In Williams v. TH Healthcare Ltd., No. 19-20134 (Nov. 14, 2019, unpubl.), the Fifth Circuit made two broadly-applicable points about the deadline running from receipt of an EEOC right-to-sue letter:

• Extra days for the weekend. Williams received a right-to-sue letter for her Title VII and ADA claims on July 29, 2018. The ninety-day deadline for filing suit fell on Saturday, October 27, 2018. Williams thus had until the following Monday, October 29, 2018, to file suit. Williams filed suit that day. Her lawsuit was therefore timely and the district court erred in dismissing it.
• Substantive, but not jurisdictional. “he district court concluded that it “d[id] not have jurisdiction over Dovie Williams’s claims because she did not sue within ninety days of receiving the [right-to-sue] letter.” The ninety-day filing requirement, however, “is not a jurisdictional prerequisite, but more akin to a statute of limitations.” Harris v. Boyd Tunica, Inc., 628 F.3d 237, 239 (5th Cir. 2010). The court therefore treats the district court’s order as a dismissal of Williams’s claims pursuant to Rule 12(b)(6) for failing to comply with the ninety-day filing requirement.

A mismatch between counsel’s activity and the results obtained led to a substantial revision of the “lodestar” in Portillo v. Permanent Workers LLC, No. 18-31238 (Nov. 11, 2018) (unpublished): “[A] drastic reduction from the requested fees is called for by deleting some of the hours consumed and otherwise departing from the lodestar. Spending tens of thousands of dollars to recover $1305 makes little sense. Although the degree of success may not be the only factor considered, it weighs heavily here, particularly since no overarching principle was vindicated, no problem solved.” (citations omitted). (Above, a picture of a Lockheed C-60 “Lodestar”, a civilian airliner and military transport during World War II.)

“Since the issue of whether the district court applied the correct state’s law to resolve the matters before it is of primary importance in determining whether the district court ultimately reached the correct result in granting Gray’s request for summary judgment, we reject Gray’s categorization of its appeal as ‘conditional.’ Either the district court applied the correct law, or it did not. Whether the district court applied the correct law cannot and does not revolve on whether it reached a result that benefits Gray. Thus, we will address the propriety of the district court’s decision to apply Texas law regardless of whether we agree with the court’s conclusion under Texas law.” Aggreko LLC v. Chartis Specialty Ins. Co., No. 18-40325 (Nov. 11, 2019).

“[T]he plain language of the [Louisiana Lease of Movables Act] forbids a lessor from both repossessing leased equipment and collecting accelerated future rental payments. Because the Lease’s liquidated damages clause authorizes just this combination of remedies, the district court properly held it unenforceable. We, like the district court, ‘agree[] with Prince that lessors cannot be allowed to circumvent Louisiana law by simply including a lease provision allowing liquidated damages in the amount of future rent payments.’” Bank of the West v. Prince, No. 18-30970 (Nov. 12, 2019).

The en banc Fifth Circuit will consider the panel opinion in Williams v. Taylor-Seidenbach, Inc., No. 18-31159 (Aug. 15, 2019), which continued to find a lack of appellate jurisdiction over a dispute because of the so-called “finality trap.” In a previous appeal, the Court found a lack of appellate jurisdiction over an order after three defendants had been dismissed without prejudice. The plaintiff returned to district court and obtained a new order directing dismissal with prejudice (with some caveats), but to no avail: “[T]he rule 54(b) judgment did not retroactively transform the prior without-prejudice dismissals into with-prejudice dismissals. . . . [T]he finality trap, which was found to bar appellate jurisdiction in Williams I, remains shut.”  Judge Haynes’s concurrence in the panel opinion asked for en banc review of the Fifth Circuit’s cases on this topic.

Jones, the heir of a former member of the Dixie Cups, a Louisiana-based musical group, sued the Artist Rights Enforcement Corporation in Louisiana for mishandling royalties. The Fifth Circuit affirmed the dismissal of Jones’s case for lack of personal jurisdiction, observing:

• The contract was not signed in Louisiana;
• “Even if the contract was discussed and drafted in Louisiana, the exchange of communications in carrying out a contract is not enough to establish personal jurisdiction”;
• Jones had nothing to do with any Louisiana-based discussions in any event;
• “When royalties were collected, they were sent to New York and stored in a New York bank”; and
• “Although AREC sent payments to Louisiana, this [was] . . . only because [the former band member] resided there, which fails to establish purposeful minimum contacts.”

Jones v. Artists Rights Enf. Corp., No. 19-30374 (Oct. 22, 2019) (unpublished).

