Dubrow sued 2200 West Alabama Inc., alleging that Dubrow was the “rightful tenant” of space leased by 2200 West. Western World declined to defend the action, noting that its coverage only extended to claims about “[t]he wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a . . . premises that a person occupies.” (emphasis added). While the meaning of “occupies” could be debated in the abstract, the term has a clear and unambiguous meaning under Texas case law, that “requires physical presence or possession.” Because Dubow never became a tenant, he never “occupied” the premises and coverage did not arise. 2200 West Alabama v. Western World Ins. Co., No. 17-20640 (Oct. 22, 2018).

If you are a lawyer in the Dallas area, you should read today’s post on 600Commerce, about the new Democratic majority and Democratic Chief Justice on the Dallas Court of Appeals.

Property rights are often called a “bundle of sticks”; a particularly tangled bundle was the subject of RPD Holdings LLC v. Tech Pharmacy Servcs. Careful examination of both sides’ specific obligations under a patent license led to the conclusion that it was an executory contract, rejected by operation of law during one of the parties’ Chapter 7 bankruptcy case. No. 17-11113 (Oct. 29, 2018).

The issue in SCF Waxler Marine LLC v. Aris T MV was whether the excess insurers for a multi-vessel accident could enforce a “Crown Zellerbach clause,” and thus limit their liability to the value of the insured vessel. (The vessel at issue, the Aris T (right) is presently in the Atlantic en route to Rotterdam from Mobile.) The Fifth Circuit found that it lacked appellate jurisdiction over the district court’s ruling that the excess insurers could enforce such a clause: “The fundamentals of Bucher-Guyer bear a striking resemblance to this case. There, the district court determined the boundaries of a party’s liability— $500—based on the applicability of statutory language. Nevertheless, whether the opposing party was entitled to anything and, if so, how much was still to be determined. In this case, the court decided the boundaries of a party’s liability through determination of whether a contractual provision permitted them to do so. Whether Valero, Shell, and Motiva are legally permitted to recover anything from the Excess Insurers and, if so, how much remains to be determined.” No. 17-30805 (Oct. 30, 2018).

William Pearson won a modest judgment in an overtime dispute and appealed in Pearson v. Frequency Car Audio, seeking more. The Fifth Circuit affirmed; as to a challenge to the accuracy of the employer’s records, it observed:

“[T]he question before the district court was not whether Frequency kept proper records—it was whether Pearson worked overtime. And although the district court noted that Frequency’s books were “incomplete and not in evidence,” its conclusion that Pearson did not work overtime was based on its findings that: (1) Pearson’s claim that his work at Khalsa’s and Singh’s residences constituted work for Frequency was “incredible”; (2) Khalsa’s testimony that Pearson worked no overtime was credible; and (3) Pearson’s claim that he worked on cars before the shop opened was “unquantifiable.” Thus, the district court’s conclusion was largely based on the witnesses’ credibility, so we must give that conclusion due regard.”

No. 17-20769 (Nov. 2, 2018, unpublished) (emphasis added).

A Fifth Circuit panel struck down a Louisiana criminal statute about “threats” in Seals v. McBee, which led to an 8-8 vote and denial of en banc review. The full breakdown appears in the chart to the right; again, the new appointments by President Trump brought a case to the cusp of en banc review that likely would not have gotten so far before. No. 17-30667 (Oct. 31, 2018). A dissent from the denial of en banc review, joined by 4 of the 5 Trump appointees, would have dismissed the case on standing grounds. (The chart has been corrected from the original post, which misidentified Judge Dennis as a Republican appointee.)

A freak accident involving a compound bow killed Dr. Alan Sandifer, which led to litigation, which led to the plaintiff’s expert testifying as follows:

Dr. Kelkar conceded that from a biomechanical perspective, it was just as likely that Dr. Sandifer was killed by volitionally placing his head inside the bow as it was by an accidental twisting of the bowstring. But he added that he believed the second scenario was more likely because of statements from Dr. Sandifer’s friends and family describing him as a careful bow hunter and the difficulty of volitionally placing one’s head into a drawn bowstring. When pressed, Dr. Kelkar conceded that, without the statements about Dr. Sandifer’s careful nature as a hunter, he could not say his theory was more likely than the expert opinion offered by Hoyt.

