Take the Fifth

Designated for publication

• EnvTech, Inc. v. Patrick Andrew DeBusk, 25-40237, appeal from S.D. Tex.
  • Douglas, J. (Southwick, Higginson, Douglas) (oral argument), trade secrets, RICO
  • Reversing dismissal of plaintiff’s RICO/theft-of-trade-secrets claim, and remanding for further proceedings.
  • EnvTech, Inc. is a company that developed a confidential proprietary one-step chemical formula and cleaning process for hydrofluoric acid alkylation (“HF alky”) units in oil refineries, controlling roughly 80% of the western market for over twenty years. It sued Patrick DeBusk, the founder, chairman, and CEO of USA DeBusk LLC (“USAD”), an industrial cleaning competitor. EnvTech alleged that DeBusk directed former EnvTech employees Paul Taylor and Richard Rutherford—hired away by USAD—to steal EnvTech’s trade secret cleaning method and use it to secure HF alky unit cleaning contracts, generating millions in new revenue. Internal emails showed DeBusk was personally involved: he attended a key client meeting, encouraged employees to pursue alky unit business, responded “Sweet” upon learning of a contract win, and was “pushing very hard to be a top Alky contractor.” USAD’s chemical blends used the same chemicals as EnvTech’s in “very similar ratios,” and USAD performed no independent testing or experimentation.
  • At issue on appeal were (1) whether EnvTech plausibly alleged that DeBusk personally committed or conspired to commit trade secret theft under 18 U.S.C. § 1832(a) with the requisite mens rea; and (2) whether EnvTech plausibly alleged a “pattern of racketeering activity” under RICO (18 U.S.C. § 1962(c)) based on trade secret theft as predicate acts, including relatedness and open-ended continuity.
  • On mens rea and personal participation, the court found three categories of facts most persuasive: (1) the evident rarity of EnvTech’s trade secret, shown by its market dominance; (2) DeBusk’s status as founder, chairman, and CEO with extensive control over USAD; and (3) DeBusk’s specific, documented involvement in the campaign to secure HF alky business, including his awareness that USAD used EnvTech’s technology and his personal attendance at key meetings. The court rejected DeBusk’s “ignorant-CEO” theory—that he merely urged market expansion while employees stole trade secrets under his nose—holding that “even if we accepted that the facts EnvTech alleges were equally explainable on two different theories, DeBusk cites no authority for the proposition that a tie must go to the defendant.” The court also rejected any heightened pleading standard for RICO claims.
  • On RICO pattern—relatedness and predicate acts, EnvTech supplemented its own allegations with specific facts from four other trade secret lawsuits against USAD by competitors (Farr Front, RTI, HydroChem, and others), including DeBusk’s admitted personal involvement in hiring the accused employees. The court held these were “specific enough to plead additional RICO predicate acts,” unlike cases where plaintiffs merely “plead the existence of other . . . lawsuits” without underlying facts. The court noted: “to require more would be to require EnvTech to plead facts it cannot realistically know without discovery.”
  • On open-ended continuity, the court found the continuity requirement satisfied based on the consistency of the alleged modus operandi across multiple victims (hiring competitors’ key employees, directing them to use stolen trade secrets), the fact that DeBusk declined to discipline employees whose theft led to litigation, and his continuing to encourage use of stolen methods even after EnvTech’s state court lawsuit was filed. In a notably literary passage, the court quoted Shakespeare’s Hamlet—”guilt sometimes ‘spills itself in fearing to be spilt'”—in observing that DeBusk’s deposition testimony that he “never thought about trade secrets” but focuses on “execution of hiring people” could constitute a false exculpatory statement making the alleged illegal modus operandi more plausible.

Unpublished decisions

• United States v. Kerr, 24-50960, appeal from W.D. Tex.
  • per curiam (Davis, Wilson, Douglas) (no oral argument), criminal, jury selection
  • Affirming conviction of illegal reentry.
  • Francis Kerr was convicted by a jury of illegal reentry into the United States under 8 U.S.C. § 1326(a) and (b)(2) and sentenced to 30 months of imprisonment and three years of supervised release. On appeal, Kerr argued that he received an unfair trial because the district court erroneously denied his challenge for cause against a prospective juror who was a U.S. Border Patrol agent.
  • Although the district court denied the challenge for cause, the record showed the prospective juror ultimately did not serve on the panel, and nothing indicated Kerr had to use a peremptory challenge to remove the juror. Accordingly, Kerr failed to show any error related to jury selection and impartiality.

