In First American Title v. Continental Casualty, the Court analyzed a “claims-made-and-reported” policy under the Louisiana direct action statute, which allows an injured third party to directly sue the responsible party’s insurer.  No. 12-30336 (Feb. 28, 2013).   Notice was not given to the insurer during the required period.  The Court concluded that unlike an occurrence policy, where a notice requirement is intended to protect the insurer and a failure to give notice will not bar a direct action, proper notice under this policy was a condition precedent to coverage and thus barred the direct action.  A concurrence agreed with the result but advocated a narrower ground for decision.

Con-Drive contracted to provide an offshore diving system to ARV Offshore, did not perform, and was found liable for millions of dollars that it cost ARV to arrange a substitute system for an oil-drilling project.   ARV Offshore Co. v. Con-Dive LLC, No. 12-20098 (Feb. 22, 2013, unpublished).  A key damage issue was whether ARV was reimbursed by its customer for a substantial amount of the costs for the substitute.  The Fifth Circuit affirmed the judgment, noting a potential waiver issue because Con-Dive had not adequately pleaded offset as a defense, and found that the relevant testimony from an ARV representative was “non-specific and did not establish a basis for the district court to recompute the damage amount.”  The opinion is fact-specific but this observation has broader applicability in commercial damages litigation.

The insured in Mid-Continent Casualty v. Eland Energy recovered a multi-million dollar verdict against its insurer, alleging that the insurer’s efforts to unilaterally settle a claim for environmental damage after Hurricanes Katrina and Rita undermined the defense of an ongoing class action about similar claims.  No. 11-10649 (Feb. 22, 2013).   The district court granted JNOV and the Fifth Circuit affirmed.  Recognizing that “[the insured] is understandably upset,” the court rejected a common-law duty of good faith under Texas law in the handling of third-party insurance claims, dismissing as dicta or distinguishing several cases cited by the insured.   Potential claims under Louisiana law failed for  choice-of-law reasons since the claim was handled in Texas. Claims based on the Texas Insurance Code failed to establish a causal link between the alleged misconduct and the ultimate settlement terms of the class action.

Hisaw & Associates General Contractors (“HIGAC”) defaulted on contracts, requiring Liberty Mutual to pay on a surety bond.  Liberty Mutual v. Hisaw & Associates, No. 11-11012 (Feb. 20, 2013, unpublished).  After it paid, Liberty Mutual sought recovery from HIGAC’s principals; the question for appeal was whether certain transactions involving them violated a covenant about a minimum asset requirement.  The Fifth Circuit affirmed the district court’s conclusion that several payments to third parties by HAGC were not “received by” the principals under the contract, and that loan repayments by HAGC to its principals were not “as a result of . . . loans [to the principals].”  The Court then reversed in favor of the principals on whether a salary payment was a “distribution.”  The Court noted that Liberty Mutual could use more precise contract language, and faulted a senior Liberty Mutual counsel for changing testimony on a relevant issue during a deposition.

A Louisiana statute requires a well operator to provide landowners “a sworn, detailed, [and] itemized statement” about drilling costs.  Brannon Properties v. Chesapeake Operating, No. 12-30306 (Feb. 21, 2013, unpublished).  The Fifth Circuit reversed a summary judgment for the operator, finding that the district court correctly concluded that its report lacked enough detail under the unambiguous language of the statute, and that the analysis should have ended there.  Id. at 5 (“The statute clearly connects the costs reported to the benefits received in exchange.  . . . [I]t must tell the unleased mineral owner what it is getting for its money.”).  The Court faulted the district court for proceeding to analysis of the statute’s purpose after reaching a conclusion that its terms were unambiguous, and also for finding an incorrect purpose inconsistent with those terms. Id. at 6-7.

The defendant in Innovation First Int’l v. Zuru Inc. removed a trade secret case about a toy robotic fish and then obtained dismissal on forum non conveniens grounds.  No. 12-10511 (Feb. 19, 2013, unpublished).  The Fifth Circuit found no abuse of discretion in the district court’s conclusions that the design and production of the fish took place in China and that the bulk of witnesses and evidence were in China, and affirmed based on the analogous case of Dickson Marine v. Panalpina, Inc., 179 F.3d 331 (5th Cir. 1999).  A revised opinion slightly changed the Court’s analysis of the deference due to the plaintiff’s choice of forum.

Knoles v. Wells Fargo presented a rare encounter between an eviction and the Rooker-Feldman doctrine.  No. 12-40369 (Feb. 19, 2013, unpublished).  The borrower lost a forcible entry & detainer (eviction) matter at trial in JP court and on appeal.  The borrower then sued for damages, Wells removed, and the borrower unsuccessfully tried to get a TRO about possession from the federal district court.  The district court denied relief based on the Rooker-Feldman doctrine about federal review of final state court judgments.  The Fifth Circuit found that it had jurisdiction over the interlocutory appeal pursuant to 28 U.S.C. § 1292(a)(1), even though the appeal was nominally from a TRO, because the relief at issue was “more in the nature of a temporary injunction in fact, though not in name.”  The court deflected an argument about mootness to hold that the order sought a federal injunction against a final state court judgment in violation of the Anti-Injunction Act.

