Collateral estoppel is ordinarily an affirmative defense that must be pleaded, with two exceptions: (1) when both actions were brought in courts of the same district, or when all of the relevant facts are contained in the record and uncontroverted. OneBeacon Am. Ins. Co. v. Barnett, No. 18-60224 (Feb. 27, 2019).

In Louisiana Real Estate Appraisers Board v. FTC, the Fifth Circuit declined to apply the “collateral order” doctrine to an interlocutory order of an administrative agency, leaving open the possibility that the doctrine could so be applied in a different situation. No. 18-60291 (Feb. 28, 2019).

The Fifth Circuit’s new opinion in Seeligson v. Devon Energy changed its holding about a class-wide damages theory from its earlier opinion. The Court now concludes that while “it is possible that Plaintiffs could demonstrate that [Defendant] breached its implied duty to market” at a certain price, and “[i]f so, this is precisely the type of common question” that would support certification – “this court remains open as to whether damages can be ascertained on a classwide basis” and remanded for further evaluation of whether breach and damages “can be evaluated classwide or if a well-by-well analysis is required.” No. 17-10320 (revised February 20, 2019).

Contemporary mandamus practice in the Fifth Circuit is well-illustrated by In re JPMorgan Chase, in which the Court concluded:

1. An order requiring individual notice to 42,000 former Chase employees, as part of the conditional certification of a collective action under the FLSA, was not remediable by an ordinary appeal;
2. The issue of whether notice should be sent to employees with arbitration agreements — roughly 30,000 of the relevant employees — “has importance well beyond this case, so mandamus relief would be appropriate;
3. The district court’s decision to require notice to those “Arbitration Employees” was not a “clear and indisputable” error, given the state of the case law at the time of its decision; but 
4. After review of the law, the Court concluded that the district court was in fact wrong. As the court had now “issue[d] this published as a holding on these legal issues,” it stayed the case for thirty days “[t]o facilitate . . . review” of “its decision in light of this opinion, which is now binding precedent throughout the Fifth Circuit.”

No. 18-20825 (Feb. 21, 2019) (applying, inter alia. In re: Depuy Orthopaedics, Inc., 870 F.3d 345, 350 (5th Cir. 2017)).

A Mississippi regulatory board for engineers sought to ban the use of the phrase “Tire Engineers” by an oil-change business (right); the Fifth Circuit disagreed with it: “Evidence offered by both parties, particularly when viewed in the light most favorable to Express as the non-moving party, demonstrates that other states with similar statutes have not challenged the use of the trademark. Thus, despite claims to the contrary, the Board is an outlier in this respect, and it fails to address why alternative, less-restrictive means, such as a disclaimer, would not accomplish its stated goal of protecting the public. The Board thereby fails to satisfy the required burden of demonstrating a reasonable fit between its regulation and the constitutionally-protected speech.” Express Oil Change LLC v. Mississippi Board of Licensure for Profesional Engineers & Surveyors, No. 18-60144 (Feb. 19, 2019).

In a borrower’s lawsuit against the servicer of a home equity loan, the district court entered a partial final judgment pursuant to Fed. R. Civ. P. 54(b) on January 4, 2018. Then, after further review of a remaining claim by a magistrate judge, it entered a second judgment resolving the rest of the case on January 31. The Fifth Circuit held that the notice of appeal was timely as to the second judgment, but not the first. The Court had considerable doubt about whether the appeal of the second judgment could be used to question whether Rule 54(b) had properly been invoked in the first, and also found that the district court had properly used that Rule to handle the borrower’s various claims. Johnson v. Ocwen Loan Servicing LLC, No. 18-10257 (Feb. 21, 2019).

Mardi Gras comes late this year – Tuesday, March 5 – here is the energy-filled parade schedule leading up to New Orleans’ big day.

Wallace alleged that he had been retaliated against in violation of the Sarbanes-Oxley Act; the dispute about the objective reasonableness of his beliefs about the disclosure of sales tax payments in turn led to an accounting dispute, which Wallace lost after his expert was found to not have been properly disclosed. Wallace argued that the pertinent testimony was lay rather than expert, but the Fifth Circuit disagreed:

Rule [the expert]’s training, education, and experience included “‘refinery economics, strategy management for commercial crude oil, business development,’ and . . . ‘transfer pric[ing] between operating segments.’” Notably, Rule did not deal explicitly with tax calculations, SEC reporting requirements, or investor relations. We conclude that Rule’s declaration as to paragraph 22 could not have been based on his lay experience as a Tesoro employee but rather on specialized accounting knowledge. Rule’s opinion on the application of tax accounting definitions to the SEC disclosures is an example of Rule applying his “specialized knowledge” to “help the trier of fact . . . understand the evidence.

Wallace v. Andeavor Corp., No. 17-50927 (Feb. 15, 2019).

