Justia U.S. 5th Circuit Court of Appeals Opinion Summaries

A dispute arose when a company alleged that its proprietary process for manufacturing polycarbonate, a valuable industrial material, was misappropriated by a group of former employees and several consulting and engineering firms. The process involved multiple stages and technological innovations developed over decades, and had been licensed to partners around the world. After one former employee, who had extensive knowledge of the process, began consulting internationally and sharing information—including plant designs marked confidential—questions arose about whether these actions led to the improper use of trade secrets in the development and marketing of similar technology to other manufacturers.The United States District Court for the Southern District of Texas presided over a jury trial in which the jury found that four out of ten asserted trade secrets were misappropriated by the defendants, including the consulting companies and engineering firm. The jury awarded substantial damages to the plaintiff, including reasonable royalties and unjust enrichment amounts. However, the district court later granted the defendants’ motions for judgment as a matter of law, vacating the damages award on the grounds that the plaintiff had failed to properly apportion damages among the trade secrets found to be misappropriated, instead presenting an “all-or-nothing” damages model. The district court also granted summary judgment against the plaintiff's alternative claim for misappropriation of confidential information, finding it preempted by state trade secrets law, denied a new trial on damages, and entered a permanent injunction against the defendants.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the district court's rulings in all respects. The Fifth Circuit held that, where multiple trade secrets are alleged and only some are found misappropriated, the plaintiff must provide a reasonable basis for the jury to apportion damages among the proven secrets. The court also affirmed the preemption of alternative confidential information claims and upheld the permanent injunction. View "Trinseo v. Harper" on Justia Law

Sirius Solutions, L.L.L.P. is a limited liability limited partnership organized under Delaware law, operating as a business-consulting firm. The partnership consisted of both limited partners and a general partner, Sirius Solutions GP, L.L.C. For the tax years 2014, 2015, and 2016, Sirius reported all ordinary business income as allocated to its limited partners and excluded those distributive shares from net earnings from self-employment, claiming an exemption under 26 U.S.C. § 1402(a)(13) for limited partners. This resulted in Sirius reporting zero net earnings from self-employment in each year.The Internal Revenue Service audited Sirius’s returns and, through Notices of Final Partnership Administrative Adjustment, determined that Sirius’s limited partners did not qualify as “limited partners” for purposes of the statutory exception. Therefore, the IRS reclassified the distributive shares of income as subject to self-employment tax, substantially increasing Sirius’s net earnings from self-employment for the years at issue. Sirius petitioned the United States Tax Court for readjustment, and the cases for all three years were consolidated. The Tax Court, relying on its decision in Soroban Capital Partners LP v. Commissioner, 161 T.C. 310 (2023), held that only passive investors qualify as “limited partners” under § 1402(a)(13), and thus upheld the IRS’s adjustments.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the meaning of “limited partner” under § 1402(a)(13). The Fifth Circuit held that a “limited partner” is a partner in a state-law limited partnership who has limited liability, rejecting the narrower “passive investor” test applied by the Tax Court and IRS. The Fifth Circuit vacated the Tax Court’s decision and remanded for further proceedings, instructing that the distributive shares of limited partners with limited liability should be excluded from self-employment earnings for tax purposes. View "Sirius Solutions v. Commissioner of Internal Revenue" on Justia Law

