author: PRISCILLA R. OWEN, Circuit Judge:

text:
    Troy CLARK, Petitioner-Appellant, v. Lorie DAVIS, Director, Texas Department of Criminal Justice, Correctional Institutions Division, Respondent-Appellee.
    No. 14-70034
    United States Court of Appeals, Fifth Circuit.
    Filed March 10, 2017

      David R. Dow, University of Houston, Law Center, Houston, TX, for Petitioner-Appellant.
    Stephen M. Hoffman, Assistant Attorney General, Office of the Attorney General for the State of Texas, Austin, TX, for Respondent-Appellee.
    Before STEWART, Chief Judge, and HIGGINBOTHAM and OWEN, Circuit Judges.
   PRISCILLA R. OWEN, Circuit Judge:

Troy Clark, convicted of capital murder and sentenced to death in Texas state court, appeals the district court’s denial of his Federal Rule of Civil Procedure 60(b)(6) motion for relief from the district court’s judgment denying his federal habe-as petition. Clark contends that his state habeas counsel, who was also his federal habeas counsel, was ineffective because he failed to investigate fully, and consequently failed to present fully, a claim that Clark’s trial counsel was ineffective. The federal district court denied habeas relief; this court affirmed the district court’s judgment; and the Supreme Court denied Clark’s petition for certiorari.

The Rule 60(b)(6) motion is based on the change in decisional law effectuated by the Supreme Court’s decision in Trevino v. Thaler, which held that when “it [is] highly unlikely in a typical case that a defendant will have a meaningful opportunity to raise a claim of ineffective assistance of trial counsel on direct appeal,” a habeas petitioner’s procedural default of a claim not presented during an initial-review collateral proceeding can be excused if the default was caused by state habeas counsel’s ineffectiveness. This holding was an extension of the Supreme Court’s reasoning in Martinez v. Ryan.

After the Trevino decision issued, the state habeas court appointed new counsel for Clark, and Clark filed a successive claim for habeas corpus relief in state court, contending that a more fulsome ineffective-assistance-of-trial-counsel claim should be considered by the state courts, in light of Martinez and Trevino. The Texas Court of Criminal Appeals dismissed that petition as an abuse of the writ. Clark proceeded to federal district court and filed a Rule 60(b)(6) motion for relief from the district court’s prior denial of habeas relief. Clark contended that his counsel in the federal habeas proceeding had a conflict of interest because he could not be expected to argue his own ineffectiveness as state habeas counsel. The district court denied the motion and declined to issue a certificate of appealability (COA). We granted a COA, and we now affirm the district court’s judgment. The district court did not abuse its discretion in concluding that Clark’s Rule 60(b)(6) motion was untimely.

I

Clark was convicted of capital murder in Texas state court in March 2000. The decision of the Texas Court of Criminal Appeals on direct appeal reflects facts that were presented to the jury during the guilt phase of the trial regarding Christina Muse’s murder:

Clark lived with Tory Bush in Tyler, Texas, where the two used and sold methamphetamine. The victim, Christina Muse, lived with them for a short period of time. When Muse moved out, Clark became concerned that she would talk to the wrong people and “snitch” on him about his drug dealings.
According to Bush, Muse came by Clark’s house on May 19, 1998, and talked with Bush in the front bedroom. At some point during their conversation, Clark stunned Muse with a stun gun to her neck and told her she “should have kept [her] mouth shut.” When Muse fell to the floor, Clark bound her hands, legs, and mouth with duct tape. Clark then placed Muse in a closet in the second bedroom, and Bush could hear Clark talking to her. After “a couple of hours,” Clark moved Muse into the bathroom and told Bush to get him a board. Bush complied and returned to the kitchen, shortly after which she heard the loud “whack” of a board striking something., Clark yelled for Bush to come to the bathroom where she found Muse in the bathtub, blood on the back wall of the tub, and Clark filling the tub with water. Clark told Bush to help him hold Muse’s head under water and threatened her when she hesitated.
After drowning Muse, Clark told Bush to go buy some lime. Bush then went across the street ■ to Amber Scoggin’s [sic] house to get a ride to the store. When Bush returned, she took the lime to Clark in the back storage room of the house where she saw Muse’s body in a blue barrel filled with cement mix. Clark poured the lime into the barrel, mixed in water, and put a lid on the barrel. The next morning, Clark woke Bush and instructed her to clean up the backyard and to put some debris’ and garbage in the barrel over Muse’s body. When Ben Barnett, Mike Coats, and Amber Scog-gins arrived later, Clark and the two men loaded the blue barrel in the back of Clark’s truck. After the others left, Clark and Bush transported the barrel and other trash to the property of their landlord, Velva Young. Bush told the jury that the last time she saw the barrel it was in Clark’s truck, which was parked by the trash pile on Young’s property. Bush then went to Young’s house, while Clark borrowed Young’s tractor and returned to the trash pile by himself for about an hour.

With regard to the punishment phase, Clark’s counsel conducted a limited investigation to determine if potentially mitigating evidence existed and did not present any mitigating evidence at trial. Clark’s counsel was prepared to subpoena Clark’s mother, father and other potential mitigation witnesses to testify, but Clark confirmed in response to questions from the trial court that he had instructed his counsel not to subpoena any witnesses. Accordingly, counsel focused on Clark’s future dangerousness, calling one expert witness who testified that Clark would not be a future danger in prison, based on a risk assessment founded in actuarial data.

Clark rejected his counsel’s advice and testified during the punishment phase. As we set forth in a prior opinion,

Clark took the stand on his own behalf, against the advice of counsel.... In a colloquy with counsel outside the presence of the jury, Clark confirmed that he had refused to allow his attorneys to call his mother and father to testify. Clark also acknowledged that he had personally contacted other potential mitigation witnesses and instructed them not to testify on his behalf. He expressed his desire to tell the jury that he wanted to receive the death penalty. In a contentious exchange with the prosecutor on cross-examination,. Clark ultimately so testified.

The jury determined that Clark was a future danger to society and that no mitigating factors warranted a life sentence. The trial court sentenced Clark to death as state law required. The Texas Court of Criminal Appeals affirmed on direct appeal.

The state trial court appointed new counsel, Craig Henry, to represent Clark in state habeas proceedings. Henry submitted an application for a writ of habeas corpus asserting nine grounds for relief, the principal ground being that Clark’s trial counsel rendered ineffective assistance by failing to investigate potentially mitigating facts and by failing to present mitigating evidence. Henry included a two-page affidavit from Clark’s mother, Cleta Barrington, which recounts Clark’s troubled upbringing. Barrington’s affidavit stated that: Clark was born with a cleft palate that led to speech difficulties and ridicule by his peers; she used drugs for most of her adult life and supported her habit through prostitution, resulting in her incarceration for much of Clark’s life; Clark’s father had “very little to do with” him; Clark cycled between living with different family members during his formative years; while Clark lived with his mother’s brother-in-law he was subjected to physical abuse; Clark married at fifteen to avoid being placed in the foster care system; Clark’s brother committed suicide when Clark was twenty, and Clark blamed himself because he had had an argument with his brother the night before; and that she (his mother) had not been contacted by trial counsel but would have spoken with counsel if given the opportunity. Henry spent a total of five hours investigating possible mitigating circumstances in support of the state habeas claim. The affidavit from Clark’s mother was the only evidence submitted in support of the application.

The state habeas court denied relief, concluding that trial counsel’s performance was not deficient and that Clark had not demonstrated prejudice. The Texas Court of Criminal Appeals denied relief based on the trial court’s findings and its own review.

Henry was appointed to represent Clark in federal habeas proceedings. He filed a federal habeas petition, again arguing that trial counsel’s failure to investigate and failure to present mitigating evidence amounted to ineffective assistance of counsel. However, Henry conducted further investigation and found evidence that was potentially mitigating. In response to the State’s motion for summary judgment, Henry attached a thirty-page report from a mitigation specialist that detailed Clark’s social history through interviews with Clark and Clark’s family members and an affidavit from one of Clark’s trial attorneys stating that neither he nor co-counsel conducted any mitigation investigation in preparation for the punishment phase. The mitigation specialist’s report was prepared for the federal habeas proceeding and was not part of the record before the state habeas courts.

The district court, considering the affidavits from Clark’s mother, trial counsel, and the mitigation specialist’s report, found that trial counsel’s failure to investigate mitigating evidence amounted to ineffective assistance but denied habeas relief because the federal district court found that the state court’s conclusion that Clark had not demonstrated prejudice was not an unreasonable application of federal law. The district court reasoned that the mitigating evidence was not as strong as in some other habeas cases and that it was “double-edged.” The district court also explained that there was “overwhelming evidence of ... future dangerousness”: in addition to the heinous nature of the murder, “the jury heard evidence that [Clark] had murdered two other people, committed several aggravated assaults and thefts, and dealt drugs over a long period of time.” The district court noted that Clark testified before the jury, “often assuming a taunting, argumentative, and sarcastic demeanor.” He “sparred with the prosecutor, stating that he wanted the death penalty rather than spending the rest of his life locked up for something he ‘didn’t do,’ ” thereby refusing to accept responsibility for the crime and exhibiting no remorse. The district court denied habeas relief but granted a COA on the ineffective assistance of trial counsel claim.

Subsequently, the Supreme Court held in Cullen v. Pinholster that under 28 U.S.C. § 2254(d)(1), federal courts are limited to the record that was before the state court when reviewing the state court’s denial of habeas relief. Accordingly, in Clark’s first appeal to this court, we considered only the facts presented to the state habeas court. We concluded that “fairminded jurists could disagree on the correctness of the state court’s determination that counsel’s performance was not deficient.” We also concluded, as an alternate basis for affirming the district court’s judgment denying habeas relief, that the state court’s determination that Clark did not demonstrate prejudice was not an unreasonable application of federal law. Among other considerations, we concluded “most importantly, the aggravating evidence in Clark’s case was overwhelming, a circumstance which ... makes it ‘virtually impossible to establish prejudice.’ ” We noted that along with his long criminal history, the State also “demonstrated that Clark had committed two other murders, including one murder that occurred after Muse’s death but prior to Clark’s apprehension. As the Supreme Court recently recognized, evidence that a defendant ‘committed another murder [is] the most powerful imaginable aggravating evidence.’ ”

Two weeks after our decision, the Supreme Court held in Martinez v. Ryan that ineffective assistance by state habeas counsel in an initial-review collateral proceeding may establish cause to overcome procedural default of an ineffective-assistance-of-trial-counsel claim when state law required that such a claim be raised for the first time during the initial collateral proceeding. The following term, in Trevino v. Thaler, the Court extended the rationale of Martinez to Texas convictions when state procedural rules do not require the defendant to raise an ineffective-assistance-of-trial-counsel claim in an initial-review collateral proceeding but also do not provide a meaningful opportunity to raise such a claim on direct appeal.

