I commented today about the start of the Kavanaugh hearings on the morning show of Dallas’s Fox affiliate.

Having just now seen Darkest Hour, the Academy Award-winning film about Churchill confronting Britain’s terrible military situation in May of 1940, I was inspired to update this blog’s page about legal writing with an essay written by Churchill as a young man called “The Scaffolding of Rhetoric.” It illustrates five simple ways to put words together to add power to the overall message they convey.

The plaintiffs in Alaska Elec. Pension Fund v. Asar alleged securities fraud about the affairs of Hanger, Inc., the nation’s largest provider of orthotic and prosthetic patient care. The Fifth Circuit largely affirmed dismissal, but as to one defendant found adequate allegations of scienter based primarily on statements in an audit committee report, which “support the inference that McHenry shared the objectives of improperly enhancing Hanger’s financial results, or that he at least knew that others were doing so. A dissent would have also dismissed as to him, noting that “the complaint makes no effort to demonstrate which portions of the Report show that McHenry, or any other defendant, had the requisite scienter.” No. 17-50162 (Aug. 6, 2018).

While cleaning ventilation equipment at the L’Auberge Casino in Lake Charles, Renwick fell from a defective ladder and later sued the property owner for his injuries. The Fifth Circuit reversed a summary judgment for the defense, noting “that it is th[e] combination of evidence–[Defendant’s] control of work-site access, its specific instructions about how to reach the vents, its rejection of an alternate access route, and the dispute over who provided the access ladder–that creates a jury issue on operational control.” (emphasis in original0 The Court reminded: “To be sure, a fact finder could ultimately reach a different conclusion. All we decide is that the evidence –viewed, as it must be, in the light most favorable to Renwick– would permit a reasonable trier of fact to resolve the operational control issue either way, and that the district court therefore erred in granting summary judgment.” Renwick v. PNK Lake Charles LLC, No. 17-30767 (Aug. 27, 2018).

OGA Charters entered bankruptcy after a tragic accident involving one of its buses. Applying Louisiana World Exposition Inc. v. Fed. Ins. Co., 832 F.2d 1391 (5th Cir. 1987), and Houston v. Edgeworth, 993 F.2d 51 (5th Cir. 1993), the Fifth Circuit held: “We now make official what our cases have long contemplated: In the ‘limited circumstances,’ as here, where a siege of tort claimants threaten the debtor’s estate over and above the policy limits, we classify the proceeds as property of the estate. Here, over $400 million in related claims threaten the debtor’s estate over and above the $5 million policy limit, giving rise to an equitable interest of the debtor in having the proceeds applied to satisfy as much of those claims as possible.” Martinez v. OGA Charters LLC, No. 17-40920 (Aug. 24, 2018).

Monty Python’s famous “Dead Parrot” sketch involved John Cleese and Michael Palin debating whether a dead bird sold by a pet store was, in fact, deceased. In that same spirit, the case of Alliance for Good Government v. Coalition for Better Government addressed whether the Coalition’s bird-based logo infringed the Alliance’s logo:

Alliance won in the trial court, as the birds appear identical, “with the same down-pointed beak, gazing over the same wing (the right), sporting the same number of feathers (forty-three).” Unphased, Coalition argued that its bird was a hawk, while Alliance’s was an eagle, leading to a puzzled exchange with the district judge:

DISTRICT COURT: They look exactly alike to me, the two birds.

COUNSEL: […] [N]o, they really aren’t, your Honor, if you look at the wing span. The wing span of the eagle is different from the hawk. It’s much larger and it fans out, and that’s just the way the hawk looks.

Equally puzzled, the Fifth Circuit affirmed: “To cut to the chase: Alliance and Coalition have the same logo.” No. 17-30859 (Aug. 22, 2018) (emphasis in original).

IAS, an insurance claim-adjusting firm, acquired Buckley, another such firm. Litigation ensued after Buckley was unable to bring the business from a large client, QBE. The Fifth Circuit found that IAS stated a viable fraudulent-inducement claim under Fed. R. Civ. P. 9(b) as to “three alleged misrepresentations that it contends led it to enter into the asset purchase agreement: (1) Buckley’s statement that Buckley & Associates was QBE’s ‘number one’ vendor; (2) Buckley’s statement that Buckley & Associates’ revenue from QBE would continue to grow; and (3) the statement in § 2.3 of the purchase agreement that its execution would not ‘violate, conflict, [or] result in a breach of . . . any Contract . . . to which [Buckley & Associates] is a party.'” The Court’s analysis of the third factor is particularly informative, touching on recent Texas Supreme Court authority about waiver-of-reliance provisions (Italian Cowboy Partners v. Prudential Ins. Co., 341 S.W.3d 323 (Tex. 2011)) and “red flags” that can negate justifiable reliance. (JPMorgan Chase Bank v. Orca Assets GP, LLC, 546 S.W.3d 648 (Tex. 2018)). A dissent would not have found any of the representations fraudulent as pleaded. IAS Service Group v. Buckley & Assocs., No. 17-50105 (Aug. 17, 2018).

