By Tokesha Collins-Wright

On December 7, 2017, the Environmental Protection Agency (“EPA”) released a memorandum entitled, “New Source Review Preconstruction Permitting Requirements: Enforceability and Use of the Actual-to-Projected-Actual Applicability Test in Determining Major Modification Applicability.”[1] In the NSR memo, EPA announced its intention to drop its long-standing position that the Agency can use its own projections of a facility’s potential future emissions in order to determine whether a major source’s proposed modification triggers Clean Air Act (“CAA”) New Source Review (“NSR”) requirements. Instead, EPA states that now “when a source owner or operator performs a pre-project NSR applicability analysis in accordance with the calculation procedures in the regulations, and follows the applicable recordkeeping and notification requirements in the regulations, [then] that owner or operator has met the pre-project source obligations of the regulations, unless there is clear error (e.g. the source applies the wrong significance threshold).”[2] EPA continues on by stating that the Agency “does not intend to substitute its judgement [sic] for that of the owner or operator by ‘second guessing’ the owner or operator’s emissions projections.”[3] In other words, EPA will now defer to owners and operators’ pre-project NSR applicability analysis as to whether NSR applies to their proposed modification projects. EPA will step in only if there is “clear error” in this analysis.

The NSR memo further indicates that, in cases where a source projects that emissions increases will be less than the NSR thresholds, EPA will focus only on the source’s post-project actual emissions in determining whether to pursue an enforcement action.[4] This means that, even though pertinent case law has confirmed EPA’s authority to pursue NSR enforcement actions based upon a source’s failure either to perform a required pre-project applicability analysis or to correctly follow the calculation requirements of the NSR regulations,[5] EPA now does not intend to pursue new enforcement cases in the absence of actual post-project emission increases that would have triggered NSR requirements.

EPA states that this memo is intended to resolve any “uncertainty” caused by recent appellate court decisions in NSR enforcement proceedings.[6] In fact, this memo is evidence that EPA has changed its stance from the one it previously took in the aforementioned NSR enforcement proceedings. In U.S. v. DTE Energy Co., 711 F.3d 643 (6th Cir. 2013) and U.S. v. DTE Energy Co., 845 F.3d 735 (6th Cir. 2017), Detroit Edison (“DTE”) began modification of a unit, after determining that the project would not trigger NSR requirements. After investigating DTE’s projections, EPA filed an enforcement action, challenging DTE’s NSR calculations and insisting that DTE should have secured a preconstruction permit. After much litigation and back-and-forth, the Sixth Circuit ultimately held that DTE was subject to enforcement for failure to comply with NSR pre-construction requirements, regardless of what actual post-construction emissions data later showed.[7] The Court found that:

…actual post-construction emissions have no bearing on the question of whether DTE’s preconstruction projections complied with the regulations.… [T]he applicability of NSR must be determined before construction commences and [] liability can attach if an operator proceeds to construction without complying with the preconstruction requirements in the regulations. Post-construction emissions data cannot prevent the EPA from challenging DTE’s failure to comply with NSR’s preconstruction requirements.[8]

On July 31, 2017, DTE filed a petition for writ of certiorari with the Supreme Court, challenging the Sixth Circuit’s ruling. On December 11, 2017, the Supreme Court denied the writ, which upholds the Sixth Circuit’s ruling (and the older EPA position) that actual post-construction emissions data does not prevent EPA from challenging a source’s failure to comply with NSR’s preconstruction requirements.

In the NSR memo, EPA states that the guidance document is not legally binding and is not legally enforceable. EPA also notes that, in the CAA scheme of cooperative federalism, state NSR programs may be more stringent than the federal program and states have primacy over the program once approved by EPA. Environmental groups have denounced EPA’s new stance on NSR permitting requirements, announcing that they may consider challenging EPA’s action in issuing the memo in court.[9]

For any owner or operator that intends to rely on the NSR memo to guide future NSR permitting decisions, please keep in mind that, regardless of the memo, citizens could still bring citizen suits for perceived NSR violations if EPA declines to do so. As such, any pre-project NSR applicability analysis should be well-documented and supported and owner/operators should follow the applicable recordkeeping and notification requirements set forth in the CAA regulations.


