Media outlets around Louisiana recently reported on a new program from the Louisiana Workforce Commission pursuant to which employers have the opportunity to report job applicants who are either no-shows for job interviews or who turn down job offers. Here are links to stories from WAFB in Baton Rouge, KTBS in Shreveport, KNOE in Monroe, KATC in Lafayette, and KPLC in Lake Charles.

Employers can submit these reports electronically through the Louisiana Workforce Commission website. Here are the two links to electronic reporting portals within the Louisiana Workforce Commission website.

To receive unemployment benefits, an unemployed person must seek suitable work while receiving benefits. Under this reporting program, the Louisiana Workforce Commission can investigate an unemployment recipient’s job-seeking efforts, and if the recipient has declined job interviews or job offers, the recipient may lose their unemployment benefits. This is a new program aimed at helping employers who are having difficulty filling job openings. The future will tell if the program meets its goal.

Back in March of 2023, the U.S. Supreme Court granted cert in the case of Great Lakes Insurance SE v. Raiders Retreat Realty Co., LLC (find our coverage of that grant here). Last week, the Court released its opinion in that case, a 9-0 decision in favor of the insurer-appellant. In short, the Court put the presumption back into the presumptive enforceability of choice-of-law clauses in maritime contracts.

To briefly recap the case, Great Lakes Insurance issued a maritime insurance contract for a yacht owned by Raiders Retreat Realty Co., which has its headquarters in Pennsylvania. The parties’ insurance policy had a choice-of-law clause that selected New York law to govern any disputes arising under said contract.

Subsequently, Raiders’ yacht ran aground near Fort Lauderdale, Florida, sustaining significant damage. Great Lakes denied Raiders’ insurance claim on the grounds that the yacht’s fire-extinguishing equipment was not timely recertified or inspected and that Raiders had misrepresented the state of this equipment in the past, thereby voiding the policy.

After denying the claim, Great Lakes filed a related declaratory judgment action in federal court in Pennsylvania. In response, Raiders asserted contractual counterclaims against Great Lakes under Pennsylvania law. Great Lakes then moved to dismiss the Pennsylvania-based counterclaims because they violated the policy’s New York choice-of-law clause.

The district court agreed with Great Lakes and rejected Raiders’ counterclaims. But the Third Circuit reversed, holding that the presumptive enforceability of choice-of-law clauses must yield to a strong public policy of the state where a suit is brought.

With Justice Kavanaugh delivering the opinion, the Court reversed the Third Circuit and held that choice-of-law provisions in maritime contracts are presumptively enforceable under federal maritime law, with a few narrow exceptions that did not apply to this case.

The Court drew support for this rule of presumptive enforceability from its jurisprudence regarding forum-selection clauses, such as the classic case of The Bremen v. Zapata Off-Shore Co. Ironically, Raiders had relied on The Bremen for support based on a statement from the case that a “contractual choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought.” But as the Supreme Court pointed out, that sentence referred to a conflict between federal maritime law and a foreign country’s law.

Raiders further argued that the Court’s decision in Wilburn Boat Co. v. Fireman’s Fund Insurance Co. precluded any uniform federal presumption of enforceability for choice-of-law provisions in maritime contracts. But, as the Court pointed out, Wilburn Boat was not about a choice-of-law clause; it only determined what substantive rule applied to a party’s breach of a warranty in a marine insurance policy.

The Wilburn Boat Court held that no established federal admiralty rule controlled because states historically regulated insurance and federal courts were in no position to set a nationwide standard for insurance law. Instead, the Court determined that state law governed the warranty issue.

Distinguishing Wilburn Boat, the Court explained that here, state law had no gap to fill, because there is already a uniform federal rule on the enforceability of choice-of-law provisions. And even though states primarily regulate insurance, that responsibility does not resolve which state law applies in a case.

Finally, the Court did recognize a few instances where otherwise valid choice-of-law clauses would be disregarded, such as when the chosen law contravened a federal statute on point or an established federal maritime policy. Also, there must be a reasonable basis for the chosen jurisdiction in any choice-of-law provision, though a body of law being “well developed, well known, and well regarded” is good enough.

Justice Thomas issued a concurring opinion to further highlight how Wilburn Boat “rests on flawed premises and, more broadly, how the decision is at odds with the fundamental precept of admiralty law.” He explained that the Supreme Court has retreated from Wilburn Boat and that “[l]itigants and courts applying Wilburn Boat in the future should not ignore these developments.”

Baseball superstar Shohei Ohtani recently agreed to a 10-year, $700 million contract with the Los Angeles Dodgers.  While the headline number came as a shock to even sports business nerds like us, as always, the devil was in the details: $680 million of Ohtani’s contract is deferred until after Ohtani is no longer obligated to play for the Dodgers.    

Our last post contemplated what might happen to Ohtani’s $680 million in deferred compensation if the Dodgers filed bankruptcy in 2034 (i.e., after Ohtani no longer has to play for the Dodgers, but before Ohtani’s deferred compensation kicked in) and ways Ohtani might protect himself.  If you loved that post but were left wondering “what might happen if the Dodgers filed bankruptcy before the end of the 2033 baseball season? (i.e., while Ohtani is still required to suit up under the contract),” today is your lucky day because we take that issue head on.

Ohtani’s contract provides a unique illustration of an “executory contract,” a key term in most Chapter 11 bankruptcy cases. In essence, an executory contract is one where performance remains due on both sides of the contract.  During the contract’s first 10 years (2024-2033), Ohtani’s contract is executory because both Ohtani and the Dodgers owe performance to each other – Ohtani is obligated to play baseball for the Dodgers and the Dodgers are obligated to pay Ohtani.  After that, Ohtani’s contract is not executory because only the Dodgers owe performance to Ohtani – the Dodgers must pay Ohtani $680 million, but Ohtani owes no obligation to the Dodgers.

Thus, as discussed in our earlier post, if the Dodgers were to file bankruptcy after the 2033 season (i.e., once Ohtani’s contract is no longer executory), Ohtani would be like any other creditor to whom the Dodgers owed money.  If the Dodgers were to file bankruptcy before then, however, Ohtani is a counterparty to an executory contract with a bankrupt debtor and the Dodgers (not Ohtani) would have the option to assume-and-assign, assume, or reject Ohtani’s contract.  We will discuss those in reverse order.

