The arbitration clause in Bowles’s employment contract had a provision delegating to the arbitrator, “any legal dispute . . . arising out of, relating to, or concerning the validity, enforceability or breach of this Agreement, shall be resolved by final and binding arbitration.” Bowles argued that disparity of bargaining power during her contract negotiations amounted to procedural unconscionability. “Bowles’s challenge to the Arbitration Agreement as procedurally unconscionable was a challenge to the Agreement’s enforceability, not to its existence. For that reason, under the delegation clause in the Agreement that sends all enforcement challenges to an arbitrator, the district court correctly referred this challenge to the arbitrator.” Bowles v. OneMain Fin. Group, No. 18-60749 (April 2, 2020).

“For a generation, the State of Texas and a federally recognized Indian tribe, the Ysleta del Sur Pueblo, have litigated the Pueblo’s attempts to conduct various gaming activities on its reservation near El Paso. This latest case poses familiar questions that yield familiar answers: (1) which federal law governs the legality of the Pueblo’s gaming operations—the Restoration Act (which bars gaming that violates Texas law) or the more permissive Indian Gaming Regulatory Act (which “establish[es] . . . Federal standards for gaming on Indian lands”); and (2) whether the district court correctly enjoined the Pueblo’s gaming operations.” Unfortunately for the tribe, the Fifth Circuit found that a previous opinion conclusively settled these issues in favor of the State of Texas. The opinion also discusses the proper scope of injunctive relief for such a situation. Texas v. Ysleta del Sur Pueblo, No. 19-50400 (April 2, 2020).

A union protested that an arbitrator, in the guise of correcting a “technical” error with his original award, in fact revised its substance in a way contrary to the applicable arbitration rules. The Fifth Circuit disagreed: “To the contrary, he cited [AAA] Rule 40, classified his error as a “technical” one capable of correction, and held that his correction did not violate Rule 40, notwithstanding the Union’s argument that he was “redetermin[ing] the merits” of CWA’s claim against the Company. Even if the arbitrator made a mistake in reaching his conclusion, “[t]he potential for . . . mistakes is the price of agreeing to arbitration. . . . The arbitrator’s construction holds, however good, bad, or ugly.” Communication Workers of America v. Southwestern Bell, No. 19-50686 (March 27, 2020) (citations omitted).

In Bradley v. Ackal, the Fifth Circuit reversed the sealing of an on-the-record proceeding involving the settlement of a minor’s claim connected to a police shooting. The Court reminded: “’In exercising its discretion to seal judicial records, the court must balance the public’s common law right of access against the interests favoring nondisclosure.’ But, ‘[t]he presumption however gauged in favor of public access to judicial records[]’ [is] one of the interests to be weighed on the [public’s] “side of the scales.”‘ No. 18-31052 (March 23, 2020) (citations omitted).

An unsuccessful motion to compel arbitration did not fare better on appeal when:

• The question of who decides arbitrability was not raised in the motion (and was thus forfeited for appeal purposes);
• Equitable estoppel was briefed in the motion with reference to authority about “concerted misconduct estoppel” – theory rejected by the Texas Supreme Court;
• Direct benefits estoppel was unavailable because the plaintiffs sued under federal employment law, not their state-law employment agreements;
• Third party beneficiary status was not available because the movant was not named in the agreement, while the entity that actually had hired the plaintiffs was.

Hiser v. NZone Guidance LLC, No. 19-50353 (March 24, 2020) (unpublished).

The appellant in North Cypress Medical Center Operating Co. v. Cigna Healthcare argued that the district court failed to follow the law of the case as established by an earlier Fifth Circuit panel, citing a paragraph in the panel’s opinion that described the two-step process for resolving a particular ERISA issue. The Fifth Circuit disagreed: “This general statement of the law, expressed in terms of the facts of the case, is no mandate at all. Nor is it a statement of the whole law regarding review of ERISA benefit decisions. The court’s summary omits mention of [two key cases], in which this court established that a party may skip the legal correctness inquiry and proceed to consider
whether the plan administrator abused its discretion, as outlined in [the prior panel opinion]. The [prior] panel did not deny the authority of [those cases] (nor could it).
Accordingly, the district court properly relied on [those cases] in skipping the legal correctness analysis. In so doing, the court did not violate the law of the case and committed no error.” No. 18-20576 (March 18, 2020).

