Take the Fifth

Designated for publication

• Lillie v. Office of Financial Institutions State of Louisiana, 19-30705, appeal from M.D. La.
  • Smith, J. (Smith, Graves, Ho), securities law
  • Affirming denial of continuance for further discovery and grant of summary judgment to defendants (“SEI”) that were associated with Stanford International Bank, Ltd. in Robert Stanford’s Ponzi scheme, based on conclusion that SEI “had not controlled the primary securities violations of Stanford Trust Company.”
  • The Court held that, under Louisiana securities law, “Secondary liability under Section 714(B) … requires (1) a primary securities-law violator and (2) a second actor that controlled the primary violator.” The “control” element requires, “[a]t a minimum, [that] the plaintiffs must ‘show that the defendant had an ability to control the specific transaction or activity upon which the primary violation is based.’ Heck v. Triche, 775 F.3d 265, 283 (5th Cir. 2014) (cleaned up). But there is no requirement that the defendant participate in the fraudulent transaction itself.”
  • The Court rejected plaintiffs’ argument that the district court had improperly applied a “culpable participation” requirement by relying on Friedman v. JP Morgan Chase & Co., 2016 WL 2903273 (S.D.N.Y. May 18, 2016). The Court held that the record showed that the district court relied on Friedman “only in reasoning that a showing of ‘but-for causation’—namely that SEI might have been able to prevent STC’s violations—is not enough to establish control. Such a rationale (which Louisiana caselaw supports) is distinct from Friedman’s independent holding that the plaintiffs there had not alleged culpability.”
  • The Court then held that there was no genuine factual dispute as to whether SEI exercised the requisite control. The Court looked to the contractual terms between SEI and STC–“under which STC (not SEI) was responsible for pricing the CDs, providing SEI with complete and accurate data, reviewing monthly statements, and distributing those statements to investors”–then rejected that the plaintiffs’ evidence of the long-standing business relationship between SEI and STC created a genuine dispute with those terms as to “control.” “At bottom, the plaintiffs seem to think that SEI’s longstanding ties to STC create a dispute over whether SEI had control. But the plaintiffs fail to explain how those ties evidence anything more than that SEI had a business relationship with STC. A party is not secondarily liable for a primary actor’s securities violations just because it does business with that actor, no matter the length of their relationship.” The Court also rejected that any supposed ability by SEI to prevent STC’s violations is not sufficient to create “control”: “[T]he ability to stop a violation is not the same as the power to control it.”
  • The Court then held that the district court did not err in denying a Rule 56(d) continuance, that the failure of the parties to move for a status conference on discovery issues until three years after the 26(f) conference showed a lack of diligence that would justify a continuance.