Rejection: When a debtor rejects a contract, the rejection serves as a material breach of the contract by the debtor that occurred immediately before the debtor filed for bankruptcy. The debtor is no longer required to perform under the contract and the non-debtor counterparty receives a claim against the debtor’s estate for its damages from that breach.

In our scenario of a Dodgers bankruptcy while Ohtani is still playing, a rejection would mean that Ohtani would become a free agent because he would have no further obligation to play for the Dodgers.  Additionally, Ohtani would have a claim against the Dodgers’ estate for the entire amount of his contract that had not yet been paid to him ($680 million-plus).[1]

Assumption: If a debtor assumes a contract, the contract continues just as it did before bankruptcy.  A debtor must take the entire contract it is assuming — it cannot pick and choose which parts of the contract it wants and which parts it does not want.  In addition, a debtor cannot assume a contract unless it promises to promptly cure any defaults under the contract (i.e., if the debtor is two months behind on payments, it must either make those payments or promise to make them promptly before it can assume the contract).  Finally, a debtor must be able to give adequate assurance that it can promptly cure and continue to perform the contract going forward.

In our scenario of a Dodgers bankruptcy while Ohtani is still playing, to assume the contract, the Dodgers would have to: (1) agree to pay all its future obligations to Ohtani ($680 million-plus); (2) provide adequate assurance to Ohtani that it could meet all its future obligations; and (3) promptly cure any payment defaults to Ohtani under the contract.  On the other hand, if the Dodgers chose to assume the contract, Ohtani would have to continue playing for the Dodgers – he cannot get out of his contract just because the Dodgers file for bankruptcy.[2]

Assumption and Assignment: In certain circumstances, a debtor can assume a contract and assign it to another party.  This is particularly common with bankruptcy sales, where a debtor will sell its assets (instead of trying to reorganize).  Since the assets might not be worth much without the executory contracts supporting them, the Bankruptcy Code authorizes debtors to assume the executory contracts and then assign them to a third-party (usually the purchaser of the assets).  Certain contracts, including most personal service contracts, cannot be assigned without the consent of the counterparty.[3]

In our scenario of a Dodgers bankruptcy while Ohtani is still playing, the Dodgers possibly could not assign Ohtani’s contract without his consent because it is a personal services contract.[4]  Thus, if the Dodgers were sold to a third-party through bankruptcy, Ohtani would have to consent to that sale before the new Dodgers owner could guarantee fans that Ohtani would play.

At this point you might be thinking, “great summary Eric and Mack, but what happens before a debtor decides to assume or reject the contract?”  Excellent question! 

The short answer is that the debtor has no obligation to perform, but the counterparty to the executory contract must continue performing.  Although the debtor has no obligation to perform, counterparties to executory contracts are entitled to compensation from the debtor for the reasonable value of the goods and services they provide during the debtor’s bankruptcy case.  Moreover, their compensation is entitled to an “administrative priority” claim against the debtor, which means their compensation will be paid ahead of most other creditors.  In a recent bankruptcy case concerning baseball,[5] a bankruptcy judge ruled (as have most bankruptcy judges that have faced similar issues) that the “reasonable value” of the services provided by MLB teams to a media company that licensed the MLB team’s rights to broadcast MLB games was the rate provided for in the contract. 

Going back to our scenario of a Dodgers bankruptcy while Ohtani is still playing; Ohtani would be required to play for the Dodgers while they decided whether to assume or reject his contract.  That said, while the Dodgers would not have any “formal” obligation to pay Ohtani his contract rate during this time, the Dodgers would have to pay Ohtani the “reasonable value” of the services he provided, which most courts would say is his “contract rate” (circular, we know).

If you find yourself as a party to an executory contract with a bankruptcy debtor, you should contact counsel.  Team Shohei – give us a shout if the front office starts to use words like “restructuring” or “right-sizing the balance sheet” in the future.  We’d love to help you out!


[1] It is worth noting that since 1993, four MLB franchises have filed bankruptcy (the Baltimore Orioles in 1993, the Chicago Cubs in 2009, the Texas Rangers in 2010, and the Los Angeles Dodgers in 2011) and not a single player contract was rejected. 

[2] Even if his contract says he can walk away if the Dodgers file for bankruptcy, federal law says that provision in the contract is void and unenforceable.

[3] See 11 U.S.C. § 365(c)(1).  This exception is one of the many arcane nuances to executory contracts in bankruptcy, which is partly why, despite their outsize importance in bankruptcy, executory contracts have been called the most “psychedelic” area of bankruptcy law.  See Jay Lawrence Westbrook, A Functional Analysis of Executory Contracts, 74 Minn. L. Rev. 227, 228 (1989). 

[4] We say possibly because most MLB contracts explicitly require the player to agree that the contract can be freely assigned (without such a clause, trades would be impossible).  Ohtani, however, has a full “no-trade” (i.e., no assignment) clause in his contract

[5] In re Diamond Sports Group, LLC, et al. (Bankr. S.D. Tex. 23-90116). 

On December 28, 2023, the United States Environmental Protection Agency (“EPA”) signed a final rule delegating primacy over the issuance and enforcement of permits for Class VI Underground Injection Control (“UIC”) wells under the Safe Drinking Water Act to the Louisiana Department of Natural Resources (“LDNR”).[1] This decision came after a lengthy review process lasting over two years and involving over 45,000 public comments. The EPA determined that Louisiana’s UIC Class VI rules enacted under the Louisiana Geologic Sequestration of Carbon Dioxide Act (La. R.S. 30:1101-1112) and Statewide Order 29-N-6 (LAC 43:XVII.Ch. 36) were as stringent as the federal rules in 40 C.F.R. Parts 144 and 146 and that Louisiana has sufficient resources to issue permits, track compliance, and enforce its program.[2] However, the EPA retains the ability to oversee the Louisiana program through sharing of permitting information, joint inspections and annual performance reviews of the state program. The EPA also retains authority to issue UIC Class VI permits on Indian lands within Louisiana. The final delegation will become effective thirty days after publication in the Federal Register.

