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

A group of individuals, including D&T Partners LLC and ACET Global LLC, alleged that Baymark Partners Management LLC and others attempted to steal the assets and trade secrets of their e-commerce company through shell entities, corrupt lending practices, and a fraudulent bankruptcy. The plaintiffs claimed that Baymark had purchased D&T's assets and then defaulted on its payment obligations. According to the plaintiffs, Baymark replaced the company's management, caused the company to default on its loan payments, and transferred the company's assets to another entity, Windspeed Trading LLC. The plaintiffs alleged that this scheme violated the Racketeer Influenced and Corrupt Organizations Act (RICO).The case was initially heard in the United States District Court for the Northern District of Texas. The district court dismissed all of the plaintiffs' claims with prejudice, finding that the plaintiffs were unable to plead a pattern of racketeering activity, a necessary element of a RICO claim.The case was then taken to the United States Court of Appeals for the Fifth Circuit. The appellate court agreed with the district court, holding that while the complaint alleges coordinated theft, it does not constitute a "pattern" of racketeering conduct sufficient to state a RICO claim. This is because the alleged victims were limited in number, and the scope and nature of the scheme was finite and focused on a singular objective. Therefore, the appellate court affirmed the district court’s judgment. View "D&T Partners v. Baymark Partners" on Justia Law

Highland Capital Management, L.P., a firm co-founded by James Dondero, filed for bankruptcy in 2019 due to litigation claims. As part of a settlement agreement, Dondero relinquished control of Highland to three independent directors, one of whom, James P. Seery, was appointed as Highland’s Chief Executive Officer, Chief Restructuring Officer, and Foreign Representative by the bankruptcy court. To protect Seery from vexatious litigation, the bankruptcy court issued an order that no entity could commence or pursue a claim against Seery relating to his role without the bankruptcy court's prior approval. Despite this, two entities founded by Dondero, the Charitable DAF Foundation and its affiliate CLO Holdco, filed a lawsuit against Highland in district court, alleging that Highland, through Seery, had withheld material information and engaged in self-dealing related to a settlement with one of its largest creditors, HarbourVest.The bankruptcy court held the appellants in civil contempt for violating its order and ordered them to pay $239,655 in compensatory damages. The district court affirmed the bankruptcy court's decision, concluding that the award was compensatory and therefore civil. The appellants appealed to the United States Court of Appeals for the Fifth Circuit, arguing that the sanction was punitive and thus exceeded the scope of the bankruptcy court’s civil contempt powers.The United States Court of Appeals for the Fifth Circuit vacated the district court's decision and remanded the case. The appellate court found that the bankruptcy court had abused its discretion by imposing a punitive sanction that exceeded its civil contempt powers. The court held that the sanction was not compensatory because it was not based on the damages Highland suffered due to the appellants' decision to file the motion in the wrong court. The court instructed the bankruptcy court to limit any sanction award to the damages Highland suffered because of this error. View "Charitable DAF Fund v. Highland Captl Mgmt" on Justia Law

This case involves a dispute between Sheet Pile, LLC and Plymouth Tube Company. The conflict arose from an exclusivity agreement, in which Plymouth agreed to manufacture certain products only for PilePro, Sheet Pile's predecessor. Approximately a decade later, Sheet Pile accused Plymouth of breaching this agreement by selling those products to other companies, and they sued for fraud and breach of contract. The district court granted summary judgment in favor of Plymouth.Sheet Pile then appealed. The Court of Appeals for the Fifth Circuit reviewed the summary judgment de novo and affirmed the lower court's decision. For the breach-of-contract claim, the court concluded that the claim was time-barred under Texas law, which has a four-year statute of limitations for such claims. The court also held that the discovery rule, which could have deferred the accrual of the cause of action, did not apply.Regarding the fraud claim, the court concluded that Sheet Pile failed to demonstrate a genuine dispute of material fact that Plymouth's representations were false when made. The court noted that there was no evidence that Plymouth sold the exclusive products to third parties in 2014 or 2015, and that Plymouth had expressly warned PilePro that it might begin selling to third parties if PilePro didn't hold up its end of the agreement. Therefore, the court affirmed summary judgment for Plymouth. View "Sheet Pile v. Plymouth Tube" on Justia Law

