author: PATRICK E. HIGGINBOTHAM, Circuit Judge:

text:
    Henry Lee SIMS, Jr., individually and as legal heir to the Estate of Henry Lee Sims, Sr.; Timothy Everett Sims, individually and as legal heir to the Estate of Henry Lee Sims, Sr.; Willie Earl Sims, individually and as legal heir to the Estate of Henry Lee Sims, Sr.; Shamika Rae Sims, individually and as legal heir to the Estate of Henry Lee Sims, Sr.; Kathlyn Lenetta Sims, individually and as legal heir to the Estate of Henry Lee Sims, Sr.; Brence Eric Sims, individually and as legal heir to the Estate of Henry Lee Sims, Sr.; Michael Andre Sims, individually and as legal heir to the Estate of Henry Lee Sims, Sr.; Sarah Denise Sims, individually and as legal heir to the Estate of Henry Lee Sims, Sr.; Pamela Rachael Sims, individually and as legal heir to the Estate of Henry Lee Sims, Sr., Plaintiffs-Appellants v. KIA MOTORS OF AMERICA, INCORPORATED; Kia Motors Corporation, Defendants-Appellees
    No. 15-10636
    United States Court of Appeals, Fifth Circuit.
    FILED October 5, 2016

      Marc R. Stanley, Esq., Stanley Law Group, Dallas, TX, for Plaintiffs-Appellants.
    Kurt Christopher Kern, Esq., Amanda McKinzie, Tanya B, Scarbrough, Cary Alan Slobin, Bowman & Brooke, L.L.P., Dallas, TX,. for Defendants-Appellees.
    Before HIGGINBOTHAM, PRADO, and GRAVES, Circuit Judges.
   PATRICK E. HIGGINBOTHAM, Circuit Judge:

Family members of decedent Henry Sims, Sr. filed this products liability suit against Defendants-Appellees Kia Motors of America (KMA) and Kia Motors Corporation (KMC) stemming from a tragic car accident, in which Mr. Sims, a passenger in a 2010 Kia Soul, died. Among other claims, they alleged that the Soul’s fuel tank was defectively designed. After determining that Texas law applied and excluding testimony from two of their experts, the district court granted summary judgment in favor of Defendants. We AFFIRM.

I.

Henry Sims, Sr. died in the back seat of a 2010 Kia Soul after a traffic accident in Tarrant County, Texas. The initial impact occurred when the Soul collided with another car in an intersection, causing the Soul to spin and to strike various objects. One of those items was the immovable base of a yield sign, the “flange,” the top of which had disconnected as it was designed to do upon contact. The flange was 3.25 inches tall. As the Soul continued forward, the base of. the sign passed beneath the front bumper and continued along the underside of the vehicle before impacting the fuel tank. The sign base tore a large hole in the fuel tank, causing gasoline to leak onto the roadway. When the Soul eventually came to rest, the driver and passenger riding in the front seats safely exited the vehicle. The thrée passengers in the back, however, including Mr. Sims, were stuck inside when both rear doors wouldn’t open. Because the fuel tank of the Soul had ruptured during the crash sequence, the car became engulfed in flames. Mr. Sims died in the fire.

Plaintiffs, Mr. Sims’ children and grandchild, sued Defendants for products liability. They allege that “[gjiven the hazards posed by a vehicle’s gas tank, vehicle manufacturers must take reasonable steps .to design and manufacture a gas tank that is not susceptible to failure in collisions and that, if fire in the gas tank does result, the fire does not immediately explode into the passenger cabin of the vehicle so that occupants have an opportunity to escape the burning car.” They argue that Defendants should have utilized fuel tank fastening straps or a fuel tank shield or both in the 2010 Kia Soul, and that their failure to do so rendered the vehicle unreasonably dangerous and contributed to Mr. Sims’s death. Plaintiffs retained two engineers as experts: Michael McCort, who was to investigate how the flange struck the fuel tank, and Jerry Wallingford, who was to testify that feasible, safer alternative designs would have prevented the fuel tank rupture.

Plaintiffs originally filed this action in the Central District of California against KMA. It was transferred to the Northern District of Texas due to the location of evidence and convenience of witnesses relevant to Plaintiffs’ claims. With agreement of the parties, the complaint was amended to add KMC as an additional defendant.

Defendants moved for partial summary judgment, arguing that one of the Plaintiffs, Mr. Sims’s granddaughter, “has no cause of action as wrongful death statute beneficiary.” Applying Texas law, the district court granted the motion since Texas law does not allow grandchildren to recover for wrongful death claims. Defendants also sought and received leave to designate responsible third parties to whom the jury may assign responsibility at trial, as is permitted under Texas law. Finally, Defendants moved to have Texas law apply to all claims, and the district court granted this motion.

Defendants then sought to exclude some or all of the Plaintiffs’ expert testimony. The district court granted these motions, concluding that the testimony was unreliable. Defendants moved for summary judgment on all claims, arguing that—without expert testimony—the Plaintiffs raised no genuine dispute as to the material facts of their claims. The district court granted the motion, and Plaintiffs timely appealed.

II.

Plaintiffs first challenge the district court’s determination that Texas’s substantive law—not California’s—should apply. Our review is de novo.

The parties do not dispute that California’s “governmental interest approach” controls our analysis of which state’s substantive law applies. Under this approach, courts take up to three steps to determine which state’s law applies.

First, the court determines whether the relevant law of each of the potentially affected jurisdictions with regard to the particular issue in question is the same or different. Second, if there is a difference, the court examines each jurisdiction’s interest in the application of its own law under the circumstances of the particular case to determine whether a true conflict exists. Third, if the court finds that there is a true conflict, it carefully evaluates and compares the nature and strength of the interest of each jurisdiction in the application of its own law to determine which state’s interest would be more impaired if its policy were subordinated to the policy of the other state, and then ultimately applies the law of the state whose interest would be the more impaired if its law were not applied.

There is no dispute that the applicable laws in Texas and California are different. In Texas, grandchildren cannot recover in a wrongful death suit; in California, they can. And under Texas’s law but not California’s, Defendants are permitted to designate a responsible third party to whom a jury may assign responsibility during trial. Finally, Texas, unlike California, requires plaintiffs in design defect cases to show that there was a safer alternative design that Defendants could have used.

Since California and Texas law differ, we consider whether there is a “true conflict.” A true conflict arises when both states have a legitimate interest in applying their own laws. Texas’s interests are legitimate. The Soul was sold in Texas, both drivers and all plaintiffs are Texans, and the accident occurred in Texas. California’s interest in applying its law is more tenuous. On appeal, the parties dispute whether the Soul was designed in California or Korea, a factual question that the district court did not explicitly answer. The record suggests that, despite some indications to the contrary in Kia’s advertising materials, the parties originally agreed that the 2010 Kia Soul was designed in Korea, not California. The district court implicitly agreed, noting that “[t]here is no nexus to California other than the fortuity that one of the defendants is a citizen of California.”

Plaintiffs counter that California has a legitimate interest because KMC and KMA “put themselves at the heart of California’s regulatory interest” by engaging in business there. But while KMC and KMA have enjoyed the benefits of doing business with California residents, they also have done business in Texas. At best, this argument suggests that both California and Texas have an interest in applying their laws in this case.

Assuming without deciding that California has a legitimate interest in applying its laws under the second step of the governmental interest approach, we turn to the third step. We conclude that Texas’s interests would be more impaired if California law applied than California’s would be by the application of Texas law. Under California choice-of-law rules, “with respect to regulating or affecting conduct within its borders, the place of the wrong has the predominant interest.” California considers the “ ‘place of the wrong to be the state where the last event necessary to make the actor liable occurred.” The last event here—the accident—took place in Texas. Therefore, the district court did not err in applying Texas law to all claims in the suit.

III.

The Plaintiffs next challenge the district court’s decision to exclude part of expert Michael McCort’s testimony and all of Jerry Wallingford’s. McCort investigated the mechanics of how the fuel tank struck the flange and Wallingford analyzed whether safer alternative designs existed. Because Plaintiffs intended to rely on experts to establish each of the essential elements of products liability claims, the exclusion of their testimony was fatal to Plaintiffs’ case.

We review a district court’s decision to exclude expert testimony for abuse of discretion. “A trial court abuses its discretion when its ruling is based on an erroneous view of the law or a clearly erroneous assessment of the evidence.” “In conducting our review, ‘[w]e are mindful that under Daubert and Fed. R. Evid. 702, a district court has broad discretion to determine whether a body of evidence relied upon by an expert is sufficient to support that expert’s opinion.’ ” The proponent of expert testimony bears the burden of establishing the reliability of the expert’s testimony.

A.

We begin with Plaintiffs’ first expert, engineer Michael McCort. Plaintiffs hired McCort to investigate how the fuel tank was able to contact the flange. McCort traveled to the crash site to collect evidence, studied law enforcement documents about the crash, and inspected both the damaged Soul and an undamaged model. He determined that for the fuel tank to contact the flange, one of two events necessarily occurred: either (1) the entire car lost ground clearance, or (2) the fuel tank dropped independently from the vehicle. He ran several computer simulations, and determined that the body of the car could not have lowered far enough to allow the fuel tank to hit the flange. Therefore, McCort concluded that the fuel tank dropped independently of the vehicle’s body. He did not, however, “know the precise mechanism” of how the fuel tank lowered,, nor did he recreate this occurrence in a simulation.

The district court excluded the portion of McCort’s testimony that argued that the fuel tank moved downward during' the crash sequence. The court reasoned that “McCort’s proffered expert opinions and related testimony regarding the ‘downward displacement theory’ were unreliable and thus, inadmissible for the lack of reliance on sufficient facts or reliable underlying data and do not satisfy any of the requirements of the standards set forth in parts (a)-(d) of Rule 702 of the Federal Rules of Evidence.”

McCort employed a “differential diagnosis approach,” a scientific technique that essentially involves the process of elimination. This Court has previously found a similar methodology to be reliable under Daubert when used by medical experts. In Pipitone v. Biomatrix, Inc., for example, an expert witness, a doctor, used process of elimination to conclude with “99.9%” certainty that the defendant’s drug caused plaintiffs infection. The district court excluded his testimony, but this Court- reversed. We explained that the doctor had satisfied Daubert by “eliminating] ... all other likely alternatives” using “generally accepted diagnostic principles.” Plaintiffs point to Pipitone as evidence of the reliability of differential diagnosis.