[1] A copy of the memorandum is available at

[2] Id. at p. 8.

[3] Id.

[4] See id.

[5] See U.S. v. DTE Energy Co., 711 F.3d 643 (6th Cir. 2013) (“DTE I”); U.S. v. DTE Energy Co., 845 F.3d 735 (6th Cir. 2017), cert. denied, No. 17-170, 2017 WL 3324982 (U.S. Dec. 11, 2017) (”DTE II”).

[6] NSR Memo, at p. 1.

[7] DTE II, 845 F.3d at 741.

[8] DTE II, 845 F.3d at 741 (internal citations omitted).

[9] See, e.g.,

By Erin L. Kilgore

It’s been a busy end of February.  For employers, the past two weeks have included several notable decisions:

Dodd-Frank Does Not Protect In-House Whistleblowers

Last Wednesday, on February 21, 2018, the United States Supreme Court unanimously held that the anti-retaliation provision of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) does not apply to employees who report alleged violations internally.  Relying on the plain language of Dodd-Frank’s definition of “whistleblower,” the Supreme Court found that the statute’s whistleblower protections extend only to those employees who report suspected securities law violations externally, directly to the Securities and Exchange Commission (“SEC”).  Thus, employees who allege that adverse action was taken against them because they reported fraud in-house, such as to a supervisor  – but not to the SEC – are outside the scope of Dodd-Frank and are not protected from retaliation under that statute.

Instead, those alleged whistleblowers must avail themselves of the anti-retaliation provision of Sarbanes Oxley Act, which covers employees who report fraud to outlets including the SEC, other federal agencies, or a supervisor, but includes pre-suit requirements for exhaustion of administrative remedies, a shorter statute of limitations period within which to file suit, and different damages available to a prevailing plaintiff.

Additional information about the Supreme Court’s decision can be found here.  

The NLRB’s Browning-Ferris Joint Employer Standard is Back

On Monday, February 26, the National Labor Relations Board (“NLRB”) reinstated its prior expansive standard for joint-employer liability, previously announced in Browning-Ferris Industries, 362 NLRB Bo. 186 (2015).   In doing so, the Board threw-out its December 2017 decision, Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., 365 NLRB No. 156 (2017).

In Hy-Brand, the NLRB reinstated a previous test that said companies are “joint employers” only when they exercise direct control over workers.  According to the NLRB’s press release  in the wake of Hy-Brand, “two or more entities will be deemed joint employers under the National Labor Relations Act (NLRA) if there is proof that one entity has exercised control over essential employment terms of another entity’s employees (rather than merely having reserved the right to exercise control) and has done so directly and immediately (rather than indirectly) in a manner that is not limited and routine.”   Businesses welcomed that standard for joint employer liability, but it was short-lived.

Hy-Brand was decided by a 3-2 vote.  But, it was determined that one of the voting members had a conflict of interest because his law firm, prior to his joining the NLRB, had represented one of the companies in the Browning-Ferris case. The NLRB’s Designated Agency Ethics Official determined that member was, and should have been, disqualified from participating in the Hy-Brand proceeding.   Consequently, on February 26, the NLRB issued an Order vacating the Hy-Brand decision.  As explained in the Board’s press release, “Because the Board’s Decision and Order in Hy-Brand has been vacated, the overruling of the Board’s decision in Browning-Ferris Industries, 362 NLRB No. 186 (2015), set forth therein is of no force or effect.”

Consequently, the Browning-Ferris standard is back in effect, and two or more entities are joint employers of a single workforce if:  (1) they are both employers within the meaning of the common law;  and (2) they share or co-determine matters governing the essential terms and conditions of employment.  In assessing  whether an employer possesses sufficient control over employees to qualify as a “joint employer,” the NLRB will (among other factors) evaluate whether an employer has exercised control over the terms and conditions of employment indirectly through an intermediary or whether it reserved the authority to do so.

