Applying Keller v. State Bar of California, 491 U.S. 1 (1990), the Fifth Circuit concluded that certain activities by the State Bar of Texas were not “germane” to the Bar’s accepted purpose, and thus held that their funding with bar dues violated the First Amendment.

In sum, the Bar is engaged in non-germane activities, so compelling the plaintiffs to join it violates their First Amendment rights. There are multiple other constitutional options: The Bar can cease engaging in nongermane activities; Texas can directly regulate the legal profession and create a voluntary bar association, like New York’s; or Texas can adopt a hybrid system, like California’s. But it may not continue mandating membership in the Bar as currently structured or engaging in its current activities.

The Court acknowledged the “weakened foundations” of Keller after the union-dues case of Janus v. Am. Fed. of State, County, & Municipal Employees, 138 S. Ct. 2448 (2018), but concluded that it still framed the relevant issues in the context of a mandatory bar association. McDonald v. Longley, No. 20-50448 (July 2, 2021). The Texas Lawbook has written on the opinion. (The companion case of Boudreaux v. Louisiana State Bar Ass’n, No. 20-30086 (July 2, 2021), reversed a standing-based dismissal to a similar challenge to the activities of Louisiana’s state bar.)

If you are an email subscriber to this blog’s new posts, or subscribe to its RSS feed, please know that Google has discontinued its “Feedburner” service, so 600Camp is converting to a similar (but hopefully much improved) service offered by “Follow.it.” With luck, the transition will be seamless. But if you experience a loss of service – or the opposite problem of multiple deliveries – please notify me at dcoale@lynnllp.com. Many thanks for subscribing!

The plaintiff in Arruda v. Curves Int’l alleged that violations of the Franchise Rule were RICO predicate acts, but the Fifth Circuit disagreed: “Congress’s omission of a private right of action in the [Federal Trade Commission Act] controls. A violation of the Franchise Rule does not itself constitute a predicate act of mail or wire fraud to support a RICO claim.” The Court cited D.C. Circuit opinion about the Service Contract Act that asked the cogent question: “If there is no implied cause of action for damages, how much the less for treble damages?” No. 20-50734 (June 28, 2021) (unpublished).

Huawei Technologies USA v. FCC presents an exhaustive summary of modern-day administrative law, in the context of reviewing an FCC rule that excluded Huawei from federal funds as a security risk. As the Court summarized its several holdings:

Their most troubling challenge is that the rule illegally arrogates to the FCC the power to make judgments about national security that lie outside the agency’s authority and expertise. That claim gives us pause. The FCC deals with national communications, not foreign relations. It is not the Department of Defense, or the National Security Agency, or the President. If we were convinced that the FCC is here acting as “a sort of junior varsity [State Department],” Mistretta v. United States, 488 U.S. 361, 427 (1989) (Scalia, J., dissenting), we would set the rule aside.

 

But no such skullduggery is afoot. Assessing security risks to telecom networks falls in the FCC’s wheelhouse. And the agency’s judgments about national security receive robust input from other expert agencies and officials. We are therefore persuaded that, in crafting the rule, the agency reasonably acted within the broad authority Congress gave it to regulate communications.

No. 19-60896 (June 18, 2021).

The long and winding case of Doe v. McKesson, remanded from the Supreme Court with instruction to certify a threshold state-law question to the Louisiana Supreme Court, added one more state-law issue after remand. Doe v. McKesson, No. 17-30864 (June 25, 2021).

Strong feelings were voiced about the Fifth Circuit’s panel opinion in Ramirez v. Guardarrama, 844 F. App’x 710 (5th Cir. 2021) (per curiam). The vote against en banc review was 13-4, with several opinions:

• Judge Jolly, who had been on the panel that found no Fourth Amendment violation, concurred with denial and observed: “The unanimous panel opinion also explains why we cannot quarterback from our Delphic shrines, three years later, the split-second decision making required of these officers in response to a suicidal man (1) doused in gasoline, (2) reportedly high on methamphetamine, (3) screaming nonsense, (4) holding a lighter, and (5) threatening to set himself on fire and to burn down the home, occupied by six people, which he had earlier covered in gasoline.”
• Judge Ho, joined by Judges Jolly and Jones, concurred and further observed:       “[H]ow can a constitutional violation be ‘obvious,’ ‘egregious,’ and ‘conscience-shocking,’ when the dissent can’t tell the officers what they should have done differently to keep people safe?”
• Judge Oldham (also on the panel), joined by all of the above and Judge Engelhardt, reviewed the Fourth Amendment claim through a Twombly lens and concluded: “[T]he Fourth Amendment is not an antidote to tragedy. It’s a cornerstone of our Bill of Rights, with an august history and profound original meaning. We cheapen it when we treat it like a chapter from Prosser & Keeton. And we transmogrify it beyond recognition when we say officers act ‘unreasonably’ without any effort to say what a reasonable officer would’ve done.”
• Judge Smith dissented, arguing that this case provided an opportunity to revisit another recent en banc opinion.
• Judge Willett dissented, joined by Judges Graves and Higginson, pointing to recent Supreme Court cases that rejected qualified-immunity claims and observing: “The complaint alleges a plausible Fourth Amendment violation, and an obvious one at that. How is it reasonable—more accurately, not plausibly unreasonable—to set someone on fire to prevent him from setting himself on fire?”

