This blog celebrated its 12th birthday last week. To celebrate properly, you can follow this day-long (?!) recipe to make a festive New Orleans style doberge cake.

A birthday tradition for 600Camp is to recall the 2013 case of Farenco Shipping Co. v. Farenco Shipping PTE, Ltd., which produced the best mootness argument of all time — a case about the seizure of a marine vessel became moot once the ship had sailed.

The M/V OCEAN SHANGHAI, recently renamed as SFERA, has avoided the Fifth Circuit’s waters ever since; as of September 19, 2023, it had just entered the North Sea to the west of Denmark.

After an accident involving a failed tire, the remains of the tire were transported to the defendant’s trucking facility, after which they vanished. The Fifth Circuit held that the tire’s disappearance created a jury question about bad faith based on “the following circumstantial evidence:”

Prime destroyed the most crucial piece of evidence just weeks after learning that its tire may have caused a car accident; Prime cannot explain why it transported the tire to its Salt Lake facility or what happened to the tire following the accident; and Prime cannot demonstrate it had any formal preservation or retention policy for its equipment, like tires, that may have caused an injury. These circumstances create a fact question on bad faith, necessitating a jury determination.

Van Winkle v. Rogers, No. 22-30638 (Sept. 15, 2023).

A recent Fifth Circuit panel produced three opinions on an organizational-standing issue in Louisiana Fair Housing Action Center, Inc. v. Azalea Garden Props., LLC.

Top-notch legal-writing expert Ross Guberman wrote an insightful LinkedIn post about Judge Elrod’s distinction of authority in her dissenting opinion – I recommend you give it a read!

The Chitimacha Indian tribe owns a casino. The casino’s former CFO sued the tribe for allegedly violating his civil rights by reporting him to law enforcement. He sued in state court, the defendants removed, and the district judge both denied the CFO’s motion to remand and dismissed the case with prejudice, citing the tribe’s sovereign immunity.

The Fifth Circuit reversed, noting that the controlling statute (28 USC § 1447(c)) requires that a removed case “shall be remanded” if the court lacks subject matter jurisdiction. Because that language “admits of no exceptions,” it “requires remand even when the district court thinks it futile” (here, because the district court concluded that the same immunity problems would also bar state-court litigation against the tribe.

Further, the dismissal should not have been with prejudice–“it’s precisely because the jurisdiction-less court cannot reach the merits that it also cannot issue with-prejudice dismissals that would carry res judicata effect.” Montie Spivey v. Chitimacha Tribe of Louisiana, No. 22-30436 (Aug. 16, 2023).

In re Jefferson Parish involved a mandamus petition about the interplay between a putative class action (“Ictech-Bendeck“) with a 500-plaintiff mass action (“Addison“). The Fifth Circuit denied relief, as the opinion’s introduction deftly summarizes:

… This mandamus proceeding arose because the defendants object to the district court’s scheduling of a small group of Addison plaintiffs for trial before Ictech-Bendeck will finish its class certification process, which the defendants have repeatedly delayed.

Petitioners ask us to stop the Addison trial and to order the district court to rule on class certification in Ictech-Bendeck before allowing any further proceedings in Addison. Petitioners raise the novel theory that under Rule 23 of the Federal Rules of Civil Procedure, the filing of a putative class action bars any possible class members from reaching the merits of their own, separate suits until class certification proceedings conclude in the putative class action. …

… Rule 23 establishes a mechanism for plaintiffs to pursue their claims as a class. It does not cause the filing of a putative class action to universally estop all separate but related actions from proceeding to the merits until the class-certification process concludes in the putative class action, after years of motions practice.

No. 23-30243 (Aug. 24, 2023).

In Louisiana Fair Housing Action Center, Inc. v. Azalea Garden Properties, LLC, “a nonprofit entity with a mission to eradicate housing discrimination in Louisiana” sued when a “tester” used by that entity experienced allegedly unlawful behavior at an apartment complex.

A Fifth Circuit panel (notably, the same panel that found standing in the high-profile mifepristone case) found that the entity lacked standing, but offered three different analyses of that issue:

• The majority opinion found no cognizable injury had been pleaded, remanding with instructions to dismiss without prejudice;
• A concurrence offered additional thoughts about how cognizable injury could be established on remand (either with new allegations, or by adding individual plaintiffs);
• A dissent saw the standing issue as controlled by a 1982 Supreme Court case about a similarly situated housing nonprofit.

No 22-30609 (Sept. 14, 2023).

A frustrated district court imposed sanctions in Ben E. Keith Co. v. Dining Alliance, Inc., citing the persistent failure of defendant Dining Alliance LLC to identify its members (and thus, allow resolution of the question whether the federal courts had diversity jurisdiction). The sanction included a dismissal with prejudice.

The defendant protested that the district court lacked jurisdiction to do so (an awkward position, given that the entire problem arose from the defendant’s difficulty with jurisdictional infomation). The Fifth Circuit disagreed:

“A case-dispositive sanction does not require the district court to assess a claim’s merits, weigh the evidence proffered in support of or against them claim, or decide an issue that bears on the claim’s legal substance. It is a purely procedural order.”

The Court observed that Rule 41(b) refers to “the merits,” but noted Supreme Court authority holding that “the phrase on the merits ‘has come to be applied to some judgments … that do not pass upon the substantive merits of a claim.” No. 22-10340 (Sept. 12, 2023).

CAFA allows remand of a case, otherwise removable under that statute, if the plaintiffs establish that the “local controversy” exception applies. Am element of that exception is that the plaintiffs seek “significant relief” from an in-state defendant.

A recurring problem in remedies law is whether “irreparable injury” is shown (and injunctive relief thus justified) when a defendant is insolvent. State of Louisiana v. i3 Verticals, Inc. presents a simlar problem because the in-state party was “a defunct shell with no assets, facilities, business, or employees ….”

The majority held: “The interpretation of the ‘significant relief’ prong is an issue of first impression in our circuit. We begin where we always do—with the text. And all the text requires is that ‘significant relief is sought’ from an in-state defendant. It says nothing about the in-state defendant’s ability to pay.” (citation omitted). The dissent saw that holding as inconsistent with CAFA’s discouragement of artful pleading. No. 22-30553 (Sept. 1, 2023).

In Self v. BPX Operating Co., the Fifth Circuit confronted a claimed conflict between Louisiana’s forced-pooling laws and a civilian doctrine called “negotiorum gestio,” andi certified (over a dissent) the question to the Louisiana Supreme Court. I was unfamiliar with the doctrine and the case offers this summary for the uninformed attorney from a common-law tradition:

On the other hand, negotiorum gestio—or management of affairs—“is a typically civilian institution that derives from the Romanist tradition and is found in all civil codes.” La. Civ. Code art. 2292 cmt. (a). Negotiorum gestio applies when a person, the manager or gestor, acts 1) without authority, 2) to protect the interests of another, and 3) in the reasonable belief that the owner would approve of the action if made aware of the circumstances. La. Civ. Code art. 2292. The gestor must have “undertake[n] the management with the ‘benefit’ of the owner in mind” and not have “act[ed] in [its] own interest or contrary to the actual or presumed intention of the owner.” Id. cmts. (c)-(d) … Only if all these requirements are met does a person qualify as a gestor such that “[t]he owner whose affair has been managed is bound to fulfill the obligations that the manager has undertaken as a prudent administrator and to reimburse the manager for all necessary and useful expenses.” La. Civ. Code art. 2297. Negotiorum gestio is “rooted in altruism,” and its purpose is to “encourage people to assist friends and neighbors in need.”

No. 22-30243 (Sept. 8, 2023).

Rex Real Estate, a commercial real estate broker, sued Rex Exchange, a facilitator of online home sales. The defendant won judgment as a matter of law at trial, after which the Fifth Circuit affirmed in part and reversed in part. In its opinion, the Court  sought to “unconfuse” its precedent about confusion in trademark-infringement cases, reviewing the holdings of its cases and applying the resulting framework to that aspect of the case:

Plaintiff’s anecdotal proof of confusion does not involve swayed customer purchases or initial interest confusion that can result in swayed business. It also does not involve “potential customer[s] considering whether to transact business with one or the other of the parties.” But it has presented instances of potential customers of each respective company mistakenly contacting the other. . These instances are relevant, but their weight is lessened by Plaintiff’s and Defendant’s high volume of business and extensive advertising. Nevertheless, because Plaintiff has presented some relevant evidence of actual confusion, a reasonable jury could conclude that this digit weighs in its favor.

Rex Real Estate I, LP v. Rex Real Estate Exchange, Inc., No. 22-50405 (Sept. 6, 2023) (citations omitted).

After the matter ended, a health care economist sought to intervene in a qui tam case about medical billing, wanting to challenge a protective order that covered documents in which he had professional interest.

The Fifth Circuit did not rule that he had the right to intervene, but did reverse the district court’s denial of his petition, finding that it had erred on points of law in evaluating his standing, his “claim or defense” that justified intervention, and the timeliness of his petition. U.S. ex rel Hernandez v. Team Finance LLC, No. 22-40707 (Aug. 31, 2023).

The Fifth Circuit reversed the trial court’s dismissal of a case under Fed. R. Civ. P. 19, for problems with party joinder, in PHH Mortgage Co. v. Old Republic Nat’l Title Ins. Co.

The key distinction that led to reversal was this: “The [Texas] trespass-to-try-title statute applies only when ‘the claimant is seeking to establish or obtain the claimant’s ownership or possessory right in the land at issue,'” while “a breach of contract claim against a title insurance company ‘invokes the insurer’s obligation to pay the claim or defend title to the property, and this claim is separate and distinct from the claim of ownership.'” No. 22-50930 (citations omitted).

In Whirlpool Corp. v. Shenzhen Sanlida Elec. Tech. Co., the plaintiff obtained a preliminary injunction against sale of a kitchen mixer that allegedly infringed on the “KitchenAid” design. Shenzen, a China-based manufacturer, objected to the issuance of an injunction before service of process (although its counsel appeared at the preliminary-injunction hearing and argued about the merits, and Shenzen did not dispute that jurisdiction would exist upon completion of service).

The Fifth Circuit rejected this argument, noting:

• Text. “Federal Rule of Civil Procedure 65[(a)(1)] states that a court ‘may issue a preliminary injunction only on notice to the adverse party..”
• Circuit precedent. “[A]s we stated in Corrigan Dispatch Co. v. Casa Guzman, S.A., ‘Rule 65(a) does not require service of process,’ but rather requires ‘notice to the adverse party.’ 569 F.2d 300, 302 (5th Cir. 1978).
• Practicality. “[B]ecause ‘formal service of process under the Hague Convention . . . can take months,’ adopting Shenzhen’s position could result in the ‘unfortunate effect of immunizing most foreign defendants from needed emergency injunctive relief.'” (citation omitted).

No. 22-40376 (Aug. 25, 2023).

Princeton Excess & Surplus Lines Ins. Co. v. A.H.D. Houston, Inc. addresses – coverage – in strip clubs, holding that the clubs are – exposed.

As with Jan Tiffany’s burlesque act of the 1950s (right), matters “largely turn[ed] on whether the … coverage should be viewed as one ‘umbrella’ of coverage or carved into subcategories … .”

The specific issue involved insurance coverage for damages arising from unauthorized use of models’ photos, and turned on construction of the policies’ exclusions to “advertising injury” coverage. A dissent would certify the issue to the Texas Supreme Court.  No. 22-20473 (Aug. 25, 20230.

After going to see Oppenheimer, you can read State of Texas v. Nuclear Regulatory Commission.

The failure of the Yucca Mountain repository for spent nuclear fuel led the NRC to explore “a consent-based approach for siting nuclar waste storage facilities.” With encouragment from the governors of Texas and New Mexico, it authorized such a facility in Andrews County–a remote location at the heart of the Permian Basin oil fields. Texas changed its mind, enacting a statute that made the storage of high-level waste illegal in the state.’

This lawsuit resulted. The Fifth Circuit found that the plaintitfs (Texas, a state environmental agency, an oil producer, and an oil-industry group) had constitutional and statutory standing to challenge the NRC’s license, and from there, concluded that the NRC had overstepped its statutory authority. No. 21-60743 (Aug. 25, 2023).

I had an op-ed in today’s Dallas Morning News about recent friction between the Supreme Court and Fifth Circuit on standing in some high-profile constitutional/administrative-law cases.

In last week’s Texas Lawbook, I reported on an experiment with an AI competitor of ChatGPT called Claude. It’s not ready to be a virtual law clerk yet, but its surprisingly powerful.

The Satanic Temple–an enthusiastic, if not particularly coherent, litigant–appealed the denial of a preliminary injunction that it sought as to several Texas abortion laws. The Fifth Circuit thoroughly reviewed the principles that govern when a preliminary-injunction appeal can become moot with time, and concluded that they applied here to require dismissal of this particular appeal:

Plaintiffs have already appealed the dismissal of their claims; that appeal is docketed as No. 23-20329. To the extent that plaintiffs want to litigate further any issues that were raised in the preliminary injunction motion and remain live, they may do so in their appeal from the district court’s final judgment.

No. 22-20459 (Aug. 18, 2023) (footnote omitted).

The quesions in Louisiana Newpack Shrimp Co. v. Longhai Indigo Seafood Partners, Inc. was whether Louisiana Newpack (an importer and seller of seafood) owed $995,188.03 to Longhai (a crabmeat exporter) for three orders of crabmeat.

A properly-instructed jury found that the parties did not have a contract, but did have an enforceable “open account” as recognized by Louisiana law. The district court entered judgent for Longhai, but then amended the judgment under Fed. R. Civ. P. 59 to award it nothing.

The Fifth Circuit reversed, noting that Rule 59(e) requires the movant to “clearly establish … a manifest error of law or fact.’ Noting “conflicting case law” in Louisiana on the question whether an open-account claim requires the existence of a contract, the Fifth Circuit held “that it was not a manifest error of law to allow Lonhai to recover on its open account claim.” No. 22-30653 (Aug. 17, 2023, unpublished) (emphasis in original).

A few years ago, I examined en banc opinons in the Dallas Court of Appeals, and concluded that they tended to be either: (1) “error correction” of panel opinions that had become out of step with the rest of the state and/or the supreme court; (2) “successful failure” cases where en banc review became moot when the supreme court took the case; and (3) “Goldilocks” cases that involve significant issues, but not of such importance that supreme-court review is guaranteed.

The Fifth Circuit’s en banc cases fit that general taxonomy (Brackeen and the FHFA case qualifying as “successful failures”), with the recent opinion in Hamilton v. Dallas County an example of error-correction. The majority opinion summarized:

[T]he panel concluded that it was “bound by this circuit’s precedent, which requires a Title VII plaintiff” to have “suffered some adverse employment action by the employer” and which says that “adverse employment actions include only ultimate employment decisions such as hiring, granting leave, discharging, promoting, or compensating.” Because “the denial of weekends off is not an ultimate employment decision,” the panel affirmed the district court’s dismissal. The panel concluded by urging the full court to “reexamine our ultimate-employment-decision requirement” in light of our deviation from Title VII’s plain text. We granted rehearing en banc to do so.

No. 21-10133 (Aug. 18, 2023) (en banc) (footnotes omitted).

The Fifth Circuit’s mifepristone opinion has been released (although the trial court’s order remains stayed by an earlier ruling from the U.S. Supreme Court) – of particular interest is the panel majority deciding not to address the issue presented about the Comstock Act:

I discuss the importance of this point in a recent article in Slate, as does Professor Mary Ziegler in another Slate piece.

A boat sank during a hurricane, leading to an insurance-coverage dispute about whether the boat was in not located in the place warranted by the insured.

The insurance policy at issue had two “incorporation” clauses. “The first provides that ‘[t]his insuring agreement incorporates in full [Gray Group’s] application for insurance[.]’ The second states that ‘[t]his is a legally binding insurance document between [Gray Group] and [Great Lakes], incorporating in full the application form signed by [Gray Group].'”

The Fifth Circuit agreed with the district court that these clauses were ambiguous as to what specific documents were referenced. Unfortunately for the plaintiff, though, the extrinsic evidence showed that the parties intended “application for insurance” to include a document about the boat’s location–and thus, made a warranty that the boat would be in New Orleans during hurricane season. Great Lakes Ins. v. Gray Group Investments, LLC, No. 22-30041 (Aug. 1, 2023).

The Financial Times sought access to a sealed sentencing record in a high-profile criminal case about international bribery. In United States v. Ahsani, No. 23-20097, the Fifth Circuit held: “[W]e acknowledge numerous procedural irregularities in the district court, we ultimately affirm its denial of the intervenors’ motion to unseal.”

Two issues in particular were presented.

1. Notice and an opportunity to be heard before sealing. The Fifth Circuit found material errors by the district court in how it handled sealing of the sentencing proceeding. Unfortunately for the Times, those errors did not require unsealing of the hearing as a remedy, and other aspects of the record justified its continued sealing.
2. Legal error. After reviewing the requirements of the common-law and First Amendment rights of public access to court records, the Court held: “[T]he order denying intervenors’ motion to unseal included sparse detail when read in isolation, but it did contain specific, substantive findings sufficient to permit our review, given the facts.  Although its articulation of the governing legal principles could have been more detailed, the court applied the proper legal standards. … The interests it identified are compelling and implicated by the sealed information. Those interests may abate in the future, but for now, they remain salient enough to justify the sealing of the documents at issue, including the transcript of the sealed sentencing proceeding. Finally, the court properly considered the alternative of redaction and permissibly found that it was inappropriate.”

Biology teaches that form follows function; similarly, Crown Castle Fiber v. City of Pasadena teaches that “aesthetic design standards incorporating spacing and undergrounding requirements” cannot flout federal telecommunications law, anymore than a tax on federally-protected commercial activity could.

Specificaly, the Fifth Circuit held that the Federal Telecommunications Act preempted local regulations that effectively prohibited the installation of small cell nodes needed for 5G networks. As for standing, “[e]ven though § 253 does not confer a private right [of action], a plaintiff is not prevented from gaining equitable relief on preemption grounds.” And on the merits, the “spacing and undergrounding” regulations were not reasonable or competitively neutral under the FTA’s safe harbor provision. No. 22-20454 (Aug. 4, 2023).