This reliance on “propensity” evidence led to affirmance of the expert’s exclusion under Daubert: “Apart from exceeding the scope of his qualification as a biomechanical expert, the propensity evidence Dr. Kelkar based his opinion upon is not a reliable basis to draw a conclusion regarding Dr. Sandifer’s use of the bow at the time of the accident. The propensity evidence was offered by witnesses who testified that Dr. Sandifer was safety-conscious in using and handling the bow as a hunter and when hunting. Dr. Sandifer was not hunting when the accident occurred; he was in his home office and he was engaged in modifying his bow.” Sandifer v. Hoyt Archery Inc., No. 17-30124 (Oct. 24, 2018).

The high-profile litigation about use of Dallas’s convention center by “Exxxotica,” which bills itself as “The Largest Adult Event in the USA Dedicated to Love & Sex,” was brought back to life by a divided Fifth Circuit panel in Three Expo Events LLC v. City of Dallas, No. 17-10632 (Oct. 24, 2018). The issue was standing; two judges agreed that the named plaintiff had alleged a direct injury, with one writing a detailed opinion and the other concurring in the result. A dissent would have affirmed, agreeing with the district court’s distinction between the entity that sued and the entity that would have operated the event in question.

In a win for our firm’s client, the Fifth Circuit affirmed last year’s $3 million trial win by Mike Lynn and John Volney for Prince Mansour bin Abdullah Al-Saud, in a succinct opinion touching on the parol evidence rule, speculative damages, and ways to cure a pleading problem with respect to the recovery of attorneys’ fees. Al-Saud v. Youtoo Media, No. 17-10622 (Oct. 22, 2018).

The Fifth Circuit reversed a defense summary judgment in a trade secrets dispute in Brand Services LLC v. Irex Corp., noting inter alia –

• Discovery. In its summary judgment analysis, the district court should have addressed a  discovery motion filed by the non-movant: “Brand Services claims it moved to compel immediately after discovering the responsive documents in the Pennsylvania litigation. There is some indication that Brand Services could not have reasonably discovered these documents sooner: Irex’s initial blanket objections to Brand Services’s discovery request were grossly improper, and thereafter Irex did little to comply with Brand Services’s requests. Therefore, Brand Services was arguably diligent in seeking these documents even though it did not discover them until after the discovery deadline had passed. At a minimum, Irex’s conduct in this discovery proceeding is highly questionable and bears further examination in light of the exemplar documents.”
• Damages. “Although Brand Services provided little in the way of detail about its claim that it spent ‘millions’ to design the software allegedly stolen, it has, at a minimum, provided some evidence from which a jury could reasonably estimate unjust enrichment damages. For example, it demonstrated that Irex’s use of the
  allegedly stolen information saved Irex at least two to three days a month in time spent invoicing. Even assuming that Irex’s administrative personnel worked only an eight-hour day for minimum wage during those two to three days saved, this is a reasonable inference of unjust-enrichment damages.”

No. 17-30660 (revised Nov. 21, 2018).

A defendant adjusted its arguments about appropriate overtime calculation in light of the trial court’s rulings; the Fifth Circuit found no invited error, waiver, or judicial estoppel. As to judicial estoppel in particular, the Court observed: “In arguing for the comparator model, Saybolt never conceded that the FWW plaintiffs were paid based on a 40-hour workweek or were owed overtime at one and one-half times the “regular rate.” There was thus no inconsistency. Nor did the district court accept Saybolt’s initial position as is required for judicial estoppel. Indeed, the court rejected the comparator model by requiring that incentive payments be included in the “regular rate” calculation. This is why Saybolt fell back on the alternative argument that, since incentive payments must be included, the FWW method should be used to calculate the plaintiffs’ damages.” Dacar v. Saybolt LP. No. 16-20751 (Oct. 18, 2018). A brief opinion on rehearing clarified the scope of the opinion.