LDNR’s UIC Class VI program includes provisions that are more stringent than those required under the EPA rules. LDNR has created a website for the Class VI program that notes the following areas where the state program is more stringent than the federal program for these wells:[3]

  • Louisiana will not grant waivers to injection depth requirements;
  • Louisiana prohibits sequestration of CO2 in salt caverns;
  • Louisiana will not issue area permits for multiple wells at once, requiring each individual well to be reviewed and permitted on its own; and
  • Louisiana requires additional measures for monitoring systems and operating requirements.

In addition, LDNR requires applicants to submit an Environmental Analysis along with their UIC Class VI permit application. The Environmental Analysis must address the following five questions as mandated by jurisprudence interpreting the Louisiana Constitution:

(1) Have the potential and real adverse environmental effects of the proposed permit activity been avoided to the maximum extent possible?

(2) Does a cost-benefit analysis of the environmental impact costs versus the social and economic benefits of the proposed activities demonstrate that the latter outweighs the former?

(3) Are there alternative activities which would offer more protection to the environment than the proposed activity without unduly curtailing non-environmental benefits?

(4) Are there alternative sites which would offer more protection to the environment than the proposed site without unduly curtailing non-environmental benefits?

(5) Are there mitigating measures which would offer more protection to the environment than the proposed activity without unduly curtailing non-environmental benefits?

Appendix II of the LDNR primacy request package to EPA indicated that an applicant’s answers to these “must provide adequate detail with sufficient justification and supporting data.” Although this was already required of LDNR through Louisiana constitutional provisions, and was committed to by LDNR in its UIC Class VI program submittal to EPA, the requirement was made explicit through an amendment to La. R.S. 30:1104.1 via Act 378 of the 2023 Louisiana Legislature.

The delegation of primacy over the Class VI UIC program to LDNR is contingent on LDNR’s compliance with the Memorandum of Agreement (“MOA”) entered between LDNR and EPA in May 2023. The MOA requires LDNR to implement an inclusive public participation process, incorporate environmental justice and civil rights considerations in the permit review processes, to undertake sufficient enforcement, and to incorporate environmental mitigation measures where warranted. As an example of the environmental justice (“EJ”) considerations, the EPA noted that LDNR committed in the MOA addendum to use the EPA EJ Screen process to identify potential environmental justice communities and to thoroughly examine the potential risks of each proposed Class VI well to minority and low-income populations where such are identified. Under the MOA, LDNR will also use the results of the environmental justice review to determine if an enhanced public comment period will be required.

It is widely believed by federal and state regulators that Class VI UIC primacy delegations such as this to Louisiana are necessary to timely implement carbon capture and sequestration projects. The EPA has issued just two final UIC Class VI permits in the last several years. Pending applications for UIC Class VI permits at twenty-two locations in Louisiana will be transferred to LDNR to complete the permitting process once the delegation becomes effective.[4] Given LDNR’s geologic expertise and its decades of primacy over the programs for Classes I through V wells, this delegation will significantly advance federal and state efforts to combat climate change. In the Preamble to the final delegation, the EPA stated:[5]

The LDNR UIC program is comprised of staff with expertise in the variety of technical specialties needed to issue and oversee Class VI permits, including site characterization, modeling, well construction and testing, and finance. LDNR’s staff competency is demonstrated via annual reviews with the EPA in accordance with the state’s minimum qualifications for education and professional experience, and requirements to be a licensed professional engineer (P.E.) or geoscientist (or work under one) in good standing with either the Louisiana Professional Engineering and Land Surveying Board or Louisiana Board of Professional Geoscientists. The EPA understands that the state of Louisiana has a plan in place to expand its program to further support Class VI activities within the state by hiring seven additional staff and third-party contractors for modeling, risk and environmental justice analysis.

Development and deployment of carbon capture and sequestration at scale is a necessary component to achieving the United States’ goals on greenhouse gas reduction. Granting primacy to LDNR, with oversight by the EPA, substantially furthers these goals.


[1] The pre-publication rule is available at State of Louisiana Underground Injection Program; Class VI Primacy (epa.gov).

[2] EPA noted in its final decision to delegate the program that LDNR has had delegation over the issuance of Class I, II, III, IV, and V wells since 1982.

[3] See: Department of Natural Resources | State of Louisiana.

[4] See: Current Class VI Projects under Review at EPA | US EPA.

[5] State of Louisiana Underground Injection Program; Class VI Primacy (epa.gov), at p. 23.

The sports world is buzzing about Shohei Ohtani’s record-setting $700 million dollar contract with the Los Angeles Dodgers.  As bankruptcy lawyers, we are abuzz thinking about the bankruptcy implications of Ohtani’s contract.  Today’s blog post will discuss what type of claim Ohtani might have if the Dodgers file for bankruptcy (again).  In the near future, another blog will discuss how contracts like Ohtani’s are treated by the Bankruptcy Code.  

In case you haven’t seen the specifics of Ohtani’s contract with the Dodgers, it obligates Ohtani to play baseball for the Dodgers for the next 10 years (2024-2033).  Over the 10 years Ohtani plays for the Dodgers, the Dodgers will pay Ohtani $2 million per year.  The Dodgers are then supposed to pay Ohtani $68 million per year for the 10 years after he’s turned 40 and has no further obligation to show up and play for the Dodgers (2034-2043).[1]   

We say he is supposed to continue receiving $68 million per year through his 40’s because things to do not always work out as planned.  Serious Dodger fans and sports-business nerds will remember that the Los Angeles Dodgers filed a chapter 11 bankruptcy petition in June 2011.  The Dodgers filed because they were on the verge of running out of cash to pay salaries. According to court filings, the three biggest drivers to the Dodgers’ 2011 bankruptcy were: (1) a decline in attendance, (2) Major League Baseball rejecting a proposed media deal with Fox Sports, and (3) a mere $20 million in deferred compensation owed to players.  In 2034, the Dodgers will owe $832 million in deferred compensation (more than 40 times the number they owed when they filed in 2011): $680 million just to Ohtani and another $152 million to other players.[2] That deferred compensation number is expected to increase as the Dodgers try to attract more high-quality players with deferred-compensation-heavy contracts to help them win now and pay later.