Genesis Marine, LLC owned and operated the towing vessel M/V Anaconda and two barges, collectively valued at $12.5 million. Brandon Darrow, a tankerman employed by Genesis, suffered a severe back injury on December 23, 2020 while working aboard the vessel. Following the injury, Darrow underwent multiple surgeries and was ultimately deemed permanently disabled and unable to return to work. His medical records and expert evaluations indicated extensive pain, ongoing disability, and significant future care needs. Darrow’s counsel sent Genesis periodic updates regarding his medical condition and proposed damages, including an eventual settlement demand exceeding $20 million.Darrow filed a tort lawsuit against Genesis in Louisiana state court in December 2021, alleging negligence and unseaworthiness and seeking various categories of damages. Genesis filed an answer in August 2022, which included an affirmative defense invoking limitation of liability under federal law. Discovery continued, during which Genesis received detailed documentation of Darrow’s injuries, treatments, and expert reports estimating damages in excess of the vessel’s value. In August 2024, Darrow’s experts further confirmed his total and permanent disability and submitted updated damage estimates.On December 13, 2024, Genesis initiated a limitation of liability action in the United States District Court for the Eastern District of Louisiana, arguing it was timely because it was filed within six months of Darrow’s August 2024 settlement demand. Darrow moved for summary judgment, asserting the limitation action was untimely under 46 U.S.C. § 30529(a) because Genesis had received written notice of a reasonable possibility that damages would exceed the vessel’s value well before June 2024. The district court granted summary judgment for Darrow, and Genesis appealed.The United States Court of Appeals for the Fifth Circuit affirmed the district court’s judgment, holding that Genesis’s limitation action was untimely because Genesis had received sufficient written notice of a reasonable possibility that the claim would exceed the vessel’s value more than six months before filing the limitation action. View "Genesis Marine v. Darrow" on Justia Law

More than a decade ago, Peconic Bay Medical Center submitted an Adverse Action Report (AAR) to the National Practitioner Data Bank regarding Dr. John Doe. Dr. Doe made repeated efforts to have the AAR removed, including seeking review from the Secretary of the Department of Health and Human Services (HHS) and filing federal lawsuits in Washington, D.C. These lawsuits were unsuccessful, with courts such as the United States District Court for the District of Columbia and the United States Court of Appeals for the District of Columbia Circuit rejecting his claims. During the course of litigation, Dr. Doe obtained documents in discovery that he believed supported his renewed request for reconsideration to HHS regarding the AAR.HHS denied Dr. Doe’s request for reconsideration, stating that he was “not eligible for additional administrative review of the Report.” Dr. Doe then filed suit in the United States District Court for the Eastern District of Texas, alleging, among other things, that HHS’s denial violated the Administrative Procedure Act (APA). The district court dismissed Dr. Doe’s APA claim, concluding that the denial of reconsideration was unreviewable because Dr. Doe had not presented new evidence.On appeal, the United States Court of Appeals for the Fifth Circuit found that HHS violated the Chenery principle by changing its rationale for denying reconsideration during the litigation. The Fifth Circuit held that judicial review of agency action must be based solely on the grounds set forth by the agency at the time of its decision. Because HHS’s stated reason was incorrect—Dr. Doe was eligible for reconsideration under department guidance—the appellate court reversed the district court’s dismissal of Dr. Doe’s APA claim and remanded the case for further proceedings. View "Doe v. Department of Health and Human Services" on Justia Law

Jose Fuentes-Pineda, a native and citizen of El Salvador, entered the United States unlawfully in 2022 and requested deferral of removal under the Convention Against Torture (CAT). Fuentes-Pineda testified that he was forced to join the Barrio 18 gang as a teenager and later left the gang after becoming a Christian. He has tattoos indicating his former gang affiliation and was previously convicted of a gang-related homicide in El Salvador. He claimed Salvadoran police had tortured him twice in the past and argued that, if removed, he would likely be detained and subjected to torture or severe mistreatment due to his gang history.An Immigration Judge (IJ) found Fuentes-Pineda’s testimony credible but concluded he could not demonstrate a clear probability of future torture by Salvadoran authorities. The IJ noted his prior encounters with police and instances of torture but determined that most mistreatment did not rise to the level of torture. The IJ found it speculative to assume the same officers would be involved in any future detention and concluded that poor prison conditions in El Salvador were not specifically intended to inflict torture. After remand for further proceedings, the Board of Immigration Appeals (BIA) adopted and affirmed the IJ’s decision.The United States Court of Appeals for the Fifth Circuit reviewed both the BIA’s order and the underlying IJ decision, applying a highly deferential substantial evidence standard to factual findings and de novo review to legal questions. The court held that substantial evidence supported the BIA’s determination that El Salvador’s prison conditions, while harsh, were not intentionally designed to inflict torture. The court also found the risk of future torture to Fuentes-Pineda to be speculative, given the lack of compelling evidence he would be targeted. The Fifth Circuit accordingly denied Fuentes-Pineda’s petition for review. View "Fuentes-Pineda v. Bondi" on Justia Law

