The annual Appellate Judges Education Institute, hosted by the Appellate Judges Conference, an arm of the American Bar Association’s Judicial Division, will be held November 11-14, 2021, at the Hyatt Regency in Austin, Texas. This Appellate Summit offers four days of advanced-level appellate educational programming and is the largest nationwide gathering of appellate jurists and advocates. The most recent Summit sold out and the ABA had to cut off registrations early. Early-bird registration for the 2021 Summit is now open through October 15, 2021. Over 100 judges from throughout the country have already signed up for the Summit.

This year’s summit features speakers on the following topics, among others:

• How Judges Read in an E-filing Era
• Top-Notch Oral Argument Answers
• Managing Stress and Strengthening Resiliency: Practical Strategies for Judges and Lawyers
• Building and Growing an Appellate Practice
• Supreme Court Preview
• Writing from the Reader’s Perspective: How the English Language Really Works
• United States Supreme Court Civil Update
• Storytelling for Advocates and Judges: How and Why We Should Incorporate Storytelling Techniques and Themes into our Work

Panelists include:
Erwin Chemerinsky, Dean of the University of California, Berkeley, School of Law
Hon. Nathan Hecht, Chief Justice, Texas Supreme Court
Hon. Bridget Mary McCormack, Chief Justice, Michigan Supreme Court
Hon. Albert Diaz, United States Court of Appeals for the Fourth Circuit
Hon. James Earl Graves Jr., United States Court of Appeals for the Fifth Circuit
Hon. Consuelo Callahan, United States Court of Appeals for the Ninth Circuit
Hon. Steven H. David, Indiana Supreme Court
Hon. Marsha Ternus, former Chief Justice, Iowa Supreme Court
Hon. Samuel A. Thumma, Arizona Court of Appeals
Hon. Martha Warner, Fourth District Court of Appeal, Florida
Hon. David W. Ellis, Illinois Court of Appeals and best-selling author
Kannon K. Shanmugam, Partner, Paul, Weiss, Rifkind, Wharton & Garrison LLP
George Gopen, Ph.D., Professor Emeritus of the Practice of Rhetoric, Duke University & Consultant on Writing the English Language

The summit will be taking place in a hotel that will easily accommodate social distancing for attendees and presenter. The ballroom boasts over 14,000 square feet and a ceiling height of 22 feet. It is rated to hold more than 1,000 attendees during normal times, but will be capped at 400 attendees. Round tables will be set with no more than 4-5 seats instead of the usual 7 to 8. The opening reception at the Bullock Museum will be held in the museum’s Grand Lobby, which has a capacity of 600. Additionally, a color coding system, to reflect your social distancing preference, will be offered at registration. Meals also will have enhanced safety measures.

For further details on speakers, programs, and registration, go to: https://lnkd.in/exxjtGjA.

In the movie “Girls! Girls! Girls!” Elvis Presley enthusiastically sang “Return to Sender.” In that general spirit, the Fifth Circuit affirmed a disgorgement award in SEC v. Blackburn when “[f]irst, the disgorgement amounts are the profits defendants received from their securities fraud,” and “[s]econd, the district court concluded that the SEC has identified the victims and created a process for the return of disgorged funds” to the victims. (emphasis added). In so doing, the SEC avoided the “the issue [Liu v. SEC, 140 S. Ct. 1936 (2020)] left open: whether
disgorgement is ‘awarded for victims’ when the money is put into a
Treasury fund that helps “pay whistleblowers reporting securities fraud and
to fund the activities of the Inspector General.” No. 20-30464 (Oct. 12, 2021).

The fantastically controversial Texas abortion statute returned to the Fifth Circuit, which granted an administrative stay on Friday, October 8, while it receives further briefing about a stay during the appeal of Judge Pittman’s preliminary-injunction order. Enthusiasts of court history will note that the motions panel —

bears substantial similarity to the original panel in what led to the 2021 Supreme Court opinion in Collins v. Yellen. The panel divided 2-1 (Judges Haynes and Stewart, joining) about the constitutional problem with Fannie Mae’s regulator, and then again divided 2-1 (Judges Haynes and Willett, joining) about the proper remedy:

Johnson alleged that BOKF’s collection of “extended overdraft charges” (fees charged to customers who overdraw on their checking accounts and fail to timely pay the bank for covering the overdraft) were “interest” within the meaning of the National Bank Act. The Fifth Circuit rejected her claim, giving Auer deference to an interpretive letter of the Office of the Comptroller of the Currency, and noting as to the relevant considerations:

1. Authoritative. The letter was drafted by the OCC’s chief counsel, in response to a bank’s request for OCC guidance, and thus “bears the hallmarks of an official interpretation by OCC.”
2. Within the agency’s substantive expertise.  OCC administers the National Bank Act, the letter “appears aimed at providing assurance to regulated parties,” and did not appear to merely take a “convenient litigating position.”
3. Fair and considered judgment.  The letter “is neither plainly erroneous nor inconsistent with the regulations it interprets.”