The judgment debtors in Seven Arts Pictures v. Jonesfilm were found in civil contempt for failure to answer postjudgment discovery and other issues about enforcement of a judgment.  No. 11-31124 (Feb. 18, 2013, unpublished).  The Fifth Circuit affirmed, finding that the district court had general personal jurisdiction over the debtors, that the debtors had waived arguments about the orders by not timely and properly objecting below, and that the district court did not abuse its discretion in awarding $21 thousand in attorneys fees.  While the holdings on jurisdiction, waiver, and attorneys fees draw heavily from the specific facts of the case, the legal framework used is of broad applicability.  Footnote 7 acknowledges the unusual procedural posture of the jurisdiction issue, which had not been raised until after the notice of appeal was filed.

The case of Tekelec, Inc. v. Verint Systems, Inc. presented a contract dispute, sufficiently intricate that the Court attached a four-color chart to its opinion to illustrate the facts.  No. 11-40418 (Feb. 13, 2013).  In affirming summary judgment for the plaintiff on largely case-specific grounds, the Court reached two principal holdings: (1) an assignee has a right to enforce a payment obligation even if the contract documents do not create an express enforcement right, and (2) the contract payments were not “royalties or other patent damages” within the specific context of these parties’ dealings, or as the terms “royalty” and “reasonable royalty” are generally understood.  The first holding draws upon the general principle in Texas law that a contract construction leading to an exclusive remedy is disfavored unless that intent is clearly stated; an issue arising in contract litigation generally when potential equitable remedies are evaluated.

The borrowers in Priester v. JP Morgan Chase alleged two violations of the Texas Constitution about their home equity loan — not receiving notice of their rights 12 days before closing, and closing the loan in their home rather than the offices of a lender, attorney, or title company.  708 F.3d 667 (5th Cir. 2013).  A cure letter was not answered and they sued for forfeiture of interest and principal under the state constitution. The Fifth Circuit affirmed the dismissal of the claim under the Texas 4-year “residual” limitations period, finding that was the prevailing view of courts that had examined the issue, and disagreeing with a district court that had found no limitations period.  That court reasoned that a noncompliant home equity loan was void, but the Fifth Circuit concluded that the cure provision in the Constitution instead made it voidable. Tolling doctrines did not apply since it was readily apparent where the closing occurred.  The Court also affirmed the denial of a motion for leave to amend to add new claims and non-diverse parties, reviewing the factors for both aspects of such a motion.

In long-running litigation and arbitration about alleged environmental contamination in Ecuador, Chevron obtained discovery from U.S. courts several times under 28 U.S.C. § 1782 on the basis that a “foreign or international tribunal” was involved.  Republic of Ecuador v. Connor, No. 12-20122 (Feb. 13, 2013).  Chevron then successfully resisted a § 1782 application on the ground that the arbitration was not an “international tribunal.”   The Fifth Circuit applied judicial estoppel and reversed, asking: “Why shouldn’t sauce for Chevron’s goose be sauce for the Ecuador gander as well?  The Court dismissed a jurisdictional issue by characterizing § 1782 as a grant of administrative authority.  It then rejected Chevron’s arguments that judicial estoppel could not apply to legal issues and that reliance by earlier courts on Chevron’s position had not been shown.  The opinion reminds that: “Because judicial estoppel is an equitable doctrine, courts may apply it flexibly to achieve substantial justice.”  (quoting Reed v. City of Arlington, 650 F.3d 571 (5th Cir. 2011) (en banc), and citing New Hampshire v. Maine, 532 U.S. 752 (2001)).  (The “goose-and-gander” saying traces to an early collection of English proverbs.)

If you can’t make it to New Orleans for Fat Tuesday, 600camp suggests you try Emeril Lagasse’s excellent gumbo recipe.

A manufacturer of ship propulsion systems contracted with a ship operator, who in turn contracted with a shipbuilder.  The manufacturer and the operator had a sales contract (with an arbitration clause), and the operator and the shipbuilder had a separate contract.  VT Halter Marine v. Wartsila North America, No. 12-60051 (Feb. 8, 2013, unpublished).  The component manufacturer and shipbuilder had dealings as part of the overall relationship but did not have a direct contract.  The shipbuilder sued the manufacturer for supplying allegedly defective parts.  Its breach of warranty claim, derivative of the operator’s rights, was conceded to be arbitrable.  The tortious interference claim, however, could only be arbitrated under an estoppel theory since the shipbuilder was not a party to the manufacturer-shipbuilder contract.  The district court’s order was not clear about the basis for ordering arbitration of that claim, and the Fifth Circuit remanded for resolution of whether estoppel applied.  The Court reminded that while orders compelling arbitration are usually reviewed de novo, an order compelling a third party to arbitrate under an estoppel theory is reviewed for abuse of discretion (citing Noble Drilling v. Certex USA, 620 F.3d 469, 472 n.4 (5th Cir. 2010)).