The full Fifth Circuit has voted to rehear Brackeen v. Bernhardt, an important case about the Indian Child Welfare Act with broader ramifications for administrative law generally. Judge Ho is recused; Senior Judge Wiener will join the en banc court for this case because he served on the panel.

The Fifth Circuit reversed an OSHA determination that a company had failed to justify an untimely response, noting that under Fed. R. Civ. P. 60(b)(1) (which OSHA has adopted for this particular situation): “The excusable neglect inquiry is not limited to whether a party’s mistake caused the delay, such cause being expressed in the term ‘neglect,’ but equally concerns whether the party’s mistake or omission was ‘excusable.’ Focusing narrowly on whether a party is at fault for the delay and denying relief if it bears any blame clearly conflicts with Pioneer‘s more lenient and comprehensive standard.” Coleman Hammons Constr. Co. v. OSHA, No. 18-60559 (Nov. 6, 2019).

“Appellants argue that, by finding disgorgement a ‘penalty’ under [28] § 2462, Kokesh necessarily also decided that disgorgement is not an equitable remedy courts may impose in SEC enforcement proceedings. We disagree. Kokesh itself expressly declined to address that question, and so our precedent upholding district court authority to order disgorgement controls.” SEC v. Team Resources Inc., No. 18-10931 (Nov. 5, 2019).

UCC section 9.404(a)(2) say that “the rights of an assignee are subject to . . . any other defense or claim of the account debtor against the assignor that accrues before the account debtor receives a notification of the assignment authenticated by the assignor or the assignee.” Applying this provision, the Fifth Circuit held: “Filing a financing statement does not provide actual notice. Without an inquiry duty, [debtor]’s failure to find the financing statement is not ‘actual notice.’ Because the facts presented do not support the conclusion of actual notice, the district court should have granted judgment in favor of [debtor].” Finserv Casualty Co. v. Symetra Life Ins. Co., No. 18-20245 (Oct. 29, 2019). The Court acknowledged that a sufficient factual record could establish actual notice, but found that this one did not do so: “Although [debtor] knew that the payments might be assigned, and even if it knew that such payments were routinely assigned in the structured-settlement industry, it could not have had more than a suspicion that the payments had in fact been assigned.”

An excellent recent article in Law360 summarizes the state of the sometimes-Byzantine structure of Texas’s intermediate appellate courts. The article is behind Law360’s paywall but my remarks are below:

The Fifth Circuit affirmed a preliminary injunction that enforced a (reformed) noncompetition agreement under Louisiana law, observing, inter alia:

• The reformed scope was acceptable. “Rogillio’s non-compete provision specified particular parishes and the municipality of New Orleans. The reformation served only to narrow the provision’s scope by removing catch-all clauses that went beyond the listed parishes, not to identify specific parishes after the fact”; and
• Parol evidence was admissible to resolve an ambiguity in the agreement about the significance of the defendant’s physical presence in the relevant parishes, as the agreement’s integration clause dealt with a different and distinct issue.

Brock Services LLC v. Rogillio, 936 F.3d 290 (5th Cir. 2019).

In a case about whether a debtor’s discharge order could be enforced in a district other than the one that entered the order – a difficult question generating much analysis over the years – the Fifth Circuit “adopt[s] the language of the Second Circuit that returning to the issuing bankruptcy court to enforce an injunction is required at least in order to up hold ‘respect for judicial process.’  The bankruptcy court erred in holding that it could address contempt for violations of injunctions arising from discharges by bankruptcy courts in other districts. Therefore, as to . . . those debtors whose discharges were entered by courts in other districts, the bankruptcy court in these proceedings has no authority to enforce the resulting injunction.” Crocker v. Navient Solutions LLC, No. 18-20254 (Oct. 21, 2019) (citation omitted). This holding was fatal to an effort to bring a class action about the alleged mishandling of a type of student-loan debt.

David Russell paid money to Ellen Yarrell, and by doing so argued that he discharged a debt to his ex-wife Janna Russell. The Fifth Circuit agreed with the district court that this payment was ineffective because Yarrell was not Janna’s agent at the time,

As to express agency, the relevant court order required  that any negotiable instrument “shall be made payable to ‘Janna Russell’ only and shall not have any other endorsement.” As to apparent agency, while Yarrell was still an attorney of record for Janna at the time, that general relationship did not control over David’s specific awareness that Yarrell was not authorized to serve as Janna’s agent on this specific issue. Russell v. Russell, No. 18-20643  (Oct. 21, 2019).

Practice tip: The Court noted the black-letter principles that “whether . . . authority exists ‘depends on some communication by the principal either to the agent (actual or express authority) or to the third party (apparent or implied authority).’ It does not depend on whether the principal benefits from the transaction.“ (citation omitted, emphasis added). The Court noted, though, that neither party had raised the issue of ratification. Principles of restitution could also potentially come into play depending on the relationship between the alleged principal and agent.

