Hard-fought litigation about reform to Texas’s foster-care system led to an injunction, an appeal, a limited remand to revise the injunction, and a renewed appeal. The panel majority affirmed in part and reversed in part, finding, inter alia: (i) the revised injunction exceeded the mandate of the limited remand; (ii) that a requirement affirmed in the appeal was, upon further review, in fact unnecessary; and (iii) that a provision about data use required additional confidentiality safeguards.

A strong dissent protested the overall lack of deference to the district court’s discretion, focusing in particular on a provision about “an integrated computer system to rationalize record keeping.” It argued that by vacating that provision, “the majority completes its walk away from the district court’s interlaced remedial scheme, taking away provisions essential to its success . . . a decision flawed by the evidence and controlling legal principles.”  The dissent further observed: “[The State’s] reflexive resistance to the federal district court’s remedial orders–both direct confrontation and a refusal to cooperate or otherwise participate in the crafting of a response–bespeaks a view of our federalism inverted to look past the unchallenged finding of this court of the State’s deliberate indifference to the constitutional rights of PMC children . . . .”  M.D. v. Abbott, No. 18-40057 (July 8, 2019).

“The complaint alleges that during the April and October 2016 phone calls, the defendants negligently misrepresented to Mr. Dick that ‘reinstatement was not an option’ and that ‘there was nothing [the] Plaintiff could do to stop a foreclosure.’ The plaintiff’s claim that these misrepresentations prevented her from reinstating the loan merely repackages her claim for breach of contract based on the duty to cooperate. It is therefore barred by the economic loss rule.” Dick v. Colorado Housing Enterprises LLC, No. 18-10900 (July 5, 2019) (unpublished).

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

Lake Eugenie Land & Devel. v. BP, the latest in the “body of federal common law in this Circuit” about the Deepwater Horizon settlement, presents both a crisp summary of the mandate rule and a dramatic tale of piracy on the high seas.

Mandate rule. As to the mandate rule, the opinion succinctly summarizes its theoretical basis –

“The mandate rule is a subspecies of the law-of-the-case doctrine: When a court decides a question, it usually decides it once and for all ‘subsequent stages in the same case.’ This doctrine operates on a horizonal plane—constricting a later panel vis-à-vis an earlier panel of the same court.  It also operates on a vertical plane—constricting a lower court vis-à-vis a higher court. The vertical variant is what we call the ‘mandate rule,’ and it’s the kind at issue here.”

(citations omitted), as well as the way to implement it: “The first step is figuring out what our mandate said. . . . The next question is whether the district court deviated from that mandate.” (citations omitted).

Piracy on the high seas. The opinion cites some 19th-Century authority about the foundations of the mandate rule; among them, Himley v. Rose, 9 U.S. (5 Cranch) 313 (1809), which involved a “decree . . . formerly rendered” about the restoration of cargo from the merchant ship Sarah. The earlier opinion, Rose v. Himley, 8 U.S. (4 Cranch) 241 (1808), presents an amazing tale of a load of coffee, sent from the port of Santo Domingo by “brigands” during a slave revolt against the French government, which was then intercepted and seized by a French privateer and sold in Cuba.

Texas Capital Bank sued Zeidman for the alleged breach of a guaranty obligation. The Bank moved for summary judgment; in response, one of Zeidman’s arguments was that the Bank’s claim was barred by quasi-estoppel. He testified that “the Bank orally agreed to accept a $500,000 payment in satisfaction of the Guaranty, Zeidman wired that amount to the Bank, the Bank accepted the payment, and it later demanded additional payment under the Guaranty.” The Bank countered that this defense was barred by the statute of frauds, and the Fifth Circuit agreed that “oral modification of the Guaranty appears to be prohibited by the text of the Guaranty and the statute of frauds . . . .” But the Court found the Bank’s position about the statute of frauds to be inapplicable “because it improperly recharacterizes Zeidman’s affirmative defense as a claim that the underlying Guaranty was modified.” Texas Capital Bank N.A. v. Zeidman, No. 18-1114 (June 27, 2019) (unpubl.)

The Fifth Circuit revised its original opinion in SEC v. Arcturus Corp., reaching the same result (reversal of a summary judgment for the SEC about whether certain investment contracts were securities), while adding significant factual and legal detail about the sophistication of the relevant investors – the issue on which the Court found summary judgment to have been inappropriate. SEC v. Arcturus Corp. (revised), No. 17-10503.