DISH Network declared an impasse after lengthy negotiations with the Communication Workers of America. The NLRB rejected that declaration; the Fifth Circuit reversed the NLRB’s factual determination: “The Board’s decision rested on its determination that the Union’s November 2014 counterproposal was a ‘white flag’ of surrender. But the ‘white flag’ characterization in turn rested on an unsound factual foundation from the ALJ” about how unionized employees reacted to a particular compensation system as compared to nonunionized ones. DISH Network Corp. v. NLRB (revised March 24, 2020).

A Houston-based engineering firm negotiated a contract with a New Jersey town. The town then sought to avoid paying, arguing that no contract had been formed because it had not obtained proper approvals as required by New Jersey’s statutes about public contracts. The firm countered that the parties’ agreement had a Texas choice-of-law provision, which should also control as to contract formation. Noting that while this dispute seemed to form a “chicken-or-the-egg problem,” the Fifth Circuit ruled for the town as “the choice-of-law provision has force only if the parties validly formed a contract.” It remanded for consideration of potential quantum meruit liability. EHRA Engineering v. Downe Township, No. 19-20176 (March 19, 2020).

Surprising no one, the constitutional challenge to the CFPB’s structure presented by CFPB v. All American Check Cashing will be reviewed en banc by the full Fifth Circuit.

This is a cross-post from 600Commerce, which follows the Dallas Court of Appeals.

One Dallas Court of Appeals case addresses the breach-of-contract defense of impracticability, Hewitt v Biscaro, 353 S.W.3d 304 (Tex. App.—Dallas 2011, no pet.). Relevant to the current crisis, it involves a government order that allegedly made performance more difficult. The Court examined whether:

• the performance issue was a basic assumption of the contract;
• the government’s action was an official order or regulation (in that case, the SEC’s contact with the defendant was not); and
• the defendant was acting in good faith.

The Court relied on an earlier Texas Supreme Court case and the relevant Restatement (Second) of Contracts provision. Application of this opinion will be important in upcoming commercial disputes created by the novel coronavirus.

Rogers, a collection agency, wrote Salinas, stating the amount due ($4629.96)
and the interest and fees due ($0.00). The letter also said: “In the event there is interest or other charges accruing on your account, the amount due may be greater than the amount shown above after the date of this notice.”

The Fifth Circuit held that, while its precedent had not squarely addressed “conditional” language such as “in the event,” Rogers’s letter was not deceptive. “Salinas reads it to imply the possibility that interest or other charges may accrue when in fact they cannot,” noted the Court, but “[a]n illustration shows the problem with Salinas’ reading of the letter”:

Suppose a traveler boards a flight from El Paso, TX, to Tucson, AZ—a route traversing only desert—and is shown a safety video describing steps to take “in the event of a water landing.” Even the least sophisticated traveler would not take the video to imply the plane would be flying over water. No passenger would leap out of his seat in panic, concluding he had boarded the wrong flight. Even a traveler “tied to the very last rung on the intelligence or sophistication ladder” would interpret the video as merely acknowledging the reality that some flights, if not this one, fly over water.

Salinas v. R.A. Rogers Inc., No. 19-50618 (March 12, 2020).

Casalicchio received a pre-foreclosure notice that “contained a deadline thirty days from the day the notice was printed, even though the deed of trust called for a deadline thirty days from the day the letter was mailed.” (emphasis in original). Unfortunately for Casalicchio, while the Fifth Circuit acknowledged older Texas cases that refer to an “absolute” right to “strict compliance” with a deed of trust, the Court concluded: “Since the 1980s, the Texas Supreme Court has repeatedly moderated its rule that the ‘terms of a deed of trust must be strictly followed,’ clarifying recently that harmless mistakes do not void otherwise-valid foreclosure sales.” The defect in his notice was thus “but a ‘minor defect,’ insufficiently prejudicial to justify setting aside an otherwise valid foreclosure sale.” Casalacchio v. BOKF, N.A., No. 19-20246 (March 6, 2020) (applying, inter alia, Hemyari v. Stephens, 355 S.W.3d 623 (Tex. 2011)).

What is a “sole, superseding cause”? BP Exploration v. Claimaint ID 100191715 did not resolve the question, but found an argument sufficiently credible to require a remand for further review in the Deepwater Horizon claims process: “BP argues that Claimant passed the V-Shaped Revenue Pattern due solely to a price spike and drop in the price of fertilizer that was unrelated to the oil spill. According to BP, the spike caused Claimant’s revenues to soar and crash back down to normal rates thereafter. And, only because Claimant used months during the price spike as its benchmark period was it able to satisfy the ‘V-Shape Revenue Pattern’ test in Exhibit 4B. In other words, Claimant’s loss was not due to the spill; rather, the price spike in fertilizer was the sole, superseding cause for its loss.”  No. 19-30264 (March 3, 2020).

