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

Two development companies owned land in Johnson County, Texas, within the extraterritorial jurisdiction of the City of Mansfield but outside the city’s corporate boundaries. To develop this land, the companies needed access to retail water services, which, under state law, could be provided only by the Johnson County Special Utility District (“JCSUD”) because it held the exclusive certificate of convenience and necessity (CCN) for the area. However, a contract between JCSUD and the City of Mansfield required JCSUD to secure Mansfield’s written consent, which could be withheld at the City’s discretion, before providing water services within the city’s extraterritorial jurisdiction. The developers’ efforts to obtain water service were unsuccessful, as Mansfield demanded annexation and additional fees, ultimately refusing to formalize an agreement.After unsuccessful negotiations and attempts to compel service through the Texas Public Utility Commission, the developers sued the City of Mansfield in the United States District Court for the Northern District of Texas. They alleged violations of the Sherman Act and brought state-law claims. The district court, adopting a magistrate judge’s recommendation, dismissed the antitrust claims with prejudice, holding that Mansfield was entitled to state-action antitrust immunity under Texas law, and declined to exercise supplemental jurisdiction over the state-law claims.The United States Court of Appeals for the Fifth Circuit reviewed whether Mansfield was entitled to state-action immunity. The Fifth Circuit held that, although Texas law authorizes monopolies for water utilities through CCNs, it does not clearly articulate or authorize the City of Mansfield to act anticompetitively concerning the area in question, since the CCN belonged to JCSUD. Therefore, the court reversed the district court’s grant of state-action immunity and remanded the case for further proceedings. View "Megatel v. Mansfield" on Justia Law

The Securities and Exchange Commission initiated an enforcement action against Timothy Barton and related entities, alleging violations of federal securities laws. The district court subsequently appointed a receiver to manage properties allegedly acquired with funds from Barton’s fraudulent activities. Certain properties and entities, including TC Hall, LLC (owner of the Hall Street property), Goldmark Hospitality LLC (owner of Amerigold Suites), BM318, LLC, and JMJ Development, LLC, were placed within the receivership because they had received or benefitted from assets traceable to the alleged misconduct.The United States District Court for the Northern District of Texas oversaw the receivership and issued several orders approving property sales and settlements. Barton previously appealed the appointment of the receivership and its scope. The United States Court of Appeals for the Fifth Circuit, in an earlier decision (SEC v. Barton, 79 F.4th 573 (5th Cir. 2023)), vacated and remanded for reconsideration; on remand, the district court narrowed and reappointed the receivership. The Fifth Circuit later affirmed the new receivership order in SEC v. Barton, 135 F.4th 206 (5th Cir. 2025). While appeals were pending, the district court issued orders related to the sale of Amerigold Suites, settlements involving JMJ and BM318, and the sale of the Hall Street property.In the current appeal, the United States Court of Appeals for the Fifth Circuit concluded it lacked appellate jurisdiction to review the cancelled Amerigold Suites sale and the two settlement agreements, dismissing those portions of the appeal. The court found jurisdiction to review the approval of the Hall Street property sale and affirmed the district court’s order, holding that the district court did not abuse its discretion in approving the sale, which complied with statutory requirements and was in the best interest of the receivership estate. View "Securities and Exchange Commission v. Barton" on Justia Law

Corelle, a company that sold Instapot multifunction cookers, entered into a 2016 master supply agreement (MSA) with Midea, the manufacturer. Under this arrangement, individual purchase orders (POs) were used for each transaction, detailing specific terms such as price and quantity. Each PO typically included Corelle’s own terms, including indemnity provisions. In 2023, Corelle filed for Chapter 11 bankruptcy and, as part of its reorganization plan, sold its appliances business and assigned the MSA to the buyer. However, Corelle sought to retain its indemnification rights for products purchased under completed POs made before the assignment.The United States Bankruptcy Court for the Southern District of Texas denied Midea’s objection to this arrangement, finding that the POs were severable contracts distinct from the MSA. This meant the indemnification rights related to completed POs remained with Corelle. Midea appealed, contending that the MSA and all related POs formed a single, indivisible contract that should have been assigned in its entirety. The United States District Court for the Southern District of Texas affirmed the bankruptcy court’s decision, emphasizing that the structure of the MSA and the parties’ course of dealing supported the divisibility of the POs from the MSA.On further appeal, the United States Court of Appeals for the Fifth Circuit reviewed the standards applied by the lower courts, the interpretation of the contracts, and the application of 11 U.S.C. § 365(f). The appellate court held that the bankruptcy court did not err in finding the POs were divisible from the MSA, that Corelle’s retention of indemnification rights did not violate bankruptcy law, and that the lower courts applied the correct standards of review. Accordingly, the Fifth Circuit affirmed the district court’s judgment. View "GuangDong Midea v. Unsecured Creditors" on Justia Law