The Supreme Court denied Clark’s petition for certiorari on October 1, 2012, after Martinez but before Trevino was decided on May 28, 2013. On August 21, 2013, the state trial court held a hearing to set Clark’s execution date. Bobby Mims, one of Clark’s trial counsel, Jeffrey Haas, Clark’s counsel for his direct appeal to the Texas Court of Criminal Appeals, and Henry, his state and federal habeas counsel, were present at the hearing. All three attorneys argued to the court that in light of the Supreme Court’s decisions in Martinez and Trevino, additional counsel should be appointed to determine, if there were claims that should have been raised in state habeas court that were not raised due to Henry’s potential ineffectiveness as state habeas counsel. The court and the attorneys expressed confusion about where a newly-appointed attorney should file Clark’s potential claims based on Martinez and Trevino. The state court stated that it would be the new counsel’s decision whether to file in state or federal court. Nonetheless, the court subsequently appointed the Office of Capital Writs (OCW), a state agency prohibited by a Texas statute from representing a defendant in federal habeas proceedings, as Clark’s new counsel.

On February 19, 2014, OCW filed Clark’s Subsequent Application for a Writ of Habeas Corpus in state court. The application was supported by evidence that was not presented in the initial state habe-as proceeding, including affidavits from Mims and Henry discussing the limits of the mitigation investigations they performed; affidavits from two experts on Fetal Alcohol Syndrome (FAS) concluding that Clark likely suffers from FAS and that evidence was available at the time of trial that should have led trial counsel to conduct an FAS evaluation; and affidavits from nine of Clark’s family members providing detailed accounts of Clark’s troubled upbringing and family history. On May 7, 2014, the Texas Court of Criminal Appeals dismissed Clark’s application “as an abuse of the writ without considering the merits of the claim.”

Six days later, on May 13, 2014, a motion seeking to substitute David Dow and Jeffrey Newberry as Clark’s counsel and to permit Henry to withdraw was filed in the federal district court. That motion did not assert that Henry had a conflict of interest but stated that “Mr. Henry was not involved in the successive state court litigation,” and that “Mr. Dow and Mr. Newberry are conversant with the issue raised in the state court litigation.” The motion was granted on May 19, 2014. On September 19, 2014, four months after the motion for substitution was granted, Clark, through new counsel, filed a Rule 60(b)(6) motion for relief from the district court’s judgment denying Clark’s federal habeas petition. Clark argued that Henry had an inherent conflict of interest once the decision in Martinez issued and that extraordinary circumstances existed for granting Rule 60(b)(6) relief because Henry had remained Clark’s counsel of record before the federal district court for seventeen months after Martinez was decided.

In support of the Rule 60(b) motion, Clark also submitted a Proposed Amended Claim indicating what he would file with the district court if granted Rule 60(b) relief. The Proposed Amended Claim contains one ground for relief: Clark’s trial counsel was ineffective by failing to conduct a reasonable mitigation investigation. This claim is supported by the evidence submitted to the state trial court in the second state habeas application: affidavits from Clark’s previous counsel, FAS experts, and numerous family members.

A magistrate judge recommended that Clark’s Rule 60(b)(6) motion be denied as untimely and meritless and denied a COA. The district court agreed and adopted the magistrate’s recommendations. This court granted a COA.

II

Federal Rule of Civil Procedure 60(b)(6) permits a court to relieve a party from a final judgment for “any ... reason that justifies relief.” To obtain relief under Rule 60(b)(6), Clark’s motion must have been made “within a reasonable time” and must “show ‘extraordinary circumstances’ justifying the reopening of a final judgment.” We review the denial of a Rule 60(b) motion for abuse of discretion. The district court determined that Clark’s motion should be denied as both untimely and without merit.

III

We first address whether Clark’s Rule 60(b)(6) motion is prohibited under the provisions of the Antiterrorism and Effective Death Penalty Act (AEDPA) pertaining to second-or-successive habeas petitions. As the Supreme Court explained in Gonzalez v. Crosby, “Rule 60(b), like the rest of the Rules of Civil Procedure, applies in habeas corpus proceedings under 28 U.S.C. § 2254 only ‘to the extent that [it is] not inconsistent with’ applicable federal statutory provisions and rules.” Three requirements are imposed on second or successive habeas petitions by 28 U.S.C. § 2244(b)(l)-(3). They are (1) “any claim that has already been adjudicated in a previous petition must be dismissed;” (2) “any claim that has not already been adjudicated must be dismissed unless it relies on either a new and retroactive rule of constitutional law or new facts” that “could not have been discovered previously through the exercise of due diligence” and “show[] a high probability of actual innocence;” and (3) “before the district court may accept a successive petition for filing, the court of appeals must determine that it presents a claim not previously raised that is sufficient to meet § 2244(b)(2)’s new-rule or actual-innocence provisions.”

However, “when a Rule 60(b) motion attacks, not the substance of the federal court’s resolution of a claim on the merits, but some defect in the integrity of the federal habeas proceedings,” it is properly considered a Rule 60(b) motion for relief from ■ judgment. A Rule 60(b) motion based on “habeas counsel’s omissions ordinarily does not go to the integrity of the proceedings, but in effect asks for a second chance to have the merits determined favorably.” Clark argues in his initial brief in our court that his Rule 60(b) motion challenges a defect in the integrity of his federal habeas proceeding and is therefore not barred by AEDPA because, he contends, Henry, who served as both state and federal habeas counsel, had a conflict of interest in light of the Supreme Court’s decisions in Martinez and Trevino, and could not be expected to argue his own ineffectiveness to overcome the “default” in state habeas proceedings of Clark’s claim that trial counsel was ineffective. Though the principal issue that Henry raised in the initial state habeas proceeding was trial counsel’s failure to investigate for mitigation evidence, Clark asserts that Henry was himself ineffective in failing to investigate mitigation evidence more thoroughly and consequently failing to present a fully developed claim in the initial state habeas proceeding.

Henry did not contend in the federal habeas proceeding that he had been ineffective in the state habeas proceeding, and when' Martinez issued shortly after this court affirmed the denial of habeas relief, Henry did not withdraw or seek reconsideration or further relief based on Martinez. Clark contends that this prevented him from having his ineffective-assistance-of-trial-counsel claim reviewed on the merits in the federal habeas proceeding and that the federal habeas proceeding should be reopened to allow him to present his now fully-developed claim that trial counsel was ineffective because they did not discover or present mitigating evidence.

Capital habeas petitioners have a statutory right to conflict-free counsel. We have recently indicated in an unpublished opinion that a Rule 60(b) motion premised on federal habeas counsel’s conflict of interest need not be considered a successive habeas petition. To the extent that Clark’s Rule 60(b)(6) motion attacks not the substance of the federal court’s resolution of the claim of the merits, but asserts that Henry had a conflict of interest that resulted in a defect in the integrity of the proceedings, the motion is not an impermissible successive petition.

IV

A motion under Rule 60(b)(6) must be made “within a reasonable time,” “unless good cause can be shown for the delay.” Reasonableness turns on the “particular facts and circumstances of the case.” We consider “whether the party opposing the motion has been prejudiced by the delay in seeking relief and ... whether the moving party had some good reason for his failure to take appropriate action sooner.” “[Timeliness ... is measured as of the point in time when the moving party has grounds to make [a Rule 60(b)] motion, regardless of the time that has elapsed since the entry of judgment.”

Because Clark’s contention that his Rule 60(b)(6) motion was timely is intertwined with arguments he asserts regarding the Supreme Court’s decisions in Martinez v. Ryan, and Trevino v. Thaler, we again briefly address the import of those decisions. Prior to Martinez, the Supreme Court’s decision in Coleman v. Thompson foreclosed federal habeas petitioners from asserting, as excuse for the procedural default of an issue, that state habeas counsel had provided ineffective assistance. The Martinez decision changed the law in this regard by recognizing an exception that applies when state law prohibits a defendant from raising any ineffective-assistance-of-trial-counsel claim on direct appeal. In such a circumstance, because collateral review is the first opportunity to raise a contention that trial counsel was ineffective, a petitioner seeking federal habeas relief may assert that his state habeas counsel was ineffective for failing to raise trial counsel’s ineffectiveness and therefore that the procedural default of the claim regarding trial counsel’s ineffectiveness should be excused. Under Texas law, few ineffective-assistance-of-trial-counsel claims can be asserted and decided on direct appeal. In Trevino, the Supreme Court extended the Martinez exception to a Texas conviction because the first opportunity to obtain review of the ineffective-assistance-of-trial-counsel claim in that case could not have been adjudicated on direct appeal and therefore, the first opportunity to obtain review would have been in a state collateral review proceeding.

Clark argued in his Rule 60(b)(6) motion that “Henry should have asked [the federal district court] to appoint new counsel as soon ás the Supreme Court handed down its opinion in Martinez,” and that Henry “became fatally afflicted by a conflict of interest on March 20, 2012,” the date that Martinez issued. If March 20, 2012 is utilized as the date that the grounds for Clark’s Rule 60(b) motion materialized, then Clark’s Rule 60(b)(6) motion, filed September 19, 2014, was submitted two years and six months after Martinez was decided. His motion would be untimely, based on that analysis.

However, it is more appropriate to conclude that Henry’s potential conflict of interest while acting as Clark’s federal ha-beas counsel did hot arise until Trevino v. Thaler was decided. The Supreme Court explained in Trevino that “we qualified our holding” in Martinez, “We said that the holding applied where state procedural law said that ‘claims of ineffective assistance of trial counsel must be raised in an initial-review collateral proceeding.’ ” Texas law, the Court noted, did not come within that qualification. The decision in Trevino extended Martinez to convictions from Texas and other jurisdictions when an ineffective-assistance-of-trial-counsel claim could not be raised effectively in a direct appeal. The contention that a conflict of interest may arise when state habeas counsel in Texas is also federal habeas counsel flows from Trevino. Accordingly, the touchstone for Clark’s Rule 60(b) motion, which is that Henry had a conflict of interest, came into existence on May 28, 2013, the date of the Trevino decision.

Clark contends that the relevant date for determining timeliness of his Rule 60(b)(6) motion is the date on which the federal district court permitted new counsel to be substituted for Henry, which was May 19, 2014. The federal district court disagreed, concluding that “Rule 60(c) timeliness requirements are not reset every time a litigant obtains a new attorney,” and reasoned that the motion was filed “more than fifteen months after Trevino was decided.” We agree with this analysis. Additionally, we note that conflict-free counsel was appointed by the state court to represent Clark in August of 2013. The Trevino decision had been extant for twelve months, since May 2013, by the time that Clark asked the federal district court to substitute new counsel for Henry. Clark’s Rule 60(b) motion did not explain why he did not seek new counsel in the federal district court sooner than he did. The date that the federal district court permitted new counsel to appear should not be the starting point for measuring timeliness of the Rule 60(b)(6) motion in this case.

As noted, Clark filed his Rule 60(b) motion on September 19, 2014, almost sixteen months after Trevino was decided on May 28, 2013. If, rather than the date Trevino issued, we utilize August 2013, the date that conflict-free counsel was appointed by the state habeas court, then the Rule 60(b)(6) motion was filed twelve months after new counsel was appointed. Using either date, the Rule 60(b)(6) motion was untimely.

