Take the Fifth

Designated for publication

• U.S. v. Masha, 19-20673, appeal from S.D. Tex.
  • Jones, J. (Jones, Clement, Graves), criminal, sufficiency of evidence, sentencing
  • Affirming conviction and sentence on eight counts of false use of a passport under 18 U.S.C. § 1543, and vacating (with government’s acquiescence) conviction and sentence on eight counts of misuse of a passport under 18 U.S.C. § 1544. The case arose from a series scams involving bank accounts opened by the defendant using passports and identifying information purporting to be for people other than him.
  • The Court held that there was insufficient evidence to prove the § 1544 counts for misuse of a passport, for which the government would have to “prove that Masha (1) used or attempted to use a passport; (2) that the passport was issued or designed for the use of someone other than Masha; and (3) that the use was willful and knowing, i.e., that Masha knew that the passport was issued or designed for the use of someone other than himself.” The Court noted that, while it was not bound by the government’s concession that it failed to prove the elements, it indeed found that there was insufficient proof of the § 1844 crime. The Court held that the misuse must, on the plain text of the statute, be of a passport actually issued, and in this case the testimony was that the passports were likely counterfeit and therefore not actually issued.
  • By contrast, as to the false use of a passport convictions, the Court noted that “the Government had to have shown that Masha (1) willfully and knowingly, (2) used or attempted to use, (3) an instrument purporting to be a passport.” (Emphasis added).
  • The Court held that the circumstantial evidence that the defendant used the purported passports to open the bank accounts involved in the scams–including bank employee testimony about the requirement of picture IDs coupled with the admission of defendant’s driver’s license showing a picture matching the passports used to open the accounts, and positive identification of the defendant on a bank surveillance video at a time corresponding to a transaction at issue–was sufficient to support the convictions. The Court held there as no plain error in the district court’s admission of the identification testimony because there was sufficient foundation laid for the witness’s lay opinion testimony that the defendant was the one in the surveillance video.
  • The Court upheld the loss calculation for purposes of sentencing, by finding that there was sufficient evidence to show it was plausible that the full amount of transactions involving the accounts were from fraudulent transactions, without the government having to introduce evidence as to every transaction, particularly in light of the lack of any rebuttal evidence by the defendant to attempt to show any of the transactions were legitimate.

