Sample Summaries

ADMIRALTY

 

USELESS JUDGMENT, USELESS APPEAL

EURASIA INTERNATIONAL LTD v. HOLMAN SHIPPING INC.

King, Barksdale and Stewart • June 7, 2005
Appeal from E.D. Tex. • Dist. Judge Cobb

Failure to file supersedeas bond on adverse in rem judgment resulted in lack of appellate jurisdiction under “useless judgment doctrine.”

Eurasia International, stiffed for its fees for managing the M/V EMILIA, filed an in rem claim against the vessel to recover its fees plus wages and expenses, all totaling $632,465. Royal Bank of Scotland intervened on the basis of its first preferred ship mortgage in the amount of $1.4M, as did several suppliers asserting maritime liens for necessaries. The sale of the vessel netted only $192,060 and pitted the bank (and the various suppliers) against Eurasia for superior ranking. The district court ruled in favor of the bank; its judgment left Eurasia with nothing.

With distribution of the sale proceeds imminent, Eurasia successfully asked the district court to stay distribution until a certain date to give it time to file a supersedeas bond. But after Eurasia failed to file the bond by the court’s deadline, the sale proceeds were distributed (six days after Eurasia filed its notice of appeal).

The Fifth Circuit agreed with the bank that the distribution of the sale proceeds meant that any judgment the Court might render in favor of Eurasia would be useless, with the result that the Court lacked in rem jurisdiction and the appeal had to be dismissed. Once the res had been distributed in its substitute, fungible form – money – to the bank and the suppliers, it ceased to exist as an identifiable thing. “If we were to render judgment in favor of Eurasia, and allowed Eurasia subsequently to recover the amount it was allegedly owed from [the bank and other appellees], this court would effectively be rendering a judgment in personam,” the Court reasoned.

Further, Eurasia could not reseize the M/V EMILIA on the basis of any judgment finding that it had a superior lien because the marshal’s sale extinguished all liens. “Eurasia can neither re-seize the vessel nor acquire the proceeds from the Intervenors if they received a judgment from this court. Thus, a judgment from this court in Eurasia’s favor would be useless,” the panel held.

Counsel in Fifth Circuit No. 04-40666:
Ivan M. Rodriguez (New Orleans) for Royal Bank of Scotland; Seth A. Nichamoff (Houston) for Olympus Steamship Agencies, North American Marine Repair & Cleaning, Inc., and Holman Shipping, Inc.; Frank J. Goynor (Houston) for Eurasia International Ltd.; Steven E. Psarellis (New Orleans) for Gulf Marine Industrial Supplies, Inc.

 

ANTITRUST

 

FILED RATE DOCTRINE

TEXAS COMMERCIAL ENERGY, A LIMITED LIABILITY CO. v. TXU ENERGY,INC.

Garza and Benavides (by quorum) • June 17, 2005
Appeal from S.D. Tex. • Dist. Judge Jack

Filed rate doctrine defeated electricity retailer’s federal and state antitrust claims of price-fixing by electricity generator.

Texas Commercial Energy went bankrupt after wholesale electricity prices spiked in February 2003 and it was insufficiently able to pass the increases along to its retail customers. It sued TXU Energy, Inc., a generating company, on allegations that it manufactured the price spikes through its position of controlling 75 percent to 99 percent of the Texas wholesale market for short-term electric power.

The district court dismissed Texas Commercial’s federal and state antitrust claims, and state claims of fraud and misrepresentation, on the basis of the filed rate doctrine. All remaining state law claims were either dismissed on the merits or dismissed for lack of jurisdiction (antitrust was the only federal claim). Texas Commercial appealed only the dismissal of the federal and state antitrust claims, but the Fifth Circuit affirmed the application of the filed rate doctrine.

The filed rate doctrine “‘[s]imply stated ... holds that any ‘filed rate’ – that is, one approved by the governing regulatory agency – is per se reasonable and unassailable in judicial proceedings brought by ratepayers.’” Texas Commercial argued that the filed rate doctrine as a feature of federal law is inconsistent with state laws on utility regulation and antitrust. The Court disagreed, finding that Texas intended its utility laws to complement the federal antitrust landscape, of which the filed rate doctrine has been part for 65 years. As for the state’s antitrust law, it explicitly mandates harmony with the interpretation of federal antitrust law.

