As society, and the civil justice system, plan a return to more normal operations as the pandemic recedes, Judges Patrick Higginbotham and Lee Rosenthal, and Professor Steven Gensler, have written a perusasive article in Judicature about the importance of 12-person juries in civil cases: “Over the last 40-plus years, the 12- person civil jury has gone from being a fixture in the federal courts to a relative rarity. We should all be concerned. That the Supreme Court has allowed us to use smaller juries does not require us to use them. We can use 12-person juries. The benefits are large; the disadvantages marginal. We’re not suggesting this as a rule or a requirement. We are simply suggesting that judges not reflexively pick six, or eight, or even ten, and instead  remember their authority to seat 12. And the great benefits of doing so.” 

In Franklin v. Regions Bank. “Plaintiffs contracted with Regions Bank for it to manage, as their agent, their mineral interests in a large tract of land.” Under Louisiana law, the parties had “a principal-mandatary relationship, which is equivalent to a common-law principal-agent relationship.” In an Erie analysis, the Fifth Circuit noted that after the Louisiana Supreme Court limited a plaintiff’s ability to choose between a contract or tort remedy (with a large potential effect on limitations) in some mandatary relationships, the legislature then “shortened the limitations periods for claims against engineers, surveyors, professional interior designers, architects, real-estate developers, and home inspectors.  Instead of shortening the limitations period for all mandataries, the legislature chose to single-out certain professions for special treatment.” After then coupling that observation with general Louisiana legal principles about strict construction of limitation statutes, the Court held that the plaintiffs wereable to choose a tort remedy with a 10-year limitations period. No. 19-30684 (Sept. 18, 2020).

A home health care provider, feeling trapped by Medicare’s slow and complex administrative review process, sought relief in court. The Fifth Circuit affirmed the denial of its application for an injunction, observing: “The Constitution entrusts the political branches, not the judiciary, with making difficult and value-laden policy decisions. There were an infinite number of schemes Congress could have reasonably selected. Congress settled on one that guarantees at least two levels of administrative review and judicial review. And in the case of a backlog, Congress provided the ability to bypass long waits on the way to judicial review. Sahara rejected that option. At bottom, Sahara  believes a different scheme would be better. But we lack the power to change it.” Sahara Health Care v. Azar, No. 18-41120 (Sept. 18, 2020) (emphasis added).

The opinion also provides an original source for the saying, “[t]he best laid plans of mice and men oft go awry” —

Last week I spoke (virtually) at the State Bar’s Advanced Civil Appellate Course. My topic was post-verdict motions in state in federal court; here is a copy of my PowerPoint.

A dispute about an allegedly malfunctioning power generator led to an ingenious but flawed attempt to resolve it in Imperial Indus. Supply Co. v.. Thomas, in two steps:

1. “[Thomas] began by sending Imperial a document titled “ConditionalAcceptance for the Value/For Proof of Claim/Agreement” (“Alleged Agreement”) which purported to be a “binding self-executing irrevocable contractual agreement” evidencing Thomas’s acceptance of Imperial’s offer. , , , The Alleged Agreement further provided that Imperial would need to propound fifteen different “Proofs of Claim” to Thomas in order to avoid (1) breaching the Alleged Agreement; (2) admitting, by “tacit acquiescence,” that the generator caused the fire; and (3) participating in arbitration proceedings.”
2. “Then, Thomas sent Imperial two notices related to the Alleged Agreement. The first notice purported that Imperial breached the Alleged Agreement by failing to provide the proofs of claim. This notice allowed Imperial to cure the alleged breach by providing the proofs of claim within three days. In addition, the notice stated that Imperial’s refusal to follow the curing mechanism would result in Imperial’s admission and confessed judgment to the alleged breach. The second notice stated that Imperial owed the balance for the “entire contract value”1 because it did not cure the breach.”

Thomas than obtained a favorable arbitration award against Imperial. Unimpressed, the Fifth Circuit affirmed the district court’s order that vacated the award, noting: “If Thomas’s argument was valid, it would turn the notion of mutual assent on its head in ordinary purchase cases like this one: buy an item from a dealer or manufacturer, then mail a letter saying “you agree if you don’t object,” and you can have whatever deal you want if the dealer/manufacturer doesn’t respond. Thomas fails to cite a single case that would support such a ridiculous notion.” No. 20-60121 (Sept. 2, 2020).

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

Many opinions address briefing waiver issues by an appellant. But what about an appellee? The Fifth Circuit examined that procedural point in Texas Democratic Party v. Abbott:

“Appellate rules regarding how we treat absent issues differ depending on whether it is the appellant or the appellee who has neglected them. An appellant can intentionally waive or inadvertently forfeit the right to present an argument by failure to press it on appeal, a higher threshold than simply mentioning the issue. On the other hand, even an appellee’s failure to file a brief does not cause an automatic reversal of the judgment being appealed. By appellate rule, so extreme a lapse does cause the appellee to lose the right to appear at oral argument. Fed. R. App. P. 31(c). We also know that if we disagree with the grounds relied upon by a district court to enter judgment but discover another fully supported by the record, we can affirm on that alternative basis.  . . . There are a few cases that consider rules of waiver even for appellees. For example, our discretion to consider an argument not properly presented is ‘more leniently [applied] when the party who fails to brief an issue is the appellee.'”