The Coen Brothers’ 2008 movie, Burn After Reading, a comedy about spy agencies in pursuit of a “secret” document that is anything but, ends with the leaders of the CIA saying: “‘I guess we learned not to do it again,’  . . . despite not knowing exactly what they did[,]” Similarly, the revised panel majority in Nall v. BNSF Railway Co., in again finding a triable issue on the plaintiff’s disability-discrimination claim, observes:

“The dissent from our original opinion, as well as the petition for rehearing en banc and two amicus curiae submissions in support of it, expressed concern that the panel majority had imposed a new requirement for assertion of the direct-threat defense, to-wit: that in addition to showing that the employment decision was objectively reasonable, the employer must also establish that the process itself that was utilized in reaching that decision, considered separately, was objectively reasonable. Without commenting further on the efficacy of such an approach or on whether the panel majority actually adopted it, we emphasize that nothing in this substitute opinion should be understood as employing that reasoning.”

No. 17-20113 (revised Feb. 15, 2019) (emphasis added).A revised special concurrence continued to mourn the sprawl of the McDonnell-Douglas framework; a revised dissent praised the “well articulated” en banc petition and “persuasive” amicus submissions. The original opinions can be read here.

Xitronix Corp. alleged that KLA-Tencor Corp. violated the antitrust laws by fraudulently obtaining a patent from the U.S. Patent and Trademark Office. The trial court granted summary judgment to KLA, appeal was taken to the Federal Circuit, which then transferred the appeal to the Fifth Circuit – who then transferred the case back to the Federal Circuit in Xitronix Corp. v. KLA-Tencor Corp. Distinguishing the recent Supreme Court case about an attorney malpractice claim involving patent law, Gunn v. Minton, 133 S.Ct. 1059 (2013), the Fifth Circuit observed:

“This case concerns a patent that is currently valid and enforceable, issued following a PTO proceeding heretofore viewed as lawful. This litigation has the potential to render that patent effectively unenforceable and to declare the PTO proceeding tainted by illegality. This alone distinguishes the present case from Gunn. The adjudication of this Walker Process claim also implicates the interaction between the PTO and Article III courts. The district court’s acerbic statements about the PTO at summary judgment point to the complexity of relations between proceedings in federal court and before the PTO.”

No. 18-50114 (Feb. 15, 2019).

A nonprofit lacked standing to pursue a facial First Amendment challenge to an IRS regulation in Freedom Path, Inc. v. Internal Revenue Service: “Freedom Path’s claimed inability to know what communications will be deemed in pursuit of an exempt function is not an injury arising from the four corners of the Revenue Ruling but quite explicitly from its application beyond the facial terms. Thus, Freedom Path’s claimed chilled-speech injury is not fairly traceable to the text of Revenue Ruling 2004-6, meaning it does not have standing to bring this facial challenge.” No. 18-10092 (Jan. 16, 2019).

Alaska Electrical Pension Fund v. Flotek Industries shows how demanding the federal securities laws are as to the issue of “scienter,” The plaintiffs alleged misrepresentations by the defendant about the viability of its software product called “FracMax,” which analyzes data about hydraulically-fractured oil and gas wells. These four alleged misrepresentations were not sufficient to produce the required “strong inference of scienter:

1. “Defendants’ repeated use of the term “conclusive” in describing FracMax’s effect, which Plaintiffs characterize as tantamount to assuring that FracMax’s data was irrefutable”;
2. “Defendants’ reference to FracMax data as “unadjusted” when, in fact, FracMax used an algorithm to adjust certain data”;
3. “Defendant Chisholm [the CEO]’s presentation at the September 11, 2015, conference of direct comparisons between several wells that used CnF [a technology measured by FracMax] versus several that did not, which Defendants concede relied on incorrect data for the non-CnF wells”; and
4. “Chisholm’s representation at this same conference that this data was ‘back check[ed] and validate[d],’ when Defendants later admitted that ‘Flotek had no internal controls in place to ensure the integrity of the FracMax database.'”

No. 17-20308 (Feb. 7, 2019).

The surprisingly-complex issue of voluntary dismissal, addressed  by Fed. R. Civ. P. 41(a), led to the novel question in Welsh v. Correct Care LLC of whether the lack of an answer to an amended complaint, when the original pleading had been answered, allowed an automatic dismissal without prejudice. The Fifth Circuit held that it did not, and further noted that before the district court could condition such a dismissal on it being with prejudice, it would have to give the plaintiff a choice, as “[a] plaintiff typically ‘has the option to refuse a Rule 41(a)(2) voluntary dismissal and to proceed with its case if the conditions imposed by the court are too onerous.'” No. 17-11522 (Feb. 7, 2019).