Additional information can be found here and here.

Title VII Prohibits Discrimination Based on Sexual Orientation, Says the Second Circuit

Also on Monday, February 26, the Second Circuit Court of Appeal (the federal appellate court with jurisdiction over courts in Connecticut, New York, and Vermont) ruled that terminating an employee because of his sexual orientation is unlawful sex discrimination under Title VII of the Civil Rights Act of 1964.

Title VII prohibits workplace discrimination on the basis of several prohibited characteristics, including “sex.”   On Monday, the Second Circuit held that sexual orientation discrimination falls within the scope of unlawful sex discrimination under Title VII, concluding that “sexual orientation discrimination is motivated, at least in part, by sex and thus is a subset of sex discrimination.”

The Second Circuit now joins the Seventh Circuit as the two Courts of Appeal to find that Title VII bars employment discrimination based on sexual orientation.

Employers should stay tuned as standards, laws, and interpretations continue to evolve.  Although the law has been, and shows signs of continuing to be, fluid under this Administration, employers must remain vigilant to ensure that their workplace policies and practices remain current and compliant with applicable law.

By Zoe Vermeulen

Deciding whether to classify workers as employees or independent contractors is an ongoing issue for companies. Misclassifying employees as independent contractors can draw the ire of federal and state agencies – including the Internal Revenue Service, the Department of Labor, and state workers’ compensation agencies – and can subject employers to back taxes, penalties, lawsuits under the Fair Labor Standards Act, and more. And, now, misclassifying employees could also be considered a violation of the National Labor Relations Act (“NLRA”).

On February 15, the National Labor Relations Board (“NLRB”) issued a notice inviting the public to file briefs in a pending case to address whether an employer’s act of misclassifying employees as independent contractors should be a per se violation of Section 8(a)(1) of the NLRA. Among other things, Section 8(a)(1) of the NLRA makes it an unfair labor practice for an employer to interfere with employees’ rights to form a union. Independent contractors are not guaranteed the same rights to unionize under the NLRA. Thus, a number of administrative law judges have already held that misclassifying employees as independent contractors violates the NLRA because it may prevent workers from engaging in concerted activity, including unionizing.

With the invitation for public input, the NLRB is clearly concerned with the issue of misclassification and is poised to rule on it, possibly later this year. But regardless of whether the NLRB holds that misclassifying employees is a per se labor law violation, employers should always use caution when classifying workers as independent contractors. With the IRS, DOL, and individual workers to contend with, misclassifying workers can already be a troublesome and costly mistake.

We will continue to monitor this situation and will provide updates as available. In the meantime, if you are an employer and have questions or concerns about how this issue can affect you and your workers, please contact your attorney, or a member of the Kean Miller Labor and Employment Team.

By Blake Crohan

In Griffin v. Hess Corporation, 2017 WL 5125657 (5th Cir. Nov. 3, 2017) (unpublished) the U.S. 5th Circuit reaffirmed the difficult burden of proving that prescription should be excused under the Louisiana jurisprudential exception of contra non valentem non currit preaescriptio. Contra non valentem “means that prescription does not run against a person who could not bring his suit.”

The Plaintiffs in Griffin filed suit seeking unpaid royalties allegedly owed to their father pursuant to an oil, gas, and mineral lease that their great-grandfather and several other members of the Griffin family granted in 1935. The Plaintiffs alleged that production occurred on the property between 1940 and 1969, during which time several members of the Griffin family received royalty payments, except their father. Between 1983 and 1984 the Plaintiffs began researching the history of the oil wells located on the property. Their research discovered documents identifying the Defendants’ corporate predecessors, an abstract of title that was commissioned in connection with potential oil company operations, and documents and pay stubs from previous royalty payments related to the Plaintiffs’ property. Around that same time, the Plaintiffs hired an attorney to represent them with respect to these claims. The Plaintiffs continued their investigation of the allegedly unpaid royalties over the next two decades, and in 2008 reached out to ExxonMobil directly regarding their unpaid royalty claims. Ultimately, ExxonMobil informed the Plaintiffs that it had no sales under the referenced lease after July 1954, found no outstanding royalty payments held in suspense, and that the property listed was not under lease to ExxonMobil. The Plaintiffs disagreed and filed suit on October 14, 2014 in federal court in the Western District of Louisiana against Hess Corporation and ExxonMobil (“Defendants”).

