“Picking up where we left off in Germano v. Taishan Gypsum Company, Ltd., 742 F.3d 576 (5th Cir. 2014),” the Fifth Circuit affirmed personal jurisdiction in three other suits involving default judgments arising from the “Chinese Drywall” MDL litigation.  In re: Chinese-Manufactured Drywall Products Liability Litig., No. 12-31213 (May 20, 2014).  Again, the Court found jurisdiction for the same basic reasons related to the “stream of commerce.” Applying Florida and also Louisiana law, this opinion also features a detailed discussion of when an agency relationship can give rise to jurisdiction, applying the recent Supreme Court case of Daimler AG v. Bauman, 134 S. Ct. 746 (2014).

The Fifth Circuit has now resolved the challenges to BP’s Deepwater Horizon settlement, as follows:

1.  In October 2013, in three separate opinions, First Panel remanded for more fact findings as to accounting issues about the settlement.

2.  In January 2014, in a 2-1 decision, Second Panel affirmed the settlement over challenges based on Rule 23 and related standing issues.

3.  In March 2014, satisfied with the results of the remand, First Panel affirmed the mechanics of the settlement in a 2-1 decision.

4.  On May 19, 2014:

A.    First Panel denies panel rehearing, concluding in a 2-1 opinion: “In settling this lawsuit, the parties agreed on a substitute for direct proof of causation by a preponderance of the evidence.  By settling this lawsuit and agreeing to the evidentiary framework for submitting claims, the claimants did not abandon their allegations of Article III causation.”

B.  Second Panel also denies panel rehearing, also in a 2-1 opinion, noting its “complete agreement” with the denial of panel rehearing by First Panel.

C.  The full court denied en banc rehearing as to First Panel and also as to Second Panel, both over dissents that stressed Article III issues.

That’s all folks!

Eckhardt v. Qualitest Pharmaceuticals reviewed tort claims under Texas law against generic drug manufacturers.  No. 13-40151 (May 15, 2014).   The Fifth Circuit found that labeling claims were preempted under PLIVA, Inc. v. Mensing, 131 S. Ct. 2567 (2011), and products liability claims were preempted under Mutual Pharmaceutical Co. v. Bartlett, 133 S.Ct. 2466 (2013).  Misrepresentation claims against brand-name drug manufacturers were rejected under state law for lack of a duty from them to generic-drug users. Law360 provides some further discussion.

The full Senate confirmed Judge Gregg Costa’s appointment to the Fifth Circuit yesterday. While great news for the Court and bar, it bears mention that the seat was open for 837 days, and two vacancies still remain on the Fifth Circuit.  Just as it is difficult to balance the sound of an orchestra missing musicians, it is hard to balance the powers of a government missing key officials.

In Songcharoen v. Plastic & Hand Surgery Associates, the district court denied cross-motions for summary judgment about the meaning of a contract and had a trial as to the terms it believed to be ambiguous.  No. 13-60315 (April 2, 2014, unpublished).  Even though both matters present a common issue of law, because “the ‘evidence’ presented at pretrial may well be different from the evidence presented at trial,” the Court reviewed the issue through review of the denial for judgment as a matter of law.  The Court reminded: “because Rule 50 motions for judgment as a matter of law are not required following a bench trial, reviewing a district court’s denial of summary judgment is appropriate following a bench trial.”  (citing Black v. J.I. Case Co., 22 F.3d 568, 570 (5th Cir. 1994), and Becker v. Tidewater, Inc., 586 F.3d 358, 365-66 n.4 (5th Cir. 2009)).

The defendant in Advanced Nano Coatings, Inc. v. Hanafin “entered into an employment agreement with [plaintiff] in which [defendant] agreed to devote 100% of his professional time and effort to [plaintiff] or its subsidiary . . . .”  No. 13-20109 (Feb. 19, 2014, unpublished).  “The district court . . . found that Hanafin breached his fiduciary obligations . . . a finding Hanafin does not dispute on appeal.”  Quoting ERI Consulting Engineers v. Swinnea, 318 S.W.3d 867, 872 (Tex. 2010), the Fifth Circuit noted that under Texas law, “if the fiduciary . . . acquires any interest adverse to his principal, without a full disclosure, it is a betrayal of his trust and a breach of confidence, and he must account to his principal for all he has received.” The Court then held: “Accordingly, [defendant’s] breach of fiduciary duties obligates him to repay everything he gained by virtue of his position, including payments for his salary and any expenses he may have incurred.”

Chesapeake sued two defendants to recover a large overpayment.  Harleton Oil & Gas intervened to claim a share of that payment.  Chesapeake Louisiana L.P. v. Buffco Prod., Inc., No. 13-40458 (May 7, 2014, unpublished).  The Fifth Circuit ruled: (1) Harleton should have been aligned as a plaintiff rather than a defendant, since it “intervened to seek affirmative relief, not to protect its interests . . . .”; (2) that change destroyed diversity and mooted a summary judgment granted by the district court; (3) the case should then be remanded for the district court to consider whether Harleton is indispensable and its joinder requires dismissal of the entire action; but (4) the district court had jurisdiction over the defendants’ counterclaims against Chesapeake, which involved different wells than the one relevant to Harleton.  “When an independent basis for jurisdiction exists with respect to a counterclaim, a federal court may adjudicate the claim even if the original claim was dismissed for lack of subject-matter jurisdiction.”