The defendant in IMA, Inc. v. Medical City Dallas sought to compel arbitration under a “direct-benefits estoppel” theory. It argued that the plaintiff’s claim, which involved a series of related contracts, necessarily implicated an agreement that contained an arbitration clause. The Fifth Circuit affirmed the denial of its motion to compel arbitration, agreeing that the defendant lacked “knowledge of the contract’s ‘basic terms,’ and noting: “IMA neither was shown to have, nor needed, knowledge of the Hospital Agreement in order to fulfill its obligations to the Health Plan and the IMAPPOplus Agreement; rather IMA could process the claims with ‘a copy of the [Health] Plan and the PPO Contract Rates.'” No. 20-20032 (June 17, 2021).

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).

A wrongful-foreclosure case reminds of a basic Twombly principle: “Green’s breach-of contract claim in her complaint alleged that Defendants violated conditions in the deed of trust, but she never explained which part of the deed was violated. It was only in response to Defendants’ summary judgment motion that Green identified the deed’s notice requirement as the specific violation. Her failure to specify her breach-of-contract claim in her complaint warrants dismissal of that claim.” Green v. Windsor Park Asset Holding Trust, No. 20-11226 (June 18, 2021, unpublished) (per curiam).

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).

While this is a post about Texas state practice, I am cross-posting it from 600Commerce because it is of broad general interest to civil appellate practitioners. 

With respect to court orders and judgments, the words “signed,” “rendered,” and “entered” are often used interchangeably. But those words have specific, technical meanings, and it is wise to remember those meanings when differences matter.  Accord, Burrell v. Cornelius, 570 S.W.2d 382, 384 (Tex. 1978) (“Judges render judgment; clerks enter them on the minutes.  …  The entry of a judgment is the clerk’s record in the minutes of the court.  ‘Entered’ is synonymous with neither ‘Signed’ nor ‘Rendered.’”).

Two rules set the background as to when critical countdowns commence:

• Tex. R. Civ. P. 306a: “The date of judgment or order is signed as shown of record shall determine the beginning of the periods prescribed by these rules for the court’s plenary power to grant a new trial or to vacate, modify, correct or reform a judgment or order and for filing in the trial court the various documents that these rules authorize a party to file …”
• Similarly, Tex. R. App. P. 26.1 begins: “The notice of appeal must be filed within 30 days after the judgment is signed, except as follows …”

By contrast, “[j]udgment is rendered when the trial court officially announces its decision in open court or by written memorandum filed with the clerk.”  E.g., S&A Restaurant Corp. v. Leal, 892 S.W.2d 855, 857 (Tex. 1995) (per curiam).  And the above-quoted paragraph from Rule 306a concludes: “… but this rule shall not determine what constitutes rendition of a judgment or order for any other purpose.”

By contrast, entry of judgment refers to the recording of a rendered judgment in the court’s official records. See, e.g., Lone Star Cement Corp v. Fair, 467 S.W.2d 402, 405 (Tex. 1971) (“The law is settled in this state that clerical errors in the entry of a judgment, previously rendered, may be corrected after the end of the court’s term by a nunc pro tunc judgment; however, judicial errors in the previously rendered judgment may not be so corrected.” (emphasis added)).

I gratefully acknowledge the excellent insights of Ben Taylor in preparing this post!

The able Rory Ryan of Baylor’s law school has Tweeted in detail about a recent district-court opinion on a thorny, and persistent, removal-jurisdiction issue. The case, which arose under a Texas Insurance Code provision with a specific procedure about claims against insurance agents, presented these facts:

Plaintiffs sued their insurer, Chubb (who is diverse), and agent, Smith (who is non-diverse), in state court. Chubb then elected to accept whatever liability Smith might have, and the state court dismissed Smith. Chubb then removed the case under diversity jurisdiction.

Leading to this issue: “[I]n determining diversity jurisdiction, does the Court consider Smith’s citizenship?”

After an extensive review of the relevant statutes and cases, the Court concluded:

Without binding authority, the Court must rely on the policy and rationale supporting the improper-joinder rule. The improper-joinder rule holds that the non-diverse defendant never should have been a party.  As the Fifth Circuit has said: “If no reasonable basis of recovery exists, a conclusion can be drawn that the plaintiff’s decision to join the local defendant was indeed fraudulent …,” and therefore improper.  As shown above, this rationale explains the improper-joinder rule’s past application.