Even in the complex world of the modern administrative state, the Social Security Administration stands alone as “the Mount Everest of bureaucratic structures.” Barrett v. Berryhill, No. 17-41177 (revised Oct. 16, 2018) (citation omitted). Surveying that landscape, the Fifth Circuit concluded that a person claiming disability benefits did not have an automatic right to cross-examine a “medical consultant,” a doctor who reviews records without examining the claimant: “We do not mean to say that the opinions of medical consultants are unimportant or error free. But granting an automatic right to subpoena them is too strong a medicine. We do not see why examination of a medical consultant will always, or even usually, lead to meaningful impeachment. That is especially true when, as in this case, the [relevant] form is reviewed by a second medical consultant, lessening the risk of error. When a claimant has legitimate concerns that a[] . . . form is inaccurate or misleading, existing regulations provide the opportunity to question the drafter.” (emphasis in original).

In Seeligson v. Devon Energy, the Fifth Circuit made a good, and a not-good, finding for a putative class of mineral-interest holders.

• Good: The Court found that a putative class had established commonality as to the question whether the defendant “breached its implied duty to market by basing its price on a higher processing fee than the fee that a ‘reasonably prudent operator would have received at the wellhead,’ reasoning that “[t]his issue is precisely the type of common question ‘that . . . will resolve an issue that is central to the validity of each one of the claims in one stroke.'”
• Not good: “Despite the potential for individual questions based on [Defendant’s] statute of limitations defense, the district court did not mention the role, if any, the tolling or limitations issues would play in this class action litigation,” and remanded for analysis of whether the common questions would predominate over individual issues raised by these defenses.

No. 17-10320 (Oct. 16, 2018).

“The district court also abused its discretion in excluding Sharma’s testimony regarding his trend analyses. The district court found this testimony misleading because Sharma only plotted some of the data points from the testing of the pond, which indicated a steady decline moving away from Fairway View, but some of the omitted data points were inconsistent with this trend. We find that this critique of Sharma’s method does not justify excluding the trend analysis testimony entirely. Rather, this question as to the basis for Sharma’s opinion is fodder for cross-examination, “affect[s] the weight to be assigned that opinion rather than its admissibility[,] and should be left for the jury’s consideration.'” Cedar Lodge Plantation v. CSHV Fairway View I, LLC, No.. 17-30742 (Oct. 10, 2018, unpublished) (emphasis added).

The plaintiff in SureShot Golf Ventures, Inc. v. Topgolf Int’l, Inc. alleged that the defendant engaged in anticompetitive conduct by acquiring a company that made critical technology for its golf-related entertainment facilities. The Fifth Circuit affirmed dismissal on the ground that the case was not ripe: “[A]l of the allegations SureShot identifies for us are phrased in future terms, and SureShot has not alleged that any of the federal antitrust violations have resulted in the above-referenced feared actions.” No 17-20607 (Oct. 9, 2018, unpublished) (per curiam). (The district court’s opinion also dismissed for lack of antitrust injury, a point that the Fifth Circuit did not reach.)

In Kiewit Offshore v. Dresser-Rand, the Fifth Circuit affirmed a summary judgment for the plaintiff in a large construction  matter; as the final point addressed, the Court observed: “Dresser-Rand contends, for the first time on appeal, that Kiewit submitted insufficient, conclusory summaries of the work reflected in Invoices DR-04b, 05, and 06, preventing the district court from verifying the total amount of damages Kiewit claimed. Dresser-Rand failed to raise this argument below, and we therefore decline to consider it here.” The Court also noted that “it was undisputed that the invoices accurately reflected actual costs incurred . . . for work performed and accepted . . . .” It is a fair question whether the same result would obtain under Texas state practice, which among other matters distinguishes between “substantive” and “form” objections to summary judgment affidavits – “form” issues requiring objection, but not substantive ones. See Seim v. Allstate Texas Lloyds, No. 17-0488, 2018 WL 3189568, at *3 (Tex. June 29, 2018) (per curiam).