No. 20-50407 (Sept. 10, 2020).

Following two recent opinions about Fed. R. Civ. P. 9(b), the Fifth Circuit again applied it in Waste Management v. AIG: “We need not resolve this dispute because, even assuming that an adjuster can be held liable under [the] Texas Insurance Code . . . Waste did not allege facts that, taken as true, demonstrate a violation of these provisions. The only relevant, AIG Claims-specific facts that Waste alleged in its
complaint are that (1) AIG Claims served as the adjuster for ASIC and (2) ‘On July 9, 2013, AIG Claims sent Waste Management a letter denying [certain] coverage . . . .’ These threadbare factual allegations, along with Waste’s conclusory recitation of the elements of a claim under the Texas Insurance Code, are insufficient to state a plausible claim for relief. Notably, Waste did not allege that AIG Claims failed to investigate, delayed any investigation, misevaluated, misprocessed, made any misrepresentation of the policy, or otherwise failed to ‘effectuate’ a fair settlement.” (citations omitted).

Samuel Williston reviewed many opinions (right) in drafting his influential works on contract law. So too did D2 Excavating, “[a] subcontractor doing excavation work [who] ended up having to remove a lot more dirt from the construction site than the parties anticipated.” But D2 was unable to escape Williston’s black-letter principles, as the Fifth Circuit held:

• As to the original contract, it noted “tthe basic contract principle that ‘where one agrees to do, for a fixed sum, a thing possible to be performed, he will not be excused or become entitled to additional compensation, because unforeseen difficulties are encountered.'”
• As to a change order: “D2 acknowledges that the alleged consideration was its exporting excess soil. The original contract already obligated D2 to do so without any compensation beyond the contract price. Hauling the dirt, therefore, cannot serve as consideration. The oral change order is void.”

D2 Excavating v. Thompson Thrift Constr., No. 19-40745 (Sept. 2, 2020) (citations omitted).

Applying Fed. R. Civ. P. 9(b), the Fifth Circuit found no fraud claims stated in:

• Colonial Oaks Assisted Living v. Hannie Development, No. 19-30995 (Aug. 25, 2020): “The pleadings are devoid of allegations regarding what instructions the employees received, who gave the instructions, whether anyone followed the instructions, and whether Sellers were aware of the specific instructions given.
• Umbrella Investment Group v. Wolters Kluwer, No. 20-30078 (Aug. 25, 2020): “In this case, the only relevant fact that UIG has alleged beyond what little it alleges ‘on information and belief’ is that Wolters Kluwer provided ‘written certification that the property subject to the loan was not in a flood hazard area that required flood insurance under FEMA regulations pursuant to the Flood Disaster Protection Act of 1973.’ That fact alone can ground nothing more than speculation as to the cause of the error, and therefore, UIG has failed to state a claim for fraud.”

Earlier this month, the Fifth Circuit found an abuse of discretion, under Texas substantive law, in not modifying a noncompetition agreement at the preliminary-injunction stage. Calhoun v. Jack Doheny Cos., Inc. But because the parties had settled their case in the meantime, notifying the district court but not the Fifth Circuit, the case had become moot at the time of that opinion, prompting the Court to withdraw its opinion and dismiss the matter with prejudice. No. 20-20068 (Aug. 28, 2020).

(This activity about a case named Calhoun prompted me to check in on the M/V CALHOUN, a ship that under another name created a memorable mootness argument– “The ship has sailed!” – when it left the Fifth Circuit before creditors could seize it. The ship continues to be elsewhere, arriving in Venezuela as of the date of this post.)

In 1971, the Five Man Electrical Band decried an overabundance of signs, complaining that they were “[b]locking out the scenery, breakin’ my mind.” Similarly, in recent years, the City of Austin grew weary of the many highway billboards in Central Texas. It enacted an ordinance that stopped a large number of them from being updated to a new, digital format, so long as the sign involved “off-premises” business activity. The Fifth Circuit found that the ordinance was unconstitutional in Reagan National Advertising of Austin v. City of Austin, No. 19-50354 (Aug. 25, 2020) (applying Reed v. Town of Gilbert, U.S. 155 (2015)).

The specific question was whether the regulation’s limit to “off-premises” businesses was a restriction on content, or one on time, place, or manner, under the framework established by the Supreme Court in Reed. The Court focused on a series of challenging hypotheticals it has posed to the City’s counsel at oral argument, including, inter alia:

• Could Barbara and Tom maintain a digital sign in their yard that says “We love hamburgers” that contained the logo and address to a Whataburger location two miles away?

• Could Sarah place a digital sign in her yard that said “Vote for Kathy” if Kathy did not live at Sarah’s house?