This court and others have concluded that periods of delay similar to or shorter than the period at issue here can constitute unreasonable delay under Rule 60(b). In Tamayo v. Stephens, we affirmed the district court’s judgment, which held that a Rule 60(b) motion, filed nearly eight months after the pertinent change in decisional law, was untimely. In Pruett v. Stephens, the petitioner waited more than nineteen months after Trevino was decided to file his Rule 60(b) motion. We concluded that the district court did not abuse its discretion in holding the motion was not filed within a reasonable time.

Clark asserts that his motion was nevertheless timely because (1) the nine-month period during which his 2014 state habeas petition was prepared and pending should be excused; and (2) the four months in 2014 in which newly appointed federal counsel prepared the Rule 60(b) motion should be excused. Under Rule 60(b), unreasonable delay can be excused if “good cause” is shown for the delay. “What constitutes ‘good cause’ ... ‘must necessarily be evaluated on a case-by-case basis.’ ”

Clark could have made concurrent state and federal filings, and therefore, the nine month period in which OCW prepared his 2014 successive state habeas petition and during which that petition was pending before the state court should not be excused. Although OCW was barred by a Texas statute from representing Clark in any federal proceeding, OCW was not barred from advising Clark to seek federal habeas counsel and pursue concurrent federal proceedings. Furthermore, Clark was physically present in August 2013 when the state trial court considered whether a conflict of interest had arisen in the wake of Trevino due to Henry’s representation of Clark-in both state and federal habeas proceedings. In addition to Henry, Clark’s trial counsel and direct appeal counsel were also present and voiced their concerns about Henry’s conflict of interest in that proceeding. Henry indicated to the trial court that it would be prudent to appoint additional habeas counsel. There was a discussion as to whether further filings should be made in state or federal court. That question was not resolved by the state trial court during the hearing. Clark could have filed in federal court and then sought a stay of the federal petition while he exhausted state court remedies. The defect which forms the basis of Clark’s Rule 60(b) motion — conflicted counsel — was removed in August 2013 when conflict-free counsel was appointed, not in May 2014 when Clark’s 2014 state petition was denied and additional counsel was appointed for federal habeas proceedings.

In In re Paredes, an unpublished decision, Paredes argued that as long as a conflicted attorney remained his counsel, there were no grounds for filing a Rule 60(b) motion and that period of time should not be counted in assessing whether Paredes’s Rule 60(b) motion was timely. We rejected that argument, noting that Paredes had the basis for asserting that his counsel was conflicted as soon as Trevino was issued. We are persuaded that this conclusion is sound.

We cannot say that the district court abused its discretion in finding Clark’s Rule 60(b)(6) motion untimely.

V

The district court denied Clark’s Rule 60(b)(6) motion on additional, independent grounds, which were that Clark was attempting to relitigate issues that had been decided on the merits in the federal habeas corpus proceeding, and that Clark had not shown extraordinary circumstances, as required by Rule 60(b)(6). The district court adopted all of the magistrate judge’s finding and conclusions, which addressed these issues as well. Because we conclude that the Rule 60(b)(6) motion was untimely, we do not address whether the district court abused its discretion in determining that Clark failed to demonstrate “circumstances that are sufficiently extraordinary to warrant relief from final judgment.”

Nor do we address whether, to the extent that Clark seeks in his Rule 60(b)(6) motion to have the district court reopen and reconsider the ineffective-assistance-of-trial-counsel claim, his claim is a successive habeas petition that must be dismissed under 28 U.S.C. § 2244. We note that the Supreme Court held in Gonzalez v. Crosby that a change in substantive law is not a “reason justifying relief’ under Rule 60(b)(6), and that a Rule 60(b)(6) motion cannot be “used to circumvent § 2244(b(2)(A)’s dictate that the only-new law on which a successive petition may rely is ‘a new rule of constitutional law, made retroactive to cases on collateral review by the Supreme Court, that was previously unavailable.’ ” Neither Martinez nor Trevino announced a new rule of constitutional law, and neither has been made retroactive to cases on collateral review. The Supreme Court further observed in Gonzalez that “an attack based on ... habeas Counsel's omissions ... ordinarily do[ ] not go to the integrity of the proceedings, but in effect asks for a second chance to have the merits determined favorably.”

Clark contends, somewhat inconsistently, that the mitigation evidence developed by his new state habeas counsel, which Clark has presented to the district court in his Rule 60(b)(6) motion, is so “fundamentally different” from the claim raised in state court, it is a new claim not previously reviewed on the merits. He asserts in his reply brief that though the claim is new, it should not be barred by 28 U.S.C. § 2244(d).

We need not decide whether Clark presents a new claim because, to the extent that he does, any such claim would be time-barred under 28 U.S.C. § 2244(d). We first note that Clark has not sought leave to file a successive petition from this court; he has only appealed the district court’s denial of the Rule 60(b)(6) motion. If we were to consider part of his motion a new claim, however, it was not filed until September 19, 2014, almost two years after the Supreme Court denied his petition for certiorari. Clark contends that equitable tolling excuses any delay and the resulting noncompliance with the statute of limitations requirements of § 2244(d)(1). Although § 2244(d)(1) is subject to equitable tolling, tolling is only available in “rare and exceptional circumstances.” For the same reasons we conclude that Clark’s Rule 60(b)(6) motion is untimely, any available equitable tolling ended when Clark had actual knowledge in August 2013 that his federal habeas counsel had a conflict of interest. Furthermore, Clark was in fact appointed conflict-free counsel in August 2013, over a year before any new habeas petition was filed. Clark’s claim, if new, is time-barred.

We AFFIRM the district court’s judgment denying relief from its prior September 19, 2007 judgment, in which it denied Clark s petition for writ of habeas corpus on the merits.

      . Clark v. Thaler, 673 F.3d 410, 413 (5th Cir. 2012).

      . Clark v. Thaler, - U.S. -, 133 S.Ct. 179, 184 L.Ed.2d 90 (2012) (mem.).

      . — U.S. -, 133 S.Ct. 1911, 185 L.Ed.2d 1044 (2013).

        .Id. at 1921.

      . 566 U.S. 1, 132 S.Ct. 1309, 182 L.Ed.2d 272 (2012).

      . Ex parte Clark, No. WR-55,996-02, 2014 WL 1910597, at *1 (Tex. Crim. App. May 7, 2014) (per curiam) (unpublished).

      . Clark v. Texas, No. 73,816 (Tex. Crim. App. Nov. 25, 2002) (unpublished).

      . Clark v. Thaler, 673 F.3d 410, 414 (5th Cir. 2012).

        .Id.

      . Clark v. Texas, No. 73,816 at *16 (Tex. Crim. App. Nov. 25, 2002) (unpublished).

      . Clark, 673 F.3d at 415 (citing Ex parte Clark, No. 55996-01, 2003 Tex. Crim. App. LEXIS. 1033 (Tex. Crim. App. Oct. 1, 2003) (not designated for publication)).

      . Id.

      . 563 U.S. 170, 180-81, 131 S.Ct. 1388, 179 L.Ed.2d 557 (2011).

      . Clark, 673 F.3d at 416-17, 419-20.

      . Id. at 422.

      . Id.

      . Id. at 424 (quoting Ladd v. Cockrell, 311 F.3d 349, 360 (5th Cir. 2002)).

      . Id. (quoting Wong v. Belmontes, 558 U.S. 15, 28, 130 S.Ct. 383, 175 L.Ed.2d 328 (2009) (per curiam)).

      . 566 U.S. 1, 13-17, 132 S.Ct. 1309, 182 L.Ed.2d 272 (2012).

      . - U.S. -, 133 S.Ct. 1911, 1918, 1921, 185 L.Ed.2d 1044 (2013).

      . Clark v. Thaler, - U.S. -, 133 S.Ct. 179, 184 L.Ed.2d 90 (2012) (mem.).

      . Tex. Gov't Code Ann. § 78.054(b) (West) ("The office may not represent a defendant in a federal habeas review.’’).

      . Ex parte Clark, No. WR-55,996-02, 2014 WL 1910597, at *1 (Tex. Crim. App. May 7, 2014) (per curiam) (unpublished).

      . Clark v. Stephens, 627 Fed.Appx. 305 (5th Cir. 2015) (per curiam) (unpublished).

      . Fed. R. Civ. P. 60(b)(6).

      . Fed. R. Civ. P. 60(c)(1).

      . Gonzalez v. Crosby, 545 U.S. 524, 535, 125 S.Ct. 2641, 162 L.Ed.2d 480 (2005) (quoting Ackermann v. United States, 340 U.S. 193, 199, 71 S.Ct. 209, 95 L.Ed. 207 (1950)).

      . Hernandez v. Thaler, 630 F.3d 420, 428 (5th Cir. 2011); see also Diaz v. Stephens, 731 F.3d 370, 374 (5th Cir. 2013) ("In applying such a standard, '[i]t is not enough that the granting of relief might have been permissible, or even warranted[ — ]denial must have been so unwarranted as to constitute an abuse of discretion.' ") (quoting Seven Elves, Inc. v. Eskenazi, 635 F.2d 396, 402 (5th Cir. 1981)).

      . 28 U.S.C. § 2244.

      . 545 U.S. at 529, 125 S.Ct. 2641 (quoting 28 U.S.C. § 2254 Rule llfJuni) (footnote omitted).

      . Id.

      . Id. at 529-30, 125 S.Ct. 2641 (citing 28 U.S.C. § 2244(b)(1)).

      . Id. at 530, 125 S.Ct. 2641.

      . 28 U.S.C. § 2244(b)(2)(B)(i).

      . Gonzalez, 545 U.S. at 530, 125 S.Ct. 2641 (citing 28 U.S.C. § 2244(b)(2)).

      . Id. (citing 28 U.S.C. § 2244(b)(3)).

      . Id. at 532, 125 S.Ct. 2641.

      . Id. at 532 n.5, 125 S.Ct. 2641 (citation omitted).

      . Martinez v. Ryan, 566 U.S. 1, 132 S.Ct. 1309, 182 L.Ed.2d 272 (2012).

      . Trevino v. Thaler, — U.S. -, 133 S.Ct. 1911, 185 L.Ed.2d 1044 (2013).

      . See Juniper v. Davis, 737 F.3d 288, 290 & n.2 (4th Cir. 2013); see also Mendoza v. Stephens, 783 F.3d 203, 210 (5th Cir. 2015) (per curiam) (mem.) (OWEN, J., concurring) (“Mendoza is statutorily entitled to conflict-free counsel at this stage in his habeas proceedings.”) (citing Juniper, 737 F.3d 288; Gray v. Pearson, 526 Fed.Appx. 331 (4th Cir. 2013); 18 U.S.C. § 3599(a)); Christeson v. Roper, - U.S. -, 135 S.Ct. 891, 895, 190 L.Ed.2d 763 (2015) (recognizing that grounds for substitution under § 3599 exist when an attorney’s personal interests prevent her from advancing her client’s best arguments).