 

But the rationale does not support an improper-joinder finding when the plaintiff’s claims against the non-diverse defendant were initially valid. In this situation, it is false to say an improper-joinder finding amounts to a determination that the non-diverse defendant was never properly before the court. It was.

(citations omitted, emphasis in original). The case was thus remanded to state court.

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).

The Fifth Circuit harmonized two insurance-policy provisions in Miller v. Reliance Std. Ins. Co.:

“[T]he phrase ‘active, full-time’ employees must be construed in the insured’s favor to include those who, on the relevant date, are current employees even if not actually working. We also agree that the term ‘regular work week’ must be construed to refer to an employee’s job description, or to his typical workload when on duty.

 

To hold otherwise, as Reliance urges, would render the second paragraph of the Transfer Provision virtually redundant with the first. On Reliance’s reading, the paragraph would cover employees who actually maintain a full-time work schedule at the time of transfer. But this is barely different, if at all, from the previous paragraph’s provision for employees who at the time are ‘Actively at Work,’ defined to mean ‘actually performing on a Full-time basis the material duties pertaining to his/her job'[.]

 

Effectively, Reliance’s reading is that the second paragraph covers employees who are not “actually performing” work duties but are ‘otherwise’ actually working. We reject this convoluted construction as the unambiguous meaning of the provision.”

No. 20-30240 (June 2, 2021) (emphasis in original, breaks added).

The Supreme Court affirmed the Fifth Circuit’s analysis of appellate costs (often a trivial issue, but here involving over $2 million in supersedeas-bond premiums) in City of San Antonio v. Hotels.com, stating: “[W]e hold that courts of appeals have the discretion to apportion all the appellate costs covered by Rule 39 and that district courts cannot alter that allocation.” No. 20–334 (U.S. May 27, 2021). (It remains to be seen how the Roberts Court will review other, more politically charged opinions from the Fifth Circuit this term.)

A party in Int’l Energy Ventures Mgmnt, LLC v. United Energy Group, Ltd. “recognize[d] the general proposition that litigation-conduct waiver is an issue that should be decided by the court,” but “contend[ed] that the general rule does not apply here for three reasons.” The Fifth Circuit rejected each one:

• Incorporation of AAA rules. Yes, the parties’ agreement gave the arbitrator “the power to rule on its own jurisdiction,” but it did not “clearly and unmistakably” confer the power to decided litigation-conduct waiver.
• Waiver. Again, the Court found that activity during the arbitration did not “clearly and unmistakably” result in the “submission” of this issue, noting reservations made by the relevant party and the arbitrator’s own actions.
• “Unique facts.” The Court did not find key cases inapplicable because of the party who sought arbitration: “‘Arbitration is a matter of contract,'” reasoned the Court, and “[e]xtra-contractual factors–like where an issue first arises and who initiates arbitration–are not part of the interpretive analysis.”

No. 20-20221 (May 28, 2021).

The “similar birds” case — Alliance for Good Government v. Coalition for Better  Government — returned to the Fifth Circuit to address attorneys’ fees. The panel majority affirmed the final fee award, over a strong dissent that questioned the application of the Lanham Act to what it saw as purely political speech. No. 20-30233 (May 19, 2021).

Canfield v. Lumpkin presented an ineffective-assistance claim arising from voir dire. The record showed the following exchange with the juror in question, followed by general questions to the panel about the ability ot be fair, with no individual followup questioning of this juror:

The panel majority found no error sufficient to justify habeas relief, as well as a lack of sufficient prejudice. A dissent saw matters otherwise: “[T]he trial judge and counsel were acutely aware of the necessary care that must attend jury selection and the challenges of this case. Our question is whether they succeeded in protecting the jury room. Unlike the majority, I conclude that they did not. During voir dire, a prospective juror volunteered that she felt the defendant was guilty and would probably vote to convict him even if the State failed to prove his guilt beyond a reasonable doubt. Neither counsel nor the judge followed up with her. So, she served on the jury that first convicted Jerry Lee Canfield and, then, free to choose from a menu of sentences from  5 years to life imprisonment, sentenced him to 50 years in prison without the possibility of parole.” No. 18-10431 (May 18, 2021).

Please sign up for my Fifth Circuit update for the Austin Bar Association this Thursday, May 12, at noon – here is the link – and Texas Solicitor General Judd Stone will present a Supreme Court update as well! Here is a draft of my PowerPoint for the presentation.