• How could one determine whether a digital bilboard that said “God Loves You” is on-premises or off-premises?

Finding these hypotheticals as challenging as the City’s counsel did, the Court concluded that the regulation forced a consideration of content to determine its applicability, making it a content restriction under Reed.

The London Underground reminds its riders to “Mind the Gap” so they do not trip when entering or exiting a train. The Fifth Circuit’s new typography places a notable gap between paragraphs and footnotes. While this sort of line-spacing does not have a technical label like “kerning,” it is nevertheless an important part of the overall look and feel of a piece of legal writing. What are your thoughts on inter-paragraph line spacing? 

The long-running litigation about 3D printed firearms (to the right, the single-shot “Liberator” returned to the Fifth Circuit in Defense Distributed v. Grewal, in which a manufacturer sought relief in Texas from the New Jersey AG. The Court found personal jurisdiction in Texas, noting: “Grewal’s conduct beyond sending the cease-and desist letter confirms his intent to crush Defense Distributed’s operations and not simply limit the dissemination of digital files in New Jersey. Grewal’s enforcement actions are selective. He has not targeted the many similarly-situated persons who publish Defense Distributed’s files on the internet. Instead, he has focused solely on Defense Distributed.” No. 19-50723 (Aug. 19, 2020) (distinguishing Stroman Realty, Inc. v. Wercincki, 513 F.3d 476 (5th Cir. 2008).

After reviewing comparable ethical rules nationwide, the Fifth Circuit held that under the Louisiana attorney-conduct rules: “[A] contingency fee arrangement resulting in an attorney owning part of the client’s business is a business transaction under Rule 1.8(a). Because the terms of the 2013 CFA give the Firms an ownership interest in LTSG, Rule 1.8(a) applies, and the Firms were required to advise Fox to seek the advice of independent counsel. Fox did not have to take this advice, but the Firms were obligated to give it. Thus, the 2013 CFA is void.”  Wiener, Weiss, & Madison v. Fox, No. 19-30688 (Aug. 21, 2020).

In the early 1900s, railroad shareholders sued Minnesota’s Attorney General, the spectacularly-mustachioed Edward Young (right), to enjoin the enforcement of price limitations; the Supreme Court found that their request for injunctive relief did not violate the Eleventh Amendment. Ex parte Young, 209 U.S. 123 (1908). It is easier to state the rule of Young than apply it, however, especially in often-complex jurisdictional situations.

Green Valley Special Utility District v. City of Schertz presented an arcane regulatory dispute about “two orders of the Texas Public Utility Commission decertifying territory from the certificate of convenience and necessity issued to [Green Valley] for sewer (wastewater) service.” (cleaned up). Resolution of that dispute required en banc review, and produced a lead opinion with a two-page summary of the Court’s holdings, along with four concurrences on Young and the statutory-interpretation issue in the case. No. 18-51092 (Aug. 7, 2020).

Sanchez v. Smart Fabricators, No. 19-20506 (Aug. 14, 2020), held that Sanchez was a Jones Act seaman. All three judges specially concurred in the result, observing:

Two causes of action under Texas law, frequently asserted but rarely tried, were rejected by the Fifth Circuit in BBX Operating v. Bank of America, No. 19-11050 (Aug. 11, 2020, unpublished):

• Conversion. “They are conclusory allegations, which merely ‘parrot the words needed to create a claim’ without providing any factual basis for how BBX maintained an ownership interest in the funds. Perhaps recognizing this deficiency, the amended complaint characterized the funds at issue as ‘trust funds,’ and claimed that Murphy ‘held the funds . . . in trust for BBX’—the rightful owner. Yet that label is again unsupported by any factual allegations. The complaint said nothing of when or how this alleged trust was formed. And there are no allegations that Murphy entered into an agreement to create a trust.” (emphasis added)
• Money had and received. “BBX has not alleged facts demonstrating that the funds Bank of America swept from Murphy’s account belong to BBX. Nothing in the sales contract or any other agreement between BBX and Murphy demonstrates that funds Murphy collected and placed in a Bank of America account in Murphy’s name belong to BBX. Furthermore, BBX is no more the owner of those funds than the working interest owners and royalty owners that were supposed to receive payment after Murphy remitted a portion of the funds to
  BBX. At most, the amended complaint demonstrates that BBX has an unsecured breach of contract claim against Murphy for failing to satisfy whatever amounts Murphy owed BBX under the sales contract that governed their relationship. It does not demonstrate that these particular funds belong to BBX. Thus, the district court properly dismissed BBX’s money had and received claim.” (emphasis added)

A notable feature of the Fifth Circuit’s new typography is the amount of kerning (spacing between of letters) in certain elements of an opinion’s first page. (And for those who are weary of the “cases in footnotes,” “1-space, 2-space,” or “anything but Times New Roman” topics, kerning offers an entirely new topic of discussion.) What are your thoughts on appellate kerning? 

