Escobedo v. Ace Gathering, Inc. invovlved “Crude Haulers,” who are “drivers of large, 18-wheeled tanker trucks who drive to producers’ oil fields, load crude oil onto their trucks, and then transport that oil on public roads and highways to an ‘injection point’ on a pipeline.”

While that activity is conducted within Texas, the pipelines carry most of the oil to customers and markets in other states. The question was whether the drivers were engaged in “interstate commerce” within the meaning of the Motor Carrier Act of 1980.

While the pathway to the present legal standard was not free from detours, the standard itself is clear–“purely intrastate transportation rises to the level of interstate commerce when the product is ultimately bound for out-of-state destinations, just as the crude oil was here,” and no evidence suggested that the oil “came to rest” at a storage facility to potentially end its interstate journey. No. 23-20494 (July 31, 2024).

The party-presentation principle made an appearance yesterday in the “buoy case,” United States v. Abbott.

The specific issue is unique to this case, but the level of generality at which the Court identified the problem is of broader interest. Cf. United Natural Foods, Inc. v. NLRB, 66 F.4th 536, 556 (5th Cir. 2023) (Oldham, J., dissenting) (“Does anyone think that, when a party presents legal question X for decision in federal court, a federal judge is somehow disabled from reading any case, statute, regulation, or other authority not cited in the party’s brief? Of course not. We are duty-bound to understand the legal questions presented to us—even when a party presents a question less than perfectly.”).

(To learn more about this elusive but important principle, you can read my recent article in the Cornell Law Review Online).

The en banc court has ruled for Texas in the ongoing “border buoy” dispute, with a breakdown of votes as follows:

“Great cases like hard cases make bad law. For great cases are called great, not by reason of their importance … but because of some accident of immediate overwhelming interest which appeals to the feelings and distorts the judgment.” Northern  Securities Co. v. United States, 193 U.S. 197 (1904) (Holmes, J., dissenting).

Thus, United States v. Jean, in which a Fifth Circuit panel split 2-1 about an issue as to which other circuits have split 4-5, with only the Second appearing to have avoided the question. The issue is “whether district courts could consider non-retroactive changes in the law as a factor when deciding whether extraordinary and compelling reasons existed for compassionate release.” The resolution of the issue involves the cryptic phrase “extraordinary and compelling” in the relevant statute, and in the Fifth Circuit, also presents an “orderliness” question about prior Circuit precedent.

En banc review of this fiercely-disputed case seems likely. The bigger question, though, is why this case is in court. The district court found: “The term ‘rare’ does not give Mr. Jean’s rehabilitation and renewed outlook on life justice–it is wholly extraordinary.” As the panel majority observes about this and comparable cases:

The DOJ is apparently fearful that there are so many people incarcerated based on now unconstitutional or otherwise illegal laws; who have been incarcerated for ten years or more; whose sentence would be drastically different today; and whose individualized circumstances support compassionate release, that [the compassionate-release statute] will become a quasi-parole system. That is either a convenient exaggeration or a disturbing reality. 

No. 23-40463 (July 15, 2024).

To the right is an alpaca. It should not be confused with PACA, a federal law against unfair dealings in the delivery of perishable produce on its way from field to the consumer. In A&A Concepts LLC v. Fernandez, the Fifth Circuit concluded that liabliity under PACA could run to individuals who are not managing members of an LLC in the produce-related chain of commerce, but then held that the defendant in that case could not be liable because he was not in a position to control “PACA trust assets.” No. 23-50757 (July 11, 2024)

To the right is a painting of Julius Caesar crossing the Rubicon. A river-crossing issue also arose in Good River Farms, L.P. v. TXI Operations, L.P. A severe flood on the Colorado River breached a water reservoir on a commercial property, which in turn led to the flooding of a neighboring farm.

Liability under the Texas Water Code turned on whether “surface waters” (the water in the reservoir) caused the problem at the farm, or whether it was water from the Colorado River (not considered “surface water” under the Code, because the river is a “bed or channel in which water is accustomed to flow”).

The Fifth Circuit found sufficient evidence to support a judgment for the farm, reasoning that “[t]he jury apparently concluded that the water was not overflow fromthe river, but surface water accumulated in such quantity that it ran contrary to the riverine flow.” No. 23-50330 (April 25, 2024).

The Oil Pollution Act provides remedies for the wrongful release of oil into the environment. CERCLA does the same for a number of other pollutants. The issue in Munoz v. Intercontinental Terminals Co., LLC was whether OPA liability extended to a spill that combined oil with other hazardous substances regulated by CERCLA. Based on statutory language and structure, the Fifth Circuit concluded that the OPA did not apply to such a chemical release. No. 22-20456 (Oct. 27, 2023).

