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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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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A new case from the Fifth Circuit yesterday that would be of interest to civil practitioners.  The underlying dispute in Lyondell Chemical Company v. Epec Polymers(pdf) involved allocation of responsibility under CERCLA, but the interesting part of the case to me is the application of Rule 408 of the Federal Rules of Evidence (pdf) regarding exclusion of settlement discussions.

Without numbing you with unnecessary detail, part of how the district court quantified the amounts and costs in issue was discussions, after the feds threatened suit, between some of the parties regarding a related but different portion of the same site.  Although there are many more issues involved in the opinion, the Fifth Circuit found this use to be impermissible. 

Judge Higginbotham wrote for the panel:

Although El Paso characterizes the reports as part of a “congenial effort by group members to fairly and cooperatively assess the contamination” unentitled to Rule 408 protection, we cannot agree. It is undisputed that the EPA threatened litigation against Occidental and other members of the task group. . . . The work of the task force was anything but business as usual and its discussions—including the Smythe Reports—went well beyond mere “business communications.”

El Paso argued that “Rule 408 only bars the use of compromise evidence to prove the validity or invalidity of the claim that was the subject of the compromise, not some other claim.”  While acknowledging many different approaches courts and commentators have used to define the scope of a "claim," the court

 . . . decline[d] to adopt any rigid definition of “claim.” Our application of Rule 408 has been and remains fact-specific, and tethered to the rationales underlying the rule. And here, we have no trouble concluding the Smythe Reports were created for use in negotiations regarding the “claim” now being litigated. Though separated by time and location, the disputes associated with the Highway 90 and Turtle Bay sites arise out of the same events: the repeated dumping of hazardous waste intended for Highway 90.

Mmmmm.  I love the smell of evidence in the morning.

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An unusual case from the Fifth Circuit yesterday in which the Court gave the victory to a party who chose not to show up on the merits. 

In Texas Midstream Gas Services LLC v. City of Grand Prairie, the City believed that the appeal was moot, and chose only to brief the jurisdictional issue, not the merits.  The Fifth Circuit found that the case was a live controversy, leaving the City with no briefing on the merits.  Judge DeMoss, writing for the Court, exercised mercy, choosing to consider the merits rather than kicking the City to the curb:

Perhaps convinced that its mootness argument was a winner, Grand Prairie did not brief the merits of this case. At argument, counsel offered no explanation for this omission. In some instances, this would lead us to conclude that a party had forfeited its opportunity to prevail on the merits.. . . However, we retain discretion to consider matters not briefed, especially when they implicate substantial public interests. . . . Additionally, when the derelict party is the appellee, who may rely on a favorable ruling by the trial court, it makes sense to construe the “rule” of forfeiture more leniently. . . . We can also preserve judicial resources and avoid piecemeal litigation by addressing issues sooner rather than later. . . . In this case, it makes sense to proceed to the merits of the dispute. . . .

The Court then even went on to give the City a victory.  But lest you be tempted to go with the "no briefing" approach to appellate practice, the Court condemned the city's tactical choice in no uncertain terms:

We will exercise our discretion to proceed to the merits of this appeal. However, we emphasize that counsel’s amateurish tactical decision to address only Grand Prairie’s mootnes argument is an egregious lapse in counsel’s duty to brief all pertinent issues.

The case involves the substantive law of municipal ordinances, eminent domain, and preemption under the PSA, and I commend it to your reading. But I would not advocate leaving your success to the mercy of Judge DeMoss, or any other busy appellate judge.  As nice a man as he is, it's better still to do your own research and have a brief on file.