Chavez v. Plan Benefit Services, returning to the Fifth Circuit, addressed two class-action issues.

1. Standing. The Court evaluated two competing approaches to class standing. One requires named plaintiffs to establish their own individual standing, then separately analyzes class certification under Rule 23. The second examines named plaintiffs’ standing to raise claims of absent class members before applying Rule 23. As in Angell v. GEICO, 67 F.4th 727 (5th Cir. 2023), the Court avoided choice between the two by finding them both satisfied on this record.
2. Certification. The district court found the overarching question of whether the defendants owed fiduciary duties by managing the benefit trusts was both significant and dispositive of the class’s claims. The Court agreed that this issue, along with the question whether any fiduciary duty was breached, outweighed individualized inquiries into each plan’s fees or structure.

No. 22-50368 (April 11, 2023).

I’m on a summer vacation road trip, blog posts will resume upon my return next week! I hope you are having an enjoyable summer with quality air conditioning. I also recommend that you see “Oppenheimer” — with or without seeing “Barbie” — as it offers some powerful insights about civil procedure run amok in Oppenheimer’s security-clearance hearings.

After a well-publicized debacle in New York involving “research” in which ChatGPT invented nonexistent cases, the phenomenon of “hallucinatory” generative AI has arrived in Texas. The Waco Court of Appeals recently faulted a lawyer for providing a brief with three nonexistent cases (and, like the New York counsel, not responding when the problem was pointed out by the appellee). While there is nothing wrong with using ChatGPT to help with legal analysis and writing, uncritical acceptance of purported caselaw found “on the Internet” is always risky.

The Fifth Circuit found that fact issues about the plaintiff’s discovery of his potential claims precluded summary judgment in Bruno v. Biomet, Inc.:

On the one hand, a jury could reasonably determine that contra non valentem tolled the prescription period until September 2019—given Bruno’s consultations with his doctor, a medical professional. But on the other hand, a jury could just as reasonably determine that contra non valentem tolled prescription until some point in time before September 2019. It is unclear whether Bruno stopped suffering complications from infections after the removal, such that his recovery after the device’s removal would have put him on notice of any fault of Biomet’s before the letter was received.

No. 22-30405 (July 21, 2023).

Hogan v. Southern Methodist University presented, inter alia, the question whether Texas’s Pandemic Liability Protection Act – enacted in 2021 – bars a student’s complaint about SMU moving to an all-virtual learning environment in 2020.

The student argued that this backward-looking application of the law violated the Texas Constitution’s prohibition of “retroactive” laws — a unique feature of that instrument that, like the “open courts” provision, has no counterpart in the U.S. Constitution. SMU, supported by the Texas AG, argued otherwise.

The Fifth Circuit certified this issue to the Texas Supreme Court, noting its importance and the dearth of caselaw on the point to date. No. 20-10433 (July 20, 2023).

The plaintiffs in Clarke v. Commodity Futures Trading Commission sought a preliminary injunction, alleging that their business (the “Predictit Market,” where users can trade on the potential outcomes of future events) would fail after the CFTC changed position on an earlier no-action letter.

Two judges agreed that a preliminary injunction was required as a matter of law–but agreed on little else, as the concurrence noted: “Plaintiffs’ theory of final agency action admittedly conflicts with the precedents of our sister circuits. To my knowledge, no circuit has held that a no-action letter or its withdrawal is sufficient to constitute ‘final agency action’ under the Administrative Procedure Act. And some have held the
opposite.”

A dissent was so unpersuaded on the issue of final agency action that it would not have required a preliminary injunction. No. 22-51124 (July 21, 2023).

Missouri v. Biden, No. 23-30445, presents a high-profile dispute about coordination betwen the federal government and social media platforms to address misinformation. A district court in Louisiana issued an injunction against such coordination and the federal government appealed. That appeal, as do many significant constitutional disputes, implicated the division of responsibility between an initial “administrative stay,” a later “stay pending appeal,” and the resolution of the merits of the appeal. For this case, a Fifth Circuit panel resolved that matter with this order:

The arbitration award in Amberson v. McAllen said:

along with some additional explanation of the difference between a “reasoned award” and “Findings of Fact and Conclusions of Law.” The Fifth Circuit rejected the argument that the arbitrator’s drawing of this distinction kept the award from having collateral-estoppel effect. No. 22-50788 (July 12, 2023).

A&R Engineering sued the Texas Attorney General, complaining about a state law forbidding boycotts of Israel by municipal contractors, and arguing that his enforcement of the law made it lose a valuable contract with the City of Houston. The Fifth Circuit held that A&R lacked standing, concluding:

1. Injury in fact. “The lost opportunity is connected to a financial loss.  And the loss isn’t speculative. A&R retained records of how much it made in previous contracts ….”
2. Traceablity. “The economic harm and lost opportunity are traceable to the City. The City after all is the party responsible for contracting with A&R. But it’s unclear how A&R can trace its economic injury to the Attorney General. Traceability is particularly difficult to show where the proffered chain of causation turns on the government’s speculative future decisions regarding whether and to what extent it will bring enforcement actions in hypothetical cases.”
3. Redessability. “[T]he City’s conduct severs any link between A&R’s economic injury and the Attorney General.  The City told the district court it would follow state law and include the provision. But the City never attributed its actions to any enforcement or threatened enforcement by the Attorney General. A&R’s injury depended on the ‘unfettered,’ ‘independent’ choices of the City, ‘whose exercise of broad and legitimate discretion [we] cannot presume either to control or to predict,’ so the injury isn’t traceable to the Attorney General.”

A&R Engineering v. Scott, No. 22-20047 (July 10, 2023) (all citations omitted). (The Court’s analysis of redressability echoes Justice Gorsuch’s recent analysis of a similar issue in his concurrence for United States v. Texas, No. 22-58 (U.S. June 23, 2023)).

Loy v. Rehab Synergies, LLC allowed a dispute about overtime pay to proceed as a collective action, when the 22 plaintiffs were subject to a similar program that required 90% productivity,” for which “a therapist needed to record 54 minutes of billable time for every hour on-the-clock, leaving the equivalent of just six minutes per hour to complete non-billable tasks.” Given that shared foundation, the Fifth Circuit found no abuse of discretion by the district court in its assessment of the relevant factors. No. 22-40411 (June 21, 2023).

While the Supreme Court issued several opinions in Mallory v. Norfolk Southern Railway, No. 21–1168 (U.S. June 27, 2023), the part joined by a five-justice majority is straightforward. A condition for registering to do business in Pennsylvania is consent to be sued there, and the Court held that condition did not raise a due-process concern, reaffirming the validity of much older precedent on the point. Justice Jackson’s concurrence helpfully distinguishes the concepts of waiver and “minimum contacts.” No. 21-1168 (U.S. June 27, 2023).

Jeanty was arrested, and then released, after Big Bubba’s Bail Bonds posted a surety bond on his behalf. He was then re-arrested after Big Bubba’s complained to the trial court that Jeanty had failed to maintain contact as required by their contract.

Jeanty sued for false imprisonment and Big Bubba’s obtained a Rule 12 dismissal.

Providing a straightforward example of an Erie analsis, the Fifth Circuit reversed. It began with the precedent of the Texas Court of Criminal Appeals about the relevant statute, continued by reviewing more recent intermediate-court opinions and finding they were consistent with the earlier precedent, and giving little weight to an advisory opinion from the Texas Attorney General.

Jeanty v. Big Bubba’s Bail Bonds, No. 22-40241 (June 29, 2023).

Just a few days before the Supreme Court’s opinion in 303 Creatiive, a Fifth Circuit panel reached a similar result in a related setting (here, the hiring and workpace practices of a church and a “Christian business”):

[W]e decide that RFRA requires that Braidwood, on an individual level, be exempted from Title VII because compliance with Title VII post-Bostock would substantially burden its ability to operate per its religious beliefs about homosexual and transgender conduct. Moreover, the EEOC wholly fails to carry its burden to show that it has a compelling interest in refusing Braidwood an exemption, even post-Bostock.

Braidwood Management v. EEOC, No. 22-10145 (June 20, 2023).

During a tour of a “24 Hour Fitness” facility, Mr. Sauls fell into an empty hot tub and suffered severe injuries. He and his wife won a verdict for over $1.5 million in damages. But the district court granted judgment as a matter of law under Fed. R. Civ. P. 50(b) for the defendants, concluding that the hot tub was an “open and obvious” hazard.

The Fifth Circuit reversed, noting, inter alia: “Mr. Sauls is a 79-year-old man with a hearing impediment. The totality of the particular circumstances Mr. Sauls faced included no prior knowledge of the facility or the location of the hot tub, no warning as to the fact that the hot tub would be empty and located approximately five feet away from the door, and his attention was simultaneously diverted away from the hot tub by 24 Hour Fitness’ tour guide.” Sauls v. 24 Hour Fitness, No. 22-10182 (July 7, 2023) (footnotes omitted).

In May 2022, a Fifth Circuit panel held in Jarkesy v. SEC that the Seventh Amendment’s right to civil jury trial extends to an SEC enforcement action. The full Fifth Circuit later denied en banc review of the matter.

Critics of the administrative state celebrated the ruling as an important limit on agency power; others questioned whether “originalism” was fairly applied to an agency and a set of statutes that did not exist in 1792.

On June 30 of this year, the Supreme Court granted review of Jarkesy, which will be a fascinating addition to the next term of that court:

The question in Allstate Fire & Casualty Co. v. Love was whether “the amount of an insurancy policy or the underlying claim determines the amount in controversy to establish diversity jurisdiction ….” The Court addressed, and clarified, earlier Circuit precedent on that generaly topic, and went on to hold that in this case: “where the claim under the policy exceeds the value of the policy limit, courts … should ask whether there is a legal possibility that the insurer could be subject to liability in excess of the policy limit” (a Stowers claim having been made in this dispute). No. 22-20405 (June 22, 2023).

In United States v. Texas, last Friday, the Supreme Court reversed a Fifth Circuit judgment because Texas had no standing to bring a particular claim about immigration policy. The case echoes the proceedings in California v. Texas, a 2021 matter in which the Supreme Court also reversed a Fifth Circuit judgment for lack of standing — in that case, an issue about the enforceability of the Affordable Care Act.

As Texas’s Attorney General, Greg Abbott famously quipped: “I go into the office in the morning. I sue Barack Obama, and then I go home.” In a recent interview, I suggest that these opinions are a yellow light for that approach to public-law litigation; Mark Stern makes a similar point in more colorful language for Slate. Time will tell whether that traffic signal is heeded.

Two New York lawyers filed a brief with “fake law” in it, having accepted at face value a “hallucination” by ChatGPT abouot several cases that did not in fact exist. The district court has now sanctioned them. The opinion is of broad general interest, given the great influence of generative AI in its few short months of widespread public availability. And it’s also of broad general interest in avoiding sanctions–the lawyers had at least one good chance, and maybe even two, of coming clean about their error, but instead “doubled down” with purported screenshots of the nonexistent cases.

In a recent analysis of a sanctions order, the Fifth Circuit provided an instructive example of an argument that withstood a forfeiture objection:

“Ticket argues that CEATS forfeited the bad-faith argument by failing to assert it in the district court. While it is true that we tend not to entertain arguments that a party asserts for the first time on appeal, ‘an argument is not [forfeit]ed on appeal if the argument on the issue before the district court was sufficient to permit the district court to rule on it.’ Here, CEATS told the district court that a discovery violation ‘must be committed willfully or in bad faith for the court to award the severest remedies available under Rule 37(b).’ CEATS also argued that it did not violate the Protective Order willfully or in bad faith, because the ‘communications … were clearly inadvertent.’ That argument was enough to put the district court on notice that CEATS opposed any definition of ‘bad faith’ that includes inadvertent conduct.”

CEATS, Inc. v. TicketNetwork, Inc., No. 21-40705 (June 19, 2023) (citations and footnotes omitted). (This analysis has an interesting analog in the recent case of United Natural Foods, Inc. v. NLRB, where the majority and dissent disputed whether a particular issue was raised for purposes of the “party presentation” principle).

TicketNetwork, an online ticket marketplace, sued CEATS, a non-practicing IP company, for declarations that Ticket’s business did not violate CEATS’s patents or a related license agreement.

CEATS won at trial, and while its claim for attorneys fees was pending, obtained an order allowing it to see a list of Ticket’s website affiliates. That order restricted access to certain designated in-house representatives.

CEATS’s CEO, who was not supposed to see the list, then sent Ticket’s CEO a settlement demand–attaching the list. After significant proceedings, the district court awarded (1) a 30-month injunction against any dealings with the companies on the list and (2) $500,000 against CEATS, its CEO, and two litigation consultants.

The Fifth Circuit, inter alia:

• Vacated the award against the individuals: “The Individuals did not receive notice that monetary sanctions were pending against them, and they did not receive a pre-deprivation opportunity to defend themselves at a hearing. By the time the district court heard their response, it had already decided against them. That was an abuse of discretion.”
• Vacated the injunction: “We also agree with CEATS that the district court did not make the bad-faith finding that is a prerequisite to litigation-ending sanctions under [Fed. R. Civ. P.] 37(b). Instead, the district court found that CEATS acted recklessly, and then it equated recklessness with bad faith. We have rejected that equivalence.”
• Vacated the fee award: “[T]here was a significant disparity between the rates that the first court approved when it awarded attorney fees to CEATS (at an earlier stage of litigation) versus the rates that it approved when it awarded attorney fees to Ticket (as part of the sanction against CEATS).”

CEATS, Inc. v. TicketNetwork, Inc., No. 21-40705 (June 19, 2023). The Court aptly summarized: “We AFFIRM in (small) part, VACATE in (large) part, and REMAND for further proceedings.”

In Norsworthy v. Houston ISD, the Fifth Circuit acknowledged a recent amendment to Fed. R. App. P. 3(c) about the requirements for a notice of appeal.

In this case, the appellant’s notice of appeal named its Rule 59 motion to alter amend, not the final judgment itself. Under the earlier rule, that language could have given rise to a waiver issue. But a 2021 amendment says that “a notice of appeal encompasses the final judgment,” so long as the notice designates an order named in Fed. R. App. P. 4(a)(4)(A), which lists the standard post-trial motions. No. 22-20586 (June 13, 2023).

The Fifth Circuit was unwilling to extend a bankruptcy court’s “core” or “related-to” jurisdiction to reach a settlement agreement when:

“[T]he settlements contradict the plan. Whereas the plan discharged debts unless a timely proof of claim was filed, the settlements require Chesapeake to pay the non-filing lessors a portion of their royalty claims far higher than other creditors’ timely filed general unsecured claims. Whereas the plan assumed that Chesapeake’s leases would ride through bankruptcy unaffected, the settlement requires a mandatory alteration in the terms of thousands of Pennsylvania leases. Far from merely enforcing the plan, the settlement accomplished a self-described ‘fundamental reset of Chesapeake’s relationship with its Pennsylvania lessors.'”

No. 21-20232 (June 8, 2023).

The high-profile police-shooting case of Edwards v. City of Balch Springs ended with an affirmance of dismissal on qualified-immunity grounds. Among other holdings, the opinion succinctly captures the challenge in scrutinizing official use-of-force policies in this setting:

“[A] written policy is not facially unconstitutional just because it leaves out ‘detailed guidance that might have averted a constitutional violation.’ If it were otherwise, a use-of-force policy would be facially constitutional only if it recited every jot and tittle of the applicable caselaw. Surmounting that logistical hurdle would produce a behemoth free of any practical use—less a policy than a treatise.”

No. 22-10269 (June 9, 2023).  (The phrase “jot and tittle,” btw, has a Biblical origin related to pen strokes used to write Hebrew.)

Together with the able Raffi Melkonian from Houston, I presented the “Fifth Circuit Update” at the University of Texas appellate course last week; here is a copy of our PowerPoint.

An alleged requirements contract for a supply of auto parts did not satisfy the statute of frauds, when it did not say in writing that it was a requirements contract or otherwise establish a quantity, when:

• The email in question referenced a $10,000 credit limit (“Our credit manager is on the conservative side. He has given you a credit limit of $10K until he sees a credit history pattern. Your terms are net 30 days.t had a $10,000.”) The Fifth Circuit held: “The $10,000 figure is a credit limit; it is not a ‘specif[ication of] a quantity’ of goods that Wesden would buy from ITW.”
• The email attached a price list. The Court held: “Wesden contends that the attachment satisfies the quantity-term requirement because it shows that the parties agreed to an ‘”‘unlimited” quantity in writing, which is very specific.’ But this is not so. The attachment is an empty order form listing the per-unit price for each Auto Magic product. There is no quantity or exclusivity term in the price list.”

Wesdem LLC v. Illinois Tool Works, Inc., No. 22-50769 (June 9, 2023).

Jack Daniel’s v. VIP presented the question whether a dog toy, with the general appearance of a Jack Daniel’s bottle, infringed the Jack Daniel’s trademarks. The matter reached the Supreme Court because of a dispute over whether to (a) apply the customary likelihood-of-confusion factors under the Lanham Act, or (b) before applying those factors, apply “the Rogers test” that focuses on a First Amendent issue. The Supreme Court chose the simpler path and went straight to the factors:

Without deciding whether Rogers has merit in other contexts, we hold that it does not when an alleged infringer uses a trademark in the way the Lanham Act most cares about: as a designation of source for the infringer’s own goods. VIP used the marks derived from Jack Daniel’s in that way, so the infringement claim here rises or falls on likelihood of confusion. But that inquiry is not blind to the expressive aspect of the Bad Spaniels toy that the Ninth Circuit highlighted.

No. 22-148 (U.S. June 8, 2023) (citation omitted).

Longrunning litigation between the Allen Stanford receiver and a substantial Stanford investor came to an end in Janvey v. GMAG LLC, with the conclusion that the investor’s setoff defense had been forfeited.

The Fifth Circuit considered, but did not rule on, an argument based on the pretrial order. Reminding that “[a] pretrial order supersedes all pleadings,” the Fifth Circuit noted precedent that “even issues of law should be included in the pretrial order or else they are waived.” It was reluctant to apply that precedent here, however, when a joint stipulation said only that setoff would not be argued “during the trial of this matter.” The investor contended that setof was a legal matter that only became relevant after verdict.