The short opinion in Navigators Ins. Co. v. Moncla Marine Operations LLC rejected the appeal of a decision to continue a stay of court proceedings, involving the proceeds from the sale of a barge, in favor of arbitration.  No. 13-30975 (May 8, 2014, unpublished).  The Court reminded: (1) a stay is not an appealable final order (citing Apache Bohai Corp. v. Texaco China, B.V., 330 F.3d 307 (5th Cir. 2003)); (2) absent a clear identification of an “important issue . . . completely separate from the merits,” the collateral order doctrine does not allow appeal either; and (3) neither does mandamus, distinguishing a D.C. Circuit case involving a court’s statutory authority over enforcement of a foreign arbitral award.  In a footnote, the Court noted a citation by the movant to In re Radmax, 720 F.3d 285 (5th Cir. 2013), and made the understated observation: “The factors that must be demonstrated to obtain mandamus relief in a venue transfer case are not the same as the factors in an arbitration case.”

In the earlier case of Levy Gardens Partners v. Commonwealth Land Title Ins. Co., the Fifth Circuit concluded that a pleading about the extent of coverage was “fundamental to the complaint” and “did not raise a new matter outside of the complaint”; accordingly, it did not implicate the rules about the pleading of affirmative defenses.  706 F.3d 622, 633 (5th Cir. 2013).  In contrast, in LSRef2 Baron LLC v. Tauch, the Court held that a guarantor’s defense of payment by the primary obligor was an affirmative defense.  After a review of Louisiana law on the topics of offset and setoff, which characterizes those matters as defenses, the Court concluded that “[Plaintiff] simply had to allege in its complaint that there was an event of default, which is defined in the Loan Agreement, not in the Guaranty.”  The Court also agreed that the issue had not been raised in a “pragmatically sufficient time,” as “all of the critical pretrial deadlines had passed or were about to expire.”

Colbert v. Brennan arises from the difficult litigation involving the Brennan family, the noted New Orleans restaurateurs.  No. 13-30069 (May 9, 2014, unpublished).  Ted Brennan filed an unopposed motion to dismiss an appeal, pursuant to a settlement agreement [the finality of the agreement is not clear from the opinion].  (Pursuant to Fed. R. App. P. 42(b), “an appeal may be dismissed on an appellant’s unopposed motion if the parties agree about costs.”)  Two months later, he sought to reinstate the appeal.  Citing Williams v. United States, 553 F.2d 420 (5th Cir. 1977), the Fifth Circuit held that the voluntary dismissal “voided” the notice of appeal, noting that “[h]e failed to file a new notice of appeal within the time limits required by Ruel 4(a) or to seek relief in the district court as provided by Rule 4(a).”  Citing Bowles v. Russell, 551 U.S. 205 (2007), the Court declined to apply any “equitable exception” to the rule that a notice of appeal is jurisdictional.  The Court also held it was not bound, on this jurisdictional question, by a previous single-judge ruling that reinstated the appeal.

In United States ex rel Spicer v. Navistar Defense, LLC, the Fifth Circuit found that bankruptcy debtors failed to make adequate disclosure of a potential False Claims Act claim as an estate asset.  No. 12-10858 (May 5, 2014).  Accordingly, the trustee was the real party in interest and was able to take over the administration of the claim, even though he did not learn of it until after the bankruptcy closed and long after suit was filed on the claim.  The review of the debtors’ disclosure is of broad general interest.  As to the merits, the Court affirmed dismissal, reminding that “a false certification of compliance, without more, does not give rise to a false claim for payment unless payment is conditioned on compliance.”

Legal advice or business discussion?  This question is the key issue in most privilege disputes about in-house counsel.  The Fifth Circuit addressed that question and offers practical guidance for in-house counsel in Exxon Mobil Corp. v. Hill, No. 13-30830 (May 6, 2014).

ExxonMobil intervened in tort litigation to contend that the attorney-client privilege protected a short 1988 memo by an in-house lawyer. The lawyer created the memo during negotiations between Exxon Mobil and ITCO, a company that would store oil production equipment for it.  The memo recommended that Exxon Mobil, in response to an information request by ITCO, make a limited disclosure from a report it had about radioactivity associated with the equipment. As the Fifth Circuit summarized: “Stein [the lawyer] suggested that Guidry [the client] disclose only Table IV [of the report], because it contained the only data that ITCO specifically had requested, and that Guidry remove the caption ‘Table IV’ so as not to flag the existence of other tables.”   (The memo identifies the sender as “Counsel,” but does not otherwise say that the contents are privileged.)

Plaintiffs contended that the effect of this advice was to conceal information about dangerous levels of radiation.  The district court opinion [page 61 of the attached] rejected ExxonMobil’s position about privilege, reasoning that it had not shown that the “primary or predominant” purpose for consultation with the lawyer was for legal advice, “particularly in light of the fact that the [memo] itself does not contain any reference to a legal justification for Stein’s advice, or legal concerns prompting Guidry to seek such advice. . . . [I]t appears from the face of the document that the primary purpose of Stein’s advice to Guidry was to help secure more favorable contract terms . . . .”

The Fifth Circuit reversed.  Stating that its conclusion would be the same under de novo or clear error review, the Court held: “The manifest purpose of the draft [attached to the memo] was to deal with what would be the obvious reason Exxon Mobil would seek its lawyer’s advice in the first place, namely to deal with any legal liability that may stem from under-disclosure of data, hedged against any liability that may occur from any implied warranties during complex negotiations.”

