The Appellate Record : Texas Appellate Lawyer & Attorney Kendall Gray for Fifth Circuit & Supreme Court Appeals

Several new opinions today from the Supreme Court of Texas.  The most notable is the court's choice to reverse it's position in Marks v. St. Luke's Episcopal Hospital, a highly divided case that has been pending on rehearing since last August. I hope to write a future post on whether such delays and such reversals are a good thing.  (They are not).

Rather than reinvent the wheel and write up summaries of all of today's opinions, I'll refer you to a great, down and dirty summary of the issues on Don Cruse's SCOTX Blog.

After the break, this post will focus on the new petitions for review.

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On Monday, the Fifth Circuit released Jacskon v. Tanfoglio Giuseppe S.R.L. (pdf) affirming the district court’s dismissal for lack of personal jurisdiction over the affiliate of a defunct Italian firearms manufacturer. Judge Garza wrote the court’s opinion.

It only took three appeals to finally result in the district court's dismissal of an affiliate that did not manufacture any part of the allegedly defective firearm. Along the way, the Court held:

• There was no general jurisdiction based upon two unrelated trade show visits, untargeted national advertising and shipment of components (for other than the firearm in question) to Florida for assembly;
• There was no specific jurisdiction based upon the stream of commerce theory principally because the defendant did not start manufacturing the model of firearm at issue until after the decedent’s accident; and
• The jurisdictional contacts of the defunct affiliate that manufactured the firearm could not be attributed to the defendant because they were not alter egos or a single enterprise--the companies had maintained all the corporate formalities required by Italian law and had properly liquidated the failed manufacturer under Italian law.

Also of interest on Monday was Combo Maritime, Inc. v. U.S. United Bulk Terminal (pdf), which deals with settlement, contribution issues, and presumptions in maritime collision cases. It gets an honorable mention just for citing a really really old admiralty doctrine deriving from the Laws of Oleron in the 12th century. 

Evidentiary presumptions and 12th century law from the Consolato del Mare.* It just doesn’t get any better than this.

 

*According to the History of Law website, The Consolato del Mare inspired the second great code of maritime regulation, the Laws of Oleron, which are supposed to have been compiled about A.D. 1150. It is generally understood that we owe them to a woman, Eleanor, Duchess of Guienne, Queen first of Louis VII of France, who procured a divorce from her, and afterwards of Henry II of England, the first of the Plantagenets.

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And so we reach the dog days of summer when things start getting back to "normal" for grownups while kiddos head back to school, there to write the obligatory essay: what I did on my summer vacation.

Well, the Supreme Court of Texas is back to it again this week, having held its first full conference since the summer break.  The result was 2 new opinions hot and fresh from the oven or perhaps cooked well done on a Texas sidewalk under the August sun.   The court also granted two petitions for review and set one mandamus for argument.

After the jump summaries and links to the new opinions. 

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Wednesday, the Fifth Circuit released Choice Health Care Inc. v. Kaiser Health Plan of Colorado (pdf) in which it upheld the dismissal of a foreign health insurer/HMO for lack of personal jurisdiction.  The court rejected an attempted extension of the "stream of commerce" theory of minimum contacts in an opinion written by Circuit Judge Davis. 

After the break, analysis and details of the opinion.

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Back on July 2, the SCOTX released its final opinions before the Summer doldrums.  This made me wonder what might be in the offing when the Court returns in August. 

Fortunately, there is an App for that.  And Don Cruse over at the Supreme Court of Texas Blog supplies it.

If you click on the Docket DB link you can follow another link to the pending docket categorizing cases by where they stand in the process.  From there, you can choose the link showing the cases (by age) that have been argued and are awaiting decision. 

There you see the tale of the tape, the oldest case is Solar Applications Engineering v. T. A. Operating, which was filed in April 2006.

You remember April 2006. Tom Delay stepped down from Congress. The former governor of Illinois was convicted of corruption.

No, not the one with the hair, the other one.

Then a year and a half later, the case was argued, in October 2007.

You remember October 2007.  Al Gore won a share of the Nobel Peace Prize and Iran and North Korea said they would dismantle their nuclear programs.

No, not that time.  The other time.

But, in the words of Coach John Wooden (who was alive in October 2007), "Goodness gracious, sakes alive," argument was over two and a half years ago.  The court has lost two of the nine members who were around for the argument.

What could account for this?

My curiosity got the better of me, and I checked out the petition for review.  Certainly it must be horrifically complex with many thorny issues.