But, held the Court, forfeiture occurred when the investor did not raise setoff in opposition to the receiver’s motion for entry of final judgment. No. 22-10235 (May 30, 2023).

Raskin v. Dallas ISD addresses whether a mother can sue, pro se, in federal court on behalf of her children under the Genetic Information Nondiscrimination Act. Acknowledging both the practical reality that many such actions must be brought pro se, and that the federal courts ordinarily require the professionalism of trained counsel, the majority opinion deftly read the relevant statutes to let the district court apply discretion to this issue on remand.

A dissent favored an absolute rule allowing such pro se proceedings, noting, inter alia, customs about pro se representation when the Judiciary Act was adopted in 1789. (to be fair, though, women such as Ms. Raskin did not have the ability to sue about much of anything in 1789, pro se or otherwise).

A recent Texas Lawbook article considers a new standing order by Hon. Brantley Starr about reliance on language-model AI programs when writing briefs. Judge Starr’s point is well-taken and Rule 11 should probably be revised to include a specific reference to this issue, given how pervasive these programs will likely become in the near future.

I asked ChatGPT what it thought about the matter (specifically: “What are the pros and cons of requiring attorneys to certify to the accuracy of court fiings made with the assistance of language-model AI programs, such as yourself?”) and here is what it had to say:

______

Introducing a requirement for attorneys to certify the accuracy of court filings made with the assistance of AI language models like GPT-4 could have several pros and cons. Here are some:

Literature is filled with nonexistent books, such as the “Necronomicon” in the works of H.P. Lovecraft, the “Treatise on the Binomial Theorem” written by Sherlock Holmes’s menace, Professor James Moriarty, etc.

To that collection, we can now add Varghese v. China South Airlines, Ltd., 925 F.3d 1339 (11th Cir. 2019).

ChatGPT helpfully offered that opinion to a New York lawyer researching a technical limitations issue. Unfortunately for that lawyer, the opinion did not actually exist and neither did any of the cases that it purported to cite. An understandably vexed federal judge is now considering sanctions about the matter.

Language-model AI tools are extraordinarily powerful and making advances every day. But they aren’t designed to do legal research, and anything they say about a specific precedent needs to be verified (and not by asking ChatGPT to verify itself, as happened in the federal case cited above).

In Ortiz v. Jordan, 562 U.S. 180 (2011), the Supreme Court “held that an order denying summary judgment on sufficiency of the evidence grounds is not apealable after a trial …. a party who wants to preserve a sufficiency challenge for appeal must raise it anew in a post-trial motion.”

In Dupree v. Younger, No. 22-210 (May 25, 2023): “The question presented in this case is whether this preservation requirement extends to a purely legal issue resolved at summary judgment. The answer is no.

That distinction makes sense and should help avoid unnecessary disputes about preservation. There will, however, be disputes about “sufficiency” questions that turn on points of law; as illustrated by the longstanding definition of a “no evidence” appeal issue in Texas state practice:

“No evidence” points must, and may only, be sustained when the record discloses one of the following situations: (a) a complete absence of evidence of a vital fact; (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a mere scintilla; (d) the evidence establishes conclusively the opposite of the vital fact.

City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005).

The complex trial-court system in Texas led to Tex. Civ. Prac. & Rem. Code § 16.065, which suspends limitations for 60 days after a dismissal for lack of jurisdiction. Simple enough, in theory. But in Sanders v. The Boeing Co., the Fifth Circuit showed the deceptive complexity of that statute when it certified these two issues about the statute to the Texas Supreme Court

1)     Does Texas Civil Practice & Remedies Code § 16.064 apply to this lawsuit where Plaintiffs could have invoked the prior district court’s subject matter jurisdiction with proper pleading?

2)     Did Plaintiffs file this lawsuit within sixty days of when the prior judgment became “final” for purposes of Texas Civil Practice & Remedies Code § 16.064(a)(2)?

(The second issue arose from the specific question “whether Texas law would deem dht flight attendants’ tolling savings-statute deadline as running from the time the district court entered judgment or the time [the Fifth Circuit] affirmed that judgment.”) No. 22-20317 (May 25, 2023).

The Fifth Circuit affirmed the certification of a class of GEICO car-insurance policyholders in Angell v. GEICO Adv. Ins. Co., holding, inter alia:

• 3 ways to breach 1 contract = 1 injury. “GEICO’s failure to remit any of the three Purchasing Fees amounts to the same harm—a breach of the Policies. Whether GEICO is liable to Plaintiffs for any of the Purchasing Fees is dependent on an interpretation on the same language in the Policies and how the Policies to support the standing approach …. Although each of the Purchasing Fees may accrue differently, e.g., through the acquisition of a vehicle or upon the expiration of a vehicle’s registration, the complained injury stems from GEICO’s failed remittance, not the costs as assessed by the State.”
• 1 injury = typicality. “The course of conduct here is virtually the
  same across the alleged deprivations of each Purchasing Fee, i.e., whether
  GEICO breached the Policies.”
• 1 injury = predominance. “[T]he need for individual calculation here is relatively minor when compared to the common issues that predominate. And Plaintiffs articulate a reasonably ascertainable formula. Sales tax is equivalent to 6.25% of [Adjusted Vehicle Value], and Plaintiffs contend that it can be calculated for almost 97% of the class without resort to individualized review.”

No. 22-20093 (May 12, 2023) (all citations omitted).

It was a busy week for legislative privilege; after an opinion involving the latest dispute about the Jackson airport, the Fifth Circuit again ruled in favor of legislative-privilege claims in LULAC v. Hughes. The Court held that such matters were appropriately raised by interlocutory appeal, and on the merits observed:

“The privilege log shows that the legislators did not send privileged documents to third parties outside the legislative process; instead they brought third parties into the process. That decision did not waive the privilege. The very fact that Plaintiffs need discovery to access these documents shows that they have not been shared publicly. On the other hand, if the legislators had shared the documents publicly, then they could not rely on the privilege to prevent Plaintiffs from introducing those documents as evidence. But here, where the documents have been shared with some third parties—but haven’t been shared publicly—the waiver argument fails.”

No. 22-50435 (May 17, 2023) (emphasis in original).

Back during the pandemic, I got a copy of “Dallam’s Decisions.” It’s a one-volume work with the opinions of the short-lived Supreme Court of the  of Texas (1840-45, give or take). It’s fascinating stuff, some of that court’s work is terrible, and some is really insightful.

I wrote down some notes about how that court dealt with slavery, and recently turned those notes into a short article.

It just came out in the “Journal of the Texas Supreme Court Historical Society,” and you can read it starting at page 75 of this link. As you can see, I think those cases offer some good insights about our world, as well as that of the 1840s.

In response to an April 27 letter from Senator Charles Schumer expressing concern about case-assignment practices in the Northern District of Texas (which, while well-intentioned, also notably misspells “Abilene” as “Abeline”), Chief Judge David Godbey wrote back yesterday to defend the District’s practices: “In addition to the fair administration of justice, we must also consider: the number and type of civil and criminal cases filed in a division, which varies significantly from division to division; the convenience of the jurors, witnesses, parties, and attorneys; the desire of communities to have local judges; the burden of travel on court personnel; and the need to provide judicial support for divisions without a resident district judge.”

Complex litigation about the settlement of a patent dispute led to two straightforward jurisdictional holdings in National Oilwell Varco, LP v Auto-Dril, Inc.:

1. Res judicata still applies. While “[p]arties may not waive the issue of subject matter jurisdiction,” it is also true that “[a] party that has had an opportunity to liitgate the question of subject-matter jurisdiction may not … reopen that question in a collateral attack upon an adverse judgment.” That principle disposed of an argument that, in the earlier case where the settlement was reached, the district court lacked jurisdiction because of problems with the underlying patent.
2.  “‘Interpretation’ means — interpretation. In that earlier case, the district court’s order implementing the settlement said that it retained jurisdiction “in the event of a dispute concerning that agreement, to interpret and enforce the agreement, if necessary.” That langugage did not extend to subject-matter jurisdiction over a fraudulent-inducement claim, as that “is a tort claim falling outside the scope of the district court’s retained jurisdiction.”

No. 21-40648 (May 12, 2023).

Contentious litigation about the governance of the Jackson Municipal Airport again reached the Fifth Circuit in Jackson Municipal Airport Auth. v. Harkins, No. 21-60312 (May 10, 2023). The Court accepted jurisdiction in a document-production dispute for reasons unique to governmental privilege, but its waiver reasoning is instructive more broadly:

As relevant here, communications with third parties outside the legislature might still be within the sphere of “legitimate legislative activity” if the communication bears on potential legislation. Consequently, some communications with third parties, such as private communications with advocacy groups, are protected by legislative privilege when they are “a part and parcel of the modern legislative procedures through which legislators receive information possibly bearing on the legislation they are to consider.” Thus, we disagree with the district court’s broad pronouncement that the Legislators waived their legislative privilege for any documents or information that had been shared with third parties.

No 21-60312 (May 10, 2023) (citations omitted).

A judge at every level of the Texas state system, as well as the U.S. Court of Appeals for the Fifth Circuit, Hon. Fortunato “Pete” Benavides recently passed away. His life of dedicated public service is well described in this obituary.

Among other issues presented by an unsuccessful attempt to relitigate an unsuccessful state-court takings claim in federal court, the Fifth Circuit reminded rhat the word “final” can have many meanings: “[A]lthough the rights of ‘all’ parties often need to be resolved before a judgment is ‘final’ for appeal, a ‘judgment may be final in a res judicata sense as to a part of an action although the litigation continues as to the rest.'” Tejas Motel LLC v. City of Mesquite, No. 22-10321 (March 22, 2023).

Sidestepping questions of equitable mootness, in Texxon Petrochemicals LLC v. Getty Leasing, Inc., No. 22-40357 (May 3, 2023), the Fifth Circuit affirmed the lower courts’ conclusions that this two-email exchange did not establish a contract to sell a North Austin gas station:

Despite skepticism in other opinions about vaccination programs in response to the COVID pandemic (especially when religious-liberty issues are in play), the Fifth Circuit reversed and rendered judgment for a prison doctor who administered an antipsychotic drug to a dangerous prisoner. The Court reasoned, inter alia: “[E]mergency  circumstances justify the abbreviation or elimination of pre-deprivation procedures like hearings.” Pinkston v. Kuiper, No. 21-60320 (May 4, 2023) (per curiam).

Owners of a yacht sued in Texas about an insurance-coverage issue. The Fifth Circuit affirmed the dismissal of the case because of a forum-selection clause requiring suit in England, noting;

1. Standard. When the parties have a valid forum-selection clause, the general forum non conveniens factors are modified in two ways. “‘First, the plaintiff’s choice of forum merits no weight’ because, by contracting for a specific forum, ‘the plaintiff has effectively exercised its “venue privilege” before a dispute arises.'” And “[s]econd, the private-interest factors ‘weigh entirely in favor of the preselected forum’ ….” (citations omitted).
2. Limitations? Plaintiffs were concerned about how an English court would apply the statute of limitations. But the case law says that “dismissal of a suit ‘when the plaintiff has violated a contractual obligation by filing suit other than the one specified in a valid forum-seleciton clause … works no injustice on the plaintiff.'” (citation omitted).

Noble House LLC v. Certain Underwriters at Lloyd’s, London, No. 22-20281 (May 1, 2023).

Restaurant Law Center v. U.S. Dep’t of Labor presented an appeal from the denial of a preliminary injunction about a new minimum-wage rule. The dispute was the district court’s conclusion that the plaintiff did not establish irreparable injury.

The panel majority faulted the district judge for not considering Circuit precedent that “the nonrecoverable costs of complying with a putatively invalid regulation typically constitute irreparable harm.” The majority also observed that the face of the regulation imposed certain administrative requirements, and that “[s]tringently insisting on a precise dollar figure reflects an exactitude our law does not require.”

The dissent, emphasizing the standard of review, faulted the majority for “reasoning that because some employers will be harmed by the Rule’s wide net, Plaintiffs via their member restaurants will inevitably by caught in the seine” (an observation about standing that bears on a central question in the upcoming mifepristone argument).  No. 22-50145 (April 28, 2023).

Ganpat v. Eastern Pacific Shipping PTE presented a clash between international antisuit injunctions, and produced diametrically opposed opinions about those proceedings and the appropriate judicial response to them.

Majority and dissent agreed on this much:

• Ganpat, an Indian citizen who served on a ship managed by Eastern Pacific, sued in New Orleans about a nasty case of malaria that he caught while serving.
• Eastern Pacific then sued Ganpat in India, won an anti-suit injunction against the American case, and aggressively enforced that order against Ganpat, ultimately getting him jailed in India.
• These events prompted the New Orleans federal court to issue an anti-suit injunction against Eastern Pacific proceeding further with the Indian case.

But from there, the opinions–both, considerably detailed–went in opposite directions in almost every way. The majority affirmed the injunction, calling the Indian proceedings  “bizarre” and saying that Eastern Pacific “evaded service,” while the dissent saw “the district court’s rulings as an attempt to compel domestic jurisdiction over a suit with highly tenuous domestic connections.”

The substantial divide between the opinions aptly frames the first sentence in the dissent’s footnote, referring to the Fifth Circuit having “take[n] a more permissive approach to foreign antisuit injunctions than many of our sister circuits: “This approach is probably wrong and should be reconsidered at an appropriate time.” No. 22-30168 (April 28, 2023) (Judge Ho (writing) and Wilson in the majority, Judge Jones dissenting).

United Natural Foods, Inc. v. NLRB, No.  a seemingly dry dispute about whether NLRB’s general counsel could withdraw an unfair labor practice complaint, produced a spirited clash between majority and dissent about how the “party presentation” principle applied to the arguments advanced in that case (see United States v. Sineneng-Smith, 140 S.Ct. 1575 (2020)). No. 21-60532 (April 24, 2023).

Despite that clash, all panel members agreed that simply throwing shade at Chevron was insufficient to present an issue for appellate review:

Turtle Island Foods (d/b/a Tofurky) makes plant-based food products, such as plant-based burgers, sausages, etc. It sued the Louisiana Agriculture Commissioner because of concerns about liability under that state’s Truth in Labeling of Food Products Act, which imposes civil penalties for “representing a food product as meat .. when the food product is not derived” from an animal.

The Fifth Circuit held as follows:

1. Standing. Tofurky had standing. It did not have to “establish that it openly intends to violate the Act”; only that “its intended action–continuing with its ‘plant-based’ labels that use meat-esque words–is arguably proscribed.”
2. Merits. Louisiana argued that by its terms, the law “applies only to ‘persons who intentionally misbrand or misrepresent” facts about a food product. In the context of a facial challenge, the Court was “required ‘to accept a narrowing construction of a state law in order to preserve its constitutionality.'”

With the issue so framed, the Court ruled for the state and reversed the trial court’s injunction against enforcement of the law. Turtle Island Foods v. Strain, No. 22-30236 (April 12, 2023) (citations omitted).

In review of a court-supervised sale of real property in a bankruptcy case, the Fifth Circuit provided a deft summary of how bankruptcy came to be an area of concern to the framers of the Constitution:

Federal bankruptcy provisions date to the Founding, embedded into our Constitution as a core tenet of the country’s economic vitality. And with good reason: “[d]ebt was an inescapable fact of life in early America . . . [that] cut across regional, class, and occupational lines,” and debtor’s prisons were antithetical to the new democratic ideal. So, in parallel with the industrialization and modernization of our markets, the Bankruptcy Code matured, its execution shifting to an independent court staffed by an array of able judges selected by merit and expert in the field, giving bankruptcy courts with their new status a crucial role in freeing the entrepreneurial energy indispensable to our nation’s economy.

SR Construction, Inc. v. Hall Palm Springs LLC, No. 21-11244 (April 17, 2023) (citations omitted).

After the Supreme Court’s stay ruling yesterday, a Fifth Circuit panel will proceed wth oral argument on May 17 in New Orleans. (Information about the audio livestream may be found in that link.)

While the Supreme Court’s order said very little, the votes of seven Justices were consistent with the position of Judge Haynes when the stay issue was before the Fifth Circuit, and no Justice indicated agreement with the analysis of the per curiam panel majority. (I recently observed in Slate that the “Dobbs-era Supreme Court is well aware of the judicial strand of conservative thought, as well as the political.”).

The plaintiffs in Spano v. Whole Foods, Inc. contended that a child with severe allergies was injured after eating a mislabeled cupcake. The district court dismissed the claims as preempted by the Federal Food, Drug, and Cosmetic Act, and the Fifth Circuit reversed, stating that “[t]he question is whether Appellants have pled tort claims which have an independent state law basis,” and concluding that “[t]ey have”:

Each of their tort claims is ‘a recognized state tort claim’ rather than ‘a freestanding federal cause of action based on violation of the FDA’s regulations.’ Appellants ably lay out in their brief that each of their allegations is based in state law. In response, Whole Foods contends that “[e]very one of the … causes of action is specifically based on federally mandated allergen warnings under the FDCA.” While each of the causes of action does reference violations of FDA regulations, violations can only be, and only are, presented as evidence to “prove [Whole Foods’] breach of the state duty by showing that [Whole Foods] violated the FDA’s [food labeling] regulations.’ If, as the case develops, it becomes clear that there is no independent state duty upon which the Spanos can hang a particular claim, that claim will be preempted. On the pleadings, none appear to contain that fault.” 

No. 22-50593 (April 14, 2023) (citations omitted).

A copyright action is governed by a three-year statute of limitations. In Martinelli v. Hearst Newspapers, LLC, the Fifth Circuit confirmed that recent Supreme Court decisions did not overruled Circuit precedent that applies a discovery rule to that statute. No. 22-2033 (April 13, 2023).

President Biden has nominated Hon. Irma Ramirez, a long-serving magistrate judge from the Dallas area, for the vacant seat on the Fifth Circuit created by the resignation of Gregg Costa. More detail is in the coverage by the Dallas Morning News.