The hard-fought litigation over Harris County’s bail policies returned to the Fifth Circuit after a limited remand on the scope and structure of proper injunctive relief. The Court granted a stay pending resolution of the merits; in particular, noting the effect of the appellate “mandate rule” on 3 parts of the revised injunction:

• “The original injunction contained the requirement that a hearing be held within 24 hours. Thus, the same issue of what to do with arrestees during the gap between arrest and hearing—be it 24 or 48 hours—was always at issue and could have been addressed during the initial proceedings. Remand is not the time to bring new issues that could have been raised initially. Thus, Section 7 plainly violates the mandate rule, and the Fourteen Judges are likely to succeed on the merits as to that section.” (emphasis added)
• “[The first appeal determined that 48 hours was sufficient under the Constitution.. . . [I]n the model injunction, the proposed remedy for failure to comply with that requirement was for the County to make weekly reports to the district court identifying any delays and to inform the detainees’ counsel or next of kin about the delays. . . .  The district court was to monitor the situation for a pattern of violations and only then take possible corrective action. Anything broader than that remedy violates any reasonable reading of the mandate.” (emphasis added).

O’Donnell v. Goodhart, No. 18-20466 (Aug. 14, 2018).

At the intersection of civil and criminal law, United States v. Gas Pipe reminds of the reach of the federal civil forfeiture: “Although ‘merely pooling tainted and untainted funds in an account does not, without more, render that account subject to forfeiture,’ untainted funds are forfeitable if a defendant commingled them with tainted funds ‘to disguise the nature and source of his scheme.’ Here, the Government alleged in its verified complaint that the defendant Claimants commingled tainted and untainted funds in the UBS accounts to conceal or disguise the tainted funds. Some commingled funds allegedly also secured a loan that financed the alleged spice scheme and which was repaid with criminal proceeds.” No. 17-10626 (Aug. 16, 2018) (citations omitted).

Veritext, a national court reporting service, challenged restrictions on its pricing practices (volume discounts, etc.) imposed by the Louisiana Board of Examiners of Certified Shorthand Reporters. The Fifth Circuit rejected Veritext’s constitutional claims but found that it had stated a viable restraint-of-trade claim under the Sherman Act. The Board claimed Parker antitrust immunity as a state actor, which required it to show “two requirements: first that ‘the challenged restraint . . . be one clearly articulated and affirmatively expressed as state policy,’ and second that ‘the policy . . . be actively supervised by the State.’” The Board satisfied the first, as its regulations were clear (thus creating the alleged restraint of trade in the first place), but failed the second: “Nothing in the record indicates that elected or appointed officials oversaw or reviewed the Board’s decisions or modified the Board’s enforcement priorities. And the Board’s argument on this point—that the legislature can amend the law in this area or veto proposed rules under Louisiana’s Administrative Procedure Act—is unconvincing. State legislatures always possess the power to change the law.”  Veritext Corp. v. Bonin, No. 17-30691 (Aug. 17, 2018) (applying State Board of Dental Examiners v. FTC, 135 S.Ct. 1101 (2015)).

Four of my LPCH partners and I were recently named to “Best Lawyers in America” for 2019!

An expert’s analysis of an electrical fire on a boat involved a “‘hose test,’ in which he directed water from a garden hose onto the boat’s wet bar and tracked where the water ended up.” Unfortunately for him, because this work was “meant to be a simulation or re-creation of what actually happened, it must be performed under ‘substantially similar conditions'” to the fire, and it was not: “Plaisance’s videos did not contain important information about how he conducted the experiment, such as ‘how long the hose ha[d] been running’ or ‘the pressure of the water coming out of the hose.’ Moreover, the video showed ‘a continuous stream of water from a garden hose directly at the junction between the back of the wet bar and the boat’s wall,’ and there was no indication that Gonzalez ever used a hose in that fashion. In fact, as the district court noted, Plaisance did not provide any information about how Gonzalez typically washed the boat.” Similar problems also undermined another expert’s testimony about electrical issues on the boat. Atlantic Specialty Insurance Co. v. Porter, Inc., No. 16-31259 (Aug. 6, 2018).

