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

Seville Industries, LLC, a business providing services to the oil and gas sector, applied for a Paycheck Protection Program (PPP) loan during the COVID-19 pandemic. The company included payments to independent contractors in its payroll costs calculation, resulting in a loan amount of $2,578,351. The Small Business Administration (SBA) later reviewed Seville's loan and determined that the inclusion of independent contractor payments was incorrect, leading to a partial forgiveness of the loan amount.The United States District Court for the Western District of Louisiana reviewed Seville's appeal against the SBA's decision. The district court granted summary judgment in favor of the SBA, upholding the decision to deny full loan forgiveness based on the inclusion of independent contractor payments in the payroll costs.The United States Court of Appeals for the Fifth Circuit reviewed the case and affirmed the district court's decision. The court held that the CARES Act's definition of "payroll costs" does not include payments made to independent contractors by businesses. The court emphasized that the statutory text and structure clearly distinguish between payroll costs for employees and income for independent contractors or sole proprietors. The court also rejected Seville's claims that the SBA's interim final rule changed the meaning of "payroll costs" and that the SBA should be equitably estopped from denying full forgiveness. The court concluded that Seville was not entitled to include payments to independent contractors in its payroll costs calculation for PPP loan forgiveness. View "Seville Industries v. SBA" on Justia Law

In November 2023, Media Matters for America, a nonprofit organization, published articles critical of X Corp. and its CEO, Elon Musk, alleging that advertisements from popular brands were placed next to harmful content on the X platform. This led to significant losses for X as advertisers withdrew. X sued Media Matters and its employees in the federal district court for the Eastern District of Texas, alleging interference with contract, business disparagement, and interference with prospective economic advantage. Media Matters moved to dismiss the complaint for lack of personal jurisdiction, improper venue, and failure to state a claim, but the district court denied the motion. Media Matters then sought to certify the personal jurisdiction question for immediate appeal, which was also denied.The district court denied Media Matters' subsequent motion to transfer venue to the Northern District of California, citing untimeliness and a pattern of gamesmanship. Media Matters then filed a petition for writ of mandamus with the United States Court of Appeals for the Fifth Circuit, seeking a venue transfer based on 28 U.S.C. §§ 1404 and 1406.The United States Court of Appeals for the Fifth Circuit reviewed the petition and found that the district court had not properly considered the eight public- and private-interest factors required for a venue transfer analysis. The appellate court granted Media Matters' petition in part, vacated the district court's order denying the transfer, and remanded the case for a proper venue analysis. The court also held Media Matters' interlocutory appeal in abeyance pending the resolution of the remand. View "In Re: Media Matters for America" on Justia Law

Raymond Vuoncino, a corporate-finance professional, worked for U.S. Pipe Fabrication, LLC (Fabrication). After Fabrication implemented new accounting practices for inter-company sales, Vuoncino objected to these practices as potentially fraudulent. Subsequently, he was fired by an executive of Fabrication’s parent company, Forterra, Inc. Vuoncino sued Fabrication, Forterra, and two Forterra executives, alleging violations of the Sarbanes-Oxley Act’s anti-retaliation provision.The United States District Court for the Northern District of Texas dismissed Vuoncino’s first amended complaint for failure to state a claim, denied his motion for leave to amend his complaint, and denied reconsideration of those orders. Vuoncino appealed these decisions.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed the district court’s denial of Vuoncino’s motion for leave to file a second amended complaint, finding the proposed amendments were time-barred and did not relate back to the original complaint. The court also affirmed the district court’s denial of reconsideration, noting that Vuoncino’s motion rehashed previously rejected arguments and did not present newly discovered evidence.However, the Fifth Circuit reversed the district court’s dismissal of the Sarbanes-Oxley Act claim against Fabrication, concluding that Vuoncino’s first amended complaint plausibly alleged that Fabrication employed him. The court found that Vuoncino’s allegations, taken as true, were sufficient to raise a plausible inference that he was a Fabrication employee. The court affirmed the dismissal of the Sarbanes-Oxley Act claims against Forterra, Bradley, and Kerfin, as Vuoncino failed to sufficiently plead that these defendants were his employer’s alter ego or that he could sue Forterra directly without establishing an employment relationship.The Fifth Circuit affirmed in part, reversed in part, and remanded the case for further proceedings. View "Vuoncino v. Forterra" on Justia Law