The motions panel ruled in Alliance for Hippocratic Medicine v. FDA, No. 23-10362 (April 12, 2023). In a nutshell, the panel majority concludes that (1) the plaintiffs have standing based on the percentage of mifepristone users who have side effects, (2) the plaintiffs’ challenge to FDA’s original approval of mifepristone for use in medication abortions is likely time-barred, and (3) FDA did not meet its burden, as the party seeking a stay, to show that plaintiff’s other challenges to FDA’s regulation of mifepristone were time-barred or otherwise fatally flawed. Judge Haynes would have granted an administrative stay and otherwise deferred to the merits panel (who is, in fact, not constrained by any of (1)-(3)). Further proceedings in the Supreme Court appear likely.

Valuable 600Camp merchandise can be yours if you identify the distinguished-looking gentleman to the right.

In Abdullah v. Paxton, a former state employee sued about potential future injuries, resulting from a state law that requires certain retirement funds to divest from companies that boycott Israel. The Fifth Circuit affirmed the dismissal of his suit on standing grounds, reminding:

The only way Abdullah could demonstrate he will “actually” suffer future economic harm is if he plausibly alleged that, as a result of § 808’s constraints, the Systems will not be able to pay out his benefits at all when he reaches retirement.  Abdullah tries his hand at this argument, urging that the Systems are underfunded, so there is a credible threat the fund will fail. But we are unconvinced—this theory is simply too speculative (and also ignores Texas’s ability to obtain funds by taxes, fees, assessments, etc.).

No. 22-50315 (April 11, 2023) (citations omitted).

Longrunning litigation about pretrial bail in Texas criminal cases came to an end with a second en banc opinion, Daves v. Dallas County, No. 18-11368 (March 31, 2023). It held by a substantial majority that legislative changes to the relevant laws had mooted the case, and (8-7) that Younger abstention should have barred the case from proceeding in federal court in the first instance. The breakdown of votes and opinions is as follows:

I have an article in Slate today about a challenge presented by the appeal of the medication-abortion decision. The case presents a “politically” conservative outcome (restricted abortion access), that rests on a standing argument that is not “judicially” conservative because of the amount of speculation it requires.

Austin’s regulation of large freeway billboards returned to the Fifth Circuit after an earlier opinion was reversed by the Supreme Court; on remand, a 2-1 majority cut to the chase and concluded: “Municipalities have traditionally been given wide discretion in the domain of sign regulations. Austin is entitled to that latitude. AFFIRMED.” A dissent read the signs given by the Supreme Court differently. Reagan National Adv. of Austin, Inc. v. City of Austin, No. 19-50354 (March 30, 2023).

In Direct Biologics, LLC v. McQueen, a preliminary-injunction case involving a noncompetition agreement, the Fifth Circuit found no abuse of discretion when the district court declined to presume irreparableharm. Among other factors reviewed by the Court, it considered:

• “[I]t is unclear whether federal courts should apply a state-law ‘presumption of irreparable harm’ when determining whether a preliminary injunction should issue in federal court.
• “The district court did not abuse its discretion by declining to presume irreparable injury based on McQueen’s breach of his non-compete covenants. As previously explained, the Employment Agreement broadly prohibited him from providing “similar” services to Vivex that he provided to DB.  The Operating Agreement covenant was even broader. Thus, McQueen could have breached these covenants even without actually using or disclosing DB’s confidential information or trade secrets.“
• “[T]he district court could have found the presumption rebutted by Vivex’s evidence that McQueen was not in fact competing with DB through his work for Vivex.”

No. 22-50442 (April 3, 2023).

The abortion-medication opinion has been issued, staying the FDA’s approval of mifepristone, and staying itself for seven days to allow appeal.

Without reference to the Federalist Papers or the records from the Constitutional Convention, the Fifth Circuit held in Consumers’ Research v. FCC that the six criteria in 47 U.S.C. § 254(b) gave the FCC “intelligible principles” to guide its regulation of communication, unlike the “total absence of guidance” identified last year in Jarkesy v. SEC, 34 F.4th 446 (5th Cir. 2022). No. 22-60008 (March 24, 2023).

The original panel opinion in Devillier v. State of Texas, No. 21-40750 (Nov. 28, 2022) (footnotes omitted), said that in federal court “the Fifth Amendment Takings Clause as applied to the states through the Fourteenth Amendment does not provide a right of action for takings claims against a state,” but in state court, “[t]he Supreme Court of Texas recognizes takings claims under the federal and state constitutions, with differing remedies and constraints turning on the character and nature of the taking ….” Devillier v. State of Texas, No. 21-40750 (Nov. 28, 2022) (footnotes omitted).

The panel revised its opinion in January to say only: “The State of Texas appeals the district court’s decision that Plaintiffs’ federal Taking Clause claims against the State may proceed in federal court. Because we hold that the Fifth Amendment Takings Clause as applied to the states through the Fourteenth Amendment does not provide a right of action for takings claims against a state, we VACATE the district court’s decision and REMAND for further proceedings. Nothing in this opinion is intended to displace the Supreme Court of Texas’s role as the sole determinant of Texas state law.” A detailed footnote described the Texas Supreme Court’s holdings in this area.

An en banc vote proceeded, which produced an 11-5 vote against rehearing, released on March 23, 2023:

Following Pepi Corp. v. Galliford, 254 S.W.3d 457, 462 (Tex. App.—Houston [1st Dist.] 2007, pet. denied.), the Fifth Circuit summarized when a quantum meruit claim could be pursued even when an express contract applies:

“First, recovery in quantum meruit is allowed when a plaintiff has partially performed an express contract but, because of the defendant’s breach, the plaintiff is prevented from completing the contract. …

Second, “[r]ecovery in quantum meruit is sometimes permitted when a plaintiff partially performs an express contract that is unilateral in nature.” [and]

Third, “a breaching plaintiff in a construction contract can recover the reasonable value of services less any damages suffered by the defendant if the defendant accepts and retains ‘the benefits arising as a direct result of the plaintiff’s partial performance.’”

Credos Indus. Supplies & Rentals, LLC v. Targa Pipeline Mid-Cont. WestTex, LLC, No. 22-20480-CV (March 24, 2023).

The en banc Fifth Circuit affirmed a nationwide injunction against President Biden’s federal-employee vaccine mandate, concluding that the relevant statute did allow federal jurisdiction over such issues. The breakdown of opinions in Feds for Medical Freedom v. Biden is as follows:

In a dissent from a dismissal order in Chapman v. Doe, Justice Jackson questioned whether the Supreme Court had become too quick to vacate judgments, noting, inter alia, that “our common-law system assumes that judicial decisions are valuable and should not be cast aside lightly, especially because judicial precedents ‘are not merely the property of private litigants,’ but also belong to the public and ‘legal community as a whole.'” (reviewing United States v. Munsingwear, Inc., 340 U.S. 36 (1950)).

As she was the sole dissenter on this point, her views are apparently not shared by a majority of that court, but her analysis is still thought-provoking and deserves study, as it examines a part of the appellate process that often goes largely unnoticed. Thanks to Ben Taylor for drawing my attention to this one!

Last year the Fifth Circuit held that the Consumer Financial Protection Bureau was funded through an unconstitutional mechanism that circumvented the Congressional appropriations process. That matter is now before the Supreme Court. The Second Circuit has now joined the fray in CFPB v. Law Offices of Crystal Moroney, P.C., No. 20-3471 (March 23, 2023), joining the D.C. Circuit in finding that the CFPB’s funding mechanism does not violated the Appropriations Clause.

Majestic Oil v. Certain Underwriters at Lloyd’s is an insurance coverage case in which the key issue is what caused a roof to leak. The plaintiff’s expert prepared a second report that added analysis of certain weather data; he characterized it as a permissible supplement to his original report, while the defense moved to strike it as containing an impermissible new opinion after the expert-report deadline.

The Fifth Circuit reversed the trial court’s ruling that struck the new report, remanding for more fulsome consideration of all four factors identified by Fed. R. Civ. P. 37(c)(1): “(1) the explanation for the failure to identify the [information]; (2) the importance of the [information]; (3) potential prejudice in allowings the timeliness of an expert report and the [information]; and (4) the availability of a continuance to cure such
prejudice.” No. 21-20542 (March 17, 2023, unpublished).

In a case about a school district’s liabilty for a student’s assault of another student, the Fifth Circuit declined to recognize a “state-created danger” exception to district officials’ immunity. The Court summarized:

     The Due Process Clause of the Fourteenth Amendment provides that “[n]o State shall . . . deprive any person of life, liberty, or property, without due process of law.” “The Due Process Clause . . . does not, as a general matter, require the government to protect its citizens from the acts of private actors.” We have recognized just one exception to this general rule: “when [a] ‘special relationship’ between the individual and the state imposes upon the state a constitutional duty to protect that individual from known threats of harm by private actors.” However, “a number of our sister circuits have adopted a ‘state-created danger’ exception to the general rule, under which a state actor who knowingly places a citizen in danger may be accountable for the foreseeable injuries that result.” … 

     The problem for [Plaintiff] is that “the Fifth Circuit has never recognized th[e] ‘state-created-danger’ exception.” In our published, and thus binding, caselaw, “[w]e have repeatedly declined to recognize the statecreated danger doctrine.” For this reason, [Plaintiff] “ha[s] not demonstrated a clearly established substantive due process right on the facts [she] allege[s].” The district court thus erred in denying qualified immunity to Appellants.

Fisher v. Moore, No. 21-20553-CV (March 16, 2023) (footnotes omitted).

My home city of Dallas was founded with the hope of becomging an inland port, using the Trinity River to connect North Texas with the Gulf of Mexico. Unfortunately, the Trinity turned out to be essentially unnavigable.

Lacking any navigable waters of my own, I am fascinated by opinions that define the “navigable waters” of the United States such as Newbold v. Kinder Morgan SNG Operator LLC. A fishing boat in the D’Arbonne National Wildlife Refuge ran into an underwater object; the case-dispositive issue was choice of law. If the accident did not occur in “navigable waters,” then Louisiana law controlled and the plaintiff would have no claim.

While the boat was, in fact, navigating at the time of the allision, the test excludes “recreational fishing” activity. The Fifth Circuit reviewed the relevant factors and found that the area the boat was in was not “navigable water” governed by federal law:

“[T]he location of the allision is on land that is dry 67 percent of the time, where vegetation is not destroyed and the land is not bare, as evidenced by the need to mow it with some regularity. More significantly, the Bayou D’Arbonne does have an ‘unvegetated channel’ which is some 597 feet wide at the location where the boat split off to fish near the sign. The sign was located 58 feet away from the unvegetated channel. The unvegetated channel is a neat, natural line by which the ordinary high-water mark may be established. Within the channel, there is no vegetation; outside of it, there is.” 

No. 22-30416 (March 14, 2023).

An unfortunate incident involving out-of-hand heckling of Judge Duncan at Stanford Law School, compounded by an administrator fanning the flames, led to an apology from Stanford’s president. Aside of general problems with good manners and common sense, this sort of thing isn’t even good protesting; cf. Tinker v. Des Moines ISD, 393 U.S. 503 (1969) (protecting “a silent, passive expression of opinion, unaccompanied by any disorder or disturbance on the part of petitioners”).

New England Construction complained that large lumber companies monopolized the wood-products marked during the COVID-19 pandemic. Unfortunately for its claim, however, it only purchased the defendants’ lumber through intermediates (Lowes, Home Depot, etc.). It thus had no standing under the Illinois Brick line of authority, and the Fifth Circuit affirmed the dismissal of its claims. New England Construction, LLC v. Weyerhaeuser Co., No. 22-60329 (March 8, 2023) (unpublished).

Dream Medical Group v. Old South Trading Co. reminds how hard it is to challenge the merits of an arbitration award.

Dream Medical bought medical face masks from Old South. They had a contract dispute that went to arbitration with the AAA. Dream Medical won and Old South opposed confirmation.

Among other arguments, Old South complained that its fraudulent-inducement claim was mishandled, in that the panel violated a AAA rule by not fully considering Old South’s fraudulent-inducement claim, and thus came within the FAA’s provision about arbitrators who “exceeded their powers.”

The Fifth Circuit rejected that argument as an invitation for us to reasses the merits of the Panel’s decision.” It also noted that “manifest disregard of the law” is not a viable, nonstatutory basis for opposing confirmation under Fifth Circuit precedent. No. 22-20286 (March 6, 2023) (unpublished).

The Fifth Circuit updated its panel opinion in United States v. Rahimi. The holding  remains the same (that the federal law, criminalizing the possession of a firearm by someone subject to a domestic violence protective order, violates the Second Amendment), but the majority opinion adds explanation about what its holding does, and does not, affect. No. 21-11001 (March 2, 2023) (withdrawing and substituting prior opinion).

While I wrote an op-ed in the Dallas Morning News about the original opinion, noting that the Fifth Circuit had found the same statute constitutional under the pre-Bruen Second Amendment framework, I had not fully grasped the contrast until reading the revised opinion. The Fifth Circuit’s previous opinion turned on “means-end scrutiny” — in other words, a comparison of benefit and burden. The present opinion thus finds this law unconstitutional (as it must under its analysis of Bruen) even though Circuit precedent says that the law did not unduly burden gun rights when compared to the law’s policy objectives. It thus provides a particularly stark example of the impact of Bruen‘s history-only framework on the law in this area.

The poem Antigonish begins:

Yesterday, upon the stair,
I met a man who wasn’t there
He wasn’t there again today
I wish, I wish he’d go away.

In that spirit, the majority and concurrence in Mexican Gulf Fishing Co v. U.S. Dep’t of Commerce, No. 22-30105 (Feb. 23, 2023), disagreed about the continuing viability of Chevron.

The case presented a dispute about the authority of the Commerce Department, under a Congressional mandate to conserve the nation’s offshore fisheries, to require charter boats to carry a GPS-location device and submit specified records about fishing  activity.

3-0, the Fifth Circuit concluded that the government had exceeded its boundaries. The majority used a Chevron approach to the relevant statute; a concurrence joined but argued that recent Supreme Court cases have tacitly overruled Chevron, and the third judge joined specific parts of the majority opinion.

Colorfully, the majority and concurrence disputed whether Chevron is fairly called the “Lord Voldemort of administrative law,” due to the Supreme Court’s unwillingness to refer to it recent administrative-law opinions. While that’s witty and good fun, the lack of clear guidance from the Supreme Court about this fundamental doctrine is clearly a problem–as this very opinion shows, since three judges approached the same issue in three different ways under the current state of the law. If the Supreme Court wants to overrule Chevron, it should overrule Chevron. 

Celebrate Mardi Gras with Emeril’s chicken and andouille gumbo recipe!

The Fifth Circuit didn’t bite on a last-minute attempt to stop a trial in the Allen Stanford litigation, denying a mandamus petition (with memorable language obviously written by Judge Higginbotham despite the “per curiam” designation):

This case is, at minimum, complex, featuring myriad fact-specific issues litigated over the course of nearly a decade and a half through multiple courts. Halting the litigation’s momentum mere days before trial is set to begin would require indisputable clarity as to its necessity. Here, no such need is evident; assisted by able briefing and a review of the record, we are unpersuaded that either petition reaches the high demands of mandamus, or that the movant has satisfied the similar burden of staying the trial….

The four most powerful words from the lips of a United States District Judge are simply “Call your first witness,” and the veteran presiding judge will so state in a few short days.

In re Toronto-Dominion Bank, No. 22-20648 (Feb. 14, 2023). (It could be debated whether those are in fact a trial judge’s most powerful words–a case could be made for “So ordered” or “Your objection is overruled,” for example.)

A case now pending in the Amarillo Division of the Northern District of Texas challenges the FDA’s approval of one of the drugs commonly used to carry out a “medication abortion,” including a question whether the 19th-Century Comstock Act prohibits the mailing of abortion-related medication.  A decision is expected after preliminary-injunction briefing closes on February 24. This is the plaintiffs’ brief in support of a preliminary injunction, and this is the defendants’ response.

On Wednesday at noon, I am doing a virtual CLE for the Dallas Bar that reviews the key cases, since last spring, from the U.S. Court of Appeals for the Fifth Circuit and the Fifth Court of Appeals in Dallas. You can register here and you can download (subject to last-minute revisions) my PowerPoint here. I hope you can join me!

Last week’s opinion in United States v. Rahimi found that a federal law, criminalizing the possession of a firearm by someone under a domestic-violence restraining order, violated the Second Amendment’s protection of a right to bear arms.

The Attorney General plans to seek review. The perspective of a Dallas-based operator of a women’s shelter appears in this Fox 4 news story on the case. I recently wrote an op-ed about the opinion in the Dallas Morning News. A flavor of the national  commentary about the case can be obtained from these representative articles in Slate and Reason.

Referring to a federal law that prohibits firearm ownership by someone subject to a domestic-violence restraining order, the Fifth Circuit holds in United States v. Rahimi:

“Doubtless, 18 U.S.C. § 922(g)(8) embodies salutary policy goals meant to protect vulnerable people in our society. Weighing those policy goals’ merits through the sort of means-end scrutiny our prior precedent indulged, we previously concluded that the societal benefits of § 922(g)(8) outweighed its burden on Rahimi’s Second Amendment rights. But Bruen forecloses any such analysis in favor of a historical analogical inquiry into the scope of the allowable burden on the Second Amendment right. Through that lens, we conclude that § 922(g)(8)’s ban on possession of firearms is an ‘outlier[] that our ancestors would never have accepted.’ Therefore, the statute is unconstitutional, and Rahimi’s conviction under that statute must be vacated.

No. 21-11001-CR (Feb. 2, 2023) (citation omitted).

The plaintiffs in Elson v. Black brought a putative class action against the manufacturers of the “FasciaBlaster, a two-foot stick with hard prongs that is registered with the Food and Drug Administration as a massager,” alleging that they “falsely advertised that the FasciaBlaster was able to ‘virtually eliminate cellulite,’ help with weight loss, and relieve pain.” The Fifth Circuit affirmed the dismissal of those class claims, noting that class-wide issues did not predominate:

1. Law. “[V[ariations in state law here ‘swamp any common issues and defeat predominance'” as to reliance and other basic matters; and
2. Fact. “Plaintiffs’ allegations introduce numerous factual differences that in no way comprise a coherent class. … [T]he named plaintiffs do not complain about the same alleged misrepresentations. Some are disgruntled because they expected the FasciaBlaster to reduce cellulite. Others are dissatisfied because they expected it to reduce their pain or address certain health concerns. And others are displeased because they expected it to help them lose weight. … Moreover, even within these groups, the possibility of class analysis disintegrates because the members did not rely on the same alleged misrepresentations.”