The en banc Fifth Circuit affirmed a nationwide injunction against President Biden’s federal-employee vaccine mandate, concluding that the relevant statute did allow federal jurisdiction over such issues. The breakdown of opinions in Feds for Medical Freedom v. Biden is as follows:

The slippery statutory-interpretation question in United States v. Palomares, briefly summarized in Monday’s post, presented a concurrence by Judge Andy Oldham. In it, he reminded of the importance of “textualism” in statutory interpretation, while cautioning against “hyper-literalism”:

“‘[W]ords are given meaning by their context, and context includes the purpose of the text.’ As Justice Scalia once quipped, without context, we could not tell whether the word draft meant a bank note or a breeze. Such nuance is lost on the hyper-literalist.”

(citations omitted). He further observed:

“[H]yper-literalism … opens textualism to the very criticism that necessitated textualism in the first place. In one of the most influential law review articles ever written, Karl Llewellyn denigrated the late nineteenth century ‘Formal Period,’ in which ‘statutes tended to be limited or even eviscerated by wooden and literal reading, in a sort of long-drawn battle between a balky, stiff-necked, wrongheaded court and a legislature which had only words with which to drive that court.'” 

(emphasis added, quoting Karl M. Llewellyn, “Remarks on the Theory of Appellate Decision and the Rules or Canons about How Statutes Are to Be Construed,” 3 Vanderbilt L. Rev. 395 (1950)).

The prefix “hyper-” is well chosen; Jean Baudrillard’s Simulacra and Simulations developed the concept of “hyperreality,” by which “simulacra” of reality can supplant reality itself–precisely the scenario described by Llewellyn and Judge Oldham’s concurrence:

If we were able to take as the finest allegory of simulation the Borges tale where the cartographers of the Empire draw up a map so detailed that it ends up exactly covering the territory (but where, with the decline of the Empire this map becomes frayed and finally ruined, a few shreds still discernible in the deserts – the metaphysical beauty of this ruined abstraction, bearing witness to an imperial pride and rotting like a carcass, returning to the substance of the soil, rather as an aging double ends up being confused with the real thing), this fable would then have come full circle for us, and now has nothing but the discrete charm of second-order simulacra.

Ultra Petroleum entered bankruptcy because of a sharp decline in natural gas prices. During the bankruptcy case, however, the price of gas recovered and soared and “propelled the debtors back into solvency.” That fortunate situation led to the question whether the “solvent debtor” concept survived recent Bankruptcy Code amendments.

The Fifth Circuit’s panel majority applied the relevant statutory-interpretation framework:

We must defer to prior bankruptcy practice unless expressly abrogated. The [Supreme] Court has endorsed a substantive canon of interpretation regarding the Bankruptcy Code vis-à-vis preexisting bankruptcy doctrine. Namely, abrogation of a prior bankruptcy practice generally requires an “unmistakably clear” statement on the part of Congress; any ambiguity will be construed in favor of prior practice.

(citations omitted), and concluded that the exception continued to apply:

The reason for this traditional, judicially-crafted exception is straightforward: Solvent debtors are, by definition, able to pay their debts in full on their contractual terms, and absent a legitimate bankruptcy reason to the contrary, they should. Unlike the typical insolvent bankrupt, a solvent debtor’s pie is large enough for every creditor to have his full slice. With an insolvent debtor, halting contractual interest from accruing serves the legitimate bankruptcy interest of equitably distributing a limited pie among competing creditors as of the time of the debtor’s filing. With a solvent debtor, that legitimate bankruptcy interest is not present. 

Ultra Petroleum Corp. v. Ad Hoc Committee, No. 21-20008 (Oct. 14, 2022) (citations omitted). A dissent read the Code differently.

The Fifth Circuit found that the natural-disaster exception to the WARN Act did not apply to COVID-19, reasoning:

The natural-disaster exception provides that “[n]o notice under this chapter shall be required if the plant closing or mass layoff is due to any form of natural disaster, such as a flood, earthquake, or the drought currently ravaging the farmlands of the United States.” Congress’s use of the term “such as” “indicat[es] that there are includable other matters of the same kind which are not specifically enumerated by the standard.”  By providing three examples after “such as,” Congress indicated that the phrase, “natural disaster” includes events of the same kind as floods, earthquakes, and droughts.

Easom v. U.S. Well Servcs., No. 21-20202 (June 15, 2022). The Court went on to discuss specific canons of interpretation relevant to this observation.

The civil codes of Louisiana and Ecuador share a common lineage in the Napoleonic Code, which came in handy in Guerrero v. Occidental Petroleum–a dispute over a provision in Ecuadorian law that affected how hundreds of millions of dollars would be allocated in a litigation settlement. No. 20-20633 (May 5, 2022).

