Take the Fifth

Designated for publication

• Burgess v. Whang, 22-11172, appeal from N.D. Tex.
  • Wiener, J. (Wiener, Douglas, Ramirez), FDIC, jurisdiction
  • Remanding appeal from injunction against FDIC proceedings on constitutional basis, with instructions to dismiss for lack of jurisdiction.
  • The FDIC initiated an enforcement action against Cornelius Burgess, former CEO of Herring Bank, after investigations dating back to 2010 revealed misconduct. The case first proceeded before an Administrative Law Judge (ALJ), who in 2017 recommended Burgess’s removal from the banking industry and a $200,000 penalty. The FDIC Board adopted this recommendation. Burgess appealed, raising an Appointments Clause challenge that was ultimately bolstered by the Supreme Court’s decision in Lucia v. SEC (2018). The Fifth Circuit remanded for a new proceeding before a constitutionally appointed ALJ, which was conducted by ALJ Jennifer Whang in 2022. She issued the same recommendation of removal and penalties, but before the Board could issue its final order, Burgess sought relief in federal district court.
  • In district court, Burgess advanced three constitutional claims: that the FDIC Board and its ALJs were unconstitutionally insulated from removal, and that the agency deprived him of his Seventh Amendment right to a jury trial. He asked the court to enjoin the FDIC from issuing a final order. The district court acknowledged the jurisdictional hurdle posed by 12 U.S.C. § 1818(i)(1), which explicitly restricts district courts from interfering with FDIC enforcement proceedings. Nonetheless, it held that the statute did not bar its jurisdiction in this case, treating the issue as one of first impression and declining to follow recent circuit precedent.
  • On the merits, the district court rejected Burgess’s removal claims because he failed to show actual harm as required under Collins v. Yellen (2021). But it ruled that he was likely to succeed on his Seventh Amendment claim, finding that agency adjudication deprived him of his right to a jury trial. The court granted an injunction halting the FDIC’s proceeding in full. The FDIC appealed, arguing that § 1818(i)(1) squarely strips district courts of jurisdiction in such circumstances. Burgess cross-appealed the denial of relief on his removal claims.
  • The Fifth Circuit reversed. It held that § 1818(i)(1) provides an explicit jurisdictional bar against district courts enjoining or otherwise interfering with FDIC enforcement proceedings, reserving review exclusively for the courts of appeals after a final order is issued. The panel emphasized that its own precedent in Bank of Louisiana v. FDIC (2019) and the Supreme Court’s decision in MCorp Financial (1991) make clear that Congress intended to preclude district court jurisdiction. The court distinguished earlier dicta in Bank of Coushatta (1991) and clarified that any ambiguity was resolved by later en banc and Supreme Court authority.
  • Finally, the court rejected Burgess’s reliance on Webster v. Doe (1988), which requires a clear statement to preclude constitutional claims. The Fifth Circuit explained that § 1818(i)(1) channels constitutional challenges to the courts of appeals after final agency action, rather than foreclosing them entirely, thus satisfying the requirements of Elgin v. Treasury (2012). Because Burgess still has access to meaningful judicial review of his constitutional claims in the appellate courts, district courts have no role at this stage. Accordingly, the Fifth Circuit reversed the preliminary injunction and remanded with instructions to dismiss for lack of subject matter jurisdiction.

• Fire Protection Service, Inc. v. Survitec Survival Products, Inc., 24-20405, appeal from S.D. Tex.
  • Dennis, J. (Stewart, Dennis, Haynes), breach of contract, Texas Dealer Act
  • Reversing district court judgment that the Texas Fair Practices of Equipment Manufacturers, Distributors, Wholesalers, and Dealers Act (“Dealer Act”) does not include life rafts within the statutory definition of “Equipment,” and remanding for further proceedings.
  • Survitec Survival Products manufactured and sold marine safety products, including life rafts, through Fire Protection Service (FPS), a Texas dealer under an oral, non-exclusive agreement. In 2017, Survitec terminated the dealership without cause and refused to repurchase FPS’s remaining inventory. FPS sued under the Texas Dealer Act, which protects dealers of certain “Equipment” by requiring good cause for termination and mandating supplier buy-backs of unsold inventory. The district court ruled against FPS, holding that life rafts were not “Equipment” under the Act. On appeal, the Fifth Circuit emphasized that it must interpret Texas law as the Texas Supreme Court would, making an “Erie guess” where no direct precedent exists.
  • The appellate court analyzed whether life rafts qualify as “Equipment” under the Act, which covers machinery and implements used in agricultural, industrial, construction, mining, or utility activities. The court determined that “mining” in Texas law has long included oil and gas extraction, and that “industrial activities” encompasses commercial fishing, shipping, and offshore oil operations—contexts where Survitec’s life rafts are legally mandated. Because the Act requires only a tangential connection between the equipment and the covered activities, the court held that life rafts fall squarely within its scope. Rejecting Survitec’s narrower interpretation, the Fifth Circuit concluded that the Dealer Act applies and reversed the district court’s judgment, remanding the case for further proceedings.