Texas Commercial also argued that because TXU’s rates were never actually set or approved by the market regulator (the Public Utility Commission of Texas), the filed rate doctrine could not apply. The Court found, though, that the commission’s oversight of the market was sufficiently detailed that TXU’s “energy rates [were] ‘filed’ within the meaning of the filed rate doctrine.”

Finally, TXU argued that it qualified for the competitor exception to the filed rate doctrine. The rationale for the exception is that customers, not competitors, benefit from public utility regulation, so the filed rate doctrine should only bar claims by customers, not competitors. The Court noted that neither it nor the Supreme Court has ever recognized the exception, and that it wouldn’t apply anyway because Texas Commercial did not compete against TXU in the generation of electricity.

The Court denied Texas Commercial’s petition for rehearing en banc.

Practice tip: Two amici curiae successfully moved under FRAP 29(g) for permission to participate in oral argument and to be allotted seven minutes of argument time in addition to the normal time allotted to the parties. The motion is available in the record or by contacting FCCN.

Counsel in Fifth Circuit No. 04-40962:
Mikal C. Watts (Corpus Christi) for Texas Commercial Energy; Thomas G. Slater (Richmond, Virg.) for TXU Energy Solutions Management Co., TXU Portfolio Management Co., LP, TXU Generation Services Co., LP, and TXU Energy, Inc.; Robert S. Potosky (Dallas) for amici curiae Cirro Energy Corp. and Utility Choice LP

 

LABOR & EMPLOYMENT

 

ESTOPPEL OF UNDISCLOSED TITLE VII CLAIM

JETHROE v. OMNOVA SOLUTIONS, INC.

Garwood, Smith and Clement • June 13, 2005
Appeal from N.D.Miss. • Dist. Judge Mills

Judicial estoppel barred a Chapter 13 petitioner from pursuing a Title VII lawsuit against her former employer where she failed to disclose her claim in her bankruptcy filing.

Sharon Jethroe contested her job termination by filing an EEOC charge alleging discrimination and retaliation. Eight months later, she filed a Chapter 13 bankruptcy petition, where she stated under penalty of perjury that she had no “other contingent and unliquidated claims” and no pending “suits and administrative proceedings.” Her bankruptcy case was still open two years later when her employment dispute progressed from the EEOC charge to a Title VII lawsuit. Jethroe did not amend her bankruptcy petition to disclose the lawsuit. Her bankruptcy case was closed a few months later because she failed to comply with an agreed order.

The district court granted summary judgment to the Title VII defendant, finding that Jethroe’s failure to disclose her employment claim estopped her from pursuing the claim. The Fifth Circuit affirmed.

Under the common law doctrine of judicial estoppel, a party who has assumed one position in pleadings may be estopped from assuming an inconsistent position. Detrimental reliance by the opposing party need not be shown because the doctrine is intended to protect the judicial system, not the litigants. A court should apply judicial estoppel if (1) the position of the party against whom estoppel is sought is plainly inconsistent with her prior legal position; (2) the party against whom estoppel is sought convinced a court to accept the prior position; and (3) the party did not act inadvertently. “Judicial estoppel is particularly appropriate where, as here, a party fails to disclose an asset to a bankruptcy court, but then pursues a claim in a separate tribunal based on that undisclosed asset,” the Court noted.

The first two requirements for applying judicial estoppel were clearly present. As to the second, the bankruptcy court confirmed Jethroe’s plan at least in part based on its assessment of her assets and liabilities. Jethroe argued that the third requirement wasn’t met, claiming that her nondisclosure was inadvertent as she relied on her bankruptcy attorney’s awareness of the Title VII matter and advice that it was irrelevant. The Court rejected this argument because the controlling inquiry on inadvertence is “the knowing of facts giving rise to inconsistent positions.” A claimant’s lack of awareness of a statutory duty to disclose isn’t relevant.

Alternatively, Jethroe might have proven inadvertence by demonstrating a lack of any motive to conceal, but the Court agreed with the district court’s fact-finding that Jethroe had an incentive to conceal her Title VII claim from creditors.

Counsel in Fifth Circuit No. 04-60557:
Sharon Jethroe (Columbus), pro se; William T. Siler (Jackson) for Omnova Solutions, Inc.