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

Articles Posted in Business Law
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After assignors and assignees of membership interests in Dongtai Investment Group filed suit against Dongtai's managing member, the district court granted injunctive and declaratory relief, ordering the managing member to turn over his remaining Dongtai membership units partially to satisfy the judgment.The Fifth Circuit affirmed and first concluded that it has jurisdiction to address the rulings challenged by the managing member in this case. In regard to the managing member's motion to dismiss, the court concluded that at least one group, if not both, have sufficient membership interest in Dongtai to confer standing to bring a derivative proceeding; the district court did not err in declining to dismiss plaintiffs' securities fraud claims; the district court properly denied the managing member's argument that plaintiffs did not satisfy the requisite heightened pleading standard; the district court properly overruled the managing member's contention that plaintiffs' securities fraud claims should be dismissed; the complaint lacks evidence that the membership units were purchased in the United States; and the managing member's contention that none of the securities fraud allegations specifically implicate LCL Company are simply untrue. The court also concluded that the district court did not abuse its discretion in granting a preliminary injunction where plaintiffs have established a substantial threat they would suffer irreparable injury if an injunction was not granted. Finally, the court discerned no error in the declaratory relief fashioned by the district court and the district court did not abuse its discretion in ordering the managing member to turn over his remaining membership interest in Dongtai. View "Xiongen Jiao v. Ningbo Xu" on Justia Law

Posted in: Business Law
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This case presents a coda to its companion appeal, No. 20-50671. The Fifth Circuit affirmed the district court's post-judgment order, as modified, charging defendant's membership interest in M. G. & Sons, a single-member LLC, and requiring both defendant and M. G. & Sons to obtain leave of court before transferring assets to third parties. The court stated that it is well established that courts have the power to enforce their judgments through injunctive relief. The court concluded that the district court properly exercised this power, in addition to charging defendant's interest in M. G. & Sons according to Texas law, by restricting Hughes from transferring assets to evade the district court's judgment. View "Thomas v. Hughes" on Justia Law

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The Fifth Circuit slightly modified the district court's final judgment to prevent the possibility of double recovery and otherwise affirmed the district court's final judgment, attorney's fee award, and denial of post-judgment relief on various grounds. The court concluded that the district court did not err in limiting defendant's testimony as it did; the evidence was sufficient for the jury to conclude that defendant and Performance Probiotics misappropriated trade secrets; defendant breached her fiduciary duty to PPI; defendant fraudulently transferred assets in violation of the Texas Uniform Fraudulent Transfer Act; and to support the jury's decision to pierce the corporate veils of PPI and Performance Probiotics.The court also concluded that the district court did not err by retaining jurisdiction over API or abuse its discretion either in denying defendant's motion for a new trial or in awarding attorney's fees and expenses. The court clarified that the district court's judgment could be read to allow for a duplicative recovery and thus modified the judgment affirmatively to state that plaintiffs may not recover the amount of the Comal County judgment twice. View "Thomas v. Hughes" on Justia Law

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MDK, a Bolivian entity, filed suit against Proplant, a Texas-based corporation under both breach of contract and tort theories. The Fifth Circuit affirmed the district court's grant of summary judgment in favor of Proplant, concluding that MDK did not meet the Federal Rule of Civil Procedure 56(d) standard for deferring summary judgment, and thus the district court did not err by ruling on Proplant's summary judgment motion before the parties had completed discovery. In this case, MDK's opening brief failed to adequately present its arguments that Proplant's summary judgment motion and the district court's summary judgment order were "legally deficient." Therefore, MDK has waived these issues.Finally, the court rejected MDK's contention that the district court erred in granting summary judgment on MDK's two breach of contract claims. In regard to the first claim, the court concluded that MDK has not pointed to any evidence suggesting that it did in fact execute the October Document. In regard to the second claim, the court concluded that MDK failed to meet its burden of demonstrating by competent evidence that there is a dispute of material fact as to whether YPFB awarded Proplant the O&M contract. View "MDK Sociedad de Responsabilidad Limitada v. Proplant Inc." on Justia Law

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BP retained the Responders (O’Brien’s and NRC) for nearly $2 billion to assist with the cleanup of the Deepwater Horizon oil spill. Thousands of the Responders' workers filed personal injury lawsuits against BP, which were consolidated and organized into “pleading bundles.” The B3 bundle included “all claims for personal injury and/or medical monitoring for exposure or other injury occurring after the explosion and fire of April 20, 2010.” In 2012, BP entered the “Medical Settlement” on the B3 claims with a defined settlement class. The opt-out deadline closed in October 2012. The Medical Settlement created a new type of claim for latent injuries, BackEnd Litigation Option (BELO) claims. After the settlement, plaintiffs could bring opt-out B3 claims if they did not participate in the settlement, and BELO claims if they were class members who alleged latent injuries and followed the approved process. Responders were aware of the settlement before the district court approved it but neither Responder had control over the negotiations, nor did either approve the settlement.In 2017, BP sought indemnification for 2,000 BELO claims by employees of the Responders. The Fifth Circuit held that BP was an additional insured up to the minimum amount required by its contract with O’Brien’s; the insurance policies maintained by O’Brien’s cannot be combined to satisfy the minimum amount. O’Brien’s is not required to indemnify BP because BP materially breached its indemnification provision with respect to the BELO claims. View "O'Brien's Response Management, L.L.C. v. BP Exploration & Production, Inc." on Justia Law

