did not preclude the trial court clerk from assessing appropriate costs on remand pursuant to Fed. R. Civ. P. 39(e).

The Court also held: “The fact that the decretal language in the first appeal used the word ‘vacated’ instead of ‘reversed’ does not change this result. . . . While an argument can be made that ‘reversed’ might have been the better choice for the decretal language in the first appeal, what matters for purposes of Rule 39(a) is the substance of the disposition, not merely the form.” San Antonio v. Hotels.com, No. 19-50701 (May 11, 2020) (citations omitted, emphasis in original).

PRACTICE TIP: Fed. R. App. P. 39(e)(3) includes “premiums paid for a bond or other security to preserve rights pending appeal” as a taxable cost–in this litigation, a cost exceeding $2 million.

Despite the May 11 en banc opinion about the “finality trap,” the plaintiff in CBX Resources v. ACE Am. Ins. Co. remained stuck in the trap after dismissing certain of its claims – against the sole defendant – without prejudice: “To be sure, many cases applying the Ryan rule have multiple defendants, one or more of which was dismissed without prejudice while at least one defendant prevailed on the merits. But Ryan itself was an employment dispute with a single plaintiff suing a single defendant, his employer.” No. 18-50740 (May 12, 2020).

The “finality trap” can arise when a plaintiff sues two defendants and then (a) voluntarily dismisses one defendant without prejudice, and then (b) litigates to conclusion against the other and loses. The plaintiff’s ability to appeal the outcome of proceeding (b) is affected by the lack of a final judgment in proceeding (a), because under Fed. R. Civ. P. 54(b), there is not a final decision as to any one defendant until there is a final decision for all defendants

Williams v. Seidenbach found that entry of a partial final judgment under Rule 54(b) solved the plaintiffs’ problem in that case. (Judge Ho, joined by Chief Judge Owen and Judges Jones, Stewart, Dennis, Elrod, Haynes, Graves, Higginson, and Engelhardt).

A concurrence suggested that future litigants consider “bindingly disclaiming their right to reassert any dismissed-without-prejudice claims” as way to solve the problem. (Judge Willett, joined by Judge Southwick) (Note that all opinions appear in the same PDF document, linked above).

A dissent, focused on the text of Rules 41 and 54, observed that once a “Rule 41(a) dismissal ‘adjudicated’ the plaintiffs’ claims . . . there were no claims pending after that adjudication” which mean that “Rule 54(b) was (and still is) completely irrelevant.” (Judge Oldham, joined by Judges Smith, Duncan and – unexpectedly – Costa).

To be continued . . .

O’Shaughnessy v. Young Living Essential Oils presents the classic contract-law problem of an agreement contained in more than one document; here, it led to the Fifth Circuit rejecting the defendant’s effort to compel arbitration. O’Shaughnessey’s “Member Agreement” with Young Living had three salient features:

1. A “Jurisdiction and Choice of Law” clause – “The Agreement will be interpreted and construed in accordance with the laws of the State of Utah applicable to contracts to be performed therein. Any legal action concerning the Agreement will be brought in the state and federal courts located in Salt Lake City, Utah.”
2. A merger clause – “The Agreement constitutes the entire agreement between you and Young Living and supersedes all prior agreements; and no other promises,
   representations, guarantees, or agreements of any kind will be valid unless in writing and signed by both parties.”
3. And it incorporated by reference a “Policies and Procedures” document.

The Policies and Procedures, in turn, had an arbitration clause with a carve-out for certain kinds of injunctive relief.  The Court held: “The arbitration clause’s exemption of certain litigatory rights from its purview does not cure its inherent conflict with the Jurisdiction and Choice of Law provision. The two provisions irreconcilably conflict and for this reason, we agree that there was no ‘meeting of the minds’ with respect to arbitration in this case.” No. 19-51169 (April 28, 2020). (The above picture, BTW, is Mary Astor playing Brigid O’Shaughnessey in 1941’s The Maltese Falcon.)

With the kids home from school because of the coronavirus, I’ve watched a lot of YouTube videos over their shoulders.  In particular, this one tells the fascinating story about how post-production editing saved Star Wars, which was bloated and impossible to follow in its first rough versions. Among other changes, the start of the film was drastically simplified – from a series of back-and-forths between space and Tatooine, to a focus on the opening space battle and no shots of Tatooine until the droids landed there. This bit of editing is directly relevant to the tendency of legal writers to “define” (introduce) all characters and terms at the beginning of their work, without regard to the flow of the narrative that follows.

In affirming a preliminary injunction in a noncompete case, Realogy Holdings Corp. v. Jongeblood suggested that the district court could “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.” Interestingly, this suggestion came after the Fifth Circuit had granted a stay during the preliminary-injunction appeal, which it also expedited. Specifically, the relevant covenants last for a year, the injunction was granted on November 15, 2019; the appellate stay was granted on January 24, 2020, and the opinion issued on April 27. No. 19-20864.

