Chevron sued Aker Maritime and Oceaneering International in connection with bolt failures on an offshore drilling rig.  Chevron USA v. Aker Maritime Inc., No. 11-30369 (July 31, 2012).  Chevron recovered a significant damage award against both defendants, and Aker sought indemnity from Oceaneering.  Id. at 4.  To recover under the indemnity provision, Aker had to establish that it was an agent of Chevron with respect to Oceaneering’s work.  The Court concluded that Aker was an agent with respect to the specific activity of procurement, which it found “extends beyond Aker’s mere ordering and includes the receipt of the bolts.”  Id. at 8.

In Gonzalez v. Fresnius Medical Care, the Court affirmed a JNOV on claims under the False Claims Act.  Nos. 10-50413, 10-51171 (July 30, 2012).  The Court agreed with the district court’s conclusion that the plaintiff had not shown a wrongful patient referral scheme, noting that the number of referred patients stayed the same over time, whether or  not the alleged conspiracy was in place.  Id. at 8.  The Court also agreed that a line of cases about claims “tainted by fraud” was limited to the fraudulent inducement context.  Id. at 9-11.  Finally, the Court affirmed a sanctions award under 28 USC §  1927 based on the plaintiff’s changing testimony on whether she was asked to cover up the alleged scheme, noting differences between the deposition, the errata sheet afterwards, and then trial testimony.  Id. at 13-16.

BP and Exxon disputed the condition of an offshore rig operated by Noble off the coast of Libya; Noble sought payment from either of them.  BP Exploration Libya Ltd. v. ExxonMobil Libya Ltd., No. 11-20547 (July 30, 2012).  The resulting three-party dispute ran into practical problems because the arbitration clause had a procedure for selecting three arbitrators that was only workable in a two-party dispute.  The Fifth Circuit found that a “mechanical breakdown” had occurred that justified federal court intervention under the FAA, 9 U.S.C. § 5, but that the district court exceeded its authority by ordering that arbitration proceed with five arbitrators rather than the three specified by the agreement.  The Court remanded with instructions as to the process for the district court to follow in forming a three-arbitrator panel.

The Court vacated its earlier panel opinion in Sawyer v. du Pont, which rejected claims of fraudulent inducement by employees who the Court concluded were “at-will.”  The issue of whether at-will employees can bring such claims (which here, also involves the application of a notice provision in the employees’ CBA with their employer), has now been certified to the Texas Supreme Court.  No. 11-40454 (July 27, 2012).  The Texas Lawyer Blog has some interesting insight on the procedural history of this ruling.

Lawyers in the North Texas area will enjoy the new blog 600commerce.com, which covers the Texas Fifth District Court of Appeals that sits at 600 Commerce in downtown Dallas.

“What follows is the tale of competing mineral leases on the Louisiana property of Lee and Patsy Stockman during the Haynesville Shale leasing frenzy.”  Petrohawk Properties v. Chesapeake Louisiana at 1, No. 11-30576 (as rev’d Aug. 2012).  The Fifth Circuit affirmed a finding that one of the dueling leases was procured by fraudulent misrepresentations as to the legal effect of a lease extension, rejecting several challenges to whether such a representation was actionable under Louisiana law, as well as an argument that the fraud had been “confirmed [ratified].”  The Court also rejected a counterclaim for tortious interference with contract, noting that Louisiana has a limited view of that tort and requires a “narrow, individualized duty” between plaintiff and tortfeasor.  Id. at 20-24 (citing 9 to 5 Fashions v. Spurney, 538 So.2d 228 (1989)).

In Westlake Petrochemicals v. United Polychem, the plaintiff obtained judgment for $6.3 million under the UCC for breach of a contract to supply ethylene.  No. 10-20634 (July 24, 2012).  The Fifth Circuit affirmed on liability, finding that evidence about the need for credit approval did not disprove contract formation, defeat the Statute of Frauds, or establish a condition precedent.  Id. at 9-13.  The Court reversed and remanded on damages, finding that the plaintiff was analogous to a “jobber” and thus could recover lost profits but not the contract-market price differential.  Id. at 17 (citing Nobs Chemical v. Koppers Co., 616 F.2d 212 (5th Cir. 1980)).  The Court also reversed as to an individual’s guaranty of the damages, finding a conflict between the termination provision of the guaranty and the plaintiff’s argument about when liability accrued, which created an ambiguity that made the guaranty unenforceable under Texas law.  Id. at 20-21.