The modern administrative state often requests documents for compliance and enforcement purposes; such a request led to a Fourth Amendment challenge to a subpoena from the Texas Medical Board in Barry v. Freshour. The challenge was made by a doctor who practiced at the facility that received the request. The Fifth Circuit rejected the doctor’s challenge and reversed the district court’s ruling in his favor: “The district court concluded Barry had standing because the records were sought in a proceeding against him and the subpoena was addressed to him personally (though it was also addressed to the records custodian). But the Supreme Court has rejected a ‘target’ approach to Fourth Amendment standing that would look to whether the evidence obtained could be used against the person seeking to challenge the search.” Here, “Barry relies on a list of pure privacy interests in the information the records contain. All but one, as he concedes, are specifically tied to his patients’ privacy interests in their own medical records. To the extent such interests are constitutionally cognizable, they cannot be asserted by Barry.” No. 17-20726 (Oct. 4, 2018).

A federal statute regulates towing vessels, defined as “a commercial vessel engaged in or intending to engage in the service of pulling, pushing, or hauling along side, or any combination of pulling, pushing, or hauling along side.” Shell Offshore v. Tesla Offshore LLC presented the novel question of whether pulling a “towfish” underwater, as part of an archaeological project, fell within this statute (after an unfortunate encounter not with undersea history, but with a Shell offshore drilling rig). The Fifth Circuit found the statute applicable, concluding that the statute’s language did not require the exclusion of academically-oriented activity, that the statute would not reach ordinary fishing activity because the was not “the service” of such vessels, and that applying the statute here would not produce an absurd result. No. 16-30528 (Oct. 5, 2018). (This analysis would correctly exclude a Hummer carrying  a TOW missile (above), although that could be called “tow-ing”).

Whole Foods admitted to mislabeling certain prepackaged foods, which in addition to other legal problems, drew a securities fraud claim. The Fifth Circuit affirmed the rejection of that claim, observing: “The relationship between the weights-and-measures fraud and the plaintiffs’ loss (the decline in the stock price) is causal; the relationship between the alleged securities fraud and the plaintiffs’ loss is spurious. Whole Foods’ overcharging caused (1) the alleged accounting problems and (2) the public-relations problems. The public-relations problems arguably led to slowed sales and the loss in stock price. But the accounting problems did not cause the public-relations problem, nor do the plaintiffs allege that the accounting problems caused a separate loss in stock price.” Employers’ Retirement System v. Whole Foods Market, No. 17-50840 (Oct. 3, 2018).

The “concurrent-remedies doctrine” holds that “when the jurisdiction of the federal court is concurrent with that of law, or the suit is brought in aid of a legal right, equity will withhold its remedy if the legal right is barred by the local statute of limitations.” In Sierra Club v. Luminant Energy, that doctrine would have barred a private litigant’s claim for an injunction when a damages claim was time-barred – but it was held not to apply to a request for injunctive relief brought by the U.S. in its capacity as sovereign. On the merits of the request, the panel majority noted that “the statute of limitations that barred the legal relief [of damages] does not itself bar equitable relief unless it constitutes a penalty,” and left the question of whether the relief was in fact a penalty for the district court on remand. A dissent reasoned that “both of these so-called forms of injunctive relief are really just time-barred penalties in disguise,” would have affirmed dismissal of the entire case on limitations grounds, and avoided the issue about applying the concurrent-remedies doctrine to sovereigns. No. 17-10235 (Oct. 1, 2018).

Griggs was ordered to arbitrate his dispute with Stream Energy. Griggs refused to do so. When asked by the district court for a status report, in an echo of Bartleby the Scrivener’s famous “I would prefer not to,” Griggs responded in relevant part:

“Griggs anticipated that this Court would have already dismiss[ed] this case for want of prosecution because this Court left him only an arbitration which he has not pursued. So, Griggs states the following for the Court’s consideration: 1. Griggs understands and appreciates this Court’s order compelling arbitration. Griggs believes that the Court cons[idered] all arguments before it ruled. 2. However, Griggs disagrees with this Court’s conclusion that this matter must go to arbitration. 3. Griggs will not pursue arbitration. 4. Griggs stands ready to litigate this case before this Court to a conclusion.”

