The Bankruptcy Code allows debtors to breach and cease performing executory contracts if the bankruptcy court approves. We thus have held that debtors may “reject” regulated energy contracts even if the Federal Energy
Regulatory Commission (“FERC”) would not like them to.  A sister circuit agrees, and we confirmed our view mere months ago[.]

     Nevertheless, FERC persisted. Anticipating the petitioner’s insolvency, FERC issued four orders purporting to bind the petitioner to continue performing its gas transit contracts even if it rejected them during bankruptcy. The petitioner asks us to vacate those orders. Because FERC cannot countermand a debtor’s bankruptcy-law rights or the bankruptcy court’s powers, we grant the petitions for review and vacate the orders.

Gulfport Energy Corp. v. FERC, No. 21-60017 (July 19, 2022) (citations omitted).

The holding of Union Pacific R.R. Co. v. City of Palestine may be of interest only to the parties, but the backstory is a sprawling drama about westward expansion and the legal framework that followed it: “Union Pacific Railroad Company seeks to end its operations in Palestine, Texas, but has been unable to do so because a 1954 Agreement between its predecessor and Defendants City of Palestine and Anderson County, Texas has prevented it from leaving. Because the 1954 Agreement is preempted by the Interstate Commerce Commission Termination Act, Union Pacific is free to leave. … The background of this case spans 150 years, and we have discussed much of it in prior opinions. We nonetheless recount it here to illuminate the intersection between the parties’ purported contractual agreements and increased federal regulation of the railroad system.” No. 21-40445 (July 22, 2022) (cleaned up) (emphasis added).

A sweeping analysis of different types of disgorgement led to this conclusion about the securities laws in SEC v. Hallam: “[W]e conclude that Sections 78u(d)(3) and (d)(7) authorize legal ‘disgorgement’ apart from the equitable ‘disgorgement’ permitted by Liu. That answers the question which ‘soil,’ came with the ‘term of art,’ that Congress used.” No. 21-10222 (July 19, 2022) (citations omitted). While focused on a precise issue about the most recent amendments to federal securities law, Hallam offers a detailed history and summary of approaches to disgorgement of ill-gotten gains, in both law and equity.

“[T]he oldest and most consistent thread in the federal law of justiciability is that the federal courts will not give advisory opinions.” E.g., In re: Franchise Servcs. of N. Am., 891 F.3d 198 (5th Cir. 2018). That said, not all statements of legal rules are the same (as detailed in this Pepperdine Law Review article that I co-authored several years ago). Illustrating that point:

• In Leonard v. Martin, the panel majority in a discovery-order mandamus observed in a footnote: “In mandamus cases, this court often holds ‘that a district court erred, despite stopping short of issuing a writ of mandamus.'” (citation omitted) No. 21-30475 (June 30, 2022).
• In SEC v. Novinger, the concurrence in a case resolved on procedural grounds about Fed. R. Civ. P. 60(b) observed: “If you want to settle, SEC’s policy says, ‘Hold your tongue, and don’t say anything truthful—ever’—or get bankrupted by having to continue litigating with the SEC. A more effective prior restraint is hard to imagine. … Given the agency’s current activism, I think it will not be long before the courts are called on to fully consider this policy.” No. 21-10985 (July 12, 2022).
• And in SEC v. Hallam, a case about the kind of disgorgement available as a remedy under the securities laws, the Court observed: “… if we are confronted with an appeal from a request for an award of that nature, we may need to decide whether it could be equitable disgorgement consistent with Liu’s constraining those awards to ‘net profits[.]” And that may also require us to resolve Hallam’s contention that the SEC is required strictly to trace the ill-gotten gains, and the profits on them, into assets still held by the defendant.” No. 21-10222 (July 19, 2022) (citations omitted).

Louisiana Indep. Pharmacies Ass’n v. Express Scripts, Inc. “presents a novel issue concerning the amount in controversy requirement for diversity jurisdiction in cases brought by organizations on behalf of their members.” An association of Louisiana pharmacists sought a declaration about their appropriate Medicare reimbursement, and while the total value of all their claims exceeded $75,000, the Fifth Circuit concluded that the law required that “at least one pharmacy would have to allege that Express Scripts shortchanged it on the provider fee for over 750,000 Medicare Part D prescriptions.” Accordingly, it dismissed for lack of subject matter jurisdiction. No. 21-30331 (July 20, 2022).

Despite a contrary view of the case by a motions panel, a majority of the the panel that received the merits briefing denied the petitions for review in Wages & White Lions Investments LLC v. FDA, a case about the regulation of “vaping” products: “Petitioners advance two primary arguments: (1) FDA acted arbitrarily and capriciously by pulling a ‘surprise switcheroo‘ on Petitioners and failing to consider important aspects of the PMTAs; and (2) FDA lacks statutory authority to impose a comparative efficacy requirement. We are unpersuaded by either argument.” 