No. 18-11375 (Sept. 29, 2021).

“[T]he district court erred by failing to give notice to the parties. We ask, then, whether that error was harmless. Lexon argues that, had it received notice, it would have submitted different evidence of the value of its ‘lost collateral’—less than the full amount of the letters of credit. Lexon argues that the lost collateral, while perhaps not being worth the full value of the letters of credit, ‘had at least some economic value.’ However, Lexon never pleaded nor argued in the district court that its damages could be anything less than the full value of the letters of credit—$9,985,500. If the district court did not have an opportunity to rule on an argument, we will not address it on appeal.” Lexon Ins. Co. v. FDIC, No. 20-30173 (Aug. 2, 2021) (footnote and citation omitted) (emphasis added).

In Jungian psychology, the “Trickster” archetype (right) has been called “the embodiment of ambiguity.” In McDonnel Group, LLC v. Jung, LLC, the Fifth Circuit found an embodiment of ambiguity in an insurance policy provision that defined the flood-damage deductible as:

“5% of the total insured values at risk at the time and place of loss subject to a $500,000 minimum deduction as respects … FLOOD.”

The Court observed that “the plaintiffs read the deductible as saying ‘5% of the total insured values at risk … as  respects FLOOD,'” and that “the insurers read the provision as ‘5% of the total insured values at risk at the time and place of loss, subject to a $500,000 minimum deduction … as respects FLOOD.” In other words: “[U]nder the plaintiffs’ theory, ‘as respects FLOOD’ modifies ‘total insured values at risk,'” while “[u]nder the insurer’s theory, ‘as respects FLOOD’ pertains only to the ‘$500,000 minimum deduction.'” The Court concluded that “[b]oth parties’ interpretations are reasonable, so the policy is ambiguous.” No. 20-30140 (Sept. 24, 2021).

The United States successfully seized the M/Y Galactic Star, a valuable yacht, in connection with a massive bribery scheme involving Nigerian government officials. The Fifth Circuit agreed with the district court that the majority shareholder of the yacht’s corporate owner lacked standing to complain: “LightRay chose to maintain Earnshaw as a separate corporate entity, thereby securing all the attendant advantages of doing so, including an attempt by its principals to support the argument that LightRay is an innocent owner. We agree with the Eighth Circuit that ‘[a] court of equity will not disregard a corporation’s exclusive ownership of assets and claims ‘where those in control have deliberately adopted the corporate form in order to secure its advantages.’'” United States v. The M/Y Galactic Star, No. 20-20471 (Sept. 13, 2021) (citations omitted).

• “Atlas Shrugged.” Ayn Rand, 1957.
• “Jesus wept.” John 11:35.
• “Mandamus lied.” Synopsis, State v. Walker, 679 S.W.2d 484 (Tex. 1984).

(H/T to Ben Taylor for showing this one to me!)

Forby v. One Technologies presented the unusual situation of an arbitration waiver by the defendant, followed by an arbitration waiver the plaintiff as to a newly asserted claim: “We again address a class action claiming that One Technologies, L.P. (“One Tech”), duped consumers into signing up for ‘free’ credit reports that were not really free. The last time around, we ruled One Tech waived its right to arbitrate the plaintiffs’ state-law claims. Forby v. One Technologies., 909 F.3d 780 (5th Cir. 2018) [hereinafter Forby I]. Now, we consider whether One Tech also waived its right to arbitrate federal claims added after remand. Adhering to our precedent that waivers of arbitral rights are evaluated on a claim-by-claim basis, see Subway Equip. Leasing Corp. v. Forte, 169 F.3d 324, 328 (5th Cir. 1999), we hold that One Tech did not waive its right to arbitrate the new federal claims.” No. 20-10088 (Sept. 14, 2021) (citing, inter alia, Collado v. J&G Transp., Inc., 820 F.3d 1256 (11th Cir. 2016)).

Despite the defeat of the Moorish armies in 732 by Charles Martel at the Battle of Tours (right), the appellants in Luminant Mining Co. v. PakeyBey asserted rights as cotenants to certain real property in East Texas as “’Moorish Americans’ who are ‘sovereign freemen under the Republic . . . .'” The Fifth Circuit affirmed judgment for the appellees, concluding: “[T]the PakeyBey parties contend that Luminant failed to demonstrate hostile possession vis-à-vis its cotenants. They assert that the record is devoid of evidence of actual notice of repudiation of the common title. They further contend that Luminant cannot show constructive notice of repudiation, arguing that constructive notice and ouster require more than Luminant’s demonstrated possession of the land and the absence of a claim against the land by Walling’s heirs. Their argument rests on a correct reading of the law, up to a point. (citation omitted) But Luminant’s possession and Luminant’s recorded deeds are sufficient to give constructive notice of hostility to cotenants and to effect an ouster.” No. 20-40803 (Sept. 17, 2021).