Removals under the federal-officer statute have drawn increased scrutiny in recent years. In BP P.L.C. v. Mayor and City Council of Baltimore, the Supreme Court addressed an important issue about appellate review of remand orders involving that statute, concluding: “To remove a case, a defendant must comply with 28 U. S. C. §1446. Essentially, that statute requires the defendant to provide affected parties and
courts with a notice stating its grounds for removal. §§1446(a), (d). The combination of these actions ‘effect[s] the removal.’ §1446(d). To remove a case ‘pursuant to’ §1442 or §1443, then, just means that a defendant’s notice of removal must assert the case is removable ‘in accordance with or by reason of’ one of those provisions. Here, everyone admits the defendants’ notice of removal did just that by citing §1442 as one of its grounds for removal. Once that happened and the district court ordered the case remanded to state court, the whole of its order became reviewable on appeal.” No. 19-1189 (U.S. May 17, 2021) (footnotes omitted).

The appellant in Lillie v. Office of Financial Institutions argued that an adverse summary judgment was based on an unreliable case. The Fifth Circuit disagreed: “The court relied on Friedman only in reasoning that a showing of ‘but-for causation’—namely that SEI might have been able to prevent STC’s violations—is not enough to establish control. Such a rationale … is distinct from Friedman’s independent holding that the plaintiffs there had not alleged culpability. One may cite a case without endorsing everything for which it stands. The district court understood the law.” No. 19-30705 (May 14, 2021).

Roe v. Wade famously named Dallas County DA Henry Wade (right) as its defendant, because he was the official charged with enforcement of the criminal statute at issue. The Texas Legislature has passed a new abortion law — a “heartbeat bill” — that features a novel enforcement procedure involving private litigants. The statute disclaims any public enforcement, relying on a private right of action against abortion providers that features an extremely broad definition of standing. The Texas Tribune correctly notes that the Fifth Circuit’s en banc opinion in Okpalobi v. Foster, 244 F.3d 501 (5th Cir. 2001), declined to extend Ex Parte Young (left) to a Louisiana statute that created a somewhat-analogous private cause of action against abortion providers. Assuming that the Governor signs the new Texas law, Okpalobi will likely be cited frequently in federal-court challenges to it. (I recently did a an interview with Fox 4’s “Good Day” about this new law.)

While Olivarez v. T-Mobile involved the high-profile topic of Title VII’s protection for  transgendered individuals, it turned on a basic and common proof problem in such cases: “Olivarez has failed to plead any facts indicating less favorable treatment than others ‘similarly situated’ outside of the asserted protected class.  In fact, the Second Amended Complaint does not contain any facts about any comparators at all. The complaint simply indicates that Olivarez took six months of leave from September 2017 to February 2018—including an extension granted by T-Mobile and Broadspire—and that when Olivarez requested additional leave in March 2018, T-Mobile denied the request and terminated Olivarez’s employment in April 2018. Notably, there is no allegation that any non-transgender employee with a similar job and supervisor and who engaged in the same conduct as Olivarez received more favorable treatment.” No. 20-20463 (May 12, 2021) (emphasis added).

In 2017, the USS Fitzgerald, a U.S. Navy destroyer, collided with the MV ACX Crystal, a commercial container ship, in Japanese territorial waters. The incident caused extensive damage and injury, including the death of seven American sailors. Relatives of the deceased sailors sued the ship owner in federal court under the Death on the High Seas Act. They based personal jurisdiction on Fed. R. Civ. P. 4(k)(2), “alleging that, despite NYK Line’s status as a foreign corporation, its substantial, systematic, and continuous contacts with the United States should make NYK Line amenable to suit in federal court.” I

In Douglass v. Nippon Yusen Kabushiki Kaisha, the Fifth Circuit noted that that the case raised novel but significant issues about the distinction between 5th and 14th Amendment due process protections, but found itself constrained by the “rule of orderliness” to follow an earlier Circuit case on the topic. A 2-judge dissent urged en banc consideration, noting that “[o]ur decision today … determines that a global corporation with extensive contacts with the United States cannot be haled into federal court for federal claims arising out of a maritime collision that killed seven United States Navy sailors.” No. 20-30379 (April 30, 2021).

The difficult First Amendment case of Wilson v. Harris County Community College System, 955 F.3d 490 (5th Cir. 2020), produced a panel opinion that allowed an elected member of a community-college board to bring a claim about alleged retaliation for his exercise of First Amendment rights, followed by an 8-8 tie on the question of en banc review. The Supreme Court has now granted review of this fundamental issue about the relationship between elected officials’ rights and the interests of the institutions they serve: (The first episode of the “Coale Mind” podcast considers this case along with the “Cancel Culture” phenomenon.)

