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

Seville Industries, LLC, a business providing services to the oil and gas sector, applied for a Paycheck Protection Program (PPP) loan during the COVID-19 pandemic. The company included payments to independent contractors in its payroll costs calculation, resulting in a loan amount of $2,578,351. The Small Business Administration (SBA) later reviewed Seville's loan and determined that the inclusion of independent contractor payments was incorrect, leading to a partial forgiveness of the loan amount.The United States District Court for the Western District of Louisiana reviewed Seville's appeal against the SBA's decision. The district court granted summary judgment in favor of the SBA, upholding the decision to deny full loan forgiveness based on the inclusion of independent contractor payments in the payroll costs.The United States Court of Appeals for the Fifth Circuit reviewed the case and affirmed the district court's decision. The court held that the CARES Act's definition of "payroll costs" does not include payments made to independent contractors by businesses. The court emphasized that the statutory text and structure clearly distinguish between payroll costs for employees and income for independent contractors or sole proprietors. The court also rejected Seville's claims that the SBA's interim final rule changed the meaning of "payroll costs" and that the SBA should be equitably estopped from denying full forgiveness. The court concluded that Seville was not entitled to include payments to independent contractors in its payroll costs calculation for PPP loan forgiveness. View "Seville Industries v. SBA" on Justia Law

In this case, the families of Michael Jackson, Carl Wiley, Jr., and Rashad Henderson, who were killed during high-speed police chases in Houston, Texas, sued the City of Houston. They alleged that the Houston Police Department (HPD) has a policy of racial profiling that leads to more high-speed chases in predominantly black neighborhoods, resulting in the deaths of their loved ones. The plaintiffs brought several federal municipal liability claims, including violations of equal protection, Title VI, 42 U.S.C. § 1982, and substantive due process, as well as state tort claims.The United States District Court for the Southern District of Texas granted in part and denied in part Houston's motions to dismiss for lack of subject matter jurisdiction and for judgment on the pleadings. The court dismissed all claims except the equal protection claims and Jackson’s state law claims. Houston then filed an interlocutory appeal, raising issues regarding standing, failure to state federal claims, capacity to sue, and governmental immunity for Jackson’s state law claims.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court determined that it lacked jurisdiction to review non-final district court orders except under 28 U.S.C. § 1292(b). The court found that it could only review whether the plaintiffs had standing to assert their equal protection claims. The court held that the plaintiffs lacked standing because their injuries did not stem from unequal treatment based on race. Consequently, the court reversed the district court’s order regarding standing for the equal protection claims and vacated the district court’s decision on governmental immunity for Jackson’s negligence claim, remanding the case for further proceedings. View "Jackson v. City of Houston" on Justia Law

Detective Genaro Hernandez, a Dallas Police Department detective, was involved in a shooting investigation outside The Green Elephant bar in August 2019. Hernandez, who also worked for the Stainback Organization, allegedly pursued false charges against the bar's owner, Shannon McKinnon, and a security guard, Guadalupe Frias, to benefit his private employer. Despite the Special Investigation Unit finding no criminal offense by the plaintiffs, Hernandez bypassed standard procedures and directly sought prosecution from the Dallas County District Attorney’s Office, leading to the plaintiffs' indictment for tampering with evidence. The charges were later dropped when Hernandez's conflict of interest was revealed during Frias's trial.The plaintiffs filed a lawsuit against Hernandez, alleging federal claims under 42 U.S.C. § 1983 for false arrest and malicious prosecution, and state-law claims for malicious prosecution, false imprisonment, and civil conspiracy. The United States District Court for the Northern District of Texas dismissed the federal malicious-prosecution claim but allowed the federal false-arrest claim and the state-law claims to proceed. Hernandez appealed, arguing he was entitled to governmental immunity under the Texas Tort Claims Act.The United States Court of Appeals for the Fifth Circuit reviewed the case and determined that Hernandez's actions, despite being motivated by personal interests, fell within the scope of his employment as a detective. The court held that Texas law provides broad immunity to state actors for actions within their employment scope, regardless of intent. Consequently, the court reversed the district court's decision denying dismissal of the state-law claims and remanded the case for further proceedings on the remaining federal claim. View "Frias v. Hernandez" on Justia Law