The ground rules for the administrative state are few, important, and vexingly difficult to apply. The en banc court confronted the structure of Fannie Mae’s regulator, the Federal Housing Finance Agency, in Collins v. Mnuchin, 938 F.3d 553 (5th Cir. 2019), and found it wanting constitutionally. In CFPB v. All American Check Cashing, a panel majority confronted the structure of another Great Recession entity, the Consumer Finance Protection Board, and concluded that “neither the text of the Constitution nor the Supreme Court’s previous decisions support the Appellants’ arguments that the CFPB is unconstitutionally structured.” No. 18-60302 (March 3, 2020).

A concurrence elaborated: “The President can remove the CFPB Director only for ‘inefficiency, neglect of duty, or malfeasance in office,’ a broad standard repeatedly approved by the Supreme Court. That alone is enough to decide this case. If there is any threat of undue concentration of power, the Office of President is its beneficiary.” A dissent faulted the majority’s reasoning and the judicial process employed: “Collins winds up in the dustbin because two judges say it should. At one time, those judges thought it beyond the pale ‘to rely on strength in numbers rather than sound legal principles in order to reach their desired result in [a] specific case.’ Now, they suddenly discover that stare decisis is for suckers.” (footnotes omitted).

An exceptionally clear example of “virtual representation” for res judicata purposes appears in Butler v. Endeavor Air, Inc., No. 19-20304 (March 4, 2020).

Butler unsuccessfully sued Delta Airlines in state court about difficulties his daughter experienced on a flight. Final judgment was entered for Delta after a partial summary judgment and a jury trial.

Butler also sued Endeavor Airlines–a Delta subsidiary that operated the flight in question. Delta had stipulated, in both cases (it had at one point been named in the second case) that it would accept any liability assigned to Endeavor.

The district court found the Endeavor suit was barred by res judicata and the Fifth Circuit. Delta was Endeavor’s “virtual representative” in the first action given their parent-subsidiary relationship, the same set of facts involved in both cases, and Delta’s stipulation.

Rules of procedure require precision in pleading a cause of action. The eight-corners rule of insurance coverage, in contrast, often rewards imprecision. A powerful example appears in Allied World Specialty Ins. Co. v. McCathern, PLLC, a duty-to-defend claim arising from a legal malpractice claim, where the Fifth Circuit held: “The allegations that McCathern did not monitor the file, conduct legal research, or communicate with the client are factual assertions—as opposed to causes of action—even if they are vague. Allied World’s challenge to the factual allegations thus seems to be that they are not specific enough or may not prove true. But at the duty-to-defend stage it is not for us to say whether West Star will be able to prove that McCathern was negligent in failing to monitor the personal injury suit or in failing to research legal issues.” No. 17-10615 (Feb. 26, 2020, unpublished).

J&J Sports v. Enola Investments, a dispute about an unauthorized broadcast of the most recent “Fight of the Century” (Mayweather v. Pacquiao in 2015) led to a muddled record as to how the bar in question rebroadcast the fight:

“There is conflicting evidence about how the Lounge broadcast the Fight. Small claimed that an employee streamed the Fight over the internet, but J & J’s investigator testified that internet streaming typically results in lower quality video than the high definition broadcast he saw at the Lounge. J & J’s corporate representative also testified that the Fight was not available to commercial establishments via internet streaming. But J & J’s investigator muddled the waters by stating that he did not see cable or satellite equipment at the Lounge. And now, on appeal, defendants claim that the Lounge received the Fight via cable because Enola maintained a business account with Comcast. The only undisputed evidence is that the Fight was originally transmitted via satellite.”

This record required affirmance under the applicable standard: “The district court thus had several plausible options to choose from—satellite, internet, or cable. And when ‘there are two permissible views of the evidence, the fact-finder’s choice between them cannot be clearly erroneous.'” (citations omitted). No. 19-20458 (Feb. 28, 2020, unpublished).

The 2016 Presidential election, one of only five since 1824 when the Electoral College winner lost the popular vote, led to nationwide debate about the College, which in turn led to LULAC v. Abbott – a constitutional challenge to the “Winner Take All” law in Texas that assigns all the state’s electoral votes to the candidate who wins that state’s popular vote. The Fifth Circuit rejected a “one-person, one-vote” challenge to WTA based on a 1969 three-judge opinion that the Supreme Court summarily affirmed, and has not overruled or limited since. It also rejected a challenge based on right-of-association grounds, observing: “[A]ny disadvantage they allege is solely a consequence of their lack of electoral success. But ‘the function of the election process is to winnow out and finally reject all but the chosen candidates.'” No. 19-50214 (Feb. 26, 2020) (citations omitted). (Above, the unfortunate Samuel Tilden, the only Presidential candidate in history to lose despite receiving an outright majority – not just a plurality – of the popular vote).