The Fifth Circuit sidestepped a question about the scope of the “equitable mootness” doctrine, in favor of reliance on section 363(m) of the Bankruptcy Code, which (in the Court’s summary of the statute’s clunky terms) “limits the ability of appellate courts to review the sale of estate property when the order approving the transaction is not stayed.” To avoid the statute, the would-be appellant “says it does not challenge the sale of the property but only challenges the disbursement of cash to the probate estate.” That distinction did not moo-ve the Court, as it reasoned: “Without the more than $8 million payment, the probate estate would not have released its claim that it owned the Channelview shipyard. And without that release, San Jac Marine likely would have walked away from the deal. As the bankruptcy court noted, there is no way to sever
the settlement from the sale; they are mutually dependent.” No. 18-40350 (Feb.5, 2019).

The Coston Flare, the first technically and commercially viable maritime flare, was a universal attention-getting sign at sea for many years. Similarly, the “Rule of Orderliness Opinion” attracts en banc review in the Fifth Circuit; the most recent example being a January 17 panel dissent about circuit precedent on the viability of a patient’s implied right of action under the Medicaid Act, which led to a February 5 vote to take the issue en banc. In that spirit, yesterday’s 3-opinion panel resolution of Wittmer v. Phillips 66 Co.raises the question whether circuit precedent addresses Title VII’s applicability to discrimination based on sexual orientation. No. 18-20251 (Feb. 6, 2019).

The Pugas received a substantial judgment in their favor after a jury trial, arising from a collision with a truck controlled by RXC Solutions. The Fifth Circuit substantially affirmed, holding, inter alia:

• Preservation. The defendant’s FRCP 50(b) motion, based on the argument that federal law does not allow courts to hold motor carriers liable for the acts of independent contractors, was not permissible when its 50(a) motion only attacked the sufficiency of the evidence about the driver’s employee status and alleged negligence;
• Jury charge. The district court did not abuse its discretion when it “closely examined the statute, avoided the obvious, overbroad definition of motor carrier, and picked out the correct, limited definition.”
• Expert testimony. The defendant’s objections to the testimony of an accident investigator went to weight rather than admissibility, even though “[i]t did not take into account every possible explanation for the accident, and some measurements were missing.”
• Remittitur. “We measure disproportionality by applying a percentage enhancement to past similar awards. This enhancement is 50% for jury trials.”

Puga v. RCX Solutions, Inc., No. 17-41282 (Feb. 1, 2019).

St. Bernard Parish v. Lafarge North America, the long-running litigation about damages related to Hurricane Katrina and a large Lafarge barge, led to an appeal by Seymour – a former attorney for some of the claimaints, whose attempt to intervene in the case and collect his fee was rejected. The Fifth Circuit affirmed, noting, inter alia, that he was not entitled to rely upon representation of his interests by other parties after his 2011 withdrawal, and that he appeared capable of pursuing relief in other fora. No. 18-30029 (Feb. 1, 2019).

The removal statute does not allow an in-state defendant to remove a case, even if diversity exists. That rule imposes a substantial limitation on removable cases. But if such a removal survives to final judgment, the judgment will stand: ” The removal bar of 28 U.S.C. § 1441(b), however, is procedural and not jurisdictional. Therefore, ‘where there is improper removal, the pertinent question is whether the removed action could have been filed originally in federal court; and, if it could have been and the action has proceeded to judgment on the merits in federal court, that judgment will not be disturbed.'”   There is complete diversity, so the case could have been brought originally in federal district court. Furthermore, Lamb did not object to removal in the district court, and the case has proceeded to a judgment on the merits. Lamb v. Ashford Place Apartments LLC, No. 18-30469 (Jan. 30, 2019) (citations omitted, emphasis in original).

In Springboards to Education v. Houston ISD, an education-services company sued the Houston school district about a summer reading program. The company’s program, called the “Read a Million Words Campaign,” offered incentives to join the “Millionaire’s Reading Club” and gave prizes when students reached their reading goals. HISD’s program, focused just on summer reading, involved the “Houston ISD Millionaire Club” and similar sorts of goal-related gifts. In affirming a summary judgment for HISD, the Fifth Circuit made two important, general observations about the purposes of trademark law:

1. Trademark law protects marks – not process. “HISD could have copied the methodologies used in the Read a Million Words campaign step by step, and, whatever other problems that might have engendered, as long as it used clearly distinguishable nomenclature, Springboards would have no argument that HISD violated the Lanham Act in doing so.” The Court noted that a patent could, at least in theory, potentially protect such processes.
2. Purchaser confusion is the key – not “confusion” generally. The Court noted that confusion about the programs involving HISD students and their parents was relevant – but only to the extent it bore on the test for evaluating confusion by potential purchasers of Springboards’ products. “Looking the digits of confusion for guidance, we conclude that no reasonable jury could find a likelihood of confusion. Springboards’ marks are not widely known and are similar or identical to multiple third-party marks. HISD did not market the Houston ISD Millionaire Club to Springboards’ potential customers—i.e., third-party school districts. There is no evidence of an intent to confuse. And Springboards’ potential customers are sophisticated institutional purchasers that are not easily confused. The only digit pointing unwaveringly in Springboards’ favor is the similarity of the products. But even this does not strongly suggest a likelihood of confusion given the popularity of millionaire-themed literacy programs.” (emphasis added).