No. 21-20349 (Jan. 5, 2023).

Thanks to diversity jurisdiction, the Fifth Circuit reviews some fundamental state-law tort issues along with its loftier docket of constitutional disputes.

In Badeaux v. Louisiana-I Gaming, Badeaux sued for damages after he tripped over a sprinkler head at a casino. The Fifth Circuit affirmed summary judgment for the casino because the sprinkler head was “open and obvious,” noting, inter alia: “There are multiple photographs of the scene showing that: (1) there were working lights in the parking lot on the night of Badeaux’s fall; (2) the sprinkler head was located in a grassy, landscaped area that was separated from the parking lot by a raised curb; and (3) the raised curb surrounding the sprinkler head was painted bright yellow.”

No. 21-30129 (Jan. 20, 2023).

On January 29, the Washington Post published a lengthy article about issues of the day in the Fifth Circuit.

Significantly different and tone and focus, it is similar in scope to a Texas Monthly article of last summer about the Court.

An exasperated Fifth Circuit granted mandamus relief to require FERC to explain significant delay in a nuclear-power rate dispute, In re Louisiana Public Service Comm’n, No. 22-60458 (Jan. 18, 2023).

As to jurisdiction, the Court observed: “This court has jurisdiction over the LPSC’s petition to safeguard our prospective jurisdiction to review final FERC orders under the Federal Power Act. When federal appellate courts have jurisdiction to review agency action, ‘the All Writs Act empowers those courts to issue a writ of mandamus compelling the agency to complete the action.'” (footnotes omitted).

As to the merits, the Court observed: “FERC is correct that ratemaking is challenging work, and we are fully aware of the difficulties attending the substitution of nuclear for other power sources, with its attendant difficulties of allocating huge installation costs among electrical suppliers now looking to a new power source. Yet Congress has duly charged FERC with this important duty, and FERC has yet to provide this court with a meaningful explanation for its inability to expeditiously conclude Section 206 proceedings. FERC must convince this court that it has acted ‘within a reasonable time . . . to conclude [the] matter presented to it.’ In failing to do so, FERC risks judicial intervention to protect the rights of the parties before it and the interests of consumers.” (footnotes omitted).

Cargill v. Garland, an en banc opinion released earlier this month, holds that the ATF’s “bump stock” rule was invalid. The diagram to the right, referenced by a link in the majority opinion, illustrates the firing mechanism for a semi-automatic firearm, which a bump stock facilitates by allowing rapid operation of the trigger.

The majority opinions aligned as follows:

The three Democratic appointees on the court at the time (Higginson, Dennis, and Graves) dissented.

The Fifth Circuit reversed the dismissal of a securities claim against Six Flags involving its public statements about an expansion effort in China, concluding that as to some of the challenged statements, the plaintiff had satisfied the PSLRA’s demanding requirements. Oklahoma Firefighters Pension & Retirement System v. Six Flags Entertainment Corp., No. 21-10865 (Jan. 18, 2022). The opinion provides detailed discussion of just is required to adequately plead falsity and scienter, especially in the context of forward-looking statements. It also provides what appears to be the first reference in the Federal Reporter to vexillology (the study of flags):

Last July, I fearlessly predicted that “[a] petition for en banc rehearing seems a near certainty” in Wages & White Lion Investments v. FDA, a challenge to a significant FDA regulation in the vaping industry. The full court has now voted to consider the matter en banc; time will tell if the panel majority’s analysis goes up in smoke, or whether the case simply offers smoke and no fire.

The main issue in Hanover Ins. Co. v. Binnacle Devel., LLC was the interpretation of a Texas Water Code provision about MUDs (“municipal utility districts”) — yes, “MUDdy waters.” Resolution of that issue led to a short discussion as to whether a key contract provision was a damage-limitation clause or a liquidated damages clause, and the Fifth Circuit said:

The damages clause is entitled “LIQUIDATED DAMAGES FOR DELAY/ECONOMIC DISINCENTIVE” and expressly provides for “liquidated damages in the amount of $2,500 for each [] calendar day” of delay. This provision does not, in substance, set a mere limitation of liability or delimit damages to “an agreed maximum.” 24 WILLISTON ON CONTRACTS § 65:6 (4th ed.). Rather, the clause provides that Hassell is liable for the liquidated damages of $2,500 for every day the Projects are late. Looks like a liquidated-damages provision to us.

No. 21-40662 (Jan. 12, 2023).

The Fifth Circuit and Texas Supreme Court both recently addressed limitations issues in commercial cases:

• Civelli v. JP Morgan Securities involved an investor’s claim that JP Morgan wrongly transferred certain shares of stock in an oil company. The Fifth Circuit declined to apply the discovery rule, stating: “Any injury incurred from the J.P. Morgan defendants’ alleged negligence in transferring the shares without plaintiffs’ consent arose at the time of the transfer. Because Civelli admits that he knew by February 2014 that they had transferred the funds, the rule of discovery does not apply.” No. 21-20618 (Jan. 11, 2023).
• Marcus & Millichap v. Triex Texas Holdings LLC was a suit against a real-estate broker about the sale of a gas station. The Texas Supreme Court held: “It is undisputed that Triex knew it was injured in December 2012. The question before us is whether the discovery rule defers accrual of Triex’s cause of action until it knew that Marcus & Millichap caused its injury. We hold that it does not.” No. 21-0913 (Jan. 13, 2023) (per curiam).

Yes, the defendant “intentionally” coded a key record in a certain way. But that “intentional” action did not establish an “intent” to harm the victim of an industrial accident:

“Populars fails to show that Trimac knew it mislabeled the tanker. It is not enough that Trimac intentionally coded into its system that the tanker contained MDI. Doing so may have been reasonable, negligent, or reckless … [but Populars instead needed to demonstrate that Trimac (or a reasonable company in Trimac’s position) knew this designation was wrong, and, therefore, knew that Populars’s injury was inevitable. Despite claiming that ‘Trimac knew it possessed chemicals that would produce a violent exothermic reaction when mixed together,’ Populars points to no evidence to support that assertion.”

Populars v. Trimac Transportation, Inc., No. 22-30413 (Jan. 3, 2023, unpublished) (emphasis in original).

In a time of well-documented skepticism in the federal courts about the administrative state, the FTC has doubled down, seeking public comment on a rule that would ban enforcement of noncompetition agreements.

As part of the explanation for its authority, the FTC cited authority that “Section 5 reaches conduct that, while not prohibited by the Sherman or Clayton Acts, violates the spirit or policies underlying those statutes.” That broad language will sound familiar to readers of the vaccine-mandate cases and their discussions of the EEOC’s rulemaking authority.

Given the present climate in the courts about expansive claims of agency authority, it seems likely that any FTC rule in this area will lead to extensive litigation before such a rule actually takes effect.

In Louisiana v. Biden, No. 22-30019 (Dec. 19, 2022), a panel majority invalidated a Presidential vaccination mandate, holding: “This so-called ‘Major Questions Doctrine’ – that is, that ‘[w]e expect Congress to speak clearly when authorizing an agency to exercise powers of vast economic and political significance,’ – serves as a bound on Presidential authority.” (citation omitted, emphasis added, applying West Virginia v. EPA, 142 S. Ct. 2587 (2022)).

A dissent saw matters otherwise. A commentator in Slate criticized the expansion of the major questions doctrine to actions by the executive branch. On this general topic, I’ve suggested in Law360 that the major questions doctrine may have the unintended consequence of justifying Congressional restrictions on Article III jurisdiction.

Now available! My (free) e-book, “Originalism Ascendant,” which builds upon recent media appearances to describe where the Constitution finds itself, for the rest of the 2020s, after the overruling of Roe v. Wade.

Topics include:

• How clear are the guidelines for state laws about abortion activity in another state?
• Will Lochner make a comeback?
• If so, what body of academic thought will provide guidance for the courts?
• What would Alexander Hamilton really think about modern economic regulation?
• Who exactly are “the people’s elected representatives” referred to by the Supreme Court in Dobbs?

The Fifth Circuit recently summarized the sometimes-confusing law about when an adverse ruling about a grand-jury subpoena may be appealed:

Our jurisdiction is generally limited to reviewing final decisions of a district court. This rule applies to appeals of orders issued in grand jury proceedings. There are two exceptions. First, if a witness chooses not to comply with a grand jury subpoena compelling production of documents and is held in contempt, that witness may immediately appeal the court’s interlocutory order. Second, under what is called the Perlman doctrine, a party need not be held in contempt prior to filing an interlocutory appeal if “the documents at issue are in the hands of a third party who has no independent interest in preserving their confidentiality.

In re Grand Jury Subpoena, No. 21-30705 (Dec. 14, 2022). (At least in theory, a mandamus petition may also be available in this setting, see generally David Coale, Five Years After Mohawk, 34 Rev. Litig. 1 (2015)).

Coming next week! My (free) e-book, “Originalism Ascendant,” which builds on recent media appearances to describe where the Constitution finds itself for the rest of the 2020s after the overruling of Roe v. Wade. A link will be available on this blog.

iiiTec v. Weatherford Technology Holdings presents a series of unfortunate events that led to dismissal of an appeal.

1. “iiiTec filed two motions on July 23, 2021, the twenty-eighth day after judgment. The first was a request to exceed the page limit on its proposed Rule 59/60 motion; the second was a short 14-page motion to alter the judgment. A request for leave to file is not one that can toll the deadline to appeal, but a motion to alter is.” (footnote omitted). So far, so good. But then …
2. “[W]hen the court struck iiiTec’s motion to alter on October 4, the deadline to appeal reset to thirty days later on November 3. But by that date, iiiTec still had not filed its notice of appeal; it had only filed another Rule 59/60 motion to reconsider. Under Rule 59, the motion was untimely for exceeding the strict 28-day period to file; and under Rule 60, the motion could not toll the deadline because it was filed more than 28-days after final judgment.” (footnote omitted).

No. 22-20076 (Dec. 27, 2022, unpublished).

The plaintiff in Newell-Davis v. Phillips challenged the constitutionality of Louisiana’s “Facility Need Review” for entrants into the respite-care business. The program requires Louisiana regulators to “determine if there is a need for an additional [respite care] provider in the geographic location” before a new business is authorized. The Fifth Circuit found that the program satisfied rational-basis review, noting:

The record supports the State’s assertions that FNR permits enhancement of consumer welfare by “allowing [LDH] to prioritize postlicensure compliance surveys that ensure client health, safety and welfare, over the resource intensive and costly initial licensing surveys.” For example, by limiting the number of providers in the respite care business, the State can focus its resources on a manageable number of providers, which aid it in ensuring that consumers receive the best possible care in their communities.

No. 22-30166 (Dec. 13, 2022).

Defense Distributed markets design files from which a rudimentary firearm can be made on a 3-D printer. This controversial product has drawn substantial attention from regulators, which in turn has led to litigation.

One part of that litigation, involving the New Jersey Attorney General, was transferred from Texas federal court to New Jersey federal court, after which a Fifth Circuit panel held that the transfer was erroneous. But New Jersey is not in the Fifth Circuit (right), and the New Jersey district court declined a request to voluntarily return the case.

Defense Distributed thus reloaded in Texas, “advanc[ing] two procedural theories to establish that the district court now has jurisdiction over their new request for a preliminary injunction against NJAG. One is that our court’s order to vacate the district court’s sever-and-transfer order automatically ‘revived’  plaintiffs’ claims against NJAG by operation of law. The second is that Federal Rule of Civil Procedure 15 allows plaintiffs to ‘refile’ their claims against NJAG, and they did so when they requested leave to amend to add NJAG to the existing case against the State Department in the Western District of Texas.”  (emphasis added).

The Fifth Circuit found that neither theory was viable after a case had been transferred out of its jurisdiction. It observed that “[t]here was a solution to the jurisdictional morass in which plaintiffs found themselves: [t]hey could have moved for a stay of the district court’s transfer order before the case was transferred.” Defense Distributed v. Platkin, No. 22-50669 (Dec. 15, 2022) (Haynes, J., concurring in the judgment only).

A specific federal statute, 28 U.S.C. § 1782(a), deals with discovery requests in aid of foreign litigation. In Banca Pueyo SA v. Lone Star Fund IX (US), L.P., the Fifth Circuit held that its precedent “cannot be read either for the proposition that adversarial testing may be precluded on the merits of a § 1782(a) application following an ex parte ruling [about the requested discovery], or that [Fed. R. Civ. P.] 45 furnishes the only means to challenge the initiation of the subpoenas approved ex parte by the district court.” No. 21-10776 (Dec. 13, 2022).

The Senate today confirmed Hon. Dana Douglas of Louisiana as the newest judge on the Fifth Circuit, taking a seat vacated by long-serving Hon. James Dennis. Welcome to the court, Judge Douglas! Louisiana’s Advocate has a thorough story about her confirmation hearings and personal background.

Valiant efforts to argue that various things were not “assets” under a contract did not succeed in Sanare Energy Partners LLC v. PetroQuest Energy, LLC:

The Properties are “Assets” under the PSA, including section 11.1, even if the Bureau’s withheld consent prevented record title for the Properties from transferring to Sanare. This conclusion is plain from the PSA’s text, which excludes Customary Post-Closing Consents such as the Bureau’s from the category of consent failures that alter the parties’ bargain. Consent failures that do not produce a void-ab-initio transfer also do not alter the parties’ bargain, so the Agreements, too, are Assets under the PSA’s plain text.

No. 21-20677 (Nov. 29, 2022).

12-3 (one recusal), the full Fifth Circuit denied en banc review in Freedom From Religion Foundation v. Mack, in which the panel found no coercion (and thus no standing) in a challenge to a Texas JP’s pre-court practices.

The Fifth Circuit found that the rule of lenity applied in a disciplinary proceeding involving this Louisiana ethics rule:

A division of fee between lawyers who are not in the same firm may be made only if: (1) the client agrees in writing to the representation by all of the lawyers involved, and is advised in writing as to the share of the fee that each lawyer will receive; (2) the total fee is reasonable; and  (3) each lawyer renders meaningful legal services for the
client in the matter.

It concluded that the rule was ambiguous when applied to successive rather than simultaneous counsel. In re Andry, No. 22-30231 (Nov. 29, 2022). The panel later granted rehearing and issued a revised opinion.

By a 9-7 vote, the Fifth Circuit declined to review en banc the panel opinion in Seekins v. United States. Under well-established Circuit precedent, Seekins presented a straightforward application of a criminal statute about possession of ammunition that had moved in interstate commerce. The petitioner directly challenged that precedent, arguing that it rested on an overly broad reading of Congress’ power to regulate interstate commerce. Plainly, the close vote signals the Court’s willingness to reconsider longstanding concepts about that constitutional provision. The breakdown of votes is below:

In a straightforward application of its class-certification and Daubert case law, the Fifth Circuit rejected the certification of a class of aggrieved buyers of tickets to fly on 737 Max planes operated by Southwest Airlines, finding that the buyers suffered no cognizable injury:

[T]he plaintiffs in this suit have not plausibly alleged that they’re any worse off financially because defendants’ fraud allowed Southwest and American Airlines to keep flying the MAX 8 during the class period. If anything, plaintiffs are likely better off financially. If the MCAS defect had been widely exposed earlier, the MAX 8 flights plaintiffs chose would have been unavailable and they’d have had to take different, more expensive (or otherwise less desirable) flights instead.

The Court reasoned that if information about the MAX’s problems had become publicly known earlier than it did, then some combination of Boeing, Southwest, and the FAA would have grounded the MAX (as in fact happened), thus reducing the available supply of tickets and raising prices. Earl v. The Boeing Co., No. 21-40720 (Nov. 21, 2022).

In federal court, “the Fifth Amendment Takings Clause as applied to the states through the Fourteenth Amendment does not provide a right of action for takings claims against a state,/” but in state court, “[t]he Supreme Court of Texas recognizes takings claims under the federal and state constitutions, with differing remedies and constraints turning on the character and nature of the taking ….” Devillier v. State of Texas, No. 21-40750 (Nov. 28, 2022) (footnotes omitted).

The Fifth Circuit concluded that an effort to collect a judgment in federal court failed for lack of a sufficient amount in controversy:

    … As pre-judgment interest has completely accrued during the prior case, this sum can be precisely calculated and does not vary depending on the other awards and when the plaintiff files suit. Because pre-judgment interest is an accrued component of the judgment sued upon at the time the claim to enforce the judgment arose, and because pre-judgment interest’s value does not depend on the passage of time after entry of the state court judgment, pre-judgment interest can be fairly said to constitute an ‘essential ingredient in the . . . principal claim.

As to the post-judgment interest accruing after entry of the Texas Judgment, however, we conclude that it may not be included in determining the amount in controversy in an action to enforce that Judgment. Excluding post-judgment interest from the calculation furthers § 1332(a)’s statutory purpose of preventing plaintiffs from delaying in filing suit until sufficient interest has accrued such that they can reach the jurisdictional amount.

Cleartrac LLC v. Lantrac Contractors, LLC, No. 20-30076 (Nov. 17, 2022).

The plaintiffs in National Horsemen’s Benevolent & Protective Ass’n v. Black sought to rein in the Horseracing Integrity and Safety Authority, a private entity created by Congress in 2020 – nominally under FTC oversight – to nationalize the regulation of thoroughbred horseracing.  The Fifth Circuit scratched HISA, finding it facially unconstitutional as an excessive private delegation of federal-government power:

A cardinal constitutional principle is that federal power can be wielded only by the federal government. Private entities may do so only if they are subordinate to an agency. But the Authority is not subordinate to the FTC. The reverse is true. …  HISA restricts FTC review of the Authority’s proposed rules. If those rules are “consistent” with HISA’s broad principles, the FTC must approve them. And even if it finds inconsistency, the FTC can only suggest changes. … An agency does not have meaningful oversight if it does not write the rules, cannot change them, and cannot second-guess their substance.

No. 22-10387 (Nov. 18, 2022) (citations omitted, emphasis added).

For those who had doubts about the matter, Foley Bey v. Prator confirms that the search of a fez is protected by qualified immunity if conducted as part of courthouse security, notwithstanding the plaintiffs’ appeal to the U.S.-Morocco Friendship Treaty of 1836. (The digital image to the right could be called a hi-res fez.) No. 21-30489 (Nov. 17, 2022).