In light of the recent, intense debate about principles of “textualism” in Hewitt v. Helix Energy, it seemed a good time to revisit this classic meme:

The en banc court divided along atypical lines in Hewitt v. Helix Energy, a dispute about overtime-pay obligations for highly compensated employees in the oil-and-gas industry. The Texas Lawbook and Houston Chronicle have covered the opinion thoroughly; below is a chart showing which judges joined the majority opinion and which judges dissented in some way.  Note that Senior Judge Wiener participated in this en banc case because he was part of the original panel.

Longtime observers of the Court may see echoes of the divided en banc court in Mississippi Poultry Ass’n v. Madigan, 31 F.3d 293 (5th Cir. 1994) (en banc), a dispute about the import of the word “same” in the Poultry Products Inspection Act.

Retana, a Dallas police officer, sued several social-media companies after he was injured in a mass shooting. He alleged that Hamas radicalized the shooter through their platforms, and sought relief under the Anti-Terrorist Act. The Fifth Circuit affirmed dismissal, agreeing that the Dallas shooting was not “primarily outside the territorial jurisdiction of the United States” as the Act requires, and also found that the companies did not assist any terrorist group’s actions: “The shooting was committed by a self-radicalized ‘lone wolf’ … not by Hamas.” Retana v. Twitter, Inc., No. 19-11389 (June 16, 2021).

The Supreme Court reversed a Fifth Circuit panel opinion about the constitutionality of the Affordable Care Act, finding that none of the plaintiffs had standing in light of (1) the repeal of coverage-related penalties and (2) the apparent mismatch between the ACA provisions complained of as unconstitutional, and those that caused the complained–of harms to the states. California v. Texas, No. 19-840 (U.S. Jun 17, 2021) (reversing Texas v. United States, 945 F. 3d 355 (5th Cir. 2019)).

An important question about statutes bearing on the ability of a federal court to hear a matter is whether they are “jurisdictional,” or only speak to issues of “claim-processing.” See, e.g., Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010). In Rivero v. Fidelity Investments, “[e]xamining the text and structure of the [Declaratory Judgment Act]’s federal-tax exception” led to the conclusion that it was jurisdictional: “[T]he statute plainly ‘speak[s] to the power of the court.’ … [T]he juxtaposition of the DJA’s reference to federal courts’ jurisdiction and the federal-tax exception indicates that the latter deprives a court of jurisdiction that might otherwise exist in cases ‘with respect to Federal taxes.'” The court also noted holdings in cases about a similarly-worded provision of the Anti-Injunction Act. No. 20-40371 (June 10, 2021) (citations omitted).

If MoneyGram is a “bank” under the applicable Internal Revenue Code provision, it can take a large deduction that it cannot otherwise take. The Fifth Circuit did not agree with its claim to be a bank: “MoneyGram contends that when a customer buys a money order, the customer is placing funds with MoneyGram for safekeeping, at least until such time as the recipient of the money order presents it for payment. The tax court rejected this argument, likening a money order to the purchase of a gift card rather than a deposit in a bank account. We agree.” MoneyGram Int’l v. Commissioner of Internal Revenue, No. 20-60146 (June 1, 2021).

In Tejero v. Portfolio Recovery Associates, a plaintiff who successfully settled a Fair Debt Collection Practices Act case sought recovery of attorneys’ fees, noting that the FDCPA allows a fee award for a “successful action to enforce …. liability.” The Fifth Circuit held that this language “means a lawsuit that generates a favorable end result compelling accountability and legal compliance with a formal command or decree under the FDCPA. Tejero won no such relief because he settled before his lawsuit reached any end result, let alone a favorable one. And by settling, Portfolio Recovery avoided a formal legal command or decree from Tejero’s lawsuit.” No. 20-50543 (April 7, 2021).

Vesting both enhances the image of a distinguished law professor. and creates an exception to the ordinary rule in Mississippi that a right conveyed by a statute comes to an end if the statute is repealed or modified. To qualify as “vested,” a right must satisfy two requirements. First, there must ‘be no condition precedent to the interest’s becoming a present estate’ and, second, it must be ‘theoretically possible to identify who would get the right to possession if the interest should become a present estate at any time.’ Put another way, it must be ‘not contingent’ upon a future event taking place.” As to the claimed right in Harper v. Southern Pine Elec Coop., “the legislature left it up to the board to determine when its revenues were no longer ‘needed’ for specified purposes. Only once the board makes that determination does the statute require it to return those revenues to the members. The right that plaintiffs assert, then, is contingent upon a determination of the board. And a right that is contingent is, definitionally, not vested.” No. 20-60451  (Feb. 8, 2021) (citations omitted).