The insurers in Pride Transportation v. Continental Casualty faced a claim arising from a truck accident that left the victim a paraplegic, with evidence that the driver falsified her logs to make deliveries on time, and with plaintiff’s counsel who had won personal injury verdicts in the same county for amounts in excess of policy limits.  No. 11-10892 (Feb. 6, 2013, unpublished).  Under these circumstances, the Fifth Circuit agreed with the district court that the insurers did not incur Stowers liability under Texas law for accepting (rather then rejecting, the classic Stowers fact pattern) a settlement offer at policy limits and then withdrawing from the defense of the insured trucking company.  The Court did not address potential issues arising from the specific release in this settlement (it only named the driver, and excluded the company) except to note that potential indemnity claims between them would fall within the “insured-v.-insured” exclusion.

The insured in Kerr v. State Farm filed a claim about a stolen fishing boat, but declined to give an examination under oath (EUO).  No. 12-30332 (Feb. 5, 2013, unpublished).  State Farm claimed that refusal was a material breach that prevented recovery on the policy.  The insured said that State Farm was not prejudiced.  The Fifth Circuit affirmed summary judgment for State Farm, citing “affidavits from members of [State Farm’s] Special Investigative Unit stating that an EUO is an important tool in the claim investigation process and that by refusing an EUO, Kerr impeded State Farm’s ability to gather information about the claim.”  The Court declined to address an argument by State Farm that prejudice need not be shown when an EUO is refused in a first-party case.

An apartment developer sought recovery on a title insurance policy after unfortunate zoning stopped the project.  Levy Gardens Partners v. Commonwealth Land Title Insurance, No. 12-30010 (Jan. 31, 2013).  The Fifth Circuit affirmed the finding of coverage, concluding, among other matters, that: (1) state court rulings about zoning laws deserved deference by federal courts in later coverage litigation; (2) the state court preliminary injunction litigation about zoning had become a sufficiently “final decree” to trigger coverage; (3) delay in giving notice did not cause prejudice; and (4) the policy did not require the developer to invoke a “conditional use process.”  The Court also found, however, that the policy “unambiguously restricts liability to the difference in the value of the title with and without the zoning encumbrance,” thus limiting the insured’s recovery to roughly $650,000 rather than several million in development expenses.  In rejecting the insured’s arguments about the policy, the Court also found no prejudicial violation of Fed. R. Civ. P. 8(c) about the pleading of defensive matters.

A group of chicken farmers supplied poultry to Pilgrim’s Pride.  After the company terminated its contracts and entered bankruptcy, the farmers sued for damages under a promissory estoppel theory, alleging that its oral promises of a long-term relationship induced them to invest in chicken houses.  Clinton Growers v. Pilgrim’s Pride, No. 12-10063 (Jan. 31, 2013) at 2.  The Court affirmed summary judgment for Pilgrim’s Pride, finding that the plain language of the contract specified a contract duration (“flock-to-flock,” roughly 4-9 weeks), and foreclosed an estoppel claim about that topic.  Id. at 7.  Similarly, contract provisions about the farmers’ compensation and maintenance obligations foreclosed other attempts to recast the subject of the estoppel claim.  Id. at 8.   The Court distinguished a prior Arkansas case about a commitment by Tyson Foods to supply hogs to a hog grower, both on legal grounds and on the strength of the evidence about the alleged misrepresentations by Tyson.  Id. at 8-10.  The Texas Law Book covered the opinion shortly after its release.

In the fourth of a series of unrelated cases about mortgages and foreclosures in 2013, the Fifth Circuit affirmed the dismissal of claims about the foreclosure on a home used as collateral for a business loan.  Water Dynamics v. HSBC Bank, No. 12-10307 (Jan. 30, 2013, unpublished).  The holdings included: (1) the foreclosure price exceeded 50 of the claimed value, and was thus not “grossly inadequate” and appellants could not state a wrongful foreclosure claim, (2) appellants’ prior breach of contract foreclosed their contract claims, and the contract modifications they alleged were barred by the Texas statute of frauds, (3) acts of the lender alleged to be inconsistent with the loan documents did not state a waiver claim, especially given the deed of trust’s anti-waiver provision, and (4) “Appellants’ allegations may demonstrate a failure to communicate between themselves and the lender, but they fall far short of . . . [showing] ‘a course of harassment that was willful, wanton, malicious, and intended to inflict mental anguish and bodily harm'” so as to state a claim for unreasonable collection efforts.