In the district court, the Defendants filed a motion for summary judgment arguing that the Plaintiffs’ claims for unpaid royalties were prescribed and barred under Louisiana Civil Code article 3494(5), which provides that the prescriptive period for unpaid royalties is three years. The Defendants asserted that the Plaintiffs acknowledged that they first became aware of their claims for the unpaid royalties between 1983 and 1984—more than thirty years prior to filing suit.

In order to survive Defendant’s motion, the Plaintiffs had to prove that contra non valentem applied to excuse them for not filing suit earlier. The district court explained that “[s]uit need not be filed when there is a mere apprehension that something might be wrong,” but that prescription commences when “the plaintiff has actual or constructive knowledge of the” wrongful act. The Plaintiffs argued that “many circumstances [justified Plaintiffs’] delay in filing this lawsuit.” Specifically, they argued that between 1983 and 1984 they were merely seeking out who was responsible for the payment of royalties and that many members of their family were uneducated.  The district court was not persuaded. The district court held that “[b]y at least 2008, Plaintiffs had received the assistance of an attorney and had collected information, both documentary and oral, sufficient to excite attention and prompt further inquiry as to the unpaid royalties alleged owed to their father.” Thus, the Plaintiffs claims were dismissed as prescribed.

On appeal to the U.S. 5th Circuit, the Plaintiff-Appellants argued that “it was impossible to bring this lawsuit prior to . . . filing the [2014] complaint in federal court, because in light of the uncertainty of circumstances surrounding their father’s claim, they had no basis to file any claim on behalf of their father.” While the 5th Circuit noted that “their level of education may, by itself, support application of [contra non valentem], the court cannot disregard the substance of their actions which do not indicate any inability to bring this claim.” The Court explained that Appellants were adults when they were informed that they may be entitled to unpaid royalties, they investigated their ownership rights extensively, and knew that Hess Corporation had a past ownership interest in the property. Further, the Court found it compelling that Appellants received advice and meaningful information from three different lawyers on various occasions through their investigation. Nevertheless, Appellants waited until 2008 to contact ExxonMobil and then waited until 2014 to file suit. Finally, the Court noted that the appropriate focus on the commencement of prescription “is not when a plaintiff develops a strong legal case but when he has sufficiently reasonable knowledge of his legal options.” The Court affirmed the district court’s granting of summary judgment in favor of the Defendant-Appellees.

The 5th Circuit’s opinion in Griffin highlights two important aspects of Louisiana law. First, plaintiffs must be diligent in their efforts to initiate a lawsuit in order to preserve their claims. While courts are cognizant of the lay persons’ knowledge of legal claims, plaintiffs cannot wait until they have a “strong legal case” or know all of the facts necessary to prove their claim. Second, prescription is a strong defense mechanism for defendants. While the exception of contra non valentem remains a viable option to defeat prescription, courts applying Louisiana law will strictly construe the doctrine to ensure that its use is not abused.

By Troy Charpentier and Matthew Smith

After contesting the construction of the Dakota Access pipeline, environmental advocacy groups have turned their attention to the proposed Bayou Bridge pipeline in South Louisiana. The Bayou Bridge pipeline is a 162-mile-long, 24-inch-wide proposed pipeline which will cross the Atchafalaya Basin to connect facilities in Lake Charles, Louisiana to crude oil refineries in St. James Parish, Louisiana.