Not exactly.  The issue presented is:

Is a general contractor who has substantially performed a construction contract required to provide lien releases from it and its subcontractors as a condition to sue an owner who has refused to pay for work done?

Well, I'm sure the Respondent's lawyer has something to say about it too, but that doesn't seem so hard.

Then it must be substandard lawyering that is mucking up the issues, right?

Not exactly.  The Petitioner is represented by Doug Alexander and the Respondent by Sharon Callaway.  They both "got game."

So there can be but one explanation that can account for the complete disappearance of matter from the known universe. 

There is a worm hole in the Supreme Court's suite of offices, and Cause No. 06-0243 has fallen through the void in the space/time continuum and entered a parallel universe in which parties' time and money are no object. 

If not, if in fact the cause is still housed in our dimension, perhaps contractors or lien holders will need to start holding candlelight vigils with hunger strikes when the next SCOTX opinions start appearing in mid August.

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It might surprise you, but I am a largely self-taught writer.

Then again, maybe it shows. 

The last time I had any formal training in English composition, Ronald Reagan was President.  The year was 1984.  A stamp was 20 cents. The Cosby Show debuted on NBC.  And we were all worried about ballooning federal spending: $851.85 billion.

Less than a trillion?  How cute!  You itty bitty widdle federal budget!

I've lived with a persistent fear and terror since 1984--fear of tiny little words and commas.  But after the jump, learn how Professor Wayne Schiess liberated me from my linguistic straight jacket.

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In my last post, I summarized the Fifth Circuit's new MGE UPS Systems opinion.  The substance is sound and important to civil lawyers, but I've got a bone to pick with the author.

This legal writing rant could be brought to you by Radio Shack and its series of Tour de France Alphonse commercials with Lance Armstrong.  The one I have in mind is, "LOL," where Lance sets out the rules of engagement:

First things first: No man over the age of 30 will EVER use emoticons. 

And poor Alphonse replies, "LOL, Lance," to which Lance gives his steely glare: 

Whoa.  LOL??!!!  Don't make me get off this bike.

Not that I am the Lance Armstrong of anything, but I propose a new rule:

No one with a law degree will EVER make up his or her own acronyms.

I've heard judges complain about briefing in which every corporation and affiliate bears its own inscrutable acronymic reference.  And the complaints are well taken.  You shouldn't need a score card or an answer key to tell who did what to whom. If one has to either memorize new abbreviations or flip back and forth to the definitions, the odds of engaging that reader are markedly diminished.

But the same can be said for opinions that are an alphabet soup of abbreviations.  Why not give parties and statutes names that make intuitive sense? (And secondarily, why can't companies have names instead of alphanumeric hieroglyphic identifiers??)  In the first pages of MGE, for example, we are treated to:

• MGE
• GE
• GE/PMI
• DMCA

And this opinion is not even a big offender.  But all one really needs is MGE and Power Management.  Because of all the extras, I can tell you that I was not LOL-ing or ROTFLMAO-ing or even LQTM-ing while I was trying to learn the technology involved in the dispute.  Several times, I was all, like, "BRB--I have to turn back to the first page to figure out what's going on here."

Simply stated, neither briefs nor opinions ought to read like Bankruptcy Plans or Offering Memoranda.  (Bankruptcy Plans and Offering Memoranda likely ought not be the way they are either, but that's a post for another day.)

Now, I'm not condemning acronyms that everybody knows already, e.g., IRS, NASA, USA, AT&T or ERISA.  Those kinds of acronyms aid comprehension because they already contain meaning.  Because they aid in precision and understanding they are good. 

But excessive use of made up acronyms rather than just calling the parties "Power Maintenance" or "Plaintiff" violates Kendall's Prime Directive Of Legal Writing:

No matter what Bryan Garner and the Bluebook say, anything that interferes with understanding is bad.

So, please.  The life you save may be your own:

No one with a law degree will EVER make up their own acronyms.

Don't make me get off this bike.

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Yesterday, the Fifth Circuit released an opinion of some importance for commercial and intellectual property litigation.  

In MGE UPS Systems Inc. v. GE Consumer Industrial Inc. (pdf), the Court affirmed an injunction against a competitor's unauthorized use of security "dongles" to boot up software necessary to service and calibrate uninterruptible power supplies.  All the underlying damage claims, however, failed.  Judge Garza wrote the Court's opinion.   

The Court held that

1. The Digital Millennium Copyright Act's provisions on circumventing technological measures protecting copyrighted work "prohibits only forms of access that would violate or impinge on the protections that the Copyright Act otherwise affords copyright owners."  You can get a copy of the Act here (pdf) and a summary of it's contents here (pdf).
2. The plaintiffs' claims for damages for copyright and misappropriation of trade secrets claims could not be sustained based upon evidence of the wrongdoer's gross revenues.  

