When an appellate decision starts with a quote from the Federalist papers about despotism, you know this decision presents a bumpy ride. In Community Financial Services Assoc. of Ame. v. Consumer Financial Protection Bureau, No. 21-50826 (5th Cir. 10/19/2022), the Fifth Circuit quotes from the Federalist papers six different times. The Federalist papers have their place in jurisprudence, but they are not precedent. It is the rare appellate opinion that quotes from the Federalist papers even once.

The Fifth Circuit oversees appeals for Louisiana, Mississippi and Texas. This is the court of appeals for federal district court in those three states. The Fifth Circuit has generally been pretty conservative for a few decades. But, with half a dozen Trump appointees, it seems to have entered a whole other level of conservative. In one recent decision, Community Financial Services, the court addresses the 2017 Payday lending rule. That rule prevents lenders from debiting a person’s account more than twice if the funds are not available. Prior to establishment of the rule, lenders – usually payday lenders – would debit the account multiple times, so as to rack up more fees.

The Community Financial Services Assoc. is the organization that represents those payday lenders. The CFSA sued attacking the rule. On appeal, the Fifth Circuit panel, comprised of three Trump appointees, found the appeal “missed the mark,” except for the attack on the constitutionality of the CFPB itself. In an odd decision, the court found the funding mechanism was unconstitutional. The CFPB is funded by funds which pass through the Federal Reserve. The Fifth Circuit panel was concerned that the funding was not the result of annual appropriations by Congress. It pointed to a normally mundane and non-controversial provision in the Constitution that says no money shall be drawn from the Treasury except by appropriation by Congress. The provision does not require an annual, weekly or hourly appropriation. It simply says Congress must appropriate any money which it spends. That language imposes no time requirement.

Second Agency Funding

The panel found that funding which passes through another agency to render the CFPB unconstitutional. Yet, numerous agencies are funded in ways not involving an annual appropriation: the Federal Reserve itself, the Federal Deposit Insurance Corporation, and others. The court in Community Financial does acknowledge that other courts that have addressed the issue have found the CFPB to be constitutional. As the panel noted, the constitutionality of the CFPB has been “heavily” litigated. This is the first decision to find the agency’s funding mechanism to be unconstitutional.

The court’s reasoning disregards the decision in Cincinnati Soap Co. v. U.S., 301 U.S. 308 (1937). That decision held that the appropriations clause simply requires that Congress pass a law allowing expenditures. As the Cincinnati Soap court said, “that Congress has wide discretion in the matter of prescribing details of expenditures for which it appropriates must, of course, be plain.” Cincinnati Soap, 301 U.S. at 322. There is no requirement in the Constitution or in caselaw that Congress pass an annual appropriation for a particular agency. The court’s opinion even acknowledges that Congress has sole power over spending. So, if Congress – with exclusive power to appropriate monies as it sees fit – passes a law allowing funding through a second agency, how is that not constitutional? The court does not address that question. See the decision here.

And, now we know that funding through a second agency represents despotism. … Who knew?

PACER – Public Access to Court Electronic Records – has existed for some 20 years. Prior to PACER, lawyers and parties received court orders via regular old snail mail. But, with PACER, we would receive those orders via fax and then via email. PACER seemed like a good price, because it did not send a bill if the PACER charges were below $15. But, it turns out the provider of those records over-charged its users. According to a class action lawsuit, PACER which charged up to $3 per document at 10 cents per page was too much. Even though the charges were maxed out at $3 per document, no matter how long the document, the charges were much higher than the actual cost pf providing those copies.

Three non-profits brought the class action: Alliance for Justice, National Veterans Legal Services Program and the National Consumer Law Center. In a 2018 ruling, a federal district court said fees from PACER public records should not have been used for expenses related to anything other than online filing and downloading copies. In 2020, the Federal Circuit affirmed that ruling.

The court has already lowered the PACER fee to $30, meaning a user who incurs less than $30 in a billing quarter will not incur a charge.

Under the terms of the class action, all persons who have used PACER from 2010 to 2018 will receive a refund of at least $350. The user does not need to register his/her claim to receive that refund. See ABA Bar Journal report here.

What sort of person seeks to profit from the murder of dozens of children? Twenty of the victims were between 6 and 7 years old. Yet, for years, Alex Jones sought to profit from the deaths of children killed at Sandy Hook Elementary. In so doing, he inflicted emotional torment on their families. For this, a jury in a Connecticut district court has awarded $965 million in compensatory damages to 15 different plaintiffs, all family members of Sandy Hook victims and one FBI agent. The jury will next decide on punitive damages. The jury verdict applies to both Alex Jones and his company, Free Speech Systems LLC. Free Speech Systems has already filed for bankruptcy. It is very likely Mr. Jones will also file for bankruptcy protection. See Reuter news report here.