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This case concerns three orders purporting to enforce a settlement between the parties in a commercial dispute: (1) an order declaring that Vikas breached the settlement; (2) an order striking Vikas's pleadings as a sanction; and (3) a summary judgment that Vikas had procured the settlement by fraud, causing $40 million in damages.The Fifth Circuit concluded that the district court lacked subject matter jurisdiction to issue the summary judgment for fraud and thus the court vacated the order and denied as moot Vikas's related appeals. The court also vacated the sanctions order based on either lack of subject matter jurisdiction or an abuse of discretion standard. Finally, the court vacated the ruling that Vikas breached the settlement, concluding that the district judge ignored key provisions of the settlement and failed to support his judgment with relevant record evidence. Accordingly, the court remanded for further proceedings. View "Vikas WSP, Ltd. v. Economy Mud Products Co." on Justia Law

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After plaintiff was run over by a barrel-racing horse at a Texas rodeo, she filed suit against Kosse Roping Club, the rodeo operator, for negligence. Ten months later, plaintiff filed suit against the club's directors.The Fifth Circuit affirmed the district court's dismissal of plaintiff's claims against the directors as untimely. The court need not decide the validity of plaintiff's tolling theory because it concluded that, under Texas law, plaintiff could not pierce the club's corporate veil based solely on evidence that the club was undercapitalized. Therefore, plaintiff's veil-piercing theory failed and, along with it, any argument that the limitations clock against the directors was tolled by her suing Kosse. View "Ledford v. Keen" on Justia Law

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Petrobras, the American subsidiary of a Brazilian oil and gas producer, alleges that Samsung, a Korean shipbuilder, secretly bribed Petrobras executives to finalize a contract between Petrobras and Pride. In a 2007 contract, Samsung had an option to build a deep-sea drillship if Pride secured a drilling-services contract with another company. Samsung arranged to bribe Petrobras executives to secure Pride's contract for the construction of DS-5. After Petrobras put DS-5 on permanent standby and conducted an internal audit, it informed Brazilian prosecutors. A 2014 investigation into corruption throughout Brazil, included a separate bribery scheme in which Samsung contracted with Petrobras to construct two other ships.In 2019, Petrobras sued Samsung for its role in the bribery that led to the Petrobras–Pride DS-5 contract, citing common-law fraud under Texas law and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1962(c),(d). The district court took judicial notice of Petrobras’s 2014 SEC filing and Washington Post and Reuters articles, describing the bribery schemes underlying other Samsung–Petrobras contracts that did not mention the Petrobras–Pride DS-5 contract. From those, the court inferred that Petrobras was on notice by 2014 that the DS-5 contract was suspect. Holding that “the specific drillship in this case is not subject to its own limitations clock,” the district court dismissed the suit. The Fifth Circuit reversed. The pleadings do not establish as a matter of law that Petrobras had actual or constructive notice of its injury before March 2015, so dismissal at the pleading stage was improper. View "Petrobras America, Inc. v. Samsung Heavy Industries Co., Ltd." on Justia Law

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AAAPC and UAS filed suit against Quest for conspiring to force them out of the market of providing allergy and asthma testing. The district court dismissed plaintiffs' claims under Federal Rule of Civil Procedure 12(b)(6).The Fifth Circuit concluded that plaintiffs' claims alleging that Quest violated sections 1 and 2 of the Sherman Act and the Texas antitrust law are not time-barred. The court explained that plaintiffs' allegations about Phadia and Quest's continued meetings with providers and payors do not restart the statute of limitations; plaintiffs' allegations regarding the June 2015 policy change does not suffice to restart the statute of limitations; but plaintiffs have sufficiently alleged that Phadia and Quest were involved in the alleged conspiracy and that the allegation regarding Phadia's May 2014 email reset the statute of limitations. Therefore, the court reversed the district court's dismissal as to the state and federal antitrust claims. The court also reversed the dismissal of plaintiffs' misappropriation of trade secrets claim, concluding that plaintiffs have sufficiently pled they could not have discovered their misappropriation injury using reasonable diligence. Moreover, nothing in the complaint forecloses their potential rejoinder to the statute of limitations defense. The court affirmed the district court's dismissal of the civil conspiracy and tortious interference claims. Finally, the court affirmed the district court's denial of plaintiffs' request for leave to amend their complaint. View "Academy of Allergy & Asthma in Primary Care v. Quest Diagnostics, Inc." on Justia Law

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WickFire filed suit against Media, alleging a violation of section 43(a) of the Lanham Act, tortious interference with existing contracts, tortious interference with prospective economic relationships, and civil conspiracy. In this appeal, Media challenged the jury verdict in favor of WickFire.The Fifth Circuit concluded that the district court had jurisdiction over WickFire's Lanham Act claim and thus pendent jurisdiction over each of WickFire's state law tort claims. On the merits, the court concluded that any argument that WickFire offered insufficient evidence regarding the section 43(a) claim is moot where the jury found that there were no damages and thus WickFire cannot be a prevailing party under the Act. The court also concluded that WickFire's tortious interference with contractual relations claim failed as a matter of law. However, because the evidence of damages is insufficient as a matter of law, the court reversed the judgment as to the tortious interference with prospective business relations claim. Because each of WickFire's underlying claims failed, the court reversed the judgment as to the civil conspiracy claim. Finally, the court concluded that TriMax is not entitled to judgment as a matter of law on WickFire's justification defense. Accordingly, the court denied TriMax's motion to dismiss; reversed as to WickFire's tortious interference claims and its civil conspiracy claim; and affirmed in all other respects. The court remanded for further proceedings. View "WickFire, LLC v. Woodruff" on Justia Law