Federal crop insurance “protects an asset that does not yet exist,” since future crops are not yet grown. Congress refined the applicable statutes in 2014, allowing farmers to “elect to exclude” certain low-production years from the historical calculations needed to write insurance for future crop production. The relevant amendment applied “for any of the 2001 and subsequent crop years,” and became effective immediately. A dispute arose between Texas winter wheat farmers, who announced their intention to exclude years under this statute, and the Federal Crop Insurance Corporation, who said it lacked time to prepare the necessary data. The Fifth Circuit rejected the FCIC’s argument that this statute’s “effective” date was distinct from its “implementation” date, finding that it failed step one of Chevron – “Such a problem arises not from an ambiguous text but from Congress implementing razor sharp deadlines without, at least according to the FCIC, sufficient resources. That does not give the FCIC authority to disregard the plain text of the statute . . . .” Adkins v. Silverman, No. 17-10759 (Aug. 7, 2018).

The parties settled and filed an unconditional stipulation of dismissal under Fed. R Civ. P. 41(a)(1)(A)(ii). Months later, one of them sought to reopen that action and rescind the settlement, alleging forgery of a key signature. The Fifth Circuit found that “ancillary jurisdiction” was not available, as that doctrine is limited to (1) “factually interdependent claims” (which “disappear[] . . . after the original federal dispute is dismissed,” or (2) “‘collateral issues’ . . . things like fees, costs, contempt, and sanctions,” which could apply to an appropriate order but not to this type of unconditional dismissal. The Court found jurisdiction under Fed. R. Civ. P. 60(b)(1), which addresses “mistake, inadvertence, surprise, or excusable neglect,”  but was of little help here where the settlement documents expressly allocated risk about later-discovered evidence. Other parts of that rule did not apply. “By unconditionally dismissing this action under Rule 41(a)(1)(A)(ii), the parties divested the district court of subject-matter jurisdiction over their dispute. To reopen this case, Scott must lean on Rule 60(b). But that rule’s six doors remain closed.” National City Golf Finance v. Scott, No. 17-60283 (Aug. 9, 2018).

Problems in the construction of the Zapata County courthouse (right) led to litigation between S&P (the general contractor), and its subcontractors, as well as between S&P and its insurer. The insurer and S&P disputed S&P’s allocation of the proceeds from settlements with the subcontractors, and the Fifth Circuit affirmed judgment for the insurer: “S&P bears the burden to show that the subcontractor settlement proceeds were properly allocated to either covered or noncovered damages. If S&P cannot meet that burden, under the [two controlling cases], then we must assume that all of the settlement proceeds went first to satisfy the covered damages under U.S. Fire’s policy.” Satterfield & Pontikes Constr. v. U.S. Fire Ins. Co., No. 17-20513 (Aug. 2, 2018).

The district court dismissed fraud claims against an accounting firm for not complying with a Louisiana pre-suit review requirement. The Fifth Circuit affirmed but remanded for clarification as to whether the dismissal was with, or without, prejudice. Fed. R. Civ. P. 41 generally assumes that silence means “with prejudice,” but the Supreme Court has recognized that that rule’s exception for “jurisdiction” goes so far as “encompassing those dismissals which are based on a plaintiff’s failure to comply with a precondition requisite to the Court’s going forward to determine the merits of his substantive claim.”
Firefighters’ Retirement System v. EisenerAmper LLP, No. 17-30273 (Aug. 2, 2018).

“Aetna’s reliance on any alleged misrepresentation by NCMC was not justifiable. Almost immediately after NCMC notified Aetna of its prompt pay discount, Aetna began investigating. Its investigation revealed NCMC’s billing practices. Yet Aetna continued to pay claims marked with the prompt pay discount moniker.” In support, the Fifth Circuit cited the recent and influential case of JPMorgan Chase v. Orca Assets,  546 S.W.3d 648 (Tex. 2018), and “promoted” the unpublished case of Highland Crusader Offshore Partners v. LifeCare Holdings, 377 F. App’x 422 (5th Cir. 2010), observing: “The panel recognizes that Highland Crusader is unpublished, and therefore not precedential, but we cite it here to show consistency throughout our case law.” North Cypress Medical Center v. Aetna, No. 16-20674 (July 31, 2018).