CNN recently reported on a Capitol rioter who was turned in by an unimpressed Bumble match (right). This story illustrates precisely the kind of “red-blue” interaction (admittedly, with less romanticism) that jury service forces when it brings together people of different backgrounds and interactions.  These interactions are increasingly important in our divided times, and have taken on new dimensions after the difficult year of 2020. I discuss this topic (jury selection, not date-getting) with top jury consultant Jason Bloom in the most recent episode of the Coale Mind podcast.

During the course of a long-running contract dispute, the Fifth Circuit remanded the case for further development of the record about diversity jurisdiction. Problems with appellate deadlines for a later appeal ensued; in reviewing the parties’ arguments the Court noted:

• “Full” v. “partial” remand. “It is true that in some cases where this court has remanded with a specific directive to the district court, we have retained jurisdiction over the appeal, obviating the need for the appellant to file a new notice of appeal after the district court’s remand proceedings. However, in those cases, this court specified that we retained jurisdiction over the appeal.”
• Effect of an attorneys-fee appeal. “[W]hen the merits judgment has already become final and unappealable, a mere delay of that judgment is no longer possible, and the court lacks any authority under FRAP 4(a)(4)(A)(iii) and FRCP 58[(e)] to modify the finality or the effect of the merits judgment.” (citation omitted).
• Good cause is not GOOD CAUSE. “Rule 4(a)(5), unlike Rule 4(a)(4)(A)(iii) and Rule 58(e), does allow a district court to revive an untimely notice of appeal after the original time to appeal has expired. … Pathway’s motion cannot be construed as a Rule 4(a)(5) motion, however. The extension motion cites Rule 58(e) rather than Rule 4(a)(5), and its arguments are relevant only to the former ….”

Midcap Media Finance LLC v. Pathway Data, Inc., No. 20-50259 (April 20, 2021).

In one corner, there is “Metchup”: “Mr. Dennis Perry makes Metchup, which depending on the batch is a blend of either Walmart-brand mayonnaise and ketchup or Walmart-brand mustard and ketchup. Mr. Perry sells Metchup exclusively from the lobby of a nine-room motel adjacent to his used-car dealership in Lacombe, Louisiana. He has registered Metchup as an incontestable trademark. Though he had big plans for Metchup, sales have been slow. Since 2010, Mr. Perry has produced only 50 to 60 bottles of Metchup, which resulted in sales of around $170 and profits of around $50. He owns www.metchup.com but has never sold Metchup online. For better or worse, the market is not covered in Metchup.”

In the other corner, there is Heinz: “Along comes Heinz. It makes Mayochup, which is solely a blend of mayonnaise and ketchup. To promote Mayochup’s United States launch, Heinz held an online naming contest where fans proposed names. A fan submitted Metchup, and Heinz posted a mock-up bottle bearing the name Metchup on its website alongside mock-up bottles for the other proposed names. Heinz never sold a product labeled Metchup.” 

Sadly for Perry’s trademark-infringement claim, the Fifth Circuit concluded: “It would be a coincidence to ever encounter both Mayochup and Metchup in the market, much less get confused about the affiliation, sponsorship, or origin of the two products. Accordingly, no reasonable jury could conclude that Heinz’s use of Metchup in advertising or the sale of its own product, Mayochup, created a likelihood of confusion.” Perry v. H.J. Heinz, No. 20-30418 (April 12, 2021).

This week on the “Coale Mind” podcast, I had top-flight jury consultant Jason Bloom as a special guest; in the episode we touch on the many pervasive effects that 2020 will have on jurors and jury selection, including:

– A surprising eagerness of people to show up and serve on juries, in part driven by widespread feelings of frustration after months of shutdown;

– Concern about what Jason calls the “massive exercise in confirmation bias” that potential jurors bring to the courthouse with them, depending on how restricted a juror’s information sources may be;

– The once-obscure psychological terms “ultracrepidarian” and “pareidolia” (you have to listen to the podcast to explore those terms’ meaning 🙂;

– Remembering that 2020 changed potential jurors not only because of COVID, but because of Black Lives Matter, the Biden-Trump election and its aftermath, etc.

– And a reminder that jury service—unlike the similar civic-engagement exercise of voting—forces jurors to form a consensus among their different beliefs; and

– Why 1-page written questionnaires for potential jurors may be particularly useful now in light of the above issues.

Confronted with the impossibly tangled Gordian Knot, Alexander the Great famously sliced it in half with his sword (right). Confronted with a “counterintuitive flow of money” in the complex intersection between pharmaceutical patents and the antitrust laws, in the Fifth Circuit affirmed the outcome of an FTC proceeding on the narrowest available ground in Impax Labs v. FTC, No. 19-60394 (April 13, 2021). The case arose from the settlement of a patent case between a brand-drug manufacturer and a generic drug maker, which presented these considerations about competition:

• The legal monopoly created by the brand-drug maker’s patent, and the challenge to it posed by the patent dispute;
• The framework established by the Hatch-Waxman Act for FDA approval of a generic drug, which has the practical effect of shifting all of the generic maker’s products into the first six months of manufacture;
• The settlement of the patent dispute by lengthening the brand-drug maker’s monopoly in exchange for consideration given to the the generic manufacturer (which in turn, potentially worsens the approval “bottleneck” created by the Hatch-Waxman Act);
• The pro-competitive effect of ending a patent monopoly earlier than it might otherwise have ended;
• Whether certain pro-competitive features of the parties’ settlement had a “nexus” to the above payments.

