Fifth Circuit Update: ADA Goes En Banc + Two Preemption Decisions

Posted on January 28, 2011 by Kendall Gray

 

It has been awhile since we touched on the Fifth Circuit, but the MIghty Mighty Fifth neither slumbers nor sleeps. The Court has taken an ADA case en banc and has released two cases dealing with federal preemption as applied to medical devices.

On the ADA font, Frame v. City of Arlington involves the potential application of the Americans with Disabilities Act to a city and its sidewalks and curbs as well as how the statute of limitations applies to such claims.

  • A panel of the Court first held (pdf) that the City’s curbs, sidewalks, and parking lots constitute a service, program, or activity within the meaning of Title II but that the district court had misallocated the burden of proof on limitations.
  • On rehearing (pdf), the panel recognized that the case presented an issue of first impression and held that that sidewalks curbs, and parking lots are not Title II services, programs, or activities; thus, the plaintiffs lack a private right of action to enforce the regulations unless noncompliance has denied access to a service, program, or activity--if they survive the statute of limitations on which the district court had misallocated the burden of proof.
  • Now (pdf) the en banc Court will consider the case after taking supplemental briefing.

Two different panels of the Court also issued decisions dealing with preemption of personal injury claims arising from medical devices:

  • In Hughes v. Boston Scientific Corporation (pdf), the Court held that the Medical Device Amendments to the Federal Food, Drug, and Cosmetics Act preempted the plaintiffs’ claims concerning a HydroThermAblator used to treat excessive uterine bleeding. “Failure to warn” claims against the manufacturer were viable to the extent it was predicated on the failure to comply with federal statutes and regulations. Judge Davis wrote the Court’s opinion.
  • In Funk v. Stryker Corporation (pdf), the Court affirmed dismissal of the plaintiff’s claims arising from his hip replacement because the claim, as pleaded, was preempted. There are additional procedural wrinkles. The Court did not consider a potential theory in the plaintiff’s second amended complaint because he had not appealed the order denying leave to file it. Likewise, the Court validated the district court’s use of judicial notice as being consistent with a dismissal on the pleadings. Judge Jolly wrote the Court’s opinion.  
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Fifth Circuit Update: Insurance, Real Estate and NLRB (Oh My!)

Posted on December 8, 2010 by Kendall Gray

Many thanks to Jason Shyung, blog contributor and recent Fifth Circuit clerk, for lending a hand in compiling this material, because the Fifth Circuit has been busy this holiday season. It has released a number of opinions that should be of interest to civil practitioners:

  • Cal-Dive Int’l, Inc. v. Seabright Ins. Co. (pdf) reverses a district court’s determination that Seabright Insurance Company had a duty to defend a certain personal-injury lawsuit. The court found that Seabright was absolved from any duty to defend the lawsuit because:

(1) Seabright’s policy included a “Protection and Indemnity” exclusion that removed from coverage any injuries covered by another protection and indemnity policy; and

(2) it was undisputed that such a policy existed and covered the injuries at issue. Judge Davis wrote the court’s opinion.

  • Overstreet v. El Paso Disposal, L.P. (pdf) affirms a district court’s grant of injunctive relief under Section 10(j) of the Labor Relations Management Act. In its decision, the Fifth Circuit made a number of significant holdings, including the following:

(1) injunctive relief under Section 10(j) of the Labor Relations Management Act is not governed by the traditional four-part equitable test for injunctive relief that requires a showing of irreparable harm;

(2) the National Labor Relations Board (“NLRB”) may delegate its authority to seek injunctive relief under Section 10(j) to its General Counsel;

(3) the NLRB’s General Counsel does not lose any authority delegated to him or her when the NLRB does not have a quorum to do business if it had such a quorum at the time it delegated the particular authority at issue; and

(4) a district court in granting injunctive relief may not order a party to agree to a bargaining proposal.

Judge Wiener wrote the court’s opinion.