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Two opinions from The Hon. Justice Per Curiam today at the SCOTX:

• Hidalgo v. Hidalgo applies a procedural mercy rule, to wit, when the SCOTX takes away your lead pipe cinch procedural argument while a case is pending, the CA ought to let you brief your substantive attacks on a judgment rather than finding them waived.
• Texas Health Insurance Risk Pool v. Sigmundik holds that a trial court cannot cut an insurer with a contractual right of subrogation out of a tort settlement by using a bench trial to allocate all the funds to other parties to the claim--here the surviving wife and child.  The essence:

It was improper to cut the Risk Pool out of a settlement to which it, through the estate, has a valid claim, just as it would be an error to cut out any other estate creditor or recipient in this situation. As in all cases tried to the bench, the trial court was authorized to decide disputed issues of fact and law, see TEX. R. CIV. P. 262, however, a trial court abuses its discretion by failing to follow guiding rules and principles.
* * *
The Risk Pool provided extensive medical records and testimony to support both the expenses it requested and the damages suffered by Sigmundik; that evidence was uncontroverted. Even Sigmundik’s wife testified that his injuries—for which the Risk Pool could seek recovery—amounted to “[e]xceedingly more than” one million dollars. In short, there was evidence that the damages to Sigmundik exceeded the amount of the $800,000 settlement. There can be no doubt that all of the parties here—Sigmundik’s wife and children, but also Sigmundik himself (and thus his estate)—suffered substantial injuries. Trial-court discretion is not boundless and cannot insulate a decision to allocate none of the $800,000 settlement to Sigmundik when the court knew the facts surrounding his severe burns and trauma, his suffering and numerous surgeries, and his death 52 days later.

The Court also granted four petitions for review and indicated argument will be had on a pending petition for writ of mandamus, about which (hopefully) more later.

No conference is set next week so, alas, I guess there will not be a flood of new opinions for the poor sap who has to give the Supreme Court Update next week at the UTCLE Conference on State and Federal Appeals. 

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The Supreme Court released three opinions Monday that would be of interest to civil practitioners:

• American Needle, Inc. v. National Football League (pdf), holding that the NFL and its teams were separate enough to be capable of creating a combination in restraint of trade by the formation of a single entity to exclusively license NFL gear (Stephens, J.).
• Lewis v. City of Chicago (pdf), holding that a plaintiff can bring a disparate impact claim under Title VII when the practice is applied, even if the practice was adopted outside the otherwise applicable limitations period (Scalia, J.).
• Hardt v. Reliance Standard Life Insurance Company (pdf), holding that ERISA allows an award of attorneys fees, even if the party seeking them was not a prevailing party; rather, they need only be a mostly prevailing party (Thomas, J.).

The three cases are a tale of three different federal statutes, to which the Court (of necessity) had to apply three entirely different methods of statutory construction.

Hardt (pdf) involved ERISA, a detailed statute from the early 1970s to which Justice Thomas gave a familiar, modern and literalistic construction to Congress' language:

Whether § 1132(g) limits the availability of attorney’s fees to a “prevailing party” is a question of statutory construction. As in all such cases, we begin by analyzing the statutory language, “assum[ing] that the ordinary meaning of that language accurately expresses the legislative purpose.” . . .  We must enforce plain and unambiguous statutory language according to its terms. . . .
* * *
The words “prevailing party” do not appear in this provision. Nor does anything else in §1132(g)(1)’s text purport to limit the availability of attorney’s fees to a “prevailing party.” Instead, §1132(g)(1) expressly grants district courts “discretion” to award attorney’s fees “to either party."

In contrast, American Needle (pdf) involved the Sherman Act, dating from the dawn of time, containing language so broad that Justice Stevens rightly acknowledged that it could not be construed literally in light of the problems that would follow:

Taken literally, the applicability of §1 to “every contract, combination . . . or conspiracy” could be understood to cover every conceivable agreement, whether it be a group of competing firms fixing prices or a single firm’s chief executive telling her subordinate how to price their company’s product. But even though, “read literally,” §1 would address “the entire body of private contract,” that is not what the statute means.

