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

The Fifth Circuit vacated the district court's award of fees to class counsel in a class action settlement involving consumers who purchased defective toilet tanks against defendants. The court agreed with Porcelana that the district court erred in calculating the lodestar and refusing to decrease it. In this case, the district court abused its discretion by failing to make any factual findings regarding the nature of the class's unsuccessful claims and an unsupported assertion is insufficient to permit the district court to bypass the proper lodestar calculation and only consider the unsuccessful claims under the eighth Johnson factor. Nor is this a case where the record supports such a conclusion in the absence of an explicit finding by the district court. Even assuming the district court had adequately supported its conclusion that unsuccessful claims were intertwined with those that proved successful, the court stated that the district court still failed to properly analyze the award in relation to the results obtained. Accordingly, the court remanded for further proceedings. View "Fessler v. Porcelana Corona de Mexico, S.A. de C.V." on Justia Law

The Fifth Circuit granted defendants' motion for a stay of discovery in this class action lawsuit while the court reviews their appeal under Federal Rule of Civil Procedure 23(f). Boeing and Southwest were sued for allegedly conspiring to conceal design defects in Boeing's 737 MAX 8 aircraft and thus defrauding airline ticket purchasers. After considering the Nken factors, the court concluded that Boeing and Southwest have made a strong showing that the court is likely to reverse the class-certification decision because they raised substantial predominance questions regarding damages. Furthermore, defendants have also made a strong showing regarding irreparable harm; plaintiffs have not plausibly alleged that they or any other parties will be irreparably injured by delaying further discovery until the conclusion of the Rule 23(f) appeal; and the public interest supports staying district court proceedings to avoid potentially wasteful and unnecessary litigation costs where, as here, defendants have shown a substantial likelihood of success on appeal. View "Earl v. Boeing Company" on Justia Law

A class of Louisiana medical providers sued Louisiana Preferred Provider Organizations (PPOs) in Louisiana state court, alleging that the PPOs violated the Louisiana PPO Act by discounting their bills without prior notice. After receiving class certification, the Class settled with all of the Louisiana defendants except Med-Comp; CorVel (Homeland’s insured) assigned to the Class its claims against Homeland. The assignment did not initially include the bad faith claim CorVel was pursuing against Homeland in Delaware. The Delaware Supreme Court ultimately held that the claim was time-barred. CorVel then assigned all of its claims against Homeland to the Class. The Class amended its complaint against MedComp in Louisiana state court to assert the bad faith claim against Homeland.The litigation then consisted of the Class's state law PPO Act claims against one non-diverse defendant (Med-Comp) and a state law bad faith claim as an assignee against one diverse defendant (Homeland). Homeland removed the case to federal court. The district court remanded the PPO Act claims against Med-Comp to state court and dismissed the bad faith claims as barred by the Delaware judgment.The Fifth Circuit reversed in part. The district court lacked jurisdiction because a non-diverse defendant remained from the original lawsuit. Med-Comp was not improperly joined because the Class has a possibility of recovery against Med-Comp (a non-diverse defendant) on the PPO Act claims. The court remanded with instructions to remand the entire case to state court. View "Williams v. Homeland Insurance Co. of New York" on Justia Law

After a class of homeowners settled their claims against a Chinese company for manufacturing and selling toxic drywall, the settlement agreement divided the settlement class into three groups based on when a plaintiff joined the litigation. Three plaintiffs appeal the settlement award, alleging that the lawyers for the settlement class placed them in the wrong plaintiff group and the district court failed to fix the error.The Fifth Circuit dismissed plaintiffs' appeal, concluding that the settlement agreement waived a plaintiff's right to appeal an award determination beyond the district court. In this case, because plaintiffs opted into the settlement agreement as absent class members, they waived their right to appeal. View "Frego v. Settlement Class Counsel" on Justia Law

Plaintiffs, representatives of a class of plaintiffs, filed suit against an ADT employee in state court seeking millions in damages after the employee, who installed ADT's home-security surveillance systems, used his access privileges to spy on customers in their homes. ADT, which is being sued directly by other plaintiffs in both Texas and Florida for the breach of privacy, intervened in this suit and removed to the district court under the Class Action Fairness Act (CAFA). The district court granted plaintiffs' motion to remove to state court under the home state exception to CAFA.The Fifth Circuit granted ADT's motion to appeal under 28 U.S.C. 1453(c) and reversed the district court's remand order. In this case, plaintiffs claim to represent a class of plaintiffs seeking millions in recovery for the invasion of their privacy, although, as of yet, they have asserted claims against only the offending employee (who is imprisoned). The court explained that the thrust of this suit is to gain access to ADT's deep pockets and ADT, having properly intervened, must be considered a primary defendant under CAFA. View "Madison v. ADT, LLC" on Justia Law