This opinion offers practical guidance for maintaining privilege as to in-house counsel. First, the memo is focused.  Written in 1988, before long email chains became common, it presents a short exchange on a specific topic.  Second, it has a specific audience — it is written to a specific person rather than a large group — or a “reply all.”  Finally, it is clear. The memo refers directly to legal concepts such as warranty liability and property interests.  The memo’s focus, audience, and clarity appear to have been critical for the Court’s analysis and the preservation of Exxon Mobil’s privilege with its in-house counsel.

The plaintiff in Marucci Sports LLC v. NCAA alleged that the “Bat-Ball Coefficient of Restitution Standard” — a testing protocol “to ensure that aluminum and composite bats perform like wood bats” — was in fact an anticompetitive device calculated to protect the NCAA’s relationship with large bat manufacturers.  No. 13-30568 (May 6, 2014).  The Fifth Circuit affirmed dismissal, finding: (1) inadequate pleading of a conspiracy under Twombly; (2) inadequate pleading of an injury to “competition among non-wood baseball bat manufacturers” as opposed to its own; and (3) that the standard could fairly be called a procompetitive “rule and condition” of athletic competition.  Denial of leave to amend was also affirmed.

Odle v. Wal-Mart Stores, Inc. presents an interesting, if unlikely to recur, issue about the tolling of limitations during appellate review of class certification.  No. 13-10037 (April 1, 2014).  The question was whether one of the plaintiffs in the original Wal-Mart v. Dukes class action was barred by limitations, when the Ninth Circuit’s en banc ruling had remanded the “former employee” claims (which included hers) for further consideration under a different part of Rule 23 that what the district court used.   The Fifth Circuit concluded that, under the considerations detailed by American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974) and later Circuit cases applying it, the claim was not time-barred: “To rule otherwise would frustrate American Pipe‘s careful balancing of the competing goals of class action litigation on the one hand and statutes of limitation on the other, by requiring former class members to file duplicative, needless individual lawsuits before the court could resolve the class certification issue definitively.”

A restaurant showed the pay-per-view broadcast of a boxing championship without the approval of the holder of the licensing rights.  J&J Sports Productions, Inc. v. Mandell Family Ventures, LLC, No. 13-10485 (May 2, 2014).  The licensor sued the restaurant under the Federal Communication Act, and the district court granted summary judgment to the licensor for $350 in statutory damages and $26,730.30 in attorneys fees.  The Fifth Circuit reversed, reviewing two issues.  First, as to the licensor’s claim under section 553 of the Act, the Court found a fact issue as to whether the restaurant had been “specifically authorized . . . by a cable operator” to make the showing, which would bring the restaurant within a statutory safe harbor.  The Court reviewed affidavit testimony of the cable company that at least showed “the Defendants did not steal, intercept, or obtain the broadcast under false pretenses.”  Second, the Court rejected a claim based on section 605 of the Act, finding it limited to radio communications only (thereby siding with the Third Circuit in a split with the Seventh about the applicability of that section to cable television).

The Fifth Circuit released a slightly revised opinion in Excel Willowbrook LLC v. JP Morgan Chase Bank, No. 12-20367 (revised April 24, 2014), a dispute about the FDIC’s rights upon assigning the assets of a failed bank.  Of particular interest is the new footnote 34, which observes: “[T]he continued vitality of prudential ‘standing’ is now uncertain in the wake of the Supreme Court’s recent decision in Lexmark International, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014).  See id. at 1388 (‘[A] court . . . cannot limit a cause of action . . . merely because “prudence” dictates.’).”

At issue in Asarco v. Baker Botts. L.L.P. was a fee enhancement associated with an exceptional recovery in fraudulent transfer litigation for a bankruptcy estate.  No. 12-40997 (April 30, 2014).  The Fifth Circuit credited the bankruptcy court’s detailed findings about the quality of the law firms’ work and the “rare and extraordinary” result.  In so doing, the Court reminded that “[b]ecause this court, like the Supreme Court, has not held that reasonable attorneys’ fees in federal court have been ‘nationalized,’ the bankruptcy court’s charts comparing general hourly rates of out-of-state firms and rates charged in cases pending in other circuits are not relevant.”  The Court rejected the firms’ request for compensation from the estate for defending their fee applications, reasoning that the Code had sufficient protections against vexatious litigation, and declining to further expand the American Rule about defendants’ fees.

1.  The Fifth Circuit vacated its panel opinion in Sawyer v. duPont to certify two questions to the Texas Supreme Court — paraphrased slightly, they were (1) whether an at-will employee can sue for fraud for loss of employment, and (2) whether a 60-day “cancellation-upon-notice” collective bargaining agreement would change a “no” answer to (1).  The Texas Supreme Court has now answered those questions: “no” as to the basic question about a fraud claim arising from at-will employment, and “in the situation presented, no” to the second question about the effect of the CBA.  “The Employees argue that it would contravene public policy to allow an employer to benefit from its duplicity, but public policy is not better served by allowing contracting parties to circumvent their agreement.”  No. 12-0626 (Tex. April 25, 2014).  (The Fifth Circuit formally adopted that reasoning and affirmed on June 11, 2014).