“Applying Skidmore, we ask whether EPA’s interpretation of Title V in the Hunter Order is persuasive. Specifically, we inquire into the persuasiveness of EPA’s current view that the Title V permitting process does not require substantive reevaluation of the underlying Title I preconstruction permits applicable to a pollution source. As we read it, the Hunter Order defends the agency’s interpretation based principally on Title V’s text, Title V’s structure and purpose, and the structure of the Act as a whole. Having examined these reasons and found them persuasive, we conclude that EPA’s current approach to Title V merits Skidmore deference.” Environmental Integrity Project v. EPA, No. 18-60384 (Aug. 13, 2020) (emphasis added).

My newest Coale Mind podcast episode looks forward to this fall, when the Supreme Court will consider two decisions by the en banc (full) U.S. Court of Appeals for the Fifth Circuit, the federal appellate court for Texas.

In the first, California v. Texas, a Fifth Circuit panel found that the individual mandate of the Affordable Care Act was  unconstitutional after the repeal of the relevant tax, and the en banc court denied review in a close vote. In the second, Collins v. Mnuchin, the en banc Fifth Circuit found that Fannie Mae’s regulator was structured unconstitutionally.

These cases, important in their own right, also reflect a fascinating encounter between two “conservative” federal courts. Will the Fifth Circuit, widely seen as a particularly conservative court after President Trump’s many appointments, be seen by the Roberts Court as having gone too far? Or will the two courts by “in synch” with each other on these important constitutional issues?

In Six Dimensions, Inc. v. Perficient, Inc., the Fifth Circuit concluded that under California noncompete law, the parties’ “2014 Agreement” was unenforceable.  A key question was whether their “2015 Agreement” was also subject to that conclusion, or whether it was separate and the arguments against it had been waived in the trial court. The Court found no waiver, concluding that the below language was insufficient notice that the plaintiff was seeking summary judgment about that contract.

“Defendant argues that Brading was permitted to engage in this wrongful conduct because the contract that she signed, contained a provision that is not allowed under California law. Defendant argues that even though the Amended Complaint does not accuse Brading of breaching the non-competition portion of the 2014 Agreement [Dkt 10-2], that its presence in the 2014 Agreement invalidates that agreement. Texas has no such provision. It is respectfully submitted, as asserted in the Complaint, that the law of Texas applies and as such, the 2014 Agreement is clearly breached by Brading’s undisputed conduct in violating both portions of the 2014 Agreement. Further, there is no noncompetition portion for the Termination Certification signed by Brading in June of 2015 and as such, under the law of either State, Brading is responsible for violating the 2015 Agreement.” 

No. 19-20505 (Aug. 7, 2020) (emphasis added).

The Fifth Circuit found it was an abuse of discretion to not reform a noncompetition agreement at the preliminary-injunction stage, rejecting the argument that reformation “is a remedy to be granted at a final hearing, whether on the merits or by summary judgment, not as interim relief.” The Court held: “This argument runs against the clear majority practice of Texas courts, which have on many occasions reformed contracts for the purposes of granting interim relief. The Texas case that has most thoroughly considered the question has rejected the argument Calhoun makes here, finding that reformation ‘is not only a final remedy’ and may be made ‘as an incident to the granting of injunctive relief.'” Calhoun v. Jack Doheney Cos., No. 20-20068 (Aug. 7, 2020).

“The Texas Supreme Court has held that a Texas court of civil appeals does not have jurisdiction to initiate an award of appellate attorneys’ fees because ‘the award of any attorney fee is a fact issue which must [first] be passed upon the trial court.’” In Texas state courts, requesting appellate fees at the original trial is a placeholder requirement to ensure the state trial courts maintain jurisdiction over the issue. Those are procedural rules that do not apply in federal court. Our local rules provide for appellate litigants to petition this court for. Local Rule 47.8 does not require a party seeking appellate attorneys’ fees to first request appellate attorneys’ fees in the district court as a placeholder.” Atom Instrument Corp. v. Petroleum Analyzer Co., No. 19-20151 (Aug. 7, 2020) (citations omitted).

The ABA House of Delegates has recently adopted a comprehensive set of best practices for litigation funding–an important topic in modern law practice.

OSHA regulations have an exemption for “diving performed solely as a necessary part of a scientific, research, or educational activity by employees whose sole purpose for diving is to perform scientific research tasks. Scientific diving does not include performing any tasks usually associated with commercial diving such as: Placing or removing heavy objects underwater; inspection of pipelines and similar objects; construction; demolition; cutting or welding; or the use of explosives.”

OSHA concluded that the divers who clean the tanks at the Houston Aquarium were not “scientific divers” under this regulation; the Fifth Circuit saw otherwise: “The divers are engaged in a ‘studious … examination’ and ‘detailed study’ when they observe the animals for abnormalities, and when they work to keep the animals in the Aquarium alive, healthy, and breeding. That an organization collaborates among employees and engages in verbal communication does not mean that the examination and study of the animals in the tanks is not ‘studious’ or ‘detailed.’ Nothing about the feeding and cleaning dives renders the information that the trained scientists performing the dives gather during these dives outside of the definition of ‘research.’” Houston Aquarium, Inc. v. OSHRC, No. 19-60245 (July 15, 2020).

