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

Plaintiffs, shareholders of ATP, filed a securities class action concerning ATP's collapse into bankruptcy. Plaintiffs alleged that defendants, each of whom was an officer or director of ATP, misrepresented the production of Well 941 #4, ATP's liquidity and whether the company had the available funds to complete the Clipper pipeline, and the true reason that Matt McCarroll resigned as CEO of ATP. The district court dismissed plaintiffs' Second Amended Complaint with prejudice. The court concluded that, viewing plaintiffs' allegations as a whole, plaintiffs failed adequately to allege scienter with regard to Defendant Reese's statements; plaintiffs' allegations of scienter as to ATP's liquidity and the Clipper project failed as a matter of law; and there was no basis for the court to conclude that Defendants Bulmahn and Reese knew or were reckless in not knowing McCarroll's true reasons for resigning. Accordingly, the court affirmed the judgment. View "Neiman v. Bulmahn" on Justia Law

The Trustee filed suit against Officers of NRMC alleging that the Officers breached their fiduciary duty of care, loyalty, and good faith. The district court has not been able to identify clear controlling precedents from the Supreme Court of Mississippi that would resolve this case. Therefore, the court certified the following questions of law to the Supreme Court of Mississippi regarding the Mississippi Tort Claims Act (MTCA), Miss. Code Ann. 11-46-1, et seq. 1) Does the MTCA furnish the exclusive remedy for a bankruptcy trustee standing in the shoes of a public hospital corporation against the employees or directors of that public corporation? 2) If the answer to the foregoing question is affirmative, does the MTCA permit the trustee to pursue any of the claims identified in his complaint against the officers and directors of NRMC in their personal capacity? View "Lefoldt, Jr. v. Rentfro" on Justia Law

Plaintiff owned AIA-LOGO! Promotions, LLC and defendant owned Insignia Marketing, Inc. Plaintiff filed suit against defendant, claiming breach of a partnership agreement, and defendant counterclaimed for breach of the same partnership agreement. Insignia then initiated a separate suit against plaintiff and Logo Promotions for trademark infringement, copyright infringement, cyber piracy, false advertising, and civil conspiracy. The jury found that plaintiff, but not defendant, had breached the partnership agreement, and awarded $60,000 in damages; found, however, that neither plaintiff nor Logo Promotions had infringed Insignia's trademark; found that Insignia had obtained registration of the "Communicat-R" trademark through fraud, that the mark was not in use on the day it was registered, and that Insignia had abandoned the mark after registration, all supporting cancellation of the registration; and found plaintiff and Logo Promotions liable for false advertising, but not cyber piracy or civil conspiracy. The trial court subsequently denied plaintiff attorneys' fees and reaffirmed its finding of waiver and, in the alternative, that the case was not "exceptional" enough to warrant such an award under the Lanham Act, 15 U.S.C. 1051 et seq. Defendant moved for a partial new trial and plaintiff moved for a renewed judgment as a matter of law, both of which the trial court denied. The court affirmed the denial of defendant's motion for a new trial to the extent that the motion was based on errors in the trial and jury instructions; affirmed the denial of defendant's motion for a new trial to the extent that the motion challenged the jury’s verdict as against the great weight of the evidence; affirmed the denial of plaintiff's renewed motion for judgment as a matter of law; affirmed the trial court's equal division of the interpleaded funds; and affirmed the denial of attorneys' fees. View "Vetter v. McAtee" on Justia Law

Three publicly traded real estate companies (the Publics) and Pillar filed a declaratory judgment against Prime LLC, Prime Inc., and Hometown in state court, seeking a declaration that the Publics and Pillar were not the alter egos of Prime LLC and Prime Inc. Hometown removed to federal district court and filed the instant action against Prime LLC as well as Prime Inc., the Publics, Pillar, and individual defendants who served as officers or directors of Prime LLC, alleging, among other things, a claim for fraudulent transfer under the Texas Uniform Fraudulent Transfer Act (TUFTA), Tex. Bus. & Com. Code Ann. 24.001-.013. On appeal, Hometown argues that the district court should not have dismissed its TUFTA claims, and that finding Prime LLC's Advisory Agreements were not assets under TUFTA was error. Determining that it has subject matter jurisdiction, the court held that contractual payments due during a required sixty-day notice period prior to termination of contractual rights constitute "assets" under TUFTA. Accordingly, the court reversed the dismissal of the TUFTA claims and remanded for further proceedings. View "Hometown 2006-1 1925 Valley View v. Prime Income Asset Management" on Justia Law

This case stems from the collapse of Allen Stanford's Ponzi scheme. The court concluded that the Receiver cannot be compelled to arbitrate its claims against any of the defendants; the court did not reach the Receiver's argument that these particular arbitration agreements at issue are additionally unenforceable because they were instruments of the fraud inasmuch as the privacy they provided facilitated the fraud and because the Stanford entities were coerced into accepting them by Stanford as part of his Ponzi scheme; the court also did not reach the Receiver's similar but broader policy argument that the underlying purpose of the federal equity receivership statutes is at odds with the Federal Arbitration Act's, 9 U.S.C. 1 et seq., mandate in favor of arbitration; and the court rejected arguments raised by some of the defendants that the district court’s order exceeded the scope of the court's mandate in Alguire III. The court explained that, because the Receiver properly brings his Texas Uniform Fraudulent Transfer Act, Tex. Bus. & Comm. Code 24.009, claims on behalf of the Stanford International Bank, which did not consent to arbitration with any of the defendant employees, other than Luis Giusti, it cannot be compelled to arbitrate with those defendants. Moreover, because Giusti waived his right to arbitration, the Receiver cannot be compelled to arbitrate its claims against him either. Accordingly, the court affirmed the judgment. View "Janvey v. Alguire" on Justia Law