In this case, the plaintiffs, Carl and Mary Ellen Schnell, filed an insurance claim with their home insurer, State Farm Lloyds, after a hailstorm damaged their home's roof. State Farm accepted coverage for some claims but denied others, including the claim that the City of Fort Worth required the Schnells to replace their entire roof, rather than just the damaged tiles. The Schnells sued, and the district court ruled in favor of State Farm. The Schnells appealed this decision.The United States Court of Appeals for the Fifth Circuit found that there were genuine issues of material fact that prevented the case from being resolved through summary judgment. The court found conflicting evidence regarding whether a building code administrator had flatly denied the Schnells' request for spot repairs or had conditioned his decision on the Schnells confirming that the old and new tiles on their roof did not interlock. The court also found a genuine dispute of fact about whether the Schnells' roof tiles were damaged by a covered risk like wind or hail, which would have triggered their insurance coverage.Thus, the court vacated the district court's summary judgment in favor of State Farm on the Schnells' breach of contract and Texas Prompt Payment of Claims Act claims. The court affirmed the remainder of the district court's judgment and remanded the case for further proceedings consistent with its opinion. View "Schnell v. State Farm Lloyds" on Justia Law

In an effort to curb illegal immigration, the Texas legislature passed Senate Bill 4 (S.B. 4), which amended various statutes. The new laws prohibited noncitizens from illegally entering or reentering the state and established removal procedures. However, the United States, two non-profit organizations, and the county of El Paso challenged S.B. 4, arguing that it was preempted by federal law. The district court granted a preliminary injunction, and the state of Texas appealed.The United States Court of Appeals for the Fifth Circuit denied Texas’s motion to stay the injunction, arguing that the state had not shown it was likely to succeed on the merits of its preemption claims. The court found that the federal government has broad and exclusive power over immigration, including the entry and removal of noncitizens. The court also noted that the Texas law interfered with the federal government's foreign policy objectives and could lead to unnecessary harassment of noncitizens who federal officials determine should not be removed.Furthermore, the court concluded that S.B. 4 conflicted with federal law because it blocked the federal government's discretion to decide whether to initiate criminal proceedings or civil immigration proceedings once a noncitizen is apprehended, and because it permitted state courts to impose criminal sanctions and order removal of noncitizens without the federal government's input.In light of these findings, the court ruled that the balance of equities weighed against granting a stay. The court emphasized that any time a state is prevented from enforcing statutes enacted by its representatives, it suffers a form of irreparable injury. However, the court also noted that enforcement of S.B. 4 could lead to international friction and potentially take the United States out of compliance with its treaty obligations. Therefore, the court denied Texas's motion for a stay pending appeal. View "United States v. Texas" on Justia Law

The case involves Michael Garrett, a prisoner in the Texas Department of Criminal Justice system for over thirty years, who contends that the prison's schedule allows him only three and a half hours of sleep per night, with a maximum of two and a half hours of continuous sleep. According to Garrett, this sleep deprivation constitutes a violation of the Eighth Amendment's ban on cruel and unusual punishment. He sued the Department after his complaints were ignored by prison officials.The United States District Court for the Southern District of Texas dismissed Garrett's claim, reasoning that he failed to demonstrate a direct causal relationship between his health issues and his sleep deprivation. The court also held that the prison officials' actions did not constitute deliberate indifference, as the schedule was based on legitimate penological purposes.Upon appeal, the United States Court of Appeals for the Fifth Circuit found that the district court had applied incorrect legal standards. The appellate court held that to establish a violation of the Eighth Amendment, a prisoner need only show a substantial risk of serious harm, not actual harm. Furthermore, the court clarified that the prison’s penological purpose has no bearing on whether an inmate has shown “deliberate indifference” for purposes of an Eighth Amendment claim. The case was vacated and remanded to the district court to apply the correct legal standards. View "Garrett v. Lumpkin" on Justia Law