Many forum-selection disputes, particularly about arbitration clauses, turn on whether the parties’ contract incorporates another document. A variation on this common fact pattern appeared in Sierra Frac Sand v. CDE Global, No. 19-40489 (May 26, 2020),”Sierra concedes that some document was incorporated into the contract. Indeed, by making the agreement ‘subject to’ the ‘Standard Terms and Conditions of Sale” that were available on request, the contract explicitly refers to another document. The question for us is whether the document titled ‘CDE General Conditions – June 2016’ is the incorporated document.”

The answer was “yes,” given evidence that:

• “before this lawsuit commenced …, CDE sent Sierra the 2016 addendum as an attachment to a letter about the project’s timeline,” and “CDE’s financial director attested that the 2016 addendum was the document referred to in the order acknowledgement”;
• “CDE explained that the addendum was dated 2016, even though the contract was executed in 2017, because when the agreement was signed, the 2016 addendum was the most current version of CDE’s terms and conditions”; and,
• “… as the district court found, the 2016 addendum contained the kind of terms and conditions one would expect to accompany the parties’ agreement.”

No. 19-40489 (May 26, 2020).

Ecclesiastes 3:1-8 instructs: “For everything there is a season, and a time for every [a]purpose under heaven: a time to be born, and a time to die; a time to plant, and a time to pluck up that which is planted,” and so forth. McRaney v. North American Board of the Southern Baptist Convention instructs: “At this early stage of the litigation, it is not clear that any of these [necessary]  determinations will require the court to address purely ecclesiastical
questions. McRaney is not challenging the termination of his employment,  and he is not asking the court to
weigh in on issues of faith or doctrine[.] His complaint asks the court to apply neutral principles of tort law
to a case that, on the face of the complaint, involves a civil rather than religious dispute.” (citations omitted).

Acknowledging the Supreme Court’s recent reminder that “[t]he First Amendment protects the right of religious institutions ‘to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine,” the Court held: “At this time, it is not certain that resolution of McRaney’s claims will require the court to interfere with matters of church government, matters of faith, or matters of doctrine. The district court’s dismissal was premature.” No. 19-60293 (July 16, 2020).

The parties’ arbitration agreement adopted certain AAA rules; among them, Rule 52(e) says: “Parties to an arbitration under these rules may not call the arbitrator . . . as a witness in litigation or any other proceeding relating to the arbitration” and that an arbitrator is “not competent to testify as [a] witness[] in such proceeding.”

The appellant in Vantage Deepwater Co. v. Petrobras, facing an award of close to $700 million, sought the deposition of the dissenter on a 3-judge panel, noting his unusual statement that “the entire arbitration, ‘the prehearing, hearing, and posthearing processes,’ denied Petrobras ‘fundamental fairness and due process protections.'” 

The Fifth Circuit held otherwise: “We have not discovered any court of appeals decision holding that a district court abused its discretion in denying discovery from an arbitrator about the substance of the award. We see nothing in this record to cause us to be the first.”  No. 19-20435 (July 16, 2020).

“Jackson [National Life]’s objection to personal jurisdiction concerned only class members who were non-residents of Texas. Those members, however, were not yet before the court when Jackson filed its Rule 12 motions. What brings putative class members before the court is certification: ‘Certification of a class is the critical act which reifies the unnamed class members and, critically, renders them subject to the court’s power.’ When Jackson filed its pre-certification Rule 12 motions, however, the only live claims belonged to the named plaintiffs, all Texas residents as to whom Jackson conceded personal jurisdiction.” Accordingly, Jackson did not waive the issue of personal jurisdiction by raising it in the proceedings about certification. Cruson v. Jackson National Life, No. 18-40605 (March 25, 2020).

For insurance-coverage lawyers, State Farm Lloyds v. Richards represents another case in which the Fifth Circuit concludes that “the eight-corners rule applies here; the ‘very narrow exception’ does not,” and then finds that the relevant pleading “contains
allegations within its four corners that potentially constitute a claim within the four corners of the policy.” No. 18-10721 (July 19, 2020).

For fans of legal typography, State Farm Lloyds represents a daring new look – stylish, yet readable!

Please check out my new podcast, Coale Mind, where once a week I talk about constitutional and other legal issues of the day. This forum lets me get into more detail than other media appearances, while also approaching issue from a less technical perspective than blogging and other professional writing. I hope you enjoy it and choose to subscribe! Available on Spotify, Apple, and other such services.

