CONSTITUTIONAL LAW: Court deems ban on home distilling operations unconstitutional.
McNutt v. U.S. D.O.J. (5th Cir. No. 24-10760). The Fifth Circuit held unconstitutional the federal prohibition on home distillation of consumable spirits, concluding that 26 U.S.C. § 5178(a)(1)(B) and § 5601(a)(6) exceeded Congress’s powers under the Taxation and Necessary and Proper Clauses.
The court first held the plaintiffs had standing based on credible threats of enforcement, including prior warnings issued by federal regulators. On the merits, the opinion acknowledged Congress’s longstanding authority to tax distilled spirits but concluded the categorical residential-distillation ban swept beyond what was necessary to support tax collection. Although the government argued the statute prevented tax evasion and protected revenue, the ban was not a valid exercise of the taxing power because it did not raise revenue, instead preventing taxable spirits from coming into existence and criminalizing conduct outright. Without a “limiting principle” to the government’s argument, the statutes merely functioned as an impermissible federal police regulation rather than a revenue-collection regime.
QUI TAM: Court rejects False Claims Act based on “reverse false claims” theory.
United States ex rel. Palmer v. Tata Consulting Services, Ltd. (5th Cir. No. 25-40368). The Fifth Circuit affirmed dismissal of a qui tam action alleging that Tata made “reverse false claims” under the False Claims Act (FCA) by fraudulently obtaining cheaper visa classifications and underpaying foreign workers. The relator alleged Tata improperly used B-1 and L-1A visas instead of more expensive H-1B visas to avoid higher visa fees and payroll-tax obligations.
The allegations failed because the FCA requires an established, present “obligation to pay or transmit money” to the government. Tata never applied for H-1B visas, so it had no legal obligation to pay H-1B-related fees. Likewise, although Tata allegedly underpaid workers in violation of immigration regulations, the FCA does not convert hypothetical wage obligations into tax obligations on wages never actually paid.
Thus, even assuming visa fraud occurred, liability attaches only when a false claim deprives the government of money or property. The panel repeatedly distinguished underlying misconduct from actionable FCA claims, reinforcing the Fifth Circuit’s insistence on payment obligations that are established and present, not merely potential or contingent.
MANDAMUS: Panel finds that district court misapplied court-congestion factor in Section 1404(a) transfer analysis.
In re Google LLC (5th Cir. No. 25-40788). The Fifth Circuit granted mandamus and ordered transfer of an antitrust case from the Eastern District of Texas to the Northern District of California, concluding the district court misapplied 28 U.S.C. § 1404(a)’s transfer factors. Branch Metrics sued Google in Texas based largely on evidence developed in prior federal antitrust litigation. Google sought transfer to California, where most sources of proof were located.
Over Judge Higginson’s dissent, the majority held the district court erred by treating court-congestion statistics as weighing against transfer in a complex case. Such metrics are speculative and particularly unreliable in discovery-intensive litigation, and the court effectively allowed that single factor to override the other factors, which either favored transfer or were neutral. The majority opinion thus reflects that plaintiffs may strategically select favorable fora, but judges must faithfully apply transfer doctrine without allowing docket-speed considerations to trump other factors. And Clayton Act claims warrant no heightened deference.
FIRST AMENDMENT: En Banc Fifth Circuit upholds Ten Commandments classroom display.
Nathan v. Alamo Heights ISD (5th Cir. No. 25-50695). The en banc Court upheld Texas S.B. 10, which requires public-school classrooms to display the Ten Commandments, vacating a preliminary injunction entered on Establishment Clause and Free Exercise grounds. Importantly, the court found the Texas statute ripe for review because it prescribed a uniform display requirement, unlike a similar Louisiana law previously dismissed as unripe. Judge Duncan’s majority opinion held that modern Establishment Clause analysis is governed by the historical-tradition framework articulated in Kennedy v. Bremerton. The Supreme Court’s earlier Stone v. Graham precedent, depending on the now-abrogated Lemon test, no longer controlled.
The court rejected a Free Exercise challenge, distinguishing Mahmoud v. Taylor on the grounds that S.B. 10 does not create a coercive religious curriculum, authorize proselytizing, or require students to affirm or practice religion. The majority thus framed the dispositive merits question as whether S.B. 10 resembles a founding-era “establishment of religion.” Surveying historical practices, the majority concluded that religious establishments historically involved coercive features like mandatory worship, taxation supporting clergy, punishment of dissenters, or governmental control over doctrine. S.B. 10 did none of those things. Nathan signals historical coercion—not mere religious content—as a key consideration of future Establishment Clause analyses in the Fifth Circuit.
.png)