In 2006, Cabot Oil & Gas Company began fracking in Dimock Township, Pennsylvania. By 2009, their operations caused a residential water well explosion, leading to methane gas contamination in local water supplies. The Pennsylvania Department of Environmental Protection (DEP) found Cabot in violation of environmental laws, resulting in the 2009 Consent Order, which mandated corrective actions and a $120,000 penalty. Cabot violated this order by 2010, leading to another consent order and additional fines. Over the next decade, Cabot received numerous violation notices and faced lawsuits, including a 2020 grand jury finding of long-term indifference to remediation efforts, resulting in criminal charges and a nolo contendere plea.Shareholders filed a derivative suit against Cabot’s directors, alleging breaches of fiduciary duties, including failure to oversee operations, issuing misleading statements, and insider trading. The United States District Court for the Southern District of Texas dismissed the claims, finding no serious oversight failure or bad faith by the directors, and insufficient particularized allegations to support claims of material misrepresentation or insider trading.The United States Court of Appeals for the Fifth Circuit reviewed the case de novo. The court affirmed the district court’s dismissal, agreeing that the directors had implemented and monitored compliance systems, and that the shareholders failed to demonstrate bad faith or conscious disregard of duties. The court also found that the statements in Cabot’s disclosures were not materially misleading and that the shareholders did not adequately plead demand futility regarding the insider trading claim. Thus, the court upheld the dismissal of all claims with prejudice. View "Ezell v. Dinges" on Justia Law

The case involves a dispute arising from alleged breaches of a partnership agreement between PNC Bank, N.A., Columbia Housing SLP Corporation (collectively, the "PNC Parties"), and Rene O. Campos, along with 2013 Travis Creek GP, LLC, as general partner. The partnership was formed to acquire, construct, develop, and operate an affordable housing apartment complex in Austin, Texas, with anticipated federal tax credits. A mechanic’s lien was placed on the property, leading to a default on the construction loan. The PNC Parties sought to remove the general partner and replace it with Columbia, resulting in a lawsuit.The PNC Parties filed the lawsuit in the United States District Court for the Western District of Texas, invoking diversity jurisdiction. The district court retained supplemental jurisdiction over the enforcement of the settlement agreement that resolved the 2017 lawsuit. In 2021, the Eureka Parties moved to re-open the case to enforce the settlement agreement, leading to competing motions to enforce. The district court severed the motions from the original lawsuit, creating a new case, and granted each motion in part, offsetting the balance owed. The Eureka Parties and the Partnership appealed.The United States Court of Appeals for the Fifth Circuit reviewed the case and found that the parties failed to establish an independent jurisdictional basis for the severed motions. The court noted that severed claims must have an independent jurisdictional basis and that the record lacked sufficient evidence to establish diversity of citizenship. Consequently, the court remanded the case to the district court for the limited purpose of determining whether such jurisdiction exists. The panel retained jurisdiction over the limited remand. View "PNC Bank v. 2013 Travis Oak Creek" on Justia Law

Timothy Barton was involved in a scheme to develop underutilized land with loans from Chinese nationals. The Securities and Exchange Commission (SEC) and the Department of Justice initiated parallel civil and criminal proceedings against Barton and his associates, alleging violations of antifraud provisions of the Securities Act and the Exchange Act. The SEC sought a receivership to preserve lenders' assets, leading to various district court orders imposing and administering a receivership and freezing Barton’s assets. Barton appealed these orders and requested reassignment of the case on remand.The United States District Court for the Northern District of Texas initially imposed a receivership, which Barton appealed. The United States Court of Appeals for the Fifth Circuit vacated the receivership order, finding that the district court used the wrong standard and that the receivership's scope was too broad. On remand, the district court applied the correct standard from Netsphere, Inc. v. Baron and reimposed a receivership, including entities that received or benefited from assets traceable to Barton’s alleged fraudulent activities. Barton again appealed, challenging the district court’s jurisdiction, the decision to appoint the receiver, the scope of the receivership, the administration of the receivership, and the preliminary injunction.The United States Court of Appeals for the Fifth Circuit affirmed the district court’s imposition and scope of the receivership and the grant of a preliminary injunction. The court found no abuse of discretion in the district court’s actions and dismissed Barton’s appeal of certain orders administering the receivership for lack of jurisdiction. The court also denied Barton’s request to reassign the case to another district-court judge, finding no basis for reassignment. View "Securities and Exchange Commission v. Barton" on Justia Law

Zyla Life Sciences, LLC (Zyla) sells FDA-approved indomethacin suppositories, while Wells Pharma of Houston, LLC (Wells Pharma) sells compounded indomethacin suppositories that are not FDA-approved but are produced in a registered compounding facility. Zyla filed suit against Wells Pharma under the unfair-competition laws of six states, arguing that Wells Pharma's sales violated state laws that mirror the Federal Food, Drug, and Cosmetic Act (FDCA) by requiring FDA approval for new drugs.The United States District Court for the Southern District of Texas granted Wells Pharma's motion to dismiss, holding that the state laws were preempted by federal law. Zyla appealed the decision.The United States Court of Appeals for the Fifth Circuit reviewed the case and reversed the district court's decision. The Fifth Circuit held that state laws mirroring federal requirements are not preempted by the FDCA. The court relied on the Supreme Court's decision in California v. Zook, which established that state laws incorporating federal law do not create a conflict and are not preempted. The court also distinguished this case from Buckman Co. v. Plaintiffs’ Legal Committee, noting that Buckman involved state-law claims of fraud on a federal agency, which is a uniquely federal concern, unlike the parallel state regulations at issue here.The Fifth Circuit concluded that the state laws in question do not conflict with the FDCA and do not interfere with federal enforcement discretion. Therefore, the district court's order granting Wells Pharma's motion to dismiss was reversed, Wells Pharma's cross-appeal for attorney's fees was dismissed as moot, and the district court's order denying Zyla's motion for leave to amend was vacated. The case was remanded for further proceedings. View "Zyla Life Sciences v. Wells Pharma" on Justia Law