The panel in Gonzalez v. CoreCivic, Inc., No. 19-50691 (Jan. 20, 2021), in the context of an interlocutory appeal certified under 28 USC § 1292, affirmed the denial of a motion to dismiss a claim based on the Trafficking Victims Protection Act of 2000. That law imposes civil liability on on e who “knowingly provides or obtains the labor or services of a person” by certain coercive means. The panel found that the text of the statute unambiguously reached the plaintiffs’ claims against a private company that operated detention facilities for ICE.

A dissent would have found that the plaintiff did not adequately state her claim under Twombly and Iqbal; in response, a concurrence argued that the concept of “party presentation” foreclosed the Court’s review of that matter. North Texas practitioners will recognize echoes of the debate among Justices about supplemental briefing from the Flakes litigation.

An IRS limitations statute runs from the filing of the “return” in question. The issue in Quezada v. IRS was whether the filing of a return–but the wrong type of return–starts the clock running. The Fifth Circuit found that it did, so long as it contained information from which the taxpayer’s claimed error could be identified: “Accordingly, consistent with a plurality of our sister circuits, we think the better reading of [Supreme Court precedent] is that the taxpayer is not required to file the precise return prescribed by treasury regulations in order to start the limitations clock. Instead, ‘the return’ is filed, and the limitations clock begins to tick, when the taxpayer files a return that contains data sufficient (1) to show that the taxpayer is liable for the tax at issue and (2) to calculate the extent of that liability.” No. 19-5100-CV (Dec. 11, 2020).

The Department of Health & Human Services promulgated a new Medicare regulation about compensation for inpatient psychiatric facilities. It established a formula to run from January 1 of one year to January 1 of the next. For 364 days of the year, that worked well enough, but the confusion about what formula applied on January 1 led to litigation. Relying on the concept that a court should “attempt to reconcile . . . competing provisions in a manner that gives effect to each one”–which at times may require it to “dishonor some bit of text” as a preferred alternative to “apply[ing] the unintelligibility canon . . . and . . . deny[ing] effect to both provisions”–the Fifth Circuit concluded that the new year formula would apply on January 1: “That is what context indicates. It is what the agency proposes.” Greenbrier Hospitall, L.L.C. v. Azar, No. 19-30331 (Sept. 9, 2020).

Faced with “extraordinarily confused” case law within the Circuit about the federal-officer removal statute (28 USC sec. 1442(a)(1)), the en banc Court’s opinion in Latiolais v. Huntington Ingalls is intended to “strip away the confusion, align with sister circuits, and rely on the plain language of the statute, as broadened in 2011.” The new test requires a defendant to show: “(1) it has asserted a colorable federal defense, (2) it is a ‘person’ within the meaning of the statute, (3) that has acted pursuant to a federal officer’s directions, and (4) the charged conduct is connected or associated with an act pursuant to a federal officer’s directions.” It abandons a previously-recognized “causal nexus” requirement. Accordingly, the defendant shipbuilder “was entitled to remove this negligence case filed by a former Navy machinist because of his exposure to asbestos while the Navy’s ship was being repaired at the Avondale shipyard under a federal contract.” No. 18-30652 (Feb. 24, 2020). (Above, the formidable bow of the U.S.S. Somerset, the last ship launched from the long-serving shipyard.)

Ms. Whitlock received a large amount of money from the DeBerrys in September 2013, and returned $241,000 of it to them in October. In early 2014, Mr. DeBerry filed for bankruptcy. The trustee of his bankruptcy estate sought recovery of the 2013 transfer from Ms. Whitlock. The Fifth Circuit agreed with her that the $241,000 was not recoverable because it had already been returned to the estate before filing of the bankruptcy petition:

In matters of statutory interpretation, text is always the alpha. Here, it’s also the omega. Section 550(a) permits the trustee to “recover” the property. To “recover” means “[t]o get back or regain in full or in equivalence.”  Obtaining a duplicate of something is not getting it back; it’s getting a windfall. Property that has already been returned cannot be “recovered” in any meaningful sense. And that principle defeats the Trustee’s claims against Ms. Whitlock. Once the fraudulently transferred property has been returned, the bankruptcy trustee cannot “recover” it again using § 550(a)

Whitlock v. Lowe, No. 18-50335 (Dec. 23, 2019) (citations omitted) (emphasis added).

A Chevron dispute about the Department of the Interior’s collection of natural gas royalties led to the question whether “the agency must credit all of W&T’s prior overdeliveries in calculating the cumulative delivery shortfall.” Observing that the defense of “equitable recoupment is ‘never barred by the statute of limitations so long as the main action itself is timely,'” the Fifth Circuit rejected the Department’s three arguments against its application – looking to three common reference points for resolving such disputes:

1. Statutory limitations. A statutory prohibition on “pursu[it of] any other equitable or legal remedy, whether under statute or common law” did not clearly preclude the assertion of this defense;
2. Factual linkage. “This objection is easily dispatched, as the Department of the Interior’s requirement that payments be made on a monthly basis does not trump the reality that each monthly obligation arises from a single contract: the lease.
3. Overall equities. The Department’s facially “neutral application of the statute of limitations across the industry does not counteract the inequitable result that W&T suffered  . . . .”