        . In re Paredes, 587 Fed.Appx. 805, 822-23 (5th Cir. 2014) (per curiam) ("Paredes has presented an issue that cannot be considered a successive motion for habeas corpus' relief. He contends that in the wake of the Supreme Court’s decisions in Martinez and Trevino, his initial federal habeas counsel, Gross, had a conflict of interest because Gross also served as state habeas counsel.”).

      . Fed. R. Civ. P. 60(c)(1).

      . In re Osborne, 379 F.3d 277, 283 (5th Cir. 2004) (citing Pryor v. U.S. Postal Serv., 769 F.2d 281, 287-88 (5th Cir. 1985)).

      . Travelers Ins. Co. v. Liljeberg Enters., Inc., 38 F.3d 1404, 1410 (5th Cir. 1994) (citing First RepublicBank Fort Worth v. Norglass, Inc., 958 F.2d 117, 119 (5th Cir. 1992)); see also Ashford v. Steuart, 657 F.2d 1053, 1055 (9th Cir. 1981) (per curiam) ("What constitutes ‘reasonable time' depends upon the facts of each case, taking into consideration the interest in finality, the reason for delay, the practical ability of the litigant to learn earlier of the grounds relied upon, and prejudice to other parties.”).

      . Lairsey v. Advance Abrasives Co., 542 F.2d 928, 930 (5th Cir. 1976) (quoting 11 Wright & Miller, Federal Practice & Procedure § 2866, at 228-29).

      . First RepublicBank, 958 F.2d at 120.

      . 566 U.S. 1, 132 S.Ct. 1309, 182 L.Ed.2d 272 (2012).

      . - U.S. -, 133 S.Ct. 1911, 185 L.Ed.2d 1044 (2013).

      . 501 U.S. 722, 757, 111 S.Ct. 2546, 115 L.Ed.2d 640 (1991).

      . Martinez, 566 U.S. at 9, 13-14, 132 S.Ct. 1309; see also Trevino v. Thaler, -U.S. -, 133 S.Ct. 1911, 1914, 185 L.Ed.2d 1044 (2013) (explaining that the procedural rule at issue in Martinez "required a defendant convicted at trial to raise a claim of ineffective assistance of trial counsel during his first state collateral review proceeding — or lose the claim”).

      . Id. at 13-14, 16, 132 S.Ct. 1309.

      . Trevino, 133 S.Ct. at 1918-1919.

      . Id. at 1921.

      . Tamayo v. Stephens, 740 F.3d 986, 991 (5th Cir. 2014) (per curiam) (holding that the district court did not abuse its discretion in denying a Rule 60(b) motion when the relevant change in law occurred eight months prior, and petitioner filed the motion two days before his execution); In re Paredes, 587 Fed.Appx. 805, 824-25 (5th Cir. 2014) (per curiam) (holding that a defendant who had waited thirteen months after Trevino was decided before seeking appointment of conflict-free counsel had not filed his Rule 60(b) motion within a reasonable time).

      . - U.S. -, 133 S.Ct. 1911, 185 L.Ed.2d 1044 (2013).

      . Id. at 1914.

      . Id. at 1914-15.

      . Id. at 1915 (The court explained: "In this case Texas state law does not say ‘must.’ It does not on its face require a defendant initially to raise an ineffective-assistance-of-trial-counsel claim in a state collateral review proceeding. Rather, that law appears at first glance to permit (but not require) the defendant initially to raise-a claim of' ineffective assistance of trial counsel on direct appeal. The structure and design of the Texas system in actual operation, however, make it ‘virtually impossible’ for an ineffective assistance claim to be presented on direct review. We must now decide whether the Martinez exception applies in this procedural regime. We conclude that it does.” (citation omitted)).

      . See id.

      . In re Paredes, 587 Fed.Appx. 805, 824-25 (5th Cir. 2014) (per curiam); see also Pruett v. Stephens, 608 Fed.Appx. 182, 186 (5th Cir. 2015) (per curiam) (noting that Trevino "provided the basis for the conflict of interest argument” raised in the Rule 60(b) motion).

      . - U.S. -, 133 S.Ct. 1911, 185 L.Ed.2d 1044 (2013).

      . See, e.g., Tamayo v. Stephens, 740 F.3d 986, 991 (5th Cir. 2014) (per curiam) (eight months after change in law was untimely); Trottie v. Stephens, 581 Fed.Appx. 436, 438 (5th Cir. 2014) (per curiam) (three years from district court denial of petition and over a year from denial of a COA not timely); Buck v. Thaler, 452 Fed.Appx. 423, 429-30 (5th Cir. 2011) (per curiam) (over a year after denial of certiorari and no extenuating circumstances not within reasonable time); cf. Lewis v. Lewis, 326 Fed.Appx. 420, 420 (9th Cir. 2009) (mem.) (unpublished) (six-month delay without any explanation not reasonable); Tredway v. Parke, 79 F.3d 1150, at *1 (7th Cir. 1996) (unpublished) (five-month delay was unreasonable when motion only challenged court’s prior analysis).

      . Tamayo, 740 F.3d 986, 991 (5th Cir. 2014).

      . Pruett, 608 Fed.Appx. at 186.

      . Id.

      . In re Osborne, 379 F.3d 277, 283 (5th Cir. 2004).

      . In re Jasper, 559 Fed.Appx. 366, 372 (5th Cir. 2014) (quoting Osborne, 379 F.3d at 283).

      . Tex Gov’t Code Ann. § 78.054(b) (West).

      . Cf. Tex. Code Crim. Proc. Ann. art. 11.071 § 2(e) (West) (providing time periods for when state habeas counsel must move to appoint federal habeas counsel after the court of criminal appeals denies relief).

      . In re Paredes, 587 Fed.Appx. 805, 824-25 (5th Cir. 2014) (per curiam).

      . Id.

      . Diaz v. Stephens, 731 F.3d 370, 375 (5th Cir. 2013).

      . 545 U.S. 524, 531-32, 125 S.Ct 2641, 162 L.Ed.2d 480 (2005).

      . Id. at 532 n.5, 125 S.Ct. 2641 (citation omitted).

      . Clark v. Thaler, - U.S. -, 133 S.Ct. 179, 184 L.Ed.2d 90 (2012) (mem.).

      . See Holland v. Florida, 560 U.S. 631, 649, 130 S.Ct. 2549, 177 L.Ed.2d 130 (2010) (holding that § 2244(d) is subject to equitable tolling if Ae petitioner demonstrates “ '(1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way' and prevented timely filling” (quoting Pace v. DiGuglielmo, 544 U.S. 408, 418, 125 S.Ct. 1807, 161 L.Ed.2d 669 (2005))).

        . Davis v. Johnson, 158 F.3d 806, 811 (5th Cir. 1998).


source: Caselaw Access Project

author: PATRICK E. HIGGINBOTHAM, Circuit Judge:

license: Public Domain

text:
    GEOPHYSICAL SERVICE, INCORPORATED, Plaintiff-Appellant v. TGS-NOPEC GEOPHYSICAL COMPANY, Defendant-Appellee
    No. 15-20706
    United States Court of Appeals, Fifth Circuit.
    Filed March 10, 2017

      Joel B. Rothman, Esq., Schneider Roth-man Intellectual Property Law Group, Boca Raton, FL, Brent Taylor Caldwell, Esq., Matthew J. M. Prebeg, Ph. D., Pre-beg, Faucett & Abbot, P.L.L.C., Houston, TX, for Plaintiff-Appellant.
    Melanie B. Rother, Peter C. Tipps, Norton Rose Fulbright US, L.L.P., Houston, TX, for Defendant-Appellee.
    Before HIGGINBOTHAM, ELROD, and HIGGINSON, Circuit Judges.
   PATRICK E. HIGGINBOTHAM, Circuit Judge:

Canada has a law that requires companies who gather seismic data about the Earth’s substructure to submit their findings to the Canadian government. After a period of confidentiality, the Canadian agency that compiles this data is then apparently permitted to release it to members of the public upon specific request. In this case, a Houston company requested seismic data from this Canadian agency pursuant to that law, and the Canadian agency sent copies of a particular Canadian company’s seismic data to the United States. The Canadian company then sued the Houston company, alleging copyright infringement.

We are called upon to determine whether the act of state doctrine forbids a United States court from considering the applicability of copyright’s first sale doctrine to foreign-made copies when the foreign copier was a government agency. We hold that it does not. We must also decide whether the inapplicability of the Copyright Act to extraterritorial conduct bars a contributory infringement claim based on the domestic authorization of entirely extraterritorial conduct. We hold that it does. Accordingly, we affirm in part, reverse in part, vacate in part, and remand.

I.

The parties compete in the seismic data industry, using off-shore technological equipment to bounce sound waves off the ocean floor. The reflected sound waves bring information about the rock layers beneath the earth’s crust, information nigh useless until geophysicists digitally create “seismic lines,” paper copies of which are known as “seismic sections.” A seismic line is a cross section of the area surveyed that incorporates professional interpretation of the information gathered and puts it into a useful format. The result is a copyright-protected geological “picture” of the subterranean structure in the area surveyed, useful to the oil and gas industry in locating hydrocarbons. These pictures are often licensed to oil and gas explorers.

Plaintiff-Appellant Geophysical Service, Inc. (“Geophysical”) is a Canadian corporation based in Calgary, operating under Canadian law. The Canada-Newfoundland and Labrador Offshore Petroleum Board (“CNLOP Board”), established by Canadian legislation, regulates energy exploration to ensure worker safety, environmental protection and safety, effective management of land, maximum hydrocarbon recovery and value, and benefits to the government. Under Canadian law and the regulations of the CNLOP Board, companies are required to provide the CNLOP Board with a copy of each seismic line they create, and the Board is required to keep these submissions confidential for ten years. Geophysical provided copies of its seismic lines to the Board.

In 1999, Defendant-Appellee TGS-NO-PEC Geophysical Co. (“TGS”) emailed the CNLOP Board to request copies of thirty-three of Geophysical’s old seismic lines. Pursuant to that request, and apparently acting under the authority of the Canadian legislation that established it, the CNLOP Board directed a private copy service in Canada -to prepare copies of Geophysical’s old seismic lines and send them by courier to TGS in Houston. The Board billed TGS $97.75 in shipping and handling costs. Geophysical discovered this transaction years later, in 2013.

With the requested copies of Geophysical’s seismic lines in hand, TGS performed its own seismic surveys in the same locations surveyed by Geophysical and captured in its seismic lines. Geophysical also alleges that TGS prepared additional copies of Geophysical’s seismic lines, distributed them to third parties, removed their copyright management information, and prepared derivative works from them.