The FTC concluded that these factors made the settlement anticompetitive, and also concluded that the parties had a “less restrictive alternative” available that would have avoided these issues. The Fifth Circuit affirmed on the less-restrictive-alternative ground, finding it supported by “[t]hree evidentiary legs–industry practice, credibility determinations about settlement negotiations, and economic analysis ….”

In an arbitrability dispute, the Fifth Circuit reviewed the basis for federal jurisdiction, noting: “[Vaden v. Discover Bank, 556 U.S. 49 (2009)] then went on to point out a wrinkle. ‘As for jurisdiction over controversies touching arbitration, however, the [Federal Arbitration] Act is something of an anomaly in the realm of federal legislation: It bestows no federal jurisdiction but rather requires for access to a federal forum an independent jurisdictional basis over the parties’ dispute.'” Applied to the case at hand: “Under that “look through” analysis, we hold that this underlying dispute presents a federal question. Polyflow’s arbitration demand included at least three federal statutory claims under the Lanham Act …. What matters is that a federal question—the Lanham Act claims—animated the underlying dispute, not whether Polyflow listed them in its original complaint.” Polyflow LLC v. Specialty RTP LLC, No. 20-20416 (March 30, 2021).

The full Fifth Circuit declined to grant en banc review to State of Texas v. Rettig, 987 F.3d 518 (5th Cir. 2021), which involved constitutional challenges by certain states to two aspects of the Affordable Care Act. They contended that the “Certification Rule” violated the nondelegation doctrine, and that section 9010 of the ACA violated the Spending Clause and the Tenth Amendment’s doctrine of intergovernmental tax immunity. The panel found the laws constitutional, in an opinion by Judge Haynes that was joined by Judges Barksdale and Willett. “In the en banc poll, five judges voted in favor of rehearing (Judges Jones, Smith, Elrod, Ho, and Duncan), and eleven judges voted against rehearing (Chief Judge Owen, and Judges Stewart, Dennis, Southwick, Haynes, Graves, Higginson, Costa, Willett, Engelhardt, and Wilson),” with Judge Oldham not participating, and the five pro-rehearing judges joining a dissent.

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).

Several years ago, mathematicians rejoiced at the mapping of the world’s most complex structure, the 248-dimension “Lie Group E8” (right). Not to be outdone, the en banc Fifth Circuit has issued  Brackeen v. Haaland, a 325-page set of opinions about the constitutionality of the Indian Child Welfare Act–a work so complicated that a six-page per curiam introduction is needed to explain the Court’s divisions on the issues. No. 18-11479 (April 6, 2021). The splits, opinions, and holdings will be reviewed in future posts.

While applying a Louisiana statute, the Fifth Circuit reviewed federal securities law in Firefighters’ Retirement System v. Citco Group Ltd. and concluded that the defendants were not “control persons.” The substantive issue involved “material omissions from [an] offering memorandum”; thus, “to establish that the [defendants] were control persons, the pension plans must show that they had the ability to control the content of the offering memorandum.” The Court noted evidence that (a) the defendants “provided back-office administrative services” to the company at issue and could have stopped providing those services, (b) had made a loan that could have been called, and (c) “held … voting shares for administrative convenience” in a relevant entity, and found this evidence insufficient. No. 20-30654 (March 31, 2021).

In an appeal from a reduction of an attorney-fee award in an unpaid-overtime case, the Fifth Circuit affirmed. Among other matters, it noted the interplay of the required “lodestar” calculation with other factors to be considered later in the analysis: “As to the fifteen-percent reduction of the lodestar under the Johnson actors, the magistrate judge was careful to avoid so-called ‘double counting’ to the extent that a factor was already accounted for in the initial lodestar determination. Among the factors that were not already subsumed by the lodestar calculation, the magistrate judge emphasized that the success achieved is the most important factor and then also considered the novelty of the issues and preclusion of other employment.” Rodney v. Elliott Security Solutions, No. 20-30251 (April 1, 2021) (unpublished).