A real estate developer, HK Baugh Ranch, LLC, petitioned the Texas Public Utility Commission (PUC) to release its undeveloped land, River Bend Ranch, from the certificate of convenience and necessity (CCN) issued to Crystal Clear Special Utility District (Crystal Clear). Crystal Clear, a federally indebted utility district, sued the PUC’s Chair and Commissioners in federal court, alleging that Texas Water Code § 13.2541, which allows for decertification, was preempted by 7 U.S.C. § 1926(b). This federal statute protects certain federally indebted utilities from curtailment of their service areas while their loans are outstanding.The United States District Court for the Western District of Texas issued a preliminary injunction preventing the PUC from decertifying River Bend Ranch. The district court applied the “physical ability” test from Green Valley Special Utility District v. City of Schertz, determining that Crystal Clear likely made its service available to HK Baugh and was thus entitled to the protections of § 1926(b). The court concluded that § 1926(b) likely expressly preempts Texas Water Code § 13.2541, resolving the remaining preliminary injunction factors in favor of Crystal Clear.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court held that the district court did not err in concluding that Crystal Clear would likely satisfy the “physical ability” test. However, the appellate court found that the district court erred in holding that § 1926(b) expressly preempts Texas Water Code § 13.2541. The appellate court remanded the case to the district court to determine whether § 1926(b) otherwise preempts Texas Water Code § 13.2541 and to address all preliminary injunction factors as necessary. The preliminary injunction remains in place pending further proceedings. View "Crystal Clear v. HK Baugh Ranch" on Justia Law

The City of Dallas amended an ordinance regulating the short-term lending industry, which TitleMax of Texas, Inc. claimed severely harmed its business. TitleMax sought declaratory and injunctive relief, arguing the amendment was preempted by state law and violated its due course of law guarantee under the Texas Constitution. TitleMax requested a preliminary injunction to halt enforcement of the amendment until a trial on the merits, but the district court denied this request.The United States District Court for the Northern District of Texas reviewed the case and denied TitleMax’s motion for a preliminary injunction. The magistrate judge found that while TitleMax demonstrated potential irreparable harm, it did not show a substantial likelihood of success on the merits of its claims. The district court accepted this recommendation, leading TitleMax to appeal the decision.The United States Court of Appeals for the Fifth Circuit reviewed the case and affirmed the district court’s decision. The appellate court concluded that TitleMax did not demonstrate a likelihood of success on its preemption and due course of law claims. The court found that the amended ordinance did not prohibit all Credit Services Organizations (CSOs) or Credit Access Businesses (CABs) from operating, but rather regulated their business models. Additionally, the court determined that TitleMax did not have a constitutionally protected interest in operating its business profitably under the due course of law guarantee. The court held that the ordinance was rationally related to a legitimate governmental interest in protecting low-income borrowers. Consequently, the appellate court affirmed the district court’s denial of the preliminary injunction. View "TitleMax of Texas v. City of Dallas" on Justia Law

Spirit AeroSystems, a manufacturer of airplane parts, was issued a Request to Examine (RTE) by the Attorney General of Texas, W. Kenneth Paxton. The RTE statute allows the Attorney General to inspect business records without providing an opportunity for precompliance judicial review. Spirit challenged the statute as facially unconstitutional, arguing it violated the Fourth Amendment by not allowing precompliance review.The United States District Court for the Western District of Texas agreed with Spirit, finding the RTE statute unconstitutional for failing to provide precompliance review and issued a permanent injunction preventing the Attorney General from enforcing the RTEs against Spirit. The court's decision was based on the precedent set by City of Los Angeles v. Patel, which requires an opportunity for precompliance review to avoid Fourth Amendment violations.The United States Court of Appeals for the Fifth Circuit reviewed the case. During the appeal, the Texas Supreme Court issued a decision in Paxton v. Annunciation House, Inc., which interpreted the RTE statute to include the required opportunity for precompliance review through Texas Rule of Civil Procedure 176.6. This rule allows recipients of administrative subpoenas to seek a protective order before compliance is required.Given the Texas Supreme Court's interpretation, the Fifth Circuit vacated the district court's judgment and remanded the case for further proceedings consistent with the new interpretation, which now provides the necessary precompliance review to satisfy Fourth Amendment requirements. View "Spirit Aerosystems v. Paxton" on Justia Law

Following Hurricane Ida in 2021, Terrebonne Parish requested assistance from Lafayette Utilities Systems (LUS) to help restore power in Houma, Louisiana. LUS, in turn, requested help from the City of Wilson, North Carolina. Agreements were signed to facilitate emergency assistance, and the City of Wilson dispatched employees to Louisiana. Due to a shortage of hotels in Houma, the employees stayed in Lafayette and commuted daily. Kevin Worrell, a City of Wilson employee, was involved in a vehicle collision while driving from Houma to Lafayette, resulting in injuries to Edward and Linda Breaux and Jessie and Vickie Blanchard.The plaintiffs filed separate negligence lawsuits in Louisiana state court, which were removed to the federal district court in the Western District of Louisiana. The cases were consolidated, and the defendants moved for summary judgment, asserting immunity under the Louisiana Homeland Security and Emergency Assistance and Disaster Act. The district court granted summary judgment, finding statutory immunity, and dismissed the plaintiffs' claims with prejudice. The plaintiffs appealed, challenging the district court's interpretation of the Act's immunity provision.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court noted the need to interpret the Louisiana emergency preparedness law and expressed doubt about its ability to make a reliable Erie guess. Consequently, the court certified two questions to the Louisiana Supreme Court: (1) whether an employee of a city from another state working under an emergency assistance agreement is a "representative" of Louisiana or its political subdivisions, and (2) whether an individual providing emergency assistance is "engaging in emergency preparedness and recovery activities" while commuting from the recovery site to lodging. The Fifth Circuit will resolve the case based on the Louisiana Supreme Court's guidance. View "Breaux v. Worrell" on Justia Law