Earthjustice attorneys filed suit on January 11, 2018 on behalf of Atchafalaya Basinkeeper, Louisiana Crawfish Producers Association-West, Gulf Restoration Network, Waterkeeper Alliance, the Sierra Club, and the Delta Chapter of the Sierra Club against the U.S. Army Corps of Engineers challenging permits and authorizations issued by the Corps under § 404 of the Clean Water Act (“CWA”) and under the Rivers and Harbors Act (“RHA”) for construction and operation of the pipeline. The environmental groups contend that the Corps did not conduct a sufficient environmental assessment under the National Environmental Policy Act (“NEPA”) or consider various factors required by the CWA, RHA, and NEPA, including reasonable alternatives to the project, public interest, environmental impact, cumulative effects, and adequacy of mitigation.

Shortly after filing suit, the environmental groups filed Motions seeking a Temporary Restraining Order and Preliminary Injunction to halt construction of the Bayou Bridge pipeline. On January 30, 2018, Judge Shelly Dick of the Middle District of Louisiana denied the environmental groups’ Motion for Temporary Restraining Order, finding that, based on the current record, the groups could not demonstrate a substantial likelihood of success on the merits of their challenge to the issuance of the permits.

In doing so, the court noted the “significant deference” afforded to the Corps’ decision to issue the permits, and that “the existence of opposing views does not render the Corps’ decision arbitrary and capricious.” Despite the contentions of the environmental groups, the court found that it is “undisputed that the Corps held a public hearing and allowed for public comments in accordance with the law.” The court further reviewed a 92 page Environmental Assessment (“EA”) performed by the Corps prior to issuing the relevant permits and found that it “clearly addresses the specific complaints of several Plaintiffs, albeit obviously not to Plaintiffs’ satisfaction.” Specifically, the court found that (i) the EA “reflects that several alternatives were addressed and considered,” (ii) a significant portion of the EA is devoted to consideration of the CWA permit guidelines which the groups contend were not adequately considered, and (iii) the EA included consideration of public interest factors. Accordingly, the court found that “Simply having an opposing opinion, or disagreeing with the mitigation plans imposed, is insufficient to establish a substantial likelihood of success on the merits, especially in light of the high deference that the law requires the Court to afford the Corps.”

The next step in the environmental groups’ attempt to halt construction of the Bayou Bridge pipeline will be the hearing on their Motion for Preliminary Injunction, which is currently set for February 8, 2018.

By Michael O’Brien

In Voces v. Energy Resource Technology, GOM, LLC, et al. the United States Court of Appeals for the Fifth Circuit reviewed the longstanding general rule in Louisiana known as the independent contractor defense, which provides that a principal is not liable for the negligent acts of an independent contractor acting pursuant to the contract.

The facts in Voces are similar to what occur in the oil field on a daily basis. Defendant Energy Resource Technology GOM, LLC, (“ERT”) hired independent contractor Offshore Specialty Fabricators, LLC (“OSF”) to remove an oil and gas platform. The contract between ERT and OSF provided that OSF would perform all work as an independent contractor and that OSF was responsible for providing all necessary services, equipment, materials, personnel, and engineering to safely remove the platform. The contract also spelled out OSF’s duties and responsibilities, which included written operating procedures, the performance of all work in accordance with the written operating procedures, the review of operating procedures, and the performance of work with personnel trained to do so in a safe manner. During the removal process, ERT maintained a Company Man aboard the platform to monitor OSF’s work for compliance with the contract.

The decommissioning of the platform proceeded without incident until a tragic accident claimed the life of Peter Voces, a welder employed by OSF. Following Mr. Voces’ death and a Bureau of Safety and Environmental Enforcement (BSEE) panel investigation, the decedent’s wife filed suit.  Mrs. Voces claimed that ERT was vicariously liable for the negligence of its contractor OSF and independently liable for its own negligence.  Her claims against ERT were based on the presence of the ERT Company Man aboard the platform.

As stated above, the independent contractor defense is a general Louisiana rule that a principal is not liable for the negligent acts of an independent contractor; there are exceptions to this rule. Specifically, the “operational control” exception applies when the principal retains or exercises operational control over the independent contractor’s acts or expressly or impliedly authorizes an unsafe practice. This exception is routinely satisfied in situations where a Company Man is present.