• Moats v. National Credit Union Administration Board, 24-40259, appeal from S.D. Tex.
  • Wiener, J. (Wiener, Douglas, Ramirez), jurisdiction
  • Affirming district court’s dismissal for lack of subject-matter jurisdiction of plaintiff’s constitutional challenge to administrative enforcement challenge by the National Credit Union Administration Board.
  • For over two decades, Moats served as CEO of the Edinburg Teachers Credit Union until 2021, when Texas regulators placed the institution into conservatorship and the NCUA removed him. Moats alleged the NCUA wrongfully seized personal property and denied him post-termination benefits, prompting him to sue in state court. On the eve of answering that suit, the NCUA initiated its own enforcement proceeding. Moats then turned to federal court, raising structural constitutional challenges to the NCUA’s authority and procedure, including claims involving removal protections for administrative law judges, deprivation of jury trial rights, due process violations, and a non-delegation challenge. The district court dismissed his suit for lack of subject matter jurisdiction under 12 U.S.C. § 1786(k)(1), which bars courts from interfering with NCUA enforcement actions. Moats appealed, arguing that the statute neither expressly nor implicitly precludes jurisdiction and that, even if it did, such preclusion would be unconstitutional under Supreme Court precedent like Axon Enterprise v. FTC.
  • On appeal, the Fifth Circuit examined whether § 1786(k)(1) explicitly bars district court jurisdiction. The panel noted that this provision mirrors 12 U.S.C. § 1818(i)(1), which the court recently held in Burgess v. Whang to be an express jurisdictional bar. Moats argued that Congress must specifically reference 28 U.S.C. § 1331 to achieve such preclusion, relying on Shalala v. Illinois Council. The court rejected that reading, explaining that Shalala distinguished between channeling claims through agency processes with appellate review and complete denial of review—here, Moats retains access to judicial review in the courts of appeals. Because the statutory language is materially identical to provisions already held to preclude district court jurisdiction, the court affirmed the district court’s dismissal, concluding that Moats’s constitutional claims must be raised through the prescribed administrative and appellate process rather than through an independent district court action.

• Loera v. Kingsville Independent School District, 24-40481, appeal from S.D. Tex.
  • per curiam (Elrod, Higginbotham, Remirez), Title IX, sec. 1983
  • Affirming judgment for plaintiff on jury verdict in claims brought against school district by student victim of sexual-predator teacher, under Title IX and sec. 1983.
  • Gabriel Villarreal, a theatre teacher at H.M. King High School in Kingsville, Texas, was convicted of online solicitation of a minor and attempted possession of child pornography after sexually abusing student Matthew Loera. Loera sued the Kingsville Independent School District (KISD) under 42 U.S.C. § 1983 and Title IX, arguing that the school board had rehired Villarreal in 2015 despite longstanding concerns about his inappropriate relationships with students. Testimony at trial revealed that trustees and administrators were aware of Villarreal’s troubling past behavior—including reports of boundary-crossing with students, social media posts about his relationship with a former student, and rumors of misconduct—yet still approved his rehire by a 4-2 vote.
  • Once reinstated, Villarreal continued to blur professional boundaries, attending student parties, commenting on students’ appearances, and ultimately grooming and sexually abusing Loera. The abuse included persistent requests for explicit photos, provision of expensive gifts, and physical advances, all of which culminated in Villarreal’s criminal convictions. At trial, four trustees and the superintendent testified about the decision to rehire him, acknowledging that concerns about Villarreal’s prior conduct had been discussed extensively but disregarded. The jury concluded that the board’s actions directly caused Loera’s abuse and amounted to deliberate indifference to student safety.
  • The Fifth Circuit affirmed the jury’s verdict, upholding the $250,000 award in Loera’s favor. The court held that there was sufficient evidence to support both causation and deliberate indifference under § 1983. Specifically, Villarreal’s prior misconduct was substantially similar to the abuse inflicted on Loera, creating a strong connection between his rehiring and the injury. Moreover, trustees had actual notice of serious allegations yet proceeded with the hire, making their decision a “moving force” behind Loera’s harm. Because the evidence did not overwhelmingly favor KISD, the district court properly denied its motion for judgment as a matter of law, and the appellate court affirmed.