Finally, Lewis (pdf) involved Title VII.  While Justice Scalia acknowledged that application of Congress' language created "practical problems" and "puzzling results," he stated that it was not the job of the courts to worry about such things:

[I]t is not our task to assess the consequences of each approach and adopt the one that produces the least mischief. Our charge is to give effect to the law Congress enacted. By enacting §2000e–2(k)(1)(A)(i), Congress allowed claims to be brought against an employer who uses a practice that causes disparate impact, whatever the employer’s motives and whether or not he has employed the same practice in the past. If that effect was unintended, it is a problem for Congress, not one that federal courts can fix.

Three statutes and three completely different approaches to statutory construction--all on the same day. 

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The Fifth Circuit today released Meaux Surface Protection, Inc. v. Fogleman (pdf), affirming a jury's award of lost profits under Texas law for breach of fiduciary duty.  Meaux complained that two of it's key personnel essentially poached foremen, workers and customers from it in breach of their fiduciary duties to the company.  The jury agreed and awarded $1.43 million in lost profits.  

On appeal, the defendants complained that the District Court had subjected them to trial by ambush.  They were supposedly shocked and amazed that Meaux sought lost profits (having omitted those precise terms from the pretrial order) or that the foreign CFO would testify to establish those damages.  The Fifth Circuit rejected the argument.  Its reasoning emphasized that no real surprise had occurred.  On the contrary, the defendants were trying to use the rules as a trap for the unwary. 

In the two years between filing and trial, defendants obtained discovery and filed motions concerning lost profits. Meaux’s inclusion of lost profits instructions, which the court deemed part of the pretrial order, gave defendants a warning shot across the bow months in advance of trial that this remedy was not abandoned. It is unpersuasive for defendants to say that they believed otherwise, especially when the pretrial order and proposed jury instructions made no reference to other remedies. Defendants repeatedly bewail the “ambush” they suffered when the district court allowed Meaux’s case to proceed. As did the district court, we find such protestations empty and disingenuous. Defendants were not waylaid by guerilla litigation tactics. Being denied the ability to prevail on a technicality is not the kind of “prejudice” we must remedy.

This type of practical reasoning also informed the Fifth Circuit's determination that Meaux had proved its lost profits with "reasonable certainty," any alternative explanations for the loss going only to the weight the jury might give the testimony.  Key to the determination: the profit projections used by Meaux's witness were created by the defendant himself, before he left the company and poached its resources:

The jury heard an estimate from Carsten Ennemann that Meaux had suffered a $2.3 million loss of treasure in 2007 thanks to their employees-turned freebooters. Ennemann was personally familiar with the drop in business suffered by Meaux. Ennemann compared 2007 sales figures for several major clients with the budget projections which were prepared by Fogleman himself before he jumped ship. At trial, Fogleman stood by the projections as reasonable estimates of Meaux’s likely business, taking into account the factors he deemed relevant. Fogleman’s testimony supported Meaux’s case; he was keelhauled by his own windlass. In light of the evidence tending to show that defendants’ acts harmed Meaux, the jury was entitled to find that Fogleman’s and Kotrla’s acts in derogation of a fiduciary duty to Meaux harmed it to the tune of $1.43 million. 

The Fifth Circuit only remanded the case so that the District Court could add in pre- and post-judgment interest, thus granting the Plaintiff a Meaux Bettah' Judgment.

There are several other topics of interest in the opinion that are not touched here, and I commend it to your further study.  Circuit Judge DeMoss, who wrote the Court's opinion, must be a fan of Patrick O'Brien or the Horatio Hornblower novels.  As you can see, the decision between these maritime service providers is up to the gunwales with nautical terms and allusions.

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Two new opinions from the Supreme Court of Texas today. 