“This case is a perfect example of when we should certify cases, and why certification is valuable. We are presented with a question of pure statutory interpretation on a recurring issue of interest to citizens and businesses across Texas. What’s more, it is a question that divided judges on this court. As reflected in our competing concurring opinions, different judges on this court have disagreed about whether the district court correctly interpreted the Texas Sales Representative Act (“TSRA”). But we all agreed that reasonable minds could differ. So rather than provide a partial answer—binding only litigants who file in federal court, not those in state court— we instead certified the question to the Supreme Court of Texas, which can speak with authority for all litigants, in state and federal court alike. We now have that answer, and accordingly affirm in part and reverse and remand in part.” JCB Inc. v. Horsburgh & Scott Co., No. 17-51023 (Oct. 17, 2019).

The Fifth Circuit will not ordinarily grant a writ of mandamus about the erroneous denial of a motion to dismiss for lack of subject matter jurisdiction. But in In re Gee, a sweeping challenge to Louisiana’s abortion laws, the Court observed:

“Here, the combination of five federalism concerns makes this a special circumstance and distinguishes it from an ordinary case: (1) A sovereign State is requesting the writ; (2) Plaintiffs seek sweeping review of an entire body of state law; (3) Plaintiffs seek structural injunctions that would give the district court de facto control of state law; (4) the type of discovery waiting on the other side of Louisiana’s motion to dismiss is categorically different than what awaits an ordinary civil litigant; and (5) the ordinary civil litigant cannot demand attorneys’ fees from the State’s taxpayers.”

The Court declined to grant the writ at this stage and after its detailed analysis of the relevant issues, observing

“. . . two reasons. First, it’s not clear from the district court’s order how it would resolve the State’s jurisdictional challenge. And second, much of the State’s argument in its mandamus petition goes beyond jurisdiction. In particular, the State argues that Plaintiffs’ “cumulative-effects challenge” is not cognizable. But that challenge might change after the district court conducts its claim-by-claim analysis of Plaintiffs’ standing. So in our view, resolution of whether that challenge is cognizable should await the district court’s jurisdictional analysis.”

No. 19-30353 (Oct. 18, 2019).

The Cenacs sued Orkin after Formosan termites damaged their house. Based largely on the contract documents, the Fifth Circuit affirmed summary judgment for Orkin, with the exception of the Cenacs’ negligence claim:

None of the contracts between the Cenacs and Orkin—the 1991 Agreement, the CPP, or the SSA—required Orkin to recommend, instruct, or direct its customers on how to remedy conditions conducive to termite infestation. . . .  Under these circumstances, the Cenacs’ claim that Orkin recommended installation of a vapor barrier and approved its allegedly negligent installation does not involve the breach of a specific contractual duty. Rather, Orkin undertook the task of recommending and directing installation of a vapor barrier, which . . . it had no obligation to do under its contracts with the Cenacs.

Cenac v. Orkin LLC, No. 18-31121 (Oct. 18, 2019).

The EPA approved Louisiana’s plan for controlling haze; both environmental and industry groups protested. The Fifth Circuit affirmed the EPA’s approval under the “arbitrary and capricious” standard of review.

As to industry: “We afford ‘significant deference’ to agency decisions involving analysis of scientific data within the agency’s technical expertise. The EPA’s selection of a model to measure air pollution levels is precisely that type of decision. The EPA therefore did not act arbitrarily and capriciously in relying on the CALPUFF model to approve Louisiana’s [statutorily-required] determinations.”

As to environmental groups: “Louisiana’s explanation of its . . . determination . . . omitted two of the five mandatory factors and failed to compare—or even set out—the numbers for the costs and benefits of the control options Louisiana considered. Louisiana also failed to explain how its decision accounted for the EPA-submitted analyses that pointed out substantial flaws in other analyses in the administrative record. But applying the deferential standards of the Administrative Procedures Act to the facts of this case, we hold that the EPA’s approval of Louisiana’s [plan] was not arbitrary and capricious.” Sierra Club v. EPA, No. 18-60116 (Oct. 3, 2019).

Walker and Ameriprise Financial, pursuant to their agreement, arbitrated their dispute under FINRA rules. Walker argued that the panel “exceeded its powers,” and thus fell within a statutory ground for vacatur of the arbitration award. The Fifth Circuit disagreed: “’An arbitrator exceeds his powers [under § 10(a)(4)] if he acts contrary to express contractual provisions.’ Walker does not argue that the panel violated any express provisions of the arbitration agreement, but only that it incorrectly applied [FINRA] Rule 13504.” Walker v. Ameriprise Fin. Servcs., Inc., No. 18-11641 (Oct. 9, 2019) (unpublished).