• Le v. Exeter Finance Corp., 20-10377, appeal from N.D. Tex.
  • Willett, J. (King, Elrod, Willett), breach of contract, employment, sealed records
  • Affirming summary judgment in favor of defendant employer in breach of contract claim arising from termination of plaintiff.
  • Plaintiff had been hired under an employment agreement as an executive vice president and human resources director for defendant. During the course of his employment, he elected to receive “profit interest units” (PIUs), which provided an equity interest in the defendant’s parent company. The PIUs would be valued exclusively by defendant at the time of any call. When plaintiff was fired after eighteen months and his PIUs were called, they were valued at $0.00.
  • The Court upheld the district court’s denial of a continuance of the summary judgment deadlines, effectively excluding from evidence a series of audit reports by an outside auditor of PIU value. The Court observed that “Le moved to continue based on a lingering discovery dispute that arose after the court-ordered discovery deadline”; and then held that the audit reports would not have created a genuine dispute as to the material fact of the PIUs’ value under the PIU agreement’s terms because “[t]he reports do not provide a valuation of the PIUs using the methods or dates required by the PIU Agreement.” The Court then held that the plaintiff effectively abandoned arguments that the district court erred in declining to consider any of his supplemental filings because he failed to point the Court to the governing standards for his argument or any relevant Fifth Circuit caselaw.
  • The Court upheld the summary judgment dismissal of plaintiff’s breach of contract claim as to the $0.00 valuation of the PIUs, because the valuation “was the board’s prerogative under the contract.”
  • The Court upheld the summary judgment dismissal of plaintiff’s breach of contract claim that the defendant had breached a severance agreement when it terminated him. The Court found that the employment agreement contemplated a separate severance agreement would be signed, and that the plaintiff had failed to execute the separate severance agreement after it was presented to him.
  • The Court then upheld the summary judgment dismissal of plaintiff’s claim that he was fraudulently induced to enter into the PIU agreement. “[T]he undisputed record evidence shows that Le did not rely on Exeter’s representations as to the PIUs’ projected value when he decided to join the company. Whatever Le now says he relied on, the record contains ample evidence that Le himself believed that PIUs were inherently risky; for instance, Le stated that the PIU opportunity sounded ‘outlandish.’ The record evidence does not give rise to a genuine dispute as to whether Le, a sophisticated party who understood the volatility of PIUs, actually—much less justifiably—relied on the representations that form the basis of his fraud claim.”
  • The Court also upheld the summary judgment dismissal of plaintiff’s quantum meruit claim on the unclean hands theory, finding that he had misrepresented his employment with his previous employer at the time he entered into the employment agreement with defendant.
  • The Court then spent the last half of the opinion decrying the prevalent sealing of records in the matter. “Having decided the substantive issues, we hasten to add a peripheral-yet-essential point: Judicial records are public records. And public records, by definition, presume public access.” The Court noted that “the district court granted an agreed protective order, authorizing the sealing, in perpetuity, of any documents that the parties themselves labeled confidential. Result: nearly three-quarters of the record—3,202 of 4,391 pages—is hidden from public view, for no discernable reason other than both parties wanted it that way.” The Court held, “The public deserves better. The presumption of openness is Law 101: ‘The public’s right of access to judicial records is a fundamental element of the rule of law.’ Openness is also Civics 101. The Constitution’s first three words make clear that ultimate sovereignty is wielded not by government but by the governed. And because ‘We the People’ are not meant to be bystanders, the default expectation is transparency—that what happens in the halls of government happens in public view. Americans cannot keep a watchful eye, either in capitols or in courthouses, if they are wearing blindfolds. … Why is this important? Because accessibility enhances legitimacy, the assurance that things are on the level. Article III courts are independent, and it is ‘particularly because they are independent’ that the access presumption is so vital—it gives the federal judiciary ‘a measure of accountability,’ in turn giving the public ‘confidence in the administration of justice.'” (Internal citations and footnotes omitted).
  • The Court further noted, “The secrecy is consensual, and neither party frets that 73 percent of the record is sealed. But we do, for three reasons. First, courts are duty-bound to protect public access to judicial proceedings and records. Second, that duty is easy to overlook in stipulated sealings like this one, where the parties agree, the busy district court accommodates, and nobody is left in the courtroom to question whether the decision satisfied the substantive requirements. Third, this case is not unique, but consistent with the growing practice of parties agreeing to private discovery and presuming. that whatever satisfies the lenient protective-order standard will necessarily satisfy the stringent sealing-order standard.”
  • The Court then examined the historical precepts for public court records, then held, “[C]ourts should be ungenerous with their discretion to seal judicial records, which plays out in two legal standards relevant here. The first standard, requiring only ‘good cause,’ applies to protective orders sealing documents produced in discovery. The second standard, a stricter balancing test, applies ‘[o]nce a document is filed on the public record’—when a document ‘becomes a “judicial record.”‘ Under both standards, the working presumption is that judicial records should not be sealed.” The Court then noted. the error in conflating the two standards: “At the discovery stage, when parties are exchanging information, a stipulated protective order under Rule 26(c) may well be proper. Party-agreed secrecy has its place—for example, honoring legitimate privacy interests and facilitating the efficient exchange of information. But at the adjudicative stage, when materials enter the court record, the standard for shielding records from public view is far more arduous. This conflation error—equating the standard for keeping unfiled discovery confidential with the standard for placing filed materials under seal—is a common one and one that over-privileges secrecy and devalues transparency.”