• Alas, the tow truck driver does not get to keep the large amount of cash found hidden around a suspicious truck's axle, even if his lawyer goes back to his 1L Property notes and pulls out doctrines like "bailment" and "treasure trove" otherwise known as "finders keepers." See State v. $281,420.00 In United States Currency.  But it is kind of cool to see "treasure trove" and "finders keepers" in print.  Justice O'Neill wrote the opinion.
• And yes, a dismissal "with prejudice" really is "with prejudice" even when it ought not to have been so prejudicial.  The DWOP dismissal after a non-suit precludes a later action, even if the trial court should have left well enough alone rather than erroneously DWOP-ing the case.  The judgment, even if erroneous, is not void and protestations that the dog ate it or that one never received the order will not suffice if the judgment has not been set aside.  See The Travelers Ins. Co. v. Joachim.  Justice Green wrote the opinion.  

No more petitions granted in today's orders, and no conference on the calendar next week with much work to be done before the summer dolldrums.  SCOTX needs to find that finishing kick.

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Several new opinions today from the Supreme Court of Texas.  Here's the skinny:

• Yes, you really do have to arbitrate and just because you say it is unconscionable don't make it so.
• No, a police report preliminarily assigning fault for an accident is not "actual notice," which is required for jurisdiction to obtain under the Texas Tort Claims Act.
• No, Texas is not the forum for the world, especially for Australians killed on offshore rigs located near Singapore.
• No, naturally accumulating ice in a Texas parking lot is not an "unreasonable risk of harm" from which a landowner must protect a business invitee.
• Yes, Baylor College of Medicine and its physicians are governmental entities and employees (respectively) when providing charity care at Ben Taub because the Legislature said so. This involves two cases, one with argument and a concurrence, and one PC.  (Full disclosure and shameless plug: The Andrews Kurth Appellate Practice Group represented the defendants in those cases).
• And finally yes, you may have to forfeit your ill gotten gains, in addition to other damages that result from tortious conduct, if you breach your fiduciary duty by fraudulently inducing your partner to a buy out.

Your SCOTX at work!

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Today, in an appeal  by AT&T and similarly situated carries from a preliminary injunction, the Fifth Circuit found that there was no federal question jurisdiction.  Curiously, the non-federal case arises from a regime set up under the federal Telecommunications Act of 1996.  Even more curious, the complaint, at one time, contained federal antitrust claims, dismissed without prejudice for reasons not stated in the Fifth Circuit opinion. 

As Alice would say, "Curiouser and curiouser."  Curiouser still with the addition of the obligatory, alphabet soup of federal acronyms.

In Budget Prepay v. AT&T, the Court held that the Telecommunications Act of 1966 did not provide for federal jurisdiction because, under the structure of the Act, the construction of interconnection agreements (ICAs) between incumbent carriers (ILECs) and the small, wily, competitive carriers (CLECs) are matters of state law.  The importation, by agreement, of FCC standards into the ICA is still A-OK and does not create an FQ (federal question):

[W]e held in Southwestern Bell that interpretation of the terms of an ICA, even if the ICA terms are intertwined with federal law, is a claim governed by and arising under state law.

* * * 

The fact that the ICA at issue here invokes and incorporates federal law is not to the contrary. As noted above, the Act imposes general duties on ILECs and then fills in the details of enforcement and interpretation with regulations promulgated by the FCC. But the parties are free to negotiate around these statutory and regulatory rules. See 47 U.S.C. § 252(a). The invocation of federal law in an ICA does not turn a contract dispute into a federal question case; rather, it accepts the relevant statutory language or regulation as a binding contract provision in lieu of a privately negotiated provision. . . . The fact that this ICA provision was drawn from 47 U.S.C. § 251(c)(4)(A) and not specifically negotiated does not raise a federal question. It raises an issue of state law contract interpretation.

Judge Clement wrote the opinion. 

To recap: the Federal Telecommunications Act allows ILECs and CLECs to have ICAs with FCC regs from the CFR under authority of 47 USC §§ 251 & 252 without making an FQ under 28 U.S.C. § 1331.

This is "cooperative federalism."  Simple, huh?

