In Dameware Development LLC v. American General Life Ins. Co., the plaintiff complained that the defendant insurance company did not deliver a plan with certain tax benefits.  No. 11-20218 (July 19, 2012).  The plaintiff contended that their contract was entered into based on a mistake about whether such a plan would be delivered (“error,” under the applicable Louisiana law), and the Court disagreed, characterizing the situation as a “mistaken prediction” that would not allow the contract to be voided.  Id. at 9.  As to the contract itself, the Court found particularly persuasive a disclaimer that said the insurance company would “operate[] solely in the capacity of a product provider . . . .”  Id. at 10.

In an insurance coverage case that is also a careful review of basic contract interpretation principles, the Court determined that a decedent was “legally intoxicated” and thus fell within a policy exclusion.  Likens v. Hartford Life, No. 11-20653 (July 19, 2012).  Recognizing that some authority  requires a “legal intoxication” exclusion to involve a criminal act, the Court disagreed with those cases, reviewing comparable terms elsewhere in Texas law, as well as a line of admiralty authority.

In the context of a denial of en banc rehearing, a concurring and dissenting opinion disputed whether an issue of charge error in an employment case had been preserved below.  Nassar v. UT Southwestern Medical Center, No. 11-10338 (July 19, 2012).  The exchange echoes a similar one in the recent en banc case of Jimenez v. Wood County, 660 F.3d 841 (5th Cir. 2011). 

In GuideOne Specialty Mutual Ins. Co. v. Missionary Church, a coverage case arising from a car accident by church workers on a lunch break, the Court reversed on the duty to defend, disagreeing with the district court’s decision to consider evidence about the state tort litigation as inconsistent with Texas’s “eight corners” rule.  No. 11-10894 (July 17, 2012), op. at 9-12.  Under that rule, the pleadings about the driver’s status and activities could potentially trigger coverage, creating a duty  to defend.  Id. at 13.  The Court declined to apply a “very narrow’ exception that could apply if a coverage issue did not “overlap with the merits of or engage the truth” of the facts of the case.  Id. at 14 (citing GuideOne Elite v. Fielder Road Baptist Church,  197 S.W.3d 305 (Tex. 2006)).  The Court ended by reversing an injunction against state proceedings about the accident, citing general cases about the scope of declaratory judgment actions and noting that the “relitigation exception” to the Anti-Injunction Act did not apply.  Id. at 15-16.     

The confirmation of an arbitration award in a construction dispute was affirmed in Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., No. 11-20141 (July 17, 2012).  The Court found: (1) that the arbitrator had authority, based on the parties’ agreement to AAA rules, to determine whether a particular damages issue was arbitrable; (2) the award was not procured by fraud, rejecting an argument that the claimant’s damage calculation involved a “bait-and-switch” that pretended to abandon one theory; and (3)  the district court properly awarded prejudgment interest, particularly in light of the arbitration panel creating “a thirty-day interest-free window from the date of the award” for payment.  

McMurray v. ProCollect, Inc. involved a claim that a debt collector’s demand letter contained language that was inconsistent with, and that also overshadowed, the required notice required by 15 U.S.C. section 1692g(a), the Fair Debt Collection Practices Act.  No. 11-20141 (July 17, 2012).  As to the claim of inconsistency, the Court found no violation because the letter did not contain a deadline for payment that conflicted with the 30-day contest period in the FDCPA.  Op. at 7.  As to the claim of overshadowing, the Court found that the letter simply encouraged payment and did not make threats, and did not use fonts or spacing to minimize the effect of the statutorily-required notice.  Op. at 8.  On both claims, the Court reviewed the letter through the lens of an “unsophisticated consumer standard.”  Op. at 5.

The plaintiff’s counsel in Mick Haig Productions v. Does 1-670 served subpoenas on Internet service providers (ISPs) about the alleged wrongful download of pornographic material.  No. 11-10977 (July 12, 2012).   The district court found that the subpoenas violated orders that it had made to manage discovery, and imposed significant monetary and other sanctions on the lawyer.  Op. at 4-5.  The Fifth Circuit found that all of the lawyer’s appellate challenges were waived — either because they were not raised below, or were raised only in an untimely motion to stay filed after the notice of appeal, and thus were waived.  Id. at 5.  The Court declined to apply a “miscarriage of justice” exception to the standard waiver rules, stating that the lawyer’s actions were “an attempt to repeat his strategy of . . . shaming or intimidating [the Does] into settling . . . .”  Id. at 6.

In the case of Downhole Navigator LLC v. Nautilus Insurance, an insured retained independent counsel after receiving a reservation of rights letter from its insurer, arguing that the insurer’s chosen counsel had a conflict at that point.    686 F.2d 325 (5th Cir. 2012).  Applying Northern County Mutual v. Davalos, 140 S.W.3d 685 (Tex. 2004), the Court found no conflict because “‘the facts to be adjudicated’ in the underlying . . . litigation are not the same ‘facts upon which coverage depends.'”  The Court did not see the recent case of Unauthorized Practice of Law Committee v. American Home Assurance Co., 261 S.W.2d 24 (Tex. 2008), which dealt with the responsibilities of insurers’ staff attorneys who defend a claim for an insured, as changing the basic analysis under Texas law.

While resolving an issue of Mississippi state property law, the Court provides a good example of an “Erie guess” involving canons of statutory interpretation in Marlow LLC v. BellSouth Telecommunications, No. 11-60394 (June 27, 2012).

In Smith & Fuller, P.A. v. Cooper Tire & Rubber Co., a law firm had inadvertently distributed documents, designated as confidential under a Rule 26(c) protetive order, during a conference of personal injury lawyers.  No. 11-20557 (June 21, 2012).  Pursuant to Fed. R. Civ. P. 37(b)(2)(C), the Court ordered the firm to reimburse Cooper for its fees and expenses incurred in rectifying the situation.  The Court found that the protective order was an “order to provide or permit discovery” as defined by Rule 37(b)(2), that the award was justified with “specific and well-reasoned grounds . . . that any lesser penalty would not have been an adequate future deterrent,” and that the affidavits of counsel were suficient to establish the amount awarded.  The Court noted that the firm had previously been sanctioned for another violation of a protective order involving Coooper.  Op. at 3 n.2 & 10.

The Court reviewed several Daubert rulings in the toxic tort case of Johnson v. Arkema, Inc., No. 11-50193 (June 20, 2012).  Under an abuse-of-discretion standard, it affirmed the exclusion of experts based on weaknesses in reliance upon (1) analysis of whether the materials at issue belonged to a “class of chemicals” known to cause disease; (2) state and federal exposure guidelines; (3) animal studies; and (4) the “temporal connection” between exposure and illness.  Op. at at 8-20.  The Court then affirmed the exclusion of an opinion based on a “differential diagnosis,” concluding that it was based on an unreliable presumption about general causation.  Id. at 22.  The Court concluded by reversing on a causation issue that did not require expert testimony, finding that the temporal connection between exposure and certain chronic injuries was close enough to allow trial — while also finding that the connection was to attenuated as to related chronic injuries.  Id. at 26.  A dissent took issue with the majority’s reasoning as to one well-credentialed toxicology expert.  Id. at 29.

The Court adddressed the contractual liability exclusion in a Texas CGL policy in the case of Ewing Construction v. Amerisure Insurance, No. 11-40512 (June 15, 2012).  The Court applied the “plain language of the exclusion,” guided by Gilbert Texas Construction LP v. Underwriters at Lloyd’s London, 327 S.W.3d 118 (Tex. 2010), and concluded that it reached a contractual commitment to complete a construction project.  Op. at 8.  The Court then examined whether an exception applied for liability that would exist even without the contract, and concluded that there was no such liability under Texas’s “con-tort” cases.  Id. at 9 (quoting Southwestern Bell v. DeLanney, 809 S.W.2d 493 (Tex. 1991).  The Court concluded by deferring the issue of the duty to indemnify, and acknowledging a point raised by the dissent about overlap between the “contract” and “your work” exclusions in a typical CGL contract.  Id. at 10.

