Federal Court Update
Western District of Texas Court Summaries By Soledad Valenciano, Melanie Fry, and Jeffrie Lewis
If you are aware of a Western District of Texas order that you believe would be of interest to the local bar and should be summarized in this column, please contact Soledad Valenciano (svalenciano@svtxlaw.com, 210-787-4654) or Melanie Fry (mfry@dykema.com, 210-554-5500) with the style and cause number of the case, and the entry date and docket number of the order.
COVID-19; Employment Bruce v. Olde England’s Lion & Rose Rim, LLC, No. SA-20-CV-00928-XR (Rodriguez, X., October 25, 2021). In response to the COVID-19 pandemic, Congress enacted the Emergency Paid Sick Leave Act (EPSLA), which prohibits businesses that employ fewer than 500 workers from discharging, disciplining, or discriminating against employees who take leave after contracting COVID. To determine whether EPSLA applies to a particular business based on the number of employees it has, all common employees of joint employers must be counted together. In this case, three plaintiffs sued the LLC that owned their former restaurantemployer and its manager for unlawful termination under the EPSLA, claiming they were either terminated, or denied paid leave and terminated upon complaining about the denial, after testing positive for COVID. The manager is an indirect owner of both the restaurant LLC and an LLC that provides food services at Lackland Air Force Base. The defendants moved for summary judgment, arguing the EPSLA did not apply because the restaurant LLC constitutes a single integrated enterprise with the manager or the Lackland LLC, which employ over 500 employees or because the restaurant and the manager were joint employers of common employees. The court
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denied summary judgment because there was no legal theory to support treating the manager as part of an integrated enterprise; the defendants failed to establish as a matter of law that the two LLCs are a single integrated enterprise; and the defendants failed to establish that the employees at the restaurant and those at the air force base were “common”—the defendants had failed to show that any employees of either business worked at the other.
Federal Question Jurisdiction Zapata v. Republic Services, Inc., No. SA21-CV-00800-XR (Rodriguez, X., Sept. 27, 2021). In this wrongful death case, the plaintiffs sued their deceased family member’s employer and life insurer in state court. The claim against the insurer arose under federal law. The insurer thus removed the suit to federal court under federal question jurisdiction. The plaintiff then filed a notice of dismissal against the insurer and a motion to remand, arguing that remand was proper because no claim involving a federal question existed—due to the dismissal of the insurer—at the time of the motion to remand, and thus the court no longer had subject matter jurisdiction. The court rejected that reasoning, finding that subject matter jurisdiction remained because jurisdiction is determined by the claims in the state court petition at the time of removal. As there was a federal claim
in the petition at the time of removal, the plaintiffs’ dismissal of their federal claim did not divest the court of its jurisdiction. Still, the court chose not to exercise supplemental jurisdiction over the remaining state law claims because the state law claims predominated over the (now nonexistent) federal claims. The court remanded.
Civil Forfeiture; Fourth Amendment United States v. 89.9270303 Bitcoins, No. SA18-CV-0998-JKP, 2021 (Pulliam, J. Sept. 22, 2021). In this civil forfeiture case, the United States sought forfeiture of several different digital cryptocurrency wallets containing various cryptocurrencies allegedly traceable to criminal activity. The underlying crime was a fraud scheme involving the use of stolen gift card numbers to buy “clean” gift cards, which the perpetrator then sold for Bitcoin. He stored the Bitcoin on several passcode-protected digital wallets. After the perpetrator pleaded guilty and was sentenced, the government commenced this civil forfeiture action based on information it had obtained regarding the cryptocurrency wallets from the perpetrator’s recorded phone calls from prison. The perpetrator contested the forfeiture, arguing that the government had illegally seized and searched the cryptocurrency wallets in violation of the Fourth Amendment. The court rejected that argument, holding that the perpetrator-claimant did not have a