  • Freeman v. Quicken Loans, Inc. (pdf) holds that section 8(b) of the Real Estate Settlement Procedures Act does not prohibit a lender from charging borrowers loan discount fees or loan processing fees at the closing of a mortgage transaction so long as the lender does not split the fees with another party. Chief Judge Jones wrote the majority opinion. Judge Higginbotham dissented.
  • Keller Founds., Inc. v. Wausau Underwrites Ins. Co. (pdf) holds that non-assignment clauses in insurance policies are enforceable under Texas law and coverage does not transfer to an alleged "successor" by operation of law where the policies are excluded from an asset transfer. Judge Owen wrote the court’s opinion. 

 Thanks again to Jason and stay tuned for more Nerdlaws to come. 

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Choice Healthcare v. Kaiser Foundation: Member Choices Don't Create Jurisdiction Over Health Insurer

Posted on August 13, 2010 by Kendall Gray

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.

In Choice Health Care, Kaiser contracted with an intermediary (Multiplan) to gain discounted access for it's members when they needed health care in a number of jurisdictions outside the Kaiser service area.  Multiplan had separate contracts with providers all over the country. 

Some of Kaiser's members happened to be in Louisiana when they needed services.  A Louisiana provider later claimed it was paid the wrong rate and sued Kaiser.  Kaiser, having paid some of the related charges, argued that it was nonetheless not subject to jurisdiction in Louisiana because the charges themselves resulted from the unpredictable and unilateral choices of the members, not purposeful availment by Kaiser.

The court noted:

In the instant case, no evidence was presented that Choice obtained advance approval from Kaiser prior to treatment. We are satisfied, however, that Kaiser’s payment of a limited number of claims for treatment of Kaiser’s insureds, based on the unilateral decisions of those insureds who sought treatment in Louisiana, does not establish purposeful contact between the individual Kaiser defendants and the State of Louisiana. The individual Kaiser defendants covered their respective insureds for treatment in HMOs in the area where the insureds lived and worked. This is where Kaiser directed their insureds for treatment. Kaiser only provided out-of-area coverage for limited treatment to insureds based on emergency care or other urgent health care needs. Viewed in this light, Kaiser’s payment to Choice for urgent or emergency treatment of its insureds who visited Louisiana and fortuitously required such treatment cannot qualify as commercial activity purposefully directed toward Louisiana. In making these payments, Kaiser was not attempting to expand sales to Louisiana or otherwise develop commercial activity in Louisiana. Kaiser
made the payments because its insureds independently and without encouragement from Kaiser presented to a Louisiana hospital for urgent care
while visiting Louisiana.

For similar reasons, the Court rejected the provider's attempt to argue a "stream of commerce" theory of personal jurisdiction.  Health care members are not like products placed in the stream of commerce with the knowledge and intention that they will eventually marketed in the forum.  Said the court:

The facts of this case simply do not fit the stream of commerce model . . . . Unlike the cases where the stream of commerce theory has been applied, this is not a products liability case or similar case where a defendant places a product in the stream of commerce as part of a sales or distribution network designed to market its products nationwide (or at least outside of its home state) where it would derive financial benefit from sales in the forum. . . . Deriving revenue from such commercial activity is the quid pro quo for requiring the defendant to suffer a suit in the foreign forum. . . . Additionally, the independent action of the insureds in traveling to the forum state to seek treatment outside of their coverage area . . .  unrelated to any marketing scheme by Kaiser, is inconsistent with the notion that Kaiser made purposeful commercial contact with Louisiana for the purpose of increasing its revenue

So, the commercial realities and contractual structure at issue was key to the decision in Choice Health Care.  (Go here for a prior post in which the nature of the contracting and commercial relationships also controlled the outcome of a jurisdictional question.) 
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What If You Filed A Lawsuit And Nobody Came: Comer v. Murphy Oil USA

Posted on June 14, 2010 by Kendall Gray

Did you notice when the Fifth Circuit ceased to be?

