Take the Fifth: Jan. 14, 2021 opinions

Posted on by tadbartlett

Designated for publication

  • Evolve Federal Credit Union v. Barragan-Flores, 18-50420, appeal from W.D. Tex.
    • Owen, C.J. (Owen, Wiener, Dennis), bankruptcy
    • Affirming district court’s reversal of bankruptcy court’s approval of plan that allowed debtor to retain one of two vehicles that had been cross-collateralized to secure loans on both vehicles.
    • The debtor had financed the purchase of a Chevrolet Sierra and a Toyota Camry with the credit union. When he could “no longer afford to keep both vehicles, … his Chapter 13 Plan proposed that he retain the Sierra, ‘cram down’ the Sierra Loan, and surrender the Camry to Evolve as collateral for the Camry Loan. Evolve filed an objection to the Plan, specifically the ‘partial surrender’ of collateral under the Camry Claim, arguing that the cross-collateralization provisions in the loans prevented Barragan-Flores from surrendering the Camry and retaining the Sierra.” The bankruptcy court approved the proposed plan over the credit union’s objection, but the district court reversed.
    • Under § 1325(a)(5) of the Bankruptcy Code, the Court observed, “a plan’s proposed treatment of secured claims can be confirmed if one of three conditions is satisfied: The secured creditor accepts the plan; the debtor surrenders the property securing the claim to the creditor; or the debtor invokes the so-called ‘cram down’ power. The ‘cram down’ option allows the debtor to keep the collateral over the objection of the creditor and provide the creditor with payments that, over the life of the plan, will total the present value of the collateral.” (Internal citations and quotation marks omitted).
    • The Court held that § 1325(a)(5), while allowing the debtor to select from among the options for each claim, does not allow the debtor to choose from among the different options for each piece of collateral within the claim. Where both vehicles were cross-collateralized against each other, he could not choose the “cram down” option for one piece of collateral and surrender of the collateral for the other. “A plan violates that requirement when it selects different options for different collateral securing the same claim.”
  • U.S. v. Lucio, 19-11252, appeal from N.D. Tex.
    • Duncan, J. (Stewart, Duncan, Wilson), criminal, sentencing
    • Affirming sentence for conspiracy to distribute methamphetamine, which was based on a calculation of the amount of meth at issue that took into account “cryptic texting with another dealer, illumined by testimony from Lucio’s co-conspirator and a drug enforcement agent.”
    • As part of the calculation of amount of meth at issue, the presentencing report attributed 24 kilograms of meth to the defendant based on a tex conversation recovered from his phone that discussed “24 or 25” of “food” to be picked up from a meeting at a McDonald’s. Defendant argued that the deduction that the text exchange referred to kilograms of meth was “bald speculation.”
    • Noting that the district court’s fact-findings for purposes of sentencing are entitled to great deference, the Court held that “[t]hree facts in particular support attributing to Lucio twenty-four kilograms of meth from the text transaction. First, Lucio was a meth dealer: he pleaded guilty of a meth distribution conspiracy and was directly observed by officers selling meth during controlled buys. Lucio himself quoted the price for a kilogram of ‘ice.’ Second, Lucio’s co-conspirator, Wilson, stated that Lucio bought and sold meth in kilogram quantities on multiple occasions and, moreover, had stored in a shed nearly double the amount of meth involved in the text transaction. Third, the agent who reviewed Lucio’s text messages applied his own training and experience to interpret the exchange in light of Lucio’s criminal history.” The Court noted that district courts are allowed to make reasonable extrapolations and to rely on less-than-precise co-conspirator testimony, and that Lucio had failed to present any countervailing evidence as to the drug amount at issue, such that there was no clear error in the district court’s sentencing calculation.
  • University of Texas M.D. Anderson Cancer Center v. U.S. Department of Health and Human Services, 19-60226, petition for review of final agency decision of DHHS
    • Oldham, J. (Wiener, Engelhardt, Oldham), administrative law, Administrative Procedures Act
    • Granting petition for review of HHS decision imposing fine on hospital of more than $4 million for loss of patient information, vacating penalty, and remanding for further prooceedings.
