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

On emerging from Chapter 11 reorganization effective February 9, 2021, Chesapeake Energy Corporation tested the limits of the bankruptcy court’s post-confirmation jurisdiction by asking it to settle two prebankruptcy purported class actions covering approximately 23,000 Pennsylvania oil and gas leases. The Fifth Circuit consolidated the Proof of Claim Lessors’ appeal from the preliminary approval order with the appeal from the final approval order. At issue is whether the bankruptcy and district courts had jurisdiction under 28 U.S.C. Section 1334 to hear and decide these “class” claims.   The Fifth Circuit vacated and remanded the bankruptcy and district court judgments with instructions to dismiss. The court explained that no proofs of claim were filed for class members, and every feature of the settlements conflicts with Chesapeake’s Plan and Disclosure Statement. Handling these forward-looking cases within the bankruptcy court, predicated on 28 U.S.C. Section 1334(a) or (b), rather than in the court where they originated, exceeds federal bankruptcy post-confirmation jurisdiction. View "Sarnosky v. Chesapeake" on Justia Law

After the Texas Legislature amended the Election Code in 2021, the United States and others sued, alleging the changes were racially discriminatory. When Plaintiffs sought discovery from individual, nonparty state legislators, those legislators withheld some documents, citing legislative privilege. The district court largely rejected the legislators’ privilege claims, and they filed this interlocutory appeal.   The Fifth Circuit reversed. The court explained that for their part, the legislators rely on the privilege for each of the disputed documents. Plaintiffs, too, do not argue that the documents are non-legislative. Instead, they argue only that the privilege either “was waived” or “must yield.” The court wrote that the legislators did not waive the legislative privilege when they “communicated with parties outside the legislature, such as party leaders and lobbyists.” The district court’s contrary holding flouts the rule that the privilege covers “legislators’ actions in the proposal, formulation, and passage of legislation.” Finally, the court reasoned that Plaintiffs’ reliance on Jefferson Community Health Care Centers, Inc. v. Jefferson Parish Government is misplaced. That decision stated that “while the common-law legislative immunity for state legislators is absolute, the legislative privilege for state lawmakers is, at best, one which is qualified.” But that case provides no support for the idea that state legislators can be compelled to produce documents concerning the legislative process and a legislator’s subjective thoughts and motives. View "LULAC Texas v. Hughes" on Justia Law

Plaintiffs sued Defendants GEICO Advantage Insurance Company and its related entities. Each Plaintiff possessed a vehicle that was subject to a private passenger auto insurance policy with a different Defendant (collectively, the “Policies”). Each Plaintiff’s vehicle was involved in an auto collision while insured under one of the Policies. Plaintiffs sought to represent a class of insureds claiming that GEICO failed to fully compensate them for the total loss of their vehicles under their respective insurance policies. The district court held that Plaintiffs had standing to sue on behalf of the proposed class and subsequently granted class certification. GEICO appealed both holdings.
The Fifth Circuit affirmed. The court wrote it is clear that each Plaintiff individually satisfies the less stringent class certification approach. Indeed, there is no dispute that each Plaintiff alleges that he or she has suffered some injury; the disagreement between the parties concerns how those injuries relate to those of the class. Further, the court wrote it disagreed with the contention that Plaintiffs have alleged three separate injuries. GEICO’s failure to remit any of the three Purchasing Fees amounts to the same harm—a breach of the Policies. The court also concluded that the strategic value of these claims’ waiver is considerably greater than their inherent worth. It was accordingly within the district court’s discretion to rule that Plaintiffs are adequate class representatives. Moreover, the court wrote that GEICO’s arguments against class certification for this claim largely track its arguments opposing certification of Plaintiffs’ other claims. The district court’s analysis meets the requisite rigor when read in the broader context of its decision. View "Angell v. GEICO Advantage Ins" on Justia Law