An Austin-based software developer sued a German software company for breach of contract and related torts.  Pervasive Software v. Lexware GMBH & Co., No. 11-50097 (July 20, 2012).  The Fifth Circuit affirmed the dismissal of the case for lack of personal jurisdiction, revisiting several key jurisdiction points for business relationships.  The Court held that the parties’ contracts alone would not create jurisdiction when the parties had no prior negotiations and did not envision “continuing and wide-reaching contacts” in Texas.  Id. at 15, 19 (citing Burger King v. Rudzewicz, 471 U.S. 462 (1985).  (A lengthy footnote analyzes Texas law about the role of choice-of-law clauses in a jurisdictional analysis.  Id.  at 14-15 n.4.)  The German company’s Internet sales into Texas — 15 programs, costing roughly $66 each, over four years — did not establish “purposeful availment” for specific jurisdiction, or “continuous and systematic contacts” for general jurisdiction.  Id. at 19-24, 28-29.    The alleged acts of conversion occurred in Germany and thus did not create specific jurisdiction either.  Id. at 25-26.

In Dameware Development LLC v. American General Life Ins. Co., the plaintiff complained that the defendant insurance company did not deliver a plan with certain tax benefits.  No. 11-20218 (July 19, 2012).  The plaintiff contended that their contract was entered into based on a mistake about whether such a plan would be delivered (“error,” under the applicable Louisiana law), and the Court disagreed, characterizing the situation as a “mistaken prediction” that would not allow the contract to be voided.  Id. at 9.  As to the contract itself, the Court found particularly persuasive a disclaimer that said the insurance company would “operate[] solely in the capacity of a product provider . . . .”  Id. at 10.

In an insurance coverage case that is also a careful review of basic contract interpretation principles, the Court determined that a decedent was “legally intoxicated” and thus fell within a policy exclusion.  Likens v. Hartford Life, No. 11-20653 (July 19, 2012).  Recognizing that some authority  requires a “legal intoxication” exclusion to involve a criminal act, the Court disagreed with those cases, reviewing comparable terms elsewhere in Texas law, as well as a line of admiralty authority.

In the context of a denial of en banc rehearing, a concurring and dissenting opinion disputed whether an issue of charge error in an employment case had been preserved below.  Nassar v. UT Southwestern Medical Center, No. 11-10338 (July 19, 2012).  The exchange echoes a similar one in the recent en banc case of Jimenez v. Wood County, 660 F.3d 841 (5th Cir. 2011). 

In GuideOne Specialty Mutual Ins. Co. v. Missionary Church, a coverage case arising from a car accident by church workers on a lunch break, the Court reversed on the duty to defend, disagreeing with the district court’s decision to consider evidence about the state tort litigation as inconsistent with Texas’s “eight corners” rule.  No. 11-10894 (July 17, 2012), op. at 9-12.  Under that rule, the pleadings about the driver’s status and activities could potentially trigger coverage, creating a duty  to defend.  Id. at 13.  The Court declined to apply a “very narrow’ exception that could apply if a coverage issue did not “overlap with the merits of or engage the truth” of the facts of the case.  Id. at 14 (citing GuideOne Elite v. Fielder Road Baptist Church,  197 S.W.3d 305 (Tex. 2006)).  The Court ended by reversing an injunction against state proceedings about the accident, citing general cases about the scope of declaratory judgment actions and noting that the “relitigation exception” to the Anti-Injunction Act did not apply.  Id. at 15-16.     

The confirmation of an arbitration award in a construction dispute was affirmed in Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., No. 11-20141 (July 17, 2012).  The Court found: (1) that the arbitrator had authority, based on the parties’ agreement to AAA rules, to determine whether a particular damages issue was arbitrable; (2) the award was not procured by fraud, rejecting an argument that the claimant’s damage calculation involved a “bait-and-switch” that pretended to abandon one theory; and (3)  the district court properly awarded prejudgment interest, particularly in light of the arbitration panel creating “a thirty-day interest-free window from the date of the award” for payment.  