The bankruptcy case of Bandi v. Becnel involved a dispute as to whether a debt was nondischargeable because it arose from fraud, or whether it fell within an exception for statements about “financial condition” in 11 U.S.C. § 523(a)(2)).  No. 11-30654 (June 12, 2012).  The Court found that the phrase “financial condition” should be construed “to connote the overall net worth” of the debtor, and thus did not include “[a] representation that one owns a particular residence or a particular commercial property” because the property could be subject to liens or other liabilities.  Op. at 8.  The Court reviewed a substantial body of law from its prior opinions, other Circuits, and the Supreme Court about the intricacies of this statute and other related provisions of the Bankruptcy Code.

In Greenwood 950 LLC v. Chesapeake Louisiana LP, the Court found an ambiguity in a Louisiana mineral lease, seeing two reasonable ways to harmonize clauses about obligations to “repair all surface damages” and “pay . . . all damages.”  No. 11-30436 (June 12, 2012) at 5-7 (emphasis added).  On the threshold Erie issue, the Court reminded: “[W]e look first and foremost ‘to the final decisions of Louisiana’s highest court’ rather than this Court’s prior applications of Louisiana law.”  Op. at 4 n.11 (quoting Holt v. State Farm, 627 F.3d 188, 191 (5th Cir. 2010)).

Mid-Continent Casualty v. Davis presented an insurance coverage dispute about a wrongful death claim by a construction worker.  No. 11-10142 (June 8, 2012).  Coverage turned on whether the worker was an employee or an independent contractor.   Applying the five-factor test from Limestone Products Distribution v. McNamara, 71 S.W.3d 308 (Tex. 2002), the Court affirmed a finding that the worker was an independent contractor.  Key facts were that the worker provided his own tools and supplies, largely controlled his own schedule and tasks, and was provided a 1099 rather than a W-2.  Op. at 13-14.

The Court briefly revisited personal jurisdiction in an unpublished opinion, ITL International v. Cafe Soluble, S.A., No. 11-60360 (rev’d June 7, 2012).  The case arose from a dispute between Mars, Inc. and a Latin American distributor, closely related to the dispute at issue in the recent case of ITL International v. Costenla, S.A.  The Court followed the same analytical framework, finding that the defendant’s contacts with Mississippi were not sufficiently related to the dispute to create jurisdiction.  It concluded by reminding that a dismissal for lack of personal jurisdiction should be without prejudice because it is not on the merits.

Environmental groups challenged several plans approved by the Department of the Interior for oil exploration and development in the Gulf of Mexico after the Deepwater Horizon accident.  In a group of consolidated cases, the Fifth Circuit dismissed the challenges on procedural grounds.  See, e.g., Gulf Restoration Network v. Salazar, No. 10-60411 (May 30, 2012).   Among other holdings, the Court found that the groups had standing as organizations to sue, op. at 8-10, and that case law about the effect of an agency’s allegedly “illegal [and] clandestine” internal policies did not excuse the groups’ failure to exhaust administrative remedies here.  Op. at 29.

In Continental Casualty v. North American Capacity Ins. Co., the district court required three primary carriers to split defense costs, while not allowing the excess insurer to recover defense costs from the primaries.  No. 10-20262 (May 30, 2012).  The Fifth Circuit affirmed on the cost-splitting issue, after careful review of the policies’ coverage triggers, scope, and “other insurance” clauses.  Op. at 15-20.  The Court reversed as to the excess carrier, finding it had a right of contractual subrogation, and distinguishing Mid-Continent Insurance v. Liberty Mutual, 236 S.W.3d 765 (Tex. 2007).

In Illinois Central Railroad Co. v. Guy, the Court reviewed a jury verdict that two lawyers had improperly induced a railroad into settling asbestos exposure claims.  No. 10-61006 (May 29, 2012).  The Court rejected jurisdictional challenges that were based on the Rooker-Feldman and Burford doctrines, finding sufficient distance between the facts of the case and the underlying state court proceedings.  Op. at 14, 16.  The Court also found sufficient evidence of affirmative acts of concealment, and due diligence by the railroad, to toll limitations, Op. at 20, although a dissent argued otherwise.  Op. at 27  (“I would reverse because doing nothing is not due diligence.”).  The Court rejected a waiver defense, distinguishing the defendants’ cases as arising when a fraud plaintiff accepted a benefit after it knew or should have known of fraudulent inducement.   Op. at 25.

In a significant case applying Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 130 S. Ct. 1758 (2010), the Court vacated a class arbitration award as exceeding the arbitrator’s authority.  Reed v. Florida Metropolitan University, No. 11-50509 (May 18, 2012).   The Court found that the “any dispute” and “any remedy” clauses in the parties’ agreement did not authorise class arbitration, acknowledging a different conclusion by the Second Circuit in Jock v. Sterling Jewelers, Inc., 646 F.3d 113 (2011).  Op. at 19-22.   Before reaching that result, the Court reviewed the applicable AAA rules and concluded that they allowed the threshold matter of class arbitration to be reviewed by the arbitrator.  Id. at 8.

The plaintiff in Patrick v. Wal-Mart alleged: “Defendants have engaged in a continuing pattern of bad faith . . . [and] have among other things, unreasonably delayed and/or denied authorization and/or payment of reasonable, neceessary and worker’s comp related medical treatment, as well as permanent indemnity benefits, as ordered by [the state agency].”  No. 11-60217 at 11-12 (May 17, 2012).  The Court found that this allegation “invokes three potentially cognizable theories of liability,” but was “devoid of facts to make it plausible” under Twombly — the pleading “fails to identify the specific time or nature of such wrongs . . . [and] does not identify by date or amount or type of service, any of the alleged bad-faith denials and delays . . . .”  Id.   It found no abuse of discretion in not allowing further amendment, noting “repeated failure[s] to cure deficiencies . . . .”  Id. at 12-13 (quoting United States v. Humana Health Plan, 336 F.3d 375, 387 (5th Cir. 2003)).

The plaintiff in Bowlby v. City of Aberdeen alleged a denial of procedural due process and equal protection rights as to the handling of her license to run a snow cone stand in a particular location.  No. 11-60279 (May 14, 2012).   The Court applied Twombly and Iqbal to find that she had not stated an equal protection claim, reminding that a pleading should have “facial plausibility” from its “pleaded factual content” and not offer only “labels and conclusions or a “formulaic recitation of the elements of a cause of action.”  Op. at 17 (noting “no allegations regarding the types of businesses . . . the size . . . where they are located, or what laws and regulations they have violated”).   The Court found an actionable due process issue and rejected a challenge to its ripeness, both under a specialized test for constitutional claims and under “general ripeness principles.”  Id. at 14-15 (requiring a claim “fit for judicial decision” as to which delay “would cause . . . further hardship”).

From the first third of 2012, here are 5 commercial litigation cases from the U.S. Court of Appeals for the Fifth Circuit worth knowing:

1. Unenforceable arbitration clause. A clause in an employee manual, which could be amended by giving appropriate notice, was illusory and not enforceable.  Carey v. 24 Hour Fitness, 669 F.3d 202 (5th Cir. 2012).

2. Personal jurisdiction. The defendant’s 55 transactions in Mississippi were not sufficiently related to the claim to create personal jurisdiction. This was the Circuit’s first jurisdiction case since two major Supreme Court cases in 2011.  ITL International, Inc. v. Sonstenla, S.A., 669 F.3d 493 (5th Cir. 2012).

3. Sufficient causation evidence. A thorough opinion finds that expert testimony was not needed in a personal injury case, but even then, the evidence of causation was not sufficient.  Huffman v. Union Pacific Railroad, 675 F.3d 412 (5th Cir. 2012).

4. Business Torts Damages 101. The defendants’ acts were not actionable in fraud, did not amount to fraudulent inducement, but did support liability for misappropriation of trade secrets.  Bohnsack v. Varco, 668 F.3d 262 (5th Cir. 2012).

5. Statute of Frauds 101. Sufficient evidence to satisfy the Statute of Frauds is different than what may establish contract liability.  Preston Exploration Co. v. GSF, LLC, 669 F.3d 518 (5th Cir. 2012).

