Appellate courts in Texas this week booted an emotional distress lawsuit against a North Carolina company that sells prank gifts, affirmed that Dallas County owes $33 million in a takings dispute and more.
The Fifth Circuit was busy, too, issuing rulings denying Exxon Mobil’s request for a $1.5 billion tax refund and ordering a new sentence be given to a man who posted on Facebook that he paid a friend who had COVID-19 to lick everything inside two HEB stores.
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Fourth Court of Appeals
Suit Against Mail Prank Company Doesn’t Belong In Texas
A woman who filed suit against the maker of a “highly inappropriate and humiliating” gag gift she received in the mail and opened in front of coworkers had her lawsuit dismissed by the Fourth Court of Appeals in San Antonio on Wednesday.
Neither Janelle Plummer nor North Carolina-based Witty Yeti identified the specific gag gift that Plummer had alleged caused her emotional distress. On the company’s website, they sell a subset of pranks called “mailing pranks,” which are cardboard shipping tubes labeled as sexually-related products.
Plummer also alleged that Witty Yeti was negligent for improperly withholding the identity of the customer who ordered the product and had it sent to her office.
Witty, which doesn’t do business in Texas, argued courts here have no jurisdiction over it, and the Fourth Court of Appeals agreed Wednesday, writing that “the website alone is insufficient to subject Witty to jurisdiction of a Texas court.”
The trial court tossed the suit in February, according to court records.
Plummer is represented by Kelli Cubeta and Elizabeth Assunto Germany of Cubeta Law Group.
Witty Yeti is represented by Brandon J. Grable of Grable Grimshaw.
Justices Rebeca C. Martinez, Patricia O. Alvarez and Liza A. Rodriguez sat on the panel for the Fourth Court of Appeals.
The cause number is 04-22-00075.
Fifth Court of Appeals
Dallas County Must Pay $33M In Takings Row
The Fifth Court of Appeals on Monday upheld a $33 million jury win in favor of Trinity East Energy in its dispute with the City of Dallas. The jury found in February 2020 that Dallas committed a regulatory taking of Trinity’s property and owed the company the value of the land.
Trinity, a gas drilling company, alleged the county had taken away its right to produce gas under leases with the city because it accepted a $19 million lease bonus from Trinity and later refused to approve permits that would allow for the drilling of the gas wells.
“We conclude the evidence is legally and factually sufficient to support the trial court’s finding that other than the three sites proposed in the [special-use permits], Trinity did not have reasonable access to other locations from which it could economically develop its mineral interests,” the panel wrote. “Based on the evidence and the trial court’s findings we agree with the trial court that the city’s denial of the SUPs resulted in a regulatory taking of Trinity’s property.”
The trial court entered judgment in favor of Trinity on Feb. 27, 2020, according to court records, and denied a motion for a new trial the following month. Dallas appealed to the Fifth Court of Appeals in May 2020.
Dallas is represented by Kathleen M. Fones, Nicholas D. Palmer, James B. Pinson, Patricia M. De La Garza and Christopher J. Caso of the City Attorney’s Office.
Justices Lana Myers, Leslie Osborne and Erin A. Nowell sat on the panel for the Fifth Court of Appeals.
The cause number is 05-20-00550-CV.
Thirteenth Court of Appeals
Doctor’s Electric Shock Suit Against Hospital Fails
The Thirteenth Court of Appeals on Thursday brought an end to a doctor’s workplace injury suit against the hospital where he worked, finding his failure to file an expert report in support of his claims doomed the lawsuit against Valley Regional Medical Center.
Patrick Skulemowski alleged the hospital was negligent in its operation, control and maintenance of an electrocautery device that gave him an electroshock while he was performing a cesarean section on a patient.
On appeal, Skulemowski argued he’s bringing a workplace injury claim, not a healthcare liability claim that requires an expert medical report to survive early dismissal.
“A machine shocked the doctor — this is an issue for an electrician, perhaps, or an electrical engineer, but there is no medical specialty report that would aid the process,” he argued in briefing.
The appellate panel saw it differently, though.
“The record in this case demonstrates a substantive nexus between the safety standards Skulemowski alleged Valley Regional breached and the provision of healthcare,” the panel wrote in concluding the doctor’s claims were healthcare liability claims requiring the expert report to survive dismissal under Chapter 74 of the Texas Civil Practice and Remedies Code.
Valley Regional is represented by Nicole G. Andrews, Gerald E. Castillo and Rita P. Ulrey of Serpe Andrews.
Skulemowski is represented by Ed Stapleton of Stapleton & Stapleton and Michael Gonzalez of The Law Office of Michael Gonzalez.