W&T Offshore v. Bernhardt, No. 18-30876 (Dec. 23, 2019).

Schrödinger’s Cat, wily feline that it is, made a cameo in yesterday’s Affordable Care Act opinion. Rebutting a point made by the dissent, the panel majority observed:

The dissenting opinion’s theory of the “law that does nothing” results in some bizarre metaphysical conclusions. The ACA was signed into law in 2010. No one questions that when it was signed, § 5000A was an exercise of legislative power. Yet today, the dissenting opinion asserts, § 5000A is not an exercise of legislative power. So did Congress exercise legislative power in 2010, as seen from 2015? As seen from 2018? Does § 5000A ontologically re-emerge should a future Congress restore the shared responsibility payment? Perhaps, like Schrödinger’s cat, § 5000A exists in both states simultaneously. The dissenting opinion does not say. Our approach requires no such quantum musings.

Slip op. at 43 n.38 (emphasis added).

Sometimes, simply stating the issue gives a strong indication as to the answer. Such was the case in McGlothlin v. State Farm, which examined whether two Mississippi statutes were “repugnant” to one another (synonyms for “repugnant,” according to one online reference, include “abhorrent, revolting, repulsive, repellent, disgusting, offensive, objectionable, vile, foul, nasty, [and] loathsome . . . .” Specifically, Mississippi’s uninsured-motorist statute (1) required State Farm to pay the damages that an insured is “legally entitled to recover” from an uninsured driver, and (2) treats a fireman driving a fire truck as “uninsured,” as a result of the statute’s governmental-immunity statute. A driver who was rear-ended by a fire truck argued that these two statutes were “repugnant” and had to be read in favor of coverage; the Fifth Circuit disagreed: “The two sections’ being ‘confusing’ does not equate to repugnancy.” No. 18-60338 (May 31, 2019).

Reed, whose sole income came from Social Security benefits, and who was subject to a Texas law requiring him to pay for GPS monitoring, contended that the law violated section 407(a) of the Social Security Act, which protects benefits from “execution, levy, attachment, garnishment, or other legal process.” (emphasis added).

To resolve Reed’s argument, the Fifth Circuit first summarized the general importance of statutory-construction canons, even in a focus on “plain meaning”: “Statutory language, like all language, is suffused with age-old interpretive conventions. And judges, like all readers, must be attentive not to words standing alone but to surrounding structure and other contextual cues that illuminate meaning.”

The Court then applied the concept of ejusdem generis: “‘Where general words follow specific words in a statutory enumeration, the general words are construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words.’ Section 407(a) follows this familiar semantic structure, meaning the follow-on
phrase ‘other legal process’ is limited to processes like “execution, levy, attachment, [or] garnishment.” Common phrasing; common-sense meaning.” Reed v. Taylor, No. 17-20519 (May 2, 2019).

In a residential foreclosure case, the borrower alleged that the bank/lender was vicariously liable for alleged RESPA violations by the servicer.  Noting that it was the first federal circuit court to address the point, the Fifth Circuit found that the lender could not be held vicariously liable. The regulation at issue imposed duties only on
servicers. (12 C.F.R. § 1024.41(c)(1) (“[A] servicer shall . . .”)) And when Congress wanted to expand liability, it used language showing its intent to do so. (12 U.S.C. § 2607 (saying that “no person” will pay kickbacks or unearned fees)). Christiana Trust v. Riddle, No. 17-11429 (Dec. 21, 2018).

A federal statute regulates towing vessels, defined as “a commercial vessel engaged in or intending to engage in the service of pulling, pushing, or hauling along side, or any combination of pulling, pushing, or hauling along side.” Shell Offshore v. Tesla Offshore LLC presented the novel question of whether pulling a “towfish” underwater, as part of an archaeological project, fell within this statute (after an unfortunate encounter not with undersea history, but with a Shell offshore drilling rig). The Fifth Circuit found the statute applicable, concluding that the statute’s language did not require the exclusion of academically-oriented activity, that the statute would not reach ordinary fishing activity because the was not “the service” of such vessels, and that applying the statute here would not produce an absurd result. No. 16-30528 (Oct. 5, 2018). (This analysis would correctly exclude a Hummer carrying  a TOW missile (above), although that could be called “tow-ing”).