John Williams was seriously injured in a crane accident; a jury found that the crane manufacturer “failed to warn Model 16000 Series crane operators that, if the crane tips over, large weights stacked on the rear of the crane can slide forward and strike the operator’s cab.” The Fifth Circuit affirmed that multi-million dollar verdict, finding that the jury acted within its authority as to (1) liability for failure to warn, (2) proximate cause and alleged misuse by Williams, (3) proximate cause and an alleged alternative warning (left), (4) a Daubert challenge to the plaintiff’s expert on warnings (applying Roman v. Western Manufacturing, 691 F.3d 686 (5th Cir. 2012), and Huss v. Gayden, 571 F.3d 443 (5th Cir. 2009) – two powerful statements by the Court about admissible expert analysis), and (5) admissibility rulings about other accidents and the plaintiff’s prior conduct. The opinion provides a powerful illustration of a well-conducted trial by jury. Williamv v. Manitowoc Cranes LLC, No. 17-60458 (Aug. 3, 2018).

Villareal sought to redeem five certificates of deposit purchased in the early 1980s. His primary legal theory, apparently selected to avoid problems with suing on the instruments themselves, was the quasi-contractual / restitution theory recognized in Texas law for “money had and received.” That theory ordinarily does not apply when an express contract (here, the CDs) addresses the subject. To escape that limitation, Villareal relied on Texas authority under which “an overpayment beyond what a contract provides may sometimes be recovered as unjust enrichment. If an overpayment qualifies as unjust enrichment, reasoned the district court, so should an underpayment.” (citation omitted, emphasis in original). The Fifth Circuit disagreed: “Overpayment typically falls outside a contract’s terms and, in that event, the contract would not ‘cover[] the subject matter of the parties’ dispute.’ By contrast, here the dispute involved the claimed non-payment of a debt evidenced by express contracts (the CDs). Unjust enrichment has no role to play.” (citation omitted, emphasis in original). Villareal v. Presidio Nat’l Bank (revised), No. 17-50765 (July 27, 2018, unpublished). (Picture above of Professor Samuel Williston eyeing some of his extensive work on express contracts).

After trial of a Lanham Act claim involving the right to use the term “Cowboy” in advertising bourbon, the jury found abandonment of the plaintiff’s alleged mark, and the Fifth Circuit affirmed. “As the district court observed, the jury fairly rejected the testimony of Allied’s founder, Marci Palatella, and Allied’s price lists as evidence of intent to resume use. . . .  Garrison Brothers presented evidence undermining Palatella’s contention that Allied specializes in old, rare, and expensive whiskeys; disputing Palatella’s reliance on a bourbon shortage as a reason for Allied’s failure to sell ‘COWBOY LITTLE BARREL’ bourbon after 2009; and highlighting Palatella’s inconsistent testimony concerning Allied’s price lists.” Allied Lomar, Inc. v. Lone Star Distillery LLC,  No. 17-50148 (July 17, 2018, unpublished).

In addition to inspiring 600Camp’s most painful pun of 2018, Ditech Financial LLC v. Naumann provides a thorough summary of the requirement – unique to default judgments, among all judgments available under the Federal Rules –  that  the relief awarded “must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” As applied here, “Ditech’s demand for judicial foreclosure gave meaningful notice that, in the event of default, a writ of possession would issue in favor of the foreclosure-sale purchaser. Texas’s process of enforcing a judicial foreclosure—and specifically its mechanism for enforcing the foreclosure sale— entails issuance of the writ. Accordingly, in this case the judgment’s provision for future issuance of the writ did not expand or alter the kind or amount of relief prayed for by Ditech.” No. 17-50616 (July 19, 2018, unpublished).

An element of judicial estoppel is that “a court accepted the prior position” that is inconsistent with a party’s position in the case at hand. In Fornesa v. Fifth Third Mortgage Co., a bankruptcy debtor’s failure to amend his financial schedules satisfied that requirement, as “the bankruptcy court . . . implicitly accepted the representation by operating as though [Debtor’s] financial status were unchanged. ‘Had the court been aware . . . it may well have altered the plan.'” No. 17-20324 (July 27, 2018).

The issue in Kirchner v. Deutsche Bank was whether a spouse’s signature on a deed of trust – but not the loan instrument – satisfied the Texas Constitution’s requirements about home equity loans. The Fifth Circuit found the issue was squarely addressed by a prior unpublished opinion, which it called “persuasive,” and affirmed – this time, in a published opinion. The broader principle is that unpublished opinions can work their way into published “status” when the issues they address are recurring ones. No. 17-50736 (July 11, 2018).