After an unsuccessful detour to the High Court of the Republic of the Marshall Islands, a plaintiff tried to appeal an award from the Western District of Texas of $26,726 in costs under Fed. R. Civ. P. 41(d) (“Costs of a Previously Dismissed Action”), along with a related order that administratively closed the Texas matter until the costs were paid. The Fifth Circuit found it had no jurisdiction because: (1) administrative closure is not a final judgment; (2) the collateral-order doctrine did not apply, “[s]ince there is no indication that the ordered costs could not be paid and later recovered upon a successful appeal of a final judgment,” and (3) mandamus was not available, especially when: “[A]ppellants here do not allege that they are unable to pay. Unwillingness to pay based on disagreement with the district court’s decision is insufficient. Appellants can obtain relief through direct appeal after a final judgment.” Sammons v. Economou, No. 18-50932 (Oct. 10, 2019).

A substantial body of law, focused on the requirements of the Federal Rules of Civil Procedure, defines the appropriate level of specificity for a plaintiff’s complaint. Pleading specificity can interact with other bodies of law as well, such as insurance coverage, where additional detail can affect an “eight-corners” analysis of whether the allegations fall within coverage. Another illustrative, if infrequent, situation appeared in the FCA case of United States ex rel. Hendrickson v. Bank of America, N.A., where a plaintiff’s lack of detail fed into the defendants’ defense of public disclosure: “Not disputing that the six documents constituted public disclosures, Hendrickson claims they do not disclose substantially the same allegations as his complaint because they do not reference DNEs or name specific banks. The banks respond that the documents’ disclosures are as specific as the complaint, which fails to allege particular instances of their receiving DNEs or differentiate allegations made against each defendant.” No. 18-11472 (Oct. 7, 2019).

A party sought to appeal a ruling in a forfeiture action about the M/V Galactica Star (distinct from the Battlestar Galactica, right); the Fifth Circuit dismissed for lack of jurisdiction: “Although a “Final Judgment” was signed and entered in district court, it did not reference Rule 54(b), did not include any language taken from the rule,and did not express the sentiments contained within the rule. The only document referenced in the judgment was the Government’s motion to strike, which did not mention Rule 54(b), the language of the rule, partial finality, or immediate appealability.” United States v. The MV Galactica Star, No. 18-20781 (Oct. 1, 2019). Cf. Lehmann v. Har-Con Corp., 39 S.W.3d 191 (Tex. 2001) (“[W]hen there has not been a conventional trial on the merits, an order or judgment is not final for purposes of appeal unless it actually disposes of every pending claim and party or unless it clearly and unequivocally states that it finally disposes of all claims and all parties.” (emphasis added)).

While focused on the intricate McDonnell-Douglas burden-shifting framework (a structure described in more than one Fifth Circuit opinion as “kudzu-like“), Garcia v. Professional Contract Servcs. Inc provides general insight about creation of a genuine issue of material fact.

As to the plaintiff’s prima facie case, all parties agreed that “proximity in time” – the passage of only 76 days between the plaintiff’s protected whistleblowing activity and termination – was sufficient to meet this burden.

As to pretext, while temporal proximity alone is not enough, the Fifth Circuit found a genuine issue of fact when the plaintiff pointed to: “(1) temporal proximity between his protected activity and his firing; (2) his dispute of the facts leading up to his termination; (3) a similarly situated employee who was not terminated for similar conduct; (4) harassment from his supervisor after the company knew of his protected whistleblowing conduct; (5) the ultimate stated reason for the company’s termination of [plaintiff] had been known to the company for years; and (6) the company stood to lose millions of dollars if its conduct was discovered.” The Court also disagreed with the district court about whether the “similarly situated” employee identified by the plaintiff qualified as such, noting that while they worked in different divisions: “Rodas and Garcia had identical jobs, reported to the same people, had a similar history of infractions, and both made mistakes overseeing Job 560.” No. 18-50144 (Sept. 11, 2019).

Are unpublished opinions introducing murkiness into a legal issue? Rein them in with Garcia v. Professional Contract Servcs., Inc., No. 18-50144, (Sept. 11, 2019), which:

1. Limited their holdings: “The company points to a couple of unpublished decisions of our court that have flagged the circuit split over this issue. These decisions do not reference the binding Fifth Circuit precedent on this point because they did not need to: both decisions resolved the cases before them on other grounds.” (citations omitted); and
2. Dismissed their precedential value: “To the extent some unpublished cases have introduced murkiness into the case law in this area, that confusion should be resolved by applying our binding precedent.”