• Burton v. Brenner, 25-10644, appeal from N.D. Tex.
  • per curiam (Smith, Higginson, Wilson) (no oral argument), habeas corpus, amendment
  • Vacating dismissal of § 2241 petition and remanding to allow amendment.
  • Joshua Burton, a federal pretrial detainee, filed a 28 U.S.C. § 2241 habeas petition alleging that his former attorney, Glenn Brenner, forged his signature to waive a preliminary hearing. The district court dismissed the petition for want of jurisdiction because Burton was detained in the Western District of Texas. The key issue on appeal was whether the petition named the proper respondent, as Burton named his former attorney rather than his custodian.
  • Because the proper respondent to a § 2241 petition is the person who has custody over the petitioner, and Brenner was not Burton’s custodian, the court remanded to allow Burton to amend his petition to name the proper respondent.

• Red Rover Group, L.L.C. v. City of Bossier City, 25-30639, appeal from W.D. La.
  • per curiam (Jones, Duncan, Douglas) (no oral argument), equal protection, vagueness, municipal liability, qualified immunity
  • Affirming dismissal of challenge to noise ordinance enforcement on equal protection, vagueness, and Monell, as well as on qualified immunity.
  • Red Rover Group challenged the Rule 12(b)(6) dismissal of its complaint against the City of Bossier City and individual defendants, arising from citations issued under two city noise ordinances (the “Barking Ordinances”). Red Rover raised several claims: (1) an equal protection “class of one” claim, arguing it was treated differently from a similarly situated entertainment district; (2) a void-for-vagueness challenge to the ordinances; (3) Monell liability and failure-to-train claims against the City; (4) requests for injunctive relief; and (5) state-law claims. The individual defendants asserted qualified immunity.
  • The court held that Red Rover failed to allege a sufficiently similarly situated comparator for its equal protection claim because the entertainment district had no noise complaints filed against it. The Barking Ordinances were not impermissibly vague, as their plain language gave a person of ordinary intelligence fair warning of prohibited conduct. The Monell and failure-to-train claims failed because there was no predicate constitutional violation. Qualified immunity was properly granted to the individual defendants for the same reason. Injunctive relief was properly denied because no underlying claim succeeded, and Red Rover conceded its state-law claims rose and fell with its constitutional claims.

• United States v. Duran-Escuadra, 25-20324, appeal from S.D. Tex.
  • per curiam (Smith, Higginson, Wilson) (no oral argument), criminal, sentencing
  • Affirming 60-month sentence on conviction of illegal reentry.
  • Ezequiel Duran-Escuadra pleaded guilty to illegal reentry by an unlawful alien with a previous felony conviction under 8 U.S.C. § 1326 and was sentenced above the guidelines range to 60 months of imprisonment. He argued on appeal that the upward variance was substantively unreasonable, contending the district court improperly relied on uncharged or dismissed criminal conduct and failed to adequately consider his mitigating circumstances.
  • The court found that Duran-Escuadra failed to demonstrate that the sentence gave significant weight to an irrelevant or improper factor or represented a clear error of judgment in balancing the § 3553(a) sentencing factors. The district court’s detailed explanation and consideration of the appropriate factors defeated any procedural challenge.

• Ramon v. Gladney Center for Adoption, 26-10154, appeal from N.D. Tex.
  • per curiam (Wiener, Willett, Wilson) (no oral argument), § 1983
  • Affirming dismissal of § 1983 claim against adoption agency.
  • Rita Ramon, proceeding pro se, sued Gladney Center for Adoption, its president, and a caseworker for alleged Fourteenth Amendment violations, claiming she relinquished her child for adoption in 2016 under duress and coercion. The magistrate judge construed the claims under 42 U.S.C. § 1983 and recommended dismissal because § 1983 requires the alleged violations to have been committed by a state actor.
  • The court found no error in the district court’s conclusion that the defendants were not state actors and that § 1983 therefore did not apply.

• United States v. Korn, 25-30706, appeal from W.D. La.
  • per curiam (King, Haynes, Ho) (no oral argument), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• United States v. Rudolph, 25-30351, appeal from E.D. La.
  • per curiam (Jones, Duncan, Douglas) (no oral argument), criminal, sentencing
  • Affirming 186-month sentence on conviction of conspiracy to distribute and possess with intent to distribute cocaine hydrochloride and cocaine base.
  • Gene Rudolph pleaded guilty to conspiracy to distribute and possess with intent to distribute cocaine hydrochloride and cocaine base. His guidelines range included a career-offender enhancement under U.S.S.G. § 4B1.1(a) based on prior Louisiana drug-trafficking convictions in 1996 and 2004. In a prior appeal, the Fifth Circuit had vacated and remanded because the Government failed to show Rudolph served part of his 1996 sentence within 15 years of the instant offense. On remand, after an evidentiary hearing with new documentation and testimony, the district court again applied the enhancement and sentenced Rudolph to 186 months (a downward variance from the 262–327 month range). Rudolph argued the Government presented the same insufficient evidence. He also argued, for the first time, that his Louisiana convictions did not qualify because Louisiana’s definition of cocaine was broader than the federal definition.
  • The court found that the Government presented sufficient new evidence on remand to show by a preponderance that Rudolph served part of his 1996 sentence within the relevant 15-year window. The argument about Louisiana’s broader cocaine definition was not raised in the original appeal and was beyond the scope of the remand.

