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

After ATOM filed for bankruptcy, plaintiff and ATOM initiated an adversarial proceeding against Petroleum Analyzer, alleging claims of misappropriation of trade secrets, unfair competition, and civil theft. On the bankruptcy court's recommendation, the district court withdrew the reference to the bankruptcy court and asserted jurisdiction under 28 U.S.C. 1334, and entered partial summary judgment for plaintiff and ATOM. Four years later, the district court held a bench trial and entered judgment in favor of Petroleum Analyzer and later awarded attorneys' fees to Petroleum Analyzer.The Fifth Circuit held that the district court did not clearly err by finding that Petroleum Analyzer did not use plaintiff's trade secrets in Petroleum Analyzer's sulfur-detecting excimer lamp called a MultiTek. Furthermore, the district court did not ignore the "law of the case" doctrine. The court also held that the district court did not err by awarding Petroleum Analyzer attorneys' fees under the Texas Theft Liability Act. The court remanded to allow the district court to make the initial determination and award of appellate attorneys' fees to Petroleum Analyzer. View "ATOM Instrument Corp. v. Petroleum Analyzer Co., LP" on Justia Law

HP filed suit against Quanta for illegally fixing the prices of optical disk drives. In this appeal, Quanta claims that the evidence was insufficient to justify the $438.65 million award against it and that the district court's orders enforcing the judgment should be set aside.The Fifth Circuit affirmed in part, holding that the district court properly denied Quanta's motion for judgment as a matter of law and that Quanta has not made a clear showing of an absolute absence of evidence to support the jury's verdict. The court also held that the Turnover Orders are final and that review is proper under 28 U.S.C. 1291. Finally, the court held that Quanta needs more time to complete the procedural steps required for turning over Taiwanese property. Accordingly, the court vacated in part and remanded for further proceedings. View "Hewlett-Packard Co. v. Toshiba Corp." on Justia Law

Illinois Tool Works, maker of Rain-X, filed suit against Rust-Oleum over a commercial for its competing product, RainBrella. Illinois Tool Works alleged that the commercial made three false claims. After a jury ruled in favor of Illinois Tool Works, it awarded the company over $1.3 million. The district court then reduced the corrective-advertising award.The Fifth Circuit held that Illinois Tool Works failed to present sufficient evidence showing that Rust-Oleum's profits were attributable to the Lanham Act violation. Therefore, the court vacated the disgorgement-of-profits award, holding that there was no causal connection between Rust-Oleum's false advertising and its profits. The court never explicitly condoned a prospective corrective-advertising award, but saw no principled reason to prohibit them categorically. In this case, because Illinois Tool Works offered no evidence to support the corrective-advertising award, the court held that a jury could not have reasonably awarded any amount to Illinois Tool Works. Finally, the court held that the evidence was insufficient to support the district court's injunction against Rust-Oleum for making the 100-car-washes claim.Therefore, the district court erred in denying Rust-Oleum's renewed motion for judgment as a matter of law. The court vacated the damages award and reversed the district court's judgment enjoining Rust-Oleum from making its 100-car-washes claim. The court affirmed the district court's judgment enjoining Rust-Oleum from making the other advertising claims. View "Illinois Tool Works, Inc. v. Rust-Oleum Corp." on Justia Law

The Fifth Circuit affirmed the district court's dismissal of Golden Spread and Westport's tort claims against Emerson. The claims arose after Emerson installed a new control system for Golden Spread and the control system's software had been programmed incorrectly.The court held that the economic loss rule, which prevents recovery in tort for purely economic damage unaccompanied by injury to persons or property, is applicable in this case. The court reasoned that the Texas Supreme Court would conclude that the risk suffered here is better addressed in contract than in tort. In this case, the parties are sophisticated, commercial actors that actually did negotiate over the allocation of risk. Furthermore, the parties themselves were in the best position to understand and allocate the risks of their transaction ahead of time to resolve any ambiguities in the application of that rule to their circumstances. View "Golden Spread Electric Cooperative v. Emerson Process Management Power & Water Solutions" on Justia Law

Correct Rx filed suit against CASI after CASI failed to deliver a custom automated pharmacy system by a specified deadline. Correct Rx alleged a Texas common law tort claim for negligent misrepresentation based on various alleged misstatements CASI had made over the course of their dealings regarding its experience, resources, and capabilities. The jury found in favor of Correct Rx.The Fifth Circuit affirmed, holding that the district court correctly determined that Texas's economic loss rule did not preclude Correct Rx's tort claim. The court held that Correct Rx established a breach of an independent duty and an independent injury within the meaning of Texas law. Therefore, Correct Rx's recovery was not precluded by the Texas contractual economic loss rule. View "Correct RX Pharmacy Services Inc. v. Cornerstone Automation Systems, LLC" on Justia Law