• Wright v. Union Pacific RR Co., 20-20334, appeal from S.D. Tex.
  • Wilson, J. (Stewart, Higginson, Wilson), Title VII, employment discrimination, retaliation
  • Affirming in part, reversing in part, and remanding dismissal plaintiff’s claims of employment discrimination under Title VII and retaliation in violation of the Railway Labor Act and the Texas Labor Code.
  • After being terminated from her job with defendant, Plaintiff brought suit alleging that she was impermissibly terminated under Title VII as retaliation for an earlier successful discrimination suit she had brought against the defendant; and that the refusal to allow her to have a union representative with her during mandated “coaching” sessions–which she then did not complete and the incompletion of which formed the ostensible basis for her termination for insubordination–was in violation of the RLA. The district court granted a motion to dismiss her Title VII claims for failure to allege a link between her earlier successful claim and her termination, and to dismiss her RLA claims on the basis that the exclusive remedy was in arbitration.
  • As to her Title VII claim, the Court held that the district court erred insofar as it required the plaintiff to present proof of the causal link at the pleading stage. However, the Court held that her allegations failed to state a claim because the successful discrimination claim that she brought in 2016 was too remote from her 2018 termination. “By Wright’s own account, Merchant knew about the claims underlying Wright’s 2016 lawsuit in April 2016. Yet Wright was not suspended until July 2018, or terminated until August 2018, more than two years later. Even given Merchant’s awareness of Wright’s 2016 lawsuit, this two-year lapse is indeed too remote to permit a reasonable inference of causation.” But the Court then held that the same defect did not apply to her claim of retaliation from her 2018 internal complaint to defendant’s EEO line, which preceded her suspension by just one business day and her termination by only one month. The Court therefore reversed the dismissal of the Title VII claims and remanded those for further proceedings.
  • The Court then upheld the district court’s dismissal of the RLA claim for lack of jurisdiction, finding the claim to be a “minor dispute” subject to mandatory arbitration before the National Railroad Adjustment Board.

• St. Charles Surgical Hospital, LLC v. Blue Cross Blue Shield of Louisiana, 20-30093, appeal from E.D. La.
  • Wilson, J. (Elrod, Duncan, Wilson), removal, federal officer jurisdiction
  • Vacating district court’s order to remand case to state court after federal officer-based removal, and remanding for further proceedings.
  • In this suit between non-diverse parties, alleging Louisiana state-law claims of breach of contract and abuse of right, in an amended petition the plaintiff expressly disclaimed “any fraud or abuse-of-right claim that may have occurred in connection with federally-insured patients”; but in subsequent discovery production, the plaintiff produced documents related to dozens of patients insured under the Federal Employees Health Benefits Act (“FEHBA”). BCBS pointed to this as its first notice that federally-insured patients were at issue, though St. Charles alleges that the production of those files was inadvertent; nevertheless, BCBS removed the case on preemption grounds under ERISA and FEHBA, and also under federal officer jurisdiction. The district court granted a motion to remand, and BCBS appealed under 28 U.S.C. § 1442’s allowance of appeals of remands from federal-officer removals.
  • The Court held that the disclaimer by the plaintiff of any claims in connection with federally-insured patients was not a basis of the district court’s decision nor extensively briefed by the parties, so it directed the district court on remand to consider that as a threshold issue.
  • “If St. Charles’s waiver of FEHBA-governed claims does not settle the matter, the district court’s jurisdiction hinges on a proper analysis of federal officer removal.” The Court held that, under its analysis of a set of claims between the parties in a separate suit, the FEHBA-governed claims implicated the “acting under” prong of federal officer jurisdiction (that the defendant was “acting under” a federal officer), finding that under FEHBA “[t]he federal government paid 75% of the premiums for the insurance plans administered by BCBS from a fund held by the U.S. Treasury. In the event of a dispute between BCBS and a patient (even when the patient had assigned the right to payments to a provider like St. Charles), OPM’s directives controlled. This was so, regardless of any agreement to the contrary between BCBS and a provider, as alleged by St. Charles. OPM’s directives even governed when they required that BCBS act contrary to Louisiana law, as St. Charles asserted.”
  • The Court then held that the district court’s attempt to distinguish this analysis under an “acting under” analysis was really an imposition of the Fifth Circuit’s old “causal nexus” standard that was disposed of in the en banc decision in Latiolais v. Huntington Ingalls, Inc., 951 F.3d 286, 290 (5th Cir. 2020) and replaced with a broader “connection” element. “[T]o the extent the district court blurred the ‘acting under’ and ‘connection’ elements, the ‘connection’ element may separately bear on the ultimate question of whether BCBS can properly remove St. Charles’s claims here, particularly in the light of Latiolais. In order to satisfy the ‘acting under’ requirement, a removing defendant need not show that its alleged conduct was precisely dictated by a federal officer’s directive. … Instead, the ‘acting under’ inquiry examines the relationship between the removing party and the relevant federal officer, requiring courts to determine whether the federal officer ‘exert[s] a sufficient level of subjection, guidance, or control’ over the private actor.”
  • The Court, however, did not make a determination as to the existence of federal officer jurisdiction, but remanded to the district court to apply the correct standard. “If the district court concludes that St. Charles’s waivers are valid, then there may be little room to contend that BCBS ‘acted under’ OPM in administering non-federal health insurance payments. And the same may be true if, irrespective of the waivers, the court concludes that St. Charles’s complaint does not include any federally-governed claims, because the discovery disclosures to the contrary were inadvertent, or otherwise. And finally, even if BCBS is determined to have been acting under OPM in this case, it is possible that the alleged conduct underlying St. Charles’s fraud and abuse-of-right claims was not connected or associated with (or related to) any federal directive from OPM. We leave these considerations to the district court.”