• Sarabia v. Noem, 24-50750, appeal from W.D. Tex.
  • Douglas, J. (Wiener, Douglas, Ramirez), immigration, timeliness
  • Reversing district court’s dismissal as untimely the plaintiff’s suit seeking declaration that he is an American citizen pursuant to 8 U.S.C. 1503(a), and remanding for further proceedings.
  • In 2013, Enrique Villegas Sarabia applied to USCIS for a certificate of citizenship based on his father’s U.S. birth and residence history. USCIS denied his claim, finding insufficient evidence that his father had spent the required ten years in the United States before Villegas’s birth. Villegas appealed to the AAO, which dismissed his appeal in 2018. He then filed a motion to reconsider and reopen, supplying additional affidavits, including a detailed statement from his father. The AAO denied the motion later that year. Nearly five years later, Villegas filed a federal lawsuit under 8 U.S.C. § 1503(a) seeking a judicial declaration of citizenship. The district court dismissed the case for lack of subject-matter jurisdiction, ruling that the five-year statutory time bar was jurisdictional and had expired.
  • On appeal, the Fifth Circuit examined the statutory framework governing derivative citizenship. Under the Immigration and Nationality Act in effect in 1976, Villegas could acquire citizenship at birth if his father had been physically present in the United States for ten years, including five after the age of fourteen. Applicants establish eligibility by submitting Form N-600 and evidence of parental residence. If denied, claimants can appeal to the AAO and, after final administrative denial, seek judicial review under § 1503(a), which provides a five-year window to file suit. The district court interpreted the AAO’s 2018 dismissal of Villegas’s appeal as the “final administrative denial” that triggered the time bar.
  • The Fifth Circuit began by addressing whether § 1503(a)’s time bar is jurisdictional. Relying on recent Supreme Court precedent, the court explained that jurisdictional labels carry significant consequences, barring equitable exceptions and depriving courts of power to hear untimely claims. Under the “clear statement” test, time bars are jurisdictional only when Congress plainly indicates such intent. While prior Fifth Circuit cases had casually described the § 1503(a) time bar as jurisdictional, those references were dicta or “drive-by jurisdictional rulings” lacking analysis. The statutory text, when parsed carefully, tied jurisdiction only to courts and officials, not explicitly to the five-year filing deadline. Thus, the time bar was deemed a nonjurisdictional claims-processing rule.
  • Having determined the time bar was not jurisdictional, the court turned to whether Villegas’s suit was timely. Precedent in Gonzalez v. Limon held that only the “first final administrative denial” starts the limitations clock, to prevent repetitive applications from indefinitely extending the filing period. However, the Fifth Circuit distinguished Villegas’s case. Because his motion to reopen was timely filed and provided new evidence within the regulatory framework, the denial of that motion constituted the first final administrative denial for limitations purposes. Unlike Gonzalez or Cambranis, which involved duplicative claims or untimely motions, Villegas pursued his remedies continuously and within the prescribed timeframes.
  • The court concluded that Villegas filed his federal lawsuit within five years of the final administrative denial of his motion to reopen, making his claim timely. It held that § 1503(a)’s five-year limit is a nonjurisdictional claims-processing rule and does not divest courts of authority if missed. Because Villegas’s petition was filed within the proper window, the Fifth Circuit reversed the district court’s dismissal for lack of jurisdiction and remanded the case for further proceedings on the merits of his citizenship claim.