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

The Fifth Circuit reversed a defense summary judgment in a products case in Certain Underwiters at Lloyd’s v. Axon Pressure Prods., Inc., noting:

• Procedurally, a lack of explanation as to key Daubert rulings and related elements of the plaintiff’s claim, characterizing them as “pithy to the point of being incomplete.”
• Substantively, a fact issue on causation, given conflicting testimony on (a) the handling of the relevant piece of equipment, (b) the reasons for material continuing to flow through that equipment at the time of the accident.

No. 18-20453 (Feb. 21, 2020).

The Committee for a Qualified Judiciary has published its list of Dallas-area judicial candidates found qualified.

To the right, Elvis sings “Return to Sender.” Similarly, in Rajet Aeroservicios v. Cervantes, the Fifth Circuit reminded: “‘The failure to include a return[-]jurisdiction
clause in an [FNC] dismissal constitutes a per se abuse of discretion.” . . . This is because, as our court has repeatedly made clear, ‘courts must take measures, as part of their dismissals in  [FNC] cases, to ensure that defendants will not attempt to evade the jurisdiction of the foreign courts.’ Notably, ‘[s]uch measures often include agreements
between the parties to litigate in another forum, to submit to service of process
in that jurisdiction, to waive the assertion of any limitations defenses, to agree
to discovery, and to agree to the enforceability of the foreign judgment.’ A return-jurisdiction clause assists in preventing defendants from circumventing these measures and ensures plaintiffs have the opportunity to proceed with the action in one of the forums.” No. 19-20354 (Feb. 3, 2020) (unpublished) (citations omitted, emphasis added).

Resolution of the tortious-interference claim in Whitney Bank v. SMI Companies Global, Inc. turned on whether the defendant’s profit motive could establish “actual malice” as required by Louisiana law. To the panel majority:

There is no evidence that Whitney was driven by anything other than profit in its collection efforts. Moreover, the express terms of the contract allowed Whitney to recover from SMI’s customers because both loans were secured by SMI’s accounts receivable. While it may have been more prudent and logical for Whitney to involve SMI in its collection efforts, those efforts, however brusque, served to protect the bank’s legitimate interests—collecting on the defaulted loans.

(citations omitted, emphasis added). The dissent, however:

Often this requirement [of “actual malice”] is insurmountable in the business context because of the “appropriate” motivation of profits. But I disagree with the notion that someone in a corporation who is seeking to collect money from another can never have actual malice or ill will towards that other. Corporations are run by humans, after all. . . . The magistrate judge’s decision rested in part on its determination that Whitney’s employees lacked credibility, and we do not second-guess credibility determinations.

No. 18-31189 (Feb. 3, 2020) (emphais added). (Louisiana’s actual-malice requirement for this tort is uniquely demanding, so this discussion may be less relevant in other jurisdictions.)

In Vizaline, LLC v. Tracy, the Fifth Circuit formally implemented NIFLA v. Becerra, 138 S.Ct. 2361 (2018), in the context of Mississippi’s licensing of surveyors: “The Supreme Court has recently disavowed the notion that occupational licensing regulations are exempt from First Amendment scrutiny. In overturning the “professional speech” doctrine deployed by some circuits, including ours, the Court rejected any theory of the First Amendment that ‘gives the States unfettered power to reduce a group’s First Amendment rights by simply imposing a licensing requirement.’ The district court’s ruling in this case—that Mississippi’s licensing requirements for surveyors do not trigger any First Amendment scrutiny—was inconsistent with NIFLA. We therefore reverse and remand for further proceedings.” No. 19-60053 (Feb. 14, 2020) (citations omitted, emphasis added).

Gonzales cited two Texas Supreme Court cases, decided after a summary judgment against her, holding that an insurer’s payment of an appraisal award does not preclude a Texas Prompt Payment of Claims Act (“TPPCA”) claim. The Fifth Circuit found that she failed to preserve this argument in the district court. The Court noted that “a change in law . . . does not permit a party to raise an entirely new argument that could have been articulated below”–a rule that applies when a party “could have made the same ‘general argument’ to the district court, but had not done so.” As for the state of the law at the time of the summary-judgment briefing, the Court observed:

We recognize that several courts, including our own, had previously concluded a TPPCA claim was extinguished as a matter of law after the payment of an appraisal award. But the Supreme Court of Texas granted review in [the two relevant cases] on January 18, 2019, seven days after Allstate moved for summary judgment and thirteen days before Gonzales filed her response to the motion. This fact undermines her assertion here that she “could not have made a good faith argument in the trial court that payment of the appraisal award did not preclude her from recovering under the TPPCA as a matter of law.”