• Edwards Family Partnership, L.P. v. Johnson, 20-60718, appeal from S.D. Miss.
  • Elrod, J. (Elrod, Willett, Engelhardt), bankruptcy, attorneys’ fees
  • Reversing award of attorneys’ fees to the bankruptcy debtor’s counsel for work performed prior to the appointment of a trustee, and remanding.
  • The Court held that “the district court improperly assessed the benefit of counsel’s services to the estate from hindsight, rather than assessing the reasonableness and likely benefit from the time the services were rendered.”
  • The Court also held that the trustee’s interest in contesting the fee award was not mooted by a subsequent settlement between the debtor and creditor, because “Trustee standing does not arise from the trustee’s pecuniary interest, but rather from the trustee’s official duty to enforce the bankruptcy law in the public interest.” (Internal quotation marks and citation omitted).

Unpublished

• Johnson v. U.S., 19-10326, appeal from N.D. Tex.
  • per curiam (Davis, Stewart, Dennis), prisoner suit
  • Affirming dismissal of plaintiff’s FTCA claim arising from medical care received while in custody on basis it was untimely.

• U.S. v. Garcia-Huerta, 19-40826, appeal from S.D. Tex.
  • per curiam (King, Southwick, Ho), criminal
  • Granting Anders motion to withdraw and dismissing appeal.

• Miranda-Valentin v. Wilkinson, 19-60568, petition for review of BIA order
  • per curiam (Owen, Dennis, Ho), immigration
  • Denying Honduran citizens’ petition for review of BIA order affirming the denial of their applications for asylum, withholding of removal, and relief under the Convention Against Torture.

• Suresh v. Wilkinson, 19-60690, petition for review of BIA order
  • per curiam (Haynes, Willett, Wilson), immigration
  • Dismissing in part and denying in part Sri Lankan citizen’s petition for review of BIA dismissal of his appeal from the decision and order of the IJ denying his application for asylum, withholding of removal, and CAT protection.

• U.S. v. Reed, 20-10470, appeal from N.D. Tex.
  • per curiam (Wiener, Southwick, Duncan), criminal, sentencing
  • Affirming conviction of possession of a firearm by a convicted felon, possession with intent to distribute a controlled substance, and conspiracy to possess with intent to distribute a controlled substance, and within-guidelines sentence of 188 months of imprisonment and a five-year term of supervised release.