600Camp and 600Commerce are recognized in the first-ever list of “Texas Trailblazers,” as just published by Texas Lawyer!

If you are litigating a Texas contract-law case and feel the need to scratch an equitable itch – don’t: “The Supreme Court of Texas has observed that the interpretive role of judges ‘is to be neither generous nor parsimonious’ but unswervingly faithful to what the words actually say. Looser atextual readings may scratch an equitable itch, or at times seem more pragmatic. But the Texas High Court adheres to this centuries-old principle—’law, without equity, though hard and disagreeable, is much more desirable for the public good, than equity without law: which would make every judge a legislator, and introduce the most infinite confusion.’ Texas precedent is no-nonsense about giving words their most forthright, contextual meaning. Plain language forbids judicial ad-libbing. Here, the text is clear. And, at least in Texas, clear text = controlling text.” Weaver v. Metropolitan Life Ins. Co., No. 18-10517 (Sept. 20, 2019).

On October 1, the term of Hon. Priscilla Owen begins as Chief Judge of the Fifth Circuit. The Court’s official press release provides background information. Every best wish to Chief Judge Owen in this important position.

In Simmons v. Pacific Bells LLC, the Fifth Circuit reversed a summary judgment against a Taco Bell employee who claimed he was retaliated against for going to jury duty. In particular –

He raised specific facts indicating that his termination for tardiness may have been pretextual. First, Simmons was tardy less often than other coworkers, yet those coworkers were not terminated and did not suffer adverse employment action. Second, he was never once warned about his tardiness prior to his termination. Third, Simmons demonstrated that some of his tardiness resulted from Pacific Bells’s business practices. Fourth, he was terminated immediately following his jury service. Fifth, the individual who told Simmons to lie recommended his termination and was present for it. Sixth, the individual who terminated Simmons stated in an email that she had “several different routes I can go with his termination. . . . I want to focus on [his] excessive tardiness.” In sum, the timing of Simmons’s termination, combined with the arguably pretextual rationale for his firing, could lead a reasonable jury to conclude that he was fired as a result of his refusal to lie to avoid jury service.

The Court declined to address a related issue about the scope of the “interested witness” doctrine in summary-judgment practice. No. 19-60001 (Sept. 27, 2019) (unpublished).

The Fifth Circuit (minus the two Mississippi judges, who are) voted to take en banc the difficult voting rights case of Thomas v. Bryant, No. 19-60133 (as revised, Sept. 3, 2019), which also presents important issues about justiciability and appellate procedure. At the panel level, all three judges wrote opinions.

The district court held a jury trial on whether Gilbert Galan had notice of Valero Energy’s (his employer) arbitration program.  Valero called the arbitation program “Dialogue”; the jury charge asked whether “Valero prove[d] by a preponderance of the evidence that it gave unequivocal notice to Gilbert Galan, Jr. of definite changes in employment terms regarding Valero’s Dialogue program[,]” Additionally, an instruction said that the “sole issue in this trial is whether Defendant[] Valero . . . notified plaintiff of the arbitration program and its mandatory nature.” Galan objected that the question did not have the word “arbitration”; “[h]is point is that the jury could have concluded Galan knew about the Dialogue Program as a whole, but not the part of it requiring arbitration.” The Fifth Circuit found no abuse of discretion in denying that request, especially given the instruction accompanying the question. Galan v. Valero Services, Inc., No. 19-400753 (Sept. 23, 2019) (unpublished).

The 600Camp blog celebrates its birthday this week, and invites you to join the festivity with some shrimp remoulade; here’s the recipe from Galatoire’s so you can spice up your week!

Another discovery dispute in litigation about governance of the airport in Jackson, Mississippi (a previous proceeding involved a mandamus proceeding related to the deposition of the governor’s chief of staff) arose from subpoenas to several legislators, who asserted legislative privilege in response. The Fifth Circuit found that the plaintiffs lacked standing (“The plaintiffs cite no precedent supporting their theory that Jackson voters have a right to elect officials with the exclusive authority to select municipal airport commissioners”), and that this issue was properly raised even during an interlocutory appeal of a collateral order: “[E]ven nonparty witnesses refusing to comply with a discovery order may challenge standing . . . because ‘the subpoena power of a court cannot be more extensive than its jurisdiction.'” Stallworth v. Bryant, No. 18-60587 (Aug. 21, 2019).