A Mississippi retail pharmacy, Rx Solutions, Inc., sought to join the pharmacy benefit management (PBM) network operated by Caremark, LLC, which is associated with CVS Pharmacy, Inc. Caremark denied Rx Solutions’ application, citing inconsistencies in ownership information and affiliations with Quest Pharmacy, owned by Harold Ted Cain, who Caremark claimed was previously found guilty of violating the False Claims Act. Rx Solutions disputed these reasons, noting acceptance by other PBM networks and asserting that Harold Ted Cain lacked operational control over Rx Solutions and had not been convicted of any relevant criminal offense.Rx Solutions filed suit in the United States District Court for the Southern District of Mississippi, alleging two federal antitrust violations under the Sherman Act and three state law claims: violation of Mississippi’s “any willing provider” statute, violation of the state antitrust statute, and tortious interference with business relations. The district court dismissed the federal antitrust and state statutory claims, concluding that Rx Solutions failed to adequately define relevant product and geographic markets and did not allege antitrust injury. The court also determined there was no diversity jurisdiction to support the remaining state law claims and declined to exercise supplemental jurisdiction.The United States Court of Appeals for the Fifth Circuit affirmed the district court’s dismissal of the federal antitrust and Mississippi state antitrust claims, holding that Rx Solutions did not sufficiently plead a relevant market or antitrust injury. However, the Fifth Circuit reversed the district court’s finding regarding diversity jurisdiction, based on admissions by Caremark and CVS establishing complete diversity between the parties. The appellate court affirmed the dismissal of the state antitrust claim and remanded the claims under Mississippi’s “any willing provider” statute and for tortious interference with business relations for further proceedings. View "Rx Solutions v. Caremark" on Justia Law

Texas LNG, a company seeking to construct a liquid natural gas terminal in Brownsville, Texas, received a permit from the Texas Commission on Environmental Quality (TCEQ) to build its facility. The company faced delays due to litigation and the COVID-19 pandemic, resulting in three successive extensions of its construction deadline granted by TCEQ’s executive director. The South Texas Environmental Justice Network (STEJN), an environmental advocacy group, moved to overturn the third extension, arguing that Texas LNG did not meet the requirements under Texas law to receive it and that the executive director lacked authority to grant the extension.Prior to the current appeal, both federal and state agencies reviewed Texas LNG’s permit. The Federal Energy Regulatory Commission (FERC) and TCEQ initially granted the necessary permits, but subsequent legal challenges led to a remand by the D.C. Circuit to FERC (which ultimately reaffirmed the permit) and a dismissal by the Third Court of Appeals in Austin for lack of subject-matter jurisdiction regarding the TCEQ permit. TCEQ’s Office of Public Interest recommended granting the motion to overturn on the basis of updated air quality standards, but TCEQ did not issue a decision, resulting in a denial of STEJN’s motion by operation of law.The United States Court of Appeals for the Fifth Circuit reviewed STEJN’s direct petition for review of TCEQ’s denial. Applying de novo review under the Texas Administrative Procedure Act, the Fifth Circuit held that STEJN had standing but found that TCEQ’s executive director had the authority under section 116.120 of the Texas Administrative Code to grant the third extension. The court determined that Texas LNG met the regulatory requirements for a third extension, and substantial evidence supported TCEQ’s decision. Therefore, the Fifth Circuit denied STEJN’s petition for review. View "S Texas Environmental Justice v. Commission on Environmental Quality" on Justia Law