The Fifth Circuit’s unfortunate Erie guess in Priester v. JPMorgan Chase Bank, 708 F.3d 667 (5th Cir. 2013), about limitations for an action to quiet title on a home-equity lien, was later rejected by the Texas Supreme Court in Wood v. HSBC Bank USA, 505 S.W.3d 542 (Tex. 2016). Meanwhile, the Priesters’ problems with their lender continued. The Fifth Circuit declined to consider their motion for reconsideration under Fed. R. Civ. P. 60(b), noting a lengthy delay by the Priesters in bringing the motion, and observing: “If a ‘change in law’ automatically allowed the reopening of federal cases, then anytime the Supreme Court resolved a circuit split, the courts that had taken the view that did not prevail would have to reopen cases no matter how long ago the judgments issued. . . . [The Priesters] are worried that the earlier federal judgment against them may pose a res judicata problem. But res judicata is the ordinary result of a final judgment, not an extraordinary circumstance warranting relief from one.” Priester v. JP Morgan Chase, No. 18-40127 (re-released as published on July 1, 2019).

The federal system’s more-forgiving approach, to what Texas state practice calls “the Casteel problem,” was on display in Young v. Board of Supervisors of Humphreys County, Mississippi. After a jury trial, Young won a judgment under § 1983 for depriving him of the use of several properties. Among other appeal points, “The Board takes issue with Jury Instruction 4, which told the jury that it could find the Board liable if it found, by a preponderance of the evidence, one of three things: (1) ‘The Board of Supervisors authorized a violation of Mr. Young’s property rights,’ (2) ‘Dickie Stevens had been given the authority by the Board to take the action he took with respect to Mr. Young’s property,’ or (3) ‘The Board ratified Dickie Stevens’ actions after the fact.'” The Fifth Circuit held that as to the second theory, “[e]ven assuming that the court erred in allowing the jury to determine whether Stevens was a policymaker, there was legally sufficient evidence for a reasonable jury to hold the Board liable on a ratification [the third] theory . . . Thus, ‘any injury resulting from the erroneous instruction is
harmless.’“ No. 18-60618 (June 21, 2019).

Here is my PowerPoint from the recent appellate course sponsored by University of Texas CLE. I also discussed this month’s opinion in In re: City of Houston, granting mandamus relief in a privilege dispute.

In In re City of Houston, the Fifth Circuit succinctly held: “Having reviewed the submissions of the parties, the documents in dispute, which are contained in Exhibit A to the City’s motion to seal documents, and pertinent jurisprudence, we conclude that the electronic communications identified by the City in Tabs 3, 4, 5, 8 and 9 of Exhibit A fall within the attorney-client privilege and that mandamus relief is warranted with respect to such items. See In re: Itron, Inc.,883 F.3d 553, 567–69 (5th Cir. 2018); EEOC v. BDO USA L.L.P., 876 F.3d 690, 695-97 (5th Cir. 2017); Exxon Mobil Corp. v. Hill, 751 F.3d 379, 382–83 (5th Cir. 2014); In re: Avantel, S.A., 343 F.3d 311, 316–17 (5th Cir. 2003).” No. 19-20377 (June 18, 2019, unpublished).

In SEC v. Stanford Int’l Bank, Ltd., the Fifth Circuit reviewed an intricate, court-supervised settlement between the receiver for Stanford International Bank and several D&O carriers, and “conclude[d] the district court lacked authority to approve the Receiver’s settlement to the extent it (a) nullified the coinsureds’ claims to the policy proceeds without an alternative compensation scheme; (b) released claims the Estate did not possess; and (c) barred suits that could not result in judgments against proceeds of the Underwriters’ policies or other receivership assets.”

The Court observed: “By ignoring the distinction between Appellants’ contractual and extracontractual claims against Underwriters, the district court erred legally and abused its discretion in approving the bar orders. These claims . . . lie directly against the Underwriters and do not involve proceeds from the insurance policies or other receivership assets. . . . [R]eceivership courts have no authority to dismiss claims that are unrelated to the receivership estate. That the district court was ‘looking only to the fairness of the settlement as between the debtor and the settling claimant [and ignoring third-party rights] contravenes a basic notion of fairness.'” No. 17-10663 (June 17, 2019).