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A new Fifth Circuit opinion that may be of interest for civil practitioners in Texas.  In The Offshore Drilling Co. v. Gulf Copper & Manufacturing Corp. (pdf) the Fifth Circuit upheld the summary judgment granting indemnity for the contractor whose "hot work" the rig owner blamed for starting a fire on its jack up rig.

The portion of the indemnity provision quoted by the Fifth Circuit  -- odd in its lack of "express negligence" type language ordinarily required under Texas law -- read:

Owner shall indemnify Contractor . . . against any and all losses [to Owner’s property] . . . (unless such property is under the control of Contractor at the time at which such loss or damage occurs), which arise from, are incident to, connected with, or result directly or indirectly from the performance of the work . . . .

The parties disputed control, and according to the Fifth Circuit, came up with additional arguments on their way to the appellate court.  The Court found those to be waived (about which I hope to write more later).  The Court relied on analogies to Texas premises liability law in finding that the "hot work" contractor was not in "control of the property" even though the rig was located at its dock, primarily because it was one of many subcontractors whose access to the rig was controlled and monitored by the rig's owner:

While no Texas court has analyzed “control” in these circumstances, at least one Texas appellate court has applied this definition in a similar context. See Rendleman v. Clarke, 909 S.W.2d 56, 60 (Tex. App. – Houston [14th Dist.] 1995). Rendleman addressed an issue of premises liability, but its discussion of control is still instructive. Specifically, the Rendleman court found that a subcontractor did not control a construction site when multiple other subcontractors were also at work on it, and the contractor performed substantial coordinating functions. Id. at 60-61.

. . . Although TODCO presents evidence demonstrating Gulf Copper’s duties on the vessel, most of these facts pertain only to control over Gulf Copper’s specific project. . . .

. . . As in Rendleman, the evidence showed that TODCO directed and coordinated the bulk of the work performed by the many unrelated contractors also on board.

Judge Southwick wrote the opinion and was joined by Judge Garwood in all respects.  Judge Owen agreed with the result on liability but dissented on the question of whether indemnitee was entitled to attorneys' fees under the language of the contract.

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That incredibly geeky sound you heard over the weekend was the sound of delight as civil procedure profs and appellate lawyers thrilled over the new Fifth Circuit opinions.  What could be better than federal subject matter jurisdiction involving alienage, diversity and removal?

•  In Halmekangas v. State Farm the defendant removed a case to federal court that had no independent basis for federal subject matter jurisdiction, arguing that it was related to a Katrina coverage case already pending in federal court and would fall under the court's "supplemental jurisdiction" (28 U.S.C. 1367).  The Fifth Circuit said, "Interesting argument, but no. Every case must have its own basis for federal jurisdiction before non-federal claims may hitch a ride."  Judge Higginbotham wrote the opinion. 
• Berik Stiftung v. Plains Marketing involved the wonderfully arcane question of how a Lichtensteinian entity ought to be treated for determining diversity of citizenship jurisdiction.  Berik Stiftung argued that it was like a trust under U.S. law and the court should consider only the citizenship of its beneficiaries (i.e., Florida v. Canada and Texas).  Plains argued that Berik Stiftung was more like a corporate person so that the court should consider the state of its incorporation (i.e. Lichtenstein v. Canada and Texas).   This would mean damn foreigners on both sides of the "v," no diversity of citizenship and no federal jurisdiction. 

Plains won.  Judge DeMoss wrote the opinion and got to use the words "res nova" and  “juristische Person.”  Nice touch, that.

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Psssst.  Check it out.

The Fifth Circuit released a couple of opinions yesterday that were not blogworthy--unless that is you thrive on insurance coverage opinions or arcane, federal statutory questions.  

Not that there's anything wrong with that.

But you know what?  The blog has a tool that you can use to peruse the new, published opinions as they come out, even if I don't post on them individually.