But this Court, has cautioned that “the results of a differential diagnosis are far from reliable per se.” In Pipitone, the doctor did not merely “rule out” alternative causes of infection. -He also “ruled in” defendant’s drug as the cause by evaluating “the timeliness of the infection (symptoms of which began to appear hours after the [drug] injection), the source of the [drug], [and] the type of organism (salmonella) that infected [plaintiff].” Other courts have explicitly cautioned that merely “ruling out” other possible explanations is not enough to establish reliability; experts must also have some scientific basis for “ruling in” the phenomenon they allege. This Court has not held—and does not here hold—that differential diagnosis may never satisfy Dauberb. Rather we observe that the district court has broad discretion to make the fact-specific inquiry in a given case as to whether such an approach is sufficiently reliable, especially in the absence of evidence “ruling in” an expert’s conclusion.

The parties dispute whether McCort in fact “ruled in” his downward displacement theory using scientifically reliable methodology. In his initial expert report, McCort indicated that after the accident, the .tank “was found to be approximately the same vertical height” as it normally is on an undamaged vehicle. He speculated that although the tank “had displaced downward” prior to impacting the flange, the “significant forces” from the impact had returned the tank to its normal height. The report did not point to any physical evidence that “ruled in” the theory that the tank had initially displaced downward.

McCort later offered two pieces of evidence to “rule in” his conclusion that the tank displaced downward. First, he observed that the mounting brackets of the fuel tank were “bent” upwards. When deposed, McCort conceded that the bending “probably” was the result of the flange contacting the fuel tank; that is, the mounting brackets did not bend before the fuel tank hit the flange, causing the tank to drop, but rather after the tank hit the flange. McCort reasoned that the bend was nonetheless probative of his downward displacement theory because the fact that the brackets “bent in one direction” suggested that “[tjhere’s no reason they couldn’t bend in another direction”—downwards.

Second, McCort’s declaration states that “Kia’s own testing shows that the tank displaces downward several inches during normal acceleration and deceleration events, even without the vehicle sustaining any collision-related damage.” McCort did not mention this testing in his original report, nor did he reference it during his deposition. Plaintiffs have not pointed to any source in the record substantiating that claim. When mentioning Kia’s internal testing in their briefing, Plaintiffs cite only to McCort’s declaration.

McCort’s claim about Kia’s internal test could help “rule in” his theory, especially if it were otherwise substantiated in the record. The only evidence we found in the record concerning McCort’s theory—besides his own declaration—is in the deposition of Plaintiffs’ other expert, Walling-ford, and he appears to undermine McCort’s position. Defense counsel asked Wallingford about the “sled test” that formed the basis for “[his] opinion that the bottom of the tank bulges.” Wallingford responded that the test appeared “in the ... documentation [that] came from Kia” and begins to concede that he was not familiar with the precise parameters of the testing. The next three pages of the deposition, including the rest of Wallingford’s answer to the question about the particulars of the test, are absent from the record. On the next page of the deposition in the record, Wallingford continued to discuss Kia’s internal testing. He stated that “[i]t shows and should have showed the Kia engineers the tank will significantly swell.” But when asked, “[D]idn’t you just tell us that the swelling of the tank is not a factor in this accident, this tank rupture?” Wallingford replied in the affirmative.

The record is not wholly clear whether Wallingford was discussing the same internal testing referenced in McCort’s declaration. In their briefing, Defendants argue that Wallingford was indeed referring to the same testing as McCort. They maintain that Wallingford’s concession that the swelling was not a factor in this accident undermines McCort’s theory; that Kia’s testing cannot “rule in” the downward displacement theory if the swelling played no role in this accident. Plaintiffs, given the opportunity to clarify that Wallingford was talking about a different phenomenon, did not. Instead, Plaintiffs wrote that:

Defendants’ own testing confirms that the Kia Soul’s fuel tank moves down several inches during normal driving, even when the vehicle is not involved in a crash [citing McCort’s declaration]. Defendants complain that this testimony is irrelevant because this tank “swelling” did not contribute to the crash [citing Defendant’s brief]. This misses the point. Defendants’ contention that it was impossible for the tank to drop during this crash ignores that the tank does drop several inches, under normal driving conditions, even when the vehicle is not damaged.

This language does not reject Defendants’ assertion that the internal testing referenced by McCort is the same internal testing that Wallingford explained was not a factor in this accident. And if Kia’s internal testing showed a phenomenon that, although dangerous, did not play a role in this accident, the probative value of that testing in “ruling in” the downward displacement theory is minimal. Therefore, McCort’s unsubstantiated reference to Kia’s testing is not a reliable basis for his downward displacement theory.

Because the record does not reflect any reliable facts or data “ruling in” McCort’s downward displacement theory, the district. court did not abuse its discretion in excluding it.

B.

The district court also did not abuse its discretion in excluding engineer Jerry Wallingford’s testimony. Walling-ford’s initial report argued, inter alia, that the Soul was unreasonably dangerous and that there were safer alternative designs that Kia could have used. Texas law defines a “safer alternative design” as a design “other than the one actually used” that in reasonable probability:

(a) would have prevented or significantly reduced the risk of the claimant’s personal injury, property damage, or death without substantially impairing the product’s utility and
(b) was economically and technologically feasible at the time the product left the control of the manufacturer or seller by the application of existing or reasonably achievable scientific knowledge.

. Plaintiffs argue on appeal that Walling-ford should have been permitted to testify about two safer alternative designs: a fuel tank shield and fuel tank fastening straps. According to Plaintiffs, Walling-ford would have shown that a fuel tank shield, made of either plastic or metal, would have prevented the fuel tank from dropping in the crash, or would have prevented rupture by “absorbing] or redirecting] the energy from the impact.” Similarly, they maintain that Wallingford could have shown that fuel tank fastening straps would have prevented the tank from moving, or would have raised the tank higher into the cavity of under the vehicle, avoiding contact with the flange. In his investigation, Wallingford reviewed photographs and law enforcement reports from the scene of the accident, Kia’s internal documents about the Soul, and depositions from other parties, including Kia’s experts. He also employed “the laws of physics” and his own experience and education.

The district court excluded his testimony, writing that:

Mr. Wallingford’s proffered expert opinions and related testimony regarding the fuel tank straps and fuel tank shield are unreliable and thus, inadmissible for the lack of reliance on sufficient facts or reliable underlying data, and do not satisfy any of the requirements of the standards set forth in parts (a)-(d) of Rule 702 of the Federal Rules of Evidence.

The district court’s order also indicates that its exclusion was, at least in part, due to Wallingford’s dependence on McCort’s theory that the tank displaced downwards during the accident. The court wrote that “[i]n particular, Wallingford’s opinions are based on the premise [from McCort’s report] that ‘following the initial crash, the fuel tank deformed downward.’ ” Since the court had already deemed McCort’s testimony inadmissible, it concluded that Wall-ingford’s testimony about safer alternative designs was also inadmissible.

Plaintiffs argue that this conclusion rested upon “a clearly erroneous assessment of the evidence,” because Wallingford only partially incorporated McCort’s theory into his; Indeed, Wallingford’s report concluded that a shield would have protected the fuel tank from rupture upon contact with the flange, whether the tank dropped or not. In this regard, the record shows that Wall-ingford’s conclusions were, at least in part, independent from McCort’s inadmissible theory. To the extent the district court’s exclusion of Wallingford’s testimony about the shields rested upon its understanding to the contrary, the court erred.

On the other hand, the district court correctly determined that Wallingford’s fuel tank straps theory necessarily rested upon McCort’s inadmissible downward-displacement theory. Wallingford reasoned that using straps to raise the tank would have “maximized] the ground clearance” such that the tank avoided contact with the flange. He substantiated this theory by looking to the measurements of the flange, the Soul’s ground clearance, and the height at which the flange contacted the tank. It is undisputed that the flange was 3.25 inches in height. Wallingford provided varying measurements for the ground clearance of the Kia Soul, depending on the occupancy of the vehicle. He first reported that the fuel tank “has a ground clearance of approximately 210 millimeters (slightly more than 8 inches)” and jater explained that “the gas tank rides about 6 inches off of the ground when carrying five passengers.” Wallingford also' observed that the top of the flange contacted the front of the fuel tank approximately two inches above the bottom of the tank.

Wallingford’s theory must account for the gap.between the top of the flange— 3.25 inches off the ground—and the height at which Wallingford asserts it contacted the tank—approximately 8 inches off the ground. McCort’s theory about tank displacement is not the only way to account for the closing of this gap. For instance, the wheels could have deflated, sinking the entire car lower to the ground. But that was not Wallingford’s theory. Instead, he relied on McCort’s theory, writing- that “[h]ad Kia used fuel mounting straps, rather than direct mounting of the fuel tank, the downward deformation of the fuel tank would have been minimalized preserved [sic] the ground clearance of the fuel tank.”

On appeal, Plaintiffs argue that “Wall-ingford’s opinions-regarding the use of the fuel tank straps are not reliant upon the opinions of Mr. McCort.” They reason that McCort analyzed mounting bolts, “a completely different technology” than straps. This distinction bears no logical relevance to whether Wallingford relied on McCort’s theory that the tank displaced downwards. Plaintiffs also insist that “the use of fuel tank straps would have -increased the ground clearance of the fuel tank sufficiently to avoid contact with the signpost base regardless of how the tank ultimately dropped.” That may be true, but nothing in Wallingford’s report, testimony, or declaration explains how lifting the tank would have prevented the rupture here without assuming the tank was already lower to the ground than usual. Therefore, the district court properly excluded Wall-ingford’s theory about fuel tank straps, because it relied on McCort’s inadmissible downward displacement theory.

Turning to the court’s exclusion of Wall-ingford’s shield theory, we again conclude that the district court did not abuse its discretion. After briefing from both parties, the court held a Daubert hearing concerning the admissibility of Wallingford’s proffered testimony. Defendants raised essentially the same arguments they do on appeal. Specifically, they argued that Wall-ingford’s proposed fuel tank shield (i) would not have made a difference in this accident; (ii) had not been subject to risk-utility analysis; and (iii) had not been shown to be technologically or economically feasible.

Some of these arguments are without merit. For instance, under Texas law, a claimant can establish the technical feasibility of a safer alternative design by showing its use by others in the industry. Wallingford’s report indicated that at least some kinds of tank shields were widely used by car manufacturers—including Kia—well before this accident. Defendants’ experts also indicated that fuel shields were commonly used in the industry. Therefore, Wallingford likely met his burden of demonstrating technical feasibility.