■ Learning that the CNLOP Board had furnished the seismic lines, Geophysical filed this suit in the Southern District of Texas. Its complaint alleged that it held a valid copyright in its seismic lines and that TGS committed direct copyright infringement, committed contributory copyright infringement, and unlawfully removed Geophysical’s copyright management information from its works. TGS filed a motion under Rule 12(b)(6) to' dismiss the complaint, or alternatively, to abstain. The district court first ruled that the CNLOP Board had an implied' license to create copies of Geophysical’s seismic lines, so TGS’s importation of them was protected by the -first sale doctrine, and that any other claims were insufficiently pled, but that Geophysical could amend its complaint to add sufficient allegations. Geophysical did not amend, but instead moved for reconsideration of the district court’s initial order, which the court granted. Its new order is the subject of this appeal.

In its final judgment, the district court ruled that Geophysical failed to state a claim for direct infringement or removal of copyright management information because its allegations in support of those claims were speculative and conclusory. It further ruled that Geophysical could not maintain a claim for contributory infringement because the direct infringement upon which that claim was predicated occurred extraterritorially, and alternatively, because the act of state doctrine forbade the court from passing on the legality of the CNLOP Board’s actions. Finally, the district court ruled that to the extent Geophysical claimed importation of infringing material, that claim was barred because the act of state doctrine and “extraterritoriality principles” required the court to find that the copies were lawfully made.

The district court then dismissed Geophysical’s complaint with prejudice and awarded TGS its attorneys’ fees and costs upon TGS’s motion. Geophysical timely appealed both the dismissal and fee award.

II.

1.

“We review a district court’s grant of a motion to dismiss de novo.” We review whether a district court applied the correct legal standard for attorneys’ fees de novo. We review a district court’s ultimate award of attorneys’ fees for abuse of discretion.

2.

Turning first to our jurisdiction, as we must, we see only one jurisdictional issue: TGS’s contention that, as Geophysical did not allege domestic copyright infringement, its claims are beyond the territorial reach of the Copyright Act. Some cases treat the territorial reach of the Copyright Act as an issue of jurisdiction, so we turn first to this question.

We are persuaded that the Copyright Act’s insistence that infringing conduct be domestic offers an essential element of a copyright infringement plaintiffs claim, not of jurisdiction. As Arbaugh v. Y&H Corp. explained:

If the Legislature clearly states that a threshold limitation on a statute’s scope shall count as jurisdictional, then courts and litigants will be duly instructed and will not be left to wrestle with the issue .... But when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdietional in character.

The Copyright Act does not express its limit on territorial reach. That limit arises from the background presumption that legislation reaches only domestic conduct. Because the domestic boundary is not “clearly state[d]” to “count as jurisdictional,” we “treat the restriction as nonjuris-dictional in character.”

Though the Court has never confronted the precise question before us, analogous cases applying Arbaugh confirm that the issue is not one of jurisdiction. Section 10(b) of the Securities Exchange Act’s implicit requirement of domestic conduct is nonjurisdietional, and a different threshold requirement of the Copyright Act is nonjurisdietional. We are persuaded that bounding the reach of the Copyright Act to territorial conduct presents a question of the merits of the claim, not the jurisdiction of the court.

III.

1.

A claim of copyright infringement has two elements: (1) ownership of a valid copyright; and (2) copying constituent elements of the work that are copyrightable. This appeal concerns the second element.

Geophysical advanced three claims in the district court: direct infringement, contributory infringement, and unlawful removal of copyright management information. Geophysical’s direct infringement claim as presented to the district court consisted of two distinct components: first, that TGS unlawfully imported copies of Geophysical’s seismic lines; second, that TGS thereafter prepared additional copies, prepared derivative copies, and distributed those copies to the public.

However, Geophysical’s briefing on appeal shifts ground, focusing entirely on the importation component of its direct infringement claim and its contributory infringement claim. “An appellant abandons all issues not raised and argued in its initial brief on appeal.” To the extent that Geophysical’s claim of direct infringement was based on alleged actions taken by TGS after receiving the imported copies, it now abandons those allegations on appeal, as well as any claim of unlawful removal of copyright management information. Dismissal of those aspects of Geophysical’s claims is not before us.

2.

Two claims remain: direct infringement by importation and contributory infringement.

A. Direct Infringement by Importation

The district court dismissed Geophysical’s claim of unlawful importation on two independent grounds. First, it found that Geophysical had failed to plead unlawful importation in its complaint. Second, it found that amendment was futile: Geophysical’s unlawful importation claim would be barred because the act of state doctrine and “extraterritoriality principles” required the court to find that the copies made by the CNLOP Board were “lawfully made” within the meaning of the first sale doctrine.

1. Failure to Plead

We are not persuaded that Geophysical failed to plead a claim for unlawful importation. Under § 602 of the Copyright Act, importation into the United States of copyrighted work without the copyright holder’s permission is actionable as infringement of the copyright holder’s exclusive right to distribute. Unauthorized importation of copyrighted work is a statutorily established method of demonstrating infringement of one of the exclusive rights afforded by § 106 of the Copyright Act and is not itself a separate claim that must be separately pleaded.

Geophysical’s complaint pleads that TGS imported copies of its copyrighted seismic lines:

[O]n March 29, 1999, TGSN solicited CNLOPB to copy and distribute to TGSN copies of the ... Works.... [O]n or about April 9, 1999, CNLOPB copied and distributed the ... Works to TGSN by courier to TGSN in Houston, Texas.

It farther alleges, under the heading “Direct Copyright Infringement,” violation of Geophysical’s exclusive right to distribute. The complaint did not state that “unauthorized importation” or some variant partially formed the basis of Geophysical’s direct infringement claim, but its substance was sufficient, and we turn to the merits of Geophysical’s direct infringement claim alleging unlawful importation.

2. Merits

On the merits of Geophysical’s importation claim, TGS defended on the basis that its importation of copies of Geophysical’s seismic lines was protected by the first sale doctrine because the copies were “lawfully made.” TGS offered the district court several alternative bases by which to find that the copies it imported were lawfully made: (1) because the act of state doctrine required the court to deem the actions of the CNLOP Board lawful; (2) because Canadian law authorized the CNLOP Board to make the copies; and (3) because Geophysical had granted the CNLOP Board an implied license to create copies of its works, making their creation “lawful” under United States copyright principles. In finding that amendment would be futile, the district court was persuaded by the act of state argument. It ruled that Geophysical’s claim of unlawful importation would be barred by the first sale doctrine because the act of state doctrine required it to find “lawful” the actions of the CNLOP Board, a Canadian government agency. It did not reach the question of whether Canadian or United States law governed whether the copies were “lawfully made.”

Ultimately, we disagree with the application of the act of state doctrine here, for reasons we will describe. But first, we turn to the principles of the first sale doctrine.

i First Sale Doctrine

The Copyright Act vests in copyright holders several enumerated exclusive rights that they enjoy over their copyrighted works. It is clear that one of those rights is the exclusive right “to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.” But § 106 is equally clear that each of those exclusive rights is “[sjubject to sections 107 through 122,” which establish various limitations on the enumerated exclusive rights. Relevant here is § 109, which limits the copyright owner’s exclusive right to distribute:

Notwithstanding the provisions of section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the-authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

This “first sale doctrine” found its way into United States copyright law long before it was codified as § 109 in the current Copyright Act in 1976. It reflects the fundamental principle of copyright that ownership of the copyright in a work is distinct from ownership of the material object that embodies the work. When a copyright owner transfers' or authorizes transfer of a copy or phonorecord embodying his copyright, he does not surrender his copyright, but he does mostly surrender control of the material object. The copyright owner will not be heard to complain of his transferee’s transferring the material object in a way that might otherwise foul the exclusive right to distribute.

The doctrine of “first sale” is somewhat of a misnomer. The limitation embodied in § 109. does not depend on .whether the copyright owner’s initial disposition was by sale; the only prerequisite is that the copy or phonorecord in question be “lawfully made.” Accordingly, nations elsewhere in the world with similar copyright regimes refer to the principle as the “exhaustion doctrine,” reflecting the notion that the copyright owner “exhausts” his distribution right in a copy or phonorecord upon first transfer of that copy or phono-record.

Section 109 by its plain terms limits only the exclusive right to distribute. The owner of a lawfully made copy or phonorecord is still forbidden from copying it, preparing derivative works based on it, publicly performing it, or publicly displaying it, any of which would violate one of the copyright owner’s other exclusive rights (absent some other limitation or defense).

Section 602 of the Copyright Act establishes that unauthorized importation into the United States of copies or phono-records acquired outside the United States is infringement of the § 106(3) exclusive right to distribute. Because this “importation right” is merely a corollary of the distribution right, it is similarly limited by the first sale doctrine. Accordingly, importation into the United States of lawfully made copies or phonorecords, even where the copyright holder has not authorized such importation, is protected by § 109.

In Kirtsaeng v. John Wiley & Sons, Inc. [Kirtsaeng I], the Supreme Court held that the first sale doctrine protects importers of lawfully made copies no matter where in the world those copies were made. In Kirtsaeng I, plaintiff Wiley published textbooks in the United States and authorized its wholly owned subsidiary, Wiley Asia, to manufacture and publish essentially identical textbooks in Thailand. Defendant Kirtsaeng took advantage of the substantially lower prices for the Asian versions of the textbooks by having his friends and family purchase Wiley textbooks in Thailand, then ship them to him in the United States so that he could resell them for a profit at a lower price than the comparable American version.

Wiley sued Kirtsaeng, alleging that his unauthorized importation of its textbooks amounted to infringement of Wiley’s § 106(3) exclusive right to distribute by virtue of § 602’s prohibition on unauthorized importation of copyrighted works. Kirtsaeng defended by invoking the first sale doctrine, pointing out that the textbooks he acquired were “lawfully made” and that he acquired them legitimately, so he was permitted to import and resell the textbooks without the copyright .owner’s permission. Wiley argued that the first sale doctrine protected only copies made in the United States or its territories, insisting that the phrase “lawfully made under this title” in § 109 imposed a geographic limitation restricting the lawful making of copies to places where the United States Copyright Act is the law.

Wiley’s view was shared at the time by the Second and Ninth Circuits. That view was plausible because the Supreme Court case that originally had applied the first sale doctrine to importation claims had involved a situation where the copies were made in the United States, exported, and then subsequently reimported. However, the Court in Kirtsaeng I declined to limit the application of the first sale doctrine to importation claims to those facts. Instead, it held that the first sale doctrine applies to copies of a copyrighted work lawfully made abroad.

The instant case implicates a question left open by Kirtsaeng I. Upon the Court’s determination that “lawfully made under this title” could mean lawfully made anywhere, there was no argument to be made — and indeed Wiley did not argue— that the imported textbooks were not lawfully made. Wiley expressly assigned to Wiley Asia the rights to publish, print, and sell Wiley’s textbooks in Thailand, so the imported textbooks were indisputably lawfully made. Once the question of the geographic scope of § 109 was resolved, there was no question before the Court whether the creation of the Thai textbooks was lawful or unlawful, or whose law applied to make that determination. Kirtsaeng I therefore leaves open the difficult interpretive puzzle of what it means for a copy manufactured abroad to have been “lawfully made under this title” within the meaning of § 109.

