November 30, 2021, opinions

Posted on by tadbartlett

Designated for publication

  • Williams v. Homeland Insurance Co. of New York, 20-30196, appeal from W.D. La.
    • Haynes, J. (Jones, Haynes, Ho), Ho, J., concurring; Jones, J., dissenting; jurisdiction
    • Reversing district court’s determination that it had diversity jurisdiction because a non-diverse defendant had been mis-joined, vacating the district court’s merits ruling dismissing the plaintiffs’ claims, and remanding with instructions to remand to state court.
    • The plaintiff class had settled its claims under Louisiana’s PPO law against all but one non-diverse PPO network; one of the settling defendant networks had assigned to the class its insurance coverage claims against its insurer. The plaintiff class then amended its suit to add bad-faith claims against that diverse insurer in the class’s capacity as assignee of the settling defendant’s rights, in addition to going forward on its PPO law claim against the one non-diverse defendant network. The insurer defendant removed, asserting regular diversity jurisdiction on the basis that the class’s PPO law claim against the non-diverse network was mis-joined with its claim as assignee against the insurer. The district court denied the class’s motion to remand, purported to partially remand the PPO law claim against the non-diverse defendant, and subsequently dismissed the bad faith claims against the insurer as barred by res judicata.
    • The Court held that the district court’s “reasoning and conclusions” that there was no possibility of recovery against the non-diverse defendant “cannot be squared with this circuit’s improper joinder jurisprudence. Rather, the district court functionally applied the fraudulent misjoinder doctrine, which we have never adopted and do not adopt now.” The Court observed, “[T]he district court did not actually assess whether the pleadings or other facts showed that the Class lacked a possibility of recovery on its PPO Act claims against Med-Comp. … The district court reasoned that because the Class’s litigation was under two different capacities, the capacity in which the Class had a suit against Homeland, was different from the capacity against Med-Comp and, therefore, lacked a possibility of recovery. … The district court’s conclusion to split the Class into two different capacities is inconsistent with this circuit’s traditional improper joinder analysis and has absolutely no basis in the text of the relevant statutes. We have never held that a capacity-by-capacity analysis is warranted in evaluating improper joinder.”
    • The Court then held that the pleadings stated a plausible claim for recovery against the non-diverse network defendant under the PPO law, and that the claims against the non-diverse defendant were therefore not mis-joined.
    • The Court rejected the diverse defendant’s argument that the Fifth Circuit should adopt the fraudulent joinder test epitomized in the 11th Circuit’s Tapscott decision: “Homeland’s requested expansion would invite district courts to evaluate procedural questions regarding misjoinder that are better resolved in state courts prior to removal. Put another way, if there is a possibility of recovery against both defendants but one defendant believes the case should be severed, there is nothing to prevent seeking that severance in state court. If it is granted, then the removal would be straightforward; if not, then clearly not appropriate. Additionally, the sought expansion is completely inconsistent with our emphasis that improper joinder is a ‘narrow exception’ to § 1332(a)’s complete diversity requirement. Campbell, 509 F.3d at 669 (quotation omitted). Homeland’s approach would greatly broaden it. … As articulated above, our established approach is straightforward. Our case law emphasizes substantive viability—not procedural questions like party joinder.”
    • Judge Ho joined fully in the opinion, and added a concurrence. “The question presented in this appeal is an arcane issue of federal civil procedure. But the proper answer to that question implicates a fundamental principle of judicial methodology: When faced with a conflict between text and precedent, we should maximize the former—and minimize the latter.”
    • Judge Jones dissented. “As this case was framed in state court before the most recent removal, it did not fit the classic diversity mold: Louisiana plaintiffs, the PPO Class and the Class-as-CorVel assignee, in effect two separate plaintiffs, sued, respectively, the non-diverse defendant Med-Comp, a citizen of Louisiana, and the diverse defendant Homeland. There are two separate plaintiffs and two entirely distinct legal claims. … The majority asserts that Smallwood sets forth the exclusive tests for improper joinder, but it ignores that when this court clarified the improper joinder test in Smallwood, there was no occasion to consider how the test might apply to a situation involving the improper joinder of plaintiffs’ unrelated claims against an out-of-state and an in-state defendant. See id. at 571–72. Nor has this court subsequently addressed the situation. What I contend is that Smallwood’s logic suggests that if removal jurisdiction exists notwithstanding that one plaintiff ‘improperly’ asserted a claim against a non-diverse defendant, then jurisdiction also exists if multiple plaintiffs have ‘improperly’ joined in-state and out-of-state defendants using claims wholly unrelated to the other plaintiffs’ claims.”
  • U.S. v. Bittner, 20-40597, appeal from E.D. Tex.
    • Duncan, J. (Owen, Clement, Duncan), Bank Secrecy Act
    • Affirming denial of defendant’s reasonable-cause defense with regard to charged crimes of violating the Bank Secrecy Act by failing to report interests in foreign bank accounts on annual FBAR forms; reversing reduction of $2.72 million civil penalties, which had been based on $10,000 penalty for each unreported account for each year from 2007 to 2011, to $50,000 on the basis that the $10,000 penalty applied to each failure to file an annual FBAR and not to each account; vacating and remanding to the district court.
    • “[T]he BSA imposes no penalty for a non-willful violation of section 5314 if ‘such violation was due to reasonable cause.’ 31 U.S.C. § 5321(a)(5)(B)(ii)(I).” Borrowing from well-understood judicial and regulatory interpretations of the term “reasonable cause” in the tax code, the Court held, “Drawing on several reasonable-cause exceptions in the IRC and in regulations and caselaw interpreting these exceptions, we conclude that the reasonable-cause exception in section 5321(a)(5)(B)(ii)(I) requires showing that the individual exercised ordinary business care and prudence, considering all pertinent facts and circumstances on a case-by-case basis.” The Court then concluded that the district court did not err in finding that the defendant did not exercise ordinary business care and prudence in failing to file the required FBARs.
    • The Court then held, “Together …, the text of the BSA and its regulations impose (1) a statutory requirement to report each qualifying transaction or relation with a foreign financial agency and (2) a regulatory requirement to file these reports on an FBAR before a certain date each year (June 30). See id. § 1010.306(c). By authorizing a penalty for ‘any violation of[] any provision of section 5314,’ as opposed to the regulations prescribed under section 5314, section 5321(a)(5)(A) most naturally reads as referring to the statutory requirement to report each account—not the regulatory requirement to file FBARs in a particular manner.”
  • Randolph v. East Baton Rouge Parish School System, 21-30022, appeal from M.D. La.
    • Higginbotham, J. (Higginbotham, Smith, Ho), COBRA
    • Reversing district court’s holding that school system did not violate COBRA’s requirement to notify the plaintiff retired employee of her right to continue her insurance coverage; affirming district court’s denial of plaintiff’s request for the school system to pay her medical expenses; remanding the district court’s decision to not award statutory penalties or attorneys’ fees; and vacating district court’s denial of plaintiff’s motion to alter or amend judgment or for new trial.
    • While the Court affirmed the district court’s holding that the plaintiff’s placement on unpaid leave was not a “qualifying event” under COBRA, it reversed the district court and held that the plaintiff’s retirement was a “qualifying event.” The Court noted that, even though the plaintiff’s loss of coverage was not contemporaneous with her retirement, there need only be a but-for causal connection between the qualifying event and the loss of coverage, but that the connection need not be held to a standard of contemporaneity. “A loss of coverage does not need to be contemporaneous to the qualifying event.”
    • The Court held that there was no clear error in the district court’s denial of payment of medical expenses, as the unpaid premiums were higher than the unpaid medical bills. The Court held that it was unclear, as to statutory penalties, whether the district court considered the proper “qualifying event” date in analyzing the extended nature of the COBRA violation, and remanded for a determination of that question, as well as to re-determine whether to award attorneys’ fees pursuant to the Court’s shifting of the Wegner factors.
  • State of Texas v. U.S., 21-40618, appeal from S.D. Tex.
    • per curiam (Owen, Jones, Smith, Stewart, Dennis, Elrod, Southwick, Haynes, Graves, Higginson, Costa, Willett, Ho, Duncan, Engelhardt, Oldham, Wilson), immigration
    • Granting en banc rehearing of panel’s September 15, 2021 opinion (14 F.4th 332, now vacated) wherein panel partially granted a motion to stay a nationwide preliminary injunction by the district court to enjoin immigration enforcement priorities set forth by the Biden administration. In a separate order, the Court specifically vacated the motions panel’s prior stay and ordered assignment of the merits to an oral argument panel “in the regular course.”