The plaintiff in Akerblom v. Ezra Holdings sued several companies for damages arising from their business dealings.  No. 12-20182 (Jan. 28, 2013, unpublished).  Federal jurisdiction turned on whether one defendant, called “Subsea” in the opinion, was improperly joined.  To determine whether “the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant,” the Court reminded that the focus is on pleadings at the time of removal — any later pleadings or affidavits can only “amplify or clarify facts alleged in the state-court complaint.”  Id. at 7.  Applying Texas’s “fair and adequate notice” standard for proper pleading, the Court found that the fraud claim against Subsea failed to say that misrepresentation Subsea allegedly made, or who from Subsea allegedly made it.  Id. at 10.  There were also substantive issues as to whether several alleged representations were actionable.  The Court’s focus on “what” and “who” under Texas law echoes recent opinions under the federal Twombly standard.

An expert opined that a railroad crossing was unsafe and required active warning devices.  Brown v. Illinois Central Railroad, No. 11-60654 (Jan. 28, 2013).  He contended that the crossing had “‘narrow’ pavement, ‘skewed’ angle, ‘rough’ surface and ‘steep’ incline” but did not tie those conclusions to a guideline or publications, relying instead on “education and experience.”  He also admitted that visibility at the crossing was adequate under the Transportation Department’s standards.  Id. at 7.  Accordingly, the Fifth Circuit affirmed the district court’s exclusion of his testimony under Daubert, calling it “transparently subjective.”  Id. at 8.

In 2011, Antill Pipeline joined a new third-party defendant to a case and obtained a continuance.  In 2012, Antill Pipeline had the case consolidated with another lawsuit it had filed, which had the effect of joining two new defendants, and obtained another continuance. In December 2012, the trial court dismissed several defendants, including the three joined by Antill Pipeline.  One week before the January 28 trial setting, Antill Pipeline moved to stay the trial and then sought mandamus two business days before the scheduled start date.  The Fifth Circuit held: “Antill’s petition, if granted, would further delay a trial that Antill has already caused to be delayed numerous times. Under these circumstances we cannot say that the district court clearly abused or usurped its judicial power . . . .”  In re Antill Pipeline Construction Co., No. 13-30102 (Jan. 25, 2013, unpublished).

The defendant in Factory Mutual Insurance v. Alon USA stipulated to liability after an explosion at a waste treatment plant.  The remaining issue was whether fair market value of the plant was the cost to replace it (roughly $6 million) or the cost of the plant’s component parts (roughly $900,000).  No. 11-11080 (Jan. 23, 2013).  Under deferential clear error and abuse-of-discretion standards of review, the Fifth Circuit affirmed the district court’s conclusions that: (1) the plant system was unique and the cost of its components did not fairly estimate its value (distinguishing Hartford Ins. Co. v. Jiminez, 814 S.W.2d 551 (Tex. App.–Houston [1st Dist.] 1991, no pet.)); (2) the plaintiff’s expert “educated and interviewed . . . employees” about a key depreciation issue, and thus “did more than just repeat information gleaned from external sources” (distinguishing U.S. v. Mejia, 545 F.3d 179 (2d Cir. 2008)); and (3) the multiplier used to reflect installation expenses was “entirely reasonable[,]” “[g]iven the lack of useful records and resources pertaining to this particular . . . plant.”

In Ergon-West Virginia, Inc. v. Dynegy Marketing & Trade, the Fifth Circuit found that Dynegy had no duty under two natural gas supply contracts to attempt to get replacement gas after a declaration of force majeure in response to hurricane damage, affirming the district court as to one contract and reversing as to the other.  No. 11-60492 (Jan. 22, 2013).  The first contract’s force majeure clause required Dynegy to “remed[y] with all reasonable dispatch” the event.  The Court found that “reasonable” was not ambiguous but that extrinsic evidence of industry standards (favorable to Dynegy) was properly admitted to give it full meaning (contrasting its approach with the district court’s, which found the term ambiguous and admitted the testimony to resolve the ambiguity).  The second contract’s provision had language about “due diligence” by Dynegy.  The Court found the term ambiguous as both parties’ readings of it were reasonable, and then held that the district court should have credited the same evidence here as it did for the first contract.

In the third mortgage servicing opinion of 2013, the Fifth Circuit affirmed the dismissal of contract, promissory estoppel, and tort claims under Texas law arising from the attempted negotiation of a loan modification during a foreclosure situation.   Milton v. U.S. Bank, No. 12-40742 (Jan. 18, 2013, unpublished); see also Gordon v. JP Morgan Chase (contract and estoppel claims under Texas law) and Pennell v. Wells Fargo Bank (negligent misrepresentation claim under Mississippi law).  The Court also found that this mortgagor-mortgagee relationship did not create an independently actionable duty of good faith, and that reliance on alleged representations that were inconsistent with the loan documents and foreclosure notice was not reasonable.  Id. at 5, 6.

The insured in Jamestown Insurance v. Reeder successfully minimized its liability with a winning appeal to the Texas Supreme Court.  No. 12-20437 (Jan. 17, 2013, unpublished).  He only gave notice of a claim at that point, however, and despite the result, ran afoul of the concept that “[o]ne of the purposes of a notice provisions . . . is to allow an insurer ‘to form an intelligent estimate of its rights and liabilities before it is obligated to pay.'”  Id. at 5 (emphasis in original).  Because the insurer could have helped influence the trial result, or negotiated a settlement at the appellate level, the “delayed tender thwarted the recognized purposes of the notice provisions” and summary judgment was affirmed for the insurer.  Id.   