The Court will rehear en banc the case of Access Mediquip v. United Healthcare, decided by the panel earlier this year, which presents a sophisticated question about when ERISA preempts certain misrepresentation claims.

The unpublished case of Stanwood Boom Works LLC v. BP Exploration & Production Inc., in the context of affirming summary judgment for the defendant in a contract case, gives a thorough summary of “black letter” Texas law about contract formation, as well as the related situation of negotiations that are too tentative to create promissory estoppel.  No. 11-20511 (April 25, 2012).

In Grissom v. Liberty Mutual, the trial court awarded $212,000 in damages for negligent misrepresentation, based on the difference between the coverage a homeowner actually had at the time of Hurricane Katrina, and the coverage he could have had under a “preferred risk policy.”  No. 11-60260 (April 23, 2012).  The Fifth Circuit reversed on preemption issues unique to flood insurance as well as the viability of the claim itself, stating: “Because Liberty Mutual was not offering insurance advice, was not a fiduciary of Grissom, and did not offer any statement to Grissom to imply the lack of alternative insurance options, Mississippi law would not recognize negligent misrepresentation as a cause of action against Liberty Mutual . . . .”  Op. at 9-10.

The parties in Ballard v. Devon Energy disputed when a provision in an oil field joint operating agreement, about the effect of “surrendering” certain leases, would apply.  No. 10-20497 (April 19, 2012)  The Court affirmed the denial of leave to amend the plaintiff’s contract claims to add a fiduciary duty count, based on a lengthy delay in raising the issue.  Op. at 6.  The Court then, applying Montana law, concluded that while the parties had both advanced “facially plausible” readings of the provision in isolation, the defendant’s reading was more persuasive in the overall context of the entire development project.  Id. at 12-15.  The Court affirmed summary judgment for the defendant, although it criticized the trial court for considering “extrinsic evidence” before attempting to construe the document on its face.  Id. at 9-10.

Sawyer v. DuPont presented employee claims of fraudulent inducement to leave jobs with DuPont for new positions at a wholly-owned subsidiary.  No. 11-40454 (April 20, 2012).   The Court began by reminding of the deference for intermediate appellate opinions in making an “Erie guess” about state law — here, the “at will” employment doctrine in Texas and its prohibition of fraudulent inducement claims about employment relationships.  Op. at  5.  Based on intermediate court authority, the Court concluded that a CBA that was terminable on notice did not change the employees’ at-will status, which thus barred their claims.  Op. at 9.  The Court also found that oral representations to another group of employees were not sufficiently definite to change their at-will status, citing Montgomery County Hospital District v. Brown, 965 SW.2d 501 (Tex. 1998).  Op. at 10.  Summary judgment for DuPont was affirmed.

In Stoffels v. SBC Communications, the Court addressed issues about whether a “retiree concession” program involving long-distance discounts should be regulated as a retirement plan under ERISA.  No. 11-50148 (April 16, 2012).  In the court below, a district judge held a trial and made fact findings, after which he recused himself.  The second judge vacated those findings in light of a new and related Fifth Circuit opinion, Boos v. AT&T, 643 F.2d 127 (5th Cir. 2011).   The Court found that Fed. R. Civ. P. 54 gave the judge authority to do so, that the “law of the case” doctrine did not constrain his authority, and that this case was not materiall different on the merits from Boos.  Op. at 8-9.

In response to a pointed request by the argument panel in a health care case, Attorney General Holder filed a letter brief on April 5 that affirms DOJ’s recognition of Marbury v. Madison while also defending its right to contest federal jurisdiction.   The request, and the letter brief, form part of the national debate now before the Supreme Court about the constitutionality of recent health care legislation.

The defendant in Love v. Tyson Foods complained that an employee’s wrongful discharge claim was barred by judicial estoppel because it was not properly disclosed in the employee’s personal bankruptcy, and the Court agreed, rejecting the employee’s contention that the disclosure issues were inadvertent.  No. 10-60106 (April 4, 2012).  The Court provided a thorough summary of how the Fifth Circuit defines the judicial estoppel doctrine, reminding that because the doctrine protects the judicial system rather than litigants, detrimental reliance is not ordinarily an element.   A detailed dissent criticized the majority for how it addressed the burden of proof and for how it applied the doctrine in the context of broader bankruptcy policies, noting earlier Circuit authority in the area.

LRK Architects v. State Farm presented the question whether a “breach of contract” exclusion should be analyzed under a “but for” or an “incidental relationship” test to determine whether an insurance policy covered a claim for copyright infringement.  No. 11-30121 (April 4, 2012).   After reminding that under Erie its job “is to attempt to predict state law, not to create or modify it,” the Court concluded that Louisiana would use a “but for” test.  Op. at 7-8.  Because the copyright claim “would exist even in the absence” of the parties’ contractual relationship, the exclusion did not apply and the insurer had a duty to cover and defend.  Op. at 9, 10.

In Waldron v. Adams & Reese, LLP, the largest creditor of a bankruptcy debtor paid the retainer fee for debtor’s counsel.  No. 11-30462 (March 29, 2012).  That payment was not disclosed for some time, after which the trustee sought to disgorge counsel’s fees on the grounds of a disqualifying conflict of interest.  The Court affirmed the lower court’s rulings, finding no disqualifying conflict on the “specific facts of [the] case.”  Op. at 8 (quoting and distinguishing In re West Delta Oil Co., 432 F.3d 347 (5th Cir. 2005)).  It reviewed counsel’s conduct during the bankruptcy case as well as prior representations of the debtors.  Then, reminding of the “clear error” standard of review, the Court affirmed a sanction of partial disgorgement (20% of the fee) for the late disclosure.  Op. at 15.  The Court concluded with a thorough review of the standards for allowing pleading amendments and affirmed the denial of leave for the trustee to add new claims.  Op. at 15-16.

In a forcefully-written opinion, the Court vacated the EPA’s disapproval of Texas environmental emission regulations relevant to the power industry.  Luminant Generation Co. v. U.S. Environmental Protection Agency, No. 10-60891 (March 26, 2012).   The Court found that the EPA erroneously invoked Texas law and applied federal law incorrectly.  See Op. at 21 (“EPA disapproved the PCP Standard Permit . . . based on its purported nonconformity with three extra-statutory standards that the EPA created out of whole cloth”).   The Court concluded: “Because the EPA waited until more than three years after the statutory deadline to act on Texas’s submission, we order the EPA to reconsider it expeditiously [on remand].”  Id. 

A bankruptcy trustee sued to avoid an alleged fraudulent transfer, in the form of payments under a guarantee, in MC Asset Recovery v. Commerzbank AG, No. 11-10070 (March 20, 2012).  The Court found that the trustee had standing, even though the debtor’s creditors had been paid in full, because recovery would benefit the estate.  Op. at 7.  Then, applying the Restatement’s “significant relationship” framework and focusing on policy issues, the Court applied New York fraudulent conveyance law (which reached guarantees) as opposed to Georgia law (which did not).  Op. at 12-13.  The lower court’s dismissal of the case was vacated and reversed.

In a detailed opinion that surveyed differing Circuit opinions on several topics, the Court found that “the purchase or sale of securities (or representations about the purchase or sale of securities) is only tangentially related to the fraudulent scheme alleged” in state class actions about the Allen Stanford scandal.  Roland v. Green (March 19, 2012).  Therefore, the Securities Litigation Uniform Standards Act (SLUSA) did not preclude those actions.  The opinion will likely have a significant influence on future cases about the scope of SLUSA in the Fifth Circuit.

Bepco v. Santa Fe Minerals presented the appeal of a remand order, which was based in part on a contractual waiver issue (reviewable) and in part on a timeliness issue (not generally reviewable).  No. 11-30986 (March 15, 2012).   While the timeliness issue was arguably not presented within 30 days of the removal, the Court held: “Whether a removal defect is not raised by a plaintiff in the motion to remand, or is raised more than 30 days after removal, does not matter.  . . . [W]hat does matter is the timing of the remand motion.”  Op. at 8.  Because the motion itself was timely, and thus satisfied the statutory time limit, and because the remand order relied on a permissible statutory ground for remand, the Court dismissed the appeal for lack of appellate jurisdiction.  Id.