The jury awarded $120 million to Robbie Parker, father to the murdered Emilie Parker. For years, Mr. Jones excoriated Mr. Parker as an actor. Jones said Parker’s tribute to his daughter the day after the shooting was “disgusting.”

I previously wrote about this second trial here. This is surely the largest defamation verdict ever. Defamation cases are notoriously difficult to win.

Jones will surely appeal. But, even a major reduction in the total will still result in a large verdict. And, we still have not seen a decision on punitive damages. A similar reduction will likely occur in bankruptcy court. The bankruptcy court cannot pay the entire amount, but the Jones estate will amount to millions of dollars. One estimate is that he has some $130-$200 million in assets.

But, the larger question remains, Why? Why would someone embark on such a mean-spirited, brutal crusade? The answer to that question may not emerge for years.

In Wilhite v. HE Butt Co., 812 S.W.2d 1 (Tex.App. Corpus Christi 1991), the employee was accused of sexual harassment. His employment was terminated after many years at HEB. Mr. Wilhite sued for defamation and invasion or privacy. The district court granted summary judgment regarding the invasion of privacy.

On appeal, the Corpus Christi Court of Appeals found that summary judgment to be error, sort of. Texas, said the court, recognizes a tort known as intrusion upon a person’s seclusion or solitude, or into his private affairs. Physical acts such as eavesdropping on a conversation or physical invasion of a person’s property are associated with this sort of invasion of privacy. The court found that the plaintiff did not allege this sort of privacy invasion. Instead, Mr. Wilhite described his employer not allowing him to confront his accusers and by invading his private life by trying to control what he could do or not do. There was no physical invasion of the plaintiff’s privacy by his employer.

The Court noted that the plaintiff’s description sounded more like the torts of 1) disclosure of embarrassing facts or 2) publicity which places the person in a false light. But, said the court, the HEB officials did not make public any private acts or accusations. So, summary judgment was appropriate. So, the court of appeals affirmed the summary judgment. See the Wilhite decision here.

The decision then recognizes that invasion of privacy at work can occur if the employer eavesdrop on conversations or invades an employee’s seclusion or solitude. The question then becomes at work, what are those areas of seclusion?

One case that answers the question is K-Mart Corp. Store No. 7441 v. Trotti, 677 S.W.2d 632 (Tex.App. Hou. 1984). That decision found that a worker did have an expectation of privacy in his locker, which the employer provided. The locker was used to store personal effects. The lockers were sometimes locked, sometimes not. In this instance, the employee did lock her locker, with her purse inside. Later, she found the locker open and her purse had been ransacked. The manager had opened all the lockers, because he believed some unknown employee had stolen a watch.

This invasion of privacy amounted to an intrusion of the plaintiff’s seclusion, said the court. In providing her own lock with the employer’s consent, the employee showed a legitimate expectation of privacy to the locker and the contents of the locker. See the decision in the Trotti case here.

Lex Machina, a service provided by Lexis Nexis, has released its latest report on employment litigation verdicts. That report shows a ten year high with $1.17 billion in jury verdicts between 2019 and 2021.  The report includes results from federal district and appellate courts.  Lex Machina points out that 21,193 employment matters were filed in 2021, the lowest number for any year in the past ten years. That low number likely reflects the effects pf the COVID19 pandemic.

The report also shows that 73$ of cases in district court settled between 2019 and 2021.  In that time period, 10% of defendant employers won, while 3% of plaintiffs won.

In appellate cases, appellees (the party who filed the appeal) won 51% during that time period. While, 13% of appellants won. 15% of the appellate cases settled. The three appellate courts with the most employment cases include: Ninth Circuit (845 appeals), Second Circuit (615), and the Fifth Circuit (613 cases).

See ABA Bar Journal report here.  See the Lex Machina synopsis of its report here.

The Texas Attorney General’s flubbed a prosecution against six sex traffickers, because they lost contact with the victim. The high profile prosecutions was known as “Operation Fallen Angle.” In the small town of Gatesville, Texas, in central Texas, this prosecution was a big deal. Six persons accused of trading crystal methamphetamine for sex are now free. The AG’s office committed a grave prosecutorial error. It lost lost contact with their key witness. The local Republican District Attorney said the system is “absolutely broken. You don’t do it this way.”