Wilson, a trustee of Houston’s community-college system, alleged that his censure by the board was done in retaliation for his exercise of First Amendment rights. A panel found that he had stated a claim that was sufficient to survive a Rule 12 challenge:

The above [Circuit] precedent establishes that a reprimand against an elected official for speech addressing a matter of public concern is an actionable First Amendment claim under § 1983. Here, the Board’s censure of Wilson specifically noted it was punishing him for “criticizing other Board members for taking positions that differ from his own” concerning the Qatar campus, including robocalls, local press interviews, and a website. The censure also punished Wilson for filing suit alleging the Board was violating its bylaws. As we have previously held, “[R]eporting municipal corruption undoubtedly constitutes speech on a matter of public concern.” Therefore, we hold that Wilson has stated a claim against HCC under § 1983 in alleging that its Board violated his First Amendment right to free speech when it publicly censured him.

Wilson v. Houston Community College System, 955 F.3d 490 (5th Cir. 2020) (footnote omitted). A vote to take the case en banc produced an 8-8 tie, with these votes (Senior Judge Eugene Davis, who wrote the panel opinion, was not part of the en banc vote):

An alleged tortfeasor, earlier named as a party in a case, settled with the plaintiff. The plaintiff sought to submit a conspiracy count related to that party, and the Fifth Circuit agreed: “The alleged co-conspirator need not actually face liability. … [A]settlement in general does not prevent submitting to the jury questions about that party’s conduct (only pursuing an actual judgment against the settling party). Therefore, we conclude that Phadia’s settlement had no bearing on the Plaintiffs’ ability to prove a civil conspiracy case against the Defendants based on an underlying tort committed by Phadia.” United Biologics v. Allergy & Asthma Network, No. 19-50257 (June 24, 2020) (unpublished).

The parties in Acadian Diagnostic Laboratories v. Quality Toxicology, LLC disputed what the phrase “customary billing practices” meant in their contract. QT argued that it meant “the billing practices that [Acadian] habitually or usually used with its customers in general,” while Acadian “asserts that it agreed to use the billing practices that it habitually or usually used with QT.” The Fifth Circuit resolved this dispute by reference to the parties’ performance, finding that “the record is entirely one-sided,” and that Acadian’s interpretation was consistent with the parties’ performance both before and after the formatoin of their contract. No. 19-30320 (July 13, 2020).

Soren Kierkegaard wondered, “What is the Absurd?” Contemporary artist Michael Cheval creates thought-provoking works of absurdist art (to the right, “Echo of Misconception” (2015)). And the Fifth Circuit plumbed the meaning of the absurd in Geovera Specialty Ins. Co. v. Joachin, No. 19-30604 (July 6, 2020), in a coverage dispute about a homeowners’ insurance policy, bserving: “Absurdity requires a result ‘that no reasonable person could approve.’ An insurance policy is thus absurd if it ‘exclude[s] all coverage’ from the outset. So is one that broadly excludes coverage without reasonable limitations. But the GeoVera policy is not absurd on its face. The policy makes perfect sense for a  homeowner who purchases it while already living in the home.”  No. 19-30605 (July 6, 2020) (citations omitted).

In Williams v. MMO Behavioral Health Systems, the Fifth Circuit affirmed a $244,000 judgment for defamation, entered after a jury trial. Good record keeping often benefits defendants in employment-related litigation, but in this case it helped the plaintiff on a key issue:

Before MMO had published the statement to the [Louisiana Workforce Commission], Williams had informed MMO that she did not falsify her timecard. This should have led MMO to examine Williams’s timecard. If MMO had done so, it would have discovered that even though Williams regularly clocked in every day, the timecard facially showed that someone else clocked in Williams on July 5th. This fact indicates that MMO should have known that Williams was not the one falsifying her timecard. The times for which Williams was clocked in on July 5th were also not her normal working hours, further suggesting that Williams was not the one to clock in on July 5th. Moreover, Williams did not fill out a missed-clock-punch form, which would have been necessary to allow someone else to clock her in or out, suggesting that Williams was not even involved with this July 5th clocking in and out.

No. 19-30757 (July 9, 2020) (unpublished).

The trap: “The Funds sought to render an interlocutory decision appealable by dismissing at least one defendant without prejudice. And under [Williams v. Seidenbach, 958 F.3d 341, 369 (5th Cir. 2020) (en banc)], that means—absent some further act like a Rule 54(b) certification—there is no final, appealable decision.”

The hint: “Because the dismissal without prejudice in this case occurred after the order the Funds seek to appeal, we do not decide how Williams . . . would apply where the dismissal occurred before the adverse, interlocutory order. See Schoenfeld v. Babbitt 168 F.3d 1257, 1265–66 (11th Cir. 1999) (concluding that there was a final decision in such a case).”

Firefighters’ Retirement System v. Citco Group Ltd., No. 19-30165 (July 7, 2020).