The Fifth Circuit has had a  about the application of Daubert, and its effect on the roles of judge and jury.  In Huffman v. Union Pacific Railroad, the Court moved to the other end of the technical spectrum, and analyzed the sufficiency of evidence in a FELA case about a former railway worker’s alleged on-the-job injuries.  No. 09-40736 (March 13, 2012)  After thorough analysis of the worker’s allegations, the Court held that expert testimony on causation was not necessary to support a jury finding for the worker, but found that the worker had not presented enough evidence about the type of injury to satisfy even that standard.  Op. at 21-22.   Judge Southwick wrote for the majority, joined by Judge Owen, and Judge Dennis dissented.  The case analyzes FELA precedent but is of substantially broader interest on general causation issues.  The Court also briefly analyzed and rejected a judicial estoppel argument.  Op. at 7-8.

As a counterpoint to some recent cases that have set limits on arbitrability, the Court rejected two court challenges to a $17 million arbitration award in a dispute about coal pricing.  Rain CII Carbon, LLC v. ConocoPhillips Co., No. 11-30669 (March 9, 2012).  The losing party argued that the arbitrator had failed to follow a specified “baseball” procedure, but the Court found that the arbitrator’s treatment of the proposed award was within the scope of his power to correct clerical issues.  Op. at 5.  The Court also found that the award was “reasoned” under prior case law: “The only description of a reasoned award in this circuit was rendered in a footnote: . . . ‘[A] reasoned award is something short of findings and conclusions but more than a simple result.'”  Id. (citing Sarofim v. Trust Co. of the West, 440 F.3d 213, 215 n.1 (5th Cir. 2006)).  The Court suggested that the parties could have contracted for more detailed findings and conclusions.   Op. at 8.

In Technical Automation Services Corp. v. Liberty Surplus Ins. Corp. the Court addressed, sua sponte, an issue about the jurisdiction of a U.S. magistrate judge after the Supreme Court’s recent opinion limiting bankruptcy court jurisdiction, Stern v. Marshall, 131 S. Ct. 2594 (2011).  No. 10-20640 (March 5, 2012).  The Court concluded that Stern did not directly overrule the prior Circuit precedent of Puryear v. Ede’s, Ltd., 731 F.2d 1153 (5th Cir. 1984) and held: “[W]e will follow our precedent and continue to hold, until such time as the Supreme Court or our court en banc overrules our precedent, that federal magistrate judges have the constitutional authority to enter final judgments on state-law counterclaims.”  Op. at 12.  On the merits, the Court reversed the lower court’s ruling that an “eight corners” analysis of an insurance coverage issue precluded consideration of a claim of mutual mistake.  Op. at 15.

The Court affirmed almost all of a series of immunity rulings by the district court in the consolidated litigation against the Corps of Engineers arising from Hurricane Katrina.  In re Katrina Canal Breaches Litigation (March 2, 2012).  While most of the opinion focuses on issues unique to flood control, it provides a crisp summary of the requirements of the National Environmental Policy Act as to environmental impact statements, and concludes with a brief summary of the standards for mandamus relief in the federal system.  Op. at 27.  The Court declined to grant a writ of mandamus to stay an upcoming trial because its opinion affirmed the immunity rulings that the district court would use for that trial.  (A subsequent opinion mooted the mandamus issue because it changed the disposition of the merits.)

Lofton v. McNeil Consumer & Specialty Pharmaceuticals presented a failure-to-warn claim based on a severe reaction to a common pain medicine.  No. 10-10956 (Feb. 22, 2012).  The Court concluded that the specific claim at issue, based on Tex. Civ. Prac. & Rem. Code § 82.007, required litigation about whether “fraud on the FDA” had occurred and was thus preempted.  Op. at 13-14.   The Court acknowledged a circuit split on this preemption issue, and also noted that it was not addressing an issue about the severability of the Texas statute because that issue was raised for the first time on appeal.

In McGee v. Arkel Int’l, the Court addressed the thorny choice-of-law issue raised by a conflict between limitations provisions.  No. 10-30393 (Feb. 16, 2012).  It found that Iraqi law was adequately proven under Fed. R. Civ. P. 44.1 through an expert’s affidavit, which included a translation and cited a generally consistent website.  Op. at 13-14 (noting that defendant “did not put forth any alternative translation and has not suggested how the [plaintiff’s] translation might be inaccurate”).  The Court found that the action was time-barred under Louisiana law, was not shown to be time-barred under Iraqi law, and thus fell within a rarely-used Louisiana law allowing the action to proceed as “warranted by compelling considerations of remedial justice.”  Op. at 18 (citing La. Civ. Code art. 3549).

Here is a helpful summary of the “Federal Court s Jurisdiction and Venue Clarification Act of 2011,” H.R. 394, P.L. 112-63, which took effect in January 2012.

In Shcolnik v. Rapid Settlements, bankruptcy creditors had obtained a $50,000 arbitration award of attorneys fees against the debtor, and appealed a summary judgment that the award was dischargeable.  No. 10-20800 (Feb. 8, 2012).  The Fifth Circuit reversed, finding an issue of fact as to whether the fee award arose from “willful and malicious injury by the debtor” in pursuing meritless claims, and was thus nondischargeable.  Op. at 5-6 (citing 11 U.S.C. § 523(a)(6)).  (The debtor’s threats included a “massive series of legal attacks . . . which will likely leave you disbarred, broke, professionally disgraced, and rotting in a prison cell.”  A thoughtful dissent questioned whether the majority’s ruling would deter legitimate litigation demands, and whether the Court was inserting itself into matters resolved by the arbitrator.  Op. at 9.

In the case of In re Dell, Inc., the Court reviewed the settlement of a shareholder class action against the arguments of two objectors.  No. 10-50688 (Feb. 7, 2012).  The Court first held that a class member does not have to file a proof of claim to have standing to object.  Op. at 5.  The Court then reviewed and rejected several objections to the fairnes of the settlement, reminding that a full evidentiary hearing is not necessarily required at a fairness hearing.  Op. at 10.  Finally, the Court found no abuse of discretion in awarding an 18% fee to the attorneys ($7.2 million) instead of requiring a “lodestar” calculation, rejecting a strict reading of In re High Sulfur Content Gasoline Prods. Liab. Litig., 517 F.3d 220, 228 (5th Cir. 2008) (which stated: “This circuit requires district courts to use the ‘lodestar method’ to ‘assess attorneys’ fees in class action suits.”).

In National Casualty Co. v. Western World Insurance, the Court addressed basic coverage issues under Texas law about auto insurance.  No. 10-41012 (Feb. 3, 2012).  It held that loading a patient into an ambulance is “use” of a an auto within the meaning of one policy, op. at 6 (citing Mid-Century Ins. v. Lindsey, 997 S.W.2d 153 (Tex. 1999)), but did not fall within a “use” exclusion to another policy, reminding that the standard for construing a coverage provision is different than for an exclusion from coverage. Op. at 11.  The Court also found that a “professional services” and an “other insurance” exclusion did not apply.

While the Fifth Circuit rarely addresses a “rear-ender” car crash case, it did so deftly in Fair v.Allen, No. 11-30467 (Feb. 3, 2012), in which the appellant sought reversal of a $38,000 judgment.  With no Daubert issue presented, the Court reviewed the conflicting testimony of medical experts and found it sufficient — under both Louisiana state law and the Federal Rules — to support the verdict and judgment.  The specific issues are unlikely to recur soon, but the framework of the opinion is a good illustration of a basic sufficiency review.

The dispute in Preston Exploration v. GSF, LLC was whether a contract to sell certain oil and gas leases satisfied the Texas Statute of Frauds (“SOF”).  (No. 10-20599, Feb. 1, 2012)  Acknowledging that the parties’ documents envisioned future title work, the Court reversed the district court’s conclusion that this remaining work barred the contracts’ enforcement under the SOF, stating: “Such analysis reflects the conflating of two distinct principles — whether parties come to a meeting of the minds as to the subject matter of a contract with whether a writing’s legal description is sufficient to meet the statute of frauds.”  Op. at 7.