Ten years ago, I posted a short note about a CAFA case (right); today, I make the 1,957th post on this blog. Tomorrow, I’ll make the 1,958th — blogging is a road traveled one case at a time. Publishing this blog has been a fantastic journey and I appreciate everyone who has shared the ride so far.

To celebrate this anniversary properly, I observe three 600Camp traditions:

• Valuable 600Camp Merchandise. Anyone who catches an error in a post goes on the list to receive valuable 600Camp merchandise. Unfortunately I do not yet have any merchandise, but I assure you that all such commitments will be duly honored at the earliest possible time.
• Update on the M/V OCEAN SHANGHAI. The 2013 case of Farenco Shipping Co. v. Farenco Shipping PTE, Ltd. produced the best mootness argument of all time — a case about the seizure of a marine vessel became moot once the ship had sailed. The M/V OCEAN SHANGHAI, recently renamed as SFERA, has avoided the Fifth Circuit’s waters ever since; as of September 18, 2021, it was transiting the Laccadive Sea south of Sri Lanka (right).
• Creole Recipe. The Fifth Circuit is blessed to be headquartered in the culturally rich city of New Orleans; to celebrate 600Camp’s birthday properly, I recommend the Artisanal Eggs Benedict at Brennan’s.

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 Fifth Circuit recently released its opinion on the emergency-stay motions of early September in the high-profile challenge to Texas’s “heartbeat law,” Whole Womens Health v. Jackson, No. 21-50792 (Sept. 10, 2021). In addition to identifying problems with the application of Ex parte Young, the Court observed: “We do not even take into account the many other justiciability defenses Defendants have raised beyond Young. Defendants have argued powerfully that, not only do they enjoy Eleventh Amendment immunity, but federal jurisdiction is also lacking under Article III. Related doctrines of standing, ripeness, and justiciability are also likely to prevail because these Plaintiffs have no present or imminent injury from the enactment of S.B 8.” 

• In reviewing a claim of improper joinder, a court may “conduct a Rule 12(b)(6)-type analysis” to determine if the claim against the in-state defendant “is plausible on its face.”
• Alternatively, if “discrete and undisputed facts . . . would preclude plaintiff’s recovery against the in-state defendant,” then “the district court may, in its discretion, pierce the pleadings and conduct a summary inquiry.”
• But, “unlike summary judgment, which can be granted when there is ‘lack of substantive evidence’ to support a plaintiff’s claim, improper joinder requires the defendant to ‘put forward evidence that would negate a possibility of liability on the part of ‘ the in-state defendant.

Accordingly, the Fifth Circuit reversed a finding of improper joinder in Hicks v. Martinrea Automotive Structures (USA), Inc., No. 20-60926 (Sept. 7, 2021), noting that the defendant’s argument about the tortious-interference element of malice “rel[ies] on evidence developed during merits discovery, which is far afield from Rule 12(b)(6) [and] the evidence they cite relates to the crucial question of Clark’s motive in terminating Hicks.” No. 20-60926 (Sept. 7, 2021).

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.

A chapter of the United Daughters of the Confederacy complained about the recent removal of a statue of a Confederate soldier from a San Antonio park. The Fifth Circuit affirmed the dismissal of its claim, observing (1) an 1899 document relating to the construction of the statue did not create a conveyance or use privilege for the relevant land; and (2) if it had done so, any such conveyance expired when an earlier chapter that actually received the document ceased operations in 1972, without conveying any such interest to its successor. Albert Sidney Johnston Chapter, Chapter No. 2060, UDC v. City of San Antonio, No. 20-50155 (Aug. 25, 2021).

There’s always “that” customer, who brings rude remarks and behavior along with repeat business. In Sansone v. Jazz Casino Co., No. 20-30640 (Sept. 1, 2021), “that” customer led to a prima facie case about a hostile work environment: “The unidentified Harrah’s customer frequently asked Sansone about her sex life and expressed his desire to sleep with her. He commented on her breasts and physical appearance and directed sexual gestures towards her. His comments were made in the presence of others and occurred at least two times a week for a significant period of time. This contrasts with instances where we have held a smaller stint within a lengthy period of employment was not sufficiently pervasive to support a hostile work environment claim.” (citations omitted, applying Farpella-Crosby v. Horizon Health Care, 97 F.3d 803, 806 (5th Cir. 1996)).