The Northern District of Texas sent this message today: “The Earle Cabell Federal Building and U.S. Courthouse located at 1100 Commerce Street, Dallas, TX, will be closed to the public tomorrow [June 18]. Initial criminal proceedings that are scheduled tomorrow before a magistrate judge will be held at the Fort Worth division located at 501 W. 10th Street, Fort Worth, TX. Other proceedings scheduled for tomorrow in Dallas will be rescheduled unless you have been specifically informed of alternative arrangements by a courtroom deputy or other court personnel. Updates to this information will be provided on our website at www.txnd.uscourts.gov.”

After a 2011 amendment, the removal statute allowed a motion to remand based on diversity after a year if the “district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action. 28 U.S.C. § 1441(c)(1).  One of the removal-jurisdiction issues in Hoyt v. Lane Construction  was the applicable legal standard to determine bad faith. The district court focused on the plaintiffs’ affidavits, which explained “why the Hoyts were reluctant to go to trial against Storm or accept Storm’s (apparently low) settlement offer,” but “do not explain why the Hoyts waited until just two days after the one-year deadline to dismiss Storm. On appeal, the plaintiffs argued for a standard based on equitable estoppel that had been developed in prior Fifth Circuit precedent, but the Court rejected those authorities as having been mooted by the 2011 amendment. No. 18-10289 (June 10, 2019).

Several parties entered an “Area of Mutual Interest” (AMI) agreement, a common feature of oil-and-gas development projects. The AMI included various interests “which were or are acquired after” the agreement’s effective date, “by a Party” to the agreement. But it excluded “all interests, leases or agreements owned by a Party prior to the Effective Date.” Thus, when a party bought interests from another party after the effective date, that sale was not within the scope of the AMI. The Fifth Circuit observed: “If Appellees sought to prohibit the type of activity in which EnerQuest engaged, they could have easily done so through the contract.” Glassell Non-Operated Interests, Ltd. v. EnerQuest Oil & Gas, LLC, No. 18-20125 (June 12, 2019).

Here is a copy of my PowerPoint from today’s presentation about business cases in the Dallas Court of Appeals during 2019. Thanks to all who came out, and to the DBA Appellate Section for the invitation!

With yesterday’s nomination of Hon. Sul Ozerden (right), who presently serves as a District Judge for the Southern District of Mississippi, the Fifth Circuit is on the cusp of having a full roster of active judges.

Today’s post on 600Commerce hearkens back to a case covered by this blog several years ago when, literally, the ship had sailed.  (The 600Commerce post goes on to note that a similar principle applies in a dispute about the right of possession (in Texas practice, a forcible detainer action), which becomes moot when “a writ of possession had been served on appellant” and thus “appellant is no longer in possession of [the] premises.” Jones v. Willems, No. 05-18-01191-CV (June 7, 2019). Longtime 600Camp readers will be interested to know that the ship in question, since reflagged as the M/V CALHOUN, is in Singapore as of the date of this post, still well away from Fifth Circuit jurisdiction.

AccentCare sent an arbitration agreement to Trammell’s home; “[t]he district court applied the ‘mailbox rule’ to presume that Trammell received the company’s proffered arbitration agreement even though she testified that she never received the contract and indicated to her employer that she was experiencing difficulties in receiving and sending mail.” This showing, especially given that AccentCare could not produce a signed agreement or otherwise rebut her claims about problems with mail, the Fifth Circuit reversed: “Because Trammell created a genuine issue of material fact regarding whether an arbitration agreement was formed, she is entitled to a jury trial under Section 4 of the FAA.” Trammell v. AccentCare, Inc., No 18-50872 (June 7, 2019, unpublished).

(The specific FAA provision, often referred to but rarely used, says: “. . . the party alleged to be in default may, except in cases of admiralty, on or before the return day of the notice of application, demand a jury trial of such issue, and upon such demand the court shall make an order referring the issue or issues to a jury in the manner provided by the Federal Rules of Civil Procedure, or may specially call a jury for that purpose”).

Rural electric cooperatives, created pursuant to the New Deal’s Rural Electrification Act, and that “‘act under’  and the [Rural Utilities Service]’s direction
based on a close and detailed lending relationship and shared goal of furthering
affordable rural electricity,” sought to remove litigation about governance issues under the “federal officer” statute. The district court remanded but the Fifth Circuit reversed: “[I]t was error to conclude that the cooperatives have not presented a colorable federal defense, as required for federal officer removal jurisdiction. Again, this is not to say that the cooperatives will inevitably be successful in their preemption defense. Rather, our conclusion is a natural byproduct of the
fact that ‘one of the most important reasons for [federal officer] removal is to have the validity of the [federal defense] tried in a federal court.'” Butler v. Coast Elec. Power Assoc., No. 18-60365 (June 7, 2019).