Chief Justice Dori Contreras and Justices Gina M. Benavides and Jaime E. Tijerina sat on the panel for the Thirteenth Court of Appeals.
The cause number is 13-20-00394-CV.
Divided Panel Tosses Jailed Ex-Councilwoman’s Retaliation Suit
A divided panel of the Fifth Circuit ruled 2-1 that former city councilwoman Sylvia Gonzalez’s suit against the police chief and mayor of Castle Hills — an enclave of San Antonio with a population of about 5,000 — alleging she was arrested in retaliation for circulating a petition to remove the city manager fails because she didn’t “establish a violation of her constitutional rights.”
The ruling was issued July 29, and on Monday morning, Gonzalez asked the Fifth Circuit to give her until Sept. 26 to file a motion for rehearing in the case.
According to the opinion, Gonzalez was arrested following a contentious council meeting where the petition was introduced after the mayor, Edward Trevino, reported to the chief of police, John Siemens, that he wanted to have Gonzalez arrested for allegedly taking the petition without consent.
After the meeting, Trevino asked Gonzalez for the petition and she allegedly found it in her binder of other materials and handed it to Trevino who said that she “probably picked it up by mistake.”
A Castle Hills Police sergeant tasked by Siemens with investigating the alleged crime found no wrongdoing, so a “special investigator,” local lawyer Alex Wright, was directed to take over the investigation.
Wright found Gonzalez violated Texas Penal Code Section 37.10(a)(3) and (c)(1) by intentionally concealing, removing or otherwise impairing the “verity, legibility, or availability of a governmental record.”
Wright went about securing an arrest warrant for Gonzalez in an unusual way that bypassed any involvement from the District Attorney’s Office and ensured Gonzalez, then 72-years-old, would spend the night in jail rather than getting to post bond immediately.
In a lengthy dissent, Judge Andrew Oldham referred to the city officials investigating Gonzalez as “conspirators” and detailed what he called their three-part plan.
“[First], investigate Sylvia for purporting to intentionally conceal the very petition she championed; drum up charges against Sylvia and arrest her in a way that makes sure she spends the night in jail; and remove her from office,” he wrote. “Part three follows from part two because ‘if a councilmember is convicted of a felony or a misdemeanor involving official misconduct, it would operate as an immediate removal from office.’”
Judge Oldham wrote that Gonzalez “alleged numerous facts to show that the conspirators arrested her for petitioning the government.”
“This is not a case where we must guess about the conspirators’ motives. It’s also not a case where we must rely on the allegations in the complaint standing alone,” he wrote. “Rather, the face of the arrest affidavit itself lists Sylvia’s viewpoints as relevant facts warranting her arrest.”
The mayor, police chief and “special investigator” Wright filed notice of appeal with the Fifth Circuit on April 4, 2021 after the trial court denied their dismissal bids.
The majority addressed Judge Oldham’s dissent, writing that he made a “forceful case for why the Constitution ought to provide a claim here, particularly given that Gonzalez’s arrest was allegedly in response to her exercise of her right to petition.”
“Were we writing on a blank slate, we may well agree with our distinguished colleague,” the majority wrote. “But we remain bound by what we consider the better readings of the relevant Supreme Court precedent.”
The case received significant amicus attention as well, including briefing from the American Civil Liberties Union and the ACLU of Texas, the National Police Accountability Project and the Constitutional Accountability Center.
The city officials are represented by Scott Michael Tschirhart and Lowell Frank Denton of Denton Navarro Rocha Bernal & Zech.
Gonzalez is represented by Institute for Justice attorneys Anya Bidwell, William Aronin and Patrick M. Jaicomo.
Judges Kurt D. Engelhardt, Rhesa H. Barksdale and Andrew S. Oldam sat on the panel for the FIfth Circuit.
The cause number is 21-50276.
ExxonMobil Loses $1.5B Tax Refund Fight, Gets $207M Penalty Undone
The Fifth Circuit on Wednesday rejected Exxon Mobil’s argument that it was entitled to a $1.5 billion refund from the IRS, but also rejected the government’s argument that a trial court wrongly axed a $207 million penalty assessed against the oil and gas giant.
Exxon argued it was entitled to the refund in part because agreements it entered into with Qatar and Malaysia to commodify offshore oil and gas deposits there were sales, not leases. In tax returns Exxon filed between 2006 and 2006 the company listed the transactions as leases, but in amended returns changed course and requested the $1.5 billion refund.
The court wrote that the question of whether it’s a lease or sale turns on whether Qatar and Malaysia “retain an economic interest in the mineral deposits that Exxon extracts.” If the countries do, the agreements are leases, if they do not, the agreements are sales.