So, what happens if the Dodgers organization finds itself in a cash crunch again in a few years and has to file bankruptcy in 2034?  Do they have to keep paying $68 million per year to a 40-year old, presumably retired Ohtani?

Not necessarily. If the Dodgers file bankruptcy in 2034 (or later years), Ohtani will have the right to file a claim in the bankruptcy case for the amount that he is due, just like all other creditors.  In most bankruptcy cases, secured claims (i.e., claims backed by collateral) get paid in full, and unsecured claims (i.e., claims by creditors who do not have collateral) get whatever is left over.  Sometimes unsecured claims are paid in full, but more often they are paid pennies on the dollar of what the creditor is owed.

Thus, from the bankruptcy lawyer’s perspective, we are particularly interested in what collateral, if any, Ohani received to secure his deferred compensation. Ohtani and the Dodgers have been quiet about the details of the contract other than the headline dollar amounts, leaving us to wonder whether Ohtani got a mortgage on Dodger Stadium (or some other real estate)[3] to secure his $700 million dollar contract?  And if he did get a mortgage, did the current mortgage holders agree to subordinate to Ohtani?  Unlikely!  Did Ohtani get personal guarantees from each member of the Dodgers’ owner, Guggenheim Baseball Partners, for his pro-rata share of the $680 million to be paid to Ohtani during his 40s?  Again, unlikely!  Did he get any collateral, or is he at risk of having an unsecured claim for $680 million dollars after spending ten years as the anchor of the Dodgers’ line up (and maybe rotation)?  And if he didn’t get collateral, did he get a very clear memo from his agent/legal team explaining the payment risk that he accepted in his contract? (Their malpractice carriers certainly hope so!)

Ohtani could also reduce payment risk by means other than getting a security interest in the Dodgers’ property.  For example, according to Forbes, the Dodgers are required to fund the “present value” of their deferred compensation obligations to Ohtani by July 1, 2026.  Forbes estimates that would require the Dodgers to fork over $297 million today.  If the Dodgers were to put that $297 million into an annuity to be paid directly to Ohtani, the annuity would likely belong to Ohtani – no matter whether the Dodgers filed bankruptcy and even though the Dodgers funded the annuity.  On the other hand, if the Dodgers simply bought treasury bonds or an annuity for themselves, Ohtani would be like every other unsecured creditor with payment risk – potentially left holding an empty bag in the event of a bankruptcy.  


[1] Shohei Ohtani’s Dodgers deal and deferred money, explained (mlb.com)

[2] The Dodgers owe two of their other superstars –Mookie Betts and Freddie Freeman –significant deferred compensation.  The Dodgers owe Betts $120 million in deferred compensation starting in 2034 (the same year as Ohtani) and owe Freeman $57 million in deferred compensation starting in 2028. 

[3] The Dodgers’ owner – Guggenheim Baseball Management LLC – owns hundreds of acres of prime Los Angeles real estate surrounding Dodger Stadium. 

In today’s legal landscape, jury awards to personal injury plaintiffs are trending upwards.  Studies show that “nuclear verdicts” are increasing in prevalence as jurors grow more critical of corporate defendants and are increasingly persuaded by provocative trial tactics from plaintiff attorneys.  However, recent decisions from Louisiana and Texas show that some courts are bucking the trend by scrutinizing and, in some instances, curtailing these excessive awards.  The analysis below examines three such cases—Gregory v. Chohan (Texas Supreme Court),[1] Warner v. Talos ERT LLC (Western District of Louisiana),[2] and Henry Pete v. Boland Marine and Manufacturing Company, LLC (Louisiana Supreme Court)[3]—and focuses on the courts’ rationales for reducing the award of damages in each case.

I. Texas Supreme Court: Gregory v. Chohan (2023)

At the outset, it is important to note that the Chohan case is an important development in the law on awards of noneconomic damages, but it does not have the same precedential effect of decisions from a majority of the Texas Supreme Court.  This is because three justices did not participate in the decision, and as a result no more than four justices joined in any section of the lead opinion.  Thus, the requisite five justices did not join to deliver a majority opinion of the court.  Instead, Chohan represents a plurality opinion whose rationale will no doubt prove persuasive to lower courts throughout Texas, but the decision is not technically binding.

The main issue discussed in Chohan was whether the evidence presented at trial was legally sufficient to support the award of noneconomic damages, such as mental anguish or loss of companionship.  Because there was no majority on this question, the kind of proof and the amount needed to support an award of noneconomic damages remain partially undetermined.  But the judgment reached in Chohan—reversing an award of $15 million in noneconomic damages—is one lower courts will no doubt keep in mind when faced with similar awards.

The Chohan case arose from a fatal accident on an icy, unlit stretch of Interstate 40 near Amarillo, Texas.  An 18-wheeler driven by Sarah Gregory for her employer New Prime, Inc. jackknifed across multiple lanes of traffic.  Afterwards, six tractor-trailers and two passenger vehicles crashed into Gregory’s truck or each other, causing four fatalities and numerous injuries.

Gregory and New Prime settled with all the plaintiffs except the wife and family of Bhupinder Deol, one of the drivers killed in the accident. At trial, the jury awarded just over $15 million to Deol’s wife and family for mental anguish and loss of companionship.

The defendants appealed the size of the noneconomic damages award to the Dallas Court of Appeals.  The court decided the case en banc and affirmed the jury’s award, holding that the award was not “flagrantly outrageous, extravagant, and so excessive that it shocks the judicial conscience.”  The defendants then raised the same issue before the Texas Supreme Court.

Justice Blacklock announced the Texas Supreme Court’s plurality opinion, joined by Chief Justice Hecht and Justice Busby, and by Justice Bland in part.  The key issue before the court was whether the plaintiffs had demonstrated a rational connection, grounded in the evidence, between the injuries suffered and the dollar amount awarded. This rational connection had to support not only the existence of a compensable injury, but also the amount awarded in compensation.