An environmental remediation company and an oil corporation entered into a Master Services Contract in 2008, which included a Texas choice-of-law and venue provision and an indemnification clause requiring the remediation company to defend and indemnify the oil corporation for claims arising from violations of applicable laws. In 2012, it was discovered that the remediation company’s then-president, along with subcontractors, had engaged in fraudulent overbilling for work performed for the oil corporation. Upon discovery, ownership of the remediation company changed hands, and litigation ensued in Louisiana state court. The remediation company’s new owner alleged that the oil corporation’s employee was complicit in the fraud, making the corporation vicariously liable.The oil corporation then filed suit in the United States District Court for the Southern District of Texas seeking a declaratory judgment that the remediation company had a duty to defend and indemnify it in the Louisiana litigation, and also sought attorney’s fees as damages for breach of contract. The district court granted summary judgment for the oil corporation, holding that Texas law applied, the remediation company owed both a duty to defend and to indemnify, and awarding attorney’s fees for both the Texas and Louisiana lawsuits.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s rulings de novo regarding summary judgment and attorney’s fees. The appellate court held that Texas law governed under the contract’s choice-of-law clause since Louisiana did not have a more significant relationship or materially greater interest, and applying Texas law did not contravene Louisiana public policy. The indemnity provision was not void as against public policy or for illegality. The court affirmed the duty to defend and to indemnify, but vacated the judgment to the extent it would require indemnification for punitive and exemplary damages, and remanded for modification. It also vacated attorney’s fees awarded for the underlying Louisiana litigation, affirming only those fees related to the declaratory judgment action. View "Anadarko v. Alternative Environmental Solutions" 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

Endure Industries, Inc., a seller of disposable medical supplies, sought to participate as a supplier in Vizient’s group purchasing organization (GPO), which negotiates bulk purchasing contracts for healthcare providers. Vizient is the largest GPO in the United States, serving a majority of general acute care centers and academic medical centers. After Vizient rejected Endure’s bid to supply medical tape in favor of another supplier, Endure filed an antitrust suit against Vizient and related entities, alleging monopolization and anticompetitive conduct in two proposed markets for disposable medical supplies.The United States District Court for the Northern District of Texas granted summary judgment to Vizient, finding that Endure failed to define a legally sufficient relevant market under antitrust law. The district court reasoned that Endure’s expert’s market definitions—(1) the sale of disposable medical supplies through GPOs to acute care centers, and (2) sales to Vizient member hospitals—excluded significant alternative sources of supply. Specifically, evidence showed that many hospitals purchase substantial amounts of supplies outside GPO contracts, demonstrating that reasonable substitutes exist and undermining Endure’s theory of market foreclosure.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed only the issue of market definition. The Fifth Circuit held that Endure did not raise a genuine dispute of material fact regarding its proposed markets, as its definitions failed to account for all commodities reasonably interchangeable by consumers. The court found that significant hospital purchasing occurs outside GPOs and that Vizient members are not “locked in” to buying exclusively through Vizient. The Fifth Circuit affirmed the district court’s summary judgment in favor of Vizient, concluding that neither of Endure’s proposed antitrust markets was legally sufficient. View "Endure Industries v. Vizient" on Justia Law

A group of individuals with large social media followings was charged with securities fraud and conspiracy to commit securities fraud. The government alleged that these individuals engaged in a “pump and dump” scheme: they would purchase securities, then use their social media platforms to post false or misleading information about those securities to induce their followers to buy, thereby artificially inflating the price. After the price increased, the defendants would sell their holdings for a profit. The indictment claimed that the defendants collectively profited $114 million from this scheme.After indictment in the United States District Court for the Southern District of Texas, one defendant pleaded guilty while the others moved to dismiss the indictment. The district court granted the motion to dismiss, reasoning that the indictment failed to allege a scheme to deprive victims of a traditional property interest, instead only alleging deprivation of valuable economic information. The district court relied on the Supreme Court’s decision in Ciminelli v. United States, which held that deprivation of economic information alone does not constitute fraud under federal law.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the sufficiency of the indictment de novo. The Fifth Circuit concluded that the indictment adequately alleged both a scheme to defraud and an intent to defraud, as required by the securities fraud statute. The court distinguished the case from Ciminelli, finding that the indictment alleged a fraudulent-inducement theory—whereby the defendants used misrepresentations to induce followers to part with money by purchasing securities—not merely a deprivation of information. The court also held that the fraud statutes do not require proof that the defendants intended to cause economic harm, only that they intended to obtain money or property by deceit. The Fifth Circuit reversed the district court’s dismissal of the indictment and remanded the case for further proceedings. View "USA v. Constantinescu" on Justia Law

