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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Fifth Circuit rejected this argument, noting:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Two issues in particular were presented.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The arbitration award in Amberson v. McAllen said:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Fifth Circuit, inter alia:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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