McMurray v. ProCollect, Inc. involved a claim that a debt collector’s demand letter contained language that was inconsistent with, and that also overshadowed, the required notice required by 15 U.S.C. section 1692g(a), the Fair Debt Collection Practices Act.  No. 11-20141 (July 17, 2012).  As to the claim of inconsistency, the Court found no violation because the letter did not contain a deadline for payment that conflicted with the 30-day contest period in the FDCPA.  Op. at 7.  As to the claim of overshadowing, the Court found that the letter simply encouraged payment and did not make threats, and did not use fonts or spacing to minimize the effect of the statutorily-required notice.  Op. at 8.  On both claims, the Court reviewed the letter through the lens of an “unsophisticated consumer standard.”  Op. at 5.

The plaintiff’s counsel in Mick Haig Productions v. Does 1-670 served subpoenas on Internet service providers (ISPs) about the alleged wrongful download of pornographic material.  No. 11-10977 (July 12, 2012).   The district court found that the subpoenas violated orders that it had made to manage discovery, and imposed significant monetary and other sanctions on the lawyer.  Op. at 4-5.  The Fifth Circuit found that all of the lawyer’s appellate challenges were waived — either because they were not raised below, or were raised only in an untimely motion to stay filed after the notice of appeal, and thus were waived.  Id. at 5.  The Court declined to apply a “miscarriage of justice” exception to the standard waiver rules, stating that the lawyer’s actions were “an attempt to repeat his strategy of . . . shaming or intimidating [the Does] into settling . . . .”  Id. at 6.

In the case of Downhole Navigator LLC v. Nautilus Insurance, an insured retained independent counsel after receiving a reservation of rights letter from its insurer, arguing that the insurer’s chosen counsel had a conflict at that point.    686 F.2d 325 (5th Cir. 2012).  Applying Northern County Mutual v. Davalos, 140 S.W.3d 685 (Tex. 2004), the Court found no conflict because “‘the facts to be adjudicated’ in the underlying . . . litigation are not the same ‘facts upon which coverage depends.'”  The Court did not see the recent case of Unauthorized Practice of Law Committee v. American Home Assurance Co., 261 S.W.2d 24 (Tex. 2008), which dealt with the responsibilities of insurers’ staff attorneys who defend a claim for an insured, as changing the basic analysis under Texas law.

While resolving an issue of Mississippi state property law, the Court provides a good example of an “Erie guess” involving canons of statutory interpretation in Marlow LLC v. BellSouth Telecommunications, No. 11-60394 (June 27, 2012).

In Smith & Fuller, P.A. v. Cooper Tire & Rubber Co., a law firm had inadvertently distributed documents, designated as confidential under a Rule 26(c) protetive order, during a conference of personal injury lawyers.  No. 11-20557 (June 21, 2012).  Pursuant to Fed. R. Civ. P. 37(b)(2)(C), the Court ordered the firm to reimburse Cooper for its fees and expenses incurred in rectifying the situation.  The Court found that the protective order was an “order to provide or permit discovery” as defined by Rule 37(b)(2), that the award was justified with “specific and well-reasoned grounds . . . that any lesser penalty would not have been an adequate future deterrent,” and that the affidavits of counsel were suficient to establish the amount awarded.  The Court noted that the firm had previously been sanctioned for another violation of a protective order involving Coooper.  Op. at 3 n.2 & 10.

The Court reviewed several Daubert rulings in the toxic tort case of Johnson v. Arkema, Inc., No. 11-50193 (June 20, 2012).  Under an abuse-of-discretion standard, it affirmed the exclusion of experts based on weaknesses in reliance upon (1) analysis of whether the materials at issue belonged to a “class of chemicals” known to cause disease; (2) state and federal exposure guidelines; (3) animal studies; and (4) the “temporal connection” between exposure and illness.  Op. at at 8-20.  The Court then affirmed the exclusion of an opinion based on a “differential diagnosis,” concluding that it was based on an unreliable presumption about general causation.  Id. at 22.  The Court concluded by reversing on a causation issue that did not require expert testimony, finding that the temporal connection between exposure and certain chronic injuries was close enough to allow trial — while also finding that the connection was to attenuated as to related chronic injuries.  Id. at 26.  A dissent took issue with the majority’s reasoning as to one well-credentialed toxicology expert.  Id. at 29.