“When reviewing for abuse of discretion, we will reverse a district court’s refusal to give a requested jury instruction ‘only if the instruction (1) was a substantially correct statement of law, (2) was not substantially covered in the charge as a whole, and (3) concerned an important point in the trial such that the failure to instruct the jury on the issue seriously impaired the [party’s] ability to present a given [claim].'” (citations omitted). In HTC Corp. v. Telefonaktiebolaget LM Ericsson, while the panel divided 2-1 about whether a requested instruction was accurate, all three judges agreed that the appellant was not “seriously impaired” at trial by its absence. No. 19-40566 (Aug. 31, 2021).

CAFA creates an exception to federal class-action jurisdiction if, among other requirements, “the primary defendants[] are citizens of the State in which the action was originally filed.” Recognizing a lack of clear authority about the meaning of “primary defendant,” the Fifth Circuit reasoned that “there is much to commend the [Third Circuit’s] emphasis on the ‘real target’ of the litigation and [this Court’s] description of the controversy’s ‘primary thrust.'” Madison v. ADT, LLC, No. 21-90028 (Aug. 24, 2021).

“We are … persuaded that, under Texas law, undercapitalization alone would not be sufficient to pierce the corporate veil.” Ledford v. Keen, No. 20-50650 (applying, inter alia, Ramirez v. Hariri, 165 S.W.3d 912, 916 (Tex. App.–Dallas 2005, no pet.)).

Zurich won an insurance coverage dispute with Maxim Crane. On appeal, in addition to defending the merits, Zurich argued that the matter should be dismissed entirely because Maxim lacked standing. This argument led to the question whether a cross-appeal was needed to make that point, and the Fifth Circuit concluded:

… although our judgment would be different if we credited Zurich’s standing argument, that does not mean that Zurich needed to file a cross-appeal to present that argument. To be sure, as a matter of standard appellate practice, “[m]any cases state the general rule that a cross-appeal is required to support modification of the judgment,” whereas “arguments that support the judgment as entered can be made without a cross-appeal.” (quoting [Wright & Miller]). But this case falls within an exception to that general rule. A cross-appeal “is not necessary to challenge the subject-matter jurisdiction of the district court, under the well-established rule that both district court and appellate courts are obliged to raise such questions on their own initiative.” Id.

Maxim Crane Works LP v. Zurich Am. Ins. Co., No. 19-20489 (Aug. 20, 2021) (ultimately, certifying the underlying coverage issue to the Texas Supreme Court).

The practical problems cause by conversion of a Rule 12 motion to one for summary judgment were examined in Lexon Ins. Co. v. FDIC, where the nonmovant argued that “had it received [proper] notice, it would have submitted different evidence of the value of its ‘lost collateral,'” but the Fifth Circuit rejected that argument because the nonmovant “never pleaded nor argued in the district court that its damages could be anything less than the full value of the letters of credit ….” No. 20-30173 (Aug. 2, 2021).

The Texas Supreme Court’s longtime staff attorney for public information, Osler McCarthy, retires on August 31 after many years of dedicated service. I wanted to salute his hard work and share a well-written tribute to him recently prepared by former Chief Justice Wallace Jefferson.

The Fifth Circuit found that Petrobras did not have sufficient knowledge of a potential claim to trigger limitations in Petrobras America, Inc. v. Samsung Heavy Indus. Co., holding:

• two officers “acted in their own interests by accepting $10 million in bribes . . . [t]hus, [they] are clearly adverse agents of Petrobras. Their knowledge cannot be imputed to Petrobras.”;
• “an ujnfavorable contract alone is not a legally cognizable injury”;
• statements in SEC filings about the general topic of bribery, when they involved “separate bribery schemes [that] involved separate parties, separate contracts, and separate ships,” “at best raise fact questions not suitable for disposition under Rule 12(b)(6).”

No. 20-20339 (Aug. 11, 2021).

The Fifth Circuit reversed the Rule 12 dismissal of a Lanham Act case in which “Plaintiffs allege that Defendants purchased trademark terms as keywords for search-engine advertising, then placed generic advertisements that confused customers as to whether the advertisements belonged to or were affiliated with the Plaintiffs.” Adler v. McNeil Consultants, No. 20-10936 (Aug. 10, 2021) (LPHS represented the appellee in this matter).

Season Two of the “Coale Mind” podcast begins by returning to an earlier episode about the Supreme Court’s review of high-profile Fifth Circuit cases — “Is the Fifth Circuit More Conservative than the Roberts Court: Revisited.” I hope you have a chance to listen!