I've set up some RSS feeds from the Court that filter out all the criminal, prisoner, immigration and unpublished cases.  Just look at the side bar for "5th Circuit Opinions" and click on a date.  All the published, civil cases coming out that day will be there for your dining pleasure. 

Enjoy. 

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Well, the Civil Procedure wonks are all a-twitter today over the Supreme Court's Shady Grove opinion  (pdf).  And who wouldn't be?  Combine the Erie Doctrine with prompt pay penalties and Federal Rule 23 and you've got a party.   Add a keg and the law nerds will be off the hook, or chain or whatever mot juste is currently de rigueur.

But I'm still counting votes, reading the opinion and trying to decide who won. 

For me the big news is United Healthcare Ins. Co. v. Davis, released today by the Fifth Circuit. 

The State of Louisiana decided to self-insure its employee health benefits to save money.  But this shut out a Louisiana HMO that handled insured products. 

So the HMO "petitioned the government" for a law creating an insured option in which only Louisiana HMOs (i.e., that HMO) could participate.  And it "petitioned the government for a new, open enrollment period during the middle of the plan year for which the foreigners handling self-insurance were already being paid on a per-member basis. 

The carriers handling self-insured plans called foul, arguing the act violated the dormant Commerce Clause and the Contracts Clause.

The Fifth Circuit held:

Because the State, by choosing with whom it did business, was acting as a participant in—and not a regulator of—the insurance market, the Act fell within the market participant exception, and the dormant Commerce Clause was therefore not a bar to its actions. However, the Act was invalid, as applied, because it interfered with the plaintiffs’ current contracts in violation of the Contract Clause.

Among the reasons the act violated the Contract Clause:

In this case, the record indisputably demonstrates that the Act is narrowly focused on benefiting in-state HMOs (indeed, a specific one) and is not a broad exercise of the State’s police power. The representative who drafted the bill met only with the President and CEO of [that specific Louisiana HMO] for input.

Lagniappe in Louisiana?  Health Care?  Political?  Who knew?

Judge Jolly wrote for the majority and Judge Dennis concurred, stating that he would have invalidated the law on both grounds.

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Yesterday the Fifth Circuit released Evanston Ins. Co. v. Dillard Department Stores Inc., which will be of interest to lawyers and civil practitioners.  The court's per curiam opinion imposes individual liability on the two law partners of a defunct limited liability partnership for a judgment taken against the law firm by Dillards arising from the firm's cyberpiracy-web-site business model.  

The judgment was taken against the law firm after the partners signed an agreement to dissolve the limited liability partnership and after its LLP registration had expired without renewal.  As a result, the "debt" (the judgment) was was "incurred" when the law firm was not an LLP.  When Dillards sued the partners to collect the judgment, the LLP statute provided no protection.

So, if you're dissolving that LLP, it ain't over 'til it's over.  Keep that registration current until all the liabilities are in the rear view mirror. 

Oh, and cyberpiracy to attract clients isn't good either.  No need to thank me.  I'm just here to help.

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The hardest working circuit in the law business continues cranking out the hits.  Two published opinions from the Fifth Circuit yesterday having potential interest to the civil practitioner.

• Laughlin v. Nouveau Body  & Tan ( In re Laughlin) (pdf) involves the question of whether the debtor's renunciation of an interest in his father's estate before seeking bankruptcy protection was a fraudulent transfer (it was not).  Judge King wrote the opinion. 
• Wackman v. Rubsamen (pdf) was a wrongful death case applying Texas law.  It probably deserves an extended post as it involved several interesting issues; however, the main issue was the legal sufficiency of the medical causation evidence.  Depending upon whom one believed, the decedent either died of cancer or (according to her largely estranged family) was killed by an overdose of pain medication intentionally administered by her caregivers. 

The court largely affirmed the judgment, finding the expert testimony and circumstantial evidence sufficient to support the judgment notwithstanding some "analytical gaps" acknowledged by the expert.  Judge Garza wrote the opinion.