Wallingford also offered some evidence that the alternative designs were possible from a risk-utility perspective. In Texas, “the plaintiff must show the safety benefits from the proposed design are foreseeably greater than the resulting costs, including any diminished usefulness or diminished safety.” The burden is minimal: plaintiffs need only offer “some evidence that their alternative design ... would not have introduced other dangers of equal or greater magnitude.” Here, Wallingford initially reported that “the use of a fuel tank shield would not have hindered the performance of the vehicle.” He later added, “I have concluded that the benefits far outweigh any impairment in utility,” but noted additional weight as one potential minor impairment. Those assertions probably meet his minimal burden to show the risk-utility of the alternative designs.

On the other hand, Defendants have a strong argument that Wallingford did not show that shields would have made a difference in this case. That is, they argue that Wallingford cannot establish that the absence of a shield caused the fuel tank to rupture here. The record shows, and the district court agreed, that this argument was central to Wallingford’s testimony. During the Daubert hearing, the court said that “[t]he causation issue, what caused it to rupture is, to me, the most important thing here.”

Plaintiffs argue that Wallingford met his burden to establish causation. In his report, he indicated that a “fuel tank shield would have absorbed or redirected the energy from the impact,” preventing the rupture. Plaintiffs note that Walling-ford was not required under Texas law to actually “build and test” a model of the shield in order to establish that it is a safer alternative design. The proposed design need only be “capable of being developed.” As Wallingford stated during his deposition, “from a monetary standpoint” he could not justify building a full-size prototype to test whether his proposed design would withstand recreated crash conditions.

However, as this Court explained in Casey v. Toyota, “Texas law expects that an alternative design be tested before a jury can reasonably conclude that the alternative would prevent or reduce the risk of injury.” This testing need not entail actually constructing a model shield; testing can be as simple as applying math and physics to establish the viability of a design. In General Motors v. Sanchez, for instance, the Supreme Court of Texas explained that plaintiffs in design defect cases do not have to “build and test” a prototype “to prove a safer alternative design.” But the expert in Sanchez relied on more than his own condusory testimony. As the court emphasized, the Sanchez expert used “engineering principles” to “support his conclusion” that his proposed design would lower the risk of accident from ten percent to one percent. Wallingford offered no such figures.

Plaintiffs also point to a recent Supreme Court of Texas case, Genie Industries v. Matak, in which the court reiterated that a safer alternative design “need not be actually built and tested.” There, the court reviewed plaintiffs expert’s testimony about possible safer alternative designs, and found only “weak” and conclusory evidence that the proposed designs would have prevented the accident. However, concluding that there was more “than a scintilla” of evidence, the court upheld the jury’s determination that there were safer alternative designs. Genie Industries does little to help Plaintiffs here. The Genie court was reviewing a jury”s judgment in favor of the plaintiff, necessitating a deferential standard of review. The Genié court’s description of the expert’s evidence suggests that the testimony would not have survived a more stringent review. Here, we review the district court’s exclusion of an expert for an abuse of discretion.

Finally, Plaintiffs argue that Defendants’ expert provided testimony supporting Wallingford’s causation argument. Specifically, Defense expert Jack Ridenour testified that Ford built its Panther Platform vehicles with fuel tank shields as “part of the solution” to the problem of fuel tanks rupturing. Since Panther Platforms were used as law enforcement vehicles, they were often involved in collisions involving speeds in excess of 100 miles per hour. Ridenour testified that the shields, along with “other upgrades,” “improved the performance of the vehicle [but] [t]hey did not eliminate the risk.” Ford “felt that they were effective upgrades.” Since it is undisputed that the collision here involved speeds of less than 100 miles per hour, Plaintiffs argue that Ridenour’s testimony shows that a fuel tank shield would have prevented the rupture of the Kia Soul’s tank.

This conclusion requires quite a leap. Ridenour stated that Ford “felt” that the fuel tanks shields—in conjunction with trunk packs and other changes not named in the record—were effective. He also said they improved the vehicle’s performance, although he did not specifically say in what regard. Ridenour also noted that the changes did not eliminate “the risk,” presumably of tank rupture. Reviewing for abuse of discretion, we cannot conclude that Ridenour’s testimony provided a reliable basis for Wallingford to conclude that a fuel tank shield would have prevented rupture in this case.

Wallingford also failed to establish the economic feasibility of the alternative designs. In Texas, experts testifying about safer alternative designs must establish that the designs were economically feasible. Wallingford did not discuss the issue in his report. After the Defendants moved to exclude his testimony, arguing inter alia that he failed to show economic feasibility, Plaintiffs submitted a sworn declaration, in whieh Wallingford described the cost of shields and straps.

At the Daubert hearing, the court expressed some concern that Wallingford had not provided any information about economic feasibility in his original report. Defense counsel stated that Plaintiffs “[were] trying to fill that gap up now,” with the declaration, to which the court responded, “[w]ell, is that something beyond his report?” After defense counsel explained that it was, the court replied that it would “think some more about that.”

Plaintiffs argue that Wallingford implicitly showed the alternative designs’ economic feasibility by noting that the designs are widely used in the automobile industry. But “[w]hile the use of an alternative design by another manufacturer may establish technological feasibility, [Texas courts] have held that, as a matter of law, it does not establish economic feasibility.” On appeal, Plaintiffs do not mention Walling-ford’s sworn declaration about costs,, apparently abandoning the argument that it serves to “fill a gap” in his original report.

Finally, Plaintiffs insist that Defendants created the gap in Wallingford’s theories by failing to ask him relevant questions during his deposition and by cutting him off when he was starting to provide more thorough explanations of his theory. This argument misconstrues the burden of proof in matters of expert testimony. It is Plaintiffs who bear the burden of establishing the reliability of the expert’s testimony. Defendants are not obligated to help Plaintiffs meet that burden during depositions.

Because the district court did not abuse its discretion in determining that Plaintiffs’ experts did not rely on sufficiently reliable methods and data, we affirm its exclusion of some of McCort’s testimony and all of Wallingford’s.

IV.

Finally, Plaintiffs argue that the district court should not have granted summary judgment in favor of Defendants. We disagree. Summary judgment is proper if “the movant shows that there is no genuine dispute as to any material fact.” Our review of the district court’s grant of summary judgment is de novo.

Under Texas law, “expert testimony is generally encouraged if not required to establish a products liability claim.” In particular, expert testimony is crucial in establishing that the alleged design defect caused the injury. As the district court correctly concluded, without admissible expert testimony, the plaintiffs cannot raise a genuine issue of material fact concerning key elements of their products liability claim. It follows that the court properly granted summary judgment in favor of,the defendants.

We AFFIRM the judgment of the district court.

      . KMC is headquartered in South Korea.

      . Ellis v. Trustmark Builders, Inc., 625 F.3d 222, 225 (5th Cir. 2010).

      . Kearney v. Salomon Smith Barney, Inc., 39 Cal.4th 95, 45 Cal.Rptr.3d 730, 137 P.3d 914, 922 (2006).

      . In diversity cases, when the initial forum selected by a plaintiff is proper, the transferee court must apply the same state law and choice of law rules that the transferor court would have applied but for the transfer. Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964).

      . Kearney, 45 Cal.Rptr.3d 730, 137 P.3d at 922 (citations omitted).

       o o c o a ü Ed tn O P < R» v to o tn P 2 ⅛ *>j n -a o o o ¾ H ⅜ s

      . Compare Tex. Civ. Prac. & Rem. Code § 33.004(e), with Cal. Civ. Proc. Code (lacking an equivalent provision).

      . Tex. Civ. Prac. & Rem. Code § 82.005(b); Barker v. Lull Eng’g Co., 20 Cal.3d 413, 423-26, 143 Cal.Rptr. 225, 573 P.2d 443 (1978).

      . Texas probably also has an interest in enacting legislation to attract businesses like Kia to the state. Plaintiffs contend that under California’s governmental interest approach, states have no interest in limiting the recovery of their own residents where the tortfeasors are not residents of that state. See Hurtado v. Superior Court, 11 Cal.3d 574, 114 Cal.Rptr. 106, 522 P.2d 666, 670 (1974). But Hurtado and similar cases may be limited to situations wherein the out-of-state defendants are individuals, not corporations. In fact, the California Supreme Court has since recognized that "nothing ... suggests that a state’s interest in the application of a statute limiting liability for specified commercial activity carried on within the state applies only to local companies and not equally to out-of state companies doing business within the state.” McCann v. Foster Wheeler LLC, 48 Cal.4th 68, 93, 105 Cal.Rptr.3d 378, 225 P.3d 516 (2010).

      . The Joint Pretrial Order submitted by both parties included as a fact "established by pleadings, by stipulations, and/or by admissions” that the 2010 Kia Soul was "designed, tested, and manufactured by Defendant Kia Motors Corporation,” which is in Korea,

      . See Hernandez v. Burger, 102 Cal.App.3d 795, 802, 162 Cal.Rptr. 564 (1980).

      . Mazza v. Am. Honda Motor Co., 666 F.3d 581, 593 (9th Cir. 2012); cf. Zinn v. Ex-Cell-O Carp., 148 Cal.App.2d 56, 80 n.6, 306 P.2d 1017 (1957) (concluding in a fraud case that the place of the wrong was the state where the misrepresentations were communicated to the plaintiffs, not the state where the intention to misrepresent was formed or where the misrepresented acts took place),

      . See Hill v. Novartis Pharm. Corp., No. 1:06-CV-00939-AWI, 2012 WL 967577, at *7 (E.D. Cal. Mar. 21, 2012) (holding that the last event necessary to make defendant liable in products liability case took place at the scene of injury).

      . These elements include that (1) there was a safer alternative design, and (2) the defect was a producing cause of the personal injury, property damage, or death for which the claimant seeks recovery. Tex. Civ. Prac. & Rem. Code § 82.005(b).

      . Gen. Elec. Co. v. Joiner, 522 U.S. 136, 142-43, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997).

      . Bocanegra v. Vicmar Servs., Inc., 320 F.3d 581, 584 (5th Cir. 2003).