Petitioners, including various agricultural and trade organizations, challenged the Environmental Protection Agency (EPA) over a rule that set an equation for calculating vehicle fuel economy, specifically the "Ra factor." They argued that the Ra factor was set arbitrarily low, which effectively increased federal fuel economy standards and decreased demand for gasoline, harming their businesses.The case was reviewed by the United States Court of Appeals for the Fifth Circuit. The petitioners contended that the EPA's rule violated the Administrative Procedure Act (APA) by ignoring significant comments and data that flagged flaws in the determination of the Ra factor. They pointed out that the EPA's test program used too few and outdated vehicles, included data from a malfunctioning vehicle, and excluded data from a properly functioning one. Additionally, they argued that the EPA failed to consider alternative data sources, such as manufacturer certification data, which showed a higher Ra factor.The Fifth Circuit found that the EPA's rule was arbitrary and capricious. The court noted that the EPA did not adequately respond to significant comments that raised substantial issues with the test program's sample size, the representativeness of the vehicles tested, and the inclusion and exclusion of certain test data. The court also found that the EPA failed to justify its rejection of alternative data sources. As a result, the court held that the EPA did not demonstrate that its decision was the product of reasoned decision-making.The court granted the petition for review and vacated the portion of the EPA's rule that set and implemented the Ra factor of 0.81. The court concluded that there was no serious possibility that the EPA could substantiate its decision on remand, and thus, vacatur was the appropriate remedy. View "Texas Corn Producers v. EPA" on Justia Law

A group of staffing companies in Texas challenged a memorandum issued by the former General Counsel of the National Labor Relations Board (NLRB), Jennifer Abruzzo. The memorandum outlined a plan to urge the NLRB to reverse its holding in a previous case, Babcock, which allowed employers to compel employees to attend meetings where they were urged to reject union representation. The staffing companies argued that the memorandum violated their First Amendment rights by restricting their speech about unionization and sought an injunction and declaratory judgment against its enforcement.The United States District Court for the Eastern District of Texas dismissed the case for lack of jurisdiction, stating that the plaintiffs were challenging unreviewable prosecutorial decisions by the NLRB General Counsel, that the NLRA's scheme precluded jurisdiction, and that the plaintiffs lacked standing. The staffing companies appealed, arguing that the district court erred in its dismissal and that they had standing because the memorandum applied to them and was a final agency action reviewable under the Administrative Procedure Act (APA).The United States Court of Appeals for the Fifth Circuit reviewed the case and found that the staffing companies lacked standing. The court noted that the plaintiffs had not provided evidence of a credible threat of enforcement of the memorandum causing them direct injury. The court also found that the plaintiffs did not demonstrate an intent to engage in conduct regulated by the memorandum, as there was no known unionization attempt at their businesses. The court concluded that the plaintiffs failed to establish a credible threat of enforcement or a substantial risk of future injury.The Fifth Circuit affirmed the district court's dismissal of the case for lack of standing. View "Burnett Specialists v. Cowen" on Justia Law

Two air ambulance providers, Guardian Flight, LLC, and Med-Trans Corporation, sued Health Care Service Corporation (HCSC) for failing to timely pay dispute resolution awards under the No Surprises Act (NSA). The providers also claimed that HCSC improperly denied benefits under the Employee Retirement Income Security Act (ERISA) and was unjustly enriched under Texas law.The United States District Court for the Northern District of Texas dismissed the providers' complaint. The court found that the NSA does not provide a private right of action for enforcing dispute resolution awards. It also dismissed the ERISA claim for lack of standing, as the providers did not show that the beneficiaries suffered any injury since the NSA shields them from liability. Lastly, the court dismissed the quantum meruit claim, stating that the providers did not perform their services for HCSC's benefit. The court also denied the providers' request for leave to amend their complaint, deeming it futile.The United States Court of Appeals for the Fifth Circuit affirmed the district court's decision. The appellate court agreed that the NSA does not contain a private right of action and that the statute's text and structure support this conclusion. The court also upheld the dismissal of the ERISA claim, reiterating that the beneficiaries did not suffer any concrete injury. Finally, the court affirmed the dismissal of the quantum meruit claim, as the providers did not render services for HCSC's benefit. The appellate court also found no abuse of discretion in the district court's denial of leave to amend the complaint. View "Guardian Flight v. Health Care Service" on Justia Law