Bass v. Stryker Corp. presents a highly technical analysis of whether state law claims about a hip implant are preempted by the federal Medical Device Amendments to the Food, Drug, and Cosmetics Act.  No. 11-10076 (Jan. 31, 2012)  The Court found that the manufacturing claims could proceed as “parallel claims that do not impose different or additional requirements than the FDA regulations,” and that certain implied warranty claims survived because they were based on violations of federal requirements.  Op. at 19, 23.  The Court affirmed the dismissal on preemption grounds of other claims, including an alleged failure to warn.   The opinion provides a thorough example of how Twombly applies to a Rule 12 motion based on preemption.

The Supreme Court wrote two major personal jurisdiction opinions in 2011: Goodyear Dunlop Tires v. Brown, 131 S. Ct. 2846, about general personal jurisdiction based on product sales into a state, and J. McIntyre Machinery v. Nicastro, 131 S. Ct. 2780, analyzing specific personal jurisdiction based on a “stream of commerce” theory.  In ITL International v. Constenla, S.A., the Fifth Circuit’s first lengthy personal jurisdiction opinion since then, the Court found that a defendant’s acceptance of 55 shipments of goods in Mississippi was “purposeful contact[],” but went on to find no specific jurisdiction because the parties’ trademark dispute had too weak a link to those contacts.  No. 10-60892 at 11 (Jan. 31, 2012) The Court did not address general jurisdiction and thus did not directly engage the Goodyear case.

In Amco Energy v. Capco Exploration (No. 11-20264, Jan. 30, 2012), the Court addressed two fundamental business tort issues.  The first involved a professional negligence claim about the evaluation of certain oil properties — the majority found that the professional’s contract did not extend to the matters complained of and thus created no professional duty, while the dissent “cannot fathom how one can conclude that there was no contract” for those matters.  Op. at 8, 10, 23.   The second found a contractual disclaimer of reliance that defeated a fraud claim, continuing the recent development of law on that issue in Italian Cowboy Partners, Ltd. v. Prudential Ins. Co., 341 S.W.3d 323, 333 (Tex. 2011) and LHC Nashua Partnership Ltd. v. PDNED Sagamore Nashua LLC, 659 F.3d 450, 460 (5th Cir. 2011).  Op. at 17.

The plaintiff in Arena v. Graybar Electric Company (No. 10-31096, Jan. 25, 2012) asserted a federal claim under the Miller Act (the statute for contractors’ claims on government projects) and related state law claims.  The Court found that failure to comply with a bonding requirement was fatal to the Miller Act claim, and thus to supplemental jurisdiction over the state claims.  The district court allowed an amendment to assert diversity jurisdiction, but the Court remanded for consideration of evidence submitted in response to that amendment that would defeat diversity if credited.   Echoing its recent decision in Enochs v. Lampasas County, 641 F.3d 155 (5th Cir. 2011), which voided a judgment on state law claims after dismisal of the federal claim, the Court reminded: “The court’s reasoning of judicial efficiency to resolve [plaintiff’s] state-law claims comes into play only when jurisdiction is proper.”  Op. at 9.

The employee handbook in Carey v. 24 Hour Fitness contained an arbitration provision and a “Change-in-Terms” clause giving the employer “the right to revise, delete, and add to the employee handbook.”  No. 10-20845 (Jan. 25, 2012).  The  Court affirmed a finding that the arbitration provision was illusory, and thus unforceable.  Op. at 4 (citing  Morrison v. Amway Corp., 517 F.3d 248, 257 (5th Cir. 2008)).  The Court contrasted In re Halliburton Co., 80 S.W.3d 566, 569-70 (Tex. 2002), in which a clause was enforced when the employer’s right to amend the arbitration provision was specifically limited as to present disputes,  and favorably cited Weekley Homes v. Rao, 336 S.W.3d 413, 415 (Tex. App.–Dallas 2011, pet. denied), in which a provision requiring notice of a handbook was not sufficient to make an arbitration provision non-illusory.

Bohnsack v. Varco presented a post-judgment appeal of successful claims for fraud and misappropriation of trade secrets about an oil drilling device called the “Pit Bull.”  No. 10-20741 (Jan. 23, 2012).  The Court ruled: (1) the evidence was sufficient to hold the defendant liable for statements of its outside counsel, to show that those statements were a “material factor” to the plaintiff, and to establish injury from lost profits (op. at 13-16); (2) the fraud damages awarded were benefit-of-the-bargain damages, not compensable under common-law fraud (op. at 16-20 (discussing Haase v. Glazner, 62 S.W.3d 795 (Tex. 2001))); (3) fraudulent inducement failed because the defendant’s statements only induced negotiations, not entry into a contract (op. at 22); and (4) the damages were compensable as misappropriation of a trade secret, under the broad definition of “use” in Texas law, and in light of damages evidence sufficient to show “the value a reasonably prudent investor would pay for the trade secret.”  Op. at 25-26.

Two individuals, involved in a political struggle about a camera system for traffic lights, sought to intervene of right in a lawsuit between the City of Houston and the system’s contractor.  City of Houston v. American Traffic Solutions (No. 11-20068, Jan. 24, 2012).  The Court reviewed the general requirements of Fed. R. Civ. P. 24(a)(2) but observed that “[b]riefing does not reveal any cases directly on point” to this situation.  Op. at 4.  The Court reversed the district court’s denial of intervention, observing that “[a] court must be circumspect about allowing intervention of right by public-spirited citizens,” but finding that these individuals were exceptionally involved in the political background for the system, and that the City was not necessarily an adequate representative for them in light of the specific history of this system and litigation.  Op. at 4-5.

The plaintiff in Kocurek v. CUNA Mutual Insurance sued for fraud about the sale of an insurance policy in 2005 on her husband’s life.  (No. 10-51042, Jan. 24, 2012).  The defendant persuaded the district court to dismiss on the pleadings, arguing that she lacked standing because she was not a beneficiary of the 2005 policy, and that the policy had a “one policy only” clause that barred claims under an earlier policy.  The Court disagreed and reversed, characterizing the plaintiff’s claims as relating to the “practice of selling multiple policies to the same individual,” op. at 4-5, and finding the “one policy only” provision potentially ambiguous and thus not a proper basis for dismissal on the pleadings.  Op. at 5.   The Court affirmed dismissal of a DTPA claim, as the plaintiff was not the “consumer” who brought the policy.  Op. at 5-6.

In a complicated case about jurisdiction over a challenge to administrative action, the Court addressed the general effect of presumptions under the Federal Rules of Evidence and Rule 301 in particular.  City of Arlington v. FCC (No. 10-60039, Jan. 23, 2012).  The Court reminded that under the “bursting-bubble” approach of Rule 301, “the only effect of a presumption is to shift the burden of producing evidence with regard to the presumed fact.”  Op. at 42.  Accordingly, “once a party introduces rebuttal evidence sufficient to support a finding contrary to the presumted fact, the presumption evaporates,” and “[t]he burden of persuasion with respect to the ultimate question at issue remains with the party on whom it originally rested.”  Id. 

The question in Haggard v. Bank of the Ozarks was whether a guarantor’s liability was limited under Texas law to the last $500,000 due on the note of the principal obligor.  (No 11-10154, Jan. 19, 2012).  Comparing language in the guaranty which limited liability “to the last to be repaid $500,000, of the principal balance of the loan,” with other terms that excused the creditor bank from first trying to collect from the principal, the Court found the guaranty ambiguous and reversed a summary judgment for the bank.  Op. at 7, 8.  (citing, as to the limitation language, NH Properties v. Mittleider, 267 F. App’x 375 (5th Cir. 2008)).  The Court reminded that a “guaranty agreement is construed strictly in favor of the guarantor,” so “[i]f the guaranty is ambiguous, then the court must apply the ‘construction which is most favorable to the guarantor.'”  Op. at 8.