The court held that the plaintiffs had not provided such connection as to the amount of the damages awarded, namely, $15 million.  The court explained that counsel for plaintiffs had not presented any evidence that would justify the amount awarded, and instead provided arguments to the jury that had nothing to do with how to calculate the proper amount of compensation.

For example, counsel referred to the value of a Boeing F-18 fighter jet ($71 million) and a Mark Rothko painting ($186 million).  Another argument presented to the jury was to give the defendants their “two cents worth” for every one of the 650 million miles that New Prime’s trucks drove during the year of the accident.

The court noted that these arguments had nothing to do with compensating the plaintiffs for their injuries, and instead spoke more to punitive concerns than compensatory ones.  The kind of evidence that is relevant on this point is “direct evidence supporting quantification of an amount of damages, such as evidence of the likely financial consequences of severe emotional disruption in the plaintiff’s life.” Direct evidence is not required, and precise, mathematical certainty is not possible.  Nevertheless, some rational basis must underly the amount of damages, the court noted.

At trial, Deol’s wife testified extensively as to the effect of her husband’s death on herself, her three children, and Deol’s parents.  The court determined that this testimony no doubt gave the jury ample evidence regarding the existence of compensable mental anguish, but it did not serve as evidence to justify the amount awarded.

The Dallas Court of Appeals erred by simply reviewing whether the amount awarded “shocked the conscience” or arose from bias or prejudice.  “Passion, prejudice, or improper motive” remains an independent basis for reversal, as does the “shock the conscience” standard.  But an appellate court must also determine whether there is a rational connection between the amount awarded and the injuries suffered.  Because no such rational connection existed in this case, the Texas Supreme Court reversed the award of noneconomic damages.

While the Chohan court did not reach a majority opinion, a majority of the justices appeared to agree that the arguments presented by plaintiffs’ counsel at trial were improper and could support reversal of the damages award.  This suggests that lower courts will be more willing to scrutinize arguments that have improper or ulterior motives besides helping the jury arrive at a proper figure for compensation.  Defendants should be ready to move for a new trial and/or a remittitur in the event plaintiffs fail to provide some rational connection between the injuries and damages requested.

II. Western District of Louisiana: Warner v. Talos ERT LLC (2023)

On the topic of courts reversing excessive damages awards, the Western District of Louisiana recently did just that in the case of Warner v. Talos ERT LLC.  The case involved a 2018 workplace accident on an oil and gas production platform operated by Talos ERT, LLC in the Gulf of Mexico.  The plaintiffs were the family members of an offshore worker who suffered fatal injuries when the rope he was using to move heavy pipe failed and caused the pipe to fall.

After trial, the jury awarded $20 million in general damages to the decedent’s minor son, and Talos filed multiple post-trial motions, including a motion seeking a remittitur on the issue of general damages.  Under Louisiana law, a court may intrude into the province of a jury “only when the award is, in either direction, beyond that which a reasonable trier of fact could assess for the effects of the particular injury to the particular plaintiff under the particular circumstances.”

The court held that the evidence did not substantiate an award of $20 million.  Under the Seventh Amendment, the court had to offer the plaintiff the alternative of a lower award or a new trial.  In trying to determine the proper amount of damages, the court applied the Fifth Circuit’s “maximum recovery rule,” under which verdicts are permitted so long as they are 150% of the highest inflation-adjusted recovery in an analogous, published decision. 

The court identified a case from 2013 in which a child living with the non-decedent custodial parent won $2,500,000 in wrongful death damages.  Applying the maximum recovery rule, the court adjusted this award for inflation and then multiplied it by 150%. Thus, the figure came out to $4,955,350.67. Because Talos was allocated 88% fault, the final award was $4,360,708.59.

The Warner decision reveals that the Western District of Louisiana is not reluctant to enforce Louisiana law prohibiting awards “beyond that which a reasonable trier of fact could assess.”  This is a promising trend as plaintiffs’ attorneys seek higher and higher jury awards.

III. Louisiana Supreme Court: Henry Pete v. Boland Marine and Manufacturing Company, LLC, et al. (2023)

Like in Chohan and Warner, the Louisiana Supreme Court recently reduced an alarming general damages award in Henry Pete v. Boland Marine and Manufacturing Company, LLC, et al.  

The plaintiff, Henry Pete, worked as a longshoreman in the Port of New Orleans from 1964 to 1968 before eventually becoming a practicing chiropractor.  After being diagnosed with mesothelioma in 2019, he filed suit against his former shoreside employers in the Civil District Court in New Orleans.  The jury rendered a verdict in favor of the plaintiff against one of the defendants, Ports America Gulfport, Inc., awarding the plaintiff $9.8 million in general damages.

The Louisiana Fourth Circuit Court of Appeal upheld the verdict, rejecting Ports America’s assignment of error as to the excessiveness of the general damage award.  In its decision, the Fourth Circuit noted that Ports America failed to make a showing that the $9.8 million general damages award “shocked the conscience” when considering the pain and suffering caused by the plaintiff’s condition.  Therefore, the court noted, the evidence did not support a finding that the jury abused its discretion.

The Louisiana Supreme Court granted certiorari to weigh in on the quantum issue.  Like the Chohan and Warner courts, the Boland Marine court found the general damages award excessive. But the Boland Marine court’s analysis was distinguishable and is thus noteworthy.  Writing for the majority, Justice McCallum noted that Louisiana Civil Code article 2324.1 vests the jury with “much discretion” in determining the amount of general damages, an inquiry which is speculative in nature and contingent on the facts and circumstances of each particular case. 

Justice McCallum then questioned the effectiveness of Louisiana’s “clear abuse of discretion” standard of appellate review for general damages, dubbing it “redundant and unnecessary” for courts to scrutinize the fact finder’s seemingly boundless discretion.  In other words, appellate judges speculating on top of the jury’s speculation only compounded the issue. 

The Boland Marine court then announced its solution: appellate courts must consider awards of general damages in similar, prior cases to add objectivity to the “abuse of discretion” analysis.  If an abuse of discretion is found, the court must use the prior awards as guideposts and amend the general damages award to the highest point that is reasonably within the trial court’s discretion.  The court cautioned that its revised standard of review did not displace the prior analysis; courts must still consider the facts and circumstances unique to each particular case.  The additional consideration of precedent cases serves to add much-needed objectivity and neutrality to the review process.  