City of New Orleans Employees’ Retirement System v. Hayward affirmed the dismissal, on forum non conveniens grounds, of putative shareholder derivative suits against BP arising from the Deepwater Horizon disaster.  No. 12-20019 (Jan. 16, 2013, unpublished).  Among other factors discussed, the Fifth Circuit noted and gave weight to the points that: (1) plaintiffs were “phantoms” for FNC purposes because of their attenuated interests in the case, (2) technological advances did not make geographical issues irrelevant in an FNC analysis [key witnesses and documents being located in the UK rather than Louisiana], (3) the UK had a substantial interest in applying its own, relatively new Companies Act, and (4) the BP derivative cases comprised one-third of the U.S. court’s MDL docket.

Plaintiffs obtained a preliminary injunction against enforcement of a school voucher program, alleging it violated a desegregation consent decree.  Moore v. Tangipahoa Parish School Board, No. 12-31218 (Jan. 14, 2013, unpublished).  The Fifth Circuit found an abuse of discretion in denying a stay pending appeal.  One reason was Pullman abstention, which arises “when an unsettled area of state law . . . would render a decision on the federal issue unnecessary,” and where the Court said the defendant had a “a strong likelihood of establishing” it in light of pending state litigation about the constitutionality of the law under state law.  Another was jurisdiction under the All Writs Act, where the Court said the plaintiffs’ evidence of harm was “based merely on general financial information and speculation.”  A dissent further discussed Pullman abstention and advocated outright dismissal of the case.  The opinion appears to have been unpublished because of its expedited procedural posture, and a later panel will fully address the merits on a conventional briefing schedule.  Id. at 4 n.1

Continuing a theme begun a few days ago in Gordon v. JP Morgan Chase, the Fifth Circuit affirmed summary judgment for a servicer on a negligent misrepresentation claim under Mississippi law based on statements during loan modification discussions.  Pennell v. Wells Fargo Bank, No. 12-60595 (Jan. 9, 2013, unpublished).  The Court saw the statements as unactionable promises of future conduct.  In reviewing the relevant cases, the Court distinguished two federal district court cases on their facts, while also diminishing their effect under Erie compared to controlling state court authority.

The district court dismissed a case about the misappropriation of trust assets under the “probate exception” to federal diversity jurisdiction.  Curtis v. Brunsting, No. 12-20164 (Jan. 9, 2013) (applying Marshall v. Marshall, 547 U.S. 293 (2006)).  The Fifth Circuit stated that “Marshall requires a two-step inquiry into (1) whether the property in dispute is estate property within the custody of the probate court and (2) whether the plaintiff’s claims would require the federal court to assume in rem jurisdiction over that property.”  Id. at 5.  Finding no evidence that this inter vivos trust was, or even could be, subject to Teas probate administration, the Court reversed and remanded.

The sales agreement for two tugboats provided for $250,000 in liquidated damages if the boat was used in violation of a noncompetition provision.  International Marine LLC v. Delta Towing LLC, No. 12-30280 (Jan. 8, 2013).  The Fifth Circuit applied federal admiralty law, using section 356 of the Second Restatement of Contracts as the guide, and placing the burden on the party seeking to invalidate the provision as a penalty. The Court quickly concluded that the second factor of that section — difficulty in proving damages — was established by evidence about the nature of the boat charter business to which the clause applied.  Id. at 9.  The Court also found that the first factor — reasonableness of the estimated anticipated loss — was satisfied by evidence about the range of expected fees and contract duration.  Id. at 9-10.  (citing Farmers Exp. Co. v. M/V Georgis Prois, 799 F.2d 159 (5th Cir. 1986)).  The clause was thus enforceable.

Several aspects of insurance coverage for hurricane damage to a shopping center were addressed in GBP Partners v. Maryland Casualty, No. 11-20912 (Jan. 4, 2013, unpublished).  The Fifth Circuit concluded that the insured: (1) did not establish a “complete interruption” of business activity to trigger coverage for lost income, (2) raised a fact issue as to whether rent abatements were necessary to prevent possible closure of the entire center, (3) did not distinguish repair fees necessary to avoid suspension of operations from other management fees, (4) the insured was responsible for various delays in replacing a damaged roof, and (5) did not allocate window damage between covered and non-covered causes.   The Court also found that a summary judgment affiant did not create an impermissible conflict with earlier deposition testimony that described the effect of the storm on business operations.  Id. at 6-7 & n.7.

The Fifth Circuit’s 2012 business litigation opinions suggest these five tips for the New Year:

1.  Plead key details.   While not removing the limits on Fed. R. Civ. P. 9(b), the Court has reminded twice of the importance of “what,” “how,” and “when” in pleading under Twombly and Iqbal.  It also reversed a Rule 12 dismissal in a contract case because the plaintiff adequately pleaded an industry custom about the relevant terms.