A practical tidbit about whether a notice of appeal is “jurisdictional” appeared during the last SCOTUS term in Hamer v. Neighborhood Housing Services: “Several Courts of Appeals, including the Court of Appeals in Hamer’s case, have tripped over our statement in Bowles [v. Russell, 551 U. S. 205, 210–213 (2007)], that “the taking of an appeal within the prescribed time is ‘mandatory and jurisdictional.’ The ‘mandatory and jurisdictional’ formulation is a characterization left over from days when we were ‘less than meticulous’ in our use of the term ‘jurisdictional.’ The statement was correct as applied in Bowles because, as the Court there explained, the time prescription at issue in Bowles was imposed by Congress. But ‘mandatory and jurisdictional’ is erroneous and confounding terminology where, as here, the relevant time prescription is absent from the U.S. Code. Because Rule 4(a)(5)(C), not § 2107, limits the length of the extension granted here, the time prescription is not jurisdictional.” No. 16-658 (Nov. 18, 2017) (citations and footnote omitted).

Rehearing motions led to a revised panel opinion and an en banc vote in Mance v. Sessions, a Constitutional challenge to restrictions on handgun sales by an authorized federally-licensed firearm dealer, to a purchaser who lives in a different state from the dealer. The revised opinion affirming the restrictions stood, with the Court voting 9-7 against rehearing en banc. Two of the three dissents from the vote were written by recent nominees of President Trump, with all of his nominees joining the vote in favor of review. Notably, this vote reflects two vacancies at the time it was conducted (one of which has since been filled with the confirmation of Judge Oldham, and other to be filled when a nomination is made to replace Judge Jolly of Mississippi). Assuming the two nominees would join the other new judges in their view of this case, their addition would be outcome-determinative as to its en banc review.

The Senate has now confirmed Andrew Oldham of Texas as the newest judge on the Fifth Circuit. Congratulations and every best wish to Judge Oldham.

A difficult question of administrative law produced a divided panel in Collins v. Mnuchin. The panel majority concluded that the Federal Housing Finance Agency (a regulator for Fannie Mae and Freddie Mac created by Congress in the wake of the 2008 financial crisis) was unconstitutionally structured. After careful review of the Supreme Court’s precedents in the area, the panel excised a “for cause” limitation on the removal of FHFA’s director from the relevant statute, finding  that with this revision “the FHFA survives as a properly supervised executive agency.” One dissent took issue with that holding; another dissent criticized the majority’s conclusion that the specific FHFA action at issue – a “net worth sweep” requiring payment of substantial quarterly dividends to the Treasury by Fannie and Freddie – was within the scope of FHFA’s statutory authority and thus insulated from judicial review. No. 17-20364 (July 16, 2018).

A succinct case study in bankruptcy standing appears in Furlough v. Cage: “Furlough’s primary contention is that, but for NOV’s proof of claim, Technicool’s assets would exceed its debt, and he would be entitled to any estate surplus. Because SBPC represents both NOV and the Trustee, Furlough argues, it might fail to disclose any problems with NOV’s claim, robbing him of the possibility of recovering a surplus. This speculative prospect of harm is far from a direct, adverse, pecuniary hit. Furlough must clear a higher standing hurdle: The order must burden his pocket before he burdens a docket.” No. 17-20603 (July 16, 2018) (emphasis added).

An emotionally-charged lawsuit about the disposal of embryonic and fetal tissue led to an unfortunately-timed subpoena (during Holy Week) to the Texas Conference of Catholic Bishops, which in turn led to emergency appellate proceedings. The Fifth Circuit’s panel majority found the order was appealable as an interlocutory order notwithstanding Mohawk Indus. v. Carpenter, 558 U.S. 100 (2009), noting the importance of the First Amendment issues involved and that “Mohawk does not speak to the predicament of third parties, whose claims to reasonable protection from the courts have often been met with respect.” A dissenting opinion would not have accepted the interlocutory appeal, noting that mandamus was also available (although requiring a “clear and indisputable” right rather than simply a substantial question), and observing that the movants’ “failure to object to the in camera inspection [at issue] certainly forfeits an appellate challenge to it, and the affirmative act of producing the documents likely amounts to full-scale waiver.” Whole Woman’s Health v. Smith, No. 18-50484 (revised July 17, 2018).

Fisk Electric, a subcontractor, sued the general contractor and its surety under the Miller Act, a “federal statute that requires general contractors to secure payment to subcontractors on most federal construction projects.” Fisk claimed it was The dispute involved the inducement into of a settlement agreement; the specific issue on appeal was “whether the party alleging fraud must engage in active investigation to satisfy the standard of justifiable reliance.” In something of a counterpoint to recent Texas cases such as JP Morgan Chase v. Orca Assets, No. 15-0712 (Tex. March 23, 2018), the Court concluded that it was not, and Fisk was entitled to rely on the general contractor’s representations in these particular negotiations. Fisk Elec. Co. v. DQSI LLC, No. 17-30091 (June 29, 2018).