The case of Time Warner Cable v. Hudson, (No. 01-5113) Jan. 13, 2012, presented a constitutional challenge to a Texas statute regulating cable TV providers, on the grounds that it unfairly discriminated against a group of them.   The Court discusses the plaintiffs’ standing at some length, holding that “[d]iscriminatory treatment at the hands of government” was a cognizable injury.  Op. at 5-8.

Texas Medical Providers v. Lakey, No. 11-50814 (Jan. 10, 2012), is a high-profile constitutional challenge to Texas laws requiring a physician who performs an abortion to show a sonogram to the woman.  The Fifth Circuit reversed a preliminary injunction against enforcement of the statute, finding that the plaintiffs failed to demonstrate a substantial likelihood of success on their First Amendment and vagueness challenges.  While most of the thorough opinion reviews the highly specific constitutional principles in this area, its treatment of the “likelihood of success” factor for a preliminary injunction is also of general interest to civil litigators.

In Davis-Lynch, Inc. v. Moreno, a company sued two individuals (among others) alleging RICO violations.  (No. 10-20859, Jan. 10, 2012)  The individuals asserted the Fifth Amendment in their answers, and then withdrew those assertions after the plaintiff filed a summary judgment motion.  The Court allowed one of those withdrawals, stating: “[A] party may withdraw its invocation of the Fifth Amendment privilege, even at a late stage in the process, when circumstances indicate that there is no intent to abuse the process or gain an unfair advantage.”  (Op. at 11)  It affirmed the denial of the other, noting that it was done at the “eleventh-hour” before the close of discovery.   (Op. at 12)  On the merits, the Court reversed a summary judgment for the plaintiff, finding deficiencies with the plaintiff’s allegations and proof of racketeering injury and activity.  (Op. at 13-20)  The Court cautioned against entry of “[a]n order that essentially amounts to a default judgment” in the summary judgment context.  (Op. at 21)   

In Jones v. Wells Fargo Bank, the Court affirmed liability for conversion when a bank “reaccepted [a check] into an account other than that of the named payee, without the proper endorsement.”  No. 11-10320 (Jan. 9, 2012).   The opinion provides detailed discussion of basic topics in the law of checks: who has the rights of a “holder” under UCC Article 3 (op. at 4-6), proper safeguards for check endorsements (op. at 8-10), and accountholder responsibilities for review of a bank statement.  (Op. at 11-13)  The opinion concludes with review of the “in pari delicto” defense, a significant issue in some corporate governance cases, and notes how the defense can apply differently to receivers as compared to bankruptcy trustees.  (Op. at 13-18)

In a dispute about termination of a Volvo truck franchise, Volvo sued the dealership under section 4 of the Federal Arbitration Act to compel arbitration.  Volvo Trucks v. Crescent Ford Truck Sales, No. 09-30782 (Jan. 5, 2012).  Both businesses were Delaware corporations.  The district court found federal question jurisdiction because some relief requested involved interpretation of a federal statute.  The Fifth Circuit applied the “look-through” approach of the Supreme Court in Vaden v. Discover Bank, 556 U.S. 49 (2009), under which a court first “assume[s] the absence of the arbitration agreement” to determine if federal jurisdiction would exist without it.  Under Vaden, the Court found that the substantive issues in dispute were governed by state law.  Op. at 6-9.  It also found that the federal issue on which declaratory relief was requested did not create jurisdiction because it “arises only as a defense or in anticipation of a defense.”  Op. at 12.

The Fifth Circuit and its courthouse are linked to life in the downtown of New Orleans – note that the clerk’s office will close at 4:00 on January 9 because of the BCS championship game at the Superdome that evening.

In Brown v. Oil States (No. 10-31257, revised Dec. 27, 2011), the plaintiff in a wrongful discharge case testified that he left his job because of racial harassment, and while that case was pending, testified in a personal injury case that he left the same job because of a back injury.  Finding that the plaintiff “plainly committed perjury” with this inconsistent testimony, the Court found no abuse of discretion in the sanction of dismissal of his employment suit.  (Op. at 13).

The case of International Fidelity Insurance v. Sweet Little Mexico Corporation (No. 11-40449, Dec. 22, 2011) rejected an argument that the U.S. Court of International Trade (“CIT”) had exclusive jurisdiction over a case between an importer and its surety about certain customs liabilities.  Op. at 4-10.  The Court then found no abuse of discretion in proceeding with that case even though there was a first-filed action in the CIT between the importer and U.S. Customs.  Acknowledging some overlap between the basic issue of customs liability and the secondary issue of the surety’s responsibility for that liability, the Court found that on these facts, “the ‘core issues’ in the two forums are not the same.”  Op. at 11.  The Court concluded that, based on the terms of the surety contract, the importer had to reimburse the surety for payments made “regardless of the outcome of the proceedings before the CIT.”  Op. at 13-16.  While the Court’s analysis of the “first-filed” and surety issues turns on the specific facts of the case, the issues addressed and the basic legal principles cited are broadly applicable to those topics.

The Court does not publish many opinions outside of the Daubert area that construe the Federal Rules of Evidence.  New judge Stephen Higginson, in a technical opinion about conditions of prison release for medical treatment, addressed an uncommon hearsay issue in Sealed Appellee v. Sealed Appellant, No. 10-11163 (5th Cir. Dec. 19, 2011).  The Court affirmed the admissibility of a probation officer’s letter under the “public records” exception of Fed. R. Evid. 803(8), despite its observation that the letter “does attribute some statements to [Appellant’s] sister.”  Op. at 7 (citing analysis of a similar issue in  Moss v. Ole South Real Estate, 933 F.2d 1300, 1309-10 (5th Cir. 1991)).

Today’s Texas Lawyer features a list of the Fifth Circuit’s “top ten” cases from 2011: http://tinyurl.com/78navn2

The case of Gilbane Building Co. v. Admiral Insurance (No. 10-20817, Dec. 12, 2011) involved an insurer’s duty to defend and indemnify an injury claim under Texas law.  The Court first reviewed the basic rules in the Circuit for an “Erie guess” about state law.  Op. at 4-5 & 8 n.2.  The Court found that Texas’s “express negligence” rule was limited to contractual indemnity and did not bear on whether the plaintiff was an “additional insured.”  The Court then applied Texas’s “eight corners” rule and found no duty to defend, reminding that this rule “consider[s] only the facts alleged in the pleadings and . . . not . . . factual assumptions or inferences that were not pleaded.”  Id. at 13.   The Court declined to recognize an exception to the “eight corners” rule for claims involving a plaintiff’s unpleaded contributory negligence.  Id. at 14-17.  The Court concluded by affirming the district court’s summary judgment for the insured on the duty to indemnify, applying a broader standard based on “the facts proven in the underlying suit.”  Id. at 17-18 & n.4 (acknowledging that “this may seem like an unusual result,” but referring to a similar result in D.R. Horton v. Markel Int’l Ins., 300 S.W.3d 740, 744 (Tex. 2009)).

Thompson v. Zurich American Insurance, No. 10-51013 (Dec. 2, 2011) presented a common law “bad faith” action under Texas law about handling of a workers compensation claim (Insurance Code rights being limited after Texas Mutual v. Ruttiger, No. 08-0751 (Tex. Aug. 26, 2011)).  After reminding that Rule 56 asks “whether a rational trier of fact could find for the non-moving party,” op. at 4, the Court reviewed Texas case law on several issues in light of Ruttiger, and found that on the facts presented, none of the following showed bad faith: (1) conflict between expert reports; (2) lack of personal treatment of the plaintiff by the expert; (3) the expert’s record of primarily working for insurance companies; (4) the expert’s analysis of “aggravation”; or (5) the insurer’s conduct after the initial review.  Op. at 5-13.  The footnotes in the opinion summarize the present state of Texas law on several “bad faith” claims-handling issues.