Cleveland v. Bell was a wrongful death claim, asserted under 42 U.S.C. § 1983, which turned on the allegation that a prison nurse was indifferent to the decedent’s calls for help. The trial court denied qualified immunity to the nurse and the Fifth Circuit reversed: “[W]e find no evidence that . . . Nurse Bell subjectively ‘dr[e]w the inference’ that Cleveland was experiencing a life-threatening medical emergency. The record contains statements from Nurse Bell indicating that she thought there was nothing wrong with Cleveland and believed he was faking illness.But nothing suggests that these statements reflected anything other than her sincere opinion at the time. Even if we construe her statements in the light most favorable to Plaintiffs, they are insufficient to establish that Nurse Bell knew how serious the situation was.” No. 18-30968 (Sept. 13, 2019) (emphasis added).

A surprisingly subtle problem can arise under secction 2.316 of the UCC when a party urges a role for implied warranties, even though the parties’ agreement contains express ones. A comment to that section advises: “The situation in which the buyer gives precise and complete specifications as to the seller is not explicitly covered in this section, but this is a frequent circumstance by which the implied warranties may be excluded.”  In Baker Hughes v. UE Compression, the Fifth Circuit found such a situation when:

. .. this Agreement included 18 single-space pages of Baker Hughes’s Specification and a 21-page responsive set of specifications comprising UE’s Quote. Baker Hughes ordered exactly what it required in the boosters. Other contractual provisions cited above confirm Baker Hughes’s ultimate responsibility for the design, its duty to supply technical information, its ability to modify specs during the fabrication, and its right to approve any drawings or specifications prepared by UE

Mo. 17-20709 (Sept. 12, 2019) (Our firm’s state-court brief on the topic in an unrelated case shows some of the potential complexities about this UCC issue.)

The Flying Dutchman is a mythical ship that forever travels the seas, unable to find a port. Conn Appliances, Inc. v. Williams presents a similar tale about a dispute involving a retail installment contract. Williams sued Conn in Tennessee, realized that he had an arbitration agreement in his contract, and then dismissed his suit in favor of arbitration in Tennessee (the clause required arbitration “near his residence”). Williams won; he filed suit in Tennessee to enforce the award while Conn filed sued in its home state of Texas to vacate it (the clause allowed confirmation in “any court with jurisdiction”). The Fifth Circuit agreed that Williams was not subject to personal jurisdiction in Texas, and affirmed the dismissal of that action. Conn protested that it was not subject to jurisdiction in Tennessee, and the Court observed: “[E]ven if the Western District of Tennessee is not the proper forum, the lack of jurisdiction over Conn in another forum does not mean that the Southern District of Texas has personal jurisdiction over Williams.” No. 19-20139 (Sept. 4, 2019).

An accounting firm successfully defended against a malpractice claim by relying on Mississippi’s “minutes rule,” under which “Mississippi courts will not give legal effect to a contract with a public board unless the board’s approval of the contract is reflected in its minutes.” After losing a summary judgment, the plaintiff (a county hospital) “attempted to submit additional evidence into the record to prove the existence of a professional relationship with Horne—namely, minutes from the board’s regular session meetings on January 19, 2011 and March 16, 2011, as well as minutes from the board’s executive session meetings. . . . The Medical Center admitted, however, that this evidence was in fact not new at all—the Center had access to its own minutes throughout the proceedings. It nevertheless sought to excuse its tardiness on the ground that the minutes became relevant only when the district court granted summary judgment to Horne.” (emphasis added). The district court rejected that explanation, and so did the Fifth Circuit. Lefoldt v. Horne LLP, No. 18-60581 (Sept. 6, 2019).

The full Fifth Circuit engaged the boundaries of the administrative state in Collins v. Mnuchin. A 9-7 majority of the en banc Court found that the FHFA (the regulator of Fannie Mae and Freddie Mac) was structured unconstitutionally; a different 9-7 majority found that the appropriate remedy was a go-forward restructure of the agency rather than the unwinding of a significant, previously-ordered financial transaction. (If the below is hard to read in your browser, just click on it to see it full-sized).

Four Republican appointees joined the majority on remedy, two of whom–Judges Owen and Duncan–had joined the majority on constitutionality.

Among the various concurrences and dissents, Judges Ho and Oldham concurred to emphasize the significance of the case to other administrative agencies, while Judges Costa and Higginson dissented on the basis of the plaintiffs’ standing.

The diverse approaches of the Republican-appointed judges underscore the frequent observation on this blog that the term “conservative” is a broad umbrella for different perspectives on distinct aspects of the apparatus of government.

The question in French v. Linn Energy LLC was subordination; the analysis reviewed the Bankruptcy Code’s policy goals: “Section 510(b) serves to effectuate one of the general principles of corporate and bankruptcy law: that creditors are entitled to be paid ahead of shareholders in the distribution of corporate assets.” The Court reviewed this issue: “whether In this case we decide that payments owed to a shareholder by a bankrupt debtor, which are not quite dividends but which certainly look a lot like dividends, should be treated like the equity interests of a shareholder and subordinated to claims by creditors of the debtor,’ and concluded that they should be. No. 18-40369 (Sept. 3, 2019).