No. 18-20119 (revised Feb. 14, 2019).

Moss and Keating sued Princip, Martin, and the partnership to which the four of them belonged. The defendants removed the case, but after an adverse verdict, raised a problem with subject matter jurisdiction: Moss and Keating were diverse from Princip and Martin – but the partnership, as a citizen of every place the partners lived, was not. The district court dismissed the partnership from the case, finding it necessary but dispensable, and the Fifth Circuit affirmed:

“Although the plaintiffs raised claims for damages derivative of the partnership’s rights, the partnership’s presence in the suit was not necessary to protect the partnership or any of the parties from prejudice. The partnership was a party throughout the litigation, but its role was purely passive, reflecting the reality that its interests did not diverge from the interests represented by the four individual partners and that its  presence played no distinct role in the outcome of the suit against the individuals.”

Moss v. Princip, No. 16-10605 (Jan. 16, 2019).

84 Lumber lost, at the pretrial stage, a construction dispute with Paschen, a general contractor. Paschen then dismissed without prejudice its third-party action against J.A., a general contractor, after which 84 Lumber appealed. The jurisdictional question was whether that dismissal without prejudice made the case unappealable under Ryan v. Occidental Petroleum  577 F.2d 298 (5th Cir. 1978). The Fifth Circuit concluded that it did not: “The purpose of the Ryan rule is to prevent the appealing party from manufacturing jurisdiction by using an ‘end-run around the final judgment rule to convert an otherwise non-final—and thus nonappealable—ruling into a final decision appealable under § 1291.’ But the plaintiff, 84 Lumber, did not participate in Paschen’s dismissal of its remaining third-party claim against J & A, so it did not manufacture appellate jurisdiction.” 84 Lumber Co. v. Continental Casualty Co., No. 18-30170 (Jan. 24, 2019).

A reminder on a basic point of judgment finality for appeal purposes: “FRAP 4(a)(1)(1)(A) requires litigants to file a notice of appeal ‘within 30 days after entry of the judgment or order appealed from.’ The district court entered judgment on March 6, 2018. Kleinman moved for attorney’s fees on March 20, which the court awarded on June 26. Kleinman appealed both the judgment and the fees award on July 23—over four months late for the judgment on the merits. And contrary to Kleinman’s arguments, ‘[m]otions addressing costs and attorney’s fees . . . are considered collateral to the judgment, and do not toll the time period for filing an appeal.’” Kleinman v. City of Austin, No. 18-50612 (Jan. 25, 2019, unpubl.)

June Medical Services v. Gee, a 2-1 decision allowing various restrictions and regulations placed on abortion procedures by Louisiana (Judge Smith, writing for the majority, joined by Judge Clement, with Judge Higginbotham dissenting), recently went to an en banc vote that fell largely along the lines of the judges’ political party of nomination – 6 judges voted in favor of rehearing (Chief Judge Stewart and Judges Dennis, Southwick, Graves, Higginson, and Costa), and 9 judges voted against rehearing (Judges Jones, Smith, Owen, Elrod, Haynes, Willett, Ho, Engelhardt, and Oldham).

The fractured panel in Collins v. Mnuchin, which addressed the legality of “sweeps” of funds from Fannie Mae and Freddie Mac by their regulator, led to a fascinating en banc argument today in New Orleans as the Court reviewed fundamental administrative-law issues.

The novel situation of a bankruptcy debtor, who emerged from bankruptcy proceedings solvent thanks to a luckily-timed rise in crude oil prices, gave rise to a fundamental if infrequently-encountered question: “whether the . . . creditors are ‘impaired’ by a plan that paid them everything allowed by the Bankruptcy Code.” The bankruptcy court said that they were, reasoning that a plan impairs a creditor if it refuses to pay an amount the Bankruptcy Code independently disallows; accordingly, it required a “make-whole” payment to certain creditors and set postpetition interest at a contractual rate. The Fifth Circuit saw a “monolithic mountain” of contrary authority, and reversed and remanded, holding that “the Code—not the reorganization plan—defines and limits the claim in these circumstances.” Ultra Petroleum Corp. v. Ad Hoc Committee, No. 17-20793 (Jan. 17, 2019), revised/shortened on rehearing, Nov 26, 2019.

The official investiture of the eight new Justices on the Fifth Court of Appeals will be at 3:30 on January 30, 2019, at the Belo Mansion in downtown Dallas.

After the November 2018 elections, the new leadership of Harris County moved to dismiss the appeal of long-running litigation about the county’s pretrial bail policy (most recently, the stay pending appeal granted in O’Donnell v. Goodhart, 900 F.3d 220 (5th Cir. 2018)). That panel rejected the movants’ request to vacate its opinion, noting the exceptional effort made to handle the case quickly and accurately, and finding that that situation was not analogous to an appeal that becomes moot. The panel agreed that “a merits panel is not bound by a motions panel,” but observed: “[T]hat is irrelevant because there is not, and never will be, a merits panel” as a result of the dismissal. O’Donnell v. Salgado, No. 18-20466 (Jan. 14, 2019).