A gentle spring breeze can be refreshing, but not when it involves “reversibly … breezy” analysis of class certification. For a putative 90,000-member class action about certain ERISA plans, the Fifth Circuit found the district court’s review lacking as to two parts of Fed. R. Civ. P. 23:

• Commonality. “Nor does the court explain why clarifying [Defendant’s] status as a fiduciary will in one stroke resolve an issue that is central to the claims of each one of the class members. Most noticeably, the order neglects to consider asserted differences among class members that could prevent the suit from generating “common answers apt to drive the resolution of the litigation.” (footnotes omitted);
• Class Type.  The court notes that, just as in Ortiz [v. Fibreboard Corp.], the
  plaintiffs’ case relates to one of the historical models—namely, an action against a fiduciary seeking an accounting to restore the subject of the trust (in this case, benefits plans). But, parting ways with Ortiz, the court’s analysis begins and ends there. It fails to examine the facts of this specific class to ensure that it qualifies.” (citation omitted).

Chavez v. Plan Benefit Services, No. 19-50904 (April 29, 2020). Cf. Seeligson v. Devon Energy, No. 20-90011 (May 15, 2020) (unpublished) (“In short, the district court complied with this Court’s instructions on remand and reconsidered its findings on both commonality and predominance. Particularly given the fact that we have already addressed this class certification once, we are not inclined to postpone consideration of the merits any further. DEPCO’s petition for permission to file a Rule 23(f) appeal is denied.”).

After recently addressing a party’s rights to oral argument in a dispute about enforcement of an arbitration award, the Fifth Circuit then returned to Sun Coast Resources v. Conrad to review the prevailing party’s motion for sanctions under Fed. R. App. 38 for a frivolous appeal.The Court observed:

    “[T]he case for Rule 38 sanctions is strongest in matters involving malice, not incompetence. And our decision on Sun Coast’s appeal was careful not to assume the former. As to the merits of its appeal—including the company’s
failure to disclose that it cited Opalinski II rather than Opalinski I to the arbitrator—we observed that ‘[t]he best that may be said for Sun Coast is that it badly misreads the record.’ As to its demand for oral argument, we stated that ‘Sun Coast’s motion misunderstands the federal appellate process in more ways than one.’
Perhaps Sun Coast earnestly (if mistakenly) believed it had a valid legal claim to press. Or perhaps it was bad faith—maximizing legal expense to drive a less-resourced adversary to drop the case or settle for less. Or perhaps its decisions were driven by counsel. But we must resolve the pending motion based on facts and evidence—not speculation. We sympathize with Conrad . . . [b]ut we conclude that this is a time for grace, not punishment.”

No. 19-20058 (May 7, 2020) (citations omitted).

While the timing is coincidental, the case is an instructive companion to the Texas Supreme Court’s recent opinion in Brewer v. Lennox Hearth Products LLC, which reversed a sanctions award. That Court noted that “while the absence of authoritative guidance is not a license to act with impunity, bad faith is required to impose sanctions under the court’s inherent authority,” and this held that “the sanctions order in this case cannot stand because evidence of bad faith is lacking.” No. 18-0426 (Tex. April 24, 2020) (footnotes omitted).

Manuel owed $250 to an orthopedics practice, first billed in December 2010 and January 2011. Merchants Professional, a collection agency, sent him “six collection
letters in 2011 and, after six years with seemingly no collection effort, it sent
four more in 2017.” Manuel sued for violation of the FDCPA arguing that it was improper to seek collection of a debt after the limitations period had run.

The Fifth Circuit reviewed and sidestepped earlier precedent which suggested that attempts to collect time-barred debt were per se violations of the Act. It nevertheless affirmed judgment for Manuel based on the specific contents of these letters, holding that “these letters seeking collection of time-barred debt, filled with ambiguous offers and threats with no indication that the debt is old, much less that the limitations period has run, misrepresent the legal enforceability of the underlying debt . . . .” Manuel v. Merchants & Professional Bureau, No. 19-50814 (April 29, 2020) (emphasis added).

On pages 62-63 of the May 2020 issue of “D CEO” magazine, you can read a profile of me as the only Tarot-reading lawyer in Dallas–a skill first acquired on trips to New Orleans for appellate business!

Related to the Fifth Circuit’s recent general reminder in Sun Coast Resources v. Conrad about when oral argument will occur, Chief Judge Owens’s April 20 Covid-19 order makes clear that individual panels may decide when to use “Zoom” or other such conferencing technology. H/T to Louisiana’s Ray Ward for drawing my attention to this order.