The case involves a petition by Inhance Technologies, L.L.C. against orders issued by the United States Environmental Protection Agency (EPA). Inhance, a company that has been fluorinating plastic containers since 1983, was charged by the EPA for violating a Significant New Use Rule regarding long-chain perfluoroalkyls (PFAS) due to the presence of PFAS in an insecticide stored in a container fluorinated by Inhance. PFAS are long-lasting chemicals found in various products and have been linked to several health issues. The EPA issued two orders under Section 5 of the Toxic Substances Control Act (TSCA), prohibiting Inhance from manufacturing or processing PFAS during its fluorination process. Inhance claimed that if the orders were enforced, they would shutdown their fluorination process and bankrupt the company.The United States Court of Appeals for the Fifth Circuit ruled in favor of Inhance, stating that the EPA exceeded its statutory authority by issuing the orders. The court held that Inhance's decades-old fluorination process could not be deemed a "significant new use" under Section 5 of TSCA. The court vacated the EPA's orders and noted that the EPA could regulate Inhance's fluorination process under Section 6 of TSCA, which requires a cost-benefit analysis for ongoing uses. The court's ruling was based on the interpretation of the term "new" in TSCA, the statutory framework, and the requirement for agencies to provide fair notice of their rules. View "Inhance Technologies v. EPA" on Justia Law

In a case before the United States Court of Appeals for the Fifth Circuit, the defendant, Clarence Santiago, appealed both his conviction and sentence related to drug trafficking and firearms charges. Santiago and his co-conspirators were selling marijuana from a hotel room when they were robbed at gunpoint by previous buyers, leading to a shootout. Santiago was apprehended and confessed to his involvement in the crime.Santiago pleaded guilty to four separate charges but later moved to withdraw his plea, arguing that the presentence investigation report recommended he be improperly punished for attempted first-degree murder. The district court sentenced Santiago to 360 months, a decision he appealed on multiple grounds.The Court of Appeals found no reversible error in Santiago's plea but held that the district court erred in calculating the guideline range for sentencing. The court noted that Santiago and his co-conspirators were under threat during the shootout, which may have been an act of self-defense rather than attempted murder.Given this, the Court of Appeals found that the district court committed clear error by applying an attempted-murder cross-reference without considering Santiago's potential self-defense. The court affirmed Santiago's conviction but vacated the sentence and remanded the case for resentencing. View "USA v. Santiago" on Justia Law

In a case heard by the United States Court of Appeals for the Fifth Circuit, R.J. Reynolds Tobacco Company and other cigarette manufacturers and retailers challenged the Food and Drug Administration's (FDA) new warning-label requirement for cigarette packages and advertisements, citing violations of the First Amendment, the Administrative Procedure Act (APA), and the requirements of the Family Smoking Prevention and Tobacco Control Act (TCA). The district court ruled in favor of the plaintiffs based on their First Amendment claim, without addressing the remaining claims.The FDA appealed, and the appellate court reversed the district court's decision. The court held that the warnings were both factual and uncontroversial, thus qualifying for scrutiny under the standard set by the Supreme Court in Zauderer v. Office of Disciplinary Council of Supreme Court of Ohio. In that case, the Supreme Court held that the government could constitutionally require advertisers to disclose purely factual and uncontroversial information, provided the requirements are reasonably related to a substantial government interest and not unjustified or unduly burdensome.Applying the Zauderer standard, the court determined that the FDA's warnings were justified by the government's interest in promoting greater public understanding of the negative health consequences of smoking and were not unduly burdensome. As such, the court concluded that the warnings did not violate the First Amendment. The court remanded the case back to the district court for consideration of the remaining claims under the APA. View "R J Reynolds Tobacco v. FDA" on Justia Law

In this case, the United States Court of Appeals for the Fifth Circuit reversed a verdict from the United States District Court for the Northern District of Texas. The plaintiffs, C. Sidney Johnston and Danette Johnston, had sued Ferrellgas, Incorporated after Mr. Johnston was injured using a propane tank manufactured by Ferrellgas. A jury had found Ferrellgas liable for a manufacturing defect and negligence and awarded the Johnstons $7 million, which the district court reduced to $1.7 million. On appeal, Ferrellgas contended that the district court erred in denying its motion for judgment as a matter of law because there was insufficient evidence to support the verdict.The Court of Appeals agreed with Ferrellgas. The Court found that there was no substantial evidence to support the jury's finding that the tank was defective when it left Ferrellgas's possession, a crucial element of a manufacturing defect claim. The Court also found that the negligence claim must fail, as it was dependent on the tank having a manufacturing defect.The Court therefore reversed the district court's denial of Ferrellgas's motion for judgment as a matter of law on both the manufacturing defect and negligence claims, and rendered judgment for Ferrellgas. View "Johnston v. Ferrellgas" on Justia Law