A triable fact issue on the issue of pretext arose in Lindsey v. Bio-Medical Applications: “As anyone who has ever worked in an office environment can attest, there are real deadlines and hortatory ones—and everyone understands the difference between the two. Missing real deadlines results in actual adverse consequences for employer and employee alike—while failing to meet hortatory deadlines does not. BMA does not point to any adverse impact that Lindsey’s tardy reports had on the company. And in any event, there is no evidence BMA ever warned Lindsey that failure to submit the reports on time could jeopardize her job. So there is a genuine issue of material fact as to whether BMA’s assertion that it fired Lindsey for this reason is ‘unworthy of credence.'” No. 20-30289 (Aug. 16, 2021).

The provocatively named book “Hooker to Looker: a makeup guide for the not so easily offended” (video summary available here) gave rise to a dispute about the preemptive force of the Copyright Act, which the Fifth Circuit resolved in favor of preemption by looking to:

• Factual allegations. “Although Di Angelo muddles its complaint with contract allegations aplenty, it also alleges that it ‘acquired copyrights in the [B]ook’ by ‘writing, editing, planning and taking all photographs and making all illustrations, and planning, designing, and arranging the layout of the [B]ook.’ …  Although the complaint uses neither the term   joint work” nor “co-author,” it is nigh impossible to read Di Angelo’s allegations … without concluding that Di Angelo is alleging, at minimum, co-authorship of the Book.” 
• The parties’ contract. “The Contract does not define author, and the word’s common meaning can apply to multiple parties who collaboratively engage in producing one creative work, a possibility expressly contemplated by copyright law. And contrary to Kelley’s suggestion, the terms of the Contract lend some support to the notion that the Book would be produced collaboratively.” (footnote omitted).
• Requested relief. “[A] declaration of Di Angelo’s copyright in the updated work could permit it to exercise rights with respect to that work that it would not enjoy under the Contract. For instance, a declaration could allow Di Angelo to profit from the Book’s update, which according to its state court complaint, Kelley currently
  prevents it from doing.”

Di Angelo Publications, Inc., No. 20-20523 (Aug. 12, 2021).

Under Texas insurance law: “Payment and acceptance of an appraisal award means there is nothing left for a breach of contract claim seeking those same damages. But a plaintiff may still have a claim under the prompt payment law after it accepts an appraisal award. The Supreme Court of Texas recently held that even a preappraisal payment that seemed reasonable at the time does not bar a prompt-payment claim if it does not ‘roughly correspond’ to the amount ultimately owed.” Randel v. Travelers Lloyds, No. 20-20567 (Aug. 12, 2021).

The plaintiffs in Turner v. Cincinnati Ins. Co. obtained a “non-adversarial” default judgment against a defunct vocational school. The Fifth Circuit found that Texas’s “no-direct action” rule did not bar their claim against the school’s insurer: “[T]he Plaintiffs’ default judgment against ATI is an adjudication that satisfies the no-action clause. Accordingly, although the non-adversarial default judgment does not bind Cincinnati to its terms,  the no-direct-action rule is not a bar to this coverage suit.” (citation omitted). (Unfortunately for the plaintiffs, the Court then affirmed the dismissal of their claim on timeliness grounds.) No. 20-50548 (Aug. 13, 2021).

The Fifth Circuit affirmed a jurisdiction-based collateral attack on a judgment in Bessie Jeanne Worthy Revocable Trust, reasoning that in the prior litigation, “the Estate’s Texas citizenship defeated diversity among the parties,” creating a “‘total want of jurisdiction’ to enter judgment[.]” No. 20-10492 (Aug. 10, 2021). In so doing, the Court distinguished Picco v. Global Marine Drilling Co., 900 F.2d 846 (5th Cir. 1990), as turning on a distinct question about the effect of the automatic bankruptcy stay. The able Rory Ryan from Baylor’s law school cautions against an overly broad reading of this new opinion.

To illustrate a point about the risks of unbounded judicial discretion, the Fifth Circuit quoted a well-known gorilla joke in Rollins v. Home Depot USA, No. 20-50736 (Aug. 9, 2021):

Counsel failed to file a summary-judgment response because his notification of filing went to his email “spam” folder. The Fifth Circuit affirmed the denial of relief under Fed. R. Civ. P. 59(e):

“It is not ‘manifest error to deny relief when failure to file was within [Rollins’s] counsel’s ‘reasonable control.’  Notice of Home Depot’s motion for summary judgment was sent to the email address that Rollins’s counsel provided. Rule 5(b)(2)(E) provides for service ‘by filing [the pleading] with the court’s electronic-filing system’ and explains that ‘service is complete upon filing or sending.’ That rule was satisfied here. Rollins’s counsel was plainly in the best position to ensure that his own email was working properly—certainly more so than either the district court or Home Depot. Moreover, Rollins’s counsel could have checked the docket after the agreed deadline for dispositive motions had already passed.”