      . In Daubert v. Merretl Dow Pharm., Inc., 509 U.S. 579, 593-94, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) the Supreme Court offered a list of factors that district courts may use in evaluating the reliability of expert testimony. These factors include whether the expert's theory or technique: (1) can be or has been tested; (2) has been subjected to peer review and publication; (3) has a known or potential rate of error or standards controlling its operation; and (4) is generally accepted in the relevant scientific community. Later, in Kumho Tire Co. v. Carmichael, 526 U.S. 137, 150, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999), the Supreme Court emphasized that the Daubert analysis is a "flexible” one, and that "the factors identified in Daubert may or may not be pertinent in assessing reliability, depending on the nature of the issue, the expert’s particular expertise, and the subject of his testimony.”

      . Rule 702 provides that "[a] witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:
      (a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;
      (b) the testimony is based on sufficient facts or data;
      (c) the testimony is the product of reliable principles and methods; and
      (d) the expert has reliably applied the principles and methods to the facts of the case.”

      . Johnson v. Arkema, Inc., 685 F.3d 452, 458-59 (5th Cir. 2012) (quoting Knight v. Kirby Inland Marine Inc., 482 F.3d 347, 354 (5th Cir. 2007)); see also Rider v. Sandoz Pharm. Corp., 295 F.3d 1194, 1197 (11th Cir. 2002) ("[Jjudges have considerable leeway in both how to test the reliability of evidence and determining whether such evidence is reliable.” (citing Kumho, 526 U.S. at 151-53, 119 S.Ct. 1167)).

        .Johnson, 685 F.3d at 458,

      . McCort’s declaration is in the record. There is no dispute about his qualifications, which include an engineering background and several years of experience in accident reconstruction.

      . See Baker v. Daikon Shield Claimants Trust, 156 F.3d 248, 252-53 (1st Cir. 1998).

      . See Pipitone v. Biomatrix, Inc., 288 F.3d 239 (5th Cir. 2002).

      . Id. at 248.

      . Id. at 248, 246.

      . Johnson., 685 F.3d at 468; see also Moore v. Ashland Chem. Inc., 151 F.3d 269, 278-79 (5th Cir. 1998) (affirming the district court’s exclusion of án expert who performed differential diagnosis of possible causes of plaintiff’s illness, but failed to present reliable evidence otherwise supporting his opinion defendant’s chemical was the cause).

      . Id.

        .See Ruggiero v. Warner-Lambert Co., 424 F.3d 249, 254 (2d Cir. 2005) (“Where an expert employs differential diagnosis to ‘rule out’ other potential causes for the injury at issue, he must also 'rule in' the suspected cause, and do so using 'scientifically valid methodology' ”) (citations omitted); Buck v. Ford Motor Co., 810 F.Supp.2d 815, 830 (N.D. Ohio 2011) ("[Wjhere an expert employs differential diagnosis to 'rule out other potential causes for the injury at issue, he must also rule in the suspected cause, and do so using scientifically valid methodology’ ”); Fireman’s Fund Ins. Co. v. Tecumseh Prods. Co., 767 F.Supp.2d 549, 555 (D. Md. 2011) (expert must show that “objects and materials are capable of behaving in the manner [he] hypothesize[d] under the conditions of the event in question”).

      . See Ruggiero, 424 F.3d at 254 ("We cannot say that a differential diagnosis may never provide a sufficient basis for an opinion as to general causation." ... The district judge has broad discretion in determining whether in a given case a differential diagnosis is enough by itself to support such an opinion”).

      . "Q: And—but that bending could be in conjunction with the slip base interacting with the fuel tank? A: I agree, and I think it probably is.”

      . See generally First United Fin. Corp. v. U.S. Fid. & Guar. Co., 96 F.3d 135, 141 (5th Cir. 1996) (Garza, J., concurring) (discussing the tension between Fed. R. Evid. 703, which allows experts to state opinions based on facts or data outside the record, and Fed. R. Civ. P. 56(e), which requires affidavits to set forth specific facts establishing a genuine issue of material fact). This Court has not yet resolved the apparent inconsistency between the leeway given experts under Rule 703 and the specificity requirements of Rule 56. Stagliano v. Cincinnati Ins. Co., 633 Fed.Appx. 217, 220 n.2 (5th Cir. 2015). We need not resolve the issue here, but we note that McCort’s claim that Kia’s testing showed downward displacement would be stronger if there were documentation of such testing in the record.

      . “Q: What were the parameters of this test? What was the speed, direction, et cetera? A: I have not looked at in particularly [sic] to see what the .... ”

      . “This particular one, .but it’s extremely poor engineering design ....”

      . Wallingford also originally intended to testify as to the vehicle's crashworthiness. The district court excluded this testimony, a decision which Plaintiffs have not appealed.

      . Tex. Civ. Prac. & Rem, Code § 82.005(b).

      . Wallingford originally argued that a different fuel tank service cover would have also prevented Mr. Sims’s death, but Plaintiffs do not argue on appeal that he should have been allowed to testify about that alternative design.

      . Bocanegra v. Vicmar Servs,, Inc., 320 F.3d 581, 584 (5th Cir.2003).

      . However, the district court’s exclusion of Wallingford's testimony did not rest entirely upon its view, that Wallingford’s testimony built upon McCort’s. As excerpted above, the court also cited to Rule 702 generally. The record provides ample support for the position that Wallingford’s shield theory cannot satisfy Daubert even assuming it did not build upon McCort’s theory.

      . In fact, Plaintiffs' other expert, McCort, insisted that the body, of the car could not -have sunk low enough to cause the fuel tank to contact the flange.

      . See Goodner v. Hyundai Motor Co., Ltd., 650 F.3d 1034, 1043-44 (5th Cir. 2011) (citing Honda of Am. Mfg. Inc. v. Norman, 104 S.W.3d 600, 607 (Tex. App. 2003)).

      . Hodges v. Mack Trucks Inc., 474 F.3d 188, 196 (5th Cir. 2006) (internal quotations omitted).

      . Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 337-38 (Tex. 1998) (emphasis added); cf. Smith v. Louisville Ladder Co., 237 F.3d 515, 520 (5th Cir. 2001) (reversing verdict where plaintiff "conceded ... he made no risk-benefit analysis, including what additional hazards" his new design would have caused).

      ,Wallingford provided this additional information through a declaration submitted after his initial report and deposition. Defendants note that Wallingford had the opportunity to disclose the information contained in the declaration earlier, but they have not explicitly argued that the information cannot be considered because of its alleged untimeliness. Instead, Defendants argue that the declaration is a "sham" because it is inconsistent with Wallingford’s deposition. Even if this inconsistency is a "sham,” the proper remedy is not striking the entire declaration but rather the inconsistent part. See Cole v. Frank's Casing Crew & Rental Tools, Inc., No. CIV.A.H-04-2566, 2005 WL 2647966, at *5 (S.D. Tex. Oct. 17, 2005).

      . See Gen. Motors Corp. v. Sanchez, 997 S.W.2d 584, 592 (Tex. 1999); see also Genie Indus., Inc. v. Matak, 462 S.W.3d 1, 7 (Tex. 2015).

      . Gen. Motors Corp., 997 S.W.2d at 592; see also Genie Indus., 462 S.W.3d at 7; Boatland of Hous., Inc. v. Bailey, 609 S.W.2d 743 (Tex. 1980).

      . Casey v. Toyota Motor Eng’g & Mfg. N. Am., Inc., 770 F.3d 322, 332 (5th Cir. 2014).

      . Sanchez, 997 S.W.2d at 591.

      . 462 S.W.3d 1 (Tex. 2015).

      . Id. at 9.

      . Id. at 9, 12.

      . Id. at 3.

      . See id. at 8 ("Absent more, [the expert’s] testimony is the mere ipse dixit of a credentialed witness"); id. ("[The expert's] conclusion that the design would have been safer ... has little support in the evidence”); id. (“The obvious flaw in the [proposed alternative] design is that it would do little to prevent misuse”).

      . Further obscuring Ridenour’s testimony is the fact that Plaintiffs only provided select excerpts from the deposition. For instance, pages 75-77 of his testimony are absent from the record, despite being right in the middle of his testimony concerning fuel tank shields,

      . Tex. Civ. Prac. & Rem. Code § 82.005(b).

      . The declaration explained that fuel tank shields cost between $40 and $300, and fuel tank straps cost $25 to $85.

      . Honda of Am. Mfg., Inc. v. Norman, 104 S.W.3d 600, 607 (Tex. App. 2003); see also Goodner v. Hyundai Motor Co., 650 F.3d 1034, 1043-44 (5th Cir. 2011) ("A few Texas appellate courts have found that the use of an alternative design by another manufacturer alone cannot establish economic feasibility.”); Smith v. Aqua-Flo, Inc., 23 S.W.3d 473, 477 (Tex. App 2000); Jaimes v. Fiesta Mart, 21 S.W.3d 301, 306 (Tex. App. 1999).

      . Johnson, 685 F.3d at 458.

      . Fed. R. Civ. P. 56(a).

      . Tiblier v. Dlabal, 743 F.3d 1004, 1007 (5th Cir. 2014).

      . Ford Motor Co. v. Ledesma, 242 S.W.3d 32, 42 (Tex. 2007).

      . See Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 583 (Tex. 2006) (holding that expert testimony was required to establish causation in products liability case, because ‘‘[a] lay juror's general experience and common knowledge do not extend to whether design defects such as those alleged in this case caused releases of diesel fuel during a rollover accident”); Nissan Motor Co. v. Armstrong, 145 S.W.3d 131, 137 (Tex. 2004) (holding, in a case where the plaintiff alleged and the jury found design, manufacturing, and marketing defects, that “[i]n [prior] cases, it was not enough that a vehicle accelerated when claimants swore they had done nothing. Instead, we have consistently required competent expert testimony and objective proof that a defect caused the acceleration. ... These requirements are not peculiar to unintended acceleration cases.").


source: Caselaw Access Project

author: HAYNES, Circuit Judge:

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellee v. Lydia VASQUEZ, Defendant-Appellant
    No. 15-41168
    United States Court of Appeals, Fifth Circuit.
    October 5, 2016

      Andrew R. Gould, Assistant U.S. Attorney, U.S. Attorney’s Office Southern District of Texas, Houston, TX, Renata Ann Gowie, Assistant U.S. Attorney, U.S. Attorney’s Office, Houston, TX, for Plaintiff-Appellee.
    Marjorie A. Meyers, Federal Public Defender, Federal Public Defender’s Office, Houston, TX, Evan Gray Howze, Federal Public Defender’s Office, Southern District of Texas, Houston, TX, Fernando G. Man-das, Edinburg, TX, Scott Andrew Martin, Assistant Federal Public Defender, Federal Public Defender’s Office, Southern District of Texas, Houston, TX, H. Michael Sokolow, Assistant Federal- Public Defender, Federal Public Defender’s Office, Southern District of Texas, Houston, TX, Lydia Vasquez, Raymondville, TX, for Defendant-Appellant.
    Before STEWART, Chief Judge, and CLEMENT and HAYNES, Circuit Judges. •
   HAYNES, Circuit Judge:

Lydia Vasquez appeals the 140-month sentence she received for knowingly enticing and coercing an individual to engage in unlawful sexual activity under 18 U.S.C. § 2422(a). Vasquez challenges whether an eight-level enhancement for an offense involving a minor under twelve years of age should have applied to increase her sentence, see U.S. Sentencing Guidelines Makual (“U.S.S.G.”) § 2G1.3(b)(5) (U.S. Sentencing Comm’n 2015), when she knew the minor was fictitious because she had made the infant up. We hold that § 2G1.3(b)(5) does not apply when a defendant invents and offers a fictitious minor under twelve years of age to entice another person to engage in unlawful sexual activity. By failing to consider whether the alleged minor actually existed, the district court did not make the factual findings necessary to apply § 2G1.3(b)(5)' in this case. We therefore VACATE the sentence and REMAND the case to the district court for further factual findings and resentencing consistent with this opinion.