• U.S. v. Clark, 24-60531, appeal from S.D. Miss.
  • Smith, J. (King, Smith, Douglas), criminal, Second Amendment
  • Affirming conviction of possession of a firearm by a felon.
  • Ernest Clark, while on probation for a Louisiana conviction of aggravated assault with a firearm, was found in possession of another firearm. A grand jury indicted him under 18 U.S.C. § 922(g)(1), which prohibits felons from possessing firearms. Clark moved to dismiss, arguing the statute was unconstitutional under Bruen, violated equal protection, and exceeded Congress’s Commerce Clause authority. The district court denied his motion, and Clark pleaded guilty under a plea agreement preserving only his right to appeal the Bruen issue. He was sentenced to 64 months’ imprisonment and three years of supervised release. On appeal, Clark raised multiple claims, though most were either foreclosed or waived by his appeal waiver. The Fifth Circuit addressed his as-applied Second Amendment challenge and his equal protection claim.
  • The Fifth Circuit upheld Clark’s conviction. Applying the Bruen framework, the court concluded that disarming individuals with violent felony convictions or those who possess firearms while under court supervision accords with the nation’s historical tradition of firearm regulation. Precedents like Bullock, Isaac, and Schnur confirmed that aggravated assault with a firearm is a violent crime warranting disarmament. Additionally, because Clark possessed a gun while on probation, his case independently fell within long-standing traditions of limiting firearm rights for supervised offenders. His equal protection claim was barred by his plea agreement. The court therefore affirmed the judgment, emphasizing that disarming violent felons and those violating probation conditions by carrying firearms is consistent with constitutional and historical principles.

• National Association of Private Fund Managers v. Securities and Exchange Commission, 23-60626, petition for review of SEC order
  • Wilson, J. (Wilson, Douglas, Vitter, by designation), administrative law
  • Granting petition for review of SEC rules on basis that SEC failed to consider and quantify the cumulative economic impact of the rules; and remanding to agency for further consideration of petitioner’s challenge to the rules.
  • The Securities and Exchange Commission (SEC) adopted two rules to enhance transparency in securities lending and short sale markets: the Securities Lending Rule and the Short Sale Rule. Securities lending involves temporarily transferring securities for a fee, while short selling requires borrowing securities to sell with the hope of repurchasing them later at a lower price. Both markets lack transparency, making oversight difficult and creating opportunities for abusive practices. The SEC issued these rules under authority granted by the Dodd-Frank Act, aiming to improve market efficiency, competition, and investor protection.
  • The Securities Lending Rule requires certain parties to report details of securities loans to FINRA, which then publishes aggregated data. Initially, the SEC proposed near-immediate reporting but later adjusted the final rule to require end-of-day reporting, with loan-size details delayed by twenty business days. The Short Sale Rule applies to institutional investment managers, mandating monthly aggregate reporting of short sale data through the SEC’s EDGAR system. While the petitioners argued that these two rules are inconsistent and impose conflicting disclosure regimes, the court found that securities lending and short sale data, though related, are not direct proxies, and the SEC reasonably explained the differences in approach.
  • Petitioners challenged the Securities Lending Rule on grounds that it exceeded statutory authority and was adopted without adequate opportunity for comment. The court rejected these claims, finding that Dodd-Frank § 984(b) clearly authorizes transparency rules for securities lending, separate from § 929X’s authority over short sales. Moreover, the final rule’s modifications to reporting timelines were deemed a “logical outgrowth” of the proposal, consistent with public comments and the Administrative Procedure Act (APA). Similarly, the court dismissed arguments that the rule improperly reversed prior SEC positions, noting that prior staff reports did not carry binding agency authority.
  • Challenges to the Short Sale Rule included claims that the SEC should have used FINRA’s existing system instead of EDGAR and that the rule improperly applied to foreign transactions. The court disagreed, concluding that the SEC had adequately considered FINRA’s system but reasonably chose EDGAR for broader coverage. The SEC also addressed cybersecurity concerns tied to EDGAR. On extraterritoriality, the court emphasized that the Short Sale Rule only applies to equity securities subject to Regulation SHO, which governs U.S.-traded securities, thereby excluding foreign securities markets.
  • The petitioners also argued that the SEC failed to reconcile contradictions between the two rules. While the court acknowledged some overlap between lending and short sale data, it found that the SEC had reasonably explained the distinctions and carefully balanced transparency with protection of proprietary trading strategies. For example, delaying the disclosure of loan-size information by twenty business days reduced the risk of exposing short sellers’ strategies while still promoting transparency. This demonstrated that the SEC had considered relevant issues and articulated a rational basis for its choices.
  • However, the petitioners prevailed on their argument that the SEC failed to account for the cumulative economic impact of the two rules. The SEC analyzed each rule in isolation, treating the other as only “proposed” during the rulemaking process, even though both were adopted in the same meeting. This siloed approach ignored the rules’ interrelated economic effects, contrary to the APA and Exchange Act requirements that the SEC assess impacts on efficiency, competition, and capital formation. The court emphasized that when rules are so closely linked and adopted concurrently, the SEC cannot avoid cumulative analysis.
  • Accordingly, the court granted the petition for review in part, remanding both the Securities Lending Rule and the Short Sale Rule to the SEC for further proceedings. On remand, the SEC must consider and quantify the cumulative economic impact of the rules and respond to public comments addressing this issue. The court otherwise upheld the SEC’s statutory authority and reasoned decisionmaking, denying other aspects of the petition. This outcome highlights the court’s insistence on rigorous economic analysis while deferring to the SEC’s substantive policy choices within its statutory mandate.