The Court adddressed the contractual liability exclusion in a Texas CGL policy in the case of Ewing Construction v. Amerisure Insurance, No. 11-40512 (June 15, 2012).  The Court applied the “plain language of the exclusion,” guided by Gilbert Texas Construction LP v. Underwriters at Lloyd’s London, 327 S.W.3d 118 (Tex. 2010), and concluded that it reached a contractual commitment to complete a construction project.  Op. at 8.  The Court then examined whether an exception applied for liability that would exist even without the contract, and concluded that there was no such liability under Texas’s “con-tort” cases.  Id. at 9 (quoting Southwestern Bell v. DeLanney, 809 S.W.2d 493 (Tex. 1991).  The Court concluded by deferring the issue of the duty to indemnify, and acknowledging a point raised by the dissent about overlap between the “contract” and “your work” exclusions in a typical CGL contract.  Id. at 10.

The bankruptcy case of Bandi v. Becnel involved a dispute as to whether a debt was nondischargeable because it arose from fraud, or whether it fell within an exception for statements about “financial condition” in 11 U.S.C. § 523(a)(2)).  No. 11-30654 (June 12, 2012).  The Court found that the phrase “financial condition” should be construed “to connote the overall net worth” of the debtor, and thus did not include “[a] representation that one owns a particular residence or a particular commercial property” because the property could be subject to liens or other liabilities.  Op. at 8.  The Court reviewed a substantial body of law from its prior opinions, other Circuits, and the Supreme Court about the intricacies of this statute and other related provisions of the Bankruptcy Code.

In Greenwood 950 LLC v. Chesapeake Louisiana LP, the Court found an ambiguity in a Louisiana mineral lease, seeing two reasonable ways to harmonize clauses about obligations to “repair all surface damages” and “pay . . . all damages.”  No. 11-30436 (June 12, 2012) at 5-7 (emphasis added).  On the threshold Erie issue, the Court reminded: “[W]e look first and foremost ‘to the final decisions of Louisiana’s highest court’ rather than this Court’s prior applications of Louisiana law.”  Op. at 4 n.11 (quoting Holt v. State Farm, 627 F.3d 188, 191 (5th Cir. 2010)).

Mid-Continent Casualty v. Davis presented an insurance coverage dispute about a wrongful death claim by a construction worker.  No. 11-10142 (June 8, 2012).  Coverage turned on whether the worker was an employee or an independent contractor.   Applying the five-factor test from Limestone Products Distribution v. McNamara, 71 S.W.3d 308 (Tex. 2002), the Court affirmed a finding that the worker was an independent contractor.  Key facts were that the worker provided his own tools and supplies, largely controlled his own schedule and tasks, and was provided a 1099 rather than a W-2.  Op. at 13-14.

The Court briefly revisited personal jurisdiction in an unpublished opinion, ITL International v. Cafe Soluble, S.A., No. 11-60360 (rev’d June 7, 2012).  The case arose from a dispute between Mars, Inc. and a Latin American distributor, closely related to the dispute at issue in the recent case of ITL International v. Costenla, S.A.  The Court followed the same analytical framework, finding that the defendant’s contacts with Mississippi were not sufficiently related to the dispute to create jurisdiction.  It concluded by reminding that a dismissal for lack of personal jurisdiction should be without prejudice because it is not on the merits.

Environmental groups challenged several plans approved by the Department of the Interior for oil exploration and development in the Gulf of Mexico after the Deepwater Horizon accident.  In a group of consolidated cases, the Fifth Circuit dismissed the challenges on procedural grounds.  See, e.g., Gulf Restoration Network v. Salazar, No. 10-60411 (May 30, 2012).   Among other holdings, the Court found that the groups had standing as organizations to sue, op. at 8-10, and that case law about the effect of an agency’s allegedly “illegal [and] clandestine” internal policies did not excuse the groups’ failure to exhaust administrative remedies here.  Op. at 29.

In Continental Casualty v. North American Capacity Ins. Co., the district court required three primary carriers to split defense costs, while not allowing the excess insurer to recover defense costs from the primaries.  No. 10-20262 (May 30, 2012).  The Fifth Circuit affirmed on the cost-splitting issue, after careful review of the policies’ coverage triggers, scope, and “other insurance” clauses.  Op. at 15-20.  The Court reversed as to the excess carrier, finding it had a right of contractual subrogation, and distinguishing Mid-Continent Insurance v. Liberty Mutual, 236 S.W.3d 765 (Tex. 2007).