A securities-fraud class action lived to fight another day in Broyles v. Commonwealth Advisors: “The district court erred in deciding that plaintiffs lacked standing under Delaware law to bring a direct action against their investment advisers rather than initiating a derivative action in behalf of the hedge funds that the advisers had assembled and managed for fraudulent inducement purposes. The investor plaintiffs adequately supported their motion for partial summary judgment demonstrating their Article III standing with appropriate evidence of their injury-in-fact that arose :immediately upon their purchase of the falsely overvalued securities; were induced and caused by the defendant advisers’ fraudulent advice and solicitations; and likely will be redressed by a favorable decision on the merits.” No. 17-30092 (Aug. 28, 2019).

Conservative thinkers frequently express skepticism about the administrative state, and in particular, the Chevron doctrine about judicial deference to it. A powerful counterpoint to that line of thinking, and an equally orthodox part of conservative philosophy, appears in the Fifth Circuit’s recent opinion in Center for Biological Diversity v. EPA, which found a lack of standing to challenge an EPA discharge permit and reminded: “’For the federal courts to decide questions of law arising outside of cases and controversies would be inimical to the Constitution’s democratic character.’ It would improperly transform courts into ‘roving commissions assigned to pass judgment on the validity of the Nation’s laws’ and agency actions. In our Government, there are entities that address environmental issues outside of the case-or-controversy constraint. This Court is not one of them. As Judge Sentelle put it many years ago: ‘The federal judiciary is not a backseat Congress nor some sort of super-agency.’“ No. 18-60102 (Aug. 30, 2019) (citations omitted).

“Incentive alignment” is a well-known business concept; in law, various types of fee arrangements are often employed to align the financial motivations of lawyer and client. The law is also wary of incentives for injustice, especially when the finances of the justice system become muddled with court procedure. A recent Fifth Circuit opinion joined the list of the clearest examples of such misalignments:

• Tumey v. Ohio, 273 U.S. 510 (1927), which found a due process violation when a “liquor court,” which prosecuted violations of the state Prohibition Act, allowed the mayor to serve as the judge and convict without a jury. If the mayor found the defendant guilty, some of the fine paid would go towards the mayor’s “costs in each case, in addition to his regular salary”; an acquittal, on the other hand, meant no money to the mayor;
• Brown v. Vance, 637 F.2d 272 (5th Cir. 1981), invalidating the statutory fee system for compensating Mississippi justices of the peace because those judges’ compensation depended on the number of cases filed in their courts (thus incentivizing them to rule for plaintiffs in civil cases and the prosecution in criminal ones to encourage more filings); and now
• Caliste v. Cantrell, No. 18-30954 (Aug. 29, 2019), finding a due process violation “[w]hen a defendant has to buy a commercial surety bond, [and] a portion of the bond’s value goes to a fund for judges’ expenses . . . [so] the more often the magistrate requires a secured money bond as a condition of release, the more money the court has to cover expenses.”

Double Eagle Energy Services filed for Chapter 11 bankruptcy protection and then sued two defendants for breach of contract in federal district court. Double Eagle then assigned that claim to one of its creditors; the defendants argued that this assignment destroyed federal subject matter jurisdiction. The Fifth Circuit disagreed, relying upon the “time-of-filing” rule to find that the “related to bankruptcy” jurisdiction existing when the case was filed continued to exist after the assignment. The separate question–whether the district court should nevertheless its exercise discretion to dismiss the case–was remanded, as the Court’s “ordinary practice for discretionary decisions is remanding to ‘allow the district court to exercise its discretion in the first instance.'” Double Eagle Energy Services v. Markwest Utica EMG, No. 19-30207 (Aug. 26, 2019).

A vocational school (RRCC) sought to recover damages from the federal government’s civil forfeiture of $4 million from it, arguing that the seizure without notice put it out of business. the Fifth Circuit found the school’s claims barred by sovereign immunity: “Congress has provided various remedies for claimants like RRCC who assert that the United States has wrongfully seized their property in forfeiture proceedings. Under certain circumstances, claimants who “substantially prevail[ ]” in a forfeiture action may recover attorneys’ fees, costs, and interest.  In some cases, they may sue the United States for property damages under the FTCA. .What claimants may not do, however, is sue the United States for constitutional torts arising out of the property seizure. Congress has not waived the United States’ sovereign immunity for damages claims of that nature. Because RRCC’s counterclaims sought precisely those kinds of damages, we hold its counterclaims are barred by sovereign immunity.” United States v. $4,480,466.16, No. 18-10801 (Aug. 22, 2019), withdrawn and revised (Nov. 5, 2019).