The Fifth Circuit affirmed the district court's decision holding that a $52 million payment from taxpayer's predecessor in interest to the predecessor's subsidiary was not a bad debt under 26 U.S.C. 166 or an ordinary and necessary business expense under 26 U.S.C. 162.In this case, BJ Parent's $52 million payment to BJ Russia created no debt owed to BJ Parent, and the payment discharged no guarantor obligation of BJ Parent's. Therefore, the court held that the payment was not deductible as a bad debt under Section 166. Furthermore, the court held that the IRS correctly disallowed any deduction based on the Free Financial Aid (FFA) as an ordinary and necessary business expense under section 162. The court explained that the FFA was not an expense of BJ Parent, and it was not provided to pay any expense of BJ Russia. The court reasoned that even if BJ Parent's long-term strategy included recapitalizing its Russian subsidiary to meet Russian capitalization requirements, this did not itself make the funds deductible. View "Baker Hughes, Inc. v. United States" on Justia Law

Symetra appealed a jury verdict in favor of FinServ and A.M.Y. in an action involving structured settlement payments Symetra owed to two individuals. Both payments were subject to security interests held by FinServ and A.M.Y. in all of Rapid and RSL-3B's then-owned and after-acquired property.The Fifth Circuit held that filing a financing statement does not provide actual notice. Without an inquiry duty, the court held that Symetra's failure to find the financing statement was not "actual notice." Because the facts presented did not support the conclusion of actual notice, the court held that the district court should have granted judgment in favor of Symetra as a matter of law, since Symetra did not receive notice that the payments were assigned to FinServ and A.M.Y. until 2012, after its offset rights accrued. Therefore, Symetra's defenses were not subordinated to the security interests held by FinServ and A.M.Y. Accordingly, the court reversed and remanded, rendering judgment as a matter of law to Symetra. View "FinServ Casualty Corp. v. Symetra Life Insurance Co." on Justia Law

The Supreme Court of Texas answered two certified questions, holding that the time for determining the existence and amount of unpaid commission due under Tex. Bus. & Com. Code section 54.001(1) is the time the jury or trial court determines the liability of the defendant, whether at trial or through another dispositive trial-court process such as a summary judgment; and that a plaintiff may recover attorney's fees and costs under section 54.004(2) even if the plaintiff does not receive treble damages, if the factfinder determines that the fees and costs were reasonably incurred under the circumstances.The Fifth Circuit held that CPTS was not entitled to treble damages, and the district court was thus correct to grant summary judgment to Horsburgh on the treble damages claim. In this case, there were no unpaid commissions due at the time of judgment, because Horsburgh had already paid all of its outstanding commissions, plus interest. The court also held that CPTS was eligible for attorney's fees simply by virtue of Horsburgh's breach. Therefore, the district court correctly concluded that CPTS was not entitled to treble damages, but erred by granting summary judgment to Horsburgh without awarding CPTS reasonable attorney's fees and costs. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings. View "JCB, Inc. v. The Horsburgh & Scott Co." on Justia Law

After plaintiff disputed discounts applied by MultiPlan under his agreement with PHCS to charges for services he provided to patients that were covered by workers' compensation insurance, he filed suit against PHCS and Multiplan. Plaintiff's claims for civil conspiracy and breach of contract proceeded to trial and were subsequently dismissed after the district court granted defendants' motions for judgment as a matter of law.The Fifth Circuit held that plaintiff failed to show that the district court erred in determining that plaintiff did not establish an underlying "unlawful purpose" or unlawful activity on which to base his civil conspiracy claim. However, the court held that a reasonable jury could find based on the evidence presented that defendants breached the parties' agreement, and thus the district court erred in granting defendants' renewed motion for judgment as a matter of law as to the breach of contract claim. The court upheld the district court's ruling prohibiting additional evidence on punitive damages and the issue of punitive damage from reaching the jury. Finally, the court concluded that the district court's ruling prohibiting Attorney Gordon from participating in trial on plaintiff's behalf did not provide grounds for disturbing any of its judgments. Accordingly, the court affirmed in part, vacated in part, and remanded. View "MultiPlan, Inc. v. Holland" on Justia Law

The Fifth Circuit granted a petition for panel rehearing and vacated the original opinion, substituting this opinion certifying a question to the Supreme Court of Texas: Is the Texas Uniform Fraudulent Transfer Act's "good faith" defense against fraudulent transfer clawbacks, as codified at Tex. Bus. & Com. Code 24.009(a), available to a transferee who had inquiry notice of the fraudulent behavior, did not conduct a diligent inquiry, but who would not have been reasonably able to discover that fraudulent activity through diligent inquiry? View "Janvey v. GMAG, LLC" on Justia Law