After the plaintiff voluntarily dismissed the federal securities claims that justified removal, the district court retained jurisdiction over the case based on supplemental jurisdiction and granted a motion to compel arbitration. The Fifth Circuit rejected the supplemental-jurisdiction argument and vacated the motion to compel: “All of SJAP’s claims against Cigna arise from or concern the In-Network Agreement and the resulting business relationship. SJAP’s federal claim against the Insight Defendants, by contrast, was based on SJAP’s purchase of securities from Insight as part of the Lab Operating Agreement, a completely separate contract that had nothing to do with Cigna that was consummated several years before the events giving rise to SJAP’s claims against Cigna. Other than SJAP’s vague assertion that Insight and the Cigna Affiliates previously ‘had a lengthy and sordid relationship’ that resulted in an undisclosed settlement agreement, the operative complaint when the case was removed demonstrated no connection between Cigna and the Insight controversy, let alone the specific federal security claim that conferred original jurisdiction on the district court.” SJ Associated Pathologists v. Cigna Healthcare of Texas, No. 20-20188 (July 6, 2020) (emphasis added).

Digidrill sued for unjust enrichment, “alleging [that] Petrolink hacked into its software at various oil drilling sites in order to ‘scrape’ valuable drilling data in real time.” The Fifth Circuit held: “Digirill’s claim is not preempted by copyright because—like the claim in GlobeRanger—it requires establishing that Petrolink engaged in wrongful conduct beyond mere reproduction: namely, the taking of an undue advantage. Under Texas law an unjust enrichment claim requires showing that one party ‘has obtained a benefit from another by fraud, duress, or the taking of an undue advantage.’ Digidrill … contends Petrolink obtained a benefit by taking undue advantage when it surreptitiously installed [certain software]. This is the claim Digidrill put to the jury. Like the alleged misappropriation-of-trade-secrets claim in GlobeRanger, which required establishing improper means or breach of a confidential relationship, Digidrill’s alleged unjust enrichment claim requires establishing wrongful conduct—i.e., inducing the MWD
companies to violate the express terms of their DataLogger licenses—that goes
beyond mere copying.” Digital Drilling Data Sysems LLC v. Petrolink Servcs., Inc., No. 19-20116 (July 2, 2020) (footnote omitted, emphasis added). The Court noted that a different type of unjust-enrichment claim could potentially lead to a different result.

When not engaged in good-natured banter about typeface or proper spacing after periods, the appellate community often argues about the right place to put citations to authority. The traditional approach places them “inline,” along with the text of the legal argument. A contrarian viewpoint, primarily advanced by Bryan Garner, argues that citations should be placed in footnotes.

Has modern technology provided a third path? Professor Rory Ryan of Baylor Law School advocates “fadecites,” reasoning:

A brief using this approach would look like this on a first read:

(A longer example is available on Professor Ryan’s Google Drive.) The reader can quickly skim over citations while reviewing the legal argument. Additionally, assuming that the court’s technology allows it, case citations can be arranged to become more visible if the reader wants to know more information. Modern .pdf technology allows a citation to become darker and more visible if the reader places the cursor on it. A hyperlink to the cited authority could also be made available.

This idea offers an ingenious solution to a recurring challenge in writing good, accessible briefs. I’d be interested in your thoughts and Professor Ryan would be as well.

A manufacturer of vaping liquid, invoking the structural limitations imposed on administrative agencies by the delegation doctrine, challenged the FDA’s power to regulate it. The Fifth Circuit observed: “The [Supreme] Court might well decide—perhaps soon—to reexamine or revive the nondelegation doctrine. But ‘[w]e are not supposed to . . . read tea leaves to predict where it might end up.'” (citation omitted). That observation was case-dispositive: “The [Supreme] Court has found only two delegations to be unconstitutional. Ever. And none in more than eighty years.” Under that precedent, Congress’s delegation of authority to the FDA in this area showed a “sufficiently intelligible principle,” constrained by Congress’s definition of “tobacco product,” and by Congress having “ma[de] many of the key regulatory decisions itself.” Big Time Vapes, Inc. v. Food & Drug Admin., No. 19-60921 (June 25, 2020).

Congratulations to Judge Cory Wilson of Mississippi, who was confirmed by the Senate yesterday as the newest member of the U.S. Court of Appeals for the Fifth Circuit.

A Texas business alleged that the CARES Act impermissibly discriminated against it as a bankruptcy debtor. The Fifth Circuit, citing its rule of orderliness, noted that it “has concluded that all injunctive relief directed at the [Small Business Administration] is absolutely prohibited.” Accordingly, “the bankruptcy court exceeded its authority when it issued an injunction against the SBA administrator … .” Hidalgo County Emergency Service Foundation v. Carranza, No. 20-40368 (June 22, 2020).

Hoover Panel Systems contracted with HAT Contract to design a component for office desks. The Fifth Circuit found their contract ambiguous, noting the tension between its introductory and first-numbered paragraphs. While both address confidentiality, the introduction is general and paragraph 1 describes a particular process:

“Both parties agree that all information disclosed to the other party, such as inventions, improvements, know-how, patent applications, specifications, drawings, sample products or prototypes,[]engineering data, processes, flow diagrams, software source code, business plans, product plans, customer lists, investor lists, and any other proprietary information shall be considered confidential and shall be retained in confidence by the other party.

 

1. Both parties agree to keep in confidence and not use for its or others benefit all information disclosed by the other party, which the disclosing party indicates is confidential or proprietary or marked with words of similar import (hereinafter INFORMATION). Such INFORMATION shall include information disclosed orally, which is reduced to writing within five (5) days of such oral disclosure and is marked as being confidential or proprietary or marked with words of similar import.”

