Western District of Texas Court Summaries

By Soledad Valenciano, Melanie Fry, and Jeffrie Lewis

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 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.

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.

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 reasonable expectation of privacy in the calls he made from prison because he was advised that the calls were recorded. The court thus denied the perpetrator’s motion to suppress the wallets as evidence and motion for summary judgment. It granted the government’s motion for summary judgment in part, awarding forfeiture of the wallets containing Bitcoin, and denied the government’s motion in part as to wallets containing non-Bitcoin cryptocurrencies, because a question of fact existed as to whether the cryptocurrency on those wallets was traceable to the criminal activity.

Valdez v. Allstate Fire & Cas. Ins. Co., No. SA21-CV-00494-XR (Rodriguez, X., Sept. 22, 2021).

The plaintiff sued her automobile insurer in state court for uninsured motorist (“UIM”) benefits under her insurance policy. She also raised extra-contractual bad-faith claims. The petition alleged damages “in excess of $250,000 but no more than $1,000,000.” The insurer removed to federal court on the basis of diversity jurisdiction. The insurer then moved to dismiss the plaintiff’s claims because she had not yet obtained a court judgment against the uninsured motorist. The plaintiff contested federal jurisdiction, claiming that despite the damages alleged in her petition, the amount in controversy did not meet the $75,000 threshold because her policy limit was less than $75,000. The court held that the policy limit guided the amount-in-controversy as to the plaintiff’s claims under her policy, but that her extra-contractual claims could still make up the difference between the policy limit and the amount of damages alleged in her state petition. The court denied the insurer’s motion to dismiss because the Texas Supreme Court held in Allstate Insurance Co. v. Irwin, 627 S.W.3d 263 (Tex. 2021), that UIM plaintiffs do not first need to obtain a judgment against the uninsured motorist before suing their insurer.

Union Pac. R.R. Co. v. Am. Ry. & Airway Supervisors’ Ass’n, No. SA-17-CV-270-XR (Rodriguez, X. Sept. 20, 2021).

An employee of a railway company was fired for testing positive for drugs. Following his termination, the employee’s union filed a claim with the Public Law Board (“Board”), a tribunal created by the federal government to resolve minor disputes between railways and unions. The Board ordered that the plaintiff be reinstated at the railway. The railway filed suit, asking the court to set aside the Board’s order. On remand from the Fifth Circuit’s decision on a separate issue, the parties submitted a joint statement asking the court to enter an order consistent with the Fifth Circuit’s holding. Nothing in the parties’ advisory mentioned an award of back wages to the worker. The court entered judgment pursuant to the terms agreed to by the parties. The worker then filed a Rule 60(a) “Motion to Correct Clerical Error, Oversight, or Omission in Final Judgment,” contending that the court should have granted an award of back wages, as requested in the union’s motion for summary judgment, which the court had granted. The court denied the motion, because the court’s authority under Rule 60(a) is limited to making corrections that are consistent with the court’s intent at the time it entered the judgment. Because nothing in the parties’ advisory to the court indicated that the court was to affirmatively award back wages, the court did not intend to do so at the time it entered the order based on the parties’ joint advisory.

EMET, LLC v. Johnson Controls, Inc., No. SA21-CV-00753-JKP-RBF (Pulliam, J. Oct. 7, 2021).

The plaintiff business sued two separate air conditioner service companies and an individual in state court, alleging they performed unsatisfactory service amounting to negligence and fraud. One of the air conditioner service providers removed to federal court on diversity grounds. The plaintiff moved to remand because the nonremoving defendants were nondiverse to the plaintiff. The removing defendant argued remand was inappropriate because the plaintiff had fraudulently joined the nondiverse parties to defeat diversity. The court thus examined whether the joinder of the second air conditioner service provider comported with the permissive joinder requirements of Fed. R. Civ. P. 20(a)(2). The court found that the case met the permissive joinder requirements because the plaintiff’s claims against both air conditioner service providers arose out of the same series of transactions or occurrences. Thus, because at least one of the nondiverse parties had been properly joined, the court remanded without consideration of whether the individual had been properly joined.

Finger Oil & Gas, Inc. v. Mid-Continent Cas. Co., No. 5-20-CV-00712-RBF (Farrer, R., October 20, 2021).

Plaintiff Finger Oil & Gas purchased a commercial general liability coverage policy from Defendant Mid-Continent. Defendant Marsh brokered the purchase. After one of its natural gas wells had a blow out, Finger Oil contacted the broker (who then contacted Mid-Continent) regarding coverage for the event. Before the claim could be approved, Finger Oil had the well brought under control and repaired. Mid-Continent denied the claim. Finger Oil sued Mid-Continent, Marsh, and Marsh’s underwriter in state court, alleging breach of contract and violations of the DTPA and Chapter 41 of the Texas Insurance Code. Mid-Continent removed the suit on diversity grounds, claiming the underwriter was improperly joined. The court denied Finger Oil’s subsequent motion to remand and dismissed the claims against the underwriter for improper joinder. In a subsequent order, the court directed Finger Oil to file an amended pleading to bring its DTPA and Chapter 41 claims, which sound in fraud, in conformance with Fed. R. Civ. P. 9. When Finger Oil failed to amend, the court dismissed those claims pursuant to Fed. R. Civ. P. 37(b)(2)(A)(iivii). The court also held that these fraud-type claims, which were also the subject of the defendants’ motions for summary judgment, failed on the merits. No confidential or fiduciary relationship exists between the parties to establish that either defendant had a duty to disclose the policy’s exclusions. Further, there were no misrepresentations of coverage and no statements that conveyed a false impression triggering an obligation to make a fuller, follow-up disclosure. There was also no evidence that any non-disclosure caused Finger Oil’s damages, as Finger Oil did not point to any evidence showing it incurred any costs because of anything that the defendants stated. In addition, the court found no genuine issue of material fact as to any failure to promptly investigate or promptly deny the insurance claim. Although there was no motion to dismiss the negligence claim, in the interest of judicial efficiency, the court stated that the negligence claim was subject to dismissal because Texas does not recognize a claim for negligent handling of an insurance claim.

Alpizar v. John Christner Trucking, LLC, No. SA-17-CV-0712-JKP (Pulliam, J., October 22, 2021).

The court examined a motion to exclude the testimony of a treating physician on the issue of causation. The plaintiff complained of continued pain following a motor vehicle accident. While the court would not allow the physician to testify as a biochemical expert, it would otherwise allow his testimony. This exclusion was justified because the physician’s opinion did not require biomechanical training. The defendants argued that the physician’s causation opinion was flawed because he did not know of a prior car accident in which the plaintiff sustained similar injuries. The court determined the physician was qualified by his education, training, and experience as an orthopedic spine surgeon to give an opinion on the cause of the plaintiff’s injury and the need for surgery. The court reasoned that lack of knowledge of one prior accident is insufficient, in and of itself, to exclude a treating doctor’s causation opinion. The court added that an opinion should not be excluded solely because it relies on the patient’s self-reported history. Rather, that fact should go to the weight of the opinion. Here, the treating physician obtained the plaintiff’s medical history, reviewed MRIs, and examined the plaintiff.

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.