David Coale
Lynn Tillotson Pinker & Cox
Recent business litigation cases before the US Court of Appeals for the Fifth Circuit suggest several practice tips for 2013. The areas include pleading requirements, relationships that create personal jurisdiction, insurance coverage, and the limited availability of mandamus relief. Each issue can greatly influence how a case develops, and the Court’s restrictive attitude about mandamus may mean finality for district court decisions about them.
1. Plead key details. The Court reminded twice in 2012 that Twombly and Iqbal can require the pleading of detail about “what,” “how,” and “when.” One pleading was found inadequate in an insurance case when it “invoke[d] three potentially cognizable theories of liability,” but “d[id] not identify by date or amount or type of service, any of the alleged bad-faith denials and delays.” Patrick v. Wal-Mart, 681 F.3d 614 (5th Cir. 2012). Similarly, a pleading about an Equal Protection claim failed because it had “no allegations regarding the types of businesses . . . the size . . . where they are located, or what laws and regulations they have violated.” Bowlby v. City of Aberdeen, 681 F.3d 215 (5th Cir. 2012). As a counterpoint, the Court also reversed a Rule 12 dismissal in an oral contract case when the plaintiff adequately pleaded an industry custom about the relevant terms. Highland Capital Management v. Bank of America, ___ F.3d ___, No. 11-11139 (5th Cir. Oct. 12, 2012).
2. Plead reasonably. The Federal Circuit, applying Fifth Circuit law, reversed the denial of Rule 11 sanctions about the complaint in a patent case. The Court found that the plaintiff’s claim construction was objectively unreasonable and that the district court erred in how it weighed the plaintiff’s subjective motivation. Raylon LLC v. Complus Data Innovations, ___ F.3d ___, Nos. 2016-1355-59 (Fed. Cir. Dec. 7, 2012). While only time will tell the impact of this case on patent litigation and civil practice generally, the opinion offers a thorough summary of Rule 11 law in the Fifth Circuit today.
3. Stretch the long arm carefully. The Supreme Court wrote two major personal jurisdiction opinions in 2011: Goodyear Dunlop Tires v. Brown, 131 S. Ct. 2846, about general personal jurisdiction based on product sales into a state, and J. McIntyre Machinery v. Nicastro, 131 S. Ct. 2780, analyzing specific personal jurisdiction based on a “stream of commerce” theory.
Since then, the Fifth Circuit has three times declined to find personal jurisdiction over out-of-state defendants. The first case involved a distributorship arrangement based in Latin America, where the Court found that 55 shipments of related product to Mississippi, while purposeful, did not create enough of a link to the asserted claim for jurisdiction there. ITL Int’l v. Constenla, S.A., S.A., 669 F.3d 493 (5th Cir. 2012). It was followed by a software case against a German company, involving what the Court called an “off-the-shelf, out-of-the-box contract” rather than an active, long-term relationship that would create jurisdiction. Pervasive Software v. Lexware GMBH & Co., 688 F.3d 214 (5th Cir. 2012). The third case rejected a claim of jurisdiction based on an alleged corporate “alter ego.” First Investment Corp. of the Marshall Islands v. Fujian Mawei Shipbuilding, ___F.3d ___, No. 12-30377 (5th Cir. Dec. 21, 2012).
4. Watch the eight corners. The Court twice rejected efforts to create exceptions to Texas’s “eight corners” rule about insurance coverage. The first case involved a request to consider unpleaded facts about a plaintiff’s alleged contributory negligence, and the second involved extrinsic evidence on a coverage issue that allegedly did not “overlap with the merits of or engage the truth” of the facts of the case. Gilbane Building Co. v. Admiral Insurance, 664 F.3d 589 (5th Cir. 2011); GuideOne Specialty Mutual v. Missionary Church, 687 F.3d 676 (5th Cir. 2012). The Court also reversed, however, to allow a claim for reformation because of mutual mistake to proceed despite the eight corners rule. Technical Automation Servs. Corp. v. Liberty Surplus Ins., 673 F.3d 399 (5th Cir. 2012).
5. Don’t count on mandamus. The Court granted mandamus relief in a high-profile venue dispute in 2008. In re Volkswagen, 545 F.3d 304 (5th Cir. 2008) (en banc). Since then, however, the Court has declined to grant the writ in three detailed opinions. On forum issues, the Court denied relief as to the wrongful denial of a remand motion as well as an alleged error about a forum selection clause. In re Crystal Power, 641 F.3d 82 (5th Cir. 2011); In re Atlantic Marine Construction, ___ F.3d ___, No. 12-50826 (5th Cir. Nov. 19, 2012). The Court also recently denied relief from a discovery order requiring a psychiatric exam. While presented as an interlocutory appeal, a concurrence explained that mandamus relief would not have been proper either on the record presented. All Plaintiffs v. Transocean Offshore, No. 12-30237 (5th Cir. Jan. 3, 2013, unpublished).