Let me explain.

No, let me sum up.

The Fifth Circuit ceased to exist for one particular case.  The result was a non-en-banc en banc reversal of the panel opinion, and the non-affirmance affirmance of the the district court opinion. 

I am referring to Comer v. Murphy Oil.  The District Court dismissed the case holding that hurricane victims could not sue the military industrial complex for worsening their hurricane damage by contributing to global warming.

A panel of the Fifth Circuit held, "yes you can."

The en banc court said, "no you can't"

Except it didn't.  Well, kinda.  After the jump, an explanation and a recommendation. 

Unencumbered by any law, my personal view is that the district court probably got it right and the underlying lawsuit is passing strange and nonjusticiable.  But it is equally strange that there is now no appellate ruling declaring that to be so.  

The en banc court did not review the merits, the district court opinion essentially became law of the case.  Why?  Because The United States Court of Appeals for the Fifth Circuit lost its quorum and ceased to exist as an adjudicative body.  Judge Davis, a member of the Panel, dissented to the dismissal of the appeal and explained:

[A] panel of this court, after full consideration of the briefs and oral argument, decided appellant’s appeal. Appellee then applied for en banc rehearing and a vote was taken. Only nine of the seventeen active judges were unrecused and qualified to participate in a vote. By 6 to 3, the nine qualified judges voted to grant rehearing en banc. Shortly after the case was voted en banc, one of the six judges voting for en banc declared herself recused thereby causing the court to lose its quorum. Instead of declaring that the loss of a quorum automatically dis-en banced the case causing the case to return to its status before it was voted en banc, five of the eight remaining unrecused judges voted to enter the attached order dismissing the appeal. The five judges who entered this order reasoned that this result was mandated by our Local Rule 41.3, which provides: “Unless otherwise expressly provided, the granting of a rehearing en banc vacates the panel opinion and judgment of the court and stays the mandate.”

So there was no more Panel Opinion, but no body capable of adjudicating the case.  Judge Dennis, also a member of the panel, dissented to the dismissal and saw no need for such an outcome:

It is worth emphasizing once more that the majority’s dismissal of this case is a decision to reject several legally valid courses of action, not a merely ministerial application of settled rules as the majority suggests. It is therefore inconsistent with the majority’s own rationale, which is predicated on the claim that we lack a quorum and therefore lack the power to take any action in this case. Despite our supposed lack of power, the majority has made the decision not to recognize that we have a quorum under 28 U.S.C. § 46; not to follow the example of the Supreme Court in North American Co.; not to invite an outside judge under 28 U.S.C. § 291; and not to apply the Rule of Necessity under Will. The majority has instead decided to dismiss a case over which we have jurisdiction, thereby violating the longstanding rule, dating back to Cohens v. Virginia, that we lack the power to decline to exercise the jurisdiction that has been conferred on us. Because this court has an absolute duty to render a decision in this appeal, I respectfully dissent.

Whether one sides with Judge Dennis in believing that the Court does have power to proceed or with the former en banc majority in believing that it does not, one thing probably ought to spark some agreement.  This Court, one of the busiest in the nation, ought not be shut down or stymied by such stuff. 

The Supreme Court of Texas famously had the "All Woman Court" appointed by Governor Pat Neff in 1925 when every member of the court (and darn near every lawyer in the state) were unable to proceed because they were members of the organization in suit.   And the Fifth Circuit managed to desegregate the deep south through both threats and acts of violence against the institution. 

But now this?

The public needs the Fifth Circuit to function.  There ought be no set of facts under which the Court cannot consider the merits of a case over which it has jurisdiction.  If it were otherwise, the Court and its decisions become subject to manipulation.  If the current rules and recusal standards subject the court to such manipulation or if they cannot protect against the loss of a judicial forum capable of exercising power, then they are inadequate and must be changed.
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