5th Circuit Contract Law News - U.S. Fifth Circuit
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No Good Faith Required Between University and Students in TX

A Texas case coming out of the Fifth Circuit should remind practitioners to watch your step in Texas with regards to breach of good-faith suits. A student who sued Southern Methodist University for breach of good and fair dealing, but discovered that his relationship with his school fell decidedly outside of Texas' handful of recognized and protected relationships.

When you go to the Lone Star State, take note of the relationships in which you enter formal agreements. You might not be getting what you thought you bargained for.

Fifth Circuit Remands Helicopter Contract Case

A recent Fifth Circuit case highlights the importance of making sure that indemnity clauses in commercial goods sales are airtight.

In Perry Luig v. North Bay Enterprises, the First Circuit Court of Appeals reversed a lower court's ruling that a defendant company should not be heard to present evidence that they had been bilked into buying a helicopter that was not "airworthy." Was this a material question of fact? Probably.

5th Cir. Favors Worker Mobility Over Texas-Based Non-Compete Clauses

The Fifth Circuit unanimously rejected a Texas-based financial institution's argument that Texas' applied Selection Clause automatically subsumed Choice-of-Contract because allowing such an application would violate Oklahoma's public policy in favoring worker's right to earn a living.

The is noteworthy because it contrasts the two state's competing viewpoints of worker's rights. It also displays the Fifth Circuit's lively writing style.

Mandatory Arbitration Agreements for Employees OK, 5th Cir. Rules

The National Labor Relations Board has been a thorn in the Fifth Circuit's said these past few years. Several days ago, however, the panel court made it perfectly clear that it hadn't changed its mind with regards to the proper scope of the National Labor Standards Act.

The issue at bar (now apparently settled) is whether or not employers can require the signing of mandatory arbitration clauses that preclude employee lawsuits against the company. The answer? Such clauses are allowed.

BP has taken its last gasp of air as it seeks it's one and only option in the ongoing saga of the oil-spill settlement agreement the company hastily signed. After unsuccessful attempts with the Fifth Circuit Court of Appeals, the oil giant is now trying its hand with the U.S. Supreme Court.

Whether the Supreme Court will grant cert. remains to be seen, but in the meantime, let's take a look at the legal backdrop of the case.

Arbitrating Arbitrability: What If It's a Truly Groundless Claim?

A lady signs up for a checking account with a bank. She closes the account a year later. A few years after that, she's involved in a car accident, her attorney negotiates a settlement, and then embezzles the funds. Bad times.

She sues the attorney's bank, which she alleges ignored blatant signs that he was a scheming crook. The bank cries "arbitration!" based on her long-since closed checking account agreement from many years prior. Common sense says "puh-leaze," right? Unrelated disputes, unrelated accounts, and the arbitration agreement was signed in connection to a long-since closed account. Ridiculous.

Texas Arbitration Agreements Can Be One-Sided and Legal

Arbitration agreements often seem one-sided, and in some employment cases, they may seem downright predatory.

But as the Fifth Circuit affirmed in their most recent look at arbitration agreements, even an agreement that allows the employer to unilaterally terminate is not illusory -- it's legal.

ERISA Death Benefits Denied Lowe's Employee Due to 'Work Trip'

A Lowe's employee was properly denied ERISA benefits on her death because of an insurance administrator's interpretation of her plan's coverage of work trips.

In a very sad case before the Fifth Circuit, Elizabeth Porter died in 2008 when a car hit hers head-on, killing herself and her unborn child. Porter had insurance benefits through her employer, Lowe's, but the company refused to pay those benefits to her husband because Porter had died while going to and from work.

The Fifth Circuit sided with the insurance administrator in Porter v. Lowe's Companies, finding that despite the gruesome facts, the decision was reasonable enough.

Economic Loss Doctrine Falls Flat in Credit Card Case

In a case filed Tuesday, the Fifth Circuit reviewed a tort claim by banks which had suffered economic damages at the hands of a ring of hackers who had stolen millions of credit card numbers.

Not the short-haired, mid-1990s Angelina Jolie type hackers, but the sophisticated real-world kind who caused several banks (called "Issuer Banks") to replace compromised credit cards and reimburse their customers for any fraudulent charges.

$25M Judgment Against Pilgrim's Pride Overturned

Pilgrim's Pride won't have to shell out $25 million to Texas, Arkansas, and Louisiana chicken growers after the Fifth Circuit overturned the lower court's ruling that declared the corporation closed down some of its operations in an attempt to manipulate prices.

The Texas-founded poultry corporation, Pilgrim's Pride Corporation (PPC), closed some of its chicken processing plants in 2009 due to an unexpected overproduction of chicken which was driving prices down, but this shift caused chicken growers to lose tens of millions of dollars, reports The Dallas Morning News.

What convinced the Court that PPC wasn't illegally playing the market?