    • After imposition of the fine and the hospital’s unsuccessful administrative appeals, while the petition for review was pending the HHS conceded it did not have the authority to levy a penalty greater than $450,000. The Court held that, regardless, the penalty violated the Administrative Procedures Act.
    • “In conducting arbitrary-and-capricious review, we must ensure that the agency did not ‘entirely fail[] to consider an important aspect of the problem’ that it seeks to address. … [I]n this case, HHS steadfastly refused to interpret the statutes at all.” The Court found that the HHS ALJ refused to consider anything other than compliance with the administrative regulations at issue, refusing to examine HIPAA or other applicable requirements, or whether the fine amount was arbitrary and capricious. “HHS’s Departmental Appeals Board agreed with the ALJ. It held that M.D. Anderson is ‘free to make its ultra vires argument to a court, but we may not invalidate a regulation.’ And the Board likewise agreed with the ALJ that the agency has no power to review penalties for arbitrariness or capriciousness because ‘there is nothing in the regulations that suggests that the ALJ evaluate penalties based on a comparative standard.'” Therefore, because there was no agency action on the issues at hand to defer to, the Court held that its review would be de novo.
    • The Court held that the hospital did not violate HHS’s Encryption Rule, because the hospital had implemented a system to protect patient information; the fact that, here, three employees had failed to use that system appropriately, did not show that the hospital had breached its obligation to have a system in place. The Court rejected HHS’s argument that the breach of information res ipsa meant that the hospital could have and should have done more. “But that’s not the regulation HHS wrote. The regulation requires only ‘a mechanism’ for encryption. It does not require a covered entity to warrant that its mechanism provides bulletproof protection of ‘all systems containing ePHI.’ Nor does it require covered entities to warrant that all ePHI is always and everywhere ‘inaccessible to unauthorized users.’ Nor does the regulation prohibit a covered entity from creating ‘a mechanism’ by directing its employees to sign an Acceptable Use Agreement that requires encryption of portable devices. Nor does it say that providing employees an IronKey is insufficient to create a compliant mechanism. Nor does it say anything about how effective a mechanism must be, how universally it must be enforced, or how impervious to human error or hacker malfeasance it must be. The regulation simply says ‘a mechanism.’ M.D. Anderson undisputedly had ‘a mechanism,’ even if it could’ve or should’ve had a better one. So M.D. Anderson satisfied HHS’s regulatory requirement, even if the Government now wishes it had written a different one.”
    • The Court then held that the hospital had not violated the Disclosure Rule, because the HHS’s regulatory language implies an affirmative act, such that the rule did cover inadvertent loss of a device containing patient information.
    • The Court also held that the ALJ was wrong to ignore a comparative analysis of similar losses of patient information that had resulted in no penalty after an investigation. “The Government’s only response is that it evaluates each case on its individual facts. As it must. But an administrative agency cannot hide behind the fact-intensive nature of penalty adjudications to ignore irrational distinctions between like cases.”
    • The Court then held that the penalty amount imposed was arbitrary and capricious because the statute imposes a $100,000/year cap for reasonable-cause violations, not the $1.5 million cap the HHS had included in its calculation. “[N]either ‘enforcement discretion’ nor Heckler v. Chaney empowers an agency to disregard Congress’s statutes.”

Unpublished

  • Gildon v. Nationstar Mortgage, LLC, 19-10727, appeal from N.D. Tex.
    • per curiam (Higginbotham, Jones, Costa), foreclosure, jurisdiction
    • Affirming dismissal of wrongful-foreclosure claim for lack of subject-matter jurisdiction based on a lack of complete diversity.
  • U.S. v. Wangwamba, 19-11362, appeal from N.D. Tex.
    • per curiam (King, Smith, Wilson), criminal, guilty plea
    • Affirming denial of motion to withdraw guilty plea.
  • U.S. v. Smith, 19-30913, appeal from E.D. La.
    • per curiam (Graves, Willett, Duncan), criminal
    • Granting Anders motion to withdraw and dismissing appeal.
  • U.S. v. Strong, 20-10461, appeal from N.D. Tex.
    • per curiam (King, Smith, Wilson), criminal, sentencing
    • Affirming conviction and sentence for possessing a firearm after felony conviction in violation of 18 U.S.C. § 922(g)(1), and sentence following the revocation of defendant’s supervised release for a prior bank robbery conviction.”