I. Background

Vasquez, a mother of five children, had a relationship by phone, text, and internet with a man named Keith who lived in another ’state. At some point, Vasquez discussed having Keith visit her and attempted to entice him to visit by suggesting that Keith could have sexual relations with Vasquez’s twelve-year-old daughter and her cousin’s allegedly unborn infant after the infant’s birth. An undercover FBI agent assumed Keith’s identity online and continued to engage in conversations with Vasquez, culminating in a plan for Keith to visit her in August 2014. Vasquez was arrested on her way to pick üp Keith at the airport.

Vasquez pleaded guilty to inducing and enticing Keith to travel interstate to engage in indecency with a child, in violation of 18 U.S.C. § 2422(a). The district court adopted the Presentence Investigation Report (“PSR”) and determined that Vasquez faced a Guidelines range of 135-168 months of imprisonment. It then sentenced Vasquez to 140 months of imprisonment and five years of supervised release. Based upon Vasquez’s conversations with Keith about the alleged unborn infant, the district court applied the eight-level enhancement in U.S.S.G. § 2G1.3(b)(5), concluding that Vasquez’s conduct involved a minor under the age of twelve, even if that minor was fictitious.

II. Standard of Review

We review the district court’s interpretation and application of the Guidelines de novo and its underlying factual findings for clear error. See United States v. Reyna-Esparza, 777 F.3d 291, 293-94 (5th Cir. 2015). “If the district court made a legal error that affected its factual findings, ‘remand is the proper course unless the record permits only one resolution of the factual issue.’ ” Ball v. LeBlanc, 792 F.3d 584, 596 (5th Cir. 2015) (quoting Pullman-Standard v. Swint, 456 U.S. 273, 292, 102 S.Ct. 1781, 72 L.Ed.2d 66 (1982)).

III. Discussion

Section 2G1.3(b)(5) of the Guidelines applies an eight-level enhancement if a defendant has a base level covered by §, 2G1.3(a)(4), as did Vasquez, and if “the offense involved a minor who had not attained the age of 12 years.” U.S.S.G. § 2G1.3(b)(5). In the Commentary relevant to this appeal, the Guidelines define a “minor” as

(A) an individual who had not attained the age of 18 years; (B) an individual, whether fictitious or not, who a law enforcement officer represented to a participant (i) had not attained the age of 18 years, and (ii) could be provided for the purposes of engaging in sexually explicit conduct; or (C) an undercover law enforcement officer who represented to a participant that the officer had not attained the age of 18 years.

Id. § 2G1.3 cmt. n.l. The parties agree that only the definition listed under “(A)” would apply in this case because this offense did not involve a fictitious individual invented by a law enforcement officer or a law enforcement officer presenting as a minor.

Vasquez argues that the district court improperly applied the eight-level enhancement under U.S.S.G. § 2G1.3(b)(5) for an offense involving a minor under twelve years of age. She contends that the enhancement in § 2G1.3(b)(5) does not apply to “a fictitious being represented to be real by an offense participant to another participant.” Vasquez also asserts that the district court based its application qf the enhancement on an infant Vasquez made up and knew to be imaginary, and made no finding that there was a real infant.

The government argues that the enhancement should apply even if the district court did not find that Vasquez’s offense involved a real infant. To support applying the enhancement in this situation, the government cites cases in which circuit courts have chosen to apply similar enhancements to punish the defendant’s intent, all involving undercover officers either posing as fictitious minors or proffering fictitious minors. See, e.g., United States v. Angwin, 560 F.3d 549, 552-53 (6th Cir. 2009); United States v. Vance, 494 F.3d 985, 996 (11th Cir. 2007), superseded by regulation, U.S.S.G. supp. app. C, Amendment 732 (Nov. 2009), as recognized in United States v. Jerchower, 631 F.3d 1181, 1186—87 (11th Cir. 2011). This case does not involve either of those circumstances, which implicate definitions of “minor” not relevant to this case. See § 2G1.3 cmt. n.1.

We find instructive the Eleventh Circuit’s interpretation of a similar enhancement applying the same definition of “minor” involved here:

The only part of the definition of “minor” in the commentary to U.S.S.G. § 2G2.2 that does not include the involvement of a law enforcement officer is “an individual who had not attained the age of 18 years.” See § 2G2.2 cmt. n.l(A). In other words, where the defendant is not dealing with a law enforcement officer, the enhancement applies only where the “minor” actually is a true, real live, sure enough minor.

United States v. Fulford, 662 F.3d 1174, 1181 (11th Cir. 2011) (emphasis added). Applying Fulford’s reasoning to the applicable definition of . “minor” in § 2G1.3(b)(5), we hold that the enhancement in § 2G1.3(b)(5) does not apply where the defendant solicits another person to engage in unlawful sexual activity with a fictitious minor, invented by the defendant, under twelve years of age. For the enhancement to apply under these circumstances, the minor must be a real person.

Here, Vasquez attempted to entice another person to engage in unlawful sexual activity with an alleged infant. The district court, without determining whether the infant was a real person, erroneously concluded that the enhancement applied even if the infant was fictitious. When Vasquez’s counsel objected that the eight-level enhancement should not apply because the infant was fictitious, the district court responded that “whether or not the child existed is not the issue.” The district court then went on to say that “you can have a fictitious minor and this is what this was, even if there was nobody that was going to give her a child, she was talking about at the very, very least a fictitious minor.” This legal error infected the district court’s factual findings, as the record does not clearly contain any factual findings about whether the infant Vasquez discussed was real. We therefore vacate Vasquez’s sentence and remand to the district court to make additional factual findings about whether the infant was real. Absent such factual findings in the record, we cannot determine whether the enhancement in § 2G1.3(b)(5) was properly applied.

Accordingly, we VACATE the district court’s sentence and REMAND the case to the district court for further proceedings consistent with this opinion.

      . This conclusion does not implicate whether a defendant may receive an enhanced sentence for seeking to entice unlawful sexual activity with a fictitious minor invented and proffered to defendant by a law enforcement officer. Indeed, situations involving law enforcement officers are explicitly addressed in the Guidelines and differ from the factual circumstances in this case. See U.S.S.G. § 2G1.3 cmt. n.l.

      . The parties also agree that the oral pronouncement of Vasquez’s sentence conflicted with the written judgment imposing her sentence, and that several special conditions of supervised release should therefore be vacated and the case remanded to the district court to eliminate the conflicts. On remand, the district court should reconcile these conflicts between the written judgment and the oral pronouncement.

      . Vasquez no longer argues, as she did before the district court, that a two-level enhancement for use of a computer was improperly applied under U.S.S.G. § 2G1.3(b)(3). She has therefore abandoned this argument. BIS Salamis, Inc. v. Dir., Office of Workers' Comp. Programs, 819 F.3d 116, 131 n.10 (5th Cir. 2016) (noting that claim was “abandoned” where plaintiff did not "explicitly contest the denial of his claim”).

      . See also Mohamad v. Palestinian Auth., — U.S. -, 132 S.Ct 1702, 1706, 182 L.Ed.2d 720 (2012) (concluding that “ 'individual' ordinarily means ‘[a] human being, a person' ” and "refer[s] unmistakably to a natural person” (first alteration in original) (citations omitted)); United States v. Vargas-Duran, 356 F.3d 598, 602 (5th Cir. 2004) (en banc) (noting that the Guidelines are interpreted according to the ordinary rules of statutory 'construction, including that the words of the Guidelines should be given their plain meaning absent ambiguity).

        .- The PSR stated that Vasquez "informed [Keith] that she was going to be given a newborn child,” but it also noted that an FBI Agent “was unable to identify the relatives of the unborn child." The government asks the court to infer from the PSR that the district court found that the infant Vasquez discussed was real, since the district court adopted the PSR in full. However, even if the district court’s adoption of the PSR could normally stand for an implicit finding on this issue, the district court’s conclusion that it need not consider whether the alleged unborn infant existed belies such an implicit finding.


author: EDITH H. JONES, Circuit Judge:

text:
    In the MATTER OF: Martha L. MONACO; Adam L. Monaco; Hope Elaine Monaco, Debtors. Adam L. Monaco, Appellant, v. Tag Investments, Limited, Appellee.
    No. 15-51085
    United States Court of Appeals, Fifth Circuit.
    Filed October 6, 2016

      Dean William Greer, Law Offices of Dean W. Greer, San Antonio, TX, for Appellant.
    Michael James O’Connor, Law Offices of Michael J. O’Connor, San Antonio, TX, for Appellee.
    Before REAVLEY, DAVIS, and JONES, Circuit Judges. .
   EDITH H. JONES, Circuit Judge:

This appeal arises out of a construction contract gone awry and subsequently complicated by bankruptcy. The district court opinion held that Monaco individually owes TAG Investments, Ltd. (“TAG”) $171,942.03, a nondischargeable debt under bankruptcy law (11 U.S.C. § 523(a)(4)) arising from the Texas Construction Trust Fund Act (“CTFA”), Tex. Prop. Code Ann. § 162.001. Monaco appeals on several bases, most notably for our purposes relying on the affirmative defense built into the CTFA (§ 162.031(b)). Based on that defense, we reverse and remand with directions to discharge the debt.