The district court then dismissed the case without prejudice. After review of the various kinds of dismissals addressed by Fed. R. Civ. P. 41, the Fifth Circuit treated the dismissal order as one for “delay or contumacious conduct” under Rule 41(b) – and thus, declined to reach the merits of the arbitration ruling: “Griggs should not be permitted, through recalcitrance, to obtain the review of the arbitration clause that he was expressly denied in the district court, a review that Congress has foreclosed under the Federal Arbitration Act.” Griggs v. SGE Management LLC, No. 17-50655 (Sept. 27, 2018).

Problems with the handling of a CJA criminal appeal led to imposition of sanctions by the district court; specifically: (1) removal from Fort Worth’s CJA panel; (2) a $750 fine; and (3) “12 hours of ethics courses at an accredited law school” within a specified period. The Fifth Circuit affirmed the imposition of sanctions and the first two specific sanctions, but set aside the third as not being “the least restrictive sanction necessary to deter the inappropriate behavior”: “To do this, [the attorney] would presumably need to take the LSAT, apply, and be admitted into a law school. He would then likely need to suspend his law practice—12 hours of classes would almost make Luttrell a fulltime student. And finally, even if he did all this, we are aware of no law school that even offers 12 hours of ethics courses in a single semester.” In re Luttrell, No. 17-10589 (Sept. 28, 2018, unpublished).

In Porter v. Times Group, the plaintiff sued People Magazine and two journalists for defamation. The case was removed, and then remanded – one of the individual defendants died and the district court allowed joinder of the Louisiana citizen appointed as that defendant’s “succession representative” under Louisiana law, which destroyed diversity. The Fifth Circuit would not ordinarily have jurisdiction over a remand order because of 28 USC § 1447(d) (“An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise . . . .”) People Magazine argued that the joinder decision was reviewable as a collateral order, and the Fifth Circuit disagreed, finding that it did not establish the third and fourth requirements for appeal of such an order (that the order be “effectively unreviewable on an appeal from final judgment” and “too important to be denied review”).

The Fifth Circuit made a second discovery-related observation in September, in Norman v. Grove Cranes, a products-liability dispute about a safer alternative design for a crane. The trial judge did not allow the plaintiff’s expert to testify on that point; on appeal, the Fifth Circuit found no abuse of discretion. Plaintiff said the expert “Perkin was unable to form an opinion regarding safer alternative design because Grove failed to produce the documents requested, i.e., the ‘draft design drawings related to the prior design of the crane at issue and similar Grove cranes.’.” The district court disagreed, “pointing out that Norman knew at least 83 days prior to the close of discovery that Perkin needed additional documents to form his expert opinion on safer alternative design but failed to file a motion to compel until a month after the close of discovery,” and noting that the plaintiff’s “failure to seek Court intervention via a motion to compel before the end of discovery shows a lack of diligence in seeking documents [he] now claims are indispensable to his expert’s ability to render a required opinion.” No. 17-20631 (Sept. 10, 2018, unpublished).

The death of the racehorse “Rawhide Canyon” led to hard-fought litigation. The district court denied the plaintiff’s motion to voluntarily dismiss under Fed. R. Civ. P. 41(a)(1), and the Fifth Circuit found an abuse of discretion in not granting it: “Because the payment of attorneys’ fees was the sole basis for the district court’s denial of voluntary dismissal and Plaintiffs subsequently made clear that they would pay these fees, the district court abused its discretion by denying Plaintiffs the ability to voluntarily dismiss their own case.” No. 17-10569 (Sept. 10, 2018, unpublished).

As neither interlocutory appeals about discovery nor discovery-related mandamus petition produce many Fifth Circuit opinions, a comment about discovery is notable when it is made. In National Urban League v. Urban League of Greater Dallas, as part of a summary judgment appeal, the appellant raised an issue about quashing a 30-b-6 deposition of Edward Smith. The Fifth Circuit found no abuse of discretion in denying a motion to quash when: “Defendant provided no explanation for why Smith could not arrange his travel plans to attend the deposition, given that he had ample notice of it, the funeral was the day before the deposition, and Plaintiff agreed to delay the deposition from the morning until the afternoon to allow for travel. Defendant also did not explain why it waited to object to the Rule 30(b)(6) topics until two days before the deposition was to occur.” No. 17-11469 (Sept. 20, 2018).