Ekhlassi sued National Lloyds in Texas state court for a flood-insurance claim, arising out of a “Write Your Own” insurance policy issued in the carrier’s name but underwritten by the federal government. His filing may have satisfied the one-year statute of limitations for such a claim – the parties disputed the trigger event – but his choice of a state forum proved fatal. The panel majority, applying Circuit precedent and authority from other Circuits, found that the grant of “original exclusive jurisdiction” in federal court by 28 U.S.C. § 4072 applied to his suit. A dissent argued that this statute, by its terms, applied only to a suit against FEMA’s Administrator and not a “WYO” carrier. Ekhlassi v. National Lloyds Ins. Co., No. 18-20228 (June 4, 2019).

District courts frequently “administratively close” an inactive matter, but that housekeeping measure does not create an appealable order: ‘”A ‘final decision’ generally is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” In contrast, “a district court order staying and administratively closing a case lacks the finality of an outright dismissal or closure.” By administratively closing the case, the district court retains jurisdiction, meaning it can “reopen the case—either on its own or at the request of a party—at any time.” “[R]eservation of jurisdiction for the purpose of hearing substantive claims . . . precludes appellate jurisdiction because an order framed this way is not a final judgment.”’ Sentry Select Ins. Co. v. Ruiz, No. 18-50605 (May 23, 2019) (unpubl.)

Life Partners’ Creditors’ Trust v. Cowley, No. 17-11477 (May 31, 2019), reviewed the dismissal of several highly-technical claims brought by a bankruptcy trustee about the sale of “viaticals” (investments in life insurance policies sold to third parties by the insureds). For each claim, the Fifth Circuit reviewed whether FRCP 9(b) or 8(a) applied, and then assessed the pleaded allegations, reaching these conclusions:

Sometimes, simply stating the issue gives a strong indication as to the answer. Such was the case in McGlothlin v. State Farm, which examined whether two Mississippi statutes were “repugnant” to one another (synonyms for “repugnant,” according to one online reference, include “abhorrent, revolting, repulsive, repellent, disgusting, offensive, objectionable, vile, foul, nasty, [and] loathsome . . . .” Specifically, Mississippi’s uninsured-motorist statute (1) required State Farm to pay the damages that an insured is “legally entitled to recover” from an uninsured driver, and (2) treats a fireman driving a fire truck as “uninsured,” as a result of the statute’s governmental-immunity statute. A driver who was rear-ended by a fire truck argued that these two statutes were “repugnant” and had to be read in favor of coverage; the Fifth Circuit disagreed: “The two sections’ being ‘confusing’ does not equate to repugnancy.” No. 18-60338 (May 31, 2019).

A recurring question in commercial arbitration is the amount of detail required for a “reasoned award’ – described generally as “something short of findings and conclusions but more than a simple result.”  The Fifth Court provides a helpful example in YPF S.A. v. Apache Overseas, Inc., which quotes the relevant part of the arbitrator’s award and holds: “KPMG noted that it based its analysis on the parties’ statements and accounting records, pointed to its finding on the accrual of liabilities, and explained what documentation it found relevant in evaluating the proper refund amount.” No. 17-20802 (May 24, 2019).

The Texas Uniform Fraudulent Transfer Act provides a potential defense to a party who receives an otherwise-fraudulent transfer in “good faith.” That said, the exact contours of that defense are not completely clear, leading the Fifth Circuit to vacate an  earlier panel opinion on the issue, to now certify this question to the Texas Supreme Court:

“Is the Texas Uniform Fraudulent Transfer Act’s ‘good faith’ defense against fraudulent transfer clawbacks, as codified at Tex. Bus. & Com. Code § 24.009(a), available to a transferee who had inquiry notice of the fraudulent behavior, did not conduct a diligent inquiry, but who would not have been reasonably able to discover that fraudulent activity through diligent inquiry”

Janvey v. GMAG, LLC, No. 17-11526 (May 24, 2019).