The “concurrent-remedies doctrine” holds that “when the jurisdiction of the federal court is concurrent with that of law, or the suit is brought in aid of a legal right, equity will withhold its remedy if the legal right is barred by the local statute of limitations.” In Sierra Club v. Luminant Energy, that doctrine would have barred a private litigant’s claim for an injunction when a damages claim was time-barred – but it was held not to apply to a request for injunctive relief brought by the U.S. in its capacity as sovereign. On the merits of the request, the panel majority noted that “the statute of limitations that barred the legal relief [of damages] does not itself bar equitable relief unless it constitutes a penalty,” and left the question of whether the relief was in fact a penalty for the district court on remand. A dissent reasoned that “both of these so-called forms of injunctive relief are really just time-barred penalties in disguise,” would have affirmed dismissal of the entire case on limitations grounds, and avoided the issue about applying the concurrent-remedies doctrine to sovereigns. No. 17-10235 (Oct. 1, 2018).

Carley and Brown, the plaintiffs in a case about overtime pay, drove a Ford F-350 in their work as “cementers” for oil wells. The threshold question was whether the  truck was a “motor vehicle[] weighing10,000 pounds or less”; if it was, a federal statute would remove them from overtime requirements. While seemingly clear, the  statute left open the important practical matters, requiring the Fifth Circuit to analyze it and conclude:

• What. Applying Skidmore deference to a Labor Department bulleting about the statute, “weight” specifically refers to the manufacturer’s specified “gross vehicle weight rating”;
• Who. So defined, the burden of proof about “weight” fell on Carley, as this statute “is . . . not an exemption . . . [but] rather, it codifies conditions under which” pay is required notwithstanding an exemption; and
• How. Echoing similar disputes about the relevance of property tax filings in valuation disputes, a document about vehicle registration, that stated the truck’s “empty weight” (7600 pounds) and “gross weight” (9600 pounds) did not overcome undisputed evidence that the GVWR was in fact 11,500 pounds.

Carley v. Crest Pumping Technologies, No. 17-50226 (May 16, 2018).

Many years, ago, “the Supreme Court viewed the fashioning of statutory remedies as within the property judicial rule [u]nder the now-abandoned maxim that ‘a statutory right implies the existence of all necessary and appropriate remedies.'” But that view has changed, and now, “the judicial task is to interpret the statute Congress has passed.” Alexander v. Sandoval, 532 U.S. 275 (2001). Proceeding from that starting point, after a review of the text and structure of the Air Carrier Access Act of 1986, the Court agreed that the Act did not create a private right of action, and it recognized that earlier Circuit authority on the issue had been essentially overruled by the analytical framework in Sandoval. Stokes v. Southwest Airlines, No. 17-10760 (April 5, 2018).

By a 2-1 opinion, in Chamber of Commerce v. U.S. Dep’t of Labor, the Fifth Circuit struck down the “Fiduclary Rule,” a regulation that significantly expanded regulation of investment advisors. The majority’s analysis focused primarily on the traditional definition of a “fiduciary” (a discussion of broad general interest to all business litigators), and the canon of interpretation that “provisions of a text should be interpreted in a way that renders them compatible, not contradictory.” The dissent focused on how, “[o]ver the last forty years, the retirement-investment market has experienced a dramatic shift toward individually controlled retirement plans and accounts.” Notably, footnote 14 of the majority opinion observes that “the Chevron doctrine has been questioned on substantial grounds, including that it represents an abdication of the judiciary’s’ duty under Article III ‘to say what the law is,'” quoting recent opinions my Justice Thomas and then-Judge Gorsuch. No. 17-10238 (March 15, 2018).

Calderone alleged that he was terminated, in retaliation for reporting a car dealership’s alleged refusal to finance cars for racial minorities, in violation of the Consumer Financial Protection Act.  Unfortunately for Calderone, no matter how reasonable his belief may have been, car dealers are exempt from the CFPA by its plain terms, as other agencies have regulatory authority in that sector of the economy. “Under the CFPA, a plainitff may have a reasonable, but mistaken, belief of fact or law that a statute has been violated. But the CFPA does not permit a plaintiff’s reasonable beliefs to expand the CFPB’s jurisdiction.” Calderon v. Sonic Houston JLR, L.P., No. 17-20029 (Jan. 9, 2018).

While both sides made cogent policy arguments, plain meaning triumphed in Morgan v. Huntington Ingalls, and the Fifth Circuit held that the thirty-day removal deadline begins to run from receipt of a deposition transcript that may create a basis for removal, rather than the oral testimony itself.  “[P]aper” is defined as “[a] written or printed document or instrument.” “[R]eceipt” is defined as the “[a]ct of receiving; also, the fact of receiving or being received; that which is received.” “Copy” is defined as “[t]he transcript or double of an original writing.” “‘Ascertain’ means ‘to make certain, exact, or precise’ or ‘to find out or learn with certainty.’” No. 17-30523 (Jan. 11, 2018).