Plaintiffs, businesses that supply information to credit bureaus, sued Lexington Law, a consumer-advocacy organization, for fraud in its preparation of demand letters by consumers. CBE Group v. Lexington Law Firm, No. 20-10166 (April 1, 2021). The Fifth Circuit affirmed JNOV for the law firm, observing problems with the plaintiff’s evidence of:

• A contract. “While Chavarria and Garza may have misunderstood the process through which Lexington Law would represent them (and that misunderstanding may have been prompted by the firm’s actions), they were still bound by the terms of an engagement agreement the validity of which is not in doubt.”
• Reasonable reliance. “Once Plaintiffs developed suspicions that the letters may not have been sent from consumers themselves, they incurred costs in investigating correspondence on their own accord rather than because of the FCRA or the FDCPA. Indeed, Plaintiffs’ internal policies require them to investigate and respond to dispute letters sent by consumers and third parties alike. Thus, Plaintiffs fraud claim falls short for the additional reason that they did not justifiably rely on any alleged misrepresentation.”

The empire of Genghis Khan stretched across thousands of miles, conquering all that it encountered. While at times, the doctrine of ERISA preemption seems to have a similar track record, it encountered a limit in Atkins v. CB&I, LLC, a dispute about whether a severance plan came within ERISA’s scope.  The Fifth Circuit observed that the plan lacked “the ongoing administrative scheme characteristic of an ERISA plan,” specifically noting that it “calls only for a single payment,” the “simplicity of calculating the one-time payment,” that no discretionary decisions were called for as to the specific plaintiffs in this case, and that the situation did not present “any special administrative apparatus dedicated to overseeing the Plan.” No. 20-30004 (March 22, 2021).

Douglas v. Wells Fargo Bank notes two different approaches that the Fifth Circuit has taken to an aspect of summary-judgment practice: “We have previously addressed the issue of new claims raised for the first time in response to a motion for summary judgment. We have taken two different approaches. The first approach states that a ‘claim which is not raised in the complaint but, rather, is raised only in response to a motion for summary judgment is not properly before the court.’ The second approach
instructs the district court to treat a new claim raised in response to a motion for summary judgment as a request for leave to amend. The district court must then determine whether leave should be granted.” No. 18-11567 (March 26, 2021) (footnotes omitted).

The question whether “manifest disregard of the law” allows a court to vacate an  arbitration award  lingered in the case law since Hall Street Assocs. v. Mattel, Inc., 552 U.S. 576 (2008), which held that an arbitration agreement cannot create a ground for vacatur or modification beyond those set out in the FAA.

Jones v. Michaels Stores provided “an opportunity to resolve at least one thing that we have directly resolved [about Hall Street]: ‘manifest disregard of the law as an independent, nonstatutory ground for setting aside an award must be abandoned and rejected.” No. 20-30428 (March 15, 2021) (quoting Citigroup Global Markets, Inc. v. Bacon, 562 F.3d 349, 358 (5th Cir. 2009)).

But what of McKool Smith, P.C. v. Curtis Int’l, Ltd.,  650 F. App’x 208 (5th Cir. 2016) (per curiam)? Jones clarified that McKool Smith was a case “in which a party argued that an arbitrator’s manifest disregard of the law showed that he had ‘exceeded [his] powers within the meaning of 9 U.S.C. § 10(a)(4).” In that case, “[b]eecause of uncertainty about whether the manifest-disregard standard could still be used as a means of establishing one of the statutory factors, McKool Smith assumed arguendo that it could because the standard was not met in any event.” In this case, however, “[a]s Jones does not invoke any statutory ground for vacatur, Citigroup Global was dispositive of Jones’s challenge to the arbitration award.

The DC Circuit’s recent style manual amendment that criticized the use of “Garamond” font has drawn national attention. As this matter has now become a pressing issue facing the federal courts, 600Camp weighs in with these thoughts, all of which are written in 14-point size:

Accordingly, if you really like Garamond and are writing a brief with a word limit rather than a page limit, you should consider bumping the size up to 15-point. And of course, in a jurisdiction with page limits rather than word limits, Garamond offers a way to add more substance to your submission–but be careful that this extra substance does not come at the price of less visibility.

Recent orders set these matters for en banc reconsideration:

US v. Dubin, in which the panel held: “An issue of first impression for our court is whether David Dubin’s fraudulently billing Medicaid for services not rendered constitutes an illegal ‘use’ of ‘a means of identification of another person’, in violation of 18 U.S.C. § 1028A.”

Daves v. Dallas County, an Ex Parte Young case in which the panel held: “With one exception, we agree with the district court that the Plaintiffs have standing. This suit was properly allowed to proceed against most of the judges and the County. As for the Criminal District Court Judges, though, we hold that they are not proper defendants because the Plaintiffs lack standing as to them and cannot overcome sovereign immunity. We also disagree with the district court and hold that the Sheriff can be enjoined to prevent that official’s enforcement of measures violative of federal law.”