“Qatar and Malaysia have an economic interest,” the panel held. “In exchange for giving Exxon valuable rights to drill in the North Field and Malay Basin, Qatar and Malaysia ‘retain a right to share in the [minerals] produced.’”
Judge Gregg Costa authored the opinion, joined by Judges Edith Brown Clement and James E. Graves Jr. Judge Costa, who will be leaving his seat on the court this month, wrote that while the court sees some merit in the government’s argument that Exxon didn’t have a reasonable basis for its position and the penalty should stand, the “lease/sale issue is a notoriously complex area of tax law. One of our opinions quips that it involves ‘occult mysteries.’”
“Although the penalty question presents a close call, the district court correctly granted Exxon a refund on this issue,” the panel held.
The penalty was assessed against Exxon by the IRS for “requesting an excessive refund.”
Both parties appealed after U.S. District Judge David Godbey entered his final judgment on Feb. 19, 2021.
Exxon filed this lawsuit in October 2016.
Exxon is represented by Kannon K. Shanmugam, Matteo Godi, Brian M. Lipshutz and Adam Savitt of Paul Weiss Rifkind Wharton & Garrison and Emily A. Parker of Holland & Knight.
The government is represented by Department of Justice Attorneys Clint Aaron Carpenter, Jonathan Lee Blacker, Bruce Raleigh Ellisen, Judith Ann Hagley and Cory Arthur Johnson.
The cause number is 21-10373.
New Sentence For Man Who Perpetrated HEB COVID-19 Hoax
An error in calculating the sentencing guideline range for a man convicted of perpetrating a hoax biological-weapons attack — via Facebook posts claiming he paid someone who was COVID-19 positive to lick everything in two San Antonio HEB stores — caused the Fifth Circuit to vacate his 15-month sentence on Wednesday.
Christopher Perez, who told the FBI agents who visited his home after the posts that he was just “shit talking” and that the statements were false, should have been sentenced under a guideline range of 12 to 18 months, rather than 15 to 21 months, the panel held.
A pre-sentencing report had wrongly counted a prior conviction for possession of a controlled substance against him even though the sentence of deferred adjudication had been imposed more than a decade earlier, the court held.
“Although the error was subtle enough that no one noticed it, this court has previously held a substantially identical mistake to be plain error,” the panel wrote.
Judges Jerry E. Smith, Jacques L. Wiener Jr. and Leslie H. Southwick sat on the panel.
Perez was represented by federal public defenders Bradford W. Bogan and Maureen Scott Franco.
The government is represented by Jeffrey Michael Smith and Joseph H. Gay Jr. of the Department of Justice.
The cause number is 21-50945.
Fifth Circ. Says Hands Tied In Dallas Jailers’ Suit Over Gender-Based Time Off Policy
Lamenting that it was bound by precedent and suggesting the case would make “an ideal vehicle” for en banc review of the issue, the Fifth Circuit on Wednesday affirmed the dismissal of a lawsuit brought by nine female Dallas County jailers challenging a gender-based scheduling policy where only male officers were given full weekends off.
The female jailers, led by Felesia Hamilton, filed suit after a sergeant told them the new policy implemented in April 2019 was based on gender and that it would “be safer for the male officers to be off during the weekends as opposed to during the week.” In a footnote, the Fifth Circuit noted that male and female jailers perform the same duties and the number of inmates is the same on weekdays and weekends.
“As mentioned, this court rarely encounters direct evidence cases because employers seldom admit to a discriminatory motive as the sergeant did here,” the panel wrote.
The trial court granted the county’s dismissal bid after holding the female jailers hadn’t suffered an adverse employment action. In upholding the ruling, the Fifth Circuit panel wrote that its jurisprudence on the issue is that only “ultimate employment decisions,” such as hiring, firing, promoting, compensating and granting leave, qualify as possible adverse employment actions.
“Surely allowing men to have full weekends off, but not women, on the basis of sex rather than a neutral factor like merit or seniority, constitutes discrimination with respect to the terms or conditions of those women’s employment. And the benefits that come with seniority, here, the ability to request one’s preferred days off, should amount to a privilege of employment,” the panel wrote. “Yet we are bound by this circuit’s precedent, which requires a Title VII plaintiff to establish a prima facie case of discrimination by showing, inter alia, that she ‘suffered some adverse employment action by the employer.’”
The jailers are represented by Jay D. Ellwanger of Ellwanger Law and Madeline Meth and Brian Wolfman of the Georgetown Law Appellate Courts Immersion Clinic.
Dallas County and the sheriff’s department are represented by Dallas County Assistant District Attorney Jason G. Schuette.
Judges Carl E. Stewart, Patrick E. Higginbotham and Cory T. Wilson sat on the panel for the Fifth Circuit.
The cause number is 21-10133.