• Marquez v. Sheriff Mike Griffis, 25-50686, appeal from W.D. Tex.
  • per curiam (Southwick, Duncan, Engelhardt) (no oral argument), prisoner suit
  • Dismissing as frivolous appeal from summary judgment dismissal of Texas state prisoner’s § 1983 suit.
  • Ernest Villa Marquez, a Texas prisoner, filed a 42 U.S.C. § 1983 complaint alleging deliberate indifference to his dental and medical needs while he was a pretrial detainee. The district court granted summary judgment for the defendants based on failure to exhaust administrative remedies, duplicative claims against defendants sued only in their official capacities, and failure to state a claim. Marquez moved to proceed in forma pauperis on appeal.
  • The court denied IFP status and dismissed the appeal as frivolous. Marquez’s minimal briefing failed to challenge any of the district court’s specific reasons for dismissal, so all claims were deemed abandoned. Marquez’s motion for appointment of counsel was also denied.

• FBCC CityPoint, L.P. v. City of Austin, 25-50293, appeal from W.D. Tex.
  • per curiam (Haynes, Higginson, Ho) (oral argument), res judicata, § 1983
  • Affirming summary judgment dismissal of apartment owner’s § 1983 claims on res judicata grounds.
  • FBCC CityPoint owned Mueller Flats, an Austin apartment complex. After Winter Storm Uri, the City issued notices of violation and required the property to register for its Repeat Offender Program (“ROP”). FBCC had previously sued the City’s Building and Standards Commission in state court over the notices of violation, and that suit was resolved by final judgment in October 2022. FBCC then filed the instant federal lawsuit against the City and officials in their official capacities, asserting constitutional challenges to the ROP under § 1983. The district court granted summary judgment for the City on res judicata grounds.
  • Applying Texas res judicata law, the court found all three elements were satisfied: (1) a prior final judgment on the merits existed from the state court action; (2) identity of parties or privity existed because the BSC was either the City itself or in privity with it (the City’s law department represented the BSC); and (3) the instant claims arose from the same nucleus of facts—the City’s code enforcement actions following Winter Storm Uri—and could have been raised in the first lawsuit.

• Wilmington Savings Fund Society, FSB v. Myers, 24-20018, appeal from S.D. Tex.
  • per curiam (Smith, Graves, Duncan) (oral argument withdrawn), foreclosure
  • Affirming judgment for plaintiff bank on breach-of-contract action arising from foreclosure.
  • Wilmington Savings brought a breach-of-contract and foreclosure action against Leeroy and Barbara Myers concerning a 2006 home equity loan secured by real property in Houston, Texas. The Myerses defaulted in 2009, triggering years of foreclosure proceedings, assignments, rescissions of acceleration, and renewed default notices by successive loan servicers. On appeal, the Myerses raised three primary arguments: (1) the district court lacked personal jurisdiction because they were not properly served under Rule 4; (2) Wilmington lacked standing because the loan note was non-negotiable under Texas law; and (3) the foreclosure claim was barred by waiver and the four-year statute of limitations.
  • On personal jurisdiction, the court found that the Myerses’ attorney intentionally avoided service of process over several months, and the district court properly found good cause to extend the time for service. On standing, the Myerses forfeited the argument that the note was non-negotiable by failing to raise it below, which by their own concession foreclosed their standing challenge. On limitations, the court agreed with the district court that rescission of acceleration restored the original maturity date and reset the limitations period, and noted the Myerses were precluded from relitigating matters decided in a 2017 summary judgment they never appealed.

• United States v. Gonzalez-Madrid, 25-11292, appeal from N.D. Tex.
  • per curiam (King, Haynes, Ho) (no oral argument), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• United States v. Guerrero-Munoz, 25-50804, appeal from W.D. Tex.
  • per curiam (Wiener, Willett, Wilson) (no oral argument), criminal, sentencing
  • Affirming constitutionality of enhanced sentence on conviction of illegal reentry.

• United States v. Rodriguez-Saldana, 25-50978, appeal from W.D. Tex.
  • per curiam (King, Haynes, Ho) (no oral argument), criminal, sentencing
  • Affirming conviction and sentence for illegal reentry.