In a counterpoint to last month’s decision in SEC v. Sethi, the Fifth Circuit reversed a summary judgment about whether oil-and-gas investment contracts qualified as “securities” for purposes of 10(b)(5) and 15(a) liability: “Fifteen investors also submitted affidavits declaring that they had the power to, and did in fact, vote on a variety of decisions. And the record does not show that Arcturus or Aschere took any significant actions without the investors’ prior approval. The fact that the investors voted and took actions to manage the drilling projects makes this case different than others where the district court appropriately granted summary judgment.” SEC v. Arcturus Corp., No. 17-10503 (Jan. 7, 2019).

Thompson v. Dallas City Attorney’s Office appears to present the first use, in the history of the federal judiciary, of both the words “augurs” and “morphed” in a circuit-court opinion. It also carefully reviews the “vexing” question of when an earlier Fifth Circuit opinion should not be followed, despite the “rule of orderliness,” because that opinion was inconsistent with Supreme Court precedent when written. The Court found that Henson v. Columbus Bank & Trust Co., 651 F.2d 320 (5th Cir. 1981) was such a case, noting:

• prior Supreme Court precedent on the relevant res judicata question, which Henson did not address or even acknowledge;
• further Supreme Court precedent, issued soon after Henson, reaffirming the earlier opinion;
• consistent Fifth Circuit case law since Henson that did not apply it; and
• a paucity of citations to Henson.

In sum: “Orderliness, rightly understood, compels deference, not defiance. And disregarding on-point precedent in favor of an aberrational decision flouting that precedent is the antithesis of orderlinesss.” No. 17-10952 (Jan. 11, 2019).

Swearingen sued her former employer, Gillar Home Health Care, for not accommodating her pregnancy-related disability. At trial, “liability turned on whether Swearingen sent Evelyn Zapalac, the supervisor who fired her, a doctor’s note to corroborate a medical-related absence or if Swearingen instead simply failed to report for work.” The trial court allowed the defense to read Zapalac’s deposition testimony rather than calling her live. The Fifth Circuit reversed and remanded. Swearingen v. Gillar Home Health Care LP, No. 17-20600 (Jan. 11, 2019) (unpublished).

While Zapalac lived 95.5 miles from the courthouse – 4.5 miles short of the 100-mile radius that makes a witness “unavailable” under Fed. R. Civ. P. 32 – the Court observed: “The Rule does not use a modifier such as ‘about’ or ‘approximately’ or ‘around.'” The Court further noted that this rule’s requirements have been “summarized . . . as prohibiting deposition testimony unless ”live testimony from the deponent is impossible or highly impracticable.'” And this error was harmful because “the only person who testified to knowing Zapalac did not receive the doctor’s note was Zapalac herself,” making “the harm . . . especially acute because liability inged on competing credibility determinations.”  Note that a different result would obtain in state court under Tex. R. Evid. 801(e)(1) which defines as a non-hearsay statement: “A Deponent’s Statement. In a civil case, the statement was made in a deposition taken in the same proceeding. ‘Same proceeding’ is defined in Rule of Civil Procedure 203.6(b). The deponent’s unavailability as a witness is not a requirement for admissibility.”

Wease established ambiguity in two aspects of a deed of trust. With respect to when a servicer could pay the borrower’s property taxes by the servicer, the key provision used the fact-specific phrase “reasonable or appropriate”; other provisions both suggested that the power was limited to back taxes, but also that it could be made “at any time.” Accordingly, “Wease was entitled to proceed to trial on his claim that Ocwen breached the contract by paying his 2010 taxes before the tax lien attached and before they became delinquent.” This analysis led to finding a triable fact issue as to whether Ocwen provided adequate notice of its actions. Wease v. Ocwen Loan Servicing, No. 17-01574 (Jan. 4, 2019). A revised opinion eliminated some statements about tax liens and when they took effect.

In Janvey v. GMAG, LLC, the Fifth Circuit returned to the “good faith” defense to a claim under the Texas Uniform Fraudulent Transfer Act – a defense that potentially allows an innocent third-party to retain the benefit of a transfer made by a debtor with intent to defraud creditors. The specific question was whether the Texas Supreme Court would accept a “futility” defense to inquiry notice, and the Court concluded that it would not: “No prior court considering TUFTA good faith has applied a futility exception to this exception, and we decline to hold that the Supreme Court of Texas would do so. Transferees seeking to retain fraudulent transfers might offer up evidence of undertaken investigations to prove a reasonable person’s suspicions would not have been aroused when the transfer was received. But the fact that a fraud or scheme is later determined to be too complex for discovery does not excuse a finding of inquiry notice and does not warrant the application of TUFTA good faith.” No. 17-11526 (Jan. 9, 2019).