After the BP Stock Fund lost significant value, the affected investors filed suit alleging that the plan fiduciaries breached their duties of prudence and loyalty by allowing the Plans to acquire and hold overvalued BP stock; breached their duty to provide adequate investment information to plan participants; and breached their duty to monitor those responsible for managing the BP Stock Fund. The district court held that the stockholders had failed to overcome the Moench v. Robertson presumption and dismissed their claims. The stockholders appealed, and while their appeal was pending in this court, the Supreme Court issued Fifth Third Bancorp v. Dudenhoeffer, holding that there was no such “presumption of prudence” under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. On remand, the district court held that the stockholders had plausibly alleged that defendants had inside information; and the stockholders had plausibly alleged two alternative actions that defendants could have taken that met the Fifth Third standard: freezing, limiting, or restricting company stock purchases; and disclosing unfavorable information to the public. The district court granted the motion to amend with respect to pleading these alternative actions. It then certified defendants’ motion for interlocutory appeal. The court concluded, however, that the district court here erred when it altered the language of Fifth Third to reach its holding. Under the Supreme Court’s formulation, the plaintiff bears the significant burden of proposing an alternative course of action so clearly beneficial that a prudent fiduciary could not conclude that it would be more likely to harm the fund than to help it. In this case, the stockholders have failed to do so. Because the stockholders' amended complaint is insufficient and the district court erred in granting their motion to amend, the court reversed and remanded. View "Whitley v. BP, P.L.C." on Justia Law

SnoWizard and Southern Snow, sellers of flavored shaved ice confections, have been involved in litigation for the past ten years in state court, federal district court, and before the Patent and Trademark Office in the Federal Circuit. In this appeal, Southern Snow challenges the district court’s dismissal of its claims under Rule 12(b)(6) and SnoWizard cross-appeals the district court’s denial of its motions for sanctions against Southern Snow. Because the claims against SnoWizard are precluded, and because the claims against Morris and Tolar fail to satisfy the requirements for conspiracy, obstruction of justice, or malicious prosecution, the court affirmed the dismissal of all the claims. Given that Southern Snow advanced arguments that, although creative, were not “ridiculous,” the court affirmed the district court’s denials of sanctions. View "Snow Ingredients, Inc. v. SnoWizard, Inc." on Justia Law

In a prior appeal of this tax case, the court affirmed the district court’s decision to disregard the partnership form of Chemtech Royalty Associates, L.P. (Chemtech I), and Chemtech II, L.P. (Chemtech II), for tax purposes but vacated and remanded as to the penalty award. On remand, the district court reinstated the vacated penalty award and further held that a tax penalty for gross-valuation misstatement applied to Chemtech II. Real party in interest Dow now appeals the penalty award solely as to Chemtech I. The court rejected Dow’s theory that the court's mandate required the district court to consider whether Dow had a reasonable basis and substantial authority for its sham-partnership position; the district court did not err in failing to justify the negligence and substantial-understatement penalties on the basis of the court's sham-partnership holding, but it could have done so; and the court affirmed the applicability of the negligence and substantial-understatement penalties on the ground that the district court would have been correct to do so. The court also concluded that Dow lacked substantial authority for its position that Chemtech I was a valid partnership. For substantially the same reasons, Dow fails to meet the lesser reasonable-basis standard. Accordingly, the court affirmed the judgment. View "Chemtech Royalty Ass'n, LP v. United States" on Justia Law

Yumilicious, a Texas frozen yogurt company, filed suit against franchisees based in South Carolina after disputes over the franchise agreement arose. Defendants filed a countercomplaint with various counterclaims. The district court granted summary judgment for Yumilicious and dismissed the remainder of the franchisees' counterclaims with prejudice for failure to state a claim under Rule 12(b)(6). The court affirmed the district court's grant of partial summary judgment and affirmed the dismissal of the franchisees' remaining counterclaims because the franchisees failed to plead the required elements of their statutory claims, failed to introduce facts suggesting non-economic injuries, failed to introduce evidence of fraudulent inducement, and contractually waived their right to punitive and consequential damages. View "Yumilicious Franchise, L.L.C. v. Barrie" on Justia Law

The Court Appointed Receiver for the Stanford International Bank Ltd. filed a fraudulent transfer claim against defendant, a former international advisor to the Stanford entities. The court concluded that there was a legally sufficient evidentiary basis for the jury’s finding that the Receiver did not discover and could not reasonably have discovered the transfers to defendant and their fraudulent nature until after February 15, 2010, and that, therefore, the Receiver’s fraudulent transfer claim was timely under the Texas Uniform Fraudulent Transfer Act’s, Tex. Bus. & Com. Code 24.010 statute of repose. Therefore, the district court did not err in denying defendant's post-verdict motion for judgment as a matter of law as to the fraudulent transfer. The court did not reach the alternative issues raised by defendant. Finally, the court denied defendant's request to abate this appeal where defendant did not object during trial to this specific language in the jury instruction and he did not request a jury finding on market value even though the parties presented conflicting evidence of market value at trial. Further, defendant failed to brief this issue on the merits. Accordingly, the court affirmed the judgment. View "Janvey v. Romero" on Justia Law