Rollins v. Home Depot USA, No. 20-50736 (Aug. 9, 2021).

“‘Lost debt’ cases present a unique type of claim. They allege ‘a RICO violation whose central purpose [i]s to prevent the collection of a claim or judgment.’ The substantive RICO violation is the act of preventing collection. And the plaintiff’s injury is the inability to collect the lawful debt. So, when the plaintiff successfully recovers that debt, it is no longer lost. And because that unrecovered debt is the only source of the plaintiff’s injury, there is no RICO claim in its absence.  As a result, a plaintiff cannot rely on its lost debt to animate a RICO suit after it has recovered that debt. The ‘debt is “lost” and thereby
becomes a basis for RICO trebling only if the debt (1) cannot be collected (2)
“by reason of” a RICO violation.’ ‘In other words, to the extent of a successful collection, the RICO claim is abated pro tanto, prior to any application of trebling.'” HCB Fin. Corp. v. McPherson, No. 20-50718 (Aug. 4, 2021) (citations omitted). Put another way: “There must be independent damages to treble; the possibility of treble damages alone cannot confer statutory RICO standing.” 

A recent antitrust case reminds of an important but infrequently-litigated point about the review of pleadings in the context of a motion to dismiss: “If an attached exhibit contradicts a factual allegation in the complaint, ‘then indeed the exhibit and not the allegation controls.'” Quadvest LP v. San Jacinto River Auth., No. 20-20447 (Aug. 3, 2021).

The plaintiffs in Quadvest LP v. San Jacinto River Auth. alleged that a state-created river authority violated Section 1 of the Sherman Act by unreasonably restraining the market for wholesale raw water in Montgomery County. Procedurally, the Fifth Circuit concluded that the denial of the authority’s motion to dismiss on immunity grounds was appealable under Circuit precedent (acknowledging that the Fifth Circuit is an outlier on this point). Substantively, the Court affirmed the denial of the authority’s motion “at this stage” of the case, concluding that “the Texas Legislature did not authorize [the authority’s] entry into and enforcement of the challenged [contract] provisions with the intent to displace competition in the market for wholesale raw water in Montgomery County.” No. 20-20447 (August 5, 2021).

Two rulings about the crime-fraud exception to the attorney-client privilege were recently reversed, by both the Fifth Circuit and Dallas’s Fifth District, in response to mandamus petitions. (This is a cross-post with 600commerce.com.)

• In the Fifth Circuit: “[A]s Boeing argues, the district court clearly erred in finding that Plaintiffs established a prima facie case that the contested documents were subject to the crime-fraud exception. The district court concluded that the contested documents were reasonably connected to the fraud based on one finding only—that the documents sought ‘f[e]ll within the period Boeing admit to hav[ing] knowingly and intentionally committed “fraud” in the DPA. However, a temporal nexus between the contested documents and the fraudulent activity alone is insufficient to satisfy the second element for a prima facie showing that the crime-fraud exception applies.” In re The Boeing Co., No. 21-40190 (July 29, 2021, unpublished).
• In the Fifth District, the Court noted: “[A] determination at the TCPA stage as to a prima facie showing does not automatically translate to a prima facie showing for purposes of application of the crime–fraud exception to the attorney–client privilege. The exception UDF attempts to invoke is for crime–fraud, not crime–tort.” From there, it declined to follow a broad view of the exception defined by another Texas intermediate court, “and note that, notwithstanding certain language in the [relevant] opinion, the El Paso court continues to apply the elements of common-law fraud when determining the applicability of the crime fraud exception, rather than requiring proof of a false statement only.” In re Bass, No. 05-21-00102-CV (July 30, 2021) (mem. op.).

A long-running discovery dispute in Texas state court led to a contempt order, which in turn led to a federal-court habeas action. The Fifth Circuit noted that habeas relief was potentially available under the Antiterrorism and Effective Death Penalty Act of 1996, as codified in 28 U.S.C. § 2254, under which:

… if an adequate state ‘corrective process’ for raising a claim exists that the petitioner could avail him or herself of, a federal court may only consider the claim if the petitioner has exhausted available state remedies. And when the petitioner has done so and the state court has rejected the claim on the merits, federal courts may provide relief only when the state court adjudication was either ‘contrary to, or involved an unreasonable application of, clearly established Federal law, as determined by the Supreme Court of the United States,’ or ‘based on an unreasonable determination of the facts in light of the evidence presented in the State court proceeding.’