2.  Similarly, the Court vacated its panel opinion in Ewing Construction v. Amerisure Insurance Corp. to certify the question whether a CGL policy’s “Contractual Liability Exclusion” would reach a contract in which a contractor commits to work in a “good and workmanlike manner.”  The Texas Supreme Court answered “no”: “[A] general contractor who agrees to perform its construction work in a good and workmanlike manner, without more, does not enlarge its duty to exercise ordinary care in fulfilling its contract, thus it does not ‘assume liability’ for damages arising out its defective work so as to trigger the Contractual Liability Exclusion.”  No. 12-0661 (Tex. Jan. 17, 2014).  The opinion has been called a “significant reassurance” to policyholders in the construction business.

In the recent case of French v. EMC Mortgage Corp., No. 13-50417 (April 29, 2014, unpublished), these allegations were deemed to “reference[] the FDCPA by way of asserting a cause of action under this federal statute,” and thus allowing removal:

“V.  ILLEGAL MORTGAGE SERVICING AND DEBT COLLECTION PRACTICES.

. . .

Specifically in collection calls and notices, monthly statements, payoff statements, foreclosure notices, and otherwise, EMC routinely makes misrepresentations to borrowers about their loans, including: [6 topics]

. . .

Plaintiffs submit that Defendant EMC’s conduct in this matter is in direct violation of the Texas Fair Debt Collection Practices Act, the Federal Fair Debt Collection Practices Act and the above referenced stipulated injunction.”

This case rested on Howery v. Allstate Ins. Co., 243 F.3d 912 (5th Cir. 2001), in which the following allegations did not create federal question jurisdiction, because “[f]rom its context, it appears that Howery’s mention of federal law merely served to describe types of conduct that violated the DTPA, not to allege a separate cause of action under the FCRA”:

The acts, omissions, and other wrongful conduct of Allstate complained of in this petition constituted unconscionable conduct or unconscionable course of conduct, and false, misleading, or deceptive acts or practices. As such, Allstate violated the Texas Deceptive Trade Practices Act, Sections 17.46, et seq., and the Texas Insurance Code, including articles 21.21, 21.21-1, 21.55, and the rules and regulations promulgated thereunder, specifically including 28 TAC Section 21.3, et seq. and 21.203.

…

Allstate’s destruction of [Howery’s] file … constituted a further violation of the Texas Deceptive Trade Practices Act, for which plaintiff sues for recovery. Allstate also engaged in conduct in violation of the Federal Trade Commission rules, regulations, and statutes by obtaining Plaintiff’s credit report in a prohibited manner, a further violation of the Texas Deceptive Trade Practices Act….

While these holdings are consistent, the line between them is only a few words in a lengthy pleading.  They underscore the importance of detail in considering whether removal is appropriate.

The dispute presented by the petition for a writ of mandamus in In re Times-Picayune, LLC was a criminal defendant’s ability to have identifying information about online commentators on the defendant’s case produced for in camera review; the defendant contending that the commentators were federal prosecutors.  No. 14-30298 (April 8, 2014, unpublished).  The Fifth Circuit denied the petition, reasoning: “Here, we are not persuaded that the district court’s (1) balancing of the speech rights of anonymous commenters against the due process interests of [defendant] and (2) ordering the Times-Picayune to turn over information for in camera review was clearly and indisputably erroneous. As an initial matter, there is little case law illuminating how the competing interests in situations comparable to this one should be balanced. . . . Even in the absence of precedent, however, we cannot say that the district court here clearly reached the wrong decision.”   [The short opinion is worth comparing to the concurrence in All Plaintiffs v. Transocean Offshore from 2013, about the availability of mandamus relief for discovery matters.]  And subsequently, the district court concluded that the commentator at issue was not a prosecutor.

The plaintiffs in Singha v. BAC Home Loans Servicing LP alleged a number of foreclosure-related claims, most of which were resolved by recent Fifth Circuit precedent.  Among them was a claim for unfair debt collection based on the common situation of failed negotiations about a loan modification.  As to that issue, the Court observed: “We do not announce a rule that modification discussions may never be debt collection activities. We do conclude, though, that the [Plaintiffs’] particular factual allegations here – allegations of what occurred during the course of what they describe as more than fifty phone calls and other contacts during a protracted loan modification process – are not communications in connection with collection of a debt.” (emphasis in original).  No. 13-40061 (April 17, 2014, unpublished).

The plaintiff in Jonibach Management Trust v. Wartburg Enterprises sued the defendant for breach of an oral contract; specifically, an agreement to exclusively market the plaintiff’s products in the US.  No. 13-20308 (April 24, 2014).  The defendant made three counterclaims, two of which were dismissed because they relied on an additional oral modification to the contract and could not satisfy the Statute of Frauds.  The third survived before the Fifth Circuit, however, as it was essentially the mirror image of the plaintiff’s claim — contending that the plaintiff wrongfully supplied goods to other distributors.  Among other reasons for that conclusion, the Court noted that the plaintiff’s “pleadings and testimony regarding the initial contract . . . constitute judicial admissions,” and reviewed the elements of such an admission.

In Aviles v. Russell Stover Candies, the Fifth Circuit again engaged the issue of whether the unilateral power to change an arbitration clause makes it illusory and unenforceable. No. 12-11227 (April 4, 2014, unpublished).  This time, however, the Court observed that the agreement subjected to arbitration “any and all claims challenging the validity or enforceability of the [Waiver and Arbitration] Agreement.”   Accordingly, the Court affirmed the dismissal of her case in favor of arbitration, but vacated the magistrate judge’s resolution of the enforceability issue because it “should have declined to decide either of those two issues.”