With #RIPTwitter trending as the top hashtag on that platform, it seemed like a good time to reflect on the phenomenon that is/was #appellatetwitter, and recall the remarkable talent of now-Judge @JusticeWillett for legal tweeting:

“Foreseeability is a fundamental prerequisite to the recovery of consequential damages for breach of contract.” T & C Devine, Ltd. v. Stericycle, Inc., No. 21-20310 (Nov. 15, 2022) (citation omitted); see also Hadley v. Baxendale, [1854] EWHC J70.

Consistent with that principle, the Fifth Circuit affirmed a summary judgment on a consequential-damage claim when the parties’ contract said that “[a]ll information obtained by [Plaintiff] in any Annual Report . . . shall be retained in the highest degree of confidentiality,” and went on to say: “Neither party may disclose the other party’s Confidential Information to any third party without the other party’s prior written approval.”

Thus: “Devine’s damages were not a probable consequence of the breach from Stericycle’s perspective at the time of contracting because it was not foreseeable that failing to provide confidential cost and expense data would deprive Devine of the opportunity to share that information with potential licensees.”

The Fifth Circuit granted mandamus relief as to an effort to subpoena Texas AG Ken Paxton for a deposition in a case about potentially overzealous enforcement of now-constitutional antiabortion laws.

The panel majority concluded: (1) that the district court lacked subject matter jurisdiction and thus could not require his testimony, citing a recent Circuit case involving discovery and qualified immunity; (2) that the subpoena sought an inappropriate “apex” deposition; and (3) that plaintiffs overreached by opposing mandamus relief (because of a potential remedy by appeal), while also seeking to dismiss Paxton’s interlocutory appeal on immunity grounds (thus, extinguishing same).

A concurrence would have focused on the apex issue and not the broader dispute about jurisdiction, at least at this stage of the proceedings. In re Paxton, No. 22-50882 (Nov. 14, 2022) — REVISED, (Feb. 14, 2023).

Stringer v. Remington Arms, No. 18-60590 (Nov, 7, 2022), presents an instructive analysis of failure-to-disclose allegations, in the context of alleged fraudulent nondisclosure of a design defect in a popular rifle design.

The panel majority found a failure to satisfy Rule 9(b):

“In [plaintiffs’] complaint, they explain that they have found public resources that contradict Remington’s public statements regarding the safety of the XMP trigger. They also allege that Remington had “actual and/or physical knowledge of manufacturing, and/or, design deficiencies in the XMP Fire Control years before the death of Justin Stringer” and that the company received customer complaints regarding trigger malfunctions as early as 2008. But Plaintiffs do not make the leap to fraudulent concealment. They say merely that  Remington “ignored” notice of a safety related problem.“

(applying Tuchman v. DSC Commc’ns Corp., 14 F.3d 1061, 1068 (5th Cir. 1994) (“If the facts pleaded in a complaint are peculiarly within the opposing party’s knowledge, fraud pleadings may be based on information and belief. However, this luxury ‘must not be mistaken for license to base claims of fraud on speculation and conclusory allegations.'”).

The dissent would have found that rule satisfied, based in part of the detail provided about what Remington knew: “The complaint’s allegations indicate that Remington knew about problems with the X-Mark Pro trigger before the recall but did not disclose its knowledge of those problems during the limitations period. And, contrary to Defendants’ assertion that the complaint allegations relate only to the “Walker” trigger, the deposition testimony cited in the complaint expressly references the “XMP” trigger at issue here.” 

In the 1985 classic, “Return of the Living Dead,” a rainstorm spreads a zombie-creating chemical throughout a city. In 2022, the Supreme Court’s relentless focus on originalism in cases like Dobbs has also awakened long-dead legal doctrines (even as it put to bed the prospects for a “Red Wave” in 2022’s Congressional elections).

Such a resurrection can be seen in the concurrence from Golden Glow Tanning Salon v. City of Columbus, No. 21-60898 (Nov. 8, 2022), which advocates an examination of a “right to earn a living” in light of how such economic matters were understood in the late 1700s.

Of course, that phrasing is precisely how the Supreme Court described the issue in Lochner v. New York, the long-discredited 1905 opinion that struck down a maximum-hour restriction in the baking industry:

“Statutes of the nature of that under review, limiting the hours in which grown and intelligent men may labor to earn their living, are mere meddlesome interferences with the rights of the individual ….”

The Supreme Court abandoned Lochner in the 1930s when laissez-faire ideas proved useless in the face of a systemic failure of capitalism itself. There is, of course, ample room for argument about the proper role of government in the economy.  But the invocation of “originalism” to simply ignore Lochner ‘s failure is not consistent with the recognized best practices for battling zombies.

The slippery statutory-interpretation question in United States v. Palomares, briefly summarized in Monday’s post, presented a concurrence by Judge Andy Oldham. In it, he reminded of the importance of “textualism” in statutory interpretation, while cautioning against “hyper-literalism”:

“‘[W]ords are given meaning by their context, and context includes the purpose of the text.’ As Justice Scalia once quipped, without context, we could not tell whether the word draft meant a bank note or a breeze. Such nuance is lost on the hyper-literalist.”

(citations omitted). He further observed:

“[H]yper-literalism … opens textualism to the very criticism that necessitated textualism in the first place. In one of the most influential law review articles ever written, Karl Llewellyn denigrated the late nineteenth century ‘Formal Period,’ in which ‘statutes tended to be limited or even eviscerated by wooden and literal reading, in a sort of long-drawn battle between a balky, stiff-necked, wrongheaded court and a legislature which had only words with which to drive that court.'” 

(emphasis added, quoting Karl M. Llewellyn, “Remarks on the Theory of Appellate Decision and the Rules or Canons about How Statutes Are to Be Construed,” 3 Vanderbilt L. Rev. 395 (1950)).

The prefix “hyper-” is well chosen; Jean Baudrillard’s Simulacra and Simulations developed the concept of “hyperreality,” by which “simulacra” of reality can supplant reality itself–precisely the scenario described by Llewellyn and Judge Oldham’s concurrence:

If we were able to take as the finest allegory of simulation the Borges tale where the cartographers of the Empire draw up a map so detailed that it ends up exactly covering the territory (but where, with the decline of the Empire this map becomes frayed and finally ruined, a few shreds still discernible in the deserts – the metaphysical beauty of this ruined abstraction, bearing witness to an imperial pride and rotting like a carcass, returning to the substance of the soil, rather as an aging double ends up being confused with the real thing), this fable would then have come full circle for us, and now has nothing but the discrete charm of second-order simulacra.

Bloomberg Law provides a good summary of yesterday’s arguments in SEC v. Cochran, addressed by the en banc Fifth Circuit in 2021, as to the appropriate places to advance constitutional challenges to SEC enforcement actions.

Nonami Palomares received a 120-month, mandatory-minimum sentence for smuggling heroin. She sought a lower sentence under 18 U.S.C. § 3553(f), which allows a drug offender with a sufficiently minor criminal history to receive relief from a mandatory minimums if certain criteria are satisfied.

So far, simple enough. That statute, however, is extremely difficult to read. It has produced a circuit split, as well as three separate opinions from the panel members in United States v. Palomares, No. 21-40247 (Nov. 2, 2022).

Try your hand, if you dare, at reading the below law, and then compare your conclusion to the panel members’. To obtain sentencing relief, did Palomares have to negate all three matters in (A)-(C), or only one of them? 

The recent en banc vote in Wearry v. Foster featured discussion of a “dubitante” opinion filed by a panel member. Unfamiliar with the term, I learned from Wikipedia that this phrase has a long and distinguished – if somewhat obscure – history in judicial opinions as a way for a judge to note his or her doubts about the rule of decision.

I then consulted my friend Brent McGuire, the pastor of Our Redeemer Lutheran Church in Dallas, who gave me further detail:

“Dubitante would literally mean ‘having doubts’ or “with a wavering [mind].’  It’s the singular participial form of the verb dubitō, dubitāre, which means to doubt or to waver.  But that ‘e’ ending means it’s the ablative case, which is basically the adverbial case, that is to say, the case the noun or adjective takes when used to describe in some way a verb, adjective, or other adverb.”

To illustrate its historical use, Pastor Maguire offered this epigram from Martial, found on the Tufts classical search engine:

which he translates roughly as:

Pastor Maguire explains: “Martial is telling the sculptor Polyclitus that his statute of Juno is so beautiful that Paris (at that most fateful beauty pageant on Ida) would have picked it over Venus (Aphrodite) and Minerva (Athena) without hesitation.  Moreover, if Jupiter had not already fallen for his actual sister Juno, he would have fallen in love for Polyclitus’s statue of her.”  Conversely, then, a “dubitante” judge may have joined Paris’s conclusion, but with nagging doubts about the eternal beauty of the goddesses.

The Fifth Circuit denied mandamus relief in In re Planned Parenthood, noting, in particular, that:

The district court also stressed the lateness of Petitioners’ motion to transfer. It concluded that the motion was “inexcusably delayed,” observing that Petitioners “filed their motion seven months after this case was unsealed and months into the discovery period.” The district court was within its discretion to conclude that Petitioners’ failure to seek relief until late in the litigation weighed against transfer. This conclusion is only strengthened by the fact that Petitioners waited to seek transfer until after the district court denied their motion to dismiss and motion for reconsideration. 

No. 22-11009 (Oct. 31, 2022) (citations omitted). In a part of the opinion joined by two judges, the Court also favorably reviewed the district court’s analysis of the underlying forum-transfer issue.

Central Crude, Inc. v. Liberty Mutual confirms that under Louisiana law, a pollution exclusion doesn’t require the insured to have the ultimate fault for the alleged pollution:

Neither the CGL policy nor [the Louisiana Supreme Court’s opinion in Doerr] requires identification of the party at fault for the oil spill in determining whether the total pollution exclusion applies here. The CGL policy’s total pollution exclusion broadly precludes coverage for bodily injury or property damage that “would not have occurred in whole or in part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants’ at any time.” The provision requires a dispersal of pollutants but makes no requirement that the party responsible for the dispersal be determined. 

No. 21-30707 (Oct. 26, 2022).

Among other issues from an insurance-coverage case arising from a building collapse, in Hudson Specialty Ins. Co. v. Talex Enterprises, LLC, the Fifth Circuit considered whether the expense of fire and police personnel was “maintenance” within the meaning of a policy exclusion. The Court found that term ambiguous as to those expenses, and thus construed it against the insurer:

The City paid for the around-the-clock presence of its fire and police personnel to protect the integrity of the site and keep people out.

On the one hand, it is reasonable to read this police and fire department presence as maintenance. By keeping watch over the site and keeping people out, these public safety officials were “upholding or keeping in being” the property in its current state. This aligns with one of the definitions of maintenance listed above.

On the other hand, the definitions of maintenance as “[t]he action of keeping something in working order” or “[t]he care and work put into property” both imply that actions are taken upon the property to keep it in working order. Keeping watch is an action, but it is not performed upon the property and does not involve putting work into the property. Thus, there are at least two reasonable meanings for the term maintenance—one where these expenses would fall under the exclusion and one where they would not.

No. 21-60794 (Oct. 28, 2022) (paragraph breaks added).

Levy (a citizen of Louisiana) sued Dumesnil (also a citizen of Louisiana), along with Zurich American Insurance Company (not a citizen of Louisiana), and another entity that “claims to be citizen of Louisiana, and nothing in the record indicates otherwise.”

Complete diversity thus did not exist. A citizen of Louisiana was on both sides of the “v.”

Nevertheless, Zurich persisted. It removed to federal court. At the time it removed, it was the only defendant that had been served. Thus, argued Zurich, it had successfully completed a “snap” removal under Texas Brine Co. v. American Arbitration Association, Inc., 955 F.3d 482 (5th Cir. 2020).

The Fifth Circuit granted mandamus relief as to the trial court’s denial of the plaintiff’s motion to remand. Yes, Zurich had removed before the in-state defendant had been served, and thus satisfied that requirement for a successful snap removal. But Zurich had not satisfied the more basic requirement for a snap – or for that matter, any – removal based on diversity: complete diversity of citizenship.

Because “the existence of diversity is determined from the fact of citizenship of the parties named and not from the fact of service,” removal was improper. In re Levy, No. 22-30622 (5th Cir. 2022) (applying New York Life Ins. Co. v. Deshotel, 142 F.3d 873, 883 (5th Cir. 1998))

Summary judgment was affirmed in a contract case, despite the appellants’ claim that genuine issues of material fact existed about the overlap between two material parties: “Imperial and Harrison are—and always have been—separate entities with their own employees, customers, and warehouses. As the district court explained, A-Z and Ali do not allege, let alone present evidence, ‘that A-Z experienced any changes in ordering procedures, pricing, delivery schedules, type or brand of goods, inventory availability, or any other indicia that . . . [shows] it was no longer doing business with Harrison.'” Harrison Co., LLC v. A-Z Wholesalers, Inc., No. 21-11028 (Aug. 11, 2022).

The Fifth Circuit set a boundary – literally – for part of the administrative state in BP v. FERC, which reviewed a FERC fine of BP for alleged gas-price manipulation associated with Hurricane Ike. The Court held:

Contrary to FERC’s position, we hold that the Commission has jurisdiction only over transactions in interstate natural gas directly regulated by the Natural Gas Act (NGA). Specifically, we reject FERC’s broader theory that its authority to address market manipulation extends to any natural gas transaction which affects the price of a transaction under the NGA. Otherwise, however, we uphold the Commission’s order. Nevertheless, because FERC predicated its penalty assessment on its erroneous position that it had jurisdiction over all (and not just some) of BP’s transactions, we must remand for reassessment of the penalty in the light of our jurisdictional holding.

No. 21-60083-CV (Oct. 20, 2022, unpublished) (emphasis added).

The Fifth Circuit recently declined to review Jarkesy v. SEC en banc; the division of votes was as follows (names in blue were appointed by a Democratic president; red, by a Republican one):

CFSA v. CFPB finds – again – that the Consumer Financial Protection Bureau is unconstitutionally structured, but this time because its “double insulated” funding mechanisms violated the Appropriations Clause by circumventing Congress’ “power of the purse.” The arguments about that fundamental Constitutional provision are intriguing and seem likely to draw the Supreme Court’s interest. No. 21-50826 (Oct. 19, 2022). The Fifth Circuit’s treatment creates a split with seven other federal courts, including PHH Corp. v. CFPB, 881 F.3d 75 (D.C. Cir. 2018). A recent Slate article offered criticism of the opinion.

The opinion also presents a rare appearance of the word “magisterial” to describe an earlier case on this topic:       Cf. Herman Hesse, “Magister Ludi” (1943).

If you are a Yale law student grown weary of debate about judicial clerkship policies, please come visit us here at Lynn Pinker Hurst & Schwegmann – Chambers says we’re in the top handful of courtroom advocacy firms in Texas, and the Dallas economy and legal market are both booming.

Ramirez v. Paloma Energy, No. 21-30536 (Oct. 12, 2022, unpublished), provides a clean example of affirmance on a ground presented by the record, independent of the district court’s opinion:

Ultra Petroleum entered bankruptcy because of a sharp decline in natural gas prices. During the bankruptcy case, however, the price of gas recovered and soared and “propelled the debtors back into solvency.” That fortunate situation led to the question whether the “solvent debtor” concept survived recent Bankruptcy Code amendments.

The Fifth Circuit’s panel majority applied the relevant statutory-interpretation framework:

We must defer to prior bankruptcy practice unless expressly abrogated. The [Supreme] Court has endorsed a substantive canon of interpretation regarding the Bankruptcy Code vis-à-vis preexisting bankruptcy doctrine. Namely, abrogation of a prior bankruptcy practice generally requires an “unmistakably clear” statement on the part of Congress; any ambiguity will be construed in favor of prior practice.

(citations omitted), and concluded that the exception continued to apply:

The reason for this traditional, judicially-crafted exception is straightforward: Solvent debtors are, by definition, able to pay their debts in full on their contractual terms, and absent a legitimate bankruptcy reason to the contrary, they should. Unlike the typical insolvent bankrupt, a solvent debtor’s pie is large enough for every creditor to have his full slice. With an insolvent debtor, halting contractual interest from accruing serves the legitimate bankruptcy interest of equitably distributing a limited pie among competing creditors as of the time of the debtor’s filing. With a solvent debtor, that legitimate bankruptcy interest is not present. 

Ultra Petroleum Corp. v. Ad Hoc Committee, No. 21-20008 (Oct. 14, 2022) (citations omitted). A dissent read the Code differently.

Echoing the Fifth Circuit’s recent opinion in King v. Baylor Univ., in Jones v. Administrators of the Tulane Education Fund, the Court again allowed a breach-of-contract claim about virtual education to proceed past the Rule 12 stage, concluding:

“First, we hold that the claim is not barred as a claim of educational malpractice because the Students do not challenge the quality of the education received but the product received. Second, we reject Tulane’s argument that the breach-of-contract claim is foreclosed by an express agreement between the parties, because the agreement at issue plausibly does not govern refunds in this circumstance. And third, we conclude that the Students have not plausibly alleged that Tulane breached an express contract promising in-person instruction and on-campus facilities because the Students fail to point to any explicit language evidencing that promise. But we hold that the Students have plausibly alleged implied-in fact promises for in-person instruction and on-campus facilities.“

No. 21-30681 (Oct. 11, 2022) (emphasis in original).

The recent Crane v. City of Arlington opinion declined to dismiss a traffic-stop case on qualified immunity grounds, noting significant factual dispute about how the situation escalated into a tragic shooting. No. 21-10644 (revised Oct. 4, 2022). The Dallas Morning News covered the case, and I did a lengthy interview with Fox 4 in Dallas about it.