Gonzales v. Allstate Vehicle & Property Ins. Co., No. 19-40250 (Feb. 11, 2020) (emphasis added, footnote omitted).

“[T]he only non-moot challenges to the injunction concern its forward-looking terms, which do not stay any ongoing state-court proceedings. See 28 U.S.C. § 2283
(absent specific exceptions, prohibiting federal courts from ‘grant[ing] an injunction to stay proceedings in a State court’); see also Dombrowski v. Pfister, 380 U.S. 479, 485 n.2 (1965) (§ 2283 bars only ‘stays of suits already instituted’ but does not ‘preclude injunctions against the institution of state court proceedings’ (citation omitted)).” Hill v. Hunt, No. 18-11633 (revised March 13, 2020).

In re Darden joins the line of cases in which the Fifth Circuit denied a mandamus petition while offering guidance on the issue presented. Darden sought relief from the trial court’s proposed jury charge on a key issue in a wrongful-death case, and the Court held:

Darden has other adequate means to attain the relief he desires. We are satisfied that on these facts, a writ of mandamus would be inappropriate. Nevertheless, we suggest that the following additional question in the verdict form, one for each officer, upon which the jury’s other findings would not be conditioned, would clearly comply with this court’s prior opinion and possibly avoid another appeal regarding these instructions after a verdict.

QUESTION NO. [#]

Do you find from a preponderance of the evidence that [officer’s name] knew or should have known of the existence and extent of Jermaine Darden’s preexisting conditions?

No. 20-10065 (Feb. 7, 2020).

A not-unusual series of events involving a settlement agreement led to a practice tip in Defense Distributed v. U.S. Dep’t of State, No.18-05911 (Jan. 21, 2020):

• Plaintiffs sued several government entities about their right to publish online plans for the “Liberator” (right) a firearm that could be made with a 3-D printer;
• That lawsuit settled, favorably for the publisher;
• The settling parties filed a Rule 41(a)(1)(A)(ii) stipulation of dismissal;
• A few days later, the district court (purported to) enter a final judgment;
• Various states brought a new lawsuit in another federal court to enjoin the settlement; leading the original plaintiffs to try and reopen the case under Fed. R. Civ. P. 59(e).

The Fifth Circuit found that the stipulation divested the district court of jurisdiction, dooming the request to reopen. The Court suggested: “If the parties had wanted to, they could have asked the district court to retain jurisdiction–for example, to oversee enforcement of a settlement agreement.” (citations omitted).

The Texas Supreme Court’s recent opinion in JP Morgan Chase v. Orca Assets, 546 S.W.3d 648 (Tex. 2018) has significantly influenced commercial litigation, particularly with its focus on “red flags” about a questionable transaction. In Universal Truckload, Inc. v. Dalton Logistics, Inc., Ni. 17-20725 (Jan. 3, 2020), a promissory estoppel case, the Fifth Circuit observed: “[T[his case differs from JPMorgan in at least three crucial ways. First, the letter of intent at issue in JPMorgan was a binding contract signed by both parties. The [Indication of Interest (“IOI”] that Universal Truckload sent Dalton is expressly nonbinding. Second, the letter of intent in JPMorgan included a clause disclaiming any oral agreements. Universal Truckload’s IOI does not. And third, the letter of intent in JPMorgan directly contradicted the oral promise, and Universal Truckload’s IOI does not. The Supreme Court of Texas explained in JPMorgan, ‘there is no direct contradiction if a reasonable person can read the writing and still plausibly claim to believe the [oral] representation.’ The conditions laid out in the IOI explain what would need to happen if Universal Truckload was to enter a contract to purchase Dalton. But the jury did not find in favor of Dalton on a contract theory. Dalton succeeded on a promissory estoppel theory, which requires the absence of a contract.”