In Conestoga Trust v. Columbus Life Ins. Co., the Fifth Circuit found that the trial court’s charge erroneously placed the burden of proof on the insured – rather than the insurer – as to an issue about delivery of a grace notice before termination of the policy. The next question was whether this error was sufficiently harmful to require reversal; the insured “claims that the district court’s improper placement of the burden constituted prejudicial error because, given the lack of direct evidence, the burden of proof was likely  outcome-determinative,” while the insurer “concludes that any error concerning the burden of proof is harmless because the record demonstrates that Columbus presented ample evidence that it mailed the Grace Notice.” Acknowledging that a burden-of-proof error does not automatically require reversal, the Court concluded:

“While the misallocation of the burden of proof did not produce an ‘irrational verdict’ here, the evidence—though largely in favor of Columbus—is not so one-sided that Conestoga failed to present a genuine issue of material fact. Given that the jury was incorrectly instructed on the law on the sole issue before it, we are left with ‘a substantial doubt whether the jury was fairly guided in its deliberations.'”

No. 17-50073 (Jan. 3, 2019, unpublished).

Justice Kavanaugh’s first signed Supreme Court opinion was a 9-0 reversal of the Fifth Circuit in Schein v. Archer & White, 17-1272 (Jan. 8, 2019). The Fifth Circuit opinion found that the district court, rather than the arbitrator, could make a decision about arbitrability when the request for arbitration was “wholly groundless”; the Supreme Court rejected that line of authority and held that this language vested the arbitrator with sole authority over such disputes:

“Disputes. This Agreement shall be governed by the laws of the State of North Carolina. Any dispute arising under or related to this Agreement (except for actions seeking injunctive relief and disputes related to trademarks, trade secrets, or other intellectual property of [Schein]), shall be resolved by binding ar- bitration in accordance with the arbitration rules of the American Arbitration Association [(AAA)]. The place of arbitration shall be in Charlotte, North Carolina.”

The Mississippi state flag incorporates the Confederacy’s “Stars and Bars”; in Mississippi Rising Coalition v. City of Ocean Springs, plaintiffs challenged a local ordinance requiring that the flag be flown over city hall and other municipal buildings. In particular, they alleged that the law “amounts to ‘racial steering’ under the [Fair Housing Act] because it deters African-Americans from living in or moving to Ocean Springs.” Citing recent authority that rejected the plaintiffs’ standing to bring an equal protection challenge to a similar law, the Fifth Circuit found that these plaintiffs also lacked both constitutional and statutory standing: “Even assuming arguendo that displaying a state flag could be considered ‘making’ or ‘publishing’ a ‘notice, statement, or advertisement,’ that alone does not plausibly suggest that the City has done
anything ‘with respect to the sale or rental of a dwelling.'” No. 18-60473 (Dec. 3, 2018).

I was on a CLE panel at the Belo today about the Texas anti-SLAPP statute with my partner Josh Sandler and Hon. Gena Slaughter of Dallas’s 191st District Court; here is a copy of our PowerPoint presentation.

Gurule, a waitress, sued her employer for violations of federal labor law about its handling of overtime and tips. After rejecting a Rule 68 settlement offer of $3,133.34, she went to trial and won $1,131.39. The district court awarded her that amount, as well as $25,089.30 in attorneys’ fees – a significant reduction from the $129,565 requested by her counsel – minus a cost award of $1,517.57, given her rejection of the Rule 68 offer. The Fifth Circuit affirmed, finding that the rejection of the Rule 68 offer should be considered as a relevant factor in determining an appropriate fee award, but not a dispositive one. Gurule v. Land Guardian, Inc., No. 17-20710 (Dec. 27, 2018).

In a residential foreclosure case, the borrower alleged that the bank/lender was vicariously liable for alleged RESPA violations by the servicer.  Noting that it was the first federal circuit court to address the point, the Fifth Circuit found that the lender could not be held vicariously liable. The regulation at issue imposed duties only on
servicers. (12 C.F.R. § 1024.41(c)(1) (“[A] servicer shall . . .”)) And when Congress wanted to expand liability, it used language showing its intent to do so. (12 U.S.C. § 2607 (saying that “no person” will pay kickbacks or unearned fees)). Christiana Trust v. Riddle, No. 17-11429 (Dec. 21, 2018).