In-N-Out attempted to keep its employees from wearing buttons in support of the”Fight for $15″ minimum wage campaign (right, approximately actual size). The NLRB found this was an unfair labor practice and the Fifth Circuit affirmed. Presumptively unreasonable under federal labor law, In-N-Out argued that the ban fell within a “special circumstances” exception for reasons of the company’s public image and food safety. Both arguments failed, in large part because the company required the wearing of significantly larger buttons during the Christmas season and a charitable fund drive each April. In-N-Out-Burger v. NLRB, No. 17-60241 (July 6, 2018).

In-N-Out-Burger v. NLRB

The plaintiffs in Firefighters’ Retirement System v. Grant Thornton LLP alleged that Grant Thornton waived its right to insist on presuit review of the claims by a review panel, as ordinarily required by Louisiana law. The Fifth Circuit rejected this argument, finding:

• Judicial estoppel did not apply to an allegedly inconsistent litigation position by Grant Thornton when the district court did not accept it (notably, stating the elements of the doctrine in a way that does not require the statement to have been made in a different proceeding), and
• Grant Thornton did not waive this requirement, distinguishing (and criticizing) a Louisiana appellate opinion on the issue, and noting that the litigation had been stayed for a lengthy period such that GT had not yet even filed an answer.

Accordingly, the court affirmed the dismissal of plaintiffs’ claims because of preemption. No. 17-30274 (July 3, 2018).

Applying Singh v. RadioShack Corp., 882 F.3d 137 (5th Cir. 2018), which in turn relied upon Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 (2014), the Fifth Circuit rejected a duty-of-prudence claim against an ERISA fiduciary based on the defendants allowing investments to continue a troubled company’s stock. Specifically, the plaintiffs alleged that the defendants “knew that it was inappropriate to rely on the market price of Idearc stock because their own fraudulent activities had caused the public markets to overvalue Idearc stock.” The Court did not agree: “[T]he alleged fraud is by definition not public information, and [Plaintiff] does not address how this information would affect the reliability of the market price ‘as an unbiased assessment of the security’s value in light of all public information.'” No. 16-11590 (June 27, 2018).

Courtesy of the Huffington Post, here are seven good trivia questions about the Declaration of Independence to enjoy on your July 4 holiday.

The judgment creditor in Century Surety Co. v. Seidel, a case involving sexual assault on an underage restaurant employee, tried valiantly to collect from the restaurant’s insurance carrier. The Fifth Circuit found that the policy’s “criminal acts” exclusion precluded coverage, despite the plaintiff not specifically pleading that the underlying acts were criminal: “Appellants have cited no case law stating that, to trigger a criminal act exclusion, the plaintiff in the underlying suit must, in addition to describing actions that necessarily imply a crime, also specifically label those actions as criminal. Such a rule is incongruous with the plain language of the Policy and would create an artifice in criminal-act exclusions.” No. 17-10026 (June 25, 2018).

A pro se complaint in a mortgage servicing dispute stated a federal claim, and thus allowed removal, when “[I]n the ‘Facts’ section . . . [Plaintiffs’] wrote: ’17. In April, 2009 BANK OF AMERICA CORPORATION claimed to be the new mortgage servicer and payments were to be made to them. BANK OF AMERICA CORPORATION was not an “original party” to the “original negotiable instrument” which the “borrowers” negotiated. BANK OF AMERICA CORPORATION was a 3rd party debt collector, pretending to be the Lender. BANK OF AMERICA CORPORATION failed to adhere to the Fair Debt Collection Practice Act, as all 3rd party debt collectors are required to do.'”  The Fifth Circuit observed: “[P]laintiffs may state a claim for relief by pleading facts that support the claim. The Smiths did just that—and cited the legal theory underlying their claim. The Smiths’ explicit reference to the ‘Fair Debt Collection Practice[s] Act’ (and its position in the U.S. Code), coupled with a description of conduct that could subject the Defendants to liability under the Act, solidifies our conclusion” about federal question jurisdiction. Smith v. Barrett Daffin Frappier Turner & Engel LLP, No. 16-51010  (June 12, 2018, unpublished).