Two Venezuelan sisters, both recipients of Temporary Protected Status (TPS) in the United States, submitted affirmative applications for asylum, alleging past persecution and fear of future persecution in Venezuela. After interviews with asylum officers, they were denied asylum by U.S. Citizenship and Immigration Services (USCIS), which concluded that they had not shown a reasonable possibility of persecution. The denial letters stated that, due to their TPS, there would be no referral to an immigration judge for removal proceedings, and that the determinations could not be appealed at that time.Following delays in adjudication, each sister filed suit against various federal officials in the United States District Court for the Southern District of Texas, seeking to overturn the asylum denials under the Administrative Procedure Act (APA) as arbitrary and capricious. The district court in one case dismissed the suit without prejudice for lack of jurisdiction under Rule 12(b)(1), finding no final agency action; the other district court dismissed with prejudice for failure to state a claim under Rule 12(b)(6), also citing lack of final agency action. The sisters appealed, and the cases were consolidated.The United States Court of Appeals for the Fifth Circuit held that the USCIS denial letters were not final agency actions under the APA because the administrative process was not complete. The sisters could still seek asylum defensively in future removal proceedings once their TPS ended. The court concluded that, since the agency’s decision did not fix legal rights or obligations or trigger legal consequences, the district courts lacked subject-matter jurisdiction. The Fifth Circuit affirmed both dismissals and modified the dismissal in the case that had been with prejudice to be without prejudice. View "Sayegh de Kewayfati v. Bondi" on Justia Law

Several entities affiliated with Allstate sued a group of individuals and entities that own, manage, and operate Memorial Heights Emergency Center in Houston, Texas. The plaintiffs alleged that, starting in 2018, defendants entered into agreements with personal injury attorneys to refer clients to the Center under letters of protection, guaranteeing future payment from insurance settlements. Defendants billed these patients—primarily car accident victims—using emergency billing codes at rates far above standard charges, often conducting expensive diagnostic tests without documented medical necessity and discharging patients without additional treatment. The bills were then sent to attorneys, who submitted them to Allstate for inclusion in settlement demands. Between August 2018 and November 2022, Allstate settled with 635 claimants and subsequently alleged it discovered a fraudulent scheme, seeking to recover $4.7 million plus treble damages and attorney fees.The United States District Court for the Southern District of Texas dismissed all claims with prejudice. The district court held that Allstate failed to sufficiently allege reliance on the fraudulent bills, undermining its RICO, common-law fraud, conspiracy, unjust enrichment, and money-had-and-received claims. The court also found Allstate had not adequately pleaded direct or proximate causation, concluded that Allstate was “complicit” in the alleged fraud due to its continued settlements after learning of the scheme, and determined that the complexity of the case made it unmanageable as a single lawsuit.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the dismissal de novo. The Fifth Circuit held that the district court applied the wrong legal standards to Allstate’s RICO claims by requiring reliance, which is not necessary for a RICO claim predicated on mail fraud. The appellate court further found that Allstate adequately pleaded proximate cause, damages, and the elements of its common-law and equitable claims. The judgment of the district court was reversed and the case remanded for further proceedings. View "Allstate Indemnity Co v. Bhagat" on Justia Law

Brent Dubois was convicted in 2011 of possession of a controlled substance with intent to distribute, receiving a sentence of 188 months in prison and three years of supervised release. As part of his supervised release, a condition required him to participate in a substance abuse program, allowing the probation office to decide whether that would be inpatient or outpatient treatment. After a relevant amendment to the Sentencing Guidelines, Dubois’s sentence was reduced to 151 months. Upon completing his incarceration in 2023, Dubois began supervised release, but struggled to comply with outpatient treatment requirements. After repeated difficulties and four revocation hearings, his probation officer filed a petition for revocation, leading Dubois to admit to violations except one allegation, which the government withdrew.The United States District Court for the Northern District of Texas sentenced Dubois to ten months in prison and 32 months of supervised release, reimposing the original supervised release conditions. Notably, it again permitted the probation office to determine whether Dubois’s substance abuse treatment would be inpatient or outpatient. Dubois did not object to this condition at sentencing, but later appealed, arguing that the delegation of this decision to the probation office was improper.The United States Court of Appeals for the Fifth Circuit reviewed the case under the plain error standard, given Dubois’s lack of objection in district court. The Fifth Circuit held that permitting the probation office to decide between inpatient and outpatient treatment constituted an impermissible delegation of the district court’s core judicial sentencing function, particularly since the sentence following revocation was only ten months. The court found this error to be clear under existing precedent, affected Dubois’s substantial rights, and warranted discretionary correction. The Fifth Circuit vacated the supervised release condition at issue and remanded the case for further proceedings. View "United States v. Dubois" on Justia Law