ERT moved to dismiss Ms. Voces’s claims based on the independent contractor defense. The District Court agreed and determined that Mrs. Voces could not prevail on her vicarious liability claim because she could not prove that ERT maintained the requisite operational control over OSF’s acts or that ERT expressly or impliedly authorized OSF’s unsafe practices. On review, the U.S. Fifth Circuit reiterated that determining operational control depends in great measure upon whether and to what degree the right to control the work has been contractually reserved by the principal.  Operational control exists only if the principal has direct supervision of the step-by-step process of accomplishing the work such that the contractor is not entirely free to do the work in his own way.  The Fifth Circuit also held that a principal may demand in its contract that an independent contractor develop safe work practices without triggering the operational control exception.

Further, it is critical to note that a principal may monitor (via a Company Man) its independent contractor’s work for compliance with contractual demands without triggering the operational control exception. As such, the mere fact that a principal takes an interest in the safety of the employees of its independent contractors and stations a Company Man on the platform does not, in and of itself, constitute operational control. Here, the Fifth Circuit found that ERT’s Company Man never dictated the work methods or operative details of the platform removal procedure. Instead, the ERT Company Man merely inspected OSF’s procedures and work to ensure OSF’s contractual compliance. Accordingly, the 5th Circuit included that ERT did not exercise operational control.

Last, the Court considered whether ERT could be held liability for its own negligent acts. Again, Mrs. Voces placed great emphasis on the presence of ERT’s Company Man aboard the platform.  However, the Court was not persuaded. Indeed, the Court advised that it has not located any Louisiana authority holding that a principal assumes a duty to ensure the safety of an independent contractor’s employees by merely stationing a Company Man on an oil platform for the purpose of overseeing a contractor’s compliance with his contractual obligations. A Company Man does not affirmatively assume any duty to provide an independent contractor’s employees with a safe workplace simply by observing their unsafe work habits. Accordingly, the Judgment of the District Court dismissing the claims of the Voces Plaintiffs against ERT was affirmed.

By Alex Rossi

The 5th U.S. Circuit Court of Appeals “adopt[ed] a bright-line rule [on January 11, 2018]: Section 1446(b)(3)’s removal clock begins ticking upon receipt of the deposition transcript” as opposed to running from the date of the deposition testimony. The decision in Morgan v. Huntington Ingalls, Inc., et al, No. 17-30523, __ F.3d __ (5th Cir. 1/11/18) was one of first impression for the court.

Plaintiff, Curtis Morgan filed the original lawsuit alleging he contracted mesothelioma as a result of asbestos exposure at various industrial facilities in Louisiana. Morgan specifically alleged that he was exposed to asbestos through his employment at Avondale Shipyard in New Orleans as a sheet metal tacker in the 1960s. Seventy-eight (78) defendants were originally named in the lawsuit.

Morgan was deposed over eight days from March 9 to April 13, 2017. On the second day of testimony, Morgan testified that he worked on unspecified vessels at Avondale Shipyard. On March 20, Morgan agreed with medical records presented by counsel for Avondale Shipyard that one of the vessels on which he worked was the USS Huntsville, a vessel Avondale refurbished on behalf of officers of the U.S. government.

Based on the testimony regarding Morgan’s work on the USS Huntsville for the U.S. Government, Avondale removed the case to the U.S. District Court for the Eastern District of Louisiana on April 28, 2017 under the federal officer removal statute and claimed that removal was timely filed 30 days after receipt of Morgan’s deposition transcript. Morgan opposed the removal as untimely, claiming that the removal clock began from Morgan’s testimony regarding the USS Huntsville, which took place 38 days prior to removal. Morgan further argued that the district court lacked subject matter jurisdiction under 28 U.S.C. § 1442.

In finding the removal untimely, the district court determined that the removal clock for “other paper” under § 1446 began running on the date of the oral deposition testimony, and not the later date of receipt of the deposition transcript. The district court did not address whether the substantive requirements of § 1442 had been met for federal officer jurisdiction.