BACKGROUND

In 2004, TAG entered into a stipulated sum contract with Buildings by Monaco, Inc. (“BBM”). The contract called for the construction of a luxury home in San Antonio, Texas. BBM served as the general contractor on the project and the contract called for progress payments which required BBM to submit an application to the architect for approval and swear that all subcontractors and supplies had been paid and lien releases had been obtained.

Despite BBM’s certifications, TAG began to receive lien notices from BBM’s subcontractors and suppliers in 2005 and fired BBM. At that time, TAG had paid BBM $1,783,662.40, and BBM had dispensed $1,600,377.78 to its subcontractors and suppliers.

TAG hired a new contractor, San Antonio Realease Management, Inc. (“SARME-CO”), to assume BBM’s subcontracts and to pay off the liens. TAG then reimbursed SARMECO in the amount of $171,942.03, and TAG demanded payment from BBM.

Four years later, Monaco individually and BBM filed Chapter 7 bankruptcy cases. Neither had paid TAG the $171,942.03 that TAG had paid SARMECO and that TAG believed it was due. TAG filed an adversary proceeding against Monaco for his misapplication of trust funds, Tex. Prop. Code Ann. § 162.031 (extending liability to officers of the “trustee”), and alleged that the debt Monaco owed was nondischargeable under 11 U.S.C. § 523(a)(4), which excepts from discharge debts for “for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.” The bankruptcy court agreed and rendered judgment in favor of TAG and against Monaco in the amount of $171,942.03.

On appeal, the district court initially vacated the bankruptcy court’s judgment and remanded the' case with instructions to address: (1) whether TAG has standing to recover for payments made by SARME-CO; (2) if so, whether Monaco is entitled to a setoff for amounts withheld as retainage; and (3) the basis for the calculation of actual damages owed to TAG. On remand, the bankruptcy court concluded that TAG has standing, via equitable subrogation, to recover for payments made by SARMECO and that Monaco is not entitled to a setoff for amounts withheld as retainage, and it clarified the debt calculation. The district court then affirmed the bankruptcy court’s judgment on October 21, 2015.

On appeal, Monaco raises several issues. He disputes that the CTFA authorizes TAG’s standing via equitable subrogation and complains that TAG’s recovery would violate the one satisfaction rule. Monaco contends he did not violate the CTFA, but in any event, CTFA § 162.031(b) provides an affirmative defense that relieves Monaco of the judgment. Because wé hold that the affirmative defense is applicable in this case, we need not rule on the other three bases for Monaco’s appeal.

STANDARD OF REVIEW

We review de novo a district court’s decision affirming a bankruptcy court’s application of the law and review its findings of fact for clear error. Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1307-08 (5th Cir.1985).

DISCUSSION

The CTFA holds liable any “trustee who, intentionally or knowingly or with intent to defraud, directly or indirectly retains, uses, disburses, or otherwise diverts trust funds without first fully paying all current or past due obligations incurred by the trustee to the beneficiaries of the trust funds.” Tex. Prop. Code Ann. § 162.031(a). The bankruptcy court concluded that “Monaco acted intentionally to obtain further payments from TAG despite not paying the subcontractors and suppliers in violation of the CTFA.” In re Monaco, 514 B.R. 477, 481 (Bankr. W.D. Tex. 2014).

Monaco contests this conclusion, arguing that both the bankruptcy court and the district court misinterpreted the certifications he attested to as a condition of payment. We need not determine whether the lower courts erred on this issue, as the statutory scheme of the CTFA also contains two affirmative defenses, one of which resolves the present case.

Section 162.031(b) of the CTFA holds that “[i]t is an affirmative defense to prosecution or other action ... that the trust funds not paid to the beneficiaries of the trust were used by the trustee to pay the trustee’s actual expenses directly related to the construction or repair of the improvement.” Tex. Prop. Code Ann. § 162.031(b). This affirmative defense raises two questions: (1) were the activities Monaco claims to have spent the money on within the scope of the affirmative defense, and (2) has TAG made a sufficient showing that Monaco is not eligible for the affirmative defense?

First, however, we briefly address the absence of any discussion of the affirmative defense in the bankruptcy court or district court opinions. Despite not appearing in the district court’s opinion, both parties briefed the issue before that court. Brief of Appellant at 4-5, Adam Monaco v. TAG Investments, LTD, No. SA-14-CA-882 (W.D. Tex. 2015) (“The evidence shows that BBM not only spent every cent it received for third-party expenses, salaries, overhead and supervision on the project, but also used approximately $70,000.00 of its profit to pay for expenses incurred on the project.”); Brief of Appellee at 4-5, Adam Monaco v. TAG Investments, LTD, No. SA-14-CA-882 (W.D. Tex. 2015) (“Overhead and profit components of draws are not authorized exceptions under § 162.031 of the Act, and are . not a basis for offset.”); Appellant’s Reply Brief at 2-7, Adam Monaco v. TAG Investments, LTD, No. SA-14-CA-882 (W.D. Tex. 2015) (“However, [TAG] insists that the $124,053 paid as salaries and overhead ... and the $77,776 paid as contractual profits to BBM were improper and constituted defalcation on the part of Adam Monaco”).

Further, Monaco raised it from the very beginning before the bankruptcy court in 2011, when TAG first filed an objection to the discharge of its debt. TAG Investments, Ltd v. Martha L. Monaco, et al., No. 10-05026 (Bankr. W.D. Tex. Nov. 23, 2011), EOF No. 52 at ¶ 7 (“Under Fifth Circuit case of In re Nicholas ... there is no liability imposed on a Contractor if he uses all the monies to pay actual expenses directly related to the construction of the project, whether or not such expenses were owed to ‘beneficiaries’ of the trust fund.”). As this argument has been properly preserved and raised, we may address it on appeal.

Turning to the scope of the affirmative defense, this court’s precedent on what qualifies for “trustee’s actual expenses” under the statute’s affirmative defense is clear. “Under the affirmative defense to the Texas Construction Trust Fund Statute ... general contractors may use the payments they receive from construction projects to keep those projects going even if, in some instances, the beneficiaries are not paid first.” In re Nicholas, 956 F.2d 110, 113 (5th Cir. 1992). This includes payment of “expenses such as telephone bills, salaries, and other overhead.” In re Pledger, 592 Fed.Appx. 296, 302 (5th Cir. 2015). Nicholas explains that “the Texas statute’s affirmative defense for payment of actual expenses directly related to the construction or improvement of the project is ... open-ended.” Nicholas, 956 F.2d at 113. See also Holladay v. CW&A, Inc., 60 S.W.3d 243, 248 (Tex. Civ. App-Corpus Christi 2001, pet. denied). Monaco could assert the affirmative defense for overhead costs of the project.

TAG requests instead that we rely on a bankruptcy decision holding that “[t]he affirmative defense at section 162.031(b) for ‘actual expenses directly related to thé construction or repair of the improvement’ is limited to costs actually and directly tied to the improvement in question and does not include ‘indirect’ expenses,' such as overhead to the contractor in question, or ‘profit’ built into the job’s price.” In re Coley, 354 B.R. 813, 816 (Bankr. N.D. Tex. 2006) (quoting In re Faulkner, 213 B.R. 660 (Bankr.W.D.Tex.1997)). In re Faulkner, another bankruptcy court decision, engages in statutory interpretation, looking at legislative history and Attorney General Opinion JM-945 (1988), but its ruling on this point is dicta: “[b]ecause we find that the defendant lacked the requisite level of ‘mental culpability’ to trigger liability for purposes of section 523(a)(4), we need not decide whether the defendant could make out a successful defense to liability under section 162.031(b) of the state statute.” Faulkner, 213 B.R. at 667. What is disposi-tive, however, is that Coley postdates Nicholas and directly conflicts with this court’s jurisprudence interpreting the affirmative defense.

Monaco explains that $124,053.00 went to salaries and overhead and an additional $50,400.00 went to supervision of this project. Tellingly, payment of these sums as reasonable was approved by TAG’S architect. These are expenses allowable under our precedents and qualify as a “trustee’s actual expenses directly related to the construction or repair of the improvement,” as required by the affirmative defense under the CTFA. Tex. Prop. Code Ann. § 162.031(b).

Moreover, TAG had the burden to prove that Monaco misapplied the funds. Nicholas, 956 F.2d at 114 (“[Although initially requiring the debtor to make a prima facie showing that he is entitled to a discharge, [federal law] ultimately places the burden on the creditor to prove that the debt falls within the § 523(a)(4) exception.”). Simply showing that the progress payment certifications were false is insufficient to overcome the affirmative defense. “Because the Texas statute permits application of trust fund receipts for ‘actual expenses directly related’ to the project, ... a beneficiary seeking to avail itself of § 523(a)(4) must adduce some evidence that funds were misapplied under this test.” Nicholas, 956 F.2d at 114. TAG was unable to show that the funds received by BBM were spent on impermissible expenses under the CTFA.

For the foregoing reasons, Monaco should not have been held liable for misapplication of construction trust funds under the CTFA and the debt claimed by TAG should have been discharged. The judgment of the lower courts holding the debt nondischargeable is REVERSED and we REMAND with directions to discharge.

      . See also In re Swor, 347 Fed.Appx. 113, 116 (5th Cir. 2009) ("Nor must these funds be spent only on the project for which they were received—they may be spent on other projects or on expenses related to general business overhead.”). We cite unpublished opinions in this decision not because they are prece-dential, which they are noti see 5th Cir. Local Rule 47.5.4, but to show the consistency of our dispositions. ■ ■


author: JERRY E. SMITH, Circuit Judge.

text:
    Elmer COX, Plaintiff-Appellant, v. NUECES COUNTY, TEXAS; Jim Kaelin, Individually, Defendants-Appellees. Thomas Burnside, Plaintiff-Appellant, v. Nueces County, Texas; Jim Kaelin, Individually, Defendants-Appellees.
    No. 16-40141
    United States Court of Appeals, Fifth Circuit.
    FILED October 10, 2016

      Christopher John Gale, Gale Law Group, Corpus Christi, TX, for Elmer Cox and Thomas Burnside.
    Keith B. Sieczkowski, Esq., Branscomb, P.C., Brian Charles Miller, Royston, Ray-zor, Vickery & Williams, L.L.P., Corpus Christi, TX, for Nueces County, Texas.
    Keith B. Sieczkowski, Esq., Branscomb, P.C., Corpus Christi, TX, for Jim Kaelin.