The plaintiff in Sanders v. Flanders alleged legal malpractice arising from the handling of patent applications.  The Fifth Circuit did not engage the question whether he had shown lost profits with reasonable certainty, noting: “[C]ounsel admitted during oral argument that [Plaintiff] did not make any offer of proof concerning the lost-profit evidence that he would have otherwise presented but for the district court’s hearsay ruling.”  No. 13-50235 (April 22, 2014, unpublished).

In reviewing a motion to dismiss under Rule 12(b)(6), the district court “must limit itself to the contents of the pleadings, attachments thereto,” and “may also consider documents attached to either a motion to dismiss or an opposition to that motion when the documents are referred to in the pleadings and are central to a plaintiff’s claims.”  Brand Coupon Network LLC v. Catalina Marketing Corp., No. 13-30756 (April 8, 2014).  Here, without converting the Rule 12 motion into a summary judgment motion, the district court considered an affidavit “signed . . . a day before [plaintiff] filed its opposition to Defendants’ motion to dismiss, and weeks after the filing of the petition.”  Accordingly, the Fifth Circuit reversed a dismissal under Rule 12 on limitations grounds.

Compare Sigaran v. U.S. Bank, N.A., No. 13–20367 (April 30, 2014, unpublished): “The district court, however, did not rely on those documents in making its ruling. The additional documents were relevant to the merits of the Sigarans’ claims under the Texas Constitution, but the district court did not reach the merits of those claims and instead dismissed them as barred under the statute of limitations. The mere presence of those documents in the record, absent any indication that the district court relied on them, does not convert the motion to dismiss into a motion for summary judgment.”

At issue in Hess Management Firm, LLC v. Bankston were the damages arising from the termination of a contract about the operation of a gravel pit (sadly, not a magical gravel pit of rule-against-perpetuities lore).  No. 12-31016 (April 18, 2014).  The dispute was whether damages were capped at 180 days — the contract term for adequate notice of closure — or whether the closure of the pit was post-breach activity that is not relevant to damage calculation.  The Fifth Circuit sided with the bankruptcy court and reversed the district court’s enlargement of the damages, concluding: “A contrary result would defeat the maxim of placing a non-breaching party in the same position they would have been had breach not occurred, and award [plaintiff] more than their expectation interest.”

1.  Defendants’ Rule 59 motion was filed a day late, “therefore the district court did not abuse its discretion in denying the motion.”

2.  Post-verdict, the defendant did not renew, under Fed. R. Civ. P. 50(b), an earlier Fed. R. Civ. P. 50(a) motion that challenged the sufficiency of the evidence for the plaintiff’s mental anguish claims.  The Court “decline[d] to review” the issue, noting that the Fifth Circuit’s cases “are not entirely uniform” as to whether this oversight was a waiver or allows review under a plain error standard.

3.  The Court found no plain error from the plaintiff’s closing argument, including the lawyer’s “odd tactic of handing his business card to the jury during argument, especially in light of the court’s curative instructions and [defendant’s] failure to move for a mistrial.” McLendon v. Big Lots Stores No. 13-20338 (April 14, 2014, unpublished).

Class actions were filed about the effects of an explosion at a chemical plant.  The Fifth Circuit agreed that CAFA jurisdiction had not been established.  Citing Berniard v. Dow Chem. Co., 481 F. App’x 859 (5th Cir. 2010), the Court held: “[D]efendants ‘overstate the reach of the plaintiffs’ petitions by improperly equating the geographic areas in which potential plaintiffs might reside with the population of the plaintiff class itself.  Further, the comparisons that the Defendants-Appellants make to damage recovery in similar cases is too attenuated to satisfy their burden.'”  Perritt v. Westlake Vinyls Company, L.P., No. 14-30145 (April 14, 2014, unpublished).  The Court also noted: “Bald exposure extrapolations are insufficient to establish the likely number of persons affected by the release or, for those affected, the severity of their harm.”

The parties’ letter agreement incorporated “AIA Document B51” with respect to “the services provided . . . under this Agreement.”  That document states that all claims shall be adopted under the AAA’s Construction Industry Arbitration Rules. Those Rules state that “the arbitrator shall have the power to rule on his or her own jurisdiction.”  The Fifth Circuit found the agreement’s incorporation of the other documents to be effective, and accordingly the arbitrator had jurisdiction to determine arbitrability — including, whether the parties’ dispute involved “services.”  RW Development, LLC v. Cunningham Group Architecture, P.A., 13-60010 (April 11, 2014, unpublished).

Congress amended the Fair Credit Reporting Act to have a limitations period of “2 years after the date of discovery by the plaintiff of the violation that is the basis for such liability.”   The plaintiff in Mack v. Equable Ascent Financial, LLC argued that this amendment meant that “he could not have ‘discovered’ the violation until he had researched the statute.”  No. 13-40128 (April 11, 2014).  The Fifth Circuit disagreed, finding that the amendment was made to equalize the treatment of different types of claims, and that the plaintiff’s reading “would indefinitely extend the limitations period.”