Plaintiffs are captains of charter boats operating in the Gulf of Mexico with federal for-hire permits, and their companies. They filed a class-action complaint in the Eastern District of Louisiana in August of 2020, naming as Defendants the Department of Commerce, NOAA, NMFS, and related federal officials. This appeal concerns a regulation issued by the United States Department of Commerce that requires charter-boat owners to, at their own expense, install onboard a vessel monitoring system that continuously transmits the boat’s GPS location to the Government, regardless of whether the vessel is being used for commercial or personal purposes.   The Fifth Circuit reversed the district court’s judgment and held that in promulgating this regulation, the Government committed multiple independent Administrative Procedure Act violations, and very likely violated the Fourth Amendment. The court wrote that two components of the Final Rule are unlawful. First, the Magnuson-Stevens Act does not authorize the Government to issue the GPS-tracking requirement. In addition, that rule violates the Administrative Procedure Act because it is arbitrary and capricious, in turn because the Government failed to address Fourth Amendment issues when considering it and failed to rationally consider the associated costs and benefits. Second, the business-information requirement violates the APA because the Government did not give fair notice that it would require the type of data specified in the Final Rule. View "Mexican Gulf v. U.S. Dept. of Comm" on Justia Law

Plaintiff, Oklahoma Firefighters Pension and Retirement System (“Oklahoma Firefighters”) is a purchaser of Six Flags Entertainment Corporation common stock and brought suit against the company and two of its executive officers. Plaintiffs alleged that Six Flags executives made material misrepresentations and omissions regarding the development of several Six Flags theme parks in China, thereby violating federal securities laws. The district court dismissed the claims with prejudice for failure to state a claim. Plaintiff sought a reversal of the district court’s two primary rulings: the dismissal of the complaint and the refusal to allow post-judgment amendments to the complaint. As to the dismissal, Plaintiff argued it sufficiently pled (1) actionable misstatements, (2) scienter, and (3) control person liability. As to the failure to allow an amendment, Plaintiff alleged it timely and sufficiently corrected the claimed deficiencies in the complaint.   The Fifth Circuit reversed and remanded the district court’s ruling. The court held that the complaint adequately alleges that Six Flags improperly recognized revenue on the China parks in its Class Period financial statements due to Defendants’ misleading statements regarding the parks’ construction progress and the admission of $15 million in overstated revenue in 2018. However, the court remanded to consider whether the complaint adequately alleges a Section 20(a) claim. View "OK Firefighters Pension v. Six Flags Entmt" on Justia Law

Fourteen women (“Plaintiffs”) from seven states brought the present putative class action against Ashley Black and her companies (“Defendants”), alleging false and deceptive marketing practices. They take issue with various representations in Defendants’ ads about a product called the FasciaBlaster, a two-foot stick with hard prongs that is registered with the Food and Drug Administration as a massager. The district court dismissed Plaintiffs’ claims in their entirety.  Plaintiffs appealed the order striking the class allegations and the dismissal of individual claims.   The Fifth Circuit found that the district court correctly struck Plaintiffs’ class allegations and properly dismissed all but two of their claims. Accordingly, the court affirmed in part, reversed in part, and remanded the case to the district court. The court explained that it agreed with the district court that Plaintiffs’ allegations suffer from a combination of defects, including a failure to plead adequately what representations were actually made when those representations were made, who made the representations, and where those representations occurred.   However, the court reversed the dismissal of Plaintiffs’ breach of express warranty under, respectively, California Consumer Code Sections 2313 & 10210, and Florida Statutes Sections 672.313 & 680.21. The court wrote that the district court did not apply the law of a specific jurisdiction when conducting its analysis. Plaintiffs on appeal cite various Fifth Circuit cases in addition to Texas and California state law precedents. Defendants proffer Fifth Circuit, California, and Florida precedents. Neither party, however, briefed what law should be applied to each claim. View "Elson v. Black" on Justia Law

Plaintiffs allege that Boeing and Southwest Airlines defrauded them by, among other things, concealing a serious safety defect in the Boeing 737 MAX 8 aircraft. The district court certified four classes encompassing those who purchased or reimbursed approximately 200 million airline tickets for flights that were flown or could have been flown on a MAX 8.In reviewing Defendants' interlocutory appeal, the Fifth Circuit reversed the district court. The court found that Plaintiffs lacked Article III standing because they failed to allege any concrete injury. View "Earl v. Boeing" on Justia Law