Citing the plain meaning and purpose of § 1446(b), as well as policy considerations, the 5th Circuit found that oral testimony at a deposition does not constitute an “other paper.” Instead, the court found the removal clock begins upon receipt of the deposition transcript as the “other paper” providing the basis for the removal. In adopting this bright light rule, the 5th Circuit balanced the competing goals of removal: encouraging prompt and proper removal and preventing, hasty, improper removals. The court declined to follow the “notice” standard adopted by the 10th Circuit, finding it counterintuitive to start the clock for removal before the objective evidence is received by the defendant.

The 5th Circuit remanded the case to the district court to address whether the substantive requirements of federal officer removal have been met.



By Lou Grossman

On January 9, 2018, a split panel of the United States Fifth Circuit Court of Appeals affirmed an order from the district court, denying a motion to remand a matter removed under the Class Action Fairness Act (“CAFA”). The 2-1 decision In Warren Lester, et. al. v. Exxon Mobil Corp., et. al., No. 14-31383, __F3d___ (5th Cir. 1/9/2018) addressed two issues of first impression for the Fifth Circuit: (1) whether a motion to transfer and consolidate can effectively create a “mass action” removable under CAFA; and (2) if so, whether CAFA may be invoked as a basis for removal when one of the underlying suits comprising the new “mass action” commenced well before the 2005 effective date of CAFA. In affirming the action of the district court below, the Fifth Circuit answered both questions in the affirmative. A full copy of the opinion can be found here.  

The removed actions included two separate matters filed in the Civil District Court for the Parish of Orleans, State of Louisiana – Warren Lester, et. al. v. Exxon Mobil Corporation, et. al. and Shirely Bottley, et. al. v. Exxon Mobil Corporation, et. al. The Lester matter was filed by over 600 plaintiffs for personal injuries and property damages allegedly resulting from Naturally Occurring Radioactive Materials (“NORM”) in 2002. The Bottley matter, on the other hand, was filed in 2013 as a wrongful death and survival suit filed on behalf of Cornelius Bottley, a decedent-plaintiff in Lester, by his three remaining heirs. Following the selection of a trial flight in the Lester matter, which was to include the claims of Mr. Cornelius Bottley, the Bottley Plaintiffs moved to transfer and consolidate their suit with Lester. The matter was promptly removed by a defendant named only in the Bottley matter.

The Fifth Circuit rejected Plaintiffs’ argument that the consolidation was meant to attach the Bottley matter only to the pending trial flight such that it did not, as CAFA requires, propose a single trial with more than 100 individual plaintiffs. Rather, the Fifth Circuit held that the focus under CAFA is on the consolidation proposed, which in the case of the Bottley plaintiffs, was a consolidation of cases involving “overlapping liabilities, damages and questions of law and fact…the determination [of which] in either case will have great bearing on the other….” Plaintiffs’ Motion did not and, as a matter of law could not, limit consolidation to only the claims set for trial. As such, the Fifth Circuit found that it proposed a “mass action,” i.e. a joint trial of 100 or more plaintiffs’ claims, under CAFA.

More importantly, the Fifth Circuit examined the date of the proposed consolidation as determining the applicability of CAFA. Though Lester had been filed before CAFA’s enactment, the proposed consolidation was proposed years later. The Fifth Circuit found that the proposed consolidation created a new “mass action.” The Fifth Circuit reasoned that a civil action may commence before it becomes a “mass action,” and that the Bottley suit became a “mass action” when Plaintiffs proposed that the claims be tried jointly with those in the Lester matter. Bottley was a “civil action” commenced after CAFA’s effective date that subsequently became a mass action subject to CAFA’s removal provisions.

In affirming the denial of Plaintiffs’ Motion to Remand below, the Fifth Circuit established two compelling rules: (1) that a consolidation is effective to create a “mass action” under CAFA; and (2) that CAFA’s Section 9 requirements are met if one of the two consolidated actions was commenced after CAFA’s effective date.  In addition to providing guidance and interpretation regarding the commencement of a mass action, this opinion demonstrates a broad approach to CAFA.

