The en banc Fifth Circuit Court of Appeals was told in oral arguments Wednesday morning that it should overrule a 45-year-old binding precedent on waiver of the right to removal and find that a dispute between a Houston personal injury law firm and its former associate belongs in federal court.
The en banc oral arguments came in a dispute between Abraham Watkins Nichols Agosto Aziz & Stogner and former associate Edward Festeryga, who the firm alleges tried to take its clients with him when he left. The whole court agreed to hear the dispute after Judge Stuart Kyle Duncan — who sat on the panel that sided with the law firm and affirmed a ruling that sent the case back to state court — called for the move in a July 2024 concurring opinion that said the crux of the court’s 1980 holding in In re Weaver was “incorrect.”
“Gritting my teeth, I concur,” Judge Duncan wrote in the July concurrence. “The removal statutes have shifted over the years, but not enough to erase the stubborn fact that Weaver transformed a remand for waiver-by-participation into a remand for lack of federal jurisdiction,” he wrote. “That is incorrect, as two circuits (and now our panel) have confirmed. We should be able to review the waiver-based remand here under settled precedent. Only Weaver bars the way. The proper course is for our en banc Court to unweave Weaver.”
After litigation began in the state court, Festeryga attempted 17 days later to remove the case to federal court on the basis that he’s a Canadian citizen. Congress allows 30 days for a litigant to remove a case to federal court. Prior to removal, he also challenged the litigation by filing a motion to dismiss under the Texas Citizens Participation Act.
U.S. District Judge George C. Hanks Jr. ruled that Festeryga had waived his right to remove the case by agreeing to a protective order and by filing a motion to dismiss in the state court.
On appeal, Judge Duncan wrote that the panel, which included Judges Don R. Willett and James L. Dennis, had “convincingly” laid out an argument as to why Weaver is incorrect and that two sister circuits have also “thrown shade at Weaver.” But despite that, the panel followed Weaver “under the rule of orderliness.”
On Sept. 11, the court voted to rehear the dispute en banc.
Derek Reinbold of Kellogg, Hansen, Todd, Figel & Frederick, who argued the case for Festeryga, told the court Wednesday “this case belongs in federal court and this court has the power to say so.” He said the “purpose” of the rules and precedent regarding removal waiver is to “prevent a defendant from experimenting on his case in state court, and then removing it to get a better result.”
“We think that’s a high standard, and one not met here,” he said.
That remark drew a question from one member of the court as to whether Festeryga’s filing of a TCPA motion could be construed as “experimenting” in the state court. The TCPA, Texas’ anti-SLAPP law, is not applicable in federal court and allows the prevailing party to seek attorney fees.
Reinbold responded that when his client removed the case to federal court, he “gave up the right to seek attorney fees and other redress,” which he argued shows a lack of intent to experiment in state court.
“The TCPA motion could not have been and was not set for a hearing,” he said, referencing the mandatory timelines enshrined in the Act. “That’s been persuasive in other courts finding against waiver.”
Judge Irma Carrillo Ramirez asked Reinbold to address how the court should weigh the fact that his client agreed to a protective order in state court when considering if he waived his right to remove the case to federal court.
“We entered that agreement as sort of an accommodation to them,” Reinbold said, explaining it required his client not to spoliate evidence or steal from clients. “We agreed in federal court to be bound by similar protections. That is not the kind of merits-based benefit that would [support waiver].”
Reinbold told the court he felt many of the questions he was fielding from the judges were targeting a specific issue.
“I think some of these questions are getting at ‘why didn’t we remove immediately,’” he said. “One, I think it was an exercise of professional diligence… It took time to research and confirm that the case was removable. And I think that was good conduct that this court shouldn’t announce a rule that would discourage.”
Should the court announce a rule like that, he argued, it would encourage people to seek removal without due diligence. Litigants also face sanctions if they try to remove a case that’s not removable, he said.
Robert Owen of Martin, Disiere, Jefferson & Wisdom argued the case for the law firm and told the judges there are three hurdles Festeryga must clear for the court to side with him in this case and that if he fails to clear even one, the en banc court should affirm Judge Hank’s remand order.
First, the court must determine it has subject matter jurisdiction despite both the argument that Festeryga waived his right to removal and what he characterized as “conflicting statements” in the record regarding Festeryga’s nationality. Those statements relate to a trademark application where Festeryga said he “inadvertently” identified himself as a U.S. citizen but later corrected the error and was granted the trademark.
Second, the court must overrule Weaver.
And third, the court would have to find Judge Hanks abused his discretion when he found waiver existed.
“We don’t believe any of that evidence exists in this record,” he said.
Judge Stephen A. Higginson asked Owen to address arguments Reinbold made: that Festeryga didn’t get an adverse decision before deciding to remove the case, didn’t have a hearing on the merits of the TCPA motion before removal and waited “just 17 days” to file for removal to federal court.
Owen said he didn’t think it was “correct to say he didn’t get an adverse ruling” before invoking the right to remove the case.
“When he filed the TCPA motion, the purpose of that was to primarily avoid returning misappropriated documents,” Owen said. “… The day before discovery was to become due under the agreed order, Mr. Festeryga removed. So he filed his TCPA motion, sought relief from the court, made an argument under the TCPA — which was partially accepted and partially rejected — and then at that point, removed to federal court so he did not have to comply with the state court order.”
“In our opinion, that’s the epitome of waiver. He tested out state court, decided he didn’t like how it was ruling and sought out a different forum.”
Abraham Watkins is also represented by its own Muhammad Aziz and Dale Jefferson of Martin, Disiere, Jefferson & Wisdom.
Festeryga is also represented by Guillermo Alarcón of Armbrust & Brown and Alejandra Ávila and Matthew Reade of Kellogg, Hansen, Todd, Figel & Frederick.
The case number is 23-20337.