      Before JOLLY, SMITH, and GRAVES, Circuit Judges.
   JERRY E. SMITH, Circuit Judge.

Elmer Cox and Thomas Burnside appeal a summary judgment on their 42 U.S.C. § 1983 claims. Finding no error, we affirm.

I.

Cox and Burnside worked for the Nueces County Sheriffs Department: Burnside in the Patrol Division, Cox in the DEA Taskforce. They were re-assigned to the Nueces County Jail: Burnside on February 3, 2012, Cox on May 31, 2012. They contend the reassignments were based not on merit but on political disagreement; they allege that defendant Jim Kaelin, the sheriff, vengefully transferred them for failing to support his re-election.

In early November 2012, both plaintiffs filed separate (though nearly identically worded) actions, claiming that the reassignment violated their First Amendment rights. In late March 2013, both were fired from the Sheriffs Department. After both complaints had survived motions to dismiss in 2014, they amended to include wrongful-termination claims and to add Kaelin as a defendant in addition to the county.

Cox and Burnside also filed grievances with the Nueces County Civil Service Commission (the “Commission”), alleging only that they were subjected to adverse employment actions in violation of county rules prohibiting such actions on grounds of participating or failing to participate in political activity. The Commission consolidated the grievances and decided them against the plaintiffs in May 2013. The next day, both plaintiffs sued in state court for review of the decision. On March 12, 2015, the state court affirmed the Commission’s decision.

Armed with the state judgment, the defendants moved for summary judgment on grounds of res judicata and estoppel. The magistrate judge recommended granting the motion on both grounds, but the district court ruled that the collateral-estop-pel recommendation was moot given its finding of res judicata, so it granted summary judgment on only the claim-preclusion ground.

II.

The plaintiffs raise two objections to the summary judgment: first, that the district court applied the law of res judicata incorrectly, and second, that res judicata was inappropriate because plaintiffs had deliberately abstained from litigating their federal claims in state court. Neither is persuasive.

A.

Because the claimed preclusive effect arises from a state-court judgment, we apply Texas law to determine whether res judicata is applicable. Under Texas law, res judicata requires proof of three elements: “(1) a prior final judgment on the merits by a court of competent jurisdiction; (2) identity of parties or those in privity with them; and (3) a second action based on the same claims as were raised or could have been raised in the first action.”

Undeterred by that clear precedent, plaintiffs cited the federal standard for res judicata in their opening brief and formulated their arguments based on that standard. Reading those arguments as generously as possible, we can discern one main complaint, which combines elements (1) and (3) listed above: Because the Texas state court never decided their First Amendment claims, there is no valid judgment on the merits as regards those claims, so res judicata does not apply. This theory is meritless.

It has been well established for more than twenty years that plaintiffs in Texas are required to bring, in the initial suit, all possible claims arising out of the same “transaction.” See Barr v. Resolution Tr. Corp,, 837 S.W.2d 627, 630-31 (Tex. 1992). “A subsequent suit will be barred if it arises out of the same subject matter of a previous suit and which through the exercise of diligence[ ] could have been raised in a prior suit.” Id. at 631. Thus, if Cox and Burnside could have raised their First Amendment claims..in state court, and did not, they are barred from continuing to litigate them in another suit.

Plaintiffs appear aware of this requirement but try to avoid it by suggesting that they were unable to bring their First Amendment claims in state court because the state court’s review of the Commission’s finding was only to insure that there was substantial evidence supporting that finding. But Texas precedent makes clear that constitutional claims can and should be brought in state-court reviews of civil service commission findings.

Indeed, this circuit has decided the issue. In Cooper v. City of Dallas, 2008 WL 3380554 (N.D. Tex. Aug. 11, 2008), the same question arose: A plaintiff tried to prosecute two separate lawsuits, one a federal case bringing various federal and state claims and the other an appeal to the Dallas Civil Service Commission. There, as here, the state court reached a final decision first. There, as here, defendants contended that res judicata foreclosed the federal .suit after the state court had made its decision. And there, as here, plaintiff did not litigate her federal claims in the state-court proceeding, even though she could have. The district court entered summary judgment for the defendant, 2008 WL 3380554 at *1, and this circuit summarily affirmed “essentially for the reasons provided in the findings and recommendations of the magistrate judge” that the district court had adopted. Cooper v. City of Dall., 402 Fed.Appx. 891, 892 (5th Cir. 2010) (per curiam).

This case is indistinguishable from Cooper in all material respects. Cox and Burnside could and should have brought these claims in their state suit; their stated reasons for not doing so are inadequate to prevent res judicata.

B.

Plaintiffs claim they “abstained” from litigating their already-existing federal claims in state court, warranting reversal. That notion is specious. A threshold requirement for any sort of abstention is that the plaintiffs inform the court of any request to abstain. See, e.g., Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 85 n.7, 104 S.Ct. 892, 79 L.Ed.2d 56 (1984). The putative abstaining court must be aware that it is abstaining from something. Id. No notice was given the state court here; the record is bereft of evidence that plaintiffs told it that they wished it only to decide state-law issues, preserving the federal claims for federal court. Indeed, the entire doctrine of abstention contemplates a situation in which the plaintiff has brought both state-law and federal-law claims in state and federal court, and here, as we have seen, plaintiffs never brought any federal claims in a state forum. Abstention is inapposite.

The summary judgment is AFFIRMED.

      . See Order Affirming the Decision of the Nueces County Civil Service Commission, Burnside v. Nueces Cty. Civil Serv. Comm'n, No. 2013-DCV-2897-E (148th Dist. Ct., Nueces Cty., Tex., Mar. 12, 2015).

      . In their reply brief, Cox and Burnside abandon res judicata and instead posit that the district court incorrectly applied collateral es-toppel. That is puzzling, given that the court specifically adopted the magistrate judge's recommendation on res judicata and explicitly disavowed any ruling on collateral estop-pel. The reply brief never explains why collateral estoppel remains relevant. In any event, we will not consider the collateral-estoppel point, because "arguments raised for the first time in a reply brief ... are waived.” United States v. Jackson, 426 F.3d 301, 304 n.2 (5th Cir. 2005); see also, e.g., Flex Frac Logistics, L.L.C. v. NLRB, 746 F.3d 205, 208 (5th Cir. 2014).

      . See Kremer v. Chem. Constr. Corp., 456 U.S. 461, 463, 102 S.Ct 1883, 72 L.Ed.2d 262 (1982) (holding that 28 U.S.C. § 1738 requires federal courts to apply state law when determining the preclusive effect of state-court judgments).

      . Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996) (citing Tex. Water Rights Comm'n v. Crow Iron Works, 582 S.W.2d 768, 771-72 (Tex. 1979)).

      . Plaintiffs also suggest that res judicata cannot apply because they filed their federal claims first. They provide no authority for that, and we know of none.

      . Plaintiffs do not appear to contest that these claims arise out of the same transaction under Texas law.

      . See Turner v. City of Carrollton Civil Serv. Comm’n, 884 S.W.2d 889, 894 (Tex. App.—Amarillo 1994, no writ) ("[W]e hold that appellant was entitled to raise her constitutional claims in her suit seeking to set aside [the Civil Service Commission’s] ruling.”).


author: CARL E. STEWART, Chief Judge:

text:
    SGIC STRATEGIC GLOBAL INVESTMENT CAPITAL, INCORPORATED; GRIL German Restaurant Investment and Lending, Incorporated; Christian Groenke, Plaintiffs-Appellants v. BURGER KING EUROPE GMBH, Defendant-Appellee
    No. 15-10943
    United States Court of Appeals, Fifth Circuit.
    FILED October 10, 2016

      Leane K. Capps, Esq., Caitlin Morgan, Polsinelli, P.C., Dallas, TX, for Plaintiffs-Appellants.
    Michael D. Joblove, Nina Greene, Ge-novese, Joblove & Battista, Miami, FL, Deborah S. Coldwell, Jamee M. Cotton, Esq., Haynes & Boone, L.L.P., Dallas, TX, for Defendant-Appellee.

      Before STEWART, Chief Judge, and PRADO and SOUTHWICK, Circuit Judges.
   CARL E. STEWART, Chief Judge:

This ease arises from a series of disputes over Burger King franchises located in Germany. The district court granted Defendant-Appellee’s motion to dismiss Plaintiffs-Appellants’ claims on grounds of forum non conveniens and denied as moot their motion for leave to file an amended complaint. For the following reasons, we AFFIRM the districts court’s judgment dismissing Plaintiffs-Appellants’ claims against Defendant-Appellee on grounds of forum non conveniens. We VACATE the district court’s judgment denying Plaintiffs-Appellants’ motion for leave to amend and REMAND for further proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs-Appellants Christian Groenke (“Groenke”), SGIC Strategic Global Investment Capital, Inc. (“SGIC”), and GRIL German Restaurant Investment and Lending, Inc. (“GRIL”) owned and operated numerous Burger King restaurants in Germany, initially through their interest in a German company, HEGO. HEGO later became a wholly owned subsidiary of another German company, SAVE. These Burger King restaurants all operated under franchise agreements entered into with Defendant-Appellee BKE. Groenke also signed a separate personal guarantee (the “Personal Guarantee”) with BKE, wherein he assumed responsibility for the payment of certain franchise fees for the Burger King restaurants operated by Plaintiffs-Appellants.

BKE is a Swiss corporation and the franchisor of Burger King restaurants in Germany. The HEGO Burger King restaurants all had individual franchise agreements with BKE, which required that, among other things, the franchisees pay franchise fees. These franchise agreements each contained a materially identical forum selection clause, which states that (1) Munich, Germany is the exclusive venue for any disputes arising out of the contract, and (2) the contract is governed by German law.

In Germany, BKB—referred to as a Burger King “support organization”— owned and operated a number of Burger King restaurants through its subsidiaries. Although these restaurants had been operating at a loss, SAVE purchased shares in BKB’s restaurants. As part of that deal, Groenke negotiated a five-year development agreement for HEGO that included the opportunity to purchase ninety-one additional franchises and executed the Personal Guarantee to assume the obligations in a number of HEGO’s franchise agreements. Although the Personal Guarantee referred to the franchise agreements, it did not contain a forum selection clause.

After the purchase of BKB’s shares, SAVE became SAGRO. A series of mergers and restructurings resulted in ARH becoming the successor in interest to SAG-RO. GRIL is the sole shareholder of ARH.