Two former students of Tulane University, on behalf of a putative class of current and former students, sued the University for failing to provide a partial refund of tuition and fees after Tulane switched from in-person instruction with access to on-campus services to online, off-campus instruction during the COVID-19 pandemic. The district court agreed with Tulane that the student's complaint should be dismissed for failure to state a claim.   The Fifth Circuit reversed and remanded. The court concluded that the claim is not barred as a claim of educational malpractice because the Students do not challenge the quality of the education received but the product received. Second, the court rejected Tulane’s argument that the breach-of-contract claim is foreclosed by an express agreement between the parties because the agreement at issue plausibly does not govern refunds in this circumstance. And third, the court concluded that Plaintiffs have not plausibly alleged that Tulane breached an express contract promising in-person instruction and on-campus facilities because Plaintiffs fail to point to any explicit language evidencing that promise. But the court held that Plaintiffs have plausibly alleged implied-in-fact promises for in-person instruction and on-campus facilities. Moreover, the court found that the Students’ alternative claim for unjust enrichment may proceed at this early stage. Finally, genuine disputes of material fact regarding whether Plaintiffs saw and agreed to the A&DS preclude reliance on the agreement at this stage. Thus, Plaintiffs have plausibly alleged a claim of conversion. View "Jones v. Admin of the Tulane Educ" on Justia Law

BP Corporation North America Inc. (“BP America”) a Defendant-Appellee in this action, acquired Standard Oil of Ohio (“Sohio). BP America converted the Sohio Plan into a new plan called the BP America Retirement Plan (the “ARP”). The ARP was also a defined benefit plan that retained the formula used by the Sohio Plan to calculate its members’ pension distributions. BP America converted the ARP into the BP Retirement Accumulation Plan (the “RAP,” the conversion from the ARP to the RAP as the “Conversion,” and the date of the Conversion as the “Conversion Date”), the other Defendant-Appellee in this action. Plaintiffs-Appellees, two Sohio Legacy Employees, (the “Guenther Plaintiffs”) filed a class action complaint against the RAP and BP America.   Four years after the Guenther Plaintiffs filed their original complaint, Movant-Appellant, along with 276 other individuals (the “Press Plaintiffs”) moved to intervene in the Guenther Action “for the purpose of objecting” to the magistrate judge’s recommendation. Press Plaintiffs contend that the certified class in the Guenther Action inadequately represents their interests, and therefore, they have a right to intervene in this case.   The Fifth Circuit affirmed the district court’s ruling denying the intervention. The court held that the Press Plaintiffs cannot demonstrate that their interests diverge from those of the Guenther Plaintiffs in any meaningful way. Further, the Press Plaintiffs did not identify a unique interest of their own, they are unable to specify how a determination in the Guenther Action could have a future detrimental preclusive effect. The court wrote it is satisfied that the Press Plaintiffs will be adequately represented. View "Guenther v. BP Retr Accumulation" on Justia Law

This is an appeal from a district court’s grant of a Rule 12(b)(6) motion to dismiss for failure to state a claim. Plaintiff sought a declaratory judgment that Defendant Biloxi H.M.A., L.L.C., doing business as Merit Health Biloxi (“Merit Health”), a hospital, has a duty to disclose that it charges a “facility fee,” also referred to as a “surcharge,” to all emergency room patients who receive care at its facility. The district court, making an Erie guess informed by the Mississippi Supreme Court’s references to, and partial application of, the Restatement (Second) of Torts Section 551, determined that Merit Health did not have a duty to disclose because the surcharge was not a “fact basic to the transaction”, and it, therefore, granted the motion to dismiss.   The Fifth Circuit reversed and remanded. The court explained that in applying relevant legal precepts, the court thinks that the Mississippi Supreme Court would hold that Plaintiff has sufficiently alleged facts that Merit Health had a duty to exercise reasonable care to disclose the surcharge. First, Plaintiff alleged that the surcharge was a material fact. Second, Plaintiff alleged that Merit Health was aware that patients like her were unaware of the surcharge, but nonetheless failed to disclose it. Third, Plaintiff alleged that she had a reasonable expectation of disclosure because Merit Health holds itself out to be a “caring community-based organization” and patients like her expected Merit Health to disclose the surcharge based on the confidence and trust that they placed in the hospital. View "Henley v. Biloxi H.M.A." on Justia Law