The AG’s office is in disarray. Turnover is high. The office routinely pushes its Assistant AG’s to engage in conservative politics. One attorney resigned after warning the office of growing discrimination against LGBTQ employees. One Assistant AG – a long-time prosecutor – quit in January after he was pressured to withhold evidence in a murder case. This past August, the division in charge of sex trafficking cases had a 40% vacancy rate. Assistant AG’s are quitting due to concern over ethics and overt politics. The office pressed its employees to attend two showings of the controversial film, 2000 Mules.

Meanwhile, AG Paxton is filing frivolous lawsuits against the federal government. He has filed 11 immigration related lawsuits against the federal government. In 2022, AG Paxton filed a friend of the court brief in the appeal regarding the seizure of documents from Mar-a-Lago. But, that brief makes no actual legal argument. It essentially argus that the Biden administration cannot be trusted.

And, in 2021, AG Paxton filed a frivolous lawsuit over the 2020 election. That lawsuit has led to the Texas Bar Association investigating Paxton’s law license. Too, when the AG files these weak lawsuits against the federal government, he files them in out-of-the-way, but favorable courts, such as Victoria, Lubbock and Amarillo. The blatant judge-shopping just looks bad.

Child Pornography Film

This tumult in employee retention follows eight top Assistant AG”s all resigning in 2020 over allegations that Paxton was violating ethical constraints and various laws. After those top aides left, Paxton hired one lawyer and one non-lawyer for his senior staff who are connected to top donors to Paxton’s legal defense fund. The non-lawyer, Tom Kelly Gleason, a former ice cream company owner whose father gave $50,000 to the Paxton legal defense fund, showed a child pornography film as a work presentation at the AG’s office. The film caused the meeting to break-up early. Paxton’s top aide, Brent Webster, then told staff not to discuss the film.

High Turnover

The number of filled Assistant AG positions is down 25% from two years ago. The financial crimes and white collar division saw half its positions cut. It was then merged into another division. This for an AG’s office that formerly rarely saw more than two or three attorney vacancies at any given time.

One Assistant AG left saying top staff was pressuring the Assistant AG’s to make political issues a higher priority. Several employees attested that as the March election primary approached, a deputy for criminal cases convened a meeting to ask about cases that could help Paxton in his re-election bid. For more information, see the AP news report here.

Other Attorneys General

Paxton has amplified a tradition started by his predecessor, Greg Abbott of politicizing the AG’s office. When Abbot was the Attorney General he used to brag that he goes to work, he sues the federal government and then goes home. See my prior post about former AG Abbott here. Compare Paxton and Abbott to former AG Jim Mattox. Mattox served as Texas Attorney General in the 1980’s. He sued oil companies who shortchanged Texas taxpayers on royalty payments, sued car dealers who rolled back odometers, close nursing homes, and challenged Quaker Oats, and car manufacturers on the accuracy of their advertising. Two former AG’s benefited themselves and their political standing, while the third AG benefited average Texans.

 

 

The war was and still is controversial. The United States has engaged in many questionable wars and this was one. A memorial to the participants in that war recognizes the unique nature of their service:

“Not for fame or reward

Not for place or rank

Not lured by Ambition

Or goaded by Necessity

But in simple Obedience to duty

As they understood it

These men suffered all, sacrificed all

“Dared all, and died”

No, these words do not commemorate those who fell in the Viet Nam war or the many other questionable wars in which our country has engaged. These words recall the service of Confederates who are buried in Arlington National Cemetery. Some 400 Confederates are buried at Arlington. How did Confederates come to be buried at this place of honor? Early in the 20th century, the United Confederate Veterans petitioned to move some 260 buried Confederates to Arlington. In a spirit of fraternity, as time passed the predecessor entity to the Veterans Administration allowed other Confederates to be buried there.

Bleached Bones from Shiloh to Corinth

Unlike Federal soldiers, very few Confederates who died during the war were buried in marked graves. Most of the Confederate KIA’s were buried in slit trenches on someone’s farm or were left to de-compose in the Tennessee, Louisiana and Mississippi soil. Several years after the war, one Confederate general started an effort to raise money to inter these thousands of remains. He said there were “bleached bones from Shiloh to Corinth.” In 1869, at a dedication of a Federal monument at Gettysburg, Gen. George Meade called for a respectful burial for the Confederate dead. He was reacting to the many news reports of dead Confederates lying openly in forests and hills from Corinth, Mississippi to Shiloh, Tennessee.  This Arlington memorial is a reaction to the complete absence of a place where Southern families could recall their loved ones.