The Fifth Circuit addressed the doctrine of mistake under Louisiana law in Fruge v. Amerisure, 663 F.3d 743 (2011).  After reminding that choice-of-law issues are waived unless presented to the district court, the Court considered reformation of an insurance policy under general contract principles.  The Court began by noting that Louisiana law allows reformation in the case of mutual mistake, and consideration of extrinsic evidence to prove such a mistake, even if the policy language is unambiguous.  It reviewed different post-accident reformation scenarios, noting that a Louisiana statute generally precludes a post-accident reformation to rescind coverage, and concluded that a reformation claim based on mutual mistake was cognizable in the post-accident setting presented in this case.  The Court reversed and remanded, noting that the extrinsic evidence could potentially prove that no mistake occurred.

Buffalo Marine v. United States, an arcane Chevron case about cleanup expenses for an oil spill, reminds in discussion of a specific statutory defense under the Oil Pollution Act that: “While some contractual relationships are themselves contracts, other contractual relationships merely relate to contracts.  The fact that no contract exists between two parties does not preclude the parties from having a ‘contractual’ relationship.”  Op. at 7-8.  This reminder may provide useful insight in litigation about insurance coverage and contract interpretation cases that involve the term “contractual relationship.”

The case of Turner v. Pleasant presented a rare attack on a judgment by an “independent action in equity.”  The underlying dispute involved a personal injury case implicated by the misconduct surrounding disgraced former judge Thomas Porteous.  Op. at 2-5.  After a clearly-written summary of the pleading requirements of Twombly and Iqbal, op. at 6-7, the Court considered whether the action could proceed, even though similar allegations were made and rejected in an earlier request for relief.   The Court reversed the dismissal of the claim and remanded, concluding that the plaintiffs had sufficiently alleged: (1) a prior judgment which ‘in equity and good conscience’ should not be enforced, (2) a meritorious claim in the underlying case, (3) fraud, accident, or mistake which prevented the party from obtaining the benefit of that claim, (4) lack of fault or negligence by the party, and (5) absence of an adequate remedy at law.  Op. at 5-10 (citing and contrasting Addington v. Farmer’s Elevator Mutual, 650 F.3d 663 (5th Cir. 1981)).

In Brown v. Offshore Specialty Fabricators, the Court affirmed dismissal of a putative RICO class action involving workers on offshore oil and gas projects.  The Court agreed that the alleged violations of the Outer Continental Shelf Lands Act (“OCSLA”) occurred outside the United States and were not actionable, op. at 4-12, a conclusion that turned on the specific language of OCSLA rather than the issue of RICO’s extraterritorial reach recently addressed by the Supreme Court in Morrison v. National Australian Bank.  The Court went on to address standing under OCSLA, finding fatal problems with the failure of the remaining plaintiffs to have satisfied statutory notice requirements, or to allege a plan to obtain future employment as required by the statute’s focus on future injuries.  Op. at 12, 14.  On the issue of standing when several plaintiffs are involved, the Court reminded: “Because no plaintiff gave the type of notice required by the OCSLA, we need not reach the plaintiffs’ argument that notice by one plaintiff can serve as notice for all.”  Op. at 12.

The Court wrote at some length in Access Mediquip v. United Healthcare to clarify earlier cases about preemption of state law tort claims by ERISA.  Access claimed that United made representations about payment for certain medical devices for three insureds.  The Court rejected a reading of Transitional Hospitals v. Blue Cross, 164 F.3d 952 (5th Cir. 1999), that would find preemption if an alleged misrepresentation dealt with the extent of coverage.   Op. at 12-13.  “The dispositive issue . . . is therefore whether Access’s state law claims are dependent on, and derived from the rights of [the three insureds] to recover benefits under the terms of their ERISA plans.”  Op. at 13.  Under that framework, the Court found that Access’s claims for misrepresentation were not preempted by Transitional, but its unjust enrichment and quantum meruit claims were.  Op. at 18-19.  The opinion synthesizes several prior cases in this complicated, technical area of preemption law.

Stephen Higginson’s nomination to the Fifth Circuit has been confirmed by the Senate.

In a case of considerable practical importance as to litigation about arbitration clauses and appellate procedure generally, the Fifth Circuit addressed a party’s motion for a stay of district court proceedings during an appeal about the arbitrability of the matter in Weingarten Realty v. Miller.  The Court acknowledged a significant circuit split as to whether a notice of appeal automatically stayed district court decisions during an arbitrability appeal, with one school of thought (two circuits) holding that a case’s merit is a distinct matter from whether it is arbitrable, and another school (five circuits) holding that a notice of appeal automatically stays district court proceedings for efficiency reasons.  Op. at 3-4.   Recognizing that this issue turns on the application of Griggs v. Provident Consumer Discount, 459 U.S. 56 (1982), and its holding that a district court may adjudicate matters not involved in the appeal, the Court concluded that under prior Circuit precedent a notice of appeal did not create an automatic stay.  Op. at 7.  The Court went on to review the motion under the general four-factor test for a discretionary stay during appeal, and again declined to order a stay, primarily because it believed the movant had a low chance of success on the merits under the contract documents and the doctrine of equitable estoppel.  Op. at 7-8.

The case of Texas Pipeline v. FERC involved a challenge to natural gas regulations as beyond FERC’s statutory authority.   The Court found that the regulations were beyond that authority, and accordingly, did not reach any issues where agency deference under Chevron could be appropriate.   See Op. at 5 (“[A]gencies cannot manufacture statutory ambiguity with semantics to enlarge their congressionally mandated border.”)  The Fifth Circuit has taken a conservative view of agency opinions about statutory authority in other thoughtful opinions, see, e.g., Mississippi Poultry v. Madigan, 31 F.3d 293 (5th Cir. 1994) (en banc) (construing the term “same” in statute governing regulation of poultry processing).

The case of Garriott v. NCsoft presented a challenge to a $28 million judgment for breach of an employee’s stock option contract.  After resolving a liability issue under South Korean law about the employee’s termination, the Court considered whether the judgment impermissibly considered post-breach stock appreciation.  The Court faulted the defendant for not raising its challenge to the damages calculation in a Daubert motion, evidence objection, or charge objection, and rejected the argument under “plain error” review.  Op. at 7-9 (“Displeased with the jury’s decision, NCSoft now asks for a mulligan.”)  The Court also found sufficient direct evidence, consistent with the expert models, as to when the employee would have sold his shares.  Op. at 9 (reminding that damages “may be too speculative if based on ‘assumptions without basis in the real world,'” but that the plaintiff “need not prove damages with mathematical certainty”).

The case of Weaver v. Texas Capital Bank first presented a jurisdictional question under the Rooker-Feldman doctrine.  Texas Capital Bank had obtained a state court default judgment against a guarantor, and contended that the guarantor’s later adversary proceeding attacking the basis for that liability was an impermissible federal attack on a final state court judgment.  The Court disagreed, finding that Rooker-Feldman was not implicated.  Op. at 5-7.  The Court went on to reverse, however, finding that the guarantor’s arguments to the bankruptcy court were defenses to the earlier state court action and thus barred by claim preclusion.  Op. at 8-11.  The opinion thoroughly reviews Texas claim preclusion law and its “transactional” approach to the application of the compulsory counterclaim rule.

Countrywide Home Loans sought to recover certain post-petition attorneys fees in a Chapter 13 bankruptcy case in Countrywide v. Velazquez.  The Court reviewed the provisions of the relevant Deed of Trust, and concluded that the word “and” in the phrase “do and pay for whatever is reasonable or appropriate to protect Lender’s interest in the Property and rights under this Security Instrument” did not require that a recoverable fee involve both the protection of the lender’s interest and the lien.  (Op. at 6-9 (citing Lanier v. Spring Cypress Investments, 1995 WL 489427 (Tex. App.–Houston [1st Dist.] Aug. 17, 1995, no writ)).  The Court “respectfully disagree[d]” with the unpublished affirmance of a different result by another panel earlier this year in Wells Fargo v. Collins.