The en banc case of Alvarez v. City of Brownsville involved a difficult question about municipal liability, under 42 U.S.C § 1983, for an alleged Brady violation arising during the plea bargaining process. The plaintiff had won a $2.3 million judgment after a jury trial. The majority opinion found inadequate evidence of deliberate indifference for § 1983 liability; as to the Brady issue, it held that “case law from the Supreme Court, this circuit, and other circuits does not affirmatively establish that a constitutional violation occurs when Brady material is not shared during the plea bargaining process.” From there, the sixteen judges that comprised this en banc panel authored six other opinions; this chart summarizes the authors and the joinders. No. 16-40772 (Sept. 18, 2018). It is unclear how that breakdown may carry over to commercial cases, but the opinions are revealing insights into a number of judges’ attitudes about structural and constitutional issues.

This blog celebrates its birthday today; if you want to help celebrate, here’s a recipe for some New Orleans-style beignets.

A standard form of an oil-and-gas project’s Joint Operating Agreement contains an attorneys’ fee provision that says: “In the event any party is required to bring legal proceedings to enforce any financial obligation of a party hereunder, the prevailing party in such action shall be entitled to recover . . . a reasonable attorney’s fee.” In Seismic Wells LLC v. Sinclair Oil & Gas Co., the Fifth Circuit found that this provision did not allow fee recovery as to a successful claim about a well damaged by a water leak. “Turning over operatorship rights and running the well on Seismic’s preferred erms are not financial obligations. Sinclair did not refuse to make some payment specified in the agreement.” (emphasis in original). No. 17-10500 (Sept. 13, 2018, unpublished).

A recurring issue in litigation about injunctions and similar court orders is how much specificity is required. In In re: Jankovic, a judgment debtor complained about a contempt order requiring his production of tax returns. The specific language required him to:

“. . . do whatever is necessary, including but not limited to correct and proper authorizations, letters to the IRS Commissioner, letters to his Congressmen to help expedite the process, daily calls and visits to the Internal Revenue Services (IRS) headquarters, and anything else that he needs to do, to have the IRS provide to the plaintiffs directly all of the tax returns on file with the IRS for JAI and JAI Holdings from 2010 to the present or, if no tax returns are on file with the IRS, an official statement or documentation from the IRS proving that no tax returns exist for JAI and JAI Holdings for the tax years requested..”

The Fifth Circuit rejected his challenges, noting on this point: “Had the district court simply ordered Jankovic to ‘do whatever is necessary’ to obtain the returns from the IRS, we would have a more difficult question. However, we need not reach that question here because the district court specified particular actions, and Jankovic has not complied with those specific requirements.” No. 18-50720 (Sept. 13, 2018, unpublished).

A retail business sold its defaulted accounts to a debt collector; litigation ensued about the retailer’s warranty in the sales contract that the accounts “have been originated, serviced, and collected in accordance with all applicable laws.” Conn Credit I LP v. TF Loanco III, LLC, No. 17-40148 (Sept. 10, 2018). This requirement created an “unambiguous condition precedent” when contained in a provision stating that the defendant was “obligated to transfer Accounts on a Closing Date only if . . . the representations and warranties of the Buyer or the Seller, respectively, in this Agreement are true and correct as of such Closing Date” (emphasis added). The Fifth Circuit declined to imply a prejudice requirement into the parties’ agreement, noting that “Conn does not identify a single Texas case applying a prejudice requirement outside of the insurance context” involving untimely claim notification.