Several operators of drug stores sued pharmacy chains for misappropriating confidential information.  The defendants successfully compelled arbitration and the Fifth Circuit affirmed.  Crawford Professional Drugs v. CVS Caremark Corp., 748 F.3d 249 (5th Cir.
2014). Specifically (applying Arizona law), the Court found that the plaintiffs’ allegations sufficiently invoked the terms of a contract that contained an arbitration agreement, allowing arbitration to be compelled against nonsignatories on an equitable estoppel theory.  The Court went on to reject the plaintiffs’ argument that the contract, and its arbitration clause, were procedurally unconscionable contracts of adhesion.  It also found insufficient evidence to support their argument that the clause imposed substantively unconscionable litigation costs.  (The Court recently revisited this topic in Muecke Co. v. CVS Caremark Corp., No. 14-41213 (Aug. 25, 2015)).

The unfortunate plaintiff in Robinson v. Wal-Mart Stores LLC argued that her state court petition referenced a $23,500 medical bill, which was in fact only $235. No. 12-41411 (April 9, 2014, unpublished).  The Fifth Circuit affirmed the denial of her motion to remand, reminding: “If at the time of removal it is facially apparent from the state-court petition that he amount in controversy exceeds $75,000, a plaintiff’s subsequent request to amend her petition to ‘clarify’ the amount in controversy cannot divest jurisdiction.”  The Court also observed: “In addition, prior to removal, Wal-Mart proposed to Robinson that she stipulate to no more than $75,000 in damages in exchange for not removing the case to federal court,” and that the plaintiff had declined to make that stipulation.

In Haase v. Countrywide Home Loans, Inc., the district court dismissed the plaintiff’s RESPA claim, declined to exercise supplemental jurisdiction over the remaining state law claims, and remanded them to state court.  No. 12-20806 (April 9, 2014).  Appellees argued that “because this judgment remanded the remaining state claims to the state court without addressing their respective merits, it is not a final disposition of all claims in the case, and therefore not appealable under 28 U.S.C. § 1291.”  The Fifth Circuit disagreed, concluding that “as a practical matter, remands end federal litigation and leave the district court with nothing else to do.”  (applying Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996)).

Payne sued Progressive Financial for violations of fair debt collection statutes, seeking statutory damages, actual damages, attorneys fees, and costs.  Payne v. Progressive Financial Services, No. 13-10381 (April 7, 2014).  Progressive made a Rule 68 offer of $1,001 in damages and fees to the date of the offer, to which Payne did not respond.  The district court reasoned that Payne had not pleaded a basis to recover actual damages, and that the unaccepted offer mooted her claim for statutory damages because it exceeded the amount she could recover.  The Fifth Circuit reversed, finding that the district court’s analysis of the actual damages claim conflated jurisdiction with resolution of the merits; accordingly, Progressive’s offer was incomplete because it did not address actual damages.  A footnote reminds that a complete Rule 68 offer can moot a case, and that the Court did not reach the argument that the offer was incomplete because it did not include post-offer fees and costs.

The stark facts of Bierwith v. Countrywide Bank, FSB are: “[A[ppellant’s] notice of appeal was filed on August 16, 2013, thirty-one days after the district court’s entry of final judgment on July 16, 2013.  Federal Rule of Appellate Procedure 4 provides that a notice of appeal ‘must be filed with the district clerk within 30 days after entry of the judgment or order appealed from.’  As the Supreme Court has made clear, a party’s failure to take an appeal within the prescribed time precludes our jurisdiction.   Accordingly, [Appellants’] appeal is DISMISSED.”  No. 13-50755 (April 3, 2014, unpublished) (footnotes omitted).

The State of Louisiana sued several insurers, alleging it was the beneficiary of assignments made by the insured in return for help rebuilding after Hurricane Katrina.  The insurers removed to federal court under CAFA.  After extensive proceedings, the district courts ultimately severed the actions by individual policy and ordered remand to state court.  State of Louisiana v. American National Property & Casualty Co., No. 14-30071 (March 26, 2014).  The Fifth Circuit reversed because “at the time of removal, these claims clearly possessed original federal jurisdiction as an integrated part of the CAFA class action.”  Noting language in Honeywell International v. Phillips Petroleum that “a severed action must have an independent jurisdictional basis,” 415 F.3d 429, 431 (5th Cir. 2005), the Court limited that language as “appl[ying] only to severed claims that are based on supplemental jurisdiction.”

1. How close does Twombly come to Fed. R. Civ. P. 9(b)?  Consider Merchants & Farmers Bank v. Coxwell, affirming the dismissal of a pleading: “The complaint did not specify what court issued the order, when it was issued, or to whom it was directed; [and] the complaint did not describe what the order required . . . .”  No. 13-60368 (5th Cir. Feb. 7, 2014, unpublished).
2. Credibility questions create fact issues.  See Vaughan v. Carlock Nissan of Tupelo, No. 12-60568 (5th Cir. Feb. 4, 2014, unpublished) (reversing a summary judgment about a manager’s “bad faith,” noting credibility questions about his claimed justifications for a firing, ambiguity in other statements, and the timing of the termination).
3. Forum non conveniens factors – the “availability of witnesses” factor is reviewed by Royal Ten Cate USA, Inc. v. TT Investors, Ltd.  No. 13-50106 (5th Cir. March 25, 2014, unpublished), and Indusoft, Inc. v. Taccolini, No. 13-50042 (March 19, 2014, unpublished).
4. Conflicting documents about arbitration are harmonized in Lizalde v. Vista Quality Markets, ___ F.3d ___ (5th Cir. March 25, 2014) (enforcing an arbitration agreement despite a benefit plan with a broad termination right, noting that both agreements’ termination provisions “clearly demarcate their respective applications”).
5. Settlement efforts as prerequisite for arbitration.  This language — “the parties agree to negotiate in good faith toward resolution of the issues, and to escalate the dispute to senior management personnel in the event that the dispute cannot be resolved at the operational level” — does not create a requirement of negotiation by senior management before arbitration is invoked.  21st Century Financial Services v. Manchester Financial, ___ F.3d ____ (5th Cir. March 31, 2014).