In Illinois Central Railroad Co. v. Guy, the Court reviewed a jury verdict that two lawyers had improperly induced a railroad into settling asbestos exposure claims.  No. 10-61006 (May 29, 2012).  The Court rejected jurisdictional challenges that were based on the Rooker-Feldman and Burford doctrines, finding sufficient distance between the facts of the case and the underlying state court proceedings.  Op. at 14, 16.  The Court also found sufficient evidence of affirmative acts of concealment, and due diligence by the railroad, to toll limitations, Op. at 20, although a dissent argued otherwise.  Op. at 27  (“I would reverse because doing nothing is not due diligence.”).  The Court rejected a waiver defense, distinguishing the defendants’ cases as arising when a fraud plaintiff accepted a benefit after it knew or should have known of fraudulent inducement.   Op. at 25.

In a significant case applying Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 130 S. Ct. 1758 (2010), the Court vacated a class arbitration award as exceeding the arbitrator’s authority.  Reed v. Florida Metropolitan University, No. 11-50509 (May 18, 2012).   The Court found that the “any dispute” and “any remedy” clauses in the parties’ agreement did not authorise class arbitration, acknowledging a different conclusion by the Second Circuit in Jock v. Sterling Jewelers, Inc., 646 F.3d 113 (2011).  Op. at 19-22.   Before reaching that result, the Court reviewed the applicable AAA rules and concluded that they allowed the threshold matter of class arbitration to be reviewed by the arbitrator.  Id. at 8.

The plaintiff in Patrick v. Wal-Mart alleged: “Defendants have engaged in a continuing pattern of bad faith . . . [and] have among other things, unreasonably delayed and/or denied authorization and/or payment of reasonable, neceessary and worker’s comp related medical treatment, as well as permanent indemnity benefits, as ordered by [the state agency].”  No. 11-60217 at 11-12 (May 17, 2012).  The Court found that this allegation “invokes three potentially cognizable theories of liability,” but was “devoid of facts to make it plausible” under Twombly — the pleading “fails to identify the specific time or nature of such wrongs . . . [and] does not identify by date or amount or type of service, any of the alleged bad-faith denials and delays . . . .”  Id.   It found no abuse of discretion in not allowing further amendment, noting “repeated failure[s] to cure deficiencies . . . .”  Id. at 12-13 (quoting United States v. Humana Health Plan, 336 F.3d 375, 387 (5th Cir. 2003)).

The plaintiff in Bowlby v. City of Aberdeen alleged a denial of procedural due process and equal protection rights as to the handling of her license to run a snow cone stand in a particular location.  No. 11-60279 (May 14, 2012).   The Court applied Twombly and Iqbal to find that she had not stated an equal protection claim, reminding that a pleading should have “facial plausibility” from its “pleaded factual content” and not offer only “labels and conclusions or a “formulaic recitation of the elements of a cause of action.”  Op. at 17 (noting “no allegations regarding the types of businesses . . . the size . . . where they are located, or what laws and regulations they have violated”).   The Court found an actionable due process issue and rejected a challenge to its ripeness, both under a specialized test for constitutional claims and under “general ripeness principles.”  Id. at 14-15 (requiring a claim “fit for judicial decision” as to which delay “would cause . . . further hardship”).

From the first third of 2012, here are 5 commercial litigation cases from the U.S. Court of Appeals for the Fifth Circuit worth knowing:

1. Unenforceable arbitration clause. A clause in an employee manual, which could be amended by giving appropriate notice, was illusory and not enforceable.  Carey v. 24 Hour Fitness, 669 F.3d 202 (5th Cir. 2012).

2. Personal jurisdiction. The defendant’s 55 transactions in Mississippi were not sufficiently related to the claim to create personal jurisdiction. This was the Circuit’s first jurisdiction case since two major Supreme Court cases in 2011.  ITL International, Inc. v. Sonstenla, S.A., 669 F.3d 493 (5th Cir. 2012).

3. Sufficient causation evidence. A thorough opinion finds that expert testimony was not needed in a personal injury case, but even then, the evidence of causation was not sufficient.  Huffman v. Union Pacific Railroad, 675 F.3d 412 (5th Cir. 2012).