A fatal injury at the L’Auberge Casino in Lake Charles, Louisiana, led to litigation in Texas against the casino’s owner. The plaintiffs asserted general personal jurisdiction based on the casino’s substantial marketing efforts directed toward Texas. The Fifth Circuit acknowledged “a handful of . . . district court cases finding general jurisdiction against non-resident casinos for their localized marketing efforts,” but found that recent Supreme Court opinions about general jurisdiction meant that “local advertising, as a standalone factor, does not meet ‘the demanding nature of the standard for general personal jurisdiction over a corporation.'” Frank v. P N K (Lake Charles) LLC, No. 18-31060 (Jan. 21, 2020) (applying, inter alia, Daimler AG v. Bauman, 571 U.S. 117 (2014)).

I spoke at the State Bar’s “Litigation Update” last Friday to give a Supreme Court and Fifth Circuit update; here is my PowerPoint from that presentation. It covers SCOTUS and CTA5 cases of general interest to business litigators since the last Litigation Update seminar in January 2019.

The General Land Office of Texas disputed the Interior Department’s decision to continue protection of the golden-cheeked warbler as an endangered species. The Fifth Circuit found the Department’s process flawed: “The Service recited this standard, but a careful examination of its analysis shows that the Service applied an inappropriately heightened one.Specifically, to proceed to the twelve-month review stage, the Service required the delisting petition to contain information that the Service had not considered in its five-year review that was sufficient to refute that review’s conclusions. . . .The Service thus based its decision to deny the delisting petition on an incorrect legal standard. Consequently, we conclude that the Service’s decision was arbitrary and capricious. We therefore vacate that decision and remand for the Service to evaluate the delisting petition under the correct legal standard.” General Land Office of Texas v. U.S. Dep’t of the Interior, No. 19-50178 (Jan. 15, 2020) (emphasis in original).

“[S]tatutory damages do not only approximate a copyright owner’s consequential damages. Statutory damages also serve an independent deterrent purpose; therefore, mitigation rules do not wholly preclude recovery of statutory damages.” Energy Intelligence Group, Inc. v. Kayne Anderson Capital Advisors, LP, No. 18-20350 (Jan .15, 2020). This case also provides a case study in the multiplication of copyright damages resulting from the unauthorized recirculation of a copyrighted publication.

The arbitration clause in Kemper Corporate Servcs., Inc. v. Computer Sciences Corp., No. 18-11276 (Jan. 10, 2020), said that “decisions shall be in writing and shall state the findings of fact and conclusions of law upon which the decision is based, provided that such decision may not (i) award consequential, punitive, special, incidental or exemplary damages or any amounts in excess of the limitations delineated in” other provisions of the parties’ contracts (emphasis added). The unsuccessful party questioned whether the arbitrator had authority to “categorize damages as consequential or direct,” but the Fifth Circuit disagreed, concluding: “For the arbitrator to resolve the dispute between CSC and Kemper, which could include awarding damages, he had to categorize the potential damages into the permitted and the prohibited categories.” The Court then affirmed under the highly-deferential standard of review as stated in BNSF R.R. Co. v. Alstom Transp., 777 F.3d 785 (5th Cir. 2015).

Among other challenges to a $65 million arbitration award, Catic USA disputed the claimants’ damages calculation. The Fifth Circuit rejected the challenge, in part because the shortcomings were of Catic’s own making: “Catic USA does not contest that AVIC’s anticipated rate of return was 15% or that the panel employed an appropriate discount rate; instead, it attacks the panel’s assumption that AVIC’s investment did (or would) generate profits. It is true that, although the amount of lost profits may be estimated, claimants generally ‘must show that there would [have been] some future profits’ but for the breach. But in this case, Catic USA has refused to provide the relevant information, and it was thus within the arbitration panel’s authority to infer that AVIC’s investment was indeed profitable.” Soaring Wind Energy LLC v. Catic USA Inc., No. 18-11192 (Jan. 7, 2020) (citation omitted, emphasis added). .

Catic USA challenged a $63 million arbitration award about a Chinese wind-energy venture, complaining inter alia, that the panel was assembled unfairly: “[O]ne side (the plaintiffs) appointed five arbitrators, the other side (Catic USA and Thompson) only two.'” The Fifth Circuit disagreed, noting that the parties’ contract identified “seven total, signatory ‘Members,'” each of whom had the right to name an arbitrator in the event of a dispute. “This case involves two sides, but, more importantly, it features seven members; suppose Eris had tossed the Apple of Discord into a Soaring Wind conference room, prompting a free-for-all among the parties–the arbiter selection process would have remained the same.” Soaring Wind Energy LLC v. Catic USA Inc., No. 18-11192 (Jan. 7, 2020). The Court reminded that as a general matter: “It is not the court’s role to rewrite the contract between sophisticated market participants, allocating the risk of an agreement after the fact, to suit the court’s sense of equity or fairness.”