Various ripeness challenges to claims based on the Fourth, Fifth, and Fourteenth Amendments were rejected in the face of these remarkably strong facts: “Without prior notice, the City of New Orleans demolished a building along the IH-10 service road that plaintiffs had recently purchased at a tax sale. Yet two days before the demolition, the City actually cancelled the Code Enforcement lien on the property, which it obtained after sending notices only to the owner from 18 years earlier. When the Garretts objected to the demolition, the City added insult to injury by sending them a bill for the costs.”  Archbold-Garrett v. City of New Orleans, No. 17-30692 (June 22, 2018).

I think the server for this blog is located in Texas, but it could just as easily be on the South Pole – I have no control over (or interest in) how HostGator organizes its business. In the same spirit, the Fifth Circuit affirmed a personal jurisdiction dismissal in a trademark dispute between “greatfence.com” and “agreatfence.com“: “We need not decide today whether a web server’s location alone never suffices to establish personal jurisdiction. We simply hold that it cannot do so here, where there is no allegation, argument, or evidence that the defendants played any role in selecting the server’s location—or that its location was selected with the purpose or intent of facilitating the defendants’ business in the forum.” GreatFence.com v. Bailey, No. 17-20487 (June 13, 2018, unpublished) (emphasis in original).

The “equal inference” rule has played an important role in Texas law about sufficiency of the evidence, especially after the memorable hypothetical in City of Keller v. Wilson, 168 S.W.3d 802, 814 (Tex. 2005): “Thus, for example, one might infer from cart tracks in spilled macaroni salad that it had been on the floor a long time, but one might also infer the opposite—that a sloppy shopper recently did both.” But that rule did not control in a slip-and-fall case involving the residue from an “autoscrubber” (right). The Fifth Circuit reasoned: “[Plaintiff’s] position is that the [security] video and Wal-Mart policies together suggest that (a) Wal-Mart used the machine to place slippery liquid on the floor, (b) the liquid was likely to collect in low-lying areas, (c) the machine paused over a low-lying area, (d) no Wal-Mart personnel checked for or took the requisite steps to remove it, and (e) [Plaintiff] slipped just where the machine had paused. This plausibly suggests the spill came from the auto-scrubber.” Garcia v. Wal-Mart, No. 17-20429 (June 18, 2018).

The Fifth Circuit issued a rare reversal in favor of an ERISA beneficiary in White v. Life Ins. Co. of N. Am. The issue was whether an “intoxication” exclusion applied; a doctor consulted by the plan administrator in its decision about benefits opined: “Since the only blood test done was an alcohol [test] that was negative and no blood tested for the presence of drugs, an estimation of Mr. White’s level of impairment cannot be done. The drugs present in his urine only show that he had prior exposure and cannot be used to estimate a level of impairment. Further, the drug screen that was done on Mr. White’s urine specimen only provided qualitative positive results.” The Court concluded that even though the insurer’s denial of benefits was supported by substantial evidence, its failure to expressly consider this report in its analysis (or to produce the report to the beneficiary’s estate until litigation) showed that its inherent conflict of interest had predominated and invalidated its denial. No. 17-30367 (revised June 14, 2018).

I am speaking this week at the 28th Annual Conference on State and Federal Appeals sponsored by the University of Texas School of Law; my topic is a “Fifth Circuit Update” and this is my PowerPoint.

Illustrating the sort of highly specific, but highly practical, issues that arise under Twombly, the Fifth Circuit held that “plaintiffs alleging claims under [ERISA] § 1132(a)(1)(B) for plan benefits need not necessarily identify the specific language of every plan provision at issue to survive a motion to dismiss under Rule 12(b)(6) (applying Electrostim Medical Services, Inc. v. Health Care Service Corp., 614 F. App’x 731 (5th Cir. 2015)). It was important to this holding that the plaintiff “was unable to obtain plan documents even after good-faith efforts to do so,” and the insurers “did not produce most of the relevant plan documents until the deadline to re-plead had passed . . . .” Innova Hospital v. Blue Cross, No. 14-11300 (June 12, 2018).

Huckaba signed an arbitration agreement with her employer, Ref-Chem – but Ref-Chem did not sign the agreement. The agreement had signature blocks for both parties, referred to the “signature affixed hereto” and the legal effect of “signing this agreement,” and also said that it “may not be changed, except in writing and signed by all parties.” The Fifth Circuit concluded that the agreement was not enforceable, focusing on the distinction between acceptance of the offer, and the separate requirement of “execution and delivery of the contract with intent that it be mutual and binding.” Huckaba v. Ref-Chem, L.P., No. 17-50341 (June 11, 2018).