The Boland Marine court applied its new analysis to the facts before it.  It first reviewed the record evidence and testimony about the plaintiff’s condition, then surveyed nine Louisiana state court mesothelioma cases dating back to 2015, in which awards of general damages ranged from $1.5 million to $3.8 million.  The court noted that the plaintiff’s significant mental and physical trauma warranted a substantial general damages award, but it could not reconcile the trial court’s $9.8 million award with those from prior cases—noting that “the record evidence of Mr. Pete’s injuries is not so dissimilar to these other cases to warrant an award so greatly exceeding the range of these cases.”  Thus, the court found that the trial court abused its discretion and reduced the $9.8 million general damages award to $5.0 million, which it found to be the highest reasonable award within the jury’s discretion.

It is said that two’s a coincidence, three’s a trendChohan, Warner, and Boland Marine exemplify a discernable pattern in which recent Louisiana and Texas courts have scrutinized and reduced excessive damages awarded to personal injury plaintiffs.  These cases mark a positive development in today’s climate, in which “nuclear verdicts” are becoming increasingly prevalent. 


[1] 670 S.W.3d 546 (Tex. 2023).

[2] No. 18-CV-01435, 2023 WL 6340422 (W.D. La. Sept. 28, 2023).

[3] 2023-00170 (La. 4/18/23); 359 So. 3d 498.

Kean Miller is closely following the recent challenges to the Chevron Deference standard established by the Supreme Court in Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). As applied by federal courts for the last four decades, the Chevron Deference standard first requires that a court determine whether a statute is ambiguous. If the statute is ambiguous, the federal court defers to the agency’s interpretation of the statute. If the statute is not ambiguous, the federal court applies the clear intent of Congress under the principles of statutory interpretation. In recent years, plaintiffs and public interest groups have increasingly called for the Supreme Court to overturn Chevron.

As previously reported, a group of plaintiffs, in the Loper Bright Enterprises v. Raimondo, directly challenged the Chevron Deference standard arising out of an agency’s interpretation of certain provisions in the Magnuson-Stevens Act. Within the last month, the Supreme Court granted writ to hear a second case, Relentless Inc. v. U.S. Department of Commerce, which challenges Chevron Deference on the same grounds as Loper. The Loper and Relentless cases both seek reversal of Chevron and abandonment of agency deference.

As background, the Loper and Relentless cases arise out of the National Marine Fisheries Service’s interpretation of the Magnuson-Stevens Act and the apparent statutory silence related to the funding of regulatory compliance monitors. The agency’s interpretation of a statutory rule would require fishermen to pay part of the costs for maintaining federal compliance monitors on their ships. The Plaintiffs have appealed (i) the agency decision and interpretation of the statute; and (ii) the deference given to the agency’s interpretation under Chevron. The Plaintiffs request the Court abandon Chevron and clarify the statutory rule at issue.

With Chevron Deference directly before the Supreme Court, multiple advocacy groups, including former state supreme court justices, Advancing American Freedom, Buckeye Institute, New England Fishermen, Southeastern Legal Foundation, and Ohio Chamber of Commerce, have filed amicus briefs arguing for the departure and/or overruling of Chevron Deference. Within these briefs, the groups strenuously argue for the reversal of Chevron in order to hand statutory interpretation back to the federal courts without any deference to agency decisions or interpretations of federal statutes.

The brief filed by former state supreme court justices argues for a more workable standard that would allow judges to interpret statutes based on general principals of law without giving unbridled deference to the agency. The judges further argue that Chevron Deference undermines the Constitution’s structure and scheme to preserve liberty and guard against federal abuse of power by improperly expanding agencies regulatory authority. The former state supreme court justices highlight that the type of deference Chevron provides ultimately leads to inconsistent findings among the federal judiciary.

The Advancing American Freedom, New England Fishermen, Buckeye Institute, and Southeast Legal Foundation groups echo the former state supreme court justices’ arguments claiming that Chevron Deference is unconstitutional and unworkable. Specifically, the New England Fishermen and Southeast Legal Foundation argue that Chevron requires lower courts to accept an agency’s determination and shrink the court’s duty to interpret statutory text.

Although Chevron has come under scrutiny in more recent years and is ripe for consideration, many of the criticisms fail to consider that Chevron has a failsafe to avoid the impacts of an agency’s unreasonable statutory interpretation. Even in the face of the deference given to agency interpretation of ambiguous statutory text, a reviewing court can still overturn an agency’s unreasonable interpretation.

Importantly, the Chevron standard recognized that agencies have specialized knowledge and experience regarding how to implement and interpret ambiguous policies, rules, and statutory text. Do agencies always get it right? No; however, an agency is in a better position to interpret and apply an ambiguous statute based on its expertise and specialized knowledge – expertise and specialization that courts may not possess. Chevron Deference considers an agency’s expertise and provides adequate deference to the agency’s decisions. Nonetheless, providing deference does not give an agency unbridled authority or allow a federal court to rubber stamp an agency’s interpretation that is completely unreasonable and unworkable.

Although many theorize the Court will overrule Chevron, it is equally possible the Court will sidestep the issue, as the Court has done in the past, and maintain Chevron Deference while finding the agency’s interpretation unreasonable. Kean Miller will continue to follow the Loper and Relentless cases which will be set for oral argument in January 2024.

In the wake of the COVID-19 pandemic, the rise of telehealth, and its subset, telemedicine, has been significant.  Medical practitioners need to pay attention to the shifting telehealth landscape on topics such as licensing, exceptions to in-person care, acceptable electronic communication technology, labeling of visits, prescription drug monitoring program queries, and record-keeping to maintain proper documentation and safeguard from potential prosecution.

In the federal regulatory space, on October 10, 2023, DEA, in concert with other federal regulators, issued a second temporary rule (88 Fed. Reg. 69879) extending COVID-19 telemedicine flexibilities for prescribing controlled substances until December 31, 2024.  Meanwhile, DEA and other federal regulators are evaluating thousands of public comments to determine implementation of a final set of telemedicine regulations under the Ryan Haight Online Pharmacy Consumer Protection Act of 2008.