(citations omitted). Among other observations, the Court held: “A rule that due process does not permit the use of civil contempt to compel the production of documents that are in the hands of third parties would also overturn longstanding precedents and would likely be unworkable in practice.” Topletz v. Skinner, No. 20-40136 (July 30, 2021).

• “While litigants should, when possible, identify specific contractual provisions alleged to have been breached, Rule 8 does not require that level of granularity. ‘So long as a pleading alleges facts upon which relief can be granted, it states a claim even if it “fails to categorize correctly the legal theory giving rise to the claim.”‘ ” (citations omitted).
• That said — “That the pleading was sufficient in this contract dispute, governed by an agreement neither exceedingly long nor rife with addenda, exhibits, and multiple parts, does not mean that Rule 8 would necessarily be satisfied by general allegations involving more complex contracts.” 

Sanchez Oil & Gas Corp. v. Crescent Drilling & Prod., Inc., No. 20-20304 (July 30, 2021).

The key contract provision in Papalote Creek II LLC v. Lower Colorado River Authority said that “[LCRA]’s damages for failure to perform its material obligations under this Agreement shall likewise be limited in the aggregate to sixty million dollars ($60,000,000).” The Fifth Circuit concluded that read in context, this provision referred to damages that LCRA would owe to Papalote (acknowledging authority that, in the abstract, would suggest damages that LCRA would be owed).

The Court went on to conclude that this provision capped damages available under a specific liquidated-damages provision, finding that another clause dealing with those specific remedies did not displace the language of the cap (It said that “for any provision for which an express and exclusive remedy or measure of damages is provided, such express remedy or measure of damages shall be the sole and exclusive remedy, [and] the obligor’s liability shall be limited as set forth in such provision[.]”). No. 19-50850 (July 16, 2021).

The relevant policy language in a data-breach coverage dispute provided insurance for:
In Landry’s, Inc. v. Ins. Co. of the State of Penn., the Fifth Circuit found that this language created coverage, observing, inter alia:

• “Publication”: “[C]overage is triggered by a ‘publication, in any manner.’ It follows that the Policy intended to use every definition of the word ‘publication’—even the very broadest ones. And some of the dictionary definitions of ‘publication’ are quite broad.”
• Scope: “[T]he Policy does not simply extend to violations of privacy rights; the Policy instead extends to all injuries that arise out of such violations. … [I]t’s undisputed that a person has a ‘right of privacy’ in his or her credit-card data.” (emphasis in original).
• Injury: “[E]veryone agrees that the facts alleged in the Paymentech complaint constitute an injury arising from the violation of customers’ privacy rights, as those terms are commonly understood. It does not matter that Paymentech’s legal theories sound in contract rather than tort. Nor does it matter that Paymentech (rather than individual customers) sued Landry’s. Paymentech’s alleged injuries arise from the violations of customers’ rights to keep their credit-card data private.”

The Fifth Circuit rejected class claims about the handling of funds in an ERISA plan, identifying a basic standing problem arising from the links in the causal chain of the plaintiffs’ damages theory: “[Plaintiffs’] expert has provided calculations for the returns that they would have earned had they not invested in the FCU Option but  had instead placed their money in a stable value fund. This ‘lost investment income’ is a ‘concrete’ and redressable injury for the purposes of standing.  That said, another question we must ask is whether Plaintiffs would have in fact invested in a stable value fund to earn the higher returns had [Defendants] never offered the FCU Option. In other words, the question is whether Plaintiffs have demonstrated that it is ‘substantially probable that the challenged acts of the defendant, not of some . . . third party[]’ (including themselves) caused the injury.  If anything, the record reveals that Plaintiffs would not have invested in a stable value fund in a counterfactual world since they did not place their money in one when given the opportunity to do so.” (citations omitted, emphasis added). Oritz v. American Airlines, No. 20-10817 (July 19, 2021).

In a will contest, “the district court determined that, because the claims against Craig and Alita were founded on a single deprivation, the loss of the transferred assets, joint and several liability is appropriate.” The Fifth Circuit agreed, quoting the Restatement (First) of Restitution section cited by the district court: “Where a claim against two persons is founded upon a single deprivation as it is where a tort resulting in a single harm has been committed by two persons concurrently or acting in cooperation, the injured person, while having a cause of action against each of the parties for the entire amount of injury, is entitled only to one satisfaction. If he obtains judgment against one and it is satisfied, he thereby loses his claim against the other.” (citation omitted). In other words, “this part of the Restatement ‘effectively imposes joint and several liability on a restitution defendant when the action is founded ‘upon a single deprivation.’” Great American Life v. Tanner, No. 20-60588 (July 16, 2021).