The facts of the instant case supply a good example of the puzzle: as in Kirt-saeng I, the copies imported into the United States here were manufactured abroad, but unlike in Kirtsaeng I, the parties dispute whether those copies were lawfully made. TGS would have us look to Canadian law to determine the lawfulness of the Board’s making of the copies — it points to the fact that Canadian law appears to authorize the CNLOP Board to release copies of data submitted to it after ten years. Geophysical asks us instead to look to United States . copyright principles — it points to the fact that the U.S. Copyright Act lacks a similar provision, so the CNLOP Board’s making copies of Geophysical’s works would have been unlawful had U.S. law applied. Applying foreign law seems to contradict the plain language of § 109, which asks whether copies were “lawfully made under this title,” presumably referring to the title in which it appears, the Copyright Act. But applying United States law seems to foul the principle that the Copyright Act has no extraterritorial application, and creates some conceptual awkwardness where, like here, the foreign-made copies were made pursuant to some legal regime that finds no analog in United States law.

We decline to resolve this issue here, as the district court did not reach it, having found primarily that Geophysical failed to plead an importation claim, and alternatively, that the act of state doctrine required a finding of “lawfulness” regardless of whose law applied. The parties have yet to brief the proper interpretation of § 109 — an issue that ought in the first instance be passed on by the able district court. We will remand for determination of the proper standard by which to assess whether imported copies made abroad were lawfully made under § 109 and application of that standard.

As mentioned, the district court did not need to engage this analysis because it found that the act of state doctrine mandated a finding that CNLOP Board’s making of the copies was lawful. We turn now to that doctrine.

ii. Act of State Doctrine

This case presents yet another wrinkle: the foreign-made copies in question were created by a Canadian government agency. The district court accepted TGS’s argument that, because the act of state doctrine bars United States courts from deciding that a foreign government acted unlawfully, the court was required to find the copies made by the CNLOP Board “lawfully made” within the meaning of § 109. We disagree.

The act of state doctrine “limits, for prudential rather than jurisdictional reasons, the adjudication in American courts of the validity of a foreign sovereign’s public acts.” The doctrine applies to bar an action when “the relief sought or the defense interposed would have required a court in the United States to declare invalid the official act of a foreign sovereign performed within its own territory.” Though seemingly international in character, the doctrine is founded in concerns of domestic separation of powers, “reflecting the strong sense of the Judicial Branch that its engagement in the task of passing on the validity of foreign acts of state may hinder the conduct of foreign affairs.” “Act of state issues only arise when a court must decide — that is, when the outcome of the ease turns upon — the effect of official action by a foreign sovereign.” It can apply “even if the defendant is a private party, not an instrumentality of a foreign state, and even if the suit is not based specifically on a sovereign act.”

We find that the question presented by the first sale doctrine, whether imported copies were “lawfully made,” is different in kind from the question whether the copy-maker acted illegally or invalidly. Hence, the first sale question is outside the scope of the act of state doctrine even when the foreign copy-maker is a government agency. The Copyright Act, which does not apply extraterritorially, does not operate against the CNLOP Board in Canada. Evaluating the first sale defense in connection with TGS’s importation of copies made by the Board does not decide whether the CNLOP Board is a copyright infringer, which would be a prohibited inquiry.

We find United States v. Portrait of Wally persuasive. There, a New York district court ruled that the act of state doctrine did not forbid it from considering the rightful ownership of a portrait even though several steps in the chain of possession were questionable transfers to and from the Austrian government. That court held that it was “not being asked to invalidate any action by an Austrian governmental authority, but only to determine the effect of such action, if any, on [the portrait’s ownership.” By analogy here, even a ruling in favor of Geophysical will not invalidate any action by the Canadian government, but only determine the effect of such action on the right of United States citizens to import copies that a Canadian agency made. Indeed, even if upon remand the district court finds that the copies were not “lawfully made under this title,” that ruling only restricts TGS’s (and others’) ability to freely import the copies. Any determination will not speak to the validity of the Canadian government’s actions, only whether those actions support lawful importation into the United States by a private party.

Further, the rationale behind the act of state doctrine does not support its application here. We are unable to see — and TGS, which bears the burden, makes no convincing argument — how passing on TGS’s first sale defense will “imperil the amicable relations between governments and vex the peace of nations.” ■ Finding that the act of state doctrine reaches ■ a discrete, ministerial act like preparing the copies here is a reach too far. In sum, disagreeing with the application here of the act of state doctrine, we must reverse the dismissal of Geophysical’s importation claim.

Hi. Extraterritoriality

The inapplicability of the United States Copyright Act -to extraterritorial conduct provides no defense to Geophysical’s importation claim. It is undisputed that TGS imported the copies of Geophysical’s seismic lines into Houston, Texas by causing the CNLOP Board to send them there. Therefore, the act of importation occurred in the United States and is actionable under the Copyright Act depending on the resolution of TGS’s first sale defense. To the extent the district court’s dismissal of Geophysical’s importation claim rested on “extraterritoriality principles,” we disagree.

S. Summary

We reverse the district court’s dismissal of Geophysical’s direct infringement claim to the extent it alleged unauthorized importation, and remand that claim to the district court. Upon remand, the district court must first decide whose law governs the determination whether the copies imported by TGS were “lawfully made” under § 109. It must then apply the legal principles that it determines to govern. For example, if the district court finds that Canadian law controls the inquiry, then it may be helpful to await the input of the Canadian courts on Geophysical’s challenge to the CNLOP Board’s practice of making and releasing copies of seismic lines. Alternatively, if the district court finds that United States law controls, then it may revisit its initial inclination that Geophysical granted the CNLOP Board an implied license — though the creation of an implied license, which turns on the copyright holder’s intent, is a fact question.

B. Contributory Infringement

Geophysical also asserted a claim of contributory infringement, seeking to hold TGS liable as a contributory infringer to the CNLOP Board’s direct infringement in creating copies of Geophysical’s seismic lines without Geophysical’s permission. The district court ruled that both the territoriality limit of the Copyright Act and the act of state doctrine independently barred this claim. We affirm on the basis of extraterritoriality.

Contributory infringement is “intentionally inducing or encouraging direct infringement.” The direct infringement that Geophysical alleges to support its contributory infringement claim is the CNLOP Board’s creation of unauthorized copies of its seismic lines. This claim is subtly, but importantly, distinct from Geophysical’s importation claim. Where Geophysical’s importation claim, as we have discussed, seeks to impose liability on TGS for the act of unauthorized importation of unlawful copies, its contributory infringement claim seeks to impose liability on TGS for intentionally encouraging or inducing the CNLOP Board to create those copies regardless of what the CNLOP Board did with them thereafter. Unlike Geophysical’s importation claim, its contributory infringement claim turns on whether the CNLOP Board directly infringed Geophysical’s copyright.

As explained, domestic conduct is a necessary element of a copyright infringement •plaintiffs claim. But if, as alleged here, the defendant induced or encouraged in the United States infringement that then occurred outside the United States, we face an issue that neither the Supreme Court nor we have addressed. We find the Ninth Circuit’s decision in Subafilms, Ltd. v. MGM-Pathe Communications Co. instructive.

In Subafilms, the en banc Ninth Circuit held that “when the assertedly infringing conduct consists solely of the authorization within the territorial boundaries of the United States of acts that occur entirely abroad[,] ... such allegations do not state a claim for relief under the copyright laws of the United States.” That holding was founded on the view that the term “to authorize” in § 106 of the Copyright Act was not intended to give rise to a protectable right of authorization in copyright holders, but rather to invoke the pre-existing doctrine of contributory. liability. And under that doctrine, there can be no liability for contributory infringement “unless the authorized or otherwise encouraged activity itself could amount to infringement.”

We are not persuaded by authority to the contrary. In Curb v. MCA Records, Inc., a district court outside of the Ninth Circuit rejected the holding of Subafilms, persuaded that “Subafilms relies upon a peculiar interpretation of the scope and nature of the authorization right in 17 U.S.C. § 106.” We are not persuaded that there is any such “authorization right.” The structure of § 106 offers a numbered list of six protectable exclusive rights in copyright holders; “to authorize” is not among them:

Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:
(1) to reproduce the copyrighted work in copies or phonorecords;
(2) to prepare derivative works based upon the copyrighted work;
(3) to distribute copies or phonorec-ords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;
(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;
(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and
(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

The phrase “to authorize” appears in the preamble to the list of exclusive rights alongside “to do.” We believe that this structure supports the conclusion that “to do” and “to authorize” refer to direct and contributory infringement, respectively, but that infringement in either case must be predicated on one of the listed exclusive rights. So codified, the doctrine of contributory infringement requires that the underlying direct infringement upon which it is predicated be actionable under the Copyright Act.

In short, we follow the holding of the Ninth Circuit in Subafilms. Where a copyright plaintiff claims contributory infringement predicated on direct infringement that occurred entirely extraterritorially, the plaintiff has stated no claim. Geophysical alleges that TGS authorized in Houston the CNLOP Board to infringe Geophysical’s copyright in Canada by creating copies in Canada and then exporting them. This fails to state a claim of contributory infringement because it alleges authorization of alleged direct infringement that occurred entirely extraterritorially. The district court correctly dismissed the claim on that basis.

This result is not changed by the fact that the underlying alleged direct infringement involved the CNLOP Board’s exportation of allegedly infringing material to the United States. That the United States was the destination does not convert the CNLOP Board’s conduct into domestic conduct for the purpose of the Copyright Act. The act of “exportation” occurred entirely in Canada, and is beyond the reach of the Copyright Act notwithstanding the destination. This division of cross-border conduct into discrete acts of “exporting” from one country and “importing” into another is supported by the Copyright Act, which does the same.

Because we affirm on the basis of extraterritoriality, we need not consider whether the act of state doctrine would bar Geophysical’s contributory infringement claim.

IV.

Because we remand this case for further development on one of Geophysical’s claims, and because of a relevant intervening Supreme Court decision, we vacate the district court’s award of attorneys’ fees and costs. Upon remand, the district court is free to entertain a motion for attorneys’ fees and costs after its disposition of Geophysical’s remaining claim, mindful of the Supreme Court’s recent guidance on awards of attorneys’ fees in copyright cases. We leave to the district court to apply the standard announced in Kirt-saeng II. It may consider in its entertainment of that motion the dismissal of the claims that we affirm here, but in the interest of allowing it to give full consideration and apply the appropriate standard, we vacate its award.

V.

We affirm the district court’s dismissal of Geophysical’s direct infringement claim to the extent that it was based on infringing acts by TGS after it received copies of Geophysical’s seismic lines. We affirm the district court’s dismissal of Geophysical’s claim of removal of copyright management information. We reverse the district court’s dismissal of Geophysical’s direct infringement claim to the extent that it was based on importation of unlawfully made copies and remand for further proceedings on that claim in light of the principles discussed here. We affirm the district court’s dismissal of Geophysical’s contributory infringement claim. We vacate the district court’s award of attorneys’ fees and costs, which the district court may reconsider at the appropriate time after its disposition of the remanded claim.