WorldVue Connect, LLC, a company specializing in in-room entertainment and technology for hotels, purchased the domestic assets of Hospitality WiFi, LLC from Jason Szuch for $9,450,000 in 2022. Szuch retained interests in international affiliates and received a minority stake in a new entity, WorldVue Global, LLC. The transaction included the transfer of goodwill, trade secrets, and a valuable technical support team. In 2024, after the business relationship soured, WorldVue bought out Szuch’s minority interest and entered into a settlement agreement with Szuch and his companies, as well as a separation agreement with a key employee, Shan Griffin. These agreements, governed by Texas law, contained non-compete, non-solicitation, and confidentiality provisions effective for one year.Following the agreements, evidence emerged that the Szuch Parties recruited WorldVue’s employees and independent contractors, including those providing remote support to clients in the contractually defined “Restricted Area.” WorldVue filed suit in Texas state court for breach of contract and tortious interference, seeking injunctive relief. The state court issued a temporary restraining order, and after removal to the United States District Court for the Southern District of Texas, the TRO was extended. The district court found that the Szuch Parties breached the agreements by soliciting WorldVue’s workers and using confidential information, and granted a preliminary injunction prohibiting further solicitation and use of confidential information.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the preliminary injunction for abuse of discretion. The court affirmed the injunction, holding that the non-solicitation provision applied to workers performing services in the Restricted Area, regardless of their physical location, and that customer service agents were covered as independent contractors. The court modified the injunction to clarify that “confidential information” does not include Szuch’s personal knowledge of worker identities acquired prior to the asset sale. View "WorldVue Connect v. Szuch" on Justia Law

The Securities and Exchange Commission (SEC) adopted two rules intended to increase transparency in the securities lending and short sale markets. Securities lending involves temporarily transferring securities from a lender to a borrower for a fee, and is closely tied to short selling, where investors sell securities they do not own, hoping to profit from a price decline. The SEC found both markets to be opaque, making regulatory oversight difficult. To address this, the SEC, under authority from the Dodd-Frank Act, promulgated the Securities Lending Rule (requiring prompt reporting of securities loans) and the Short Sale Rule (mandating monthly aggregate reporting of short sale positions by institutional investment managers).The petitioners, associations representing institutional investment managers, challenged both rules before the United States Court of Appeals for the Fifth Circuit. They argued that the rules were arbitrary and capricious, exceeded the SEC’s statutory authority, conflicted with each other, and that the SEC failed to consider their cumulative economic impact. They also raised procedural objections, including inadequate opportunity for public comment and concerns about the extraterritorial application of the Short Sale Rule. The SEC defended its process and statutory authority, maintaining that the rules addressed distinct regulatory gaps and that its economic analysis was sufficient.The United States Court of Appeals for the Fifth Circuit held that the SEC acted within its statutory authority in adopting both rules and provided adequate opportunity for public comment. The court also found that the SEC reasonably explained its choices regarding reporting systems and that the Short Sale Rule did not have impermissible extraterritorial reach. However, the court concluded that the SEC failed to consider and quantify the cumulative economic impact of the two interrelated rules, as required by the Administrative Procedure Act and the Exchange Act. The court granted the petition for review in part and remanded both rules to the SEC for further proceedings on this issue, while denying the remainder of the petition. View "Natl Assoc Priv Fund Mgr v. SEC" on Justia Law

Fire Protection Service, Inc. (FPS), a Texas business, served as a non-exclusive dealer for Survitec Survival Products, Inc., which manufactures and distributes marine safety products, including life rafts. These life rafts, each valued at over $15,000 and capable of accommodating up to 30 people, are required by federal law and international treaties to be installed on various types of navigable vessels used in industries such as offshore oil and gas, commercial fishing, and maritime shipping. In August 2017, Survitec terminated its dealership agreement with FPS without citing cause and did not repurchase FPS’s unsold inventory.FPS filed suit in the United States District Court for the Southern District of Texas, alleging that Survitec’s actions violated the Texas Fair Practices of Equipment Manufacturers, Distributors, Wholesalers, and Dealers Act (“Dealer Act”). After a bench trial, the district court granted Survitec’s Rule 52(c) motion, ruling that the life rafts did not qualify as “Equipment” under the Act, and therefore the Act did not apply to the parties’ agreement.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s legal conclusions de novo. The Fifth Circuit held that Survitec’s life rafts are “Equipment” under the Dealer Act because they are used “in connection with” commercial activities covered by the Act, including construction, maintenance, mining (which encompasses oil and gas extraction), and industrial activities. The court found that the Act’s language and legislative intent support a broad interpretation, and that the life rafts meet the statutory definition. Accordingly, the Fifth Circuit reversed the district court’s judgment and remanded the case for further proceedings consistent with its opinion. View "Fire Protection v. Survitec Survival" on Justia Law