Unpublished

  • U.S. v. Allen, 20-50712, appeal from W.D. Tex.
    • per curiam (Southwick, Oldham, Wilson), criminal, compassionate release
    • Affirming denial of motion for compassionate release.
  • Espinales-Soto v. Garland, 20-60401, petition for review of BIA order
    • per curiam (Southwick, Oldham, Wilson), immigration
    • Denying Honduran citizen’s petition for review of BIA order dismissing his appeal from an order by an Immigration Judge (“IJ”) denying his applications for asylum, withholding of removal, and protection under the CAT.
  • Guzman-Fuentes v. Garland, 20-60973, petition for review of BIA order
    • per curiam (Davis, Jones, Elrod), immigration
    • Denying Salvadoran citizens’ petition for review of BIA order dismissing their appeal from a decision by an immigration judge (IJ) denying their applications for asylum, withholding of removal, and protection under the Convention Against Torture.
  • Aranda v. Lumpkin, 20-70008, appeal from S.D. Tex.
    • per curiam (Haynes, Graves, Engelhardt), habeas corpus
    • Issuing a certificate of appealability as to federal habeas petitioner’s claims under Miranda and Strickland, but denying COA as to other claims.
  • Manzo-Hernandez v. Saucedo, 21-40034, appeal from S.D. Tex.
    • per curiam (Stewart, Ho, Engelhardt), habeas corpus
    • Dismissing as moot appeal from district court’s denial of habeas relief to undocumented immigrants who had been detained as material witnesses, as petitioners were no longer in custody by the time they appealed.
  • U.S. v. Rucker, 21-40204, appeal from S.D. Tex.
    • per curiam (Southwick, Oldham, Wilson), criminal, compassionate release
    • Affirming denial of motion for compassionate release.
  • U.S. v. Funez-Zapata, 21-503616, appeal from W.D. Tex.
    • per curiam (Southwick, Oldham, Wilson), criminal, sentencing
    • Granting summary affirmance of conviction and sentence for illegal reentry.