2.  Plead reasonably.  The Federal Circuit, applying Fifth Circuit law, reversed the denial of Rule 11 sanctions for what it saw as an objectively unreasonable construction of a patent.

3.  Stretch the long arm carefully.  Applying recent Supreme Court authority, the Fifth Circuit found no personal jurisdiction over cases about an “off-the-shelf” software contract, a distributorship arrangement based outside the forum state, and an alleged corporate “alter ego” situation.

4.  Watch the eight corners.   During 2012, the Court reversed once, and then again, to reject exceptions to Texas’s “eight corners” rule about insurance coverage, but also reversed to allow a mistake claim to proceed despite that rule.

5.  Don’t count on mandamus.  After granting mandamus in a high-profile venue dispute in 2008, the Court has since declined to grant the writ as to the wrongful denial of a remand motion and an alleged error about a forum selection clause.

An employer terminated two employees for safety violations.  An arbitrator, appointed under the parties’ collective bargaining agreement, ordered them reinstated after a suspension.  The district court vacated the award, and the Fifth Circuit reversed and reinstated.  Albermarle Corp. v. United Steelworkers, 703 F.3d 821 (2013).  The Court found that “explicating broad CBA terms like ’cause,’ when left undefined by contract, is the arbitrator’s charge.”  Id. at 7.  It distinguished prior cases that left an arbitrator no discretion as to whether certain rule violations required discharge.  Id. at 5-6 (citing E.I. DuPont de Nemours & Co. v. Local 900, 968 F.2d 456 (5th Cir. 1992)).  The Court also rejected a challenge to the award on public policy grounds, reminding that “any such public policy must be explicit, well defined, and dominant.”  Id. at 10.  Cf. Horton Automatics v. Industrial Division of the Communication Workers of America, No. 12-40576 (Jan. 4, 2013, unpublished) (reversing confirmation when labor arbitrator exceeded limited scope).

The appellant in All Plaintiffs v. Transocean Offshore (the MDL relating to Deepwater Horizon) challenged an order requiring him to submit to a psychiatric exam and supply medical records as part of the procedure.  No. 12-30237 (Jan. 3, 2013, unpublished).  Following Mohawk Industries v. Carpenter, 130 S. Ct. 599 (2009), the Fifth Circuit held that the collateral order doctrine did not allow appeal of this interlocutory discovery order.  Any erroneous effect on the merits of the case could be reviewed on appeal of final judgment, and even if that review was “imperfect[]” to remedy the intrusion on his privacy interest, the harm was not so great as to justify interlocutory review of the entire class of similar orders.  A concurrence noted that while mandamus review was theoretically possible, this party had not requested it as an alternative to direct appeal, and had not made a sufficiently specific showing of harm to obtain mandamus relief.

The plaintiff in Gordon v. JP Morgan Chase alleged that a home foreclosure was prevented by the lender′s promises of a permanent loan modification under the Home Affordable Mortgage Program (“HAMP”).  No. 12-20323 (Jan. 3, 2013, unpublished).  The Fifth Circuit agreed with the lender that the Statute of Frauds did not allow such a claim to proceed under Texas contract law.  Because the SOF barred the contract claim, promissory estoppel could only arise if the lender orally promised to sign a writing that would satisfy the SOF, and that the writing was in existence at the time of the promise.  Statements about future loan papers did not satisfy this rule.  While the opinion is unpublished, its analysis has the potential for extensive citation in state and federal cases seeking to stop foreclosures because of statements made in the context of HAMP negotiations.

The district court and Fifth Circuit agreed that fraud claims by dissatisfied consumers of weight loss medicine did not allege “bodily injury” so as to trigger a duty to defend.  CSA Nutraceuticals v. Chubb Custom Insurance, No. 12-10137 (Jan. 2, 2013, unpublished): “Failing to achieve weight reduction means the body basically did not change. It does not mean that the body was injured.”  The short opinion summarizes and rejects the plaintiff′s arguments for coverage.

Demahy v. Schwarz Pharma, Inc. involved the aftermath of the Supreme Court’s reversal of the Fifth Circuit in Pliva, Inc. v. Mensing, 131 S. Ct. 2567 (2011).  No. 11-31073 (Oct. 25, 2012, published Dec. 27).  Pliva held that federal law preempted state laws that would require generic drug manufacturers to change a drug’s label.  Id. at 3.  The plaintiff’s counsel sought relief under Fed. R. Civ. P. 59(e) from the rulings of the district court after remand from the Fifth Circuit, principally arguing that Pliva impliedly overruled a line of Louisiana authority.  The Court affirmed the district court’s denial of relief, finding that the plaintiff’s argument stretched Erie too far and that its mandate had been properly interpreted and applied.  Another recent case in the “expanding cohort controlled by Pliva v. Mensing” is Morris v. Pliva, Inc., No. 12-30319 (Feb. 14, 2013).