The damages question has the widest application to commercial and intellectual property litigation.   The Plaintiff's "Plan A" failed when it's damages expert was struck and it's lay witness was found to be insufficient to establish a reasonable royalty.  The Fifth Circuit was not asked to review these trial court rulings.  While the statutory and common law claims would have allowed for recovery of the wrongdoer's profits from the violation or misappropriation, all that was left was information concerning the defendant's gross revenues from a variety of businesses. 

This was not enough. Not only is gross revenue not the same as profit, the Court made an "Erie Guess" that Texas would not adopt a comment from the Restatement (Third) of Unfair Competition placing the burden on the defendant to show what was not attributable to the wrong once a plaintiff had placed a gross number in issue. 

Said the Court:

In the only reported Texas case involving the recovery of defendant’s profits for a misappropriation of trade secrets claim, the Dallas Court of Appeals held that although defendant’s profits are a “proper element[ ] of damages in a case involving the wrongful use of a trade secret,” a plaintiff cannot recover damages without offering evidence “to show the actual profit made by [defendant].” Elcor Chem. Corp. v. Agri-Sul, Inc., 494 S.W.2d 204, 214 (Tex. Civ. App.--Dallas 1973, writ ref’d n.r.e.) . . .

* * * 

MGE points to PMI’s total revenue . . . and argues that, under the Restatement, this exhibit satisfies its burden of proof with regard to PMI’s “sales” of providing service to UPS machines. MGE contends that GE/PMI subsequently had the burden of demonstrating which portions of PMI’s revenue were not attributable to the state law claims, which it failed to do. Texas courts have not adopted the RESTATEMENT (THIRD) OF UNFAIR COMPETITION in its entirety and whether § 45’s comment f is controlling in Texas courts is still an open question. . . . The burden-shifting procedures noted in comment f are not included in the first RESTATEMENT OF TORTS, whose definition of and factors used to identify trade secrets are still used by Texas courts. . . . Neither the Texas Supreme Court nor any of the Texas appellate courts have specifically applied comment f to determine a defendant’s profits in a trade secret action. Given that comment f’s standard sets a plaintiff’s burden of proof for trade secret damageslower than the standard applied in Elcor, we conclude that the Texas Supreme Court would not adopt the burden-shifting procedures of comment f.

Watch this space for some further commentary on MGE. 

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Yesterday, the Fifth Circuit released Willow Bend v. Downtown ABQ Partners, a personal jurisdiction case that will be of interest to commercial practitioners.  The contractual and breach of fiduciary duty claims arose out of a Louisiana real property transaction.  The Court affirmed a dismissal for lack of personal jurisdiction as to a non-signatory individual (Garcia) and the partnership for which that person was the managing partner (Downtown ABQ).   Judge Higginbotham wrote the Court's opinion. 

Determining minimum contacts can sometimes be like trying to nail jello to a tree.  But Judge Higginbotham (in characteristic fashion) gives the analysis some structure. 

Judge Higginbotham's take on minimum contacts requires a nexus between:

• the forum;
• a particular party; and
• a substantive legal duty actually pertaining to that specific party. 

The nexus was present with regard to the company that actually entered into the contract.  It did not exist for Garcia, nor for the partnership managed by Garcia.  The reason: the duties alleged were tethered to the contract to which they were not a party and did not apply to them.

This paragraph from the opinion sums it up:

[The] written agreement is no throwaway: in fact, it is the critical forum contact in this case, and the linchpin of the district court’s exercise of jurisdiction over Blue Dot. Willow Bend’s winning breach of contract and breach of fiduciary duty claims against Blue Dot arose out of and resulted from Blue Dot’s primary contact with the state of Louisiana—its contract with Willow Bend. Without a contract tying the non-signatories Garcia and Downtown ABQ to Willow Bend’s claims against them, however, those claims share an inadequate nexus to the forum: . . .  Willow Bend sued for breach of contract and breach of fiduciary duty, after all, and a defendant cannot be said to have breached a contract it never made or to have skirted a duty it never assumed. . . . Willow Bend contracted with Blue Dot—and Blue Dot alone—and it is with Blue Dot that its claims for breach of contract and breach of fiduciary duty must lie.

Thus, jurisdiction and the merits are enmeshed because jurisdiction is "claim specific." Had the breach of a different legal duty that applied to the non-signatories been alleged (e.g., fraud) a different result might have obtained. 

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