• Owensby & Kritikos, Inc. v. Boudreaux, 19-60610, petition for review of order of Benefits Review Board
  • Barksdale, J. (Barksdale, Southwick, Graves), Longshore and Harbor Workers’ Compensation Act
  • Denying employer’s petition for review of ALJ’s ruling under the Longshore and Harbor Worker’s Compensation Act (as extended by the Outer Continental Shelf Lands Act) in favor of employee who was injured in automobile accident on his way to board boat to perform his equipment-testing job on outer continental shelf platforms, which ruling had been affirmed by the Benefits Review Board; dismissing employee’s counter-petition; and granting employee’s request for attorneys’ fees.
  • The Court recounted the undisputed relevant facts: “Boudreaux spent significant amounts of time offshore for the job—at one point he was on a rig for two-and-a-half months. During the year before the accident, Boudreaux worked 2,880 hours, 89% of which were offshore. While Boudreaux was onshore and proceeding to an OCS rig, Owensby paid him for mileage and driving time based upon the distance from Owensby’s office in Broussard, Louisiana, to Boudreaux’s pickup-point for offshore transportation. Owensby also paid for time Boudreaux spent on a helicopter or boat out to a platform. On the other hand, Boudreaux did not receive travel pay for a trip to his onshore office. On the day of the accident, Boudreaux left his home in Church Point, Louisiana, to drive to Freshwater City, Louisiana, for pickup for offshore transportation, stopping only for breakfast early that morning. As he normally did for travelling offshore, he had his inspection equipment in his vehicle. Near Freshwater City, another vehicle hit Boudreaux’s, causing the accident. After the collision, an Owensby employee travelled to the accident site to retrieve Boudreaux’s tank-testing equipment and transport it offshore.”
  • The Court identified the two-step analysis applicable to the question of whether Boudreaux’s injury was covered by the LHWCA as extended by OCSLA (rather than being subject to Louisiana’s workers’ compensation statute): “first, did the injury arise out of, and occur within the scope of, his employment, under LHWCA’s relevant provision, 33 U.S.C. § 902(2); and, second, was the injury sustained as the result of operations conducted on the OCS, under OCSLA’s relevant provision, 43 U.S.C. § 1333(b)?” Only the second element was primarily at dispute in the appeal, and the Court held, “we look only to whether there is a ‘substantial nexus between the injury and extractive operations on the shelf’ to determine whether an injury qualifies under OCSLA.” Under this framework, the Court held that the employee’s injury clearly fell within the LHWCA/OCSLA: “Among the facts relevant to our inquiry, we find persuasive Boudreaux’s: being compensated by Owensby for both time and onshore mileage while traveling to and from the OCS; being on-the-job when he was injured; necessarily traveling to an intermediary pickup location to be transported from onshore to the OCS; and transporting his testing equipment in his vehicle. … And, as noted, Owensby had another employee pick up Boudreaux’s testing equipment to take it to the OCS after his accident.

• U.S. v. Thomas, 20-10757, appeal from N.D. Tex.
  • Southwick, J. (Davis, Southwick, Costa), Costa, dissenting; criminal, search and seizure
  • Affirming conviction of defendant for being a felon in possession of a firearm, upholding district court’s denial of motion to suppress evidence of the firearm during a stop and frisk. The case required the Court “to analyze the reasonableness of officers’ suspicions as to a particular individual when the uncertainty is not whether a crime has occurred but who within a group committed it.”
  • The arresting officers had been alerted by an automatic license plate reader system to the location of a car that had been stolen in an aggravated robbery, and when they arrived noticed two people inside the vehicle and four others, including the defendant, standing around it. They decided to conduct a Terry stop and frisk of the individuals. “The officers’ suspicions as to Thomas were based entirely on his presence in a high-crime area, his proximity to the stolen vehicle, and his interaction with others in and around the vehicle. No crime unrelated to the presence of the stolen vehicle was witnessed. They could not overhear any of the group’s conversation. There is no suggestion that either officer had encountered Thomas before or was aware of his criminal history.”
  • The Court held there was reasonable suspicion to support the stop and frisk. “[W]e must determine whether the officers had a particularized and objective basis for suspecting that Thomas was involved in the completed crime of an aggravated robbery. One factor is that Thomas was encountered in a high-crime area, which provides some support for the stop. … Thomas’s connection to the stolen vehicle, through his close physical proximity and his association with others inside and around the vehicle, is another specific and articulable fact.” Rejecting the defendant’s arguments that the suspicion was unreasonable because the underlying aggravated robbery had only been committed by two people, and he was not one of the two people inside the car at the time of the Terry stop, the Court observed, “Looking at the actions of these officers from an objective standard, as Terry requires, it was not unreasonable for them to be uncertain how many people had responsibility for the earlier robbery. Further, regardless of how many people had participated in the earlier crime, it was not unreasonable to suspect that those inside the vehicle might not be the culprits and instead were only being allowed to admire the vehicle stolen by someone standing outside. Thomas was standing next to the driver’s door of the stolen vehicle, which could create suspicions that he was discussing with those inside some details of ‘his’ vehicle. Again, all the officers needed was reasonable suspicion as to Thomas, not probable cause.” The Court also held that “[t]he Fourth Amendment does not require that the officers dispel all possible innocent explanations before stopping Thomas. Objectively innocent activities may, in the aggregate, amount to reasonable suspicion of criminal activity.”
  • The Court also held that the officers’ actions did not go beyond the scope of an investigatory stop to an arrest requiring probable cause, when the two officers had the six men lay face down, handcuffing them before searching them. “Our analysis of whether the actions by officers prior to the discovery of Thomas’s firearm exceeded the scope of a proper Terry stop is directed by the principle that officers are authorized to take such steps as [are] reasonably necessary to protect their personal safety and to maintain the status quo during the course of the stop.” (Internal quotation marks and citation omitted).
  • Judge Costa dissented. “Reasonable suspicion is a low bar, United States v. Sokolow, 490 U.S. 1, 7 (1989), but it is a bar. I fear that today’s ruling—finding reasonable suspicion based on proximity to, rather than possession of, property that was stolen days before—sets that bar closer to the ground than we ever have. Three features of this case made it unreasonable to suspect Thomas of being a car thief. First, the officers conducting the stop and frisk had no description of the thieves to go off of. Second, officers saw two men inside the stolen car, making them (and not Thomas) the reasonable suspects. Third, the vehicle theft had happened well before police came upon Thomas standing near the car.”