I hope to have some time to read Wackman closely and pull apart the expert discussion.  It is worth your time as well.  The question presented is right in the middle of the fairway of the when expert testimony is "no evidence," or when an objection is required, or what type of objection is sufficient, or when defects in testimony go to the admissibility or only to the weight of the testimony. 

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It was forum shopping day at the Supreme Court of Texas.  The Court released two mandamuses mandamii mandamae opinions granting petitions for writ of mandamus in which choice of forum was key.

• In re United Services Automobile Association (pdf) involves the question of whether limitations ought to have been tolled (it was not) where the plaintiff's claim exceeded the jurisdictional limits of the county court at law where he chose to file it.  Tolling depends upon whether the filing was made in "intentional disregard of proper jurisdiction" (it was).  Chief Justice Jefferson wrote the Court's opinion.
• In re Liabe Corporation (pdf) involves application of a forum selection clause to commercial actors complaining about equipment that did not work right.  The court only had to resolve fairly pedestrian contract formation questions about whether the plaintiff really really really agreed to bring suit in Indiana (it did) and whether The Hoosier State was really really really inconvenient (it was not).  As a result, the prolific Justice Per Curiam wrote the opinion.

I want to read United Services in more detail this weekend and perhaps write more.  It is certainly a new candidate to be added to the Practice Court reading list at Baylor Law School, highlighting as it does the complexity of trial court jurisdiction in Texas.  Fodder for Socratic torture questioning that is.  United Services also includes some important new wrinkles to the "inadequate remedy by appeal" standard given that denial of summary judgment is ordinarily not a subject for mandamus relief.

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Three days have passed this week, and in all three days the Mighty Fifth Circuit has released published opinions of interest to civil practitioners.  Today the Fifth Circuit released Smith v. Xerox Corp. (pdf) involving jury instructions in a Title VII retaliation case and the standard for punitive damages under the statute.  Judge Reavley wrote the opinion.  Oddly, the Panel released a separate, unpublished opinion (pdf) to explain why the evidence was sufficient to support the retaliation claim.

A divided panel held that the trial court properly inquired of the jury whether Smith's EEOC charge was a "motivating factor in Xerox's termination decision" and then whether "Xerox would have made the same termination decision even if it had not considered Smith's EEOC charge."  The extended statutory analysis is definitely worth your time if you handle employment matters with regularity. 

The Panel Majority concluded that, although the evidence was sufficient to find that retaliation was a motivating factor in the termination, the punitive damages award based on malice or reckless indifference to federal rights could not stand as the requisite mental states had not been established.

Judge Jolly dissented, intimating at a potential circuit split:

First, the majority effectively creates an unnecessary split in the circuits by failing properly to apply the Supreme Court’s ruling in Gross v. FBL Financial Services, Inc. As the Seventh Circuit has correctly reasoned, without statutory language indicating otherwise, the mixed-motive analysis is no longer applicable outside of Title VII discrimination, and consequently does not apply to this retaliation case. Second, the majority errs in treating this case as a mixed-motive case. This case is pretext, pure and simple: it was tried as a pretext case and relies on pretext evidence.

If the Court would take a breather from all this opinion writing, your most humble and obedient blog servant might have time to think deep thoughts about all these developments and commit them to print.  If the Court releases no opinions on Saturdays and Sundays, I still have a chance.

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The Fightin' Fifth Circuit had not yet begun to fight as of this morning's post.  Several more published opinions this evening, one of which might be of interest to civil practitioners.  And even better, an order for en banc review.

• Jurisdiction and procedure nerds will want to read Martin v. Halliburton (pdf) in which the Court dismissed for lack of appellate jurisdiction.  The defendants, contractors in the Iraq War, asserted various immunity defenses, but the district court denied their motion to dismiss for lack of subject matter jurisdiction.  The Fifth Circuit dismissed the interlocutory appeal, most significantly because it found the immunity defenses were not the type that would be subject to the collateral order doctrine. Judge King wrote the opinion.