Hewitt v. Helix Energy Solutions Group, a 2-1 decision involving “a legal question common to all executive, administrative, and professional employees—and to the modestly and highly compensated alike: whether a worker is paid ‘on a salary basis’ under” the Fair Labor Standards Act.

The Fifth Circuit granted a motion for sanctions as to a motion to supplement the record in Texas Alliance for Retired Americans v. Hugh); the key fact involved the duty of candor to the tribunal: “Appellees did not notify the court that their latest motion to supplement the record filed on February 10, 2021 was nearly identical to the motion to supplement the record filed several months ago by the same attorneys, on September 29, 2020. Critically, Appellees likewise failed to notify the court that their previous and nearly identical motion was denied. This inexplicable failure to disclose the earlier denial of their motion violated their duty of candor to the court.” No. No. 20-40643 (March 11, 2021).

While written in a criminal appeal, Judge Oldham’s recent concurrence about specificity in error preservation is of broad general interest; he concludes:

“[A] general declaration of ‘insufficient evidence!’ is not a meaningful objection. It challenges no particular legal error. It identifies no particular factual deficiency. It does nothing to focus the district judge’s mind on anything. It’s the litigator’s equivalent of freeing the beagles in a field that might contain truffles. Cf. del Carpio Frescas, 932 F.3d at 331 (“Judges are not like pigs, hunting for truffles buried in the record.” (quotation omitted)). Rather, if the defendant wants to preserve an insufficient-evidence challenge for de novo review, he must make a proper motion under Federal Rule of Criminal Procedure 29 and ‘specify at trial the particular basis on which acquittal is sought so that the Government and district court are provided notice.'”

United States v. Kieffer, No. 19-30225-CR (March 19, 2021). Notes: (1) A big 600Camp thanks to Jeff Levinger for drawing my attention to this case, and (2) Judge Oldham correctly notes that beagles are superior to pigs for finding truffles, as pigs tend to eat the valuable truffles after locating them.

28 USC § 1631 says: “Whenever a civil action is filed in a court as defined in section 610 of this title . . . and that court finds that there is a want of jurisdiction, the court shall, if it is in the interest of justice, transfer such action or appeal to any other such court . . . in which the action or appeal could have been brought at the time it was filed . . ., and the action or appeal shall proceed as if it had been filed in . . . the court to which it is transferred on the date upon which it was actually filed in . . . the court from which it is transferred.” In Franco v. Mabe Trucking Co., the Fifth Circuit concluded that “want of jurisdiction” included both personal and subject-matter jurisdiction, observing:  “[I]t appears no circuit split currently exists on this issue, and while we cannot predict how those circuits who have left the question open will ultimately resolve the matter, we decline to now create a split by adopting an overly restrictive reading of § 1631. Because no amount of legislative history can defeat unambiguous statutory text, we join the weight of circuit authority and conclude that the use of the term ‘jurisdiction’ in § 1631 encompasses both subject-matter and personal jurisdiction.” No. 19-30316 (March 18, 2021) (footnote and citation omitted). The Court also found no Erie problem in section 1631’s definition of the relevant filing date for limitations purposes.

My colleague Michael Hurst wrote an insightful op-ed in the Dallas Morning News about a proposed system of specialized business courts for Texas. He questions whether it fits well with constitutional guaranties of the right to jury trial.

Another voice joined the chorus of appellate observations about perceived excesses involving sealed records in Le v. Exeter Fin. Corp.: “[E]ntrenched litigation practices harden over time, including overbroad sealing practices that shield judicial records from public view for unconvincing (or unarticulated) reasons. Such stipulated sealings are not uncommon. But they are often unjustified. With great respect, we urge litigants and our judicial colleagues to zealously guard the public’s right of access to judicial records their judicial records—so ‘that justice may not be done in a corner.'” No. 20-10377 (March 3, 2021).

Equity takes many forms; in Louisiana landlord-tenant law, it manifests as the doctrine of “judicial control.” In Richards Clearview LLC v. Bed Bath & Beyond, the Fifth Circuit observed: “[E]ven assuming arguendo that BB&B defaulted on the lease, the ‘unusual circumstances’ of this case—pandemic-related office closures causing delays in the receipt of notice coupled with prompt efforts to rectify the asserted underpayments— warranted the district court’s exercise of judicial control.” No. 20-30614 (March 8, 2021) (unpublished).

The Fifth Circuit concluded that a magistrate judge lacked jurisdiction to enter final judgment. The parties had conducted an entire wrongful-foreclosure case before a magistrate judge–but, early in the case, on the standard form, PNC expressly declined to allow trial by a magistrate judge. The Court concluded that consent could not be implied in the face of this express refusal. PNC Bank v. Ruiz, No. 20-50255 (March 2, 2021).