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This language — “the parties agree to negotiate in good faith toward resolution of the issues, and to escalate the dispute to senior management personnel in the event that the dispute cannot be resolved at the operational level” — does not create (1) a requirement of negotiation by senior management before arbitration is invoked, or (2) a condition that any senior management negotiation fail before arbitratation is invoked.  It simply requires negotiation at the operational level.  21st Century Financial Services v. Manchester Financial, No. 13-50389 (March 31, 2014).

The district court granted a dismissal in favor of New Zealand, on forum non conveniens grounds, in Royal Ten Cate USA, inc. v. TT Investors, Ltd.  No. 13-50106 (March 25, 2014, unpublished).  The Fifth Circuit remanded for further consideration of what it saw as a key private-interest factor — “whether two key witnesses who reside in Texas would be amenable to process in New Zealand.”   The witnesses in question were former party employees living in Texas, and the parties disputed whether those individuals’ employment contracts obligated them to cooperate with litigation after their employment.  Their importance was heightened because they were particularly significant to one side, while the other side did not appear to have comparable problems with its likely witnesses.  The Court did not express an opinion about the proper result on remand, and noted that “[t]he decision regarding whether or not to take additional evidence is one that we leave to the sound discretion of the district court.”

A law firm appealed the disposition of its fee application.  The district court affirmed the bankruptcy court in part, vacated in part, and remanded for the firm to make another fee request that provided more necessary information.  Okin Adams & Kilmer v. Hill, No. 13-20035 (March 24, 2014).  The firm appealed to the Fifth Circuit, which concluded it had no appellate jurisdiction because the order was not final: “Given that the bankruptcy court must perform additional fact-finding and exercise discretion when determining an appropriate attorney’s fee award, the district court’s order requires the bankruptcy court to perform judicial functions upon remand.”  A detailed dissent concluded that, while the district court’s order required “more than a mechanical entry of judgment,” “it also involves only mechanical and computational tasks that are ‘unlikely to affect the issue that the disappointed party wants to raise on appeal.'”  Accordingly, it warned that “refusing to hear this appeal undermines the long-recognized, salutary purpose of allowing appeals in discrete issues well before a final order in bankruptcy.”

In Lizalde v. Vista Quality Markets, the Fifth Circuit revisited the recurring issue of whether an arbitration agreement becomes illusory because of an employer’s right to amend the terms of employment.  No. 13-50015 (March 25, 2014).The parties’ Arbitration Agreement gave the employer the power to terminate that agreement after following several procedural prerequisites, which made that agreement non-illusory.  In contrast, the parties’ Benefit Plan had a “completely unrestrained” termination power.  And, the Arbitration Agreement acknowledged: “this Agreement is presented in connection with the Company’s [Benefit Plan].  Payments made under the [Benefit Plan] also constitute consideration for this Agreement.”  The district court found the arbitration agreement illusory, based on that connection.  The Fifth Circuit reversed, nothing that both agreements’ termination provisions were limited to “this Agreement” and “this Plan” respectively and thus “clearly demarcate their respective applications.”

The plaintiffs in Moran v. Ocwen Loan Servicing LLC ran afoul of the holding in Priester v. JP Morgan Chase, 708 F.3d 667 (5th Cir. 2013), that “liens that are contrary to the requirements of § 50(a) [of the Texas Constitution] are voidable rather than void from the start.”  No. 13-20242 (March 24, 2014, unpublished).  They sought certification to the Texas Supreme Court to correct what they contended was an erroneous holding in Priester.  The Fifth Circuit gave two valuable general reminders in this area. First: “It is a well-settled Fifth Circuit rule of orderliness that one panel of our court may not overturn another panel’s decision, absent an intervening change in the law, such as by a  statutory amendment, or the Supreme Court, or our en banc court.”  Second, “While the Texas Constitution allows this court to certify questions to the Texas Supreme Court, certification is not a proper avenue to change our binding precedent.”

Indusoft sued in the Southern District of Texas alleging theft of intellectual property.  Two defendants moved to dismiss on the grounds of forum non conveniens (under Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947), not 1404(a)).  The Court affirmed dismissal, finding no error in (1) presuming that Brazil was an adequate alternate forum, (2) concluding that certain electronic data was more likely to be preserved in Brazil, (3) discounting the importance of one witness for whom compulsory process would not be available in Brazil, and (4) analyzing the interplay between the Texas case and related litigation in Brazil. Indusoft, Inc. v. Taccolini, No. 13-50042 (March 19, 2014, unpublished). The Court reversed dismissal of the other defendants’ counterclaims, finding that it was erroneous to do so sua sponte (citing Lozano v. Ocwen Federal Bank, 489 F.3d 636, 643 (5th  Cir. 2007)).