• Waldhoff v. City of Houston, 20-20340, appeal from S.D. Tex.
  • per curiam (Davis, Stewart, Dennis), due process
  • Affirming district court’s dismissal for failure to state a claim of plaintiff’s due process-related claims for the confiscation of his airport security access credentials.

• U.S. v. Johnson, 20-30348, appeal from M.D. La.
  • per curiam (Davis, Stewart, Dennis), criminal, search and seizure
  • Affirming conviction of possessing a firearm after having been convicted of a felony, concluding “that the district court did not err in its determination that Johnson lacks standing to challenge the warrantless, nonconsensual search.”

• U.S. v. Crosby, 20-30455, appeal from W.D. La.
  • per curiam (Haynes, Willett, Ho), criminal, sentencing
  • Affirming district court’s application of career offender status in sentencing defendant on his guilty plea to one count of possession with intent to distribute five grams or more of methamphetamine.

• Robinson v. Ferguson, 20-30467, appeal from E.D. La.
  • per curiam (Haynes, Willett, Ho), mootness, constitutional claims
  • Vacating district court’s dismissal of plaintiff’s claims that statutory requirements for registered sex offender to pay for the community notification was unconstitutional as applied to indigent offenders, and remanding to the district court to determine if the plaintiff’s indigence mooted his claims.

• U.S. v. Landry, 20-30539, appeal from W.D. La.
  • per curiam (Jolly, Elrod, Graves), criminal, sentencing
  • Affirming within-guidelines 87-month sentence on guilty plea to one count each of conspiracy to distribute and possess with intent to distribute anabolic steroids, possession with intent to distribute anabolic steroids, and manufacture of anabolic steroids.

• Richards Clearview, LLC v. Bed Bath and Beyond, Inc., 20-30614, appeal from E.D. La.
  • per curiam (Haynes, Willett, Wilson), landlord-tenant
  • Affirming district court’s dismissal of eviction proceedings on holding that the equitable doctrine of judicial control applied to the case.

• Lawson v. Stephens, 20-40280, appeal from E.D. Tex.
  • per curiam (Haynes, Willett, Ho), § 1983
  • Affirming dismissal for failure to state a claim of plaintiff’s § 1983 claim raising ADA-based issues arising from his incarceration.

• U.S. v. Garcia, 20-40377, appeal from S.D. Tex.
  • per curiam (Barksdale, Graves, Oldham), criminal, sentencing
  • Affirming 37-month sentence for illegal reentry.

• U.S. v. Rodriguez, 20-50068, appeal from W.D. Tex.
  • per curiam (Jones, Clement, Graves), criminal, search and seizure
  • Affirming conviction of one count of conspiracy to transport aliens and one count of transportation of illegal aliens, upholding district court’s denial of motion to suppress evidence from search of vehicle.

• U.S. v. Montoya, 20-50340, appeal from W.D. Tex.
  • per curiam (Higginbotham, Jones, Costa), criminal, sentencing
  • Affirming 63-month sentence and conviction on guilty plea to conspiracy to import 500 grams or more of methamphetamine.

• U.S. v. Alvarez-Moreno, 20-50739, appeal from W.D. Tex.
  • per curiam (Davis, Stewart, Dennis), criminal
  • Granting summary affirmance of conviction for illegal reentry.

• U.S. v. Saenz-Quintela, 20-50771, appeal from W.D. Tex.
  • per curiam (King, Smith, Wilson), criminal, sentencing
  • Affirming application of recidivism enhancements to sentencing for illegal reentry and revocation of supervised release.

• U.S. v. Ceasar, 20-60668, appeal from S.D. Miss.
  • per curiam (Haynes, Willett, Ho), criminal, sentencing
  • Affirming 36-month, Guidelines-range sentence imposed upon the revocation of his supervised release stemming from defendant’s conviction for conspiracy to distribute cocaine.