The FDIC repudiated a North Texas office lease as receiver for a failed bank, the landlord sued for unreasonable delay in violation of the statute authorizing the FDIC’s action, and the FDIC defended on the ground that the delay caused no harm in a depressed real estate market and thus could not have been unreasonable.  Building Four Shady Oaks Management LP v. FDIC, No. 12-0080 (Dec. 21, 2012, unpublished).  The district court and Fifth Circuit agreed with the FDIC.  The opinion clearly illustrates basic statutory interpretation and how a factor such as “prejudice” may be incorporated by a statutory term such as “reasonable time.”

Denied enforcement of a $26 million arbitration award in China’s Fujian Province (that court finding the award invalid because an arbitrator was imprisoned during the proceedings), the plaintiff sought recognition in the Eastern District of Louisiana.  First Investment Corp. of the Marshall Islands v. Fujian Mawei Shipbuilding,  No. 12-30377 (Dec. 21, 2012, revised Jan. 17, 2013). The Fifth Circuit affirmed dismissal for lack of personal jurisdiction with three holdings: (1) the recent case of Goodyear Dunlop Tires v. Brown, 131 S. Ct. 2846 (2011), removed doubt as to whether foreign corporations could invoke due process protection about jurisdiction; (2) the New York Convention did not abrogate those rights; and (3) no “alter ego” relationship among the relevant companies was shown that could give rise to jurisdiction.  In a companion case, the Court affirmed a ruling that denied jurisdictional discovery based on “sparse allegations” of alter ego.    Covington Marine v. Xiamen Shipbuilding, No. 12-30383 (Dec. 21, 2012); cf.Blake Box v. Dallas Mexican Consulate, No. 11-10126 (Aug. 21, 2012) (reversing jurisdictional discovery ruling).

The plaintiff in Smith v. Santander Consumer USA received $20,43.59 in damages for violation of the Fair Credit Reporting Act.  No. 12-50007 (Dec. 20, 2012).  The Fifth Circuit agreed that damages were not recoverable solely for a reduced line of credit, but found sufficient other evidence about harm to the plaintiff’s business and personal finances to affirm.  Enthusiasts of appellate arcana will find it interesting to compare the Court’s analysis of a general federal verdict under the Boeing standard with the Texas damages submissions required by Harris County v. Smith, 96 S.W.3d 230 (Tex. 2002) (applying Crown Life Ins. v. Casteel, 22 S.W.3d 378 (Tex. 2000)).

The parties’ agreement said: “State Farm agrees not to remove any Hurricane Ike cases filed by your firm to Federal Court.”  Horn v. State Farm Lloyds, No. 12-40410 (Dec. 21, 2012).  Roughly a year later, the firm filed a 100,000-member class action against State Farm, who removed the case.  State Farm argued that the agreement was intended to resolve large numbers of individual claims and extending it to a class action was not consistent with the specific consideration given.  The Fifth Circuit affirmed the remand order, finding that the terms “any” and “cases” were not ambiguous.  The Court’s emphasis on contract wording, especially in the insurance context, is consistent with other recent cases, see, e.g., Ballard v. Devon Energy, 678 F.3d 360 (5th Cir. 2012).

New Orleans taxicab owners challenged new city ordinances about their business and cars.  The Fifth Circuit vacated a preliminary injunction in their favor, primarily on grounds related to the substantive constitutional issues in play, and affirmed the district court’s denial of an injunction on other matters for lack of irreparable injury.   Dennis Melancon, Inc. v. City of New Orleans, No. 12-30921 (Dec. 18, 2012, revised Jan. 17, 2013).  Reminding that  “when the threatened harm is more than de minimis, it is not so much the magnitude but the irreparability that counts for purposes of a preliminary injunction,” the Court found that plaintiffs could later sue the city for costs of complying with the ordinances if they prevailed.  Footnotes 14 and 15 address other potential theories of irreparable injury based on “impairment of contract” and privacy rights.

The plaintiff in Arthur J. Gallagher & Co. v. Babcock obtained a $1.2 million judgment for violation of a noncompetition agreement in the insurance field.  No. 11-30452 (Dec. 18, 2012).   The Fifth Circuit affirmed the enforceability of the agreement.  As to its substance, the Court held that Gallagher’s prohibition of employees from competing for accounts on which they actually worked at Gallagher was “less restrictive than allowed under state law.”  As to geographic scope, the Court affirmed the district court’s narrowing of the provision from 64 parishes to the 9 in which Gallagher actually provided insurance services.  The Court vacated the damages because the key witness conflated (a) the group of clients who chose to leave Gallagher after the employee left with (b) the group of clients who actually followed Gallagher to his new employer.  See id. at 18 (“Defendants did not breach their agreements by leaving GBSI, but by accepting work from clients who departed along with them.”)