The Fifth Circuit confirmed a district judge’s broad discretion over discovery in JP Morgan Chase Bank v. Datatreasury, a dispute about the scope of postjudgment discovery in a licensing dispute won by Chase. The Court held that the district court did not abuse its discretion in:

• Setting a time period for relevant information, considering the scope of the judgment and the pertinent licensing agreement;
• Focusing the relevant information by reference to the judgment itself rather than the broader definition of a “creditor” under the fraudulent-transfer statutes; and
• Evaluating the “proportionality” of the requested information in light of the expense associated with older records.

No. 18-40043 (Aug. 23, 2019).

Nearly a century ago, the unfortunate Helen Palsgraf  was injured in a Long Island Railroad station; the difficult tort-law issues arising from her injury continue to challenge the courts today.  Martinez v. Walgreens Co. presented the question “whether, under Texas law, a pharmacy owes a duty of care to third parties injured on the road by a customer who was negligently given someone else’s prescription.” The Fifth Circuit answered “no,” considering, inter alia: (1) “[I]t was not sufficiently foreseeable that a pharmacy customer would take the medication in a bottle intended for someone else, notwithstanding that the label listed someone else’s name and a different medication,” and (2) “[T]he Texas legislature has shown itself to be both willing and able to undertake the public policy balancing inherent in extensive regulation of pharmacies’ treatment of prescription drugs.” No. 18-40636 (Aug. 6, 2019).

“Resolving an issue that has brewed for several years in this circuit, we conclude that the TCPA does not apply in diversity cases.” Klocke v. Watson, No. 17-11320 (revised Aug. 29, 2019) (emphasis added). “Because the TCPA imposes evidentiary weighing requirements not found in the Federal Rules, and operates largely without pre-decisional discovery, it conflicts with those rules.”

Assuming the confirmation of Hon. Sul Ozerden of Mississippi, all active-judge positions on the Fifth Circuit will soon be filled. Of the 17 judges, 12 will have been appointed by Republican Presidents (6 by President Trump), and 5 by Democrats. 8 of the 17 judges will have previously served, for some amount of time, as a state or federal trial judge.

En banc votes by the Court, examined with an eye on the political party of the appointing Presidents, can show patterns. For example, in this week’s Cole v. Carson case, the Democrat-appointed judges voted the same way while the Republican-appointed judges divided. (If these slides are hard to read on your browser, clicking on them should bring them to full size and clear resolution):

All former trial judges voted the same way:

Similarly, in the 2017 case of Jauch v. Choctaw County about pretrial detention, all the Court’s Democrat-appointed judges voted against en banc review, while the Republican-appointed ones divided:

And again, all of the Court’s former trial judges voted the same way:

There are many ways to define, characterize, and otherwise describe judges and their philosophies. This quick review suggests that an exclusive focus on political-party association is too narrow.

The Fifth Circuit’s published opinions this week include Municipal Employees’ Retirement System v. Pier One Imports, a large securities case involving the beleaguered stock of the “Pier One” retail chain; the second, Cole v. Carson, is a long-running, hard-fought lawsuit about a police shooting. (The fracturing of the en banc court in Cole will be the subject of an upcoming post.) Despite the gravity of these issues, the Court crafted two wonderful turns of phrase, deserving of a moment’s recognition because they are both fun and effective.

• The business question giving rise to Pier One was whether management had made wise decisions about what products to emphasize; thus, Judge Elrod began the opinion with some wise words from Coco Chanel:

• The dissents in Cole clashed with one another as well as the majority, leading to a “fiery” retort by Judge Willett:

Texas liquor law prohibits a public corporation from holding a “P permit,” which “authorize[s] the sale of liquor, wine, and ale for off-premises consumption.” Wal-Mart successfully challenged this law as a violation of the dormant Commerce Clause.The Fifth Circuit reversed and remanded, making these observations, of general interest beyond this specific dispute, on the issue of legislative intent:

• “Under the law of the Fifth Circuit, evidence that legislators intended to ban potential permittees based on company form alone is insufficient to meet the purpose element of a dormant Commerce Clause claim”;
• “An admission that the drafter sought to create a law that would survive a constitutional challenge is not evidence of a discriminatory legislative purpose”;
• “[O]verreliance on ‘post-enactment testimony’ from actual legislatures is problematic, and not ‘the best indicia of the Texas Legislature’s intent'”; and
• “The motivations and lobbying efforts of the [Texas Package Store are not direct evidence of legislative purpose.”

Wal-Mart Stores, Inc. v. Texas Alcoholic Beverage Commission, No. 18-50299 (Aug. 15, 2019).