4. Business Torts Damages 101. The defendants’ acts were not actionable in fraud, did not amount to fraudulent inducement, but did support liability for misappropriation of trade secrets.  Bohnsack v. Varco, 668 F.3d 262 (5th Cir. 2012).

5. Statute of Frauds 101. Sufficient evidence to satisfy the Statute of Frauds is different than what may establish contract liability.  Preston Exploration Co. v. GSF, LLC, 669 F.3d 518 (5th Cir. 2012).

The Court will rehear en banc the case of Access Mediquip v. United Healthcare, decided by the panel earlier this year, which presents a sophisticated question about when ERISA preempts certain misrepresentation claims.

The unpublished case of Stanwood Boom Works LLC v. BP Exploration & Production Inc., in the context of affirming summary judgment for the defendant in a contract case, gives a thorough summary of “black letter” Texas law about contract formation, as well as the related situation of negotiations that are too tentative to create promissory estoppel.  No. 11-20511 (April 25, 2012).

In Grissom v. Liberty Mutual, the trial court awarded $212,000 in damages for negligent misrepresentation, based on the difference between the coverage a homeowner actually had at the time of Hurricane Katrina, and the coverage he could have had under a “preferred risk policy.”  No. 11-60260 (April 23, 2012).  The Fifth Circuit reversed on preemption issues unique to flood insurance as well as the viability of the claim itself, stating: “Because Liberty Mutual was not offering insurance advice, was not a fiduciary of Grissom, and did not offer any statement to Grissom to imply the lack of alternative insurance options, Mississippi law would not recognize negligent misrepresentation as a cause of action against Liberty Mutual . . . .”  Op. at 9-10.

The parties in Ballard v. Devon Energy disputed when a provision in an oil field joint operating agreement, about the effect of “surrendering” certain leases, would apply.  No. 10-20497 (April 19, 2012)  The Court affirmed the denial of leave to amend the plaintiff’s contract claims to add a fiduciary duty count, based on a lengthy delay in raising the issue.  Op. at 6.  The Court then, applying Montana law, concluded that while the parties had both advanced “facially plausible” readings of the provision in isolation, the defendant’s reading was more persuasive in the overall context of the entire development project.  Id. at 12-15.  The Court affirmed summary judgment for the defendant, although it criticized the trial court for considering “extrinsic evidence” before attempting to construe the document on its face.  Id. at 9-10.

Sawyer v. DuPont presented employee claims of fraudulent inducement to leave jobs with DuPont for new positions at a wholly-owned subsidiary.  No. 11-40454 (April 20, 2012).   The Court began by reminding of the deference for intermediate appellate opinions in making an “Erie guess” about state law — here, the “at will” employment doctrine in Texas and its prohibition of fraudulent inducement claims about employment relationships.  Op. at  5.  Based on intermediate court authority, the Court concluded that a CBA that was terminable on notice did not change the employees’ at-will status, which thus barred their claims.  Op. at 9.  The Court also found that oral representations to another group of employees were not sufficiently definite to change their at-will status, citing Montgomery County Hospital District v. Brown, 965 SW.2d 501 (Tex. 1998).  Op. at 10.  Summary judgment for DuPont was affirmed.

In Stoffels v. SBC Communications, the Court addressed issues about whether a “retiree concession” program involving long-distance discounts should be regulated as a retirement plan under ERISA.  No. 11-50148 (April 16, 2012).  In the court below, a district judge held a trial and made fact findings, after which he recused himself.  The second judge vacated those findings in light of a new and related Fifth Circuit opinion, Boos v. AT&T, 643 F.2d 127 (5th Cir. 2011).   The Court found that Fed. R. Civ. P. 54 gave the judge authority to do so, that the “law of the case” doctrine did not constrain his authority, and that this case was not materiall different on the merits from Boos.  Op. at 8-9.

In response to a pointed request by the argument panel in a health care case, Attorney General Holder filed a letter brief on April 5 that affirms DOJ’s recognition of Marbury v. Madison while also defending its right to contest federal jurisdiction.   The request, and the letter brief, form part of the national debate now before the Supreme Court about the constitutionality of recent health care legislation.