“The central issue on appeal is whether a court can establish a receivership to control a vexatious litigant.”  Applying an abuse of discretion standard, the Fifth Circuit answered “no” on the facts of Netsphere v. Baron, No. 10-11202 (Dec. 18, 2012).  The Court reviewed and rejected several rationales for imposing a receivership on a portfolio of disputed domain names, including preservation of jurisdiction, bringing closure to long-running litigation, payment of a series of attorneys and controlling vexatious litigation.  It then addressed how to handle the fees related to the vacated receivership.  The opinion thoroughly reviews prior Circuit precedent about the reasons for and proper boundaries of a receivership. A Dallas Observer article adds some backstory about the dispute.

Servicios Azucareros v. John Deere arose from a suit by a Venezuelan company against a Louisiana-based affiliate of John Deere about the termination of a distributorship agreement in Venezuela.  No. 11-30776 (Dec. 13, 2012).  The district court dismissed, finding that the plaintiff failed to adequately brief an issue of “prudential standing” about the ability of foreign plaintiffs to sue U.S. citizens in federal court.  The Fifth Circuit found the standing issue “totally without merit,” noting that alienage jurisdiction originated to allow British creditors to sue Americans after the 1783 Treaty of Paris and avoid a “notoriously frosty” reception in state court that hurt international commerce.  The Court also disagreed with the conclusion that the briefing amounted to a waiver, reviewing case law about the handling of similar dispositive motions.

A police dispatcher was terminated based on texts and pictures found on her cell phone in violation of department policy.  Garcia v. City of Laredo, No. 11-41118 (Dec. 12, 2012).  The Fifth Circuit affirmed summary judgment on her claim that this data was protected by the Stored Communications Act, 18 U.S.C. ch. 121, finding that the phone was not a “facility” and the data saved on it was not in “electronic storage” as the statute defined those terms.  The Court also rejected her contention that the district judge had shown bias against her counsel in the course of the proceedings below.

Earlier this year, the Fifth Circuit affirmed a fee enhancement in the Pilgrim’s Pride bankruptcy pursuant to section 330 of the Code.  In ASARCO LLC v. Barclays Capital, the Court reversed an enhancement under section 328.  No. 11-41010 (Dec. 11, 2012).  “Section 328 applies when the bankruptcy court approves a particular rate . . . at the outset of the engagement, and § 330 applies when the court does not do so.”  Id. at 13.  A “necessary prerequisite” to section 328 enhancement is that the professional’s work was “not capable of anticipation.”  Here, the Court found that the length of the ASARCO bankruptcy and the exodus of its employees after filing led to “commendable” work by Barclays that was still “capable of being anticipated.”  See id. at 19 (analogizing Barclays to a car buyer who finds a new Corvette “needed far more than a car wash”).

Applying Fifth Circuit law, the Federal Circuit found an abuse of discretion in not awarding sanctions under Rule 11 and 38 U.S.C. § 985  for what it saw as a frivolous patent lawsuit, and remanded to the Eastern District of Texas for consideration of an appropriate award.  Raylon LLC v. Complus Data Innovations (Fed. Cir. Dec. 7, 2012).  The court found that the plaintiff’s claim construction was objectively unreasonable and that the district court erred in how it weighed the plaintiff’s subjective motivation.  Only time will tell whether the case leads to a wave of sanctions motions.  The opinion is a strong reminder of the power of Rule 11 in civil litigation generally, where the Fifth Circuit has tended to focus recently on litigation conduct rather than positions taken.

Paddle Tramps Manufacturing made wooden paddles with the emblems of several fraternities, a group of 32 fraternities sued to enjoin it for trademark infringement and unfair competition, and the company defended with unclean hands and laches.  Abraham v. Alpha Chi Omega, No. 12-10525 (revised Feb. 7, 2013).  The district court entered partial injunctive relief after a jury trial found for the company on the defenses.  The Fifth Circuit affirmed the instructions given, finding that the appellant’s arguments about unclean hands conflated elements of trademark liability with elements of the defense and that the laches instruction fairly handled the concept of “progressive encroachment.”   The Court also found sufficient evidence to support the “undue prejudice” element of laches, although calling it a “close question,” and found that the district court properly balanced the equities — especially injury to the alleged infringer — in crafting the injunction.  The opinion discusses and distinguishes other cases denying relief in related situations.  Professor Rebecca Tushnet further analyzes the case on her intellectual property blog.

The Fifth Circuit affirmed summary judgment for an insurer, reasoning: “We do not consider mere use of the phrase ‘property damage’ and parroted Policy language as sufficient factual allegations.  None of the assertions of ‘property damage’ in the underlying lawsuits are accompanied by facts illustrating specific harm or damage to tangbile property.”  PPI Technology Services v. Liberty Mutual Ins., No. 12-40189 (Nov. 29, 2012).  The closest, an allegation that the insured suffered “property damage throughout the lease where the well was drilled,” was characterized as “simply stating that it owns the property in which the drilling occurred . . . .”  Id. at 10.  The case analyzes the pleadings under the Texas “eight-corner” test rather than Twombly or Iqbal.