After the Supreme Court’s reversal of the Fifth Circuit in Mississippi v. AU Optronics, which held that the case was not a “mass action” under CAFA, AU Optronics argued that federal courts still had jurisdiction over the matter as a “class action.”  The Fifth Circuit disagreed, finding that it had addressed and rejected that argument in its prior panel opinion.  Mississippi v. AU Optronics, No. 12-60704 (March 19, 2014, unpublished).  Its treatment of the issue was not dicta because it was “an explication of the governing rules of law” that received the Court’s “full and careful consideration.” Because that analysis “was a proper holding, the law-of-the-case doctrine forbids its reconsideration.”  Alternatively, the point was waived when AU Optronics did not appeal it to the Supreme Court.  (While the distinction between holding and dicta is fundamental to the common law, much less appellate practice, a formal definition such as this is rare.  A detailed analysis appears in Loud Rules, an article in the Pepperdine Law Review by this blog’s author and Professor Wendy Couture of the University of Idaho Law School.)

While a host of opinions have addressed basic problems with common plaintiffs’ theories in mortgage servicing cases, the recent case of Williams v. Wells Fargo is a useful guide to a wide range of them in a single opinion, including the statute of frauds and its exceptions, waiver, and basic TDCPA and RESPA violations.  The Court also reminded that a good contract pleading should identify the specific ways in which a contract has been breached, and found waiver when the grounds were not sufficiently detailed until the appellate level.

Even by the standards of tax cases, BNSF Railway Co. v. United States is arcane, but the underlying statutory analysis is of broad general interest.  No. 13-10014 (March 13, 2014). The first issue — the taxability of certain stock options — turned on whether a Treasury regulation about the meaning of the term “compensation” was entitled to Chevron deference.  The Fifth Circuit held that it was — as to the first Chevron factor, the Court found the term ambiguous, noting (1) the lack of a similar statute using the term, (2) variation among dictionary definitions, and (3) ambiguity in business usage, such as there was, at the time the relevant statute was passed in the 1920s-40s.  [Unintentional capitalist wit appears in footnote 63, which refers to the “Rand House Dictionary” rather than the “Random House Dictionary” in a citation about “capital or finance.”]  The Court then found the regulation reasonable, noting its general consistency with the goals and structure of the statute and its legislative history.  A second holding illustrates the application of the “specific-general canon” and “the rule against superfluities.”

A law firm argued that the Texas “anti-SLAPP” statute protected its efforts to solicit former patients of a dental clinic as clients.  NCDR, LLC v. Mauze & Bagby PLLC, No. 12-41243 (March 11, 2014).  (This statute has led to a great deal of litigation about communication-related disputes, often in areas that the Legislature may not have fully anticipated — this blog’s sister details such litigation in the Dallas Court of Appeals.)  In a detailed analysis, the Fifth Circuit agreed that the district court’s ruling against the firm was appealable as a collateral order.  The Court then sidestepped an issue as to whether the anti-SLAPP statute was procedural and thus inapplicable in federal court, finding it had not been adequately raised below.  Finally, on the merits, the Court affirmed the ruling that the law firm’s activity fell within the “commercial speech” exception to the statute:  “Ultimately, we conclude that the Supreme Court of Texas would most likely hold that M&B’s ads and other client solicitation are exempted from the TCPA’s protection because M&B’s speech arose from the sale of services where the intended audience was an actual or potential customer.”

Taylor sued his employer in state court for violations of Texas law.  Taylor v. Bailey Tool & Manufacturing Co., No. 13-10715 (March 10, 2014). Later, he amended his pleading to add federal claims.  Defendant removed and moved to dismiss on limitations grounds.  Under Texas law, Taylor’s new claims would not relate back because the original state law claims were barred by limitations when suit was filed.  Under Fed. R. Civ. P. 15(c), however, the claims would relate back because they “arose out of the conduct, transaction, or occurrence set out” in the original pleading.  Noting that Rule 81(c) says the Federal Rules “apply to a civil action after it is removed,” the Fifth Circuit concluded that they did not “provide for retroactive application to the procedural aspects of a case that occurred in state court prior to removal to federal court.”  Accordingly, it affirmed dismissal.

When a homestead is permanently exempted from a bankruptcy estate, are any proceeds from a subsequent sale of the homestead also permanently exempt? Viegelahn v. Frost found they were not.  No. 12-50811 (March 5, 2014).  Frost argued that In re Zibman, 268 F.3d 298 (5th Cir. 2001), was distinguishable because he sold his homestead after petitioning for bankruptcy, when the homestead was already exempted, while Zimban concerned homestead proceeds obtained before bankruptcy. The Fifth Circuit found that distinction immaterial, concluding that once a debtor sells his homestead the essential character of the homestead changes from “homestead” to “proceeds,” placing it under a more limited six month exemption.  Accordingly, when a debtor does not reinvest the proceeds within that period, they are removed from the protection of Texas law and are no longer exempt from the estate.

In Naquin v. Elevating Boats, LLC, the Fifth Circuit found that the verdict and resulting judgment in a Jones Act case erroneously included compensation for mental anguish from seeing the death of another person.  No. 12-31258 (March 10, 2014).  The Court disposed of the case as follows: “[S]erious practical problems would be presented at trial if we were to save some elements of the damage award and retry only other elements of damage.  ‘Where, as here, the jury’s findings on questions relating to liability were based on sufficient evidence and made in accordance with law, it is proper to order a new trial only as to damages.’  We therefore retain the jury’s liability finding but order a new trial on damages.”  (quoting Hadra v. Herman Blum Consulting Engineers, 632 F.2d 1242, 1246 (5th Cir. 1980)).