Lynn Hughes and Shell

U.S. District Judge Lynn N. Hughes

In an extremely rare move, the U.S. Court of Appeals for the Fifth Circuit has removed a case from U.S. District Lynn Hughes’ docket after the Houston federal court judge declined to rule the way the appellate court wanted in a case involving Shell Exploration.

The recent decision in United States v. Shell Exploration involves a qui tam False Claims Act (FCA) action brought by two individuals against Shell alleging that the company had failed to pay the U.S. government at least $19 million in oil royalties.

The government declined to intervene in the case.

In 2012, the Fifth Circuit reversed Hughes after he issued a summary judgment for Shell dismissing the plaintiffs’ case. The appellate court concluded in a case of first impression that the FCA did not prohibit government employees from filing qui tam actions. The appellate court also concluded in that decision that Hughes erred in dismissing the case by using an overly broad standard of “public disclosure.” The FCA bars prosecution of cases based on publicly disclosed allegations.

After the case was remanded, Shell refiled a motion for summary judgment, which Hughes granted in 2014, dismissing the plaintiffs’ claims with prejudice because of the public disclosure bar. The plaintiffs appealed Hughes’ decision to the Fifth Circuit.

In a Feb. 23 opinion, the Firth Circuit again reversed Hughes.

“Shell has not pointed to a single public disclosure of the fraudulent scheme alleged in this case, and there is no basis for applying the public disclosure bar. We therefore reverse the judgment of the district court,” Judge Eugene Davis wrote in the unpublished decision.

But this time they used an “extraordinary” and “rarely invoked” appellate court power by directing the Shell case to be assigned to another judge.

“In the prior appeal, we declined to have this case reassigned to a different judge on remand. The circumstances are now different because the district court judge disregarded our clear mandate and failed to apply the legal standards we established in our opinion for public disclosure and to address the specific questions we set out in that opinion,” Davis wrote.

“Facing a lengthy and detailed summary judgment record, the district judge issued a five-page opinion with few citations to either record evidence or relevant legal authority—not surprising given that neither the summary judgment evidence nor the law to support the conclusions he reached,” Davis wrote. “The opinion consists almost entirely of conclusory statements. The district judge reached the same conclusion he reached in his previous opinion by employing the same overly broad reasoning that we rejected before.”

The decision vacates and remands Hughes’ judgment and directs the chief judge of the Southern District of Texas to reassign the case to a different district judge.

Hughes declined to comment about the decision.

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