And finally, the Court ordered rehearing en banc in Castellanos-Contrera v. Decatur Hotels LLC (pdf), which involves FLSA rights of guest workers providing services in the wake of Hurricane Katrina.

The Panel Opinion (pdf), by Judge Jolly, characterized the issues as:

three issues of first impression for this court: whether, under the FLSA, an employer must reimburse guest workers for (1) recruitment expenses, (2) transportation expenses, or (3) visa expenses, which the guest workers incurred before relocating to the employer’s location.

The panel concluded that the FLSA did not require an employer to reimburse any of these expenses, but now the whole court will get to share the fun.

 

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Well, it's been a quiet week in the United States Court of Appeals for the Fifth Circuit, my home Circuit. 

Actually, the Court has been handing down opinions with such regularity, the sister circuits are starting to take offense because the Mighty Fifth is making them look slothful by comparison.

Yesterday, the court handed down three published opinions, two of which might have interest to civil practitioners.  Very briefly:

• In Carmona v. Southwest Airlines Co. (pdf), the Court reversed the district court's decision to grant judgment as a matter of law on a flight attendant's ADA claim.  The flight attendant's psoriatic arthritis had caused the employee to miss work.  The jury had found in favor of the employee on his ADA claim but had rejected his claim under Title VII.  Judge Garwood wrote the opinion.
• And my personal favorite, Wells v. Smithkline Beecham (pdf).  The Plaintiff brought a products liability claim under Texas law and argued that Smithkline Beecham ought to have warned him that Requip would cause compulsive gambling, resulting in millions of dollars of gambling losses.  The Court affirmed the trial court's Daubert ruling finding that the expert testimony linking compulsive gambling to Requip was not up to snuff.  Judge Higginbotham wrote the opinion.   

 Daubert is one of my favs, so watch this space for some further analysis--unless the Mighty Fifth keeps up this pace, in which case there will be insufficient time!

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We at the Appellate Record are not omniscient.  It only seems that way.  Last week's prediction (although no great leap of logic) was correct.  Two full days of conference at the Supreme Court of Texas did result in some actions on the A-Agenda. 

• The Court issued opinions in eight causes.
• The Court granted five petitions for review and set one petition for writ of mandamus for argument.
• The arguments in the new causes are calendared to take place April 14 and 15. 

Alas, "the practice" interferes with my blog habit today.  Nevertheless, hearty hat tip to Don Cruse at the Supreme Court of Texas Blog for the down and dirty summary of the day's cases and links to the briefing in the new causes.  

Continue watch this space as well for further analysis in the days to come of the new opinions and the issues to be reviewed in the new causes.

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The Supreme Court released an opinion of interest to civil practitioners today, in particular attorneys who provide bankruptcy counseling.

In Milavetz, Gallop & Milavetz  v. United States, the Court held that such bankruptcy professionals are “debt relief agenc[ies]” under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) and must comply with the act's disclosure requirements as well as its prohibitions on counseling a person to "load up" with debt in advance of filing for bankruptcy protection.  

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Two published, civil opinions from the Fifth Circuit just out. 

One, Howard v. St. Germain (pdf), affirms sanctions for frivolous removal and imposes further sanctions for a frivolous appeal, a rare event in the Fifth Circuit and therefore worth a read for that reason alone. It probably did not help matters that adverse authority from the Supreme Court dated from 1866.

The second, Bustos v. Martini Club, Inc. (pdf), is a pro se action involving both the Texas Tort Claims Act and Section 1983 claims.  Notably, the case involves the amended Section 101.106 of the Tort Claims Act which requires dismissal of individual defendants under certain circumstances.  There are several cases pending at the Supreme Court of Texas involving pre and post amendment applications of this same section. 

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