Together with LPCH colleagues John Adams and Paulette Miniter, I’ve written three articles about the effect of the 2018 judicial elections in three areas:

• Removal. “Removal to Federal Court After the November 2018 Elections:
  More Incentive, But Less Receptiveness?”
• Standards of Review. The Return of Factual Sufficiency Review?
• Roles of judge and jury. Three Sentences to Study: Potential New Court of Appeals Perspectives

Ironshore, an excess insurance carrier, alleged that the Schiff Hardin law firm made negligent misrepresentations to it while reporting on litigation involving Dorel – the firm’s client and Ironshore’s insured. The Fifth Circuit made “an Erie guess that the Supreme Court of Texas would apply the attorney immunity doctrine to shield attorneys for such negligent misrepresentation claims.” It then concluded:

“The factual allegations of the complaint in this case reflect that all of the alleged misrepresentations and omissions were related to Schiff Hardin’s representation of Dorel in the Hinson litigation. Looking beyond Ironshore’s characterization of the firm’s conduct as wrongful, as we must, the type of conduct at issue in this case includes: (1) reporting on the status of litigation and settlement discussions; (2) providing opinions as to the strength and valuation of plaintiffs’ claims; (3) providing opinions as to the perceived litigation strategies employed by opposing counsel and the potential prejudice of pre-trial developments; (4) providing estimates of potential liability; (5) reporting on the progress of a jury trial; and (6) reporting on pre-trial rulings and pre-trial settlement offers. We are satisfied that the kinds of conduct at issue in this case fall within the routine conduct attorneys engage in when handling this type of litigation. Schiff Hardin’s conduct falls squarely within the scope of the firm’s representation of its client.”

Ironshore Europe DAC v. Schiff Hardin LLP, No. 18-40101 (Jan. 2, 2019).

A textbook example of the “rule of orderliness” appears in Gahagan v. U.S. Dep’t of Justice, a dispute about the recovery of attorneys’ fees under FOIA by an attorney proceeding pro se:

• In Cazalas v. DOJ, 709 F.2d 1051, 1057 (5th Cir. 1983), a panel majority of the Fifth Circuit held that “a litigant attorney represent[ing] herself or himself” is eligible for “an award of attorney fees under the FOIA.”
• In Kay v. Ehrler, 499 U.S. 432, 438, 435 (1991), which arose under 42 U.S.C. § 1988, the Supreme Court rejected “[a] rule that authorizes awards of counsel fees to pro se litigants— even if limited to those who are members of the bar,” for fear it “would create a disincentive to employ counsel whenever such a plaintiff considered himself competent to litigate on his own behalf.” Therefore, “a pro se litigant who is also a lawyer may [not] be awarded attorney’s fees.”
• In Texas v. ICC, 935 F.2d 728, 733 (5th Cir. 1991), citing Cazalas, the Fifth Circuit held that :”courts can in appropriate circumstances award attorneys fees to states” under FOIA.

“Whether Cazalas is still binding turns on first- and second-order questions under the rule of orderliness. The first question is whether ICC requires us to follow Cazalas. It does not. The second question is whether Kay requires us to abandon Cazalas. It does.” Kay overruled the rationale of Cazalas, and while ICC nominally followed Cazalas, it did not analyze the effect of Kay.

Nall, who worked for BNSF as a trainman, suffered from Parkinson’s disease, and sued BNSF for disability discrimination. The panel majority noted that BNSF had provided different descriptions of a trainman’s duties at different times, and that a key BNSF witness agreed with a version that helped Nall’s position. It thus found a fact issue, specifically described as follows:

We emphasize that our inquiry on the issue of objective  reasonableness does not ask whether BNSF’s conclusion that Nall could not perform his job duties safely was a reasonable medical judgment. Instead, we ask whether  BNSF actually exercised that judgment. In other words, the question on appeal is not whether it was reasonable for BNSF to conclude that Parkinson’s disease symptoms prevented Nall from safely performing his duties; the question is whether BNSF came to that conclusion via a reasonable process that was not, as Nall alleges, manipulated midstream to achieve BNSF’s desired result of disqualifying him. More precisely, the question is whether there is any evidence in the record which, if believed, would be sufficient to support a jury finding.

(emphasis in original). A dissent observed: “There is no basis for imposing liability under the ADA based on process concerns alone. There is liability only if the employer’s determination of a direct threat is objectively unreasonable.” A concurrence noted the “kudzu-like creep” of the McDonnell-Douglas burden-shifting framework, and as to dissent, observed that it “reminds me of the baseball player who said, ‘They should move back first base a step to eliminate all those close plays.'” Nall v. BNSF Railway Co., No. 17-20113 (Dec. 27, 2018).

Koerner sued CMR about problems with a roof; to support his fraud claim, he cited an email from a CMR superintendent after an inspection of the roof: “I did not disclose or offer any info on my findings [to Koerner] and simply left [Koerner] assured we are working on correcting his leak issue, after all he is a lawyer and I know they are sneaky :).” The Fifth Circuit was unimpressed, observing: “The email . . .  does not say that [the superintendent] did not intend to fix the other problems in addition to the leak. He just did not want to tell Koerner about them because he thought Koerner was a sneaky lawyer.” Koerner v. CMR Const. & Roofing, LLC, No. 18-30019 (Dec. 7, 2018).