At the state regulatory level, legislatures are updating telehealth laws.  In June of 2023, the Louisiana Legislature passed ACT 322 (2023 Reg. Sess. S.B. 66) which was signed into law by the Governor and will become effective on January 1, 2024.  Among other things, the new law requires relevant state agencies or professional/occupational licensing boards to promulgate rules for telehealth.

While federal regulators largely acknowledge the benefits of increased access for patients, they are wary of fraud and abuse, issuing a “Special Fraud Alert” in 2022 to medical providers entering into agreements with telehealth companies HHS-OIG Special Fraud Alert.  When deciding to embark on a telehealth investigation, federal agents will likely be looking at a practitioner’s telehealth referral pipeline, including how entities advertise and whether they only service federal health care beneficiaries, how much contact each patient has with a medical practitioner before medical necessity determinations, whether compensation is based on volume of items ordered, and if the telehealth company focuses only on providing one class of products.  In the enforcement crosshairs are diabetic supplies, durable medical equipment, genetic testing, urine screen testing, and prescription pain creams.

The latest large tele-fraud scheme charges surfaced in Massachusetts in July of 2023.  In U.S. v. David Santana, federal prosecutors charged the owner and operator of two telemedicine companies with conspiracy to commit health care fraud (18 U.S.C. § 1349) in connection with $44 million in claims to Medicare.  Prosecutors allege the scheme involved several steps.  Prosecutors allege telemarketers called and obtained information from Medicare beneficiaries.  Beneficiary information was then entered into a physician order.  The physician order was made to appear as though the practitioner had personally examined and treated the beneficiary.  Working with a medical staffing company, practitioners were sent pre-populated orders to authorize medically unnecessary durable medical equipment or genetic testing despite the lack of a qualifying telemedicine consultation.  Prosecutors also allege that Defendant paid kickbacks for beneficiary information sufficient to create and obtain signed physician orders, and received kickbacks for durable medical equipment and genetic testing orders, presumably from equipment and testing providers.

In perhaps the largest dollar tele-fraud case of 2023 ($1.9 billion), in U.S. v. Brett Blackman, et al., Miami federal prosecutors indicted three executives allegedly associated with a web of data, healthcare compliance, equipment supply, and telemarketing companies.  Prosecutors allege that defendants identified and targeted federal health care beneficiaries using advertising campaigns for free or low-cost medical equipment and prescription creams, generated physician orders and prescriptions, sold the orders to equipment suppliers, pharmacies, and telemarketing companies in exchange for kickbacks, then executed sham contracts and invoices to conceal the sale of orders.  The healthcare compliance company was allegedly an internet-based platform which prosecutors state was programmed to generate fraudulent orders for practitioners paid by telemedicine companies to sign.  The Indictment also alleges that physicians signed the orders after a brief call or no interaction with the beneficiary at all, and without regard to medical necessity.  Trial is scheduled for August 12, 2024.

Closer to home, the Gulf Coast Strike Force, composed of DOJ prosecutors and agents from HHS-OIG, FBI, IRS-CI, and the various state Medicaid Fraud Control Units in Louisiana, Mississippi, and Texas, has been actively investigating and prosecuting alleged genetic testing schemes.  In U.S. v. Jamie McNamara, federal prosecutors in New Orleans indicted the owner of laboratory companies and other businesses. The sprawling 30-page Indictment outlines an alleged $176 million scheme involving un-named co-conspirators, concealment of ownership interest, call centers with pre-approved scripts, a Florida-based telemedicine company, and kickbacks to marketers, call centers, and telemedicine companies in exchange for referring beneficiaries and physician orders for genetic testing.  Trial is scheduled for June 2024.

In U.S. v. David Thigpen, the Gulf Coast Strike Force obtained a similar telemedicine-based Indictment against a Hammond man who owned and operated urine drug and genetic testing laboratories in Louisiana and Mississippi.  The defendant has pled guilty to one count of conspiracy to commit health care fraud (18 U.S.C. § 1349) and is scheduled for sentencing on January 9, 2024.

Although many of the latest healthcare fraud cases involve old themes, namely, allegations of kickbacks, questionable medical necessity determinations, and limited or no interaction between practitioners and patients, moving forward medical practitioners need to assess and understand DEA’s anticipated final telemedicine rule(s) in conjunction with state law and licensing board rules, including the limits on electronic visit prescribing authority, and ensure that any such visits are properly documented and designated as telehealth.

The Oil Pollution Act of 1990 (known as “OPA 90”) and the Comprehensive Environmental Response, Compensation, and Liability Act (known as “CERCLA”) are two federal environmental laws with significant effects on businesses and individuals across the nation. OPA 90 provides a remedial scheme that apportions the liability and costs of oil spills among responsible parties. CERCLA does the same but for spills of “hazardous substances,” a term of art that is defined in the statute.

But what if there is a spill that is a mix of oil and hazardous substances? Which law governs, OPA 90 or CERCLA? That is the question answered recently by the U.S. Fifth Circuit in the case of Munoz v. Intercontinental Terminals Co.[1] The court’s answer: CERCLA.

The case arose out of a fire that broke out at Intercontinental Terminals Company’s chemical-storage facility at Deer Park, Texas. There was an allegation that during the ensuing battle to control the fire, various tank products, fire water, and firefighting foam accumulated behind ITC’s containment wall. Later, damage to this wall caused it to collapse, allegedly releasing various contaminants into the Houston Ship Channel.

Crucially, subsequent testing by the Texas Commission on Environmental Quality revealed that the spill was oil mixed with hazardous substances. About a year later, various plaintiffs sued ITC under OPA 90, seeking to recover economic losses due to interruptions of their business caused by closures of the Houston Ship Channel.

OPA 90, unlike CERCLA, allows for recovery of purely economic losses. For that reason, the plaintiffs brought OPA 90 claims, arguing that OPA’s definition of “oil” includes mixtures of oil and hazardous substances. ITC disagreed and moved for summary judgment on the issue of OPA 90’s applicability.