In a COVID-19 coverage case, the appellant in Coleman E. Adler & Sons v. Axis Surplus Ins. Co. tried to avoid earlier Fifth Circuit precedent by pointing to a recent opinion from an intermediate Louisiana appellate court. The Fifth Circuit did not accept the appellant’s argument, noting:

1. Orderliness. “Our court’s rule of orderliness applies to Erie cases no less than cases interpreting federal law.”
2. Erie. “[T]here has been ‘neither a clearly contrary subsequent holding of the highest court of [Louisiana] nor a subsequent statutory authority, squarely on point.’ Nor has there been contrary intervening precedent that ‘comprises unanimous or near-unanimous holdings from several—preferably a majority —of the intermediate appellate courts of [Louisiana].’ We have only one subsequent decision from an intermediate state court, and that cannot overcome our rule of orderliness.” (citations omitted).

No. 21-30478 (Sept. 20, 2022).

The panel majority in Freedom From Religion Foundation v. Mack found no coercion, and thus no standing for the plaintiff, in an Establishment Clause challenge to a Texas Justice of the Peace’s practices regarding a prayer at the beginning of court sessions. No. 21-20279 (Sept. 29, 2022).

This case contrasts with Sambrano v. United States, in which the panel majority found standing in a Title VII case about a company’s vaccination requirement, concluding that the employer’s policies had a coercive effect as to certain employees’ religious beliefs. No. 21-11159 (Feb. 17, 2022, en banc review denied).

Chevrolet’s Caprice Classic was a popular sedan in the late 1970s. But the term “caprice,” applied to the business-judgment rule in the bankruptcy context, was less popular with the Fifth Circuit in In re J.C. Penney, No. 22-40371 (Oct. 6, 2022).

Specifically, a sublessee from J.C. Penney challenged that debtor’s decision to reject that sublease, noting irregularities in the relevant bidding process, and urging adoption a view of the business-judgment rule that would not defer to “the product of bad faith, or whim, or caprice.” The Court disagreed, observing:

The question is not whether the debtor’s decision reasonably protects the interests of other parties, but rather whether the decision “appears to enhance a debtor’s estate.” This distinction proves fatal to Klairmont’s claim, as bankruptcy, by definition, often adversely affects the interests of other parties. The long-standing purpose of allowing debtors to shed executory contracts is to afford trustees and assignees the opportunity to reject “property of an onerous or unprofitable character.” The correct inquiry under the business judgment standard is whether the debtor’s decision regarding executory contracts benefits the debtor, not whether the decision harms third parties.

No. 22-40371 (Oct. 6, 2022).

The Onion, America’s Finest News Source, recently weighed in at SCOTUS with a brilliant amicus brief about First Amendment protection for parody; this excerpt summarizes the overall flavor:

In Dune, Duke Leto Atreides cautions his son about the family’s move to Arrakis, telling him to watch for “a feint within a feint within a feint…seemingly without end.” In that spirit, Advanced Indicator & Mfg. v. Acadia Ins. Co. analyzed a complex removal issue, noting:

• “Ordinarily, diversity jurisdiction requires complete diversity—if any plaintiff is a citizen of the same State as any defendant, then diversity jurisdiction does not exist.”
• “‘However, if the plaintiff improperly joins a non-diverse defendant, then the court may disregard the citizenship of that defendant, dismiss the non-diverse defendant from the case, and exercise subject matter jurisdiction over the remaining diverse defendant.’ … A defendant may establish improper joinder in two ways: ‘(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.’”
• But see: “[T]he voluntary-involuntary rule … dictates that ‘an action nonremovable when commenced may become removable thereafter only by the voluntary act of the plaintiff.’”

These principles applied to this situation:  Advanced Indicator (a Texas business) sued Acadia Insurance (diverse) and its Texas-based insurance agent (not-diverse). But after suit was filed, Acadia invoked a Texas statute “which provides that should an insurer accept responsibility for its agent after suit is filed, ‘the court shall dismiss the action against the agent with prejudice.'”

The Fifth Circuit, noting different district-court opinions about this statute and carefully reviewing its own precedents, concluded that “because [the agent] was improperly joined at the time of removal, Acadia’s removal was proper.” No. 21-20092 (Oct. 3, 2022) (emphasis added, citations removed).

Scylla and Charybdis, the “double threat” foes of Ulysses in the Odyssey (right), would have been interested in Denning v. Bond Pharmacy, Inc., where the plaintiff successfully “show[ed] an injury in fact through her breach of contract claims.” So far so good. But the Court continued: “Athough Denning has established injury in fact, she cannot get past the redressability prong required to establish standing. This is because her injury, as she alleges it, is not redressable by the compensatory and punitive damages that she seeks. Put another way, rendering an award of damages in favor of Denning does not redress her insurer’s injury of being subjected to AIS’s unauthorized billing practices.” No. 21-30534 (Sept. 30, 2022).

Addressing a basic but delicate issue about franchise law, the Fifth Circuit stated its test for enforcement of an arbitration agreement based on “close relationship” principles in Franlink Inc. v. BACE Servcs., Inc.:

Borrowing from the precedents, including the Third and Seventh Circuits, we extract a few fundamental factors applicable here that we will consider in determining whether these nonsignatories are closely related: (1) common ownership between the signatory and the non-signatory, (2) direct benefits obtained from the contract at issue, (3) knowledge of the agreement generally and (4) awareness of the forum selection clause particularly. Of course, the closely-related doctrine is context specific and is determined only after weighing the significance of the facts relevant to the particular case at hand.

No. 21-20316 (Sept. 28, 2022) (citations omitted, emphasis added).

In Rhone v. City of Texas City, the Fifth Circuit denied a request for emergency relief without prejudice, first describing the controlling rules:

[Fed. R. App. P. ] 8(a)(1) states that “[a] party must ordinarily move first in the district court for … (A) a stay of the judgment or order of a district court pending appeal.” Rule 8(a)(2) provides, however that “[a] motion for the relief mentioned in Rule 8(a)(1) may be made to the court of appeals or to one of its judges.” That provision is subject to a requirement that “[t]he motion must: (i) show that moving first in the district court would be impracticable; or (ii) state that, a motion having been made, the district court denied the motion or failed to afford the relief requested and state any reasons given by the district court for its action.” Rule 8(a)(2)(A).

Applying those rules, the Court concluded:

In this case, Rhone has moved for relief from judgment in the district court and no ruling has been made. As such, this motion is premature. Therefore, the motion before us is denied without prejudice. Should the district court deny Rhone’s pending motion, Rhone may revive the motion in this Court.

No. 22-40551 (Sept. 19, 2022, unpublished).

The district court in Williams v. Biomedical Research Foundation imposed a sanction for what it saw as an “impertinent” email to its law clerk. The Fifth Circuit reversed, noting: “The district judge signaled his intent to sanction Plante-Northington for the first time at an oral hearing on an unrelated matter. He then imposed the sanctions just minutes later at that hearing. Plante-Northington was allowed to utter only a few sentences in her defense before she was cut off. More importantly, she was given no advance notice sufficient for preparing a written or oral submission in response to the contemplated sanctions.” No. 22-30064 (Aug. 24, 2022) (unpublished).

Professor Steve Vladeck recently filed a provocative amicus brief about the State of Texas’s forum-selection practices in public law / constitutional cases.

The Fifth Circuit is soliciting comment on a potential change to local rule 47.5.4:

In BRFHH Shreveport, LLC v. Willis-Knighton Medical Center, the Fifth Circuit affirmed the dismissal of antitrust claims when:

• As to the plaintiff’s theory of a “threat-and-accession” agreement in violation of section 1 of the Sherman Act, “[t]he problem is that LSU had a completely independent reason for refusing to cooperate with BRF, which predated any alleged coercion by Willis-Knighton. Specifically, LSU issued a notice of breach to BRF in 2015--the year before LSU’s cash crunch and Willis-Knighton’s alleged coercion.” (emphasis in original).
• And as to the related monopolization claim under section 2, the relevant allegations “are little more than high-level assertions about how wonderful things would be if Willis-Knighton hadn’t formed an exclusive-dealing relationship with LSU … [T]hey are miles away from plausibly alleging that Willis-Knighton came close to substantially foreclosing the Shreveport healthcare market.”

No. 21-30622 (Sept. 19, 2022).

Today 600Camp celebrates its 11th birthday! For old times’ sake, here is the 10th-anniversary post from last year. Stir up some Shrimp Remoulade to celebrate properly!

The Fifth Circuit found an improper use of the Declaratory Judgment Act, and thus declined to apply the “first-filed” rule to a Louisiana lawsuit and deferring to another proceeding in Texas, when the record showed these facts:

“In June 2021, Bee Sand sued Pontchartrain in Texas state court. Pontchartrain removed the case to federal court in July. Later that month, Bee Sand voluntarily dismissed the case, and explained to Pontchartrain that it intended to refile in September— after a new Texas law governing attorney’s fees went into effect. Bee Sand also offered to refile in federal court to spare Pontchartrain the expense of a second removal, and Pontchartrain said that it would consider the matter. Instead of responding to this offer, Pontchartrain sought to preempt Bee Sand by suing in Louisiana state court on August 26, 2021. Pontchartrain requested a declaratory judgment in its favor.”

Pontchartrain Partners, LLC v. Tierra de los Lagos, LLC, No. 22-30286 (Sept. 15, 2022).

After a 5-4 order from the Supreme Court that allowed a stay of Texas’ social-media law to remain in effect, a 2-1 panel opinion  rejected a First Amendment challenge to that law in NetChoice LLC v. Paxton, No. 21-51178 (Sept. 16, 2022) (Judge Oldham writing the majority opinion, largely joined by Judge Jones who wrote her own concurrence, with Judge Southwick dissenting). The dissent aptly observed: “The Supreme Court will, as always, have the final word.”

Legal instruments often contain polite phrases before they get to the actual command in the instrument (“you have been sued and must file an answer,” or “you have been drafted,” etc.) Defense Distributed v. Platkin presents an unusual example of polite language in a legal instrument with no accompanying command, the background for which is as follows:

• Earlier this year, a 2-1 Fifth panel decision ordered a district judge, who had transferred a case about 3-D printed firearms to the District of New Jersey, to request the retransfer of that case back to Texas. (Judge Jones wrote the opinion, joined by Judge Elrod, with Judge Higginson dissenting).
• The New Jersey court considered the matter and declined the request on July 27.
• The Texas judge then closed the file, prompting further proceedings in the Fifth Circuit.

On September 16, the Court issued a routine order setting the matter for the earliest available argument date–but with a concurrence joined by two judges, asking that the New Jersey court reconsider the issue of transfer back to Texas:

“We can think of no substantive reason—and none has been offered to us—why this case should nevertheless proceed in New Jersey rather than Texas, other than disagreement with our decision in Defense Distributed. The Attorney General of New Jersey confirmed as much during oral argument. So we respectfully ask the District of New Jersey to honor our decision in Defense Distributed and grant the request to return the case back to the Western District of Texas—consistent with the judiciary’s longstanding tradition of comity, both within and across the circuits ….”

No. 22-50669 (Sept. 16, 2022) (Judge Ho concurring, joined by Judge Elrod, but not Judge Graves).

A surprising amount of case law addresses not whether a particular legal conclusion is correct, but whether it is “correct enough”–qualified immunity, for example, as well as mandamus cases about whether a “clear error” occurred in applying the law. Another such area involves whether the Fifth or the Federal Circuit has appellate jurisdiction over “Walker Process cases”–antitrust claims based on enforcement of a fraudulent patent. In Chandler v. Phoenix Services LLC, the Fifth Circuit held:

“We differ with the Federal Circuit over whether we have appellate jurisdiction over Walker Process cases. But the Supreme Court has told us to accept circuit-to-circuit transfers if the jurisdictional question is ‘plausible.’ While we continue to disagree with the Federal Circuit on this point, we do not find the transfer implausible. We therefore accept the case and affirm the district court’s judgment.”

No. 21-10626 (Aug. 15, 2022) (citations omitted).

It’s been a busy fall for the Dormant Commerce Clause. In addition to the Fifth Circuit’s recent invalidation of a Texas law about the ownership of electricity-generation facilities, the Court also struck down a New Orleans residency requirement for the ownership of Vrbo-type rental properties:

The district court held that the residency requirement discriminated against interstate commerce. That was the right call. But the court then applied the Pike test [for an incidental effect] to uphold the law. That was a mistake; it should have asked whether the City had reasonable nondiscriminatory alternatives to achieve its policy goals. Because there are many such alternatives, the residency requirement is unconstitutional under the dormant Commerce Clause.

Hignell-Stark v. City of New Orleans, No. 21-30643 (Aug. 22, 2022).

Henley v. Biloxi H.M.A., L.L.C., No. 20-60991 (Aug. 31, 2022), presented a thorny issue about tort liability for nondisclosure; here, certain information about rates charged by health-care providers. Applying the relevant Restatement provisions, the Fifth Circuit rejected the district court’s distinction between “basic” and “material” facts, and reversed the dismissal of the nondisclosure claim under Rule 12(b)(6).No. 20-60991 (Aug. 31, 2022).

The plaintiff in King v. Baylor Univ. contended that Baylor had breached a contract with her (the “Financial Responsibility Agreement” pursuant to which she paid her tuition). During the COVID-19 pandemic, students at Baylor University were promised that they would have live classes on campus, but the university went “all-virtual” instead. She contended that she had made an informed decision to attend Baylor “live” when in fact her education was delivered remotely. The Fifth Circuit found potential ambiguity in the phrase “educational services” in the parties’ contract and remanded for further development of that issue. No. 21-50352 (Aug. 23, 2022).

In addition to the Court’s holding about the dormant Commerce Clause, NextEra Energy Capital v. Lake explained why the plaintiff’s claim based on the Commerce Clause was properly rejected (with citations omitted, although the citations are valuable and instructive):

          One of the original Constitution’s only express limitations on state power, it directs that “No State shall … pass any …  Law impairing the Obligation of Contracts.” The Contracts Clause was a response to the state laws relieving debtors during the 1780s. In the first century or so of the Republic, before the Bill of Rights restricted states, the Contracts Clause was “the primary vehicle for federal review of state legislation.”  Some of the greatest hits of the antebellum Supreme Court were Contracts Clause cases.

          But unlike the dormant Commerce Clause, the Contracts Clause is not what it once was. The Supreme Court substantially narrowed its scope during the Great Depression. Under modern caselaw, states have some leeway to alter parties’ contractual relationships “to safeguard the vital interests of [their] people.”

          A related principle that has sapped the Contracts Clause of its earlier force applies here. We now recognize that parties contract with an expectation of possible regulation. That is especially true in highly regulated industries like power. That history of regulation put NextEra on notice that Texas could enact additional regulations affecting its two projects.  After Order 1000, there was substantial uncertainty about how state regulators would respond.

          Despite PUCT’s declaration that transmission-only companies could enter the market, Texas courts never weighed in on the issue. Moreover, the emergence of state rights of first refusal signaled that Texas could enact something similar, if not more restrictive.

No. 20-50160 (Aug. 30, 2022).

“Imagine if Texas—a state that prides itself on promoting free enterprise—passed a law saying that only those with existing oil wells in the state could drill new wells. It would be hard to believe. It would also raise significant questions under the dormant Commerce Clause. …

Texas recently enacted such a ban on new entrants in a market with a more direct connection to interstate commerce than the drilling of oil wells: the building of transmission lines that are part of multistate electricity
grids. A 2019 law says that the ability to build, own, or operate new lines “that directly [connect] with an existing utility facility . . . may be granted only to the owner of that existing facility.” …

NextEra challenges the new law, as it applies to the interstate electricity networks in Texas (but not the intrastate ERCOT network), on dormant Commerce Clause grounds. … Once we wade through the thicket of electricity regulation, the ban’s interference with interstate commerce becomes as clear as it is for the oil well hypothetical. We thus conclude that the dormant Commerce Clause claims should proceed past the pleading stage.”

NextEra Energy Capital v. Lake, No. 20-50160 (Aug. 30, 2022) (citations omitted).

For August’s end-of-month summary by the Fifth Circuit Bar Association, I contributed a one-page article about preparation for oral argument, complete with action picture (right), joining a similar one contributed last month by Association president Tom Flanagan of New Orleans. If you belong to the BAFFC, I encourage you to write one of your own! And if you don’t belong you should, it’s a great resource and features an outstanding body of work about the Fifth Circuit by the able Walter Woodruff, also of New Orleans.

A long-running trademark dispute involving a New Orleans dining treasure, the Camellia Grill, came to an end in Uptown Grill, LLC v. Cameilla Grill Holdings, Inc. Among other holdings, the Fifth Circuit held that the following permanent injunction about trade dress was not an abuse of discretion “where the district court adhered to our recitation of … eight elements [in a prior opinion in the case], albeit adding the less precise language ‘all or most.'” The Court distinguished “other cases in which injunctions referencing trade dress have been reversed for vagueness, [because] the injunction set forth by the district court here has much more detail than a general prohibition from employing ‘confusingly similar’ trade dress.”

In crafting this injunction, the Court looks specifically to the definition of “trade dress” utilized by the Fifth Circuit in its May 29, 2019 opinion. “Trade dress” is defined as “the total image and overall appearance of a product [that] may include features such as the size, shape, color, color combinations, textures, graphics, and even sales techniques that characterize a particular product.” The alleged elements of trade dress include: (1) the pink and green interior paint scheme, (2) the “U-Shaped” double horseshoe counter design, (3) the stainless steel stemmed stools with green stool cushions, (4) the fluted metal design under the customer side of the counter and above the cooking line, (5) the visible pie cases attached to the rear wall at both ends of the cooking line, (6) the “straw popping” routine, (7) audible order calling routine, and (8) the individual counter checks handed to each customer. The enjoined parties’ utilization of all or most of the above Camellia Grill trade dress elements at any single location will constitute a violation of this injunction.

No. 21-30639 (Aug. 23, 2022).

The plaintiffs in Lee v. Andrew Lawrence Collection LLC sought to register the trademark “THEEILOVE” – a phrase associated with the alma mater of Jackson State University. Then they sued that university’s licensing agent and some licensees.

The defendants successfully moved to dismiss under the infrequently-used combination of Fed. R. Civ. P. 19 and 12(b)(7), based on the university’s interest in the subject matter, and the Fifth Circuit affirmed. It reasoned:

• Interest. The university had a non-frivolous interest in the ownership of the mark based on the university’s consistent usage of it, and that interest could be “practically impaired” by a decision on that topic in this case (as distinct from an analysis of whether a judgment would in fact be preclusive). Thus, the university was a required party under Rule 19(a)(1)(B)(i).
• Proceed or dismiss? As a state university, Jackson State had sovereign immunity from suit; that interest “is necessarily impaired when plaintiffs try to use the state’s sovereign immunity to lure it into a lawsuit against its will.” That issue alone favored dismissal. The Court noted that the other, practically focused factots in Rule 19(b) also favored dismissal.