A serious car accident involving a texting driver led to a products-liability claim based on the human “neurobiological response” to a text message – “They alleged that the accident was caused by Apple’s failure to implement the [lockout mechanism] patent on the iPhone 5 and by Apple’s failure to warn iPhone 5 users about the risks of distracted driving. In particular, the plaintiffs alleged that receipt of a text message triggers in the recipient ‘an unconscious and automatic, neurobiological compulsion to engage in texting behavior.‘” The Fifth Circuit declined to extend Texas products law to this theory in this Erie case, recognizing an analogy to the development of dram-shop liability but ultimately finding that it weighed against recognizing this theory. Meador v. Apple, Inc., No. 17-40968 (Dec. 18, 2018).

Mauldin sued Gonzalez, Hernandez, and Allstate Insurance. The district court denied Mauldin’s motion to remand as to Gonzalez and entered a final judgment in Gonzalez’s favor. Two weeks later, it transferred the remaining claims to Oklahoma under § 1404(a). As to Gonzalez, it found that the remand ruling was appealable because it was combined with a final judgment – an exception to the general rule that denials of motions to remand are interlocutory and not appealable. And it found that the Fifth Circuit retained jurisdiction over the appeal about Gonzalez notwithstanding the transfer – an important if rarely-encountered point about the interplay among the jurisdiction of the federal circuits. Mauldin v. Allstate Ins. Co., No. 17-11274 (Dec. 10, 2018, unpublished).

• On the one hand, there is Texas v. Travis County, in which the Fifth Circuit rejected, on standing grounds, a declaratory judgment case brought by the State of Texas, which sought a ruling the constitutionality of new “sanctuary cities” legislation before its enforcement: “States are not significantly prejudiced by an inability to come to federal court for a declaratory judgment in advance of a possible injunctive suit by a person subject to federal regulation.”  No. 17-50763 (Dec. 12, 2018)). (quoting Franchise Tax Board v. Constr. Laborers Vac. Trust, 463 U.S. 1 (1983)).
• And on the other, headed to the Fifth Circuit from the Northern District of Texas, is Texas v. United States, finding that the entire Affordable Care Act was unconstitutional after elimination of the “individual mandate” in 2017: “In some ways, the question before the Court involves the intent of both the 2010 and 2017 Congresses. The former enacted the ACA. The latter sawed off the last leg it stood on. But however one slices it, the following is clear: The 2010 Congress memorialized that it knew the Individual Mandate was the ACA keystone; the Supreme Court stated repeatedly that it knew Congress knew that; and knowing the Supreme Court knew what the 2010 Congress had known, the 2017 Congress did not repeal the Individual Mandate and did not repeal § 18091.”  No. 4:18-cv-00167-O (N.D. Tex. Dec. 14, 2018).

This blog has a page of my tips about legal writing; several of those tips involve different tests to eliminate unhelpful extra words and passive voice. I recently learned of a new such test called “Anglish” that focuses on the origin of words, and seeks to use only words that entered the language before the Norman Conquest. (An example of the resulting prose, from Wikipedia: “I am of this opinion that our own tung should be written cleane and pure, unmixt and unmangeled with borowing of other tunges; wherein if we take not heed by tiim, ever borowing and never paying, she shall be fain to keep her house as bankrupt.“) I don’t recommend it for legal writing, but it is an interesting exercise that shows the remarkable ability of English to absorb words from other languages.

The Fifth Circuit found a waiver of the right to arbitrate in Forby v. One Technologies, finding as to the requirement of prejudice: “The district court erred in concluding that Forby failed to establish prejudice to her legal position. When a party will have to re-litigate in the arbitration forum an issue already decided by the district court in its favor, that party is prejudiced.” No.17-10883 (Nov. 28, 2018).

The district court found improper joinder and thus denied a motion to remand; the Fifth Circuit reversed in Cumpian v. Alcoa World Alumina LLC. The Court dissected the sometimes-confusing standard for determining whether a party’s joinder should be disregarded in determining the basis for a removal based on diversity jurisdiction, specifically concluding: “On a question of improper joinder at the early stage of a case, it is error to use the no-evidence summary judgment standard because the determination is being made before discovery has been allowed. . . . the evidence that is dispositive . . . are the facts that could be easily disproved if not true.” No. 17-40825 (Dec. 6, 2018)

“Sethi sold interests in an oil and gas joint venture.” The SEC then sued Sethi for selling unregistered securities, and the Fifth Circuit agreed with the SEC’s position that the joint venture interests at issue qualified as securities under federal law. That legal analysis turned on a 3-part test for whether an investment contract is a security: “(1) an investment of money; (2) in a common enterprise; and (3) on an expectation of profits to be derived solely from the efforts of individuals other than the investor,” followed by a flexible, multi-factor analysis of the term “solely,” designed “to ensure that the securities laws are not easily circumvented by agreements requiring a ‘modicum of effort’ on the part of investors.” SEC v. Sethi, No. 17-41022 (Dec. 4, 2018) (applying, inter alia, Williamson v. Tucker, 645 F.2d 404 (5th Cir. 1981)).