A remarkably long-lived case about the collapse of Enron came to an end in Lampkin v. UBS Fin. Servs., Inc.: “[Plaintiffs[‘] Securities Act claims fail because their participation in the Employee Stock Option Plan was compulsory and employees furnished no value, or tangible and definable consideration in exchange for the option grants. The Court in [Int’ Brotherhood of Teamsters v. Daniel, 439 U.S. 551 (1979)] rejected the idea that the exchange of labor was sufficient consideration in the context of a compulsory, non-contributory pension plan—the same logic applies to the option plan at issue here. Plaintiffs made no investment decision in the grant of the options, the Enron plans were compulsory and non-contributory. The fact that plaintiffs would eventually make an affirmative investment decision—whether to exercise the option or let it expire—at some point in the future is of no consequence. Plaintiffs’ claims are based explicitly on the grant of the option, not the exercise of that option.” No. 17-20608 (May 24, 2019) (emphasis added).

Valderas, the plaintiff in an excessive-force case, opposed the defendant’s motion to strike with a single argument – that the defendant had failed to satisfy the conference requirement of N.D. Tex. Local Rule 7.1. The district court disagreed, as did the Fifth Circuit: “Valderas cites to only one decision explicating the meaning of the local rule in question and implies that the decision establishes that a telephone conversation is necessary to satisfy the conference requirement. The decision explicitly notes, however, that the conference requirement can be met through a written conferral.” Valderas v. City of Lubbock , No. 18-11023 (May 21, 2019) (unpublished) (emphasis added) (applying Dondi Props. Corp. v. Commerce Sav. & Loan Ass’n, 121 F.R.D. 284, 290 (N.D. Tex. 1988) (en banc) (per curiam)).

Yesterday’s District of the District of Columbia opinion about the Congressional subpoena to Mazars (President Trump’s accounting firm), offers a fascinating summary of the history of legislative-executive friction about similar subpoenas, including the complaints of the rarely-quoted President Buchanan. In an echo of McCulloch v. Maryland about the broad scope of Congress’s power to legislate, this opinion describes a similarly-broad scope of the power to investigate before legislating.

Cohen argued, inter alia, that a letter from Allstate “merely denied ‘coverage for various items'” and thus lacked adequate specificity to effectively deny his flood-insurance claim (and thus start a 1-year federal statute of limitations). The Fifth Circuit disagreed, observing that “not even the temptations of a hard case will provide a basis for ordering recovery contrary to the terms of [a] regulation, for to do so would disregard the duty of all courts to observe the conditions defined by Congress for charging the public treasury.” Cohen v. Allstate Ins. Co., No. 18-20330 (May 17, 2019) (citation omitted).

Lopez v. Pompeo addressed an infrequent but fundamental issue of res judicata: “When this court affirms a judgment of the district court, but on different grounds than those adopted by the district court, it is the decision of this court, not the district court, that has preclusive effect . . . ‘[O]nce an appellate court has affirmed on one ground and passed over another, preclusion does not attach to the ground omitted from its decision.'” No. 18-40175 (May 14, 2019).

On the topic of personal jurisdiction, recent Supreme Court cases emphasize that “[i]t is the defendant, not the plaintiff or third parties, who must create contacts with the forum State..” Walden v. Fiore, 571 U.S. 277 (2014).  An interesting test of that principle arose in Carmona v. Leo Ship Management, No. 18-20248 (May 10, 2019), in which a stevedore sued for injuries incurred in Houston while unloading pipe from a globe-circling freighter. He sued LSM, the company that by contract operated the M/V Komatsushima Star (right) (since, renamed the M/V Kacey, and moored in the Yellow Sea as of this post). LSM did not own the ship “and could not direct where it traveled, what it carried, or for whom it worked,” and thus tried to invoke Walden and related cases about jurisdiction arising from a “mere fortuity.”

The Fifth Circuit observed:

• “[A] defendant’s contacts with a forum and the purposefulness of those contacts are distinct–though often overlapping –inquiries. Although tortious conduct within a forum ensures the existence of contacts it does not always guarantee that such contacts were deliberate.” (citation omitted);
• “Especially considering that the contract was freely  terminable with two months’ notice, LSM was hardly compelled to travel to Texas against its will. Rather, it made a deliberate choice to keep its employees aboard a ship bound for Texas” and thus “purposely availed itself” of the Texas forum;
• But as to one of Carmona’s claims: “LSM presented undisputed evidence that a third party had stowed the pipes aboard the ship while it was outside the United States,” thus establishing that “the claim that the pipes were improperly stowed does not stem from LSM’s activities in Texas.”

On May 16 at the Belo Mansion, the DBA Appellate Section presents a panel discussion among the eight newly-elected Justices of the Fifth Court of Appeals (a/k/a, the “Slate of Eight“), moderated by Justice Lana Myers, a 20-year veteran of the Fifth Court.. The Section’s announcement of the program goes on to say: “If you have a question you would like the panel to answer, please send it to DBAAppellateChair@gmail.com. The panel will try to answer pre-submitted questions during the presentation as time permits.”