Now, the Naming Commission – which is addressing the re-naming of Army posts – is expanding its brief. It is recommending that the Confederate memorial at Arlington cemetery be removed. The memorial was erected in 1914. The Commission believes it espouses Lost Cause beliefs. But, the words recounted above make no reference to a Lost Cause – or to any cause. The memorial itself speaks of sacrifice as the soldiers saw it. The wording suggest the soldiers may have been wrong in their belief. That wording renders the memorial as much anti-Lost Cause as not.

For more about the Confederate memorial, see the Arlington National Cemetery website here. For more about the unburied Confederate soldiers, see the Irish Confederates blog post here.

Alex Jones really is the oddest litigant in a lawsuit. He is siting through a second trial for defamation. This time, his trial is in Connecticut state district court. Like the prior trial in Austin, he violated discovery orders and eventually was found in default. So, the trial is not about whether he actually defamed Sandy Hook families, but about how much he owes those eight families.

The pressure must be weighing on him. He snapped during his testimony. He said he was tired of apologizing for making false claims about the Sandy Hook families. He has apologized 100 times and that is enough, or so he said. The presiding Judge Bellis has already warned him to avoid his outbursts and told him he has to follow the court rules. Mr. Jones called the judge a tyrant outside of court. So, of course, the plaintiff lawyer asked him about that comment. The plaintiff lawyer also asked him about his comment that the court was a “kangaroo court.”

Disrespecting the Court

Juries do not follow all the legal arguments. They have trouble digesting a fire hose of evidence. But, they understand when a party is disrespecting the court. Mr. Jones is really making his case worse and worse.

The two sides argued over the scope of Jones’ answers many times. Each time, the jury was sent out of the courtroom.

At one point, the plaintiff lawyer told Mr. Jones that the Sandy Hook families were real people. Jones shot back, “Just like all the Iraqis you liberals killed and love.”  A bit later, the plaintiff lawyer told Mr. Jones that these families in court had lost “children, sisters, wives, moms.” Jones replied, “Is this a struggle session? Are we in China? I’ve already said I’m sorry hundreds of times and I’m done saying I’m sorry.” See Politico news report here.

His testimony is a text book example of how not to testify. His behavior is very strange for someone who, we assume, wants to win this trial.

Sometimes, it’s just better to not accept certain clients. I talked about a major error by the Alex Jones lawyers here. Well, that same lawyer, Andino Reynal, was even then due to appear in a Connecticut district court for a show cause hearing regarding the disclosure by Alex Jones lawyers of confidential information about Sandy Hook families. See NBC news report here. A show cause hearing essentially amounts to a judge saying, “show me why I should not discipline you.” There were two Alex Jones lawyers involved in that hearing, Norm Pattis and Andino Reynal.  Mr. Reynal also represented Jones at the Austin, Texas defamation trial in August. Both defense lawyers appeared for the Connecticut hearing. But, Mr. Pattis refused to testify. He cited the Fifth Amendment. The Judge remarked that it was unusual for a lawyer to refuse to testify during his own disciplinary hearing.

Mr. Reynal, however, did testify. He said that day in the Austin court when the opposing counsel used documents Reynal’s firm had inadvertently sent was the worst day of his legal career. He was said it was very embarrassing. He had just been hired by Mr. Jones in March and was still catching up with the case.

Mr. Reynal said the link had originally been sent by a different firm in Houston that represents Jones in his bankruptcy proceedings. Mr. Reynal said a paralegal had sent the link without Reynal checking the link himself. The bankruptcy lawyer, in turn obtained the link from Norm Pattis’ law firm. Reynal said the opposing attorney, Mark Bankston, simply told him the link included medical files. Reynal told Bankston to disregard the link, not realizing Bankston’s firm had already downloaded the files. Reynal said he was stunned when Bankstoin announced at trial that the file included medical files.

At the close of the show cause hearing, Judge Bellis asked the lawyers to submit briefs regarding the legal ramifications of a lawyer not testifying at a disciplinary hearing. See ABA Bar Journal report here.

But, in truth, she likely knows what that means. It means Mr. Pattis cannot defend himself against allegations that he violated confidentiality orders. And, there is a lesson here for all attorneys, be careful of the clients you accept.

The trial regarding the death of University of Incarnate Word student Cameron Redus is set for Sept. 19, 2022.  Years of appeals over the issue whether the UIW police department enjoyed governmental immunity was resolved.  That issue was resolved in 2020. See my blog post about that Supreme Court of Texas opinion here.  After that issue was settled, UIW then filed a motion to quash the lawsuit. That motion to quash then lost on appeal on July 30, 2022.  So, nine years after young Redus was killed, the matter may finally reach trial. See San Antonio Express News report for more information.