The statutory interpretation question in United States v. American Commercial Lines was the meaning of the phrase “in connection with.” The Fifth Circuit began with the plain meaning of the word “connection,” which it called “a capacious term, encompassing things that are logically or causally related or simply ‘bound up’ with one another.” Going on to review precedent and the purpose of the statute at hand, the Coourt concluded that “[i]t is, however, not so capacious as to be rendered meaningless. Conduct does not automatically occur ‘in connection with’ a contractual relationship by the mere fact that such a relationship exists.  No. 16-31550 (Nov. 7, 2017) (citation omitted).

Welding-safety regulations enacted under the Outer Continental Shelf Lands Act contain this definition: “You means a lessee, the owner or holder of operating rights, a designated operator or agent of the lessee(s), a pipeline right-of-way holder, or a State lesssee granted a right-of-use and easement.” In United States v. Moss, the Fifth Circuit affirmed the dismissal of criminal charges against a contractor based on this set of regulations, agreeing that “you” – as defined above, and applied consistently with relevant canons of interpretation – could not be read to include a contractor. Weighing heavily against the government’s position was a long history of “virtually non-existent past enforcement of OCSLA regulations against contractors.” No. 16-30561 (Sept. 27, 2017).

TDX Energy v. Chesapeake Operating begins with an entertaining – and accurate – summary of the challenge presented by oil and gas overproduction. Brought forward into today’s market and the parties’ dispute, at issue was a Louisiana statute, under which an operator can forfeit the right to deduct drilling costs on an “unleased oil and gas interest” – defined as one “upon which the operator or producer has no valid oil, gas, or mineral lease. (Here, the relevant interests were leased to TDX but not the operator, Chesapeake.) The Fifth Circuit elected to follow a Lousiana intermediate court opinion that it found to be consistent with the applicable canons of interpretation, and concluded that “The most natural reading of [the two relevant sections together] is that operators forfeit their right to contribution when they fail to send timely reports to lessees with oil and gas interests in lands upon which the operator has no lease . . . .” 857 F.3d 253 (5th Cir. 2017).

After a pipeline breach, a federal regulator penalized ExxonMobil for violating safety rules. The Fifth Circuit reversed, finding, inter alia, that the agency’s interpretation of the “textually unambiguous” regulation required no deference under Auer v. Robbins, 519 U.S. 452 (1997). Specifically, the regulation said that pipeline operators “must consider” “all risk factors that reflect the risk conditions on the pipeline segment.” Concluding (presumably, after due consideration), that “consider” meant “to think about carefully,” the Court concluded that the regulation “unambiguously serves to informs a pipeline operator’s careful and deliberate decision-making process rather than to compel a particular outcome . . . ” This conclusion undermined the substantive basis of the agency’s liability determination, and led to reversal in substantial part. ExxonMobil Pipeline Co. v. U.S. Dep’t of Transp., No. 16-60448 (Aug. 14, 2017).

The City of Cibolo, Texas, sought to establish sewer service that would conflict with the Greeny Valley Special Utility District’s right to provide such service under a federal program. The dispute turned on the meaning of the phrase “the service” in the relevant statute – the resulting analysis (a) resolved that use of “the” is not dispositive, since its meaning depends on the following noun, and (b) Congress’s many different uses of “service” and “services” in the pertinent set of statutes was not controlling. The Fifth Circuit concluded that the plain terms of the statute required it to “decline the city’s invitation to read adjectives” into the phrase “the service,” and it reversed the district court’s ruling that had limited the phrase to services financed by a federal loan. Green Valley Special Utility District v. City of Cibolo, No.16-51282 (Aug. 2, 2017).

Press coverage of Judge Neil Gorsuch’s nomination to the Supreme Court has noted his intelligent and accessible writing style, including use of a sentence diagram (left) in a criminal case that turned on what elements of the crime required proof of intent. In the same spirit, in dissent from the denial of en banc rehearing in a highly technical case about protection of the dusky gopher frog (right), Judge Edith Jones used a pair of Venn diagrams to illustrate her view of how the Endangered Species Act should operate (below left), contrasted with the panel opinion’s (below right). Markle Interests v. U.S. Fish & Wildlife Service, No. 14-31008 (Feb. 14, 2017).

The “Gulf Council” manages fisheries in the federal waters of the Gulf of Mexico.With respect to red snapper, its statutory grant of authority requires it to establish “seprate quotas for recreational fishing . . . and commercial fishing.” A group of private anglers complained that the authority to set those two quotas precluded the ability to set a quota for fishing from charter vessels. The Fifth Circuit disagreed, finding that neither the canon that “expressing one item of a commonly associated group or series excludes another left unmentioned,” nor that “a specific statute prevails over an inconsistent general statute” compelled a ruling in favor of the anglers: “Amendment 40 does not create a separate quota for charter fishing; it subdivides the recreational sector into private and charter components.” Coastal Conservation Association v. U.S. Dep’t of Commerce, No. 16-30137 (revised Jan. 26, 2017).