The relator in Lemon v. Nurses to Go., Inc. alleged violations of the False Claims Act about several aspects of the defendants’ hospice-care services. Applying Universal Health Services v. United States ex rel. Escobar, 136 S.Ct. 1989 (2016), the Fifth Circuit reversed the district court’s finding that the issues were immaterial, finding that they (1) related to conditions of payment; (2) the government would have enforced those conditions had it known of the problems identified by relators; and (3 the issues were not “minor or insubstantial.” No. 18-20326 (May 7, 2019).

In the category of “not very surprising en banc votes”: After a plea for en banc review in a recent case about federal jurisdiction over injury claims arising from asbestos exposure at the Avondale Shipyard (in its heyday, the largest employer in Louisiana), the Fifth Circuit has accepted that case for en banc review. Latiolas v. Huntington-Ingalls, No. 18-30652 (May 8, 2019). (To the right, the launch at Avondale of a Knox-class frigate, an unheralded but stalwart antisubmarine-warfare vessel of the late Cold War.)

A multi-million dollar judgment, in favor of a bankruptcy trustee suing for the estate, foundered on two problems about party identity:

1. Injury? The estate (LSI) had no standing to seek damages about a substantial debt incurred to an alleged insider (Jabil), because: “[T]he millions of dollars awarded under Damage Element No. 1 represent Jabil’s injury, not LSI’s. Jabil manufactured and delivered the contractually agreed upon equipment to LSI. LSI benefitted from the equipment, and Ebert even leased and sold the equipment in Chapter 11 proceedings. Moreover, LSI did not pay the invoices on the equipment. Therefore, LSI benefitted and even had cash available for other needs.” (emphasis in original)
2. Benefit? Stock sales involving affiliated entities did not established a personal benefit to alleged insiders (Apfel and Bartlett): “[E]bert tacitly admits that she provided evidence only for the nominee companies’ gains, not for Appel and Bartlett in their individual capacity. Manz’s calculations were based primarily on two documents: Schedule 7.B, which showed market sales of LSI stock, and a list of nominee companies with how many shares of LSI each owned as of September 9, 2011. Yet these documents only list companies and provide no proof of or insight into Appel and Bartlett as individuals.”

Ebert v. DeJoria, No 18-10382 (April 30, 2019).

While “[t]he Texas Supreme Court has not had occasion to determine whether a contract that is unsigned but otherwise enforceable may incorporate an unsigned document by reference,” that was the issue presented in Int’l Corrugated & Packing Supplies, Inc. v. Lear Corp. But in the context of an interlocutory appeal from denial of a motion to compel arbitration, the Fifth Circuit “declined[d] to resolve this novel question of Texas law here because the district court has not yet ruled on the enforceability of Lear’s purchase orders. Specifically, . . . how the parties entered the agreements at issue in this case—either through purchase orders, or phone calls or emails prior to the sending of purchase orders, or some other conduct—nor has it determined what effect, if any, the parties’ course of dealing has on such agreements [under the UCC].” No. 18-50167 (May 3, 2019) (unpublished).

“[Mister Mudbug, Inc.] asserts that it relied on [Bloomin’ Brands, Inc.]’s representation that ‘MMI would have to substantially enlarge its production and manufacturing facilities’  if it wanted ‘to produce all of the food products that BBI would need in its nationwide restaurant operations.’ The district court held that this representation is a factual declaration, not a promise. We agree. It is not an assurance that BBI would award MMI larger contracts if it did expand; it is a statement informing MMI of the preconditions necessary to be in the running for a larger contract.” Mr. Mudbug, Inc. v. Bloomin’ Brands, Inc., No. 18-30626 (May 1, 2019) (unpublished) (emphasis added).

Reed, whose sole income came from Social Security benefits, and who was subject to a Texas law requiring him to pay for GPS monitoring, contended that the law violated section 407(a) of the Social Security Act, which protects benefits from “execution, levy, attachment, garnishment, or other legal process.” (emphasis added).

To resolve Reed’s argument, the Fifth Circuit first summarized the general importance of statutory-construction canons, even in a focus on “plain meaning”: “Statutory language, like all language, is suffused with age-old interpretive conventions. And judges, like all readers, must be attentive not to words standing alone but to surrounding structure and other contextual cues that illuminate meaning.”