A dissent saw matters otherwise: “In a mockery of ‘reasoned’ administrative decision making, FDA (1) changed the rules for private entities in the middle of their marketing application process, (2) failed to notify the public of the changes in time for compliance, and then (3) rubber-stamped the denial of their marketing applications because of the hitherto unknown requirements.” A petition for en banc rehearing seems a near certainty. No. 21-60766 (July 18, 2022).

My friend Walter Woodruff and I have picked our “Top Five Cases to Know” from the Fifth Circuit for the first half of 2022 – we agreed on 3/5 – the Bar Association for the Fifth Federal Circuit has been Tweeting them out the last few days!

Preble-Rich, a Haitian company, had a contract with a Haitian government agency to deliver fuel. A payment dispute developed and Preble-Rich started an arbitration in New York, pursuant to a broad clause in the parties’ contract (“In the event of a dispute between the [Parties] under this Contract, the dispute shall be submitted by either party to arbitration in New York. … The decision of the arbitrators shall be final, conclusive and binding on all Parties. Judgment upon such award may be entered in any court of competent jurisdiction.”). 

Preble-Rich obtained “a partial final award of security” from the arbitration panel requiring the posting of $23 million in security. Litigation to enforce that award led to Preble-Rish Haiti, S.A. v. Republic of Haiti, No. 22-20221, which held that the above clause was not an explicit waiver of immunity from attachment as required by the Foreign Sovereign Immunity Act, 28 U.S.C. § 1610(d). “The arbitration clause is relevant to whether BMPAD waived its sovereign immunity from suit generally, but a waiver of immunity from suit has ‘no bearing upon the question of immunity from prejudgment attachment.’” (citation omitted).

In reaching an important holding about the scope of “federal officer” removal, as applied to “critical infrastructure” businesses operating during the pandemic:

In this case, we must decide whether Tyson Foods, Inc. was “acting under” direction from the federal government when it chose to keep its poultry processing plants open during the early months of the COVID-19 pandemic. Tyson argues that it was, and that the district courts erred in remanding these cases back to state court. But the record simply does not bear out Tyson’s theory. Tyson received, at most, strong encouragement from the federal government. But Tyson was never told that it must keep its facilities open. Try as it might, Tyson cannot transmogrify suggestion and concern into direction and control.

(emphasis in original), the Fifth Circuit provided some interesting history about that important statute:

Congress enacted the first “federal officer removal statute” during the War of 1812 to protect U.S. customs officials. New England states were generally opposed to the war, and shipowners from the region took to suing federal agents charged with enforcing the trade embargo against England. Congress responded by giving customs officials the right to remove state-court actions brought against them to federal court. Since that time Congress has given the right of removal to more and more federal officers. Today all federal officers as well as “any person acting under that officer” are eligible.

(footnotes omitted). Glenn v. Tyson Foods, Inc., No. 21-40622 (July 7, 2022).

A recent Texas Monthly article offers a detailed analysis of the Fifth Circuit and its recent opinions.

On a Texas tort-law question about liability for a brake failure, the Fifth Circuit reasoned:

We do not think this question is close enough to warrant certification to the Supreme Court of Texas. See McMillan v. Amazon.com, 983 F.3d 194, 202 (5th Cir. 2020) (noting that certification is usually reserved for close questions of state law with “scant on-point precedent”). Certification is appropriate when “consequential state-law ground is to be plowed” and “any Erie guess would involve more divining than discerning.” Id. Our guess today is a safer bet. The Guijarros have not identified a single case cabining Armstrong to the realm of products liability. See Troice v. Greenberg Traurig, L.L.P., 921 F.3d 501, 504–05 (5th Cir. 2019) (declining to certify because multiple intermediate courts had adopted one view of the issue, and the plaintiff had not identified any contrary authority). Nor does such a distinction make sense. Add to the one-sidedness of this issue that neither party requested certification.

       We conclude that Texas law requires plaintiffs alleging a brake defect to put forth “competent expert testimony and objective proof” that the defect caused their injuries.

Guijarro v. Enterprise Holdings, Inc., No. 21-40512 (July 5, 2022).

“A bench ruling can be effective without a written order and does trigger appeal deadlines if it is final—which this ruling was. While Guerra is right that the district court’s bench ruling did not comply with [Fed. R. Civ. P.] 58’s ‘separate document’ requirement, that neither prevented him from appealing nor gave him infinite time to appeal.” Ueckert v. Guerra, No. 22-40263 (June 27, 2022).

The Fifth Circuit has set for rehearing en banc:

• Feds for Medical Freedom v. Biden (the “federal employee vaccine” case, in which a panel reversed an injunction against a Presidential executive order about COVID-19 vaccination); and
• Cargill v. Garland (the “bump stock” case, in which a panel rejected a challenge to ATF’s regulation that treats a bump stock as a “machine gun” under the relevant firearms statute)

Ardoin v. Robinson, in which the Fifth Circuit denied a stay in a case about a new Louisiana congressional district, was stayed by the Supreme Court, which also granted the cert petition and held the matter held in abeyance pending a ruling in another case.