The Court released a revised opinion in Barber v. Shinseki, in which the appellant sought review of a magistrate’s electronic order dismissing his case.  The Court first observed that the appellant did not appear to have consented to final disposition of his case by a magistrate as opposed to the district judge.  Op. at 3-4.  The Court went on to note that “[t]he electronic order entered by the magistrate judge . . . does not appear on any document–electronic or otherwise–other than as merely a separate entry on the docket sheet,” and thus did not comply with the requirement of Fed. R. Civ. P. 58 that “every judgment shall be set forth on a separate document.”  Op. at 4.  The Court noted that certain exceptions to Rule 58 were not applicable.  Op. at 4 n.2.  (The opinion was revised to “remove language indicating that all judgments must be set forth on paper documents” and to note that an appropriate document “may be electronic.”  Op. at 1.

The United States removed a case after entry of a default judgment against two doctors associated with the federal government (and after their motion for new trial was overruled by operation of law under Texas rules).  Oviedo v. Hallbauer (revised October 14, 2011)  After reviewing several potentially applicable removal statutes, the Court held: “The weight of authority thus holds that, by the time the government filed its notice of removal in this case, there was no pending case to remove, inasmuch as nothing remained for the state courts to do but execute the judgment.”  (Op. at 7)  Given this conclusion about the timeliness of the removal, the Court also rejected an argument based on the Federal Tort Claims Act that the state court may have lacked jurisdiction over this case.  (Op. at 8-10)

In the case of Jimenez v. Wood County, the en banc Court reviewed the requirements for preserving charge error.  The case presented a civil rights challenge to a county’s strip-search policy as to misdemeanor arrestees.  At trial, the County made the objection, “Just one objection, Your Honor, the — the Court finding that this was a minor offense as a matter of law.  For record purposes, we would object.”  Op. at 2-3.  The Court found that this objection preserved an argument as to whether the plaintiff was arrested for a “minor offense,” but did not preserve an argument as to whether “reasonable suspicion” was required for the search at issue.  The Court thoroughly reviewed the requirements of Fed. R. Civ. P. 51, both as to the substance and timing of a charge objection.  Op. at 4-6 & n.2.  It rejected the County’s argument that statements made at a pre-trial conference were sufficient to preserve error here, and that “any objection would have been futile” because of the state of Circuit precedent at the time.  Judge Smith’s dissent suggests potential exceptions to the majority’s approach to Rule 51.  Op. at 16 n.4.

In Wal-Mart Stores, Inc. v. Qore, Inc. (originally released in July, revised October 6), Wal-Mart sued several defendants about structural problems with a new store in Starkville, Mississippi.  Wal-Mart won some claims at trial, the share of which for defendant Qore (a geotechnical services firm) was $48,600.  Pursuant to an indenmity provision that reached “any claim, demand, loss, damage or injury (including Attorney’s fees) caused by any negligent act or omission,” the trial court awarded $810,000 in fees against Qore – the substantial majority of Wal-Mart’s fees for the whole case.  The Fifth Circuit agreed that this provision justified a fee award, but found the award excessive because Wal-Mart’s fees could have been segregated, and remanded for further proceedings.  Op. at 6.  The Court noted that Cobb v. Miller, 818 F.2d 1227 (5th Cir. 1987), an attorneys fee dispute in a civil rights case, raised policy issues about “private attorney[s] general” that did not apply to this Mississippi state law matter.  Op. at 13.

The case of LHC Nashua Partnership Ltd. v. PDNED Sagamore Nashua LLC presented several liability and damages issues in a contract case arising from a real estate development project.  While nominally applying New Hampshire law, the Court addressed Texas law because it did not materially differ on the key points.  Op. at 8.  The Court’s holdings included these: a promissory estoppel claim was not actionable given the scope of the parties’ written contract, op. at 9-10; the plaintiff offered sufficient evidence of justifiable reliance on alleged misrepresentations, op. at 11-13; and a merger clause in the parties’ agreement did not foreclose the misrepresentation claim, op. at 13-14.  The Court’s analysis of the merger clause focused on the recent Texas Supreme Court case of Italian Cowboy Partners v. Prudential, which substantially clarified Texas law in that area.  The Court affirmed an award of reliance damages but reversed an award of $25 million in lost profits, stating that the contract induced by fraud “contemplated a future closing transaction”; therefore, “[Plaintiff] cannot recover lost profits flowing from an agreement to purchase property that never closed due to the failure of that agrement’s express conditions.”  Op. at 21-23.

In an antitrust suit about fees for a golf voucher program, the defendant successfully moved to dismiss on the ground that the plaintiff had not alleged an effect on interstate commerce.  Substantively, the Court acknowledged that while it has “limited the reach of the Commerce Clause with respect to non-economic activity,” (Op. at 7, citing U.S. v. Lopez, 514 U.S. 549 (1995)), “the conduct alleged here . . . bringing out-of-state tourists to play golf–falls squarely within the Supreme Court’s commerce clause jurisprudence.  Procedurally, the Court reviewed the plaintiff’s allegations about the effect of the fees on “out-of-state residents” in light of Twombly and Iqbal and concluded that, while “sparse,” those allegations sufficed to allege an effect on interstate commerce.  The Court reversed the lower court’s dismissal of the case for lack of jurisdiction.  Gulf Coast Hotel-Motel Association v. Mississippi Gulf Coast Golf Course Association

The case of Klier v. Elf Atochem presented this challenge: “When modern, large-scale class actions are resolved via settlement, money often remains in the settlement fund even after initial distributions to class members have been made because some class members either cannot be located or decline to file a claim.”  Op. at 6.  The Court reviewed the district court’s decision to make a cy pres distribution of unclaimed funds from a tort settlement to various charities.  The Court began its analysis by reminding that the Rules Enabling Act and Fed. R. Civ. P. 23 “define the first –and often the last–arena of analysis,” Op. at 8, limiting cy pres distributions “only to rescue the objectives of the settlement when the agreement fails to do so.”  Op. at 10.  Noting that the parties’ settlement did not provide for a cy pres distribution, and that it had a clause allowing the district court to change the distribution protocol “for the benefit of the Settlement Class Members,” Op. at 11-12, the Court concluded that the unused funds were to be used for the benefit of another settlement subclass rather than as the district court had ordered.  The Court went on to review several features of the parties’ agreement, reminding that the cases in this area “have necessarily taken case-specific approaches . . . .”  Op. at 14.  Chief Judge Jones wrote a concurrence that focused on situations when it would be appropriate to return unused funds to the settling defendant.

In Friends of St. Frances Xavier Cabrini Church v. FEMA, a nonprofit association challenged several acts of FEMA in dealing with a historic church property.  The Court analyzed the association’s standing, beginning by noting that as a jurisdictional matter, the issue can be examined for the first time on appeal.   Op. at 8.  To establish standing, “[t]he plaintiff must show that he has sustained or is immediately in danger of sustaining some direct injury as the result of the challenged official conduct and the injury or threat of injury must be both real and immediate . . . ”  Op. at 9.  The Court found that the association lacked a sufficient “geographical nexus” as to FEMA’s activities in the Ninth Ward and did not suffer “concrete injury” from alleged deficiencies in FEMA’s review processes.  Op. at 12.  The case was remanded with instructions to dismiss for lack of standing.

In Young v. Merrill Lynch, the Court addressed a technical dispute under New York law about the appropriate deference to decisions of Merrill Lynch’s Compensation Committee.  Judge DeMoss dissented from the per curiam opinion.  Full text of both opinions here. 

In Williams v. Homeland Insurance, a discretionary appeal accepted under the Class Action Fairness Act, the Court affirmed the denial of a motion to remand, concluding that the “local controversy” exception to CAFA jurisdiction had been satisfied.  The opinion reminds that “[t]he parties moving for remand bear the burden of proof that they fall within an exception to CAFA jurisdiction.”  Op. at 3.  In this challenge to discounts made by a PPO program, the Court concluded that adding a claims administrator as a new party did not change the fact that “significant relief” was still sought from the in-state entity that operated the PPO network, thus satisfying that element of the local controversy exception.  Op. at 6.   The Court went on to state that “a class arbitration is not a class action,” and that as a result, a prior arbitration did not implicate the requirement of the exception that no other class action have been filed against a defendant in the previous three years.  Op. at 7.