In this election year, the Texas State Bar’s Judicial Poll has special significance. If you’re a Texas lawyer, haven’t voted yet and can’t locate the email from the Bar about it, just click here for your ballot by February 4.

“Repeatedly emphasizing that the classification turns on whether the deadline is in a statute, the Supreme Court has held that the time limits in Civil Rule 23(f), Appellate Rule 4(a)(5)(C), Criminal Rules 33 and 45, and Bankruptcy Rules 4004 and 9006 are not jurisdictional. The Court has not addressed the rule we confront, Civil Rule 50(b). But its reasoning in these cases—that “[i]t is axiomatic that the Federal Rules of Civil Procedure do not create or withdraw federal jurisdiction,”—compels the conclusion that Rule 50(b) is also a claim-processing requirement. We therefore hold that Rule 50 does not impose a jurisdictional deadline.” Escribiano v. Travis County, No. 19-50236 (Jan. 10, 2020).

“The district court’s order to stay and administratively close [Appellant]’s case is not a final order for purposes of [Federal Arbitration Act] § 16(a)(3); the collateral order doctrine does not apply to orders concerning arbitration governed by the FAA; and § 1292(a)(3) is inapplicable to referrals to arbitration in admiralty cases that do not determine a party’s substantive rights or liabilities.” Psara Energy, Ltd. v. Advantage Arrow Shipping, LLC, No. 19-40071 (Jan. 9, 2020).

Southern Credentialing showed that Hammond infringed its “credentialing packets” used for hospitals in making privilege decisions. The trial court found non-willful infringement and awarded statutory damages; Hammond appealed, arguing that such damages were not available when the alleged infringement occurred before Southern Credentialing registered its copyrights. The Fifth Circuit held: “[S]ection 412 bars statutory damage awards when a defendant violates one of the six exclusive rights of a copyright holder preregistration and violates a different right in the same work after registration. Any other conclusion would be inconsistent with the Copyright Act, which does not distinguish between ‘different’ infringements.” Southern Credentialing Support Services, LLC v. Hammond Surgical Hospital LLC, No. 18-31160 (Jan. 9, 2020).

Judicial-estoppel issues often surface when a debtor a seeks to assert a claim and dispute arises about the adequacy of the debtor’s disclosures about that claim. Wal-Mart Stores, Inc. v. Parker involved a debtors personal-injury claim, and the Fifth Circuit concluded: “After declining to apply judicial estoppel and thus allowing Parker to proceed with his personal injury suit against Wal-Mart, the bankruptcy court ordered Parker to turn over any recovery to the Chapter 13 trustee to be administered for the benefit of creditors. In cases similar to Wal-Mart’s—when a potential defendant argues that a debtor is estopped from bringing a lawsuit for failure to disclose it to the bankruptcy court—we have held that, while a debtor may be estopped from pursuing the claim on his own behalf, his bankruptcy trustee is not similarly estopped and may pursue the claim for the benefit of the creditors.” No. 18-30378 (Jan. 8, 2020). “Though the bankruptcy court’s decision is certainly odd and not the route we would have chosen, we cannot say that it contained clearly erroneous factual findings or the application of incorrect legal standards that amount to an abuse of discretion.”

A putative class action failed for lack of commonality: “Every member of the putative class received the same allegedly threatening letter from Medicredit. But the FDCPA penalizes empty threats, not all threats. So the letter alone is insufficient to certify a class. As in Dukes, there is no ‘glue’ here ‘holding the alleged reasons for all those [letters] together’—namely, evidence of a uniform intention by Seton regarding suit. So it is likewise ‘impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question’ why was I threatened.” Flecha v. Medicredit, Inc., No. 18-50551 (Jan. 8, 2020) (citations omitted, emphasis in original).

The Fifth Circuit noted two limits on Fed. R. Evid. 407, which excludes evidence of “subsequent remedial measures” –

1. In an overtime-pay case, with respect to an employer’s internal audit about employee classifications, the Court observed that “by themselves, post-accident investigations would not make the event ‘less likely to occur,’ only the actual implemented changes make it so.”

2. And as to exhibits in which the employer actually reclassified various employees, the Court said: “[F]ederal law mandates that Shipcom pay its nonexempt employees overtime wages. Because Shipcom is legally obligated to take these measures to comply with the FLSA, excluding evidence of Plaintiffs’ reclassification to nonexempt status would not further a social policy of encouraging employers to correctly classify their employees in the future.”