Unpublished

• Fletcher v. Louisiana Department of Transportation and Development, 19-30668, appeal from M.D. La.
  • per curiam (Southwick, Costa, Duncan), employment discrimination, timeliness
  • Affirming district court’s dismissal of plaintiff’s disability discrimination claims under the Rehabilitation Act as time-barred by Louisiana’s one-year prescriptive period.

• U.S. v. Cheguez-Espinosa, 19-40978, appeal from S.D. Tex.
  • per curiam (Smith, Stewart, Higginson), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• U.S. v. Jordan, 19-51010, appeal from W.D. Tex.
  • per curiam (Dennis, Costa, Engelhardt), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• U.S. v. Crenshaw, 19-51016, appeal from W.D. Tex.
  • per curiam (Smith, Stewart, Higginson), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• U.S. v. Balderas, 20-10992, appeal from N.D. Tex.
  • per curiam (Davis, Stewart, Dennis), criminal, sentencing
  • Affirming guilty plea conviction and sentence for being a felon in possession of a firearm and for possessing a firearm with an obliterated serial number.

• Flores v. Wal-Mart Stores Texas, LLC, 20-20551, appeal from S.D. Tex.
  • per curiam (Jolly, Elrod, Graves), negligence
  • Affirming summary judgment in favor of defendant on plaintiff’s premises liability claim.

• U.S. v. Gilbert, 20-30459, appeal from W.D. La.
  • per curiam (Jolly, Graves, Costa), criminal, sentencing
  • Affirming 188-month sentence on guilty plea conviction of conspiracy to possess with intent to distribute cocaine.

• U.S. v. Azpeitia-Rodriguez, 20-40132, appeal from W.D. La.
  • per curiam (King, Southwick, Ho), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• U.S. v. Young, 20-40506, appeal from E.D. Tex.
  • per curiam (King, Smith, Wilson), criminal, sufficiency of evidence
  • Affirming that there was sufficient evidence to support defendant’s conviction of being a felon in possession of a firearm.

• Phillips v. State of Texas, 20-50347, appeal from W.D. Tex.
  • per curiam (Owen, Dennis, Ho), § 1983
  • Affirming district court’s dismissal of plaintiff’s § 1983 claim arising from 2011 altercation with law enforcement.

• Ortiz-Hernandez v. Garland, 20-60651, petition for review of BIA order
  • per curiam (Jolly, Graves, Costa), immigration
  • Denying Mexican citizen’s petition for review of BIA order affirming the decision of the Immigration Judge (IJ) denying his application for withholding of removal and relief under the Convention Against Torture.