In Spectrum Association Management of Texas v. Lifetime HOA Management LLC, the Fifth Circuit identified an “exceptional case” that justified an award of attorneys’ fees under the Anti-Cybersquatting Consumer Protection Act.  The Court contrasted Kiva Kitchen & Bath Inc. v. Capital Distributing, Inc., 319 F. App’x 316 (5th Cir. 2009), observing:

“Like the defendants in Kiva, the Lifetime Defendants acted in bad faith by registering and using an infringing internet domain with the intent to divert a direct competitor’s potential customers to Lifetime’s website. Further, the facts of this case are even more egregious than Kiva, because the Lifetime Defendants never offered to transfer the Infringing Domain to Spectrum, whereas the Kiva defendants made such an offer to the plaintiff shortly before trial. Finally, the Lifetime Defendants engaged in post-trial misconduct by blatantly copying text from Spectrum’s website—evidence of willfulness and bad faith that was not present in Kiva.”

No. 20-50604 (July 13, 2021).

Official Committee of Unsecured Creditors v. Walker County Hosp. Dist. presented a debtor’s challenge to the terms of a bankruptcy court’s sale order. The Fifth Circuit dismissed: “In this opinion, we have held that § 363(m) forecloses the creditor’s appeal because it failed to seek the required stay of the Sale Order. Established precedent leads us to this conclusion, and the Committee’s argument that it appealed an order not subject to § 363(m) is unpersuasive. In short: no stay, no pay.” No. 20-20572 (July 12, 2021) (emphasis added).

The government moved to dismiss a qui tam case; the Fifth Circuit found that the relators received the statutorily-required opportunity to contest that motion at a hearing:

“Health Choice had a hearing before the magistrate judge. It had a witness available to testify at that hearing, and the witness was not prohibited from testifying. Health Choice declined to call the witness to testify and the magistrate judge did not prevent Health Choice from presenting the witness. Health Choice’s statements at oral argument suggest that it consciously and strategically chose not to offer evidence because it believed it had already won the motion. Even assuming that [42 U.S.C.] § 3730(c)(2)(A) requires the hearing to be an evidentiary hearing, there was no error because Health Choice declined to offer evidence at the hearing.”

(citations omitted). A concurrence emphasized the fact-specific nature of the holding, and one of the three panel members concurred as to the judgment only. United States ex rel. Health Choice Alliance v. Eli Lilly & Co., No. 19-40906 (July 7, 2021).

The Fifth Circuit granted a stay during appeal in a challenge to a Texas JP’s practices regarding an invocation at the beginning of court proceedings: “In deciding whether to grant a stay pending appeal, we consider four factors: ‘(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.’ All four factors favor Judge Mack.” The Court found a “manifestly erroneous” analysis of Ex Parte Young by the district court, which guided the application of the remaining factors in the appellant’s favor. Freedom From Religion Foundation v. Mack, No. 21-20279 (July 9, 2021).

Goodrich v. United States certified a complex issue of Louisiana law to that state’s supreme court; confirming the wisdom of that decision, it summarized a relevant principle as stating: “If the things subject to the usufruct are consumables, the usufructuary becomes owner of them. He may consume, alienate, or encumber them as he sees fit. At the termination of the usufruct he is bound to pay to the naked owner either the value that the things had at the commencement of the usufruct or
deliver to him things of the same quantity and quality.” No. 20-30422 (July 6, 2021) (emphasis added). Hopefully the resulting opinion will clothe the case with quality legal reasoning.

A wheelchair-bound potential juror complained about  the inaccessibility of the courthouse to him when he was called for jury duty. The Fifth Circuit reviewed two guideposts about standing for such claims in its earlier opinions, noting:

O’Hair and Herman can be summarized as holding that a plaintiff with a substantial risk of being called for jury duty has standing to seek an injunction against a systemic exclusionary practice but not a one-off, episodic exclusion related to a particular judge’s actions. Thus, the plaintiff in O’Hair had standing for injunctive relief against a state constitutional provision that systemically excluded atheists from jury service, but the plaintiff in Herman lacked standing for injunctive relief against a particular judge’s conduct.

Applied to this case, the Fifth Circuit held: “[Plaintiff] has a substantial risk of being called for jury duty again. He was called twice between 2012 and 2017. Those past incidents, though insufficient to confer standing, are still ‘evidence bearing on whether there is a real and immediate threat of repeated injury.’ Moreover, Hinds County is not extremely populous, and only a subset of its population is eligible for jury service, so it’s fairly likely that Crawford will again, at some point, be called for jury duty.” Crawford v. Hinds County Board of Supervisors, No. 20-60372 (June 16, 2021) (citations omitted).

The Supreme Court will review Reagan National Advertising v. City of Austin, 972 F.3d 696 (5th Cir. 2020). The court’s summary of the issue presented is below, and here is my discussion of the case on the Coale Mind podcast —