The Court then applied the concept of ejusdem generis: “‘Where general words follow specific words in a statutory enumeration, the general words are construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words.’ Section 407(a) follows this familiar semantic structure, meaning the follow-on
phrase ‘other legal process’ is limited to processes like “execution, levy, attachment, [or] garnishment.” Common phrasing; common-sense meaning.” Reed v. Taylor, No. 17-20519 (May 2, 2019).

Celebrate the Cinco de Mayo with 5 key Dallas court of appeals cases from 2019!

A significantly limited new version of the TCPA has passed the Texas House; a similar version is still pending in the Senate. The bill addresses several aspects of the statute’s application in business cases. While the lingering Erie issue about the TCPA’s application in federal court remains, the issue will have less ongoing significance if the Legislature reduces this statute’s force in commercial litigation.

While finding a “clear record of delay or contumacious conduct,” sufficient to justify dismissal with prejudice in a Deepwater Horizon case, as to one set of appellants in Graham v. BP Exploration, the Fifth Circuit declined to do so as to the other group: “Confused about whether their three existing complaints were ‘individual lawsuits’ under [Pretrial Order] 63, the D’Amico Appellants queried the [Plaintiffs’ Steering Committee] and were advised only to file sworn statements. This was a mistake, as the D’Amico Appellants  concede. But based on this flawed understanding of PTO 63, the D’Amico Appellants then timely filed and served sworn statements before the April 12, 2017 deadline. None of this makes those filings any less mistaken under PTO 63, but it does show an absence of willful conduct. And BP points to nothing in the record to dispel that impression. There is a critical difference between trying but failing, on the one hand, and simply not trying, on the other.” No. 18-30008 (Apr. 29, 2019) (emphasis added).

The Texas anti-SLAPP statute has generated an enormous amount of litigation and commentary, especially with the Legislature in session and actively considering amendments. Interestingly, one of the most successful defendants to invoke this statute is President Trump, who used it last year in California federal court to obtain dismissal of a defamation claim about the above Tweet, as well as a substantial award of attorneys’ fees. The district court’s opinion is interesting reading on the merits, as well on choice-of-law and the Ninth Circuit’s treatment of the underlying Erie issue.

An arbitration panel, organized under the rules of the Houston Bar Association, awarded a substantial sum to an attorney in a fee dispute with his former client. The client sought vacatur on the ground that it not know the non-attorney member of the panel worked for a large law firm (to paraphrase Claude Rains’s character in Casablanca, it was shocked, SHOCKED to make this discovery). The Fifth Circuit found this argument waived, and did not accept the client’s argument that waiver should be limited to vacatur based on conflicts of interest: “We therefore conclude that Light-Age waived its objection to Davis’s participation on the panel. Light-Age had constructive knowledge that Davis worked for a law firm at the time of the arbitration hearing; it could have discovered that Jackson Walker was a law firm simply by clicking on the link provided in Davis’s email signature or running a brief internet search. It is reasonable to expect even a pro se litigant to perform such basic research into its arbitrator.” Ashcroft-Smith v. Light-Age, Inc., No. 18-20098 (April 25, 2019) (emphasis added).

Counterclaims that “revolve around the parties’ compliance with the same settlement agreement” are compulsory under Fed. R. Civ. P. 13(a): “[B]oth regard the same instruments and transactions, and a jury would hear substantially the same facts in regard to both.” RPV, Ltd. v. Netsphere, Inc., No. 18-10462 (April 23, 2019) (unpublished) (citation omitted).

Hira, a guarantor, argued that the lender’s calculation of the amount due should not have been accepted as a basis for summary judgment against her. The Fifth Circuit disagreed:

Hira never proposed her own calculations, a step she was required to take by Texas law and the district court’s summary judgment order. RBC Real Estate Fin. v. Partners Land Dev., Ltd.543 F. App’x 477, 480 (5th Cir. 2013) (per curiam) (unpublished) (upholding a grant of summary judgment because the appellants “did not provide any controverting summary judgment evidence to the district court”); 8920 Corp. v. Alief Alamo Bank, 722 S.W.2d 718, 720 (Tex. App.—Houston [14th Dist.] 1986, writ ref’d n.r.e.) (granting a motion for summary judgement because the appellants “presented no controverting affidavits that could raise a fact issue as to appellee’s method of computation and the accuracy of its figures.”). Without providing a competing calculation, Hira failed to raise a genuine issue of material fact.

Pacific Premier Bank v. Hira, No. 18-10611 (April 15, 2019, unpublished).