The district court granted ITC’s motion, and the plaintiffs appealed, teeing up the issue for the Fifth Circuit. As with all legitimate statutory interpretation, the court started with the text of the law. CERCLA, which was passed before OPA 90, expressly excludes “petroleum, including crude oil” from its definition of “hazardous substance.” But it does not exclude mixtures of oil and hazardous substances. In fact, before OPA 90 was passed, courts interpreted CERCLA’s definition of “hazardous substance” to include such mixtures.

Because OPA 90 was passed against this backdrop, the court could reasonably assume that Congress was aware of the accepted interpretation of CERCLA when drafting OPA 90. And OPA 90’s definition of “oil” expressly excludes any “hazardous substance” under CERCLA. The statute provides:

“oil” means oil of any kind or in any form, including petroleum, fuel oil, sludge, oil refuse, and oil mixed with wastes other than dredged spoil, but does not include any substance which is specifically listed or designated as a hazardous substance under [CERCLA].

33 U.S.C. § 2701(23). The plaintiffs, however, argued that a mixture of oil and hazardous substances was not “specifically listed” under CERCLA, so OPA 90’s hazardous-substance exclusion did not include ITC’s mixed spill.

The court rejected this clever argument. It reasoned that the Ninth Circuit, the Fifth Circuit, and the EPA had interpreted CERCLA’s definition of “hazardous substance” to include mixtures of oil and hazardous substances. Therefore, when Congress later excluded hazardous substances from OPA 90’s purview, it did so knowing that exemption included commingled spills. Further, OPA 90’s legislative history revealed that Congress intended for OPA 90 and CERCLA to be mutually exclusive.

The plaintiffs also argued that the court’s interpretation of OPA 90 incentivizes the intentional or reckless commingling of oil with hazardous substances so that the responsible party can avoid liability for economic losses under OPA 90. The Fifth Circuit explained that while this might amount to a questionable policy decision under the law, it is not so absurd as to overcome the plain language of OPA 90, interpreted in light of the backdrop of CERCLA and its accepted meaning.

The Munoz case does create a disparity in potential liabilities for different parties. A party responsible for an unmixed spill of oil may be liable for pure economic losses under OPA 90, while a party responsible for a mixed spill may be liable under CERCLA, which does not include pure economic losses.


[1] Munoz v. Intercontinental Terminals Co.

A Louisiana car dealership’s Cyber Liability policy does not cover contractual reimbursements owed to a lender by that dealership following a “touchless” online vehicle purchase utilizing identity theft. During the pandemic, the dealership created a “touchless” process whereby an online buyer would submit a credit application to a lender. If approved, the buyer and the dealer would complete the paperwork electronically or by mailing documents. Once all documents were executed, the lender would then tender the purchase price to the dealer, who would then assign the credit agreement to the lender. The buyer would then arrange transport of the newly purchased vehicle via a third party.

Eventually, after no payments were made on certain transactions, the lenders discovered that those transactions were made with fake or stolen identities and sought reimbursement from the dealer under the terms of their agreements. The dealership then sought coverage for these payments from two carriers under certain Cyber Liability policies who denied coverage. Ruling on a Rule 12(b)(6) Motion to Dismiss, Judge Cain of the United States District Court for the Western District of Louisiana agreed that there was no coverage under the Cyber Liability policy provisions as to third-party and first-party coverage.

Regarding the third-party coverage, the Cyber Policy stated that it provided coverage for “…claim expenses and damages that you become legally obligated to pay resulting from a claim against you…” Allegations that the dealership was contractually obligated to remit the purchase price to the lender were not “facts that can be construed as indicating there is a claim against it causing it to be legally obligated to pay.”

As to the first-party claims, the carriers argued that the policy did not provide coverage for what was essentially a vehicle theft and that the allegations did not meet the necessary coverage triggers for any of the numerous fact-specific coverage sections of the policy. In particular, the dealership argued that the loss could be considered a “Funds Transfer Loss” under the Cyber Policy’s coverage for “Funds Transfer Fraud.” That policy defined “Funds transfer loss” as “loss of money… directly resulting from funds transfer fraud…” “Fund transfer fraud” is defined as:

Funds transfer fraud means a fraudulent instruction transmitted by electronic means, including through social engineering, to you or your financial institution directing you, or the financial institution, to debit an account of the named insured or subsidiary and to transfer, pay, or deliver money or securities from such account, which instruction purports to have been transmitted by an insured and impersonates you or your vendors, business partners, or clients, but was transmitted by someone other than you, and without your knowledge or consent. The financial institution does not include any such entity, institution, or organization that is an insured.

The dealership’s position was that the contractual reimbursement owed by the dealer to the lender was a “Funds transfer loss” because the “loss” because it was a “loss” of money as to the dealership. The court read the language in the policy’s definition of “Funds transfer fraud,” as necessarily requiring a “fraudulent instruction” directing the insured to debit its account. As such, the court found that the claims did not fall within the first-party coverage provisions of the Cyber Policy and that there was no coverage for the loss.

The matter is entitled Benoit Ford LLC et al v. Lexington Insurance Co. et al., 22-CV-06024 and is pending in the United States District Court for the Western District of Louisiana, Lake Charles Division. The Memorandum Ruling was issued on October 2, 2023.

The Fifth Circuit has previously ruled that a substantially similar provision did not cover a loss stemming from a cybercrime whereby false information was provided to an insured changing vendor payee information and subsequent payments issued to the false vendor account were made with the insured’s knowledge and consent. Mississippi Silicon Holdings, LLC v. Axis Insurance Company, 843 Fed. Appx. 581 (5th Cir. 2021). But see, Medidata Solutions, Inc. v. Federal Insurance Co., 268 F.Supp. 3d 471, 480 (S.D.NY 2017) (finding coverage under a Fund Transfer Fraud provision for identity theft of a corporate executive: “The fact that the accounts payable employee willingly pressed the send button on the bank transfer does not transform the bank wire into a valid transaction. To the contrary, the validity of the wire transfer depended upon several high-level employees’ knowledge and consent which was only obtained by trick. As the parties are aware, larceny by trick is still larceny.”)