The issue in Moneygram Int’l v. Commissioner of Internal Revenue was whether MoneyGram could take advantage of a favorable deduction rule for “banks,” unhelpfully defined in the Internal Revenue Code with a sentence beginning: “[T]he term ‘bank’ means a bank or trust company . . . .” Turning to the specific requirements of the definition, the Fifth Circuit concluded that the Tax Court “erred by interpreting ‘deposit’ to include the requirement that MoneyGram ‘hold its customers’ funds for extended periods of time,'” and by requiring that a “loan” be made for interest. A dissent criticized the majority’s “[n]itpicking some of the definitions of a loan . . . .” No. 15-60527 (Nov. 15, 2016, unpublished).

Jeff Heck sought to buy property at a foreclosure sale for $63,000; given 20 minutes to obtain a cashier’s check for that amount, he did not return in time and the property was sold to another buyer.  The underlying Texas Property Code provision — the product of a surprising amount of controversy over the years — provides: “The purchase price in a sale held by a trustee . . . is due and payable without delay on acceptance of the bid or within such reasonable time as may be agreed upon[.]”  Here, Heck did not pay without delay on acceptance, and he took more time than had been agreed upon, meaning that no violation of the statute occurred.  Heck v. Citimortgage, Inc., No. 15-40964 (Jan. 29, 2016, unpublished).

The Howard Hughes Company sold lots, and provided necessary infrastructure, in a planned development near Las Vegas.  The IRS did not let it take advantage of a special gain calculation for “home construction contracts,” and the Fifth Circuit agreed.  The key statutory interpretation principle (after the basic one that tax exemptions are strictly construed) was “the rule against superfluities,” under which an argument about one statutory provision fails if it makes another one redundant.  Howard Hughes Co. v. Commissioner of Internal Revenue, No. 14-60915 (revised Dec. 7, 2015).

An accident occurred while a dredge attempted to anchor itself in the seabed.  The legal issue was whether the dredge’s activity triggered the notice requirements of a Louisiana statute involving “excavation.”  The Fifth Circuit reasoned: “The plaintiffs may well be right that the movement of earth is an inevitable result of anchoring, and thus that a person who engages in anchoring does so knowing that he will cause the movement of earth.  But under the [statute], an activity constitutes ‘excavation’ only if the ‘purpose’ — the actual object — of engaging in it is the ‘movement . . . of earth.’  And the object of ‘anchoring’ is, unmistakably, the securing of a ship, not the movement of earth.”  Plains Pipeline LP v. Great Lakes Dredge, No. 14-31046 (Aug. 12, 2015, unpublished).

Pursuant to section 965 of the Internal Revenue Code, BMC Software repatriated to the United States several hundred million dollars of income earned by a foreign subsidiary.  It earned a substantial tax deduction for the year, as this provision is intended to incentivise the fresh investment of foreign cash into the U.S. by companies with international operations.  BMC Software v. Commissioner of Internal Revenue, No. 13-60684 (March 13, 2015).  Some time later, BMC settled a dispute about the tax treatment of royalties paid to it by the same subsidiary.  The IRS then took the position that BMC’s accounting for that dispute amounted to a loan, which would lead to the disallowal of some of the section 965 deduction (loaning money to a subsidiary who then returns it to the US would not be fresh investment).  The Fifth Circuit rejected that position and reversed the Tax Court, finding no support for it in either the statute or the settlement document.  Because the accounts receivable created as a result of the settlement were not created until after the applicable tax year, the statutory exception for loaned funds could not apply.

As part of a sale transaction, the board of “Gold Kist” (more widely known as Pilgrim’s Pride), decided to abandon certain securities for no consideration.  For tax purposes, the company then reported a $98.6 million ordinary loss.  Pilgrim’s Pride Corp. v. Commissioner of Internal Revenue, No. 14-60295 (Feb. 25, 2015).  The IRS contended that this was a capital loss, rather than an ordinary loss, creating a tax deficiency of close to $30 million.  The Court agreed with the company, finding: “By its plain terms, [26 U.S.C.] § 1234A(1) applies to the termination of rights or obligations with respect to capital assets (e.g. derivative or contractual rights to buy or sell capital assets).  It does not apply to the termination of ownership of the capital asset itself.”  In rejecting a contrary view of the statute, Judge Elrod gives a powerful summary of several canons of construction: “We disagree.  Congress does not legislate in logic puzzles . . . “