In a forum dispute arising from an oil-rig explosion, the Fifth Circuit rejected four arguments for personal jurisdiction in Texas over one of the parties, arising from that party’s litigation activity:

1. Counterclaiming. “[A] non-resident defendant may participate in litigation without submitting to the court’s jurisdiction so long as it maintains its objection to personal jurisdiction. Relatedly, this court has also held that filing a counterclaim or ‘third-party claim does not, without more, waive an objection to personal jurisdiction.'” (citation and footnote omitted);
2. Moving to compel arbitration. “Ironshore submitted to the court’s jurisdiction for the sole purpose of compelling arbitration. By submitting to the court’s power for this limited purpose and maintaining its personal jurisdiction motion to dismiss, Ironshore continued to object to ‘the power of the court’ and did not waive its personal jurisdiction defense.”
3. Demand letters. “Many other circuits have addressed similar scenarios in which a potential plaintiff sends a cease-and-desist letter threatening litigation to a potential defendant. None of these courts held that sending a letter amounts to
   purposeful availment.”
4. Settlement agreement with Texas forum clause. “There are no allegations of suit-related contact between Ironshore and Texas other than Ironshore’s
   participation as a defendant in litigation and the forum-selection clause in the
   settlement agreement . . . .”

Halliburton Energy Services, Inc. v. Ironshore Specialty Ins. Co., No. 17-20678 (April 17, 2019).

Texas’s robust attorney-immunity doctrine defeated claims about the Allen Stanford scheme in Troice v. Greenberg Traurig LLP., No. 17-11464 (April 17, 2019). The Fifth Circuit declined to certify the state-law issue, citing “the substantial treatment of the issues by the Texas courts of appeals and the ‘cogent and sound arguments’ presented by counsel,” and held:

1. “We are persuaded the Supreme Court of Texas would apply the attorney immunity doctrine in the non-litigation context”;
2. “[I]mmunity can apply even to criminal acts so long as the attorney was acting within the scope of representation” (noting that “[a]fter arguing there was a categorical bar to applying immunity in this context, the plaintiffs did not make an alternative argument that immunity does not apply because Greenberg’s acts were outside the scope of client representation”; and
3. “We conclude that the Supreme Court of Texas would not consider itself sure that the Texas Legislature intended to abrogate attorney immunity in the context of [Texas Securities Act] claims.” (emphasis in original).

A state prison, whose officers were sued for allegedly using excessive force, made video recordings of encounters with prisoners to defend against such claims. Unfortunately for the prison, in Bourne v. Gunnels the prisoner “had turned out the lights in the cell” and one of the defendants “stood in the doorway to the cell for most of the use of force,” meaning that from the video, “it is impossible to tell what occurred during the use of force.” This failure of proof led to reversal of summary judgment for the defendants. No. 17-20418 (April 16, 2019).

“In their Fourth Amended Complaint, the Bowmans make claims under the [Texas Debt Collection Act] without citing the appropriate sections of the statute for each claim. CitiMortgage raised this issue, and the Bowmans responded that they provided enough information for CitiMortgage to figure out which provisions it violated. As the district court reasoned, this is insufficient to provide fair notice to the defendant under Federal Rule of Civil Procedure 8(a).” Bowman v. CitiMortgage, No. 18-10867 (April 12, 2019) (unpublished).

The panel majority in Waste Management, Inc. v. River Birch, Inc.reversed a defense summary judgment in a civil RICO case, on the question whether an alleged bribe was the cause of an action by the disgraced former mayor Ray Nagin. The opinion detailed the circumstantial evidence both about the alleged bribe and its alleged effect, and found that a jury question had been presented: “Noting that It is rare in public bribery cases that there is definitive ‘smoking gun’ evidence to show a payment was made to an official to influence the official to perform some act—and there is no such evidence here. It is critical in cases such as this that inferences from circumstantial evidence about intent and motives about which reasonable minds could differ be sorted out by the jury.” (footnotes omitted). The dissent observed: “I don’t like granting summary judgment to campaign-finance violators. Nor do I like giving the benefit of the doubt to disgraced ex-government officials. But, in the absence of evidence, it’s what the law commands,” relying primarily on the Supreme Court’s Matsushita summary-judgment opinion. (Judge Davis wrote the majority opinion joined by Judge Costa; Judge Oldham dissented). A brief opinion on rehearing noted that the parties had not cited Matsushita so the court “therefore decline[s] to consider that case now.”