      . The parties dispute what the Board is lawfully permitted to do after this ten-year period. We offer no view on this dispute.

      . Geophysical challenged this regulatory regime in Canada. A Canadian appeals court is currently hearing the case.

      . Boyd v. Driver, 579 F.3d 513, 515 (5th Cir. 2009).

      . Hogan Sys., Inc. v. Cybresource Int'l, Inc., 158 F.3d 319, 325 (5th Cir. 1998), overturned on other grounds by Kirtsaeng v. John Wiley & Sons, Inc., - U.S. -, 136 S.Ct. 1979, 195 L.Ed.2d 368 (2016).

      . Id.

      . See Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) ("[Sjubject-matter delineations must be policed by the courts on their own initiative even at the highest level.”) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998)).

      . See Kirtsaeng v. John Wiley & Sons, Inc., - U.S. -, 133 S.Ct. 1351, 1376, 185 L.Ed.2d 392 (2013) (Ginsburg, J., dissenting) ("The Copyright Act, it has been observed time and again, does not apply extraterritorially.” (citing United Dictionary Co. v. G. & C. Merriam Co., 208 U.S. 260, 264, 28 S.Ct. 290, 52 L.Ed. 478 (1908))); see also Subafilms, Ltd. v. MGM-Pathe Commc'ns Co., 24 F.3d 1088, 1095-98 (9th Cir. 1994) (en banc).

      . See, e.g., Peter Starr Prod. Co. v. Twin Cont’l Films, Inc., 783 F.2d 1440 (9th Cir. 1986); Palmer v. Braun, 376 F.3d 1254 (11th Cir. 2004); Rundquist v. Vapiano SE, 798 F.Supp.2d 102 (D.D.C. 2011).

      . See Steel Co., 523 U.S. at 94, 118 S.Ct. 1003 ("Without jurisdiction the court cannot proceed at all in any cause.”) (quoting Ex parte McCardle, 74 U.S. 506, 514, 7 Wall. 506, 19 L.Ed. 264 (1868)).

      . 546 U.S. 500, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006).

      . Id. at 515-16, 126 S.Ct. 1235 (citations omitted).

      . See Subafilms, 24 F.3d at 1095-96.

      . See Arbaugh, 546 U.S. at 515-16, 126 S.Ct. 1235.

      . Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247, 253-54, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010).

      . Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 166, 130 S.Ct. 1237, 176 L.Ed.2d 18 (2010) (applying the Arbaugh test to conclude that the registration requirement in the Copyright Act was a "precondition to suit that supports nonjurisdietional treatment”).

      . Accord Litecubes, LLC v. N. Light Prods., Inc., 523 F.3d 1353, 1368 (Fed. Cir. 2008).

      . Bridgmon v. Array Sys. Corp., 325 F.3d 572, 576 (5th Cir. 2003).

      . Cinel v. Connick, 15 F.3d 1338, 1345 (5th Cir. 1994) (emphasis removed).

      . 17 U.S.C. § 602(a)(1) (“Importation into the United States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies or phonorecords under section 106, actionable under section 501.”); Quality King Distribs., Inc. v. L’anza Research Int'l, Inc., 523 U.S. 135, 145, 118 S.Ct. 1125, 140 L.Ed.2d 254 (1998) ("[Section] 602(a) merely provides that unauthorized importation is an infringement of an exclusive right ‘under section 106.’ ").

        . Cf. Warren v. John Wiley & Sons, Inc., 952 F.Supp.2d 610, 620 (S.D.N.Y. 2013) ("[T]he plain language of the statute makes clear that an exportation of a copyrighted work without the permission of the copyright owner is merely a type of copyright infringement, rather than a separate cause of action. Thus, ... the unauthorized import or export of copies under § 602 are simply additional examples of infringement under § 106.”).

      . 17 U.S.C. § 106.

      . Id. § 106(3).

      . Id. § 106.

      . 17 U.S.C. § 109(a).

      . 4 William F. Patry, Patry on Copyright § 13:18 (Sept. 2016 Update).

      . Id. § 13:15 (citing Columbia Pictures Indus., Inc. v. Redd Horne, Inc., 749 F.2d 154, 159 (3d Cir. 1984)); see also 17 U.S.C. § 202 ("Ownership of a copyright, or of any of the exclusive rights under a copyright, is distinct from ownership of any material object in which the work is embodied.”).

      . See 17 U.S.C. § 202.

      . Patry, supra note 25, at § 13:15.

      . Id.; UMG Recordings, Inc. v. Augusto, 628 F.3d 1175, 1179 (9th. Cir. 2011) (“Notwithstanding its distinctive name, the [first sale] doctrine applies not only when a copy is first sold, but when a copy is given away or title is otherwise transferred without the accouterments of a sale.”).

      . Patry, supra note 25, at § 13:15.

      . See 17 U.S.C. § 106(1)-(2), (4)-(6).

      . 17 U.S.C. § 602.

      . Quality King Distribs., Inc. v. L'anza Research Int’l, Inc., 523 U.S. 135, 144, 118 S.Ct. 1125, 140 L.Ed.2d 254 (1998).

      . - U.S. -, 133 S.Ct. 1351, 185 L.Ed.2d 392 (2013).

      . Id. at 1356.

      . Id.

      . Id. at 1357.

      . Id.

      . Id. at 1357-58.

      . Id. at 1357.

      . Quality King, 523 U.S. at 138-39, 118 S.Ct. 1125; see Kirtsaeng I, 133 S.Ct. at 1355.

      . Kirtsaeng I, 133 S.Ct. at 1355-56.

      . Id. at 1356.

      . 2-8 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 8.13 [B][3][c] [v] (2016).

      . Walter Fuller Aircraft Sales, Inc. v. Republic of Phil., 965 F.2d 1375, 1387 (5th Cir. 1992).

      . W.S. Kirkpatrick & Co., Inc. v. Envt'l Tectonics Corp., Int’l, 493 U.S. 400, 405, 110 S.Ct. 701, 107 L.Ed.2d 816 (1990).

      . Id. at 404, 110 S.Ct. 701 (internal quotations omitted).

      . Id. at 406, 110 S.Ct. 701.

      . Callejo v. Bancomer, S.A., 764 F.2d 1101, 1113 (5th Cir. 1985).

      . 663 F.Supp.2d 232 (S.D.N.Y. 2009).

      . Id. at 247-48.

      . Id. at 248.

      . See W.S. Kirkpatrick & Co., 493 U.S. at 409, 110 S.Ct. 701 ("[S]ometimes, even though the validity of the act of a foreign sovereign within its own territory is called into question, the policies underlying the act of state doctrine may not justify its application.”).

      . Bigio v. Coca-Cola Co., 239 F.3d 440, 453 (2d Cir. 2000).

      . Jimenez v. Aristeguieta, 311 F.2d 547, 558 (5th Cir. 1962) (quoting Oetjen v. Cent. Leather Co., 246 U.S. 297, 304, 38 S.Ct. 309, 62 L.Ed. 726 (1918)).

      . Cf. Mannington Mills, Inc. v. Congoleum Corp., 595 F.2d 1287, 1294 (3d Cir. 1979) (grant of patents not the type of sovereign activity that would be of substantial concern to the executive branch in its conduct of international affairs).

        . Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 930, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005).

        .See supra Part 11(2).

      . 24 F.3d 1088 (9th Cir. 1994) (enbanc).

      . Id. at 1089.

      . Id. at 1092.

      . Id.

      . 898 F.Supp. 586 (M.D. Tenn. 1995).

      . Id. at 594.

      . 17 U.S.C. § 106.

      . Patry, supra note 25, at § 21:46.

      . See 17 U.S.C. § 602(a)(l)-(2).

      . Kirtsaeng v. John Wiley & Sons, Inc., - U.S. -, 136 S.Ct. 1979, 195 L.Ed.2d 368 (2016) [Kirtsaeng II].


author: EDITH BROWN CLEMENT, Circuit Judge:

text:
    In the MATTER OF: Lisa Ann GALAZ, Debtor Raul Galaz and Segundo Suenos, L.L.C., Appellants v. Lisa Ann Galaz and Julian Jackson, Appellees
    No. 15-51194
    United States Court of Appeals, Fifth Circuit.
    FILED March 10, 2017

      David Clay Snell, Bayne, Snell & Krause, San Antonio, TX, for Appellants.
    Raul Galaz, Pro Se.

      Royal B. Lea, III, Benjamin R. Bing-ham, Bingham & Lea, P.C., San Antonio, TX, for Appellee Lisa Ann Galaz.
    Julian Jackson, Pro Se.
    Before SMITH, CLEMENT, and SOUTHWICK, Circuit Judges.
   EDITH BROWN CLEMENT, Circuit Judge:

Appellants Raul Galaz (“Raul”) and Segundo Sueños, LLC appeal the district court’s judgment awarding actual and exemplary damages to debtor Lisa Ann Ra-tona, formerly known as Lisa Galaz (“Lisa”). We AFFIRM the judgment of the district court.

I

This case is on appeal before this court for the second time. See Galaz v. Galaz (In re Galaz I), 765 F.3d 426 (5th Cir. 2014). It is just the latest episode in a series of lawsuits dating back ten years.

Raul founded Artist Rights Foundation, LLC (“ARF”) with Julian Jackson (“Jackson”) in 1998, and each originally held a 50 percent membership interest in ARF. When Lisa divorced Raul in 2002, she obtained a 25 percent economic interest in ARF — half of his 50 percent interest. ARF’s assets consisted of the rights to the royalties from the music of the Ohio Players, a former funk band.

In June 2005, without the knowledge of Jackson or Lisa, Raul transferred ARF’s royalty rights to “Segundo Sueños”— which at the time, “was not organized as a business entity under the laws of any state.” In re Galaz I, 765 F.3d at 428. In September 2005, Raul assisted his father, Alfredo Galaz (“Alfredo”) in establishing Segundo Sueños, LLC (“Segundo”) in Texas. Raul asserts that Alfredo is the “sole owner” of Segundo. Soon after the transfer, the royalties began to generate a substantial amount of revenue. Segundo received nearly a million dollars from the transfer until trial in February 2010. Lisa did not receive any share of the revenue, despite her 25 percent interest in ARF. Raul unilaterally dissolved ARF in December 2006.

Lisa filed for Chapter 13 bankruptcy in December 2007. In April 2008, Lisa brought this adversary proceeding against Raul, Alfredo, and Segundo, alleging that they fraudulently transferred the assets of ARF to Segundo and defrauded Lisa of her interest. Raul, Alfredo, and Segundo filed a third-party complaint against Jackson, and Jackson asserted seven counterclaims against them. Id. at 429.