In November 2023, X Corp. filed a lawsuit against Media Matters, Inc., Eric Hananoki, and Angelo Carusone, alleging interference with X Corp.'s contracts, business disparagement, and interference with prospective economic advantage. X Corp. claimed that Media Matters manipulated images to portray X Corp. as a platform dominated by neo-Nazism and anti-Semitism, which alienated advertisers, publishers, and users. During discovery, X Corp. requested Media Matters to produce documents identifying its donors and communications with them. Media Matters resisted, citing First Amendment concerns.The United States District Court for the Northern District of Texas initially ordered Media Matters to log documents responsive to X Corp.'s requests as privileged. However, Media Matters did not comply, arguing that the requests overlapped with other discovery requests. The district court then granted X Corp.'s motion to compel production, ruling that Media Matters had waived any First Amendment privilege by not searching for or logging the documents. Media Matters appealed the order and sought a stay pending appeal.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court found that it had jurisdiction under the collateral order doctrine, as the discovery order involved important First Amendment issues that were separate from the merits of the case and would be effectively unreviewable on appeal. The court determined that Media Matters was likely to succeed on the merits of its appeal because the discovery requests were not proportional to the needs of the case and posed a significant burden on Media Matters and its donors. Consequently, the court granted Media Matters's motion for a stay pending appeal, staying the district court's order compelling production. View "X Corp v. Media Matters" on Justia Law

Texas Truck Parts & Tire, Incorporated, a wholesaler and retailer of truck parts and tires, purchased tires from Chinese manufacturers between 2012 and 2017. These manufacturers shipped the tires to Texas Truck in Houston, Texas. Texas Truck did not file quarterly excise tax returns or pay excise taxes on the tires, believing the Chinese manufacturers were the importers responsible for the tax. Following an IRS audit, Texas Truck was assessed approximately $1.9 million in taxes. Texas Truck paid a portion of the taxes and filed for a refund, which the IRS did not act upon, leading Texas Truck to file a lawsuit seeking a refund. The Government counterclaimed for the remaining taxes owed.The United States District Court for the Southern District of Texas granted summary judgment in favor of Texas Truck, determining that the Chinese manufacturers were the importers and thus liable for the excise tax. The court based its decision on the interpretation that Texas Truck did not "bring" the tires into the United States under the applicable Treasury regulation, and did not consider whether Texas Truck was the beneficial owner of the tires.The United States Court of Appeals for the Fifth Circuit reviewed the case and held that Texas Truck was the beneficial owner of the tires and therefore liable for the excise tax. The court found that the district court erred by not considering whether Texas Truck was the beneficial owner under the Treasury regulation. The Fifth Circuit concluded that the Chinese manufacturers were nominal importers and that Texas Truck, as the beneficial owner, was responsible for the excise tax. Consequently, the court reversed the district court's summary judgment in favor of Texas Truck, rendered judgment for the Government, and remanded the case to the district court to determine the damages. View "Texas Truck Parts & Tire v. United States" on Justia Law

Eileen Cure, a licensed investment advisor, entered into agreements with LPL Financial LLC (LPL) to act as a registered representative under LPL’s broker-dealer umbrella. These agreements included arbitration provisions. Cure, along with her companies, Cure & Associates, P.C. and Premier Wealth & Retirement Management, LLC, filed claims against LPL after LPL terminated its relationship with Cure, alleging she violated LPL’s policies. Cure’s companies, which were not signatories to the arbitration agreements, also alleged business disparagement and other claims against LPL.The United States District Court for the Eastern District of Texas granted LPL’s motion to compel arbitration for Cure but denied it for her companies, stating that the companies were not signatories to the arbitration agreements. The court also denied LPL’s request to stay the litigation pending arbitration. LPL appealed, arguing that under California and Texas law, equitable estoppel principles should compel Cure’s companies to arbitrate their claims.The United States Court of Appeals for the Fifth Circuit reviewed the case and concluded that Cure’s companies, although nonsignatories, were bound by the arbitration provisions due to equitable estoppel. The court found that the companies received direct benefits from Cure’s agreements with LPL, making them subject to the arbitration clauses. The Fifth Circuit reversed the district court’s denial of LPL’s motion to compel arbitration for the companies and vacated the order denying a stay of the litigation. The case was remanded for the district court to compel arbitration of the companies’ claims and to stay the action pending arbitration. View "Cure & Associates, P.C. v. LPL Financial" on Justia Law