The defendant in Love v. Tyson Foods complained that an employee’s wrongful discharge claim was barred by judicial estoppel because it was not properly disclosed in the employee’s personal bankruptcy, and the Court agreed, rejecting the employee’s contention that the disclosure issues were inadvertent.  No. 10-60106 (April 4, 2012).  The Court provided a thorough summary of how the Fifth Circuit defines the judicial estoppel doctrine, reminding that because the doctrine protects the judicial system rather than litigants, detrimental reliance is not ordinarily an element.   A detailed dissent criticized the majority for how it addressed the burden of proof and for how it applied the doctrine in the context of broader bankruptcy policies, noting earlier Circuit authority in the area.

LRK Architects v. State Farm presented the question whether a “breach of contract” exclusion should be analyzed under a “but for” or an “incidental relationship” test to determine whether an insurance policy covered a claim for copyright infringement.  No. 11-30121 (April 4, 2012).   After reminding that under Erie its job “is to attempt to predict state law, not to create or modify it,” the Court concluded that Louisiana would use a “but for” test.  Op. at 7-8.  Because the copyright claim “would exist even in the absence” of the parties’ contractual relationship, the exclusion did not apply and the insurer had a duty to cover and defend.  Op. at 9, 10.

In Waldron v. Adams & Reese, LLP, the largest creditor of a bankruptcy debtor paid the retainer fee for debtor’s counsel.  No. 11-30462 (March 29, 2012).  That payment was not disclosed for some time, after which the trustee sought to disgorge counsel’s fees on the grounds of a disqualifying conflict of interest.  The Court affirmed the lower court’s rulings, finding no disqualifying conflict on the “specific facts of [the] case.”  Op. at 8 (quoting and distinguishing In re West Delta Oil Co., 432 F.3d 347 (5th Cir. 2005)).  It reviewed counsel’s conduct during the bankruptcy case as well as prior representations of the debtors.  Then, reminding of the “clear error” standard of review, the Court affirmed a sanction of partial disgorgement (20% of the fee) for the late disclosure.  Op. at 15.  The Court concluded with a thorough review of the standards for allowing pleading amendments and affirmed the denial of leave for the trustee to add new claims.  Op. at 15-16.

In a forcefully-written opinion, the Court vacated the EPA’s disapproval of Texas environmental emission regulations relevant to the power industry.  Luminant Generation Co. v. U.S. Environmental Protection Agency, No. 10-60891 (March 26, 2012).   The Court found that the EPA erroneously invoked Texas law and applied federal law incorrectly.  See Op. at 21 (“EPA disapproved the PCP Standard Permit . . . based on its purported nonconformity with three extra-statutory standards that the EPA created out of whole cloth”).   The Court concluded: “Because the EPA waited until more than three years after the statutory deadline to act on Texas’s submission, we order the EPA to reconsider it expeditiously [on remand].”  Id. 

A bankruptcy trustee sued to avoid an alleged fraudulent transfer, in the form of payments under a guarantee, in MC Asset Recovery v. Commerzbank AG, No. 11-10070 (March 20, 2012).  The Court found that the trustee had standing, even though the debtor’s creditors had been paid in full, because recovery would benefit the estate.  Op. at 7.  Then, applying the Restatement’s “significant relationship” framework and focusing on policy issues, the Court applied New York fraudulent conveyance law (which reached guarantees) as opposed to Georgia law (which did not).  Op. at 12-13.  The lower court’s dismissal of the case was vacated and reversed.

In a detailed opinion that surveyed differing Circuit opinions on several topics, the Court found that “the purchase or sale of securities (or representations about the purchase or sale of securities) is only tangentially related to the fraudulent scheme alleged” in state class actions about the Allen Stanford scandal.  Roland v. Green (March 19, 2012).  Therefore, the Securities Litigation Uniform Standards Act (SLUSA) did not preclude those actions.  The opinion will likely have a significant influence on future cases about the scope of SLUSA in the Fifth Circuit.