The insured’s commercial property insurance policy provided coverage from June 2, 2012 to June 2, 2013. “The summary judgment evidence reveals that several hail storms struck the vicinity of the hotel in the several years preceding [the insured’s] claim. Only one of these storms fell within the coverage period.” The Fifth Circuit found that the insured failed to establish coverage, even with an expert’s opinion that said a date within the period was “most likely,” when that opinion was later disclaimed and “conflicts with the data it purports to rely on.” Certain Underwriters v. Lowen Valley View LLC, No. 17-10914 (June 6, 2018).

A lease dispute turned on the agreement’s effective date. The lease was found ambiguous on that point (and the subsequent trial result based on parol evidence affirmed), when it said:

• On the last page – “IN WITNESS WHEREOF, the parties hereto have duly executed this Lease as of the day and year first written above.”
• And on the first page – “This Ground Lease (“Lease”), dated for reference purposes as ________, 2014, is made and executed by and between Malik and Sons, LLC (“Landlord”), and CIRCLE K STORES INC., a Texas corporation (“Tenant”).”

The Fifth Circuit concluded “Circle K offers a plausible interpretation, but Malik offers an alternative, credible interpretation to Circle K’s proposed interpretation. It seems equally—if not more likely—that the ‘day and year first written above’ is referencing a date the parties should have written on the last page. Therefore, although the last page references an execution date ‘written above,’ there is no date on that page. The only other date in the document is labeled as ‘for reference purposes.’ Even though Circle K is correct that parties ‘are free to specify the date of a contract’s execution,’ the issue here is whether they did.” Malik & Sons v. Circle K Stores, No. 17-30113 (May 15, 2018, unpublished).

“Litigation about litigation,” usually in the form of a federal suit to enjoin or otherwise overcome a state-court case, can involve complicated federalism concepts such as the Rooker-Feldman doctrine or Younger abstention. The Fifth Circuit reiterated an even more basic principle in Machetta v. Moren, in which an unhappy party to a state court child custody case sought to assert civil rights claims against the judges: “The district court [correctly] dismissed the case because no case or controversy exists between ‘a judge who adjudicates claims under a statute and a litigant who attacks the constitutionality of the statute.'” No. 17-20533 (June 4, 2018, unpublished).

A useful reminder about contract litigation appears in a recent insurance coverage dispute: “Neither party argues that the Hartford policy is ambiguous. Rather, the parties dispute whether the policy unambiguously provides coverage—Axis’s contention—or unambiguously excludes coverage—Hartford’s contention.” Bennett v. Hartford Ins. Co., No. 17-30311 (May 18, 2018) (emphasis in original).

A vigorously-litigated line of Texas authority, often in the context of employment relationships defined by multiple documents, addresses whether an arbitration agreement is an illusory promise and thus unenforceable. In Arnold v. Homeaway, Inc. the Fifth Circuit addressed whether such a challenge went to “validity” (and could thus be resolved by an arbitrator under a “gateway” arbitration provision), or to “formation,” and could not. Drawing an analogy to Mississippi’s “minutes role” about the required documentation for contracts with public entities, the Court concluded that the challenge went to validity. Nos. 17-50088 and 17-50102 (May 15, 2018).

Flooded landowners in Houston alleged, inter alia, a violation of substantive due process from the effects of a “Reinvestment Zone” on drainage. Among other problems, that claim foundered on its merits under “rational basis” review: “Here, the government objectives were to improve its tax base and the general welfare. As stated by the plaintiffs in the complaint, the government projects enhanced roads and drainage, though in commercial areas in which the plaintiffs did not desire these improvements. The plaintiffs have also acknowledged in the complaint that ‘[t]he tax base has increased far above projections.’ It is ‘at least debatable’ that a rational relationship exists between the government projects and objectives.” Residents Against Flooding v. Reinvestment Zone No. 17, No. 17-20373 (May 22, 2018, unpublished).

“Federal law does not prevent a bona fide shareholder from exercising its right to vote against a bankruptcy petition just because it is also an unsecured creditor. Under these circumstances, the issue of corporate authority to file a bankruptcy petition is left to state law.” Accordingly, when (a) the debtor is a Delaware corporation, (b) governed by that state’s General Corporation Law, and (c) nothing in that law would nullify the sole preferred shareholder’s right to vote against the bankruptcy petition, that shareholder has the right to vote against – and thus prevent – the corporation’s filing of a voluntary bankruptcy petition. Franchise Services. v. U.S. Trustee, No. 18-60093 (May 22, 2018).