Plaintiffs filed a class action against Arkema, a chemicals facility that combusted during Hurricane Harvey, seeking redress for the physical and financial effects of the incident, which released toxic ash and smoke into the surrounding communities and caused the evacuation of nearby residents.The Fifth Circuit vacated the district court's class certification order and remanded for further proceedings under Federal Rule of Civil Procedure 23. The court explained that, when the cementing of relationships among proffered class members of liability or damages or both turns on scientific evidence, the court must insist that the metric of admissibility be the same for certification and trial. Therefore, the Daubert hurdle must be cleared when scientific evidence is relevant to the decision to certify. In its certification order, the court concluded that the district court was not as searching in its assessment of the expert reports' reliability as it would have been outside the certification setting. Furthermore, the district court's certification order did not discuss the considerations affecting the administration of trial, and it concluded that common questions would predominate without adequately addressing Arkema's arguments that causation, injury, and damages would be highly individualized. The court also concluded that the relative balance of concededly common claim elements to contested elements of causation and injury warrants closer attention. Finally, the court concluded that the current record does not compel the conclusion that plaintiffs' medical and property injuries are incapable of being addressed by classwide injunctions. The court remanded for further proceedings. View "Prantil v. Arkema Inc." on Justia Law

The Sabine River meanders between Texas and Louisiana. Two state agencies jointly regulate its waterways and operate a hydroelectric plant--the Toledo Bend Reservoir and Toledo Bend Dam. In March 2016, heavy rains led to heavy water inflow into the reservoir and flooding of the River. The plaintiffs, about 300 Texas and Louisiana property owners, alleged that the flooding of their property was caused or exacerbated by the reservoir’s water level becoming too high and the spillway gates at the reservoir being intentionally opened. The defendants removed the case to federal court, which remanded back to Texas state court. The cases were removed again. The Texas federal district court denied a motion to remand but later dismissed all claims against private power companies and remanded the claims against the state authorities to state court.The Fifth Circuit affirmed. Federal jurisdiction obtained at the time of removal because the suit then qualified as a “mass action” under the Class Action Fairness Act (CAFA), 28 U.S.C. 1332(d)(11)(A); an exception for a local single event does not apply. CAFA mass actions “may be removed by any defendant without the consent of all defendants.” The court upheld the dismissals of the power companies based on findings that the plaintiffs did not adequately allege any violations of the FERC license; that under Texas law, only state authorities may be found liable for floodwater damage; and that the plaintiffs failed to show that the operation of the generators was a proximate cause of plaintiffs’ losses. View "Bonin v. Sabine River Authority of Louisiana" on Justia Law

Plaintiff joined the Chinese-Manufactured Drywall Products Liability Multi-District Litigation, alleging that his home contained defective Chinese-manufactured drywall. Plaintiff challenged the district court's award of $300,000 in damages and Knauf Defendants move to dismiss.The Fifth Circuit granted the Knauf Defendants' motion to dismiss for lack of jurisdiction and dismissed the appeal. In this case, the New Claims Settlement Agreement incorporates another agreement that has a waiver of appellate rights, and these explicit waivers clearly and unequivocally waive plaintiff's right to appeal. View "Dieuvil v. Gebrueder Knauf Verwaltungsgesellschaft, KG" on Justia Law

A district court must engage in a "rigorous analysis" when it certifies a class action. Plaintiffs filed suit against FBG under the Employee Retirement Income Security Act of 1974 (ERISA), alleging that FBG has acted as a fiduciary and breached its duties.The Fifth Circuit vacated the district court's certification order, because the district court failed to engage in a rigorous analysis when it certified the class. The court held that the district court analyzed Federal Rule of Civil Procedure 23 superficially, because the district court's order did not identify the common question with any specificity. Having defined the question vaguely, the district court then analyzed it conclusionally and there is no reference to ERISA. Furthermore, the district court did not explain why clarifying FBG's status as a fiduciary will in one stroke resolve an issue that is central to the claims of each one of the class members, and the order neglected to consider asserted differences among class members that could prevent the suit from generating "common answers apt to drive the resolution of the litigation." Likewise, the district court's analysis of class type was insufficient. View "Chavez v. Plan Benefit Services, Inc." on Justia Law

The term "Actual Cash Value" is ambiguous with respect to the withholding of labor depreciation in Mississippi homeowners insurance policies that provide no further definition of ACV. The Fifth Circuit affirmed the district court's denial of State Farm's motion to dismiss with respect to plaintiff's breach of contract claim. The court found that, in the context of a Mississippi homeowners policy that refers to "Actual Cash Value" without further definition, both interpretations are reasonable. Therefore, the court held that the contract was ambiguous and the court applied Mississippi's interpretive canons, which provides that an ambiguous insurance contract is interpreted against the insurance company.The court reversed the district court's denial of State Farm's motion to dismiss with respect to plaintiff's tort claims. The court explained that, because the law on this question of interpreting "Actual Cash Value" in Mississippi was unsettled, State Farm had an arguable basis to depreciate labor costs. The court also found that the district court did not abuse its discretion in certifying a class of Mississippi State Farm policyholders similarly situated to plaintiff, who received "Actual Cash Value" payments in which labor was depreciated and whose contracts similarly did not define "Actual Cash Value." View "Mitchell v. State Farm Fire & Casualty Co." on Justia Law