By Sonny Chastain

In its recent campaign, Bud Light recognizes true friends of the Crown by raising a cold adult malted beverage and chanting Dilly Dilly.  The marketing slogan was created apparently coming out of nonsense and fun.  In its campaign, Bud Light seems to want people to celebrate with a lighthearted toast of Dilly Dilly and escape the Pit of Misery.

On December 1, Modest Brewing Company in Minneapolis introduced Dilly Dilly Mosaic IIPA into the market place.  Instead of the typical “stop it or else” demand letter, Bud Light turned an infringement situation into a marketing opportunity.  Bud Light sent an actor into the Modest Brewery dressed in medieval garb to read a pronouncement from the Crown.   The Town Crier proceeded to read from a scroll, requesting Modest’s latest brew be put on a limited edition run.  The Town Crier stated that the Crown was flattered by the loyal tribute, but noted that Dilly Dilly is a motto of the Crown and disobedience would be met with additional scrolls, formal warning, and a private tour of the Pit of Misery.  As a peace offering, the Town Crier also offered two employees a free trip to the Super Bowl which is being held in Minneapolis.

The unusual cease and desist demand is achieving rave reviews on social media.   Instead of dilly dallying around in the typical strong-arm legal maneuvering, Bud Light raised a Dilly Dilly to the Modest Brewing Company.  In a creative manner, Bud Light made its point of protecting its trademark from further infringement, while generating some laughs and likely some goodwill among consumers. So, to Bud Light, Dilly Dilly!

By Sonny Chastain

General Mills filed an application to register the color yellow appearing as the uniform background on a box of Cheerios.   It contended that consumers have come to identify the color yellow specifically with Cheerios, when used in connection with the goods.  It submitted survey evidence and expert reports to support the claim of acquired distinctiveness.  However, the trademark examiner concluded that General Mills failed to prove acquired distinctiveness and that the mark fails to function as a mark.  An appeal was submitted to the Trademark Trial and Appeal Board (“TTAB”).

General Mills argued that the purchasing public recognizes the color yellow on a package of toroidal (ring or doughnut-shaped) oat-based breakfast cereal as an indicator that it is the source of the cereal.  The record showed that General Mills has sold Cheerios since 1945.  In the decade prior to 2015, General Mills spent over $1 billion in marketing yellow-box Cheerios with sales exceeding $4 billion.  However, the question was not whether consumers recognized the term Cheerios as a source indicator but whether the color yellow identifies origin.

The TTAB agreed with the examiner’s conclusion citing lack of exclusive use of the color yellow.  The Board noted that the examiner pointed to 23 cereal products that offered packaging in a similar color.  Several of the products are even offered by companies which are recognized as General Mills’ biggest competitors:  Kellogg, Post, and Quaker.  Some of General Mills’ survey subjects showed their awareness of several of the products, especially Honeycomb and Corn Pops.  Additional cereal boxes cited included Joe’s O’s, Honey O’s, Tasteeos, Honey Bunches of Oats, Crispix, and Life.  The Board concluded that General Mills is not alone in offering oat-based cereals or even toroidal shaped, oat-based cereal in a yellow package.  Thus, customers are unlikely to perceive yellow packaging as an indicator of a unique source.  While the color may be attractive and eye-catching ornamentation, it alone did not connect to a potential source.   The Board noted that while customers are familiar with the yellow color of the Cheerio’s box, the color yellow is only one aspect of the complex trade dress that includes many other features that perform as a distinguishing and source-indicating function.   It was not persuaded that customers perceive the proposed mark, the color yellow alone, as indicating the source these goods.  The Board found the yellow background did not acquire distinctiveness and does not function as a trademark.

The case teaches that it is important to recognize what mark or components thereof function to identify a source. A question to ponder is, with what features do consumers identify to connect a particular good or service with a source of origin? General Mills took an aggressive view of the source identifying capability of this color which the Board concluded was not correct.  It is possible that if additional features had been included in connection with the overall trade dress, that registration may have been possible.