No. 20-30796 (Aug. 24, 2022).  (In honor of this fairly rare analysis of Rule 19, here is a link to Paul Hardcastle’s 1985 hit Nineteen.)

Sambrano v. United Airlines, a religious-discrimination case about an airline’s vaccine mandate that prompted a (literally) fiery dissent from the panel opinion, ended in a 13-4 vote against en banc review. A dissent again urged caution in the use of unpublished (and thus, nonprecedential) opinions in significant matters. No. 21-11159 (Aug. 18, 2022).

In the unlikely event that any litigation proceeds under Texas’ SB8 law after Dobbs, a useful reference will be Perez v. McCreary, Veselka, Bragg & Allen, P.C., which found that a plaintiff’s claim under the Fair Debt Collection Act about an inaccurate demand letter failed to satisfy Article III standing requirements:

“’Congress’s creation of a statutory prohibition or obligation and a cause of action does not relieve courts of their responsibility to independently decide whether a plaintiff has suffered a concrete harm under Article III.’ Any other rule would allow Congress to grant private plaintiffs a personal stake in enforcing regulatory law and ultimately usurp the President’s Article II authority to execute the laws. And that would aggrandize our power by letting us resolve disputes that are not ‘of a Judiciary Nature.’

No. 21-50958 (Aug. 15, 2022) (citations omitted) (applying TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021)).

The 2017 collision between the MV ACX Crystal and the destroyer U.S. Fitzgerald led to litigation in New Orleans federal court against NYK, a huge shipping concern with global operations. The district court acknowledged that for this international case, the constitutional standard for personal jurisdiction was based on the Fifth rather than the Fourteenth Amendment, but concluded that the standards were materially similar and that it lacked jurisdiction over NYK.

A Fifth Circuit panel affirmed and the en banc court did also, noting that the other Circuits addressing this constitutional question reached similar conclusions. A dissent argued that the majority’s position about jurisdiction would undermine the effective operation of Congressionally-created causes of action involving asset seizure by the Castro regime and terrorist activity. Douglass v. NYK, No. 20-30382 (Aug. 16, 2022) (en banc). The judges’ votes broke along atypical lines and are detailed below:

In State of Louisiana v. Biden, the district court enjoined the federal government from pausing certain oil and gas lease sales:

The Fifth Circuit found that the term “Pause” was too vague to satisfy Fed. R. Civ. P. 65, even considering the district court’s accompanying opinion: “The present injunction fails to meet Rule 65(d) requirements. We cannot reach the merits of the Government’s challenge when we cannot ascertain from the record what conduct—an unwritten agency policy, a written policy outside of the Executive Order, or the Executive Order itself—is enjoined. Our review of APA claims must begin by determining if there was final agency action. Where, as here, it is unclear what final agency action the district court predicated its order upon, we are unable to reach the merits of the appeal.” No. 21-30505 (Aug. 17, 2022).

The well-known poem Antigonish begins:

Yesterday, upon the stair,
I met a man who wasn’t there
He wasn’t there again today
I wish, I wish he’d go away.

In that general spirit, in recent days, both the U.S. Court of Appeals for the Fifth Circuit and the Court of Appeals for the Fifth District at Dallas had close en banc votes involving questions of arbitrability, as to a party who “wasn’t there”–who had not signed an arbitration agreement, but was nevertheless potentially subject to it. (The Dallas case is discussed here; the Fifth Circuit’s, here.)

Whether the timing is an example of synchronicity I will leave to others. The courts’ difficulty with these issues shows the strong feelings provoked by the issue of court access, even among very sophisticated jurists, in an area of the law with well-developed case law on many key points.

In CAE integrated, LLC v. Moov Techs., aoLtd., the plaintiff (CAE) sought a preliminary injunction, alleging that a former employee (Meissner) improperly took confidential information about customers to his new employer (Moov). The district court found otherwise and the Fifth Circuit affirmed on the record presented, noting:

1. “Meissner’s knowledge of whom he worked with while at CAE, absent other evidence, is insufficient to support a finding that he misappropriated trade secrets.”
2. “CAE has not identified a single contact whose information was not publicly available or ascertainable through proper means. Semiconductor industry participants are available in third-party directories, meet at conventions and trade shows, and can be found through online searches.”

The Court also noted that the employee had lost access to the relevant Google Drive some time before the injunction hearing. No. 22-50034 (Aug. 9, 2022).

By an 8-8 vote over a dissent, the full Fifth Circuit declined to review Newman v. Plains All Am. Pipeline, L.P., a case about a court’s power to determine arbitrability when a nonsignatory seeks to enforce an arbitration clause. The breakdown of votes was as follows (Senior Judge King was the third panel member):

The plaintiff in Beatriz Ball, L.L.C. v. Barballago Co. alleged that a competitor’s line of tableware infringed on the plaintiff’s unregistered trade dress for its Organic Pearl, products.

After a 3-day bench trial, the trial court ruled for the defendant. The Fifth Circuit reversed and remanded. The key Lanham Act issue was whether the plaintiff’s trade dress had acquired secondary meaning. Of the seven relevant factors, three required additional scrutiny on remand:

• Volume of sales. “Beatriz Ball offered evidence of the exact volume of sales attributable to the Organic Pearl collection. … [W]hether this multimillion-dollar volume of sales ultimately weighs for or against secondary meaning should be reconsidered. No current circuit precedent expressly addresses a $6.6 million volume, but two cases uphold much higher volumes and one rejects a much lower volume as indicia of secondary meaning.”
• Nature of use in newspapers and magazines. “In its analysis of the ‘newspaper and magazines’ factor, the district court observed that ‘very few of the advertisements reference the collection by name and just as many advertisements highlight Beatriz Ball pieces from other collections.’ As Beatriz Ball points out, however, ‘[t]his is not a suit over rights to a name; it’s a suit over rights to product designs.'” 
• Defendant’s intent. “Beatriz Ball’s trade dress claim is not confined to products that include a pearl rim or that might include some distortions in the product’s shape. As described, the trade dress exhibits a unique combination of features pertaining to the individuality of each piece, the irregular and unpredictable size and shape of the pearls, the undulated shape of the body, the metallic shine, and the overall, accurate impression that each piece was handmade with artisanal quality. None of the products presented at trial incorporated these elements holistically like the Pampa Bay products.” 

No. 21-30029 (July 12, 2022).

In a change from the constitutional issues that have plagued the SEC in court of late, in SEC v. World Tree Financial, LLC, the Fifth Circuit affirmed a securities-fraud judgment based on “a fraudulent ‘cherry-picking’ scheme, in which [defendants] allocated favorable trades to themselves and favored clients and unfavorable trades to disfavored clients.” Proof of this scheme required sophisticated statistical analysis, summarized as follows:

To analyze World Tree’s allocation data, [the SEC’s expert] divided the client accounts into three categories: (1) accounts controlled by Perkins, Gilmore, or both (“Favored-Perkins accounts”); (2) accounts owned by World Tree clients other than Matthew LeBlanc and his business Delcambre Cellular (“Favored-Client accounts”); and (3) accounts owned by LeBlanc and Delcambre (“Disfavored accounts”). She then measured several performance measures and subsets of trades: most and least profitable trades, day trades, average first-day returns, earnings-day trades, overlapping stocks, and trades after LeBlanc complained to Perkins about his accounts’ poor performance. According to her analysis, from July 2012 to July 2015, Perkins methodically allocated trades with favorable first-day returns to the FavoredPerkins and Favored-Client accounts, while allocating trades with unfavorable first-day returns to the Disfavored accounts.

[She] opined that the “evidence overwhelmingly indicates that Perkins engaged in cherry-picking.” Though she acknowledged at trial that the data reflected only a pattern and that she did not “have the ability to identify individual trades that may or may not be improper,” the data in the aggregate showed a “one in one million chance that these patterns could have occurred if allocations were being made without regard to first-day return.”

No. 21-30063 (Aug. 4, 2022).

Beatriz Ball, L.L.C. v. Barballago Co., No. 21-30029 (July 12, 2022), a trade-dress case under the Lanham Act, produced a thorough concurrence by soon-to-depart Judge Costa about the distinctions between review of bench trials, and review of jury verdicts. He began by observing:

“I write separately to remark on how our remand of the trade dress claim reveals a paradox that has perplexed me about bench trials: We give a trial judge’s detailed and intensive factfinding less deference than a jury’s unexplained verdict.

If a jury had rejected Beatriz Ball’s trade dress claim—giving no more  explanation than a simple ‘No’ on the verdict form—we would presumably affirm. After all, we do not hold that Beatriz Ball is entitled to judgment as a matter of law on this claim. Instead, we remand for the district court to reassess the trade dress claim because of some errors in its 33 pages explaining why it found no protectable trade dress.”

And he concluded after a review of history and social-science research: “It turns out, then, that there is good reason for the seeming anomaly of giving less deference to bench trials: Larger and more representative groups are the ones more likely to reach the correct outcome.”

In its analysis, the concurrence notes one commentator’s observation that “while the Seventh Amendment does not compel the backwards-seeming rule giving less deference to judges’ findings, it does explain it. ‘[O]ur traditional and constitutionalized reverence for jury trial’ is why we trust juries more.” An element of that “traditional reverence” may well include some indifference to whether a jury in fact reaches a “correct” result, as the mere existence of a jury has a powerful symbolic value in its own right. See generally Batson v. Kentucky, 476 U.S. 79, 90 (1986) (“In view of the heterogeneous population of our Nation, public respect for our criminal justice system and the rule of law will be strengthened if we ensure that no citizen is disqualified from jury service because of his race.”).

The Fifth Circuit found that the federal courts had “related to” jurisdiction because of the relationship between litigation and a bankruptcy plan:

“In Zale, the dispute between NUFIC and Cigna risked disrupting Zale’s reorganization by threatening Zale’s recovery from and access to the Cigna policy funds. Here, NFC’s claims risked the same disruptions: GenMa had pledged to pay the Lessors lots of money and to keep specified cash reserves as part of a global settlement between several parties to GenOn’s restructuring. By threatening GenMa’s ability to fulfill those commitments, NFC’s claims pertained to ‘the implementation and execution’ of that crucial settlement, which was part of GenOn’s plan. Craig’s Stores, 266 F.3d at 390. So we have related-to jurisdiction. 28 U.S.C. § 1334(b).”

Natixis Funding Corp. v. Gen-On Mid-Atlantic, LLC, No. 21-20557 (July 29, 2022).

The panel majority in E.T. v. Paxton held that a group of students lacked standing (based on their concerns about catching COVID-19) to challenge Governor Abbott’s order prohibiting school mask mandates, noting:

“This circuit does not ‘recognize the concept of probabilistic standing based on a non-particularized increased risk—that is, an increased risk that equally affects the general public.’ And even where increased-risk claims are particularized, they generally ‘cannot satisfy the actual or imminent requirement,’ which necessitates ‘evidence of a certainly impending harm or substantial risk of harm.’ That’s because ‘[m]uch government regulation slightly increases a citizen’s risk of injury—or insufficiently decreases the risk compared to what some citizens might prefer.'”

But cf. Sambrano v. United Airlines, No. 21-11159 (Feb. 17, 2022) (unpublished) (finding standing in a COVID vaccine-mandate case when: “Plaintiffs are several United employees who requested religious or medical accommodations from United. Those requesting religious accommodations did so out of concern that aborted fetal tissue was used to develop or test the COVID-19 vaccines.”).

My colleague Kyle Gardner and I wrote this article for the most recent Headnotes about two cases–one federal, one state–that summarize basic personal-jurisdiction principles for Texas in business cases.

   The Bankruptcy Code allows debtors to breach and cease performing executory contracts if the bankruptcy court approves. We thus have held that debtors may “reject” regulated energy contracts even if the Federal Energy
Regulatory Commission (“FERC”) would not like them to.  A sister circuit agrees, and we confirmed our view mere months ago[.]

     Nevertheless, FERC persisted. Anticipating the petitioner’s insolvency, FERC issued four orders purporting to bind the petitioner to continue performing its gas transit contracts even if it rejected them during bankruptcy. The petitioner asks us to vacate those orders. Because FERC cannot countermand a debtor’s bankruptcy-law rights or the bankruptcy court’s powers, we grant the petitions for review and vacate the orders.

Gulfport Energy Corp. v. FERC, No. 21-60017 (July 19, 2022) (citations omitted).

The holding of Union Pacific R.R. Co. v. City of Palestine may be of interest only to the parties, but the backstory is a sprawling drama about westward expansion and the legal framework that followed it: “Union Pacific Railroad Company seeks to end its operations in Palestine, Texas, but has been unable to do so because a 1954 Agreement between its predecessor and Defendants City of Palestine and Anderson County, Texas has prevented it from leaving. Because the 1954 Agreement is preempted by the Interstate Commerce Commission Termination Act, Union Pacific is free to leave. … The background of this case spans 150 years, and we have discussed much of it in prior opinions. We nonetheless recount it here to illuminate the intersection between the parties’ purported contractual agreements and increased federal regulation of the railroad system.” No. 21-40445 (July 22, 2022) (cleaned up) (emphasis added).

A sweeping analysis of different types of disgorgement led to this conclusion about the securities laws in SEC v. Hallam: “[W]e conclude that Sections 78u(d)(3) and (d)(7) authorize legal ‘disgorgement’ apart from the equitable ‘disgorgement’ permitted by Liu. That answers the question which ‘soil,’ came with the ‘term of art,’ that Congress used.” No. 21-10222 (July 19, 2022) (citations omitted). While focused on a precise issue about the most recent amendments to federal securities law, Hallam offers a detailed history and summary of approaches to disgorgement of ill-gotten gains, in both law and equity.

“[T]he oldest and most consistent thread in the federal law of justiciability is that the federal courts will not give advisory opinions.” E.g., In re: Franchise Servcs. of N. Am., 891 F.3d 198 (5th Cir. 2018). That said, not all statements of legal rules are the same (as detailed in this Pepperdine Law Review article that I co-authored several years ago). Illustrating that point:

• In Leonard v. Martin, the panel majority in a discovery-order mandamus observed in a footnote: “In mandamus cases, this court often holds ‘that a district court erred, despite stopping short of issuing a writ of mandamus.'” (citation omitted) No. 21-30475 (June 30, 2022).
• In SEC v. Novinger, the concurrence in a case resolved on procedural grounds about Fed. R. Civ. P. 60(b) observed: “If you want to settle, SEC’s policy says, ‘Hold your tongue, and don’t say anything truthful—ever’—or get bankrupted by having to continue litigating with the SEC. A more effective prior restraint is hard to imagine. … Given the agency’s current activism, I think it will not be long before the courts are called on to fully consider this policy.” No. 21-10985 (July 12, 2022).
• And in SEC v. Hallam, a case about the kind of disgorgement available as a remedy under the securities laws, the Court observed: “… if we are confronted with an appeal from a request for an award of that nature, we may need to decide whether it could be equitable disgorgement consistent with Liu’s constraining those awards to ‘net profits[.]” And that may also require us to resolve Hallam’s contention that the SEC is required strictly to trace the ill-gotten gains, and the profits on them, into assets still held by the defendant.” No. 21-10222 (July 19, 2022) (citations omitted).

Louisiana Indep. Pharmacies Ass’n v. Express Scripts, Inc. “presents a novel issue concerning the amount in controversy requirement for diversity jurisdiction in cases brought by organizations on behalf of their members.” An association of Louisiana pharmacists sought a declaration about their appropriate Medicare reimbursement, and while the total value of all their claims exceeded $75,000, the Fifth Circuit concluded that the law required that “at least one pharmacy would have to allege that Express Scripts shortchanged it on the provider fee for over 750,000 Medicare Part D prescriptions.” Accordingly, it dismissed for lack of subject matter jurisdiction. No. 21-30331 (July 20, 2022).

Despite a contrary view of the case by a motions panel, a majority of the the panel that received the merits briefing denied the petitions for review in Wages & White Lions Investments LLC v. FDA, a case about the regulation of “vaping” products: “Petitioners advance two primary arguments: (1) FDA acted arbitrarily and capriciously by pulling a ‘surprise switcheroo‘ on Petitioners and failing to consider important aspects of the PMTAs; and (2) FDA lacks statutory authority to impose a comparative efficacy requirement. We are unpersuaded by either argument.” 

A dissent saw matters otherwise: “In a mockery of ‘reasoned’ administrative decision making, FDA (1) changed the rules for private entities in the middle of their marketing application process, (2) failed to notify the public of the changes in time for compliance, and then (3) rubber-stamped the denial of their marketing applications because of the hitherto unknown requirements.” A petition for en banc rehearing seems a near certainty. No. 21-60766 (July 18, 2022).

My friend Walter Woodruff and I have picked our “Top Five Cases to Know” from the Fifth Circuit for the first half of 2022 – we agreed on 3/5 – the Bar Association for the Fifth Federal Circuit has been Tweeting them out the last few days!

Preble-Rich, a Haitian company, had a contract with a Haitian government agency to deliver fuel. A payment dispute developed and Preble-Rich started an arbitration in New York, pursuant to a broad clause in the parties’ contract (“In the event of a dispute between the [Parties] under this Contract, the dispute shall be submitted by either party to arbitration in New York. … The decision of the arbitrators shall be final, conclusive and binding on all Parties. Judgment upon such award may be entered in any court of competent jurisdiction.”). 

Preble-Rich obtained “a partial final award of security” from the arbitration panel requiring the posting of $23 million in security. Litigation to enforce that award led to Preble-Rish Haiti, S.A. v. Republic of Haiti, No. 22-20221, which held that the above clause was not an explicit waiver of immunity from attachment as required by the Foreign Sovereign Immunity Act, 28 U.S.C. § 1610(d). “The arbitration clause is relevant to whether BMPAD waived its sovereign immunity from suit generally, but a waiver of immunity from suit has ‘no bearing upon the question of immunity from prejudgment attachment.’” (citation omitted).