Bepco v. Santa Fe Minerals presented the appeal of a remand order, which was based in part on a contractual waiver issue (reviewable) and in part on a timeliness issue (not generally reviewable).  No. 11-30986 (March 15, 2012).   While the timeliness issue was arguably not presented within 30 days of the removal, the Court held: “Whether a removal defect is not raised by a plaintiff in the motion to remand, or is raised more than 30 days after removal, does not matter.  . . . [W]hat does matter is the timing of the remand motion.”  Op. at 8.  Because the motion itself was timely, and thus satisfied the statutory time limit, and because the remand order relied on a permissible statutory ground for remand, the Court dismissed the appeal for lack of appellate jurisdiction.  Id.

The Fifth Circuit has had a  about the application of Daubert, and its effect on the roles of judge and jury.  In Huffman v. Union Pacific Railroad, the Court moved to the other end of the technical spectrum, and analyzed the sufficiency of evidence in a FELA case about a former railway worker’s alleged on-the-job injuries.  No. 09-40736 (March 13, 2012)  After thorough analysis of the worker’s allegations, the Court held that expert testimony on causation was not necessary to support a jury finding for the worker, but found that the worker had not presented enough evidence about the type of injury to satisfy even that standard.  Op. at 21-22.   Judge Southwick wrote for the majority, joined by Judge Owen, and Judge Dennis dissented.  The case analyzes FELA precedent but is of substantially broader interest on general causation issues.  The Court also briefly analyzed and rejected a judicial estoppel argument.  Op. at 7-8.

As a counterpoint to some recent cases that have set limits on arbitrability, the Court rejected two court challenges to a $17 million arbitration award in a dispute about coal pricing.  Rain CII Carbon, LLC v. ConocoPhillips Co., No. 11-30669 (March 9, 2012).  The losing party argued that the arbitrator had failed to follow a specified “baseball” procedure, but the Court found that the arbitrator’s treatment of the proposed award was within the scope of his power to correct clerical issues.  Op. at 5.  The Court also found that the award was “reasoned” under prior case law: “The only description of a reasoned award in this circuit was rendered in a footnote: . . . ‘[A] reasoned award is something short of findings and conclusions but more than a simple result.'”  Id. (citing Sarofim v. Trust Co. of the West, 440 F.3d 213, 215 n.1 (5th Cir. 2006)).  The Court suggested that the parties could have contracted for more detailed findings and conclusions.   Op. at 8.

In Technical Automation Services Corp. v. Liberty Surplus Ins. Corp. the Court addressed, sua sponte, an issue about the jurisdiction of a U.S. magistrate judge after the Supreme Court’s recent opinion limiting bankruptcy court jurisdiction, Stern v. Marshall, 131 S. Ct. 2594 (2011).  No. 10-20640 (March 5, 2012).  The Court concluded that Stern did not directly overrule the prior Circuit precedent of Puryear v. Ede’s, Ltd., 731 F.2d 1153 (5th Cir. 1984) and held: “[W]e will follow our precedent and continue to hold, until such time as the Supreme Court or our court en banc overrules our precedent, that federal magistrate judges have the constitutional authority to enter final judgments on state-law counterclaims.”  Op. at 12.  On the merits, the Court reversed the lower court’s ruling that an “eight corners” analysis of an insurance coverage issue precluded consideration of a claim of mutual mistake.  Op. at 15.

The Court affirmed almost all of a series of immunity rulings by the district court in the consolidated litigation against the Corps of Engineers arising from Hurricane Katrina.  In re Katrina Canal Breaches Litigation (March 2, 2012).  While most of the opinion focuses on issues unique to flood control, it provides a crisp summary of the requirements of the National Environmental Policy Act as to environmental impact statements, and concludes with a brief summary of the standards for mandamus relief in the federal system.  Op. at 27.  The Court declined to grant a writ of mandamus to stay an upcoming trial because its opinion affirmed the immunity rulings that the district court would use for that trial.  (A subsequent opinion mooted the mandamus issue because it changed the disposition of the merits.)

Lofton v. McNeil Consumer & Specialty Pharmaceuticals presented a failure-to-warn claim based on a severe reaction to a common pain medicine.  No. 10-10956 (Feb. 22, 2012).  The Court concluded that the specific claim at issue, based on Tex. Civ. Prac. & Rem. Code § 82.007, required litigation about whether “fraud on the FDA” had occurred and was thus preempted.  Op. at 13-14.   The Court acknowledged a circuit split on this preemption issue, and also noted that it was not addressing an issue about the severability of the Texas statute because that issue was raised for the first time on appeal.