Unpublished decisions

• U.S. v. Lopez, 25-10244, appeal from N.D. Tex.
  • per curiam (Jones, Richman, Duncan), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• U.S. v. Lewis, 25-10305, appeal from N.D. Tex.
  • per curiam (King, Haynes, Ho), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• Clouse v. Southern Methodist University, 24-10461, appeal from N.D. Tex.
  • per curiam (Dennis, Haynes, Engelhardt), personal torts, Title IX, timeliness
  • Affirming dismissal as untimely the former rowing student-athletes’ negligence, deficient medical treatment, and discrimination claims against university arising from hip injuries.

• Lanier v. Wise County, 24-10962, appeal from N.D. Tex.
  • per curiam (Jones, Graves, Rodriguez, by designation), Title VII, employment discrimination
  • Affirming dismissal of plaintiff’s sexual harassment and sexual discrimination claims arising from unwanted sexual comments from plaintiff’s same-sex supervisor on basis that plaintiff “failed to allege discrimination or harassment based on sex.”

• U.S. v. Taylor, 24-11110, appeal from N.D. Tex.
  • per curiam (Jones, Duncan, Douglas), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• U.S. v. Taboada-Cruz, 24-20394, appeal from S.D. Tex.
  • per curiam (King, Smith, Douglas), criminal, sentencing
  • Affirming 24-month sentence on conviction of illegal reentry.

• Flynn v. Van Meter, 24-20412, appeal from S.D. Tex.
  • per curiam (Jones, Southwick, Oldham), Americans with Disabilities Act
  • Affirming dismissal of ADA claims against defendants, except to reverse in part as to two defendants and rendering dismissals without prejudice as to those two defendants.

• Galynsky v. Rodriguez, 24-20553, appeal from S.D. Tex.
  • per curiam (Clement, Southwick, Oldham), personal torts
  • Affirming dismissal of plaintiff’s various tort and peonage claims.

• Hanna v. Edwards, 24-30557, appeal from M.D. La.
  • per curiam (Jones, Smith, Higginson), prisoner suit
  • Affirming in part and dismissing in part as frivolous appeal from dismissal of Louisiana state prisoner’s sec. 1983 claims.

• U.S. v. Ita, 24-40444, appeal from E.D. Tex.
  • per curiam (King, Haynes, Ho), criminal, sentencing
  • Dismissing appeal of sentence on conviction of conspiracy to commit wire fraud, on basis of appeal waiver in plea agreement.

• U.S. v. Holguin-Loya, 25-50061, appeal from W.D. Tex.
  • per curiam (Jones, Duncan, Douglas), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• Lumsden v. Collier, 24-50605, appeal from W.D. Tex.
  • per curiam (King, Smith, Douglas), prisoner suit
  • Affirming summary judgment dismissal of Texas state prisoner’s claims related to his religious exercise, medical needs, diet, safety, and exposure to heat while confined in prison.

• U.S. v. Jimenez-Maciel, 24-50859, appeal from W.D. Tex.
  • per curiam (Barksdale, Oldham, Douglas), criminal, sentencing
  • Affirming 27-month sentence on conviction of transporting for financial gain aliens unlawfully present in the United States,

• U.S. v. Williams, 24-50981, appeal from W.D. Tex.
  • per curiam (Higginbotham, Engelhardt, Ramirez), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• Gross v. Carlisle Construction Materials, L.L.C., 24-60382, appeal from N.D. Miss.
  • per curiam (Wiener, Douglas, Ramirez), Americans with Disabilities Act
  • Affirming summary judgment in favor of employer on plaintiff’s ADA-discrimination claim.

• U.S. v. Crawford, 24-60568, appeal from N.D. Miss.
  • per curiam (Elrod, Smith, Stewart), criminal, compassionate release
  • Affirming denial of motion for compassionate release.