Novick v. Shipcom Wireless, Inc., No. 19-20056 (Jan. 7, 2020) (citations omitted, emphasis added).

An issue in Novick v. Shipcom Wireless, Inc., was whether the district court erred in not letting the defendant employer open and close arguments, when it had the burden of proof on the remaining disputed issues in an overtime-pay case. The Fifth Circuit held: “Shipcom has not cited, and we have not found, any case where this court has held a trial court’s decision as to which party presents argument first to be an abuse of discretion. Many legal presentations, like the FLSA claim in this case, have a beginning, a middle, and an end. It was within the discretion of the trial court to decide that in this case the jury should hear the beginning of the story first, even though the legal effect of the beginning was not in dispute.” No. 19-20056 (Jan. 7, 2020).

Paine Snider v. L-3 Communications involved a company’s legal malpractice claim against a firm that represented it in corporate matters, when a firm partner helped a company employee with a discrimination case against the company. The Fifth Circuit affirmed the dismissal of most of the malpractice claim on limitations grounds, observing:

L-3 knew in 2007 that . . . [i]t had access to emails between Edwards and Paine Snider reflecting that Edwards participated in drafting a detailed written internal complaint document cataloging the facts and incidents supporting Paine Snider’s claims. L-3 contacted Edwards and Elizabeth Quick, both partners at Womble, and expressly asserted that Edwards had a conflict of interest. L-3 failed to follow up with the Womble firm after it was apprised in writing by Bill Raper of that firm that he would investigate IT material, and subsequently, that he had investigated and was ready to talk to the general counsel of L-3’s parent company about Edwards’s involvement with Paine Snider’s claims against L-3.

. . .

We also know that when, late in 2011, L-3 subpoenaed documents from the Womble firm, the “new” information was somewhat more salacious and provided additional evidentiary support. But the nature of and essential facts supporting L-3’s claims against Edwards and Womble remained unchanged since 2007.

No. 16-60731 (Dec. 31, 2019).

Continuing a line of thought from earlier 2019 authority about standing to challenge administrative-agency action, the Fifth Circuit found an organization’s alleged standing was too attenuated when it “contend[ed] that its injuries are traceable to Treasury’s actions because Treasury has plenary authority over the [Low-Income Housing Tax Credit] program, including the power both to issue regulations and to recapture LIHTCs from investors who violate the [Fair Housing Act].” Inclusive Communities Project, Inc. v. Dep’t of the Treasury also shows that the style trend toward use of contractions hasn’t lessened as 2019’s continued. No. 19-10377 (Dec. 30, 2019).

Several amendments to the Federal Rules of Appellate Procedure became effective on December 1, 2019. This House Report describes and explains them.

The issue in BNSF Railway v. Panhandle Northern Railroad was whether a “handling-carrier” relationship between two railroads was terminable at will. BNSF contended that it was not; Panhandle Northern, a short line operating between BNSF’s cross-country track and a large complex of chemical plants in the Texas Panhandle, argued that it was. The Fifth Circuit made a detailed “Erie guess” about the construction of the parties’ contract under the controlling Illinois law, and rendered judgment in favor of Panhandle Northern:

“[I]in making an Erie guess, we must determine, in our best judgment, how we believe the Illinois Supreme Court would resolve whether the handling-carrier relationship between PNR and BNSF is terminable at will. And, as reflected in the [key Illinois Supreme Court] decision, careful analysis of the text of the contract is paramount in making such a determination. Moreover, in the cases BNSF relies upon, the courts discussed the economics of the parties’ agreements only after first examining closely the text of the contracts at issue and determining that there were termination provisions sufficient to take the contracts of indefinite duration out of the general rule of at-will termination. Although the courts could have ended their decisions upon making those determinations, they then went on to discuss the economics of the parties’ agreements to further bolster their decisions that the contracts were not terminable at will.”

No. 18-11416 (Jan. 3, 2020). (LPCH represented the successful appellant in this case.)

In a dispute about the allocation of a fee award in a successful class action case, the trial court expressly declined to follow the customary factors about reasonableness, instead focusing on the equities of earlier agreements among counsel. Applying a prior Circuit case on the issue, the Fifth Circuit reversed: “Although sympathetic to the difficult task the lawyers gave to the district court, we must vacate the award allocating attorney’s fees and remand for proceedings consistent with this opinion and with due consideration of the Johnson factors. While nothing forecloses an agreement among all, its absence leaves no choice but to ‘do it by the book.’ The result will be ‘equitable’ but not necessarily the extant result.” Torres v. SGE Management, LLC, No. 18-20801 (Dec.18, 2019).