“After a five-day bench trial, the bankruptcy court found that the transfer of assets from ARF to Segundo Sueños was invalid, that it constituted a fraudulent transfer under TUFTA, that Raul owed fiduciary duties to [Jackson] and had breached those duties, and that Raul owed no fiduciary duties to Lisa.” Id. The bankruptcy court held Raul and Segundo liable, but held Alfredo not liable. Id. at 429 & n.4. The bankruptcy court awarded actual and exemplary damages to Lisa and Jackson. Id. at 429.

Raul and Segundo appealed to the district court, which affirmed the bankruptcy court’s judgment as to liability but vacated and remanded for redetermination of actual and exemplary damages. Id. On remand, the bankruptcy court awarded actual and exemplary damages consistent with the district court’s instructions. Id. Appellants again appealed to the district court, which affirmed. Id. Appellants then appealed to this court. Id.

This court vacated and remanded the bankruptcy court’s judgment on jurisdictional grounds, with instructions to dismiss Jackson’s third-party counterclaims for lack of subject-matter jurisdiction. Id. at 431, 434. This court also determined that Lisa’s claims were non-core bankruptcy claims, and remanded for the district court to enter final judgment after further consideration. Id.

On remand, the district court referred this adversary proceeding to the bankruptcy court. The bankruptcy court submitted proposed findings 'of fact and conclusions of law pursuant to 28 U.S.C. § 157(c)(1). After de novo review, the district court adopted those findings of fact and conclusions of law, invalidating the transfer of assets from ARF to Segundo and awarding Lisa actual and exemplary damages. Raul and Segundo again appeal.

II

When the district court enters final judgment in a bankruptcy case, this court “reviewfs] the district court’s findings of fact for clear error and its conclusions of law de novo.” Monge v. Rojas (In re Monge), 826 F.3d 250, 254 (5th Cir. 2016). “In examining for clear error, we review the record as a whole and not just the evidence supporting the finding.” Stanley v. U.S. Bank Nat’l Ass’n (In re TransTexas Gas Corp.), 597 F.3d 298, 304 (5th Cir. 2010). “Where there are two permissible views of the evidence, the factfinder’s choice between them cannot be clearly erroneous.” Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 574, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985).

Ill

A

The district court held that the purported transfer of the music rights from ARF to Segundo was fraudulent' under the Texas Uniform Fraudulent Transfers Act (“TUFTA”), Tex. Bus. & Com. Code § 24.001 et seq. TUFTA allows a court to set aside a fraudulent transfer. § 24.008(a)(1). The district court explicitly adopted the bankruptcy court’s finding that Raul acted with actual intent to defraud Lisa. We affirm.

We review for clear error because “whether the transfer was made with the actual intent to defraud creditors is a fact question.” Walker v. Anderson, 232 S.W.3d 899, 914 (Tex. Ct. App. 2007). Because “direct proof of fraudulent intent is often unavailable,” courts may consider circumstantial evidence to determine whether the transfer was made with fraudulent intent. Id. Section 24.005(b) of TUF-TA sets forth a “non-exhaustive list of facts and circumstances, which are known as the ‘badges of fraud,’ to be considered in determining whether a transfer was made with actual intent to defraud.” Id. (citing § 24.005(b)). “An individual badge of fraud is not conclusive, but a concurrence of many badges in the same case will always make out a strong case of fraud.” Id. “The judgment creditor has the burden to prove the fraudulent transfer by a preponderance of the evidence.” Id. at 913.

Although the district court did not explicitly identify which badges of fraud are present, it emphasized the following facts: “Raul transferred all of ARF’s royalty rights to Segundo Sueños”; “Segundo Sueños was not organized as a business entity under the laws of any state” until three months after the transfer; “Raul assisted his father in filing the documents required to establish Segundo Sueños as a Texas LLC”; Raul did not tell Lisa or Jackson about the transfer; and Segundo gave no consideration to ARF for the transfer of the royalty rights. Reviewing the record as a whole, the district court did not clearly err in determining that Raul acted with actual intent to defraud in transferring the royalty rights from ARF to Segundo.

At least six badges of fraud are present. First, Raul transferred ARF’s assets to “an insider” — his father, Alfredo, who purportedly owns Segundo. See § 24.005(b)(1).

Second, Raul “retained possession or control of the property transferred after the transfer.” § 24.005(b)(2). There is evidence that Raul managed Segundo and the royalty rights after the transfer. Raul admitted that he consulted with Alfredo and helped him with the process of creating Segundo. He testified at trial that he “heavily influenced” Alfredo’s decisions in Segundo. Appellants introduced no convincing evidence that Alfredo exercised any control over the royalty rights. •

Third, Raul “concealed” the transfer from Lisa. § 24.005(b)(3). Appellants do not argue that Raul told Lisa about the transfer.

Fourth, the transfer was of substantially all of ARF’s assets. § 24.005(b)(5). Appellants do not dispute this fact.

Fifth, ARF did not receive “reasonably equivalent” consideration for the transfer of the royalty rights. § 24.005(b)(8). Neither Alfredo nor Segundo — which was not formed as a Texas entity until three months after the purported transfer — paid “any money at all” to ARF at the time of the transfer. Instead, “[t]he terms of the transfer purportedly obligated Alfredo and Segundo Sueños to pay the liability that Raul recited in the Demand Letter: Raul’s out-of-pocket expenses, expenses for Raul’s ‘services,’ and the past-due California franchise taxes.” It is true that Segundo paid ARF’s tax obligations to California, totaling $11,793.05, in November and December 2006. But Segundo paid those obligations from revenue generated by the royalty rights. There is no evidence that ARF received any consideration for the transfer of the royalty rights that was independent of revenue generated by the royalty rights.

Sixth, ARF “was insolvent or became insolvent shortly after the transfer was made.” § 24.005(b)(9). Raul unilaterally dissolved ARF in December 2006. When ARF was dissolved, it had no assets and no liabilities.

The district court did not clearly err in adopting the bankruptcy court’s finding of fraudulent intent. The presence of these badges of fraud is sufficient evidence that Raul transferred ARF’s royalty rights with the actual intent of defrauding Lisa of her 25 percent economic interest in ARF. Appellants’ arguments to the contrary are entirely unavailing. The district court did not err in invalidating the purported transfer.

B

The district .court awarded Lisa $241,309.10 in actual damages. The royalties generated $969,317.93 in gross income between the time of the fraudulent transfer and trial. To restore Lisa to the position she would have had if the fraudulent transfer had not occurred, the district court awarded Lisa 25 percent of the gross income — which was $242,329.48 — less certain allowable and reasonable expenses. The district court declined to reduce Lisa’s actual damages by Segundo’s alleged expenses because Segundo is “a wholly distinct entity formed for the purpose of defrauding [Lisa] of her share of revenue.” Appellants also failed to produce credible evidence of those alleged expenses. We affirm.

Section 24.008(a)(3)(C) of- TUFTA is an equitable provision which states that a creditor may obtain “any other relief the circumstances may require.” This equitable provision “is quite broad.” Airflow Hous., Inc. v. Theriot, 849 S.W.2d 928, 934 (Tex. Ct. App. 1993). Section 24.009(c)(1) provides that actual damages for the value of property fraudulently transferred are “subject to adjustment as the equities may require.”. Appellants argue that, as a matter of law, the district court should have limited compensatory damages to the value of the royalty rights at the time of the transfer from ARF to Segundo, and that the value was “nominal” at that time. Although Appellants acknowledge that Section 24.009(c)(1) authorized the district court to adjust the value “as the equities may require,” they argue that Section 24.009(c)(2) restricts the district court from adjusting the value “to include the value of improvements made by a good faith transferee.” Because the transfer was fraudulent and Segundo is not a good faith transferee, the district court did not err in applying Section 24.009(c)(1) without the restriction in Section 24.009(c)(2).

Appellants also argue that “Considering all appropriate expenses, Segundo Sueños actually has produced no net operating income” — and thus, Lisa should not receive anything in actual damages. But Appellants provided insufficient evidence of reasonable expenses. Segundo apparently “did not regularly keep any profit and loss statements or balance sheets” and failed to present “any evidence of invoices, receipts, work orders, or other documentation.” Segundo requested that the district court, in calculating Lisa’s actual damages, deduct hundreds of thousands of dollars in unsupported expenses from the revenue generated by the royalty rights. The district court did not err in declining to reduce Lisa’s award by these alleged expenses, especially given the finding of actual intent to defraud and the broad remedial authority conferred by Sections 24.008(a)(3)(c) and 24.009(c)(1) of TUFTA.

C

The district court awarded Lisa $250,000 in exemplary damages. Appellants argue that the district court clearly erred in awarding exemplary damages because: (1) Lisa did not establish any actual damages; and (2) no evidence supports exemplary damages. The first argument is unavailing — Lisa is entitled to $241,309.10 in actual damages. The second argument fails because the district court did not clearly err in finding that Lisa proved by clear and convincing evidence that her loss was caused by the Appellants’ fraud, malice, or gross negligence. See Shafer v. Army & Air Force Exch. Serv., 376 F.3d 386, 396 (5th Cir. 2004) (if the district court applies the correct standard of review, this court “review[s] the district court’s factual findings for clear error”). There is ample evidence supporting the finding of actual intent to defraud.

Appellants also summarily argue, without citing any precedent, that “it was error for the lower courts to simply double the already-inflated compensatory damages in order to assess punitive damages” and that the district court clearly erred when it assessed exemplary damages against Segundo because “there was no determination that ... Segundo ... engaged in any objectionable conduct.” These arguments are waived for lack of adequate briefing. See Procter & Gamble Co. v. Amway Corp., 376 F.3d 496, 499 n.1 (5th Cir. 2004). The district court did not err in awarding Lisa exemplary damages against both Raul and Segundo.

IV

We AFFIRM the judgment of the district court. We make no comment on the effect of the judgment on non-parties.

      . "Segundo Sueños” was likely formed with the intention of reading "Segundo Sueños,” which is Spanish for "Second Dreams.” This opinion will use the spelling used by the entity itself.

      . Appellants do not argue that the transfer was not to an insider. They argue only, without any precedential support, that transfer to an insider should not be considered a badge of fraud where transfer is first offered to a non-insider.

      . Raul admitted that he "represented to the State of California that the dissolution of [ARF] was by a vote of all the members.”

      . Appellants' argument that Raul had no motive to defraud Lisa defies credulity. Raul transferred the royalty rights from ARF, in which he held only a 25 percent membership interest, to Segundo, a company purportedly owned by Raul's father but apparently completely within Raul’s control, as inferred by Segundo's payments to and on behalf of Raul and his friends and family. Because of this transfer, Raul did not account to Lisa for the revenue — almost a million dollars — generated by the royalty rights.

      . We also affirm the district court’s determinations that Appellants are collaterally es-topped from arguing that the transfer was valid and that Raul did not have the authority to unilaterally transfer the royalty rights.

      . Lisa’s actual damages award is reduced by “her proportionate share of reasonable and necessary expenses that were incurred by ARF prior to the date of the transfer.” Between 2003 and 2005, Lisa was responsible for 25 percent of the unpaid franchise taxes — ■ that is, $1,020.38.