The Court noted “[s]everal plausible interpretations” of these paragraphs:

• Different materials. “Hoover reads the opening paragraph to apply to the prototype, the primary property the confidentiality agreement was entered into to protect. Hoover argues that the first numbered paragraph applied to other information and communications that were not obviously confidential under the opening paragraph.”
• General v. specific. “HAT reads the opening paragraph to speak generally about the content of the agreement, and the first numbered paragraph to provide the specific instructions needed to put the confidentiality agreement into effect.”
• Different procedures. “[Another possible] interpretation is that under the agreement, proprietary information is automatically confidential while all other information must be marked. The opening paragraph states that “proprietary material shall be considered confidential,” and in the first numbered paragraph, “all information . . . which the disclosing party indicates is confidential or proprietary or marked with words of similar import” is considered confidential.”
• Substance v. housekeeping. “Another plausible reading is that the opening paragraph provides the scope for all information that is confidential while the first numbered paragraph functions as a housekeeping paragraph, providing instruction on how to mark information as confidential, but not requiring labeling as a condition precedent.”

Hoover Panel Systems, Inc. v. HAT Contract, Inc., No. 19-10650 (June 17, 2020).

In re Spiros Partners is the second recent mandamus opinion by the Fifth Circuit about  notice in large collective actions under the Fair Labor Standards Act. The plaintiff–an exotic dancer with the stage name “Syn”–had an “Entertainer’s License Agreement” with an arbitration clause, the trial court entered an order about other parties and their agreements, and the Fifth Circuit held:

1.  “[The district court] determined there was a genuine dispute as to the arbitration agreements’ validity and ordered Spiros to produce the names of the putative members along with their respective ELAs containing the arbitration agreements. The district court did not err by taking this step in deciding which putative members are subject to valid arbitration agreements, and thus which putative members will not receive notice.”
2. “The only way a putative member with a valid arbitration agreement might receive notice is if ‘nothing in the agreement’ prohibits their participation in the collective action. We conclude the district court went too far by requiring submission of evidence regarding whether Spiros has arbitrated claims with other would-be collective members.” (citation omitted).

No. 20-50318 (June 19, 2020, unpublished).

“Mistah Kurtz — he dead.” Joseph Conrad, Heart of Darkness.

Spell v. Edwards presented a challenge to a COVID-19 restriction that became moot with the passage of time: “A Louisiana church and its pastor ask us enjoin stay-at-home orders restricting in-person church services to ten congregants. But there is nothing for us to enjoin. The challenged orders expired more than a month ago. That means this appeal and the related request for an injunction … are moot.”  Notably, the restriction expired by its own terms, showing that it was not abandoned as a litigation tactic, and thus making inapplicable the “capable of repetition, yet evading review” exception to mootness. No. 20-30358 (June 18, 2020).

A recent article in the Baylor Law Review by Kylie Calabrese, a student of the able Rory Ryan at the Baylor Law School, provides a thorough and well-documented analysis of In re: JP Morgan Chase & Co., 915 F.3d 494 (5th Cir. 2019) and its implications for mandamus practice in the Fifth Circuit.

In In re Schlumberger Tech, Inc., the Fifth Circuit again held that mandamus relief can be necessary to remedy the erroneous production of privileged material. It found that no offensive-use waiver occurred when: “STC’s answer claimed only that it relied in good faith ‘on applicable law, administrative regulations, orders, interpretations and/or administrative practice or policy enforcement.’ STC did not claim that counsel advised it that its decisions complied with the FLSA. Indeed, its answer did not allude to advice of counsel at all. While privileged communications may have some bearing on STC’s beliefs about its compliance, STC has not ‘rel[ied] on attorney-client communications’ to establish its good-faith defense.” No. 20-30236 (June 4, 2020).

Last week, I noted the holding in Gulf Engineering Co. v. Dow Chemical Co. about the construction of the parties’ contract (Dow had the right, but not the obligation, to assign work to Gulf Engineering during the relevant period of time). Not surprisingly, this holding caused trouble for the plaintiff’s damages model:

“… The only evidence of how the details of daily or weekly assignments can be known is that Dow used oral and written communication that included the issuing of work orders and job schedules. What Gulf needed to offer were details about any assigned work. That would include evidence of such variables as the nature of the work, the number of employees needed, and the number of days needed to complete the work. In other words, what was needed in some form was evidence relevant to allow a calculation of what Dow would have paid and what Gulf’s expenses would have been, i.e., what Gulf’s profit would have been. Instead, the only evidence was an average from an historic time period, where all those variables were blended.

As we explained earlier, the evidence of any assigned work after the notice of termination barely suffices to show liability. For us then to allow the evidence offered of daily-average profits over one or five years to substitute for actual profits for actual assigned work is a bridge too far. …”

No. 19-30395 (June 9, 2020) (emphasis added).