In Deutsche Bank v. Burke, an appeal after a remand in a mortgage dispute, the magistrate judge “proceeded to defy the mandate and contravene the law of the case doctrine by concluding that our prior opinion was clearly erroneous and that failure to correct the error would result in manifest injustice.” Unsurprisingly, the Fifth Circuit reversed, reviewing the basic principles about those doctrines, and observing that “the conduct here is extraordinary conduct that would lead to chaos if routinely done.” No. 18-20026 (Sept. 5, 2018).

After a thorough review of the “fundamental relationship between a relator and the Government in qui tam actions,” the Fifth Circuit concluded that private relators  dismissal of an action with prejudice did not bind the non-intervening U.S. government: “[R]elators sought to abandon their claims because they no longer wished to participate in the litigation. In other words, they acted on purely private interests. The Government—even one that chooses not to intervene—should not be bound by this decision, powerless to vindicate the public’s interests in other actions that may have a stronger basis or a relator more able to shoulder the burdens of litigation.” U.S. ex rel. Vaughn v. United Biologics LLC, No. 17-20389 (Sept. 7, 2018).

The Consumer Financial Protection Bureau – the subject of ongoing litigation about the constitutionality of its structure, which has been at issue in the recent Kavanaugh hearings – lost a challenge to a civil investigative demand in CFPB v. The Source for Public Data: “The CFPB did not comply with 12 U.S.C. § 5562(c)(2) when it issued this CID to Public Data. First, it did not state the ‘conduct constituting the alleged violation which is under investigation.’ According to its Notification of Purpose, the CFPB is investigating ‘unlawful acts and practices in connection with the provision or use of public records information.’ Simply put, this Notification of Purpose does not identify what conduct, it believes, constitutes an alleged violation. . . . Moreover, this CID does not identify ‘the provision of law applicable to such violation.’ As discussed, the CID never identifies an alleged violation, so it is unsurprising that it fails to identify a relevant provision of law.” No. 17-10732 (Sept. 6, 2018).

In 2018, the Texas Supreme Court and the Fifth Circuit have taken different approaches to an important type of “Casteel” problem, in which a jury question has several legally viable theories, some of which are not supported with adequate evidence.

Federal. After a thorough (and infrequently-seen) summary of how federal law has developed on the “Casteel problem” of commingled liability theories, the Fifth Circuit concluded in Nester v. Textron, Inc., 888 F.3d 151 (5th Cir. 2018): “We will not reverse a verdict simply because the jury might have decided on a ground that was supported by insufficient evidence.” (applying, inter alia, Griffin v. United States, 502 U.S. 46 (1991)).

State. In Benge v. Williams, 548 S.W.3d 466 (Tex. 2018), a medical-malpractice case, the Texas Supreme Court observed: “The jury question in the present case, unlike the one in Casteel, did not include multiple theories, some valid and some invalid. It inquired about a single theory: negligence. But we have twice held that when the question allows a finding of liability based on evidence that cannot support recovery, the same presumption-of-harm rule must be applied.”

(Thanks to Mark Trachtenberg for pointing out this comparison at the recent Advanced Civil Appellate Course!)

The plaintiff  in Bloom v. Aftermath Public Adjusters, Inc. tried to overcome a limitations problem with the tolling doctrine for malpractice claims recognized by Hughes v. Mahaney & Higgins, 821 S.W.2d 154 (Tex. 1991). The plaintiff’s claim involved the conduct  of a licensed public adjuster working for an insurance company; the Ffith Circuit characterized his argument as saying “that public adjusters are actually lawyers in disguise. Bloom concedes defendants are technically ‘non-lawyers,’ but he insists they effectively ‘provide[d] legal services,’ because there was once a time when Texas prohibited non-lawyers from engaging in public adjusting.” The Court was unpersuaded in this Erie case:

“But that was then, and this is now. Even assuming Texas law previously classified public adjusting as legal practice, under the relevant regime, these defendants are non-lawyers who were not engaged in legal practice. By definition, Bloom’s claims cannot implicate the unique relationship that triggers the bright-line rule from Hughes. Only Texas has the power to say where lawyer-ing ends and adjusting begins, just as its courts have the sole power to decide Hughes’s outer bounds.”

No. 17-41087 (Sept. 4, 2018).

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).