The present dispute began when Groenke and SGIC attempted to sell their interest in GRIL. Groenke and SGIC claim that they informed BKE of their intention to sell GRIL and that BKE initially helped identify potential buyers. In December of 2013, SGIC entered into a term sheet with potential- buyers while the negotiations to sell GRIL progressed. Then, on April 23, 2014, SGIC entered into a share purchase agreement with SHOKOIP Limited.

Around the same time, in March and April of 2014, BKE sent correspondence to GRIL and the prospective buyers that purportedly interfered with the impending deal. BKE allegedly stated, in essence, that (1) the relevant franchise agreements required BKE’s approval for the sale of GRIL, (2) BKE opposed the sale, and (3) BKE may unilaterally terminate the franchise agreements if the share purchase agreement proceeded. When the potential buyers pulled out of the deal, Groenke, SGIC, and GRIL filed the instant lawsuit against BKE, claiming tortious interference and seeking a declaratory judgment regarding their rights under the relevant franchise agreements (the “Franchise Agreement Litigation”). The Franchise Agreement Litigation began on September 12, 2014.

On April 17, 2014—five months prior to the start of the Franchise Agreement Litigation—BKE filed a separate suit against Groenke in the Northern District of Texas to recover franchise fees.that Groenke allegedly owed BKE under the Personal Guarantee (the “Personal Guarantee Litigation”). Although the Personal Guarantee Litigation’s sole cause of action was for a breach of the Personal Guarantee, it referenced the franchise agreements to determine the parties’ rights and obligations. The restaurants at issue in the Franchise Agreement Litigation do not overlap with the restaurants at issue in the Personal Guarantee Litigation.

BKE subsequently moved to dismiss the Franchise Agreement Litigation based on lack of personal jurisdiction or, in the alternative, forum non conveniens. Plaintiffs-Appellants opposed the motion to dismiss and also filed a separate motion for leave to file an amended complaint. The proposed amended complaint sought to add HEGO and Burger King Corporation (“BKC”) as parties and asserted additional claims for business disparagement and tortious interference.

The district court dismissed the suit on grounds of forum non conveniens based on the forum selection clause in the relevant franchise agreements. In doing so, the court found that BKE did not waive .its right to enforce the. forum selection clause by filing suit against Groenke in the Personal Guarantee Litigation. The district court then entered an order, without reasons, dismissing as moot Plaintiffs-Appellants’ motion for leave to amend. Plaintiffs-Appellants filed this appeal.

II. DISCUSSION

Plaintiffs-Appellants challenge the district court’s dismissal of their claims against BKE as well as the district court’s denial of their motion for leave to amend.

A. Forum Non Conveniens

Plaintiffs-Appellants first argue that the district court erred in dismissing them claims on grounds of forum non con-veniens. They assert that BKE waived the forum selection clause in the franchise agreements by filing the Personal Guarantee Litigation in Texas.

This court reviews the waiver of a contractual right de novo and the factual findings underlying the district court’s waiver determination for clear error. See Subway Equip. Leasing Corp. v. Forte, 169 F.3d 324, 326 (5th Cir. 1999). Similarly, “[w]e review the district court’s interpretation of the [forum selection clause] and its assessment of that clause’s enforceability de novo.” Weber v. PACT XPP Techs., AG, 811 F.3d 758, 768 (5th Cir. 2016).

As this court has noted, “[t]here is a lack of authority determining whether federal or state law principles control the standard for determining a party’s waiver of rights under a forum selection clause.” Wellogix, Inc. v. SAP Am., Inc., 648 Fed.Appx. 398, 401 (5th Cir.2016). We have previously “held that federal law governs the enforceability of a forum selection clause, but the forum state’s choice of law rules control what law governs the interpretation of the clause.” Id. (citing Weber, 811 F.3d at 770).

One line of authority, previously acknowledged by this court, applies a traditional waiver standard to forum selection clauses. See GP Plastics Corp. v. Interboro Packaging Corp., 108 Fed.Appx. 832, 835-36 (5th Cir. 2004); Wellogix, 648 Fed.Appx. at 401-02 (citing Haber v. Biomet, Inc., 578 F.3d 553, 558 (7th Cir. 2009)). These cases hold that waiver of a forum selection clause requires: “(1) an existing right, benefit, or advantage; (2) actual or constructive knowledge of its existence; and (3) actual intent to relinquish that right.” GP Plastics, 108 Fed.Appx. at 836 (citation omitted). Waiver can also occur if a party engages in “conduct so inconsistent with the intent to enforce the right as to induce a reasonable belief that it has been relinquished.” N. Am. Specialty Ins. Co. v. Debis Fin. Servs., Inc., 513 F.3d 466, 470 (5th Cir. 2007).

This court has also recognized “[a] second line of authority, articulating both federal and Texas law, [which] would apply essentially the test used by federal courts to assess waiver of arbitration clauses, which are a species of forum selection clause.” Wellogix, 648 Fed.Appx. at 401. Under this test, “the party to the [forum selection] clause waives its right if it ‘(1) substantially invokes the judicial process [in derogation of the forum selection clause] and (2) thereby causes detriment or prejudice to the other party.’” Id. at 402 (quoting Al Rushaid v. Nat’l Oilwell Vareo, Inc., 757 F.3d 416, 421 (5th Cir. 2014)); accord In re ADM Inv’r Servs., 304 S.W.3d 371, 374 (Tex. 2010).

Plaintiffs-Appellants contend that by filing suit in the Personal Guarantee Litigation in Texas, BKE waived its right to enforce the forum selection clause in the Franchise Agreement Litigation. We are not persuaded by this argument. Both parties concede that the franchises at issue in the Personal Guarantee Litigation are different franchises than those at issue in the Franchise Agreement Litigation. Although the franchise agreements contain materially identical language, the Franchise Agreement Litigation involves a set of contracts wholly separate from those involved the Personal Guarantee Litigation. Even assuming that BKE’s filing of the Personal Guarantee Litigation resulted in waiver of the forum selection clauses in those agreements, that waiver would not extend to the forum selection clauses in the specific agreements at issue in the Franchise Agreement Litigation. Therefore, we cannot conclude that BKE’s filing of the Personal Guarantee Litigation resulted in waiver of its right to enforce the forum selection clause in the Franchise Agreement Litigation. See N. Am. Specialty, 513 F.3d at 470 (finding waiver can occur when a party engages in “conduct so inconsistent with the intent to enforce [its] right[s]” that it raises a reasonable belief that the party relinquished its rights).

We additionally note that Plaintiffs-Appellants have not shown waiver under the second potentially applicable test articulated in Wellogix and Al Rushaid because they did not allege that BKE’s filing of the Personal Guarantee Litigation resulted in their “detriment or prejudice.” Wellogix, 648 Fed.Appx. at 402; Al Rushaid, 757 F.3d at 421.

Accordingly, we, uphold the district court’s judgment dismissing Plaintiffs-Appellants’ claims against BKE on grounds of forum non conveniens.

B. Leave to Amend

Next, we turn to Plaintiffs-Appellants’ second argument that the district court erred in denying as moot their motion for leave to amend. Plaintiffs-Appellants argue that because the motion for leave to amend was the first time they sought amendment of the complaint and the amendment was filed within the scheduling order deadline, the district court abused its discretion in denying their motion as moot -without providing reasons for doing so. We agree.

We “review[] a district court’s denial of leave to amend a complaint for abuse of discretion.” Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d 1459, 1464 (5th Cir. 1995). Federal Rule of Civil Procedure 15(a) states that the district “court should freely give leave [to amend] when justice so requires.” “[T]he language of this rule ‘evinces a bias in favor of granting leave to amend,’” and “[a] district court must possess a ‘substantial reason’ to deny a request.” Smith v. EMC Corp., 393 F.3d 590, 595 (5th Cir. 2004) (citation omitted). A district court should “examine[] five considerations to determine whether to grant a party leave to amend a complaint: 1) undue delay, 2) bad faith or dilatory motive, 3) repeated failure to cure deficiencies by previous amendments, 4) undue prejudice to the opposing party, and 5) futility of the amendment.” Id. (citations omitted). Moreover, “[g]iven the policy of liberality behind Rule 15(a), it is apparent that when a motion to amend is not even considered, much less not granted, an abuse of discretion has occurred.” Lowrey v. Tex. A & M Univ. Sys., 117 F.3d 242, 245-46 (5th Cir. 1997) (quoting Marks v. Shell Oil Co., 830 F.2d 68, 69 (6th Cir. 1987)).

Notwithstanding our strong preference for explicit reasoning for denial of a motion to amend, “when the justification for the denial is ‘readily apparent,’ a failure to explain ‘is unfortunate but not fatal to affirmance if the record reflects ample and obvious grounds for denying leave to amend.’” Marucci Sports, LLC v. Nat’l Collegiate Athletic Ass’n, 751 F.3d 368, 378 (5th Cir. 2014) (quoting Mayeaux v. La. Health Serv. & Indem. Co,, 376 F.3d 420, 426 (5th Cir. 2004)).

As noted, the district court stated—without providing reasons—that the motion for leave to amend was moot. Although “mootness is a valid basis for denying leave to amend,” it is not clear on the record before us that all of Plaintiffs-Appellants’ additional claims would have been moot. Carroll v. Fort James Corp., 470 F.3d 1171, 1175 (5th Cir. 2006). Moreover, there is no explanation from the district court concerning other factors that could warrant the district court’s denial of the motion. Plaintiffs-Appellants filed the motion within the scheduling order deadline. “Thus, on its face, the motion was timely and evidenced no prejudice to the other parties or potential to delay the proceeding.” Halbert v. City of Sherman, 33 F.3d 526, 529 (5th Cir. 1994).

Consequently, we hold that the district court abused its discretion when it denied as moot Plaintiffs-Appellants’ motion for leave to amend without providing reasons for doing so, when the record also lacked “ample and obvious grounds” supporting its denial of the motion. Marucci, 751 F.3d at 378.

III. CONCLUSION

We AFFIRM the district court’s judgment dismissing Plaintiffs-Appellants’ claims against BKE on grounds of forum non conveniens. We VACATE the district court’s order denying Plaintiffs-Appellants’ motion for leave to amend and REMAND for further proceedings consistent with this opinion.

      . Throughout this opinion, the full names of foreign businesses and corporations appear in the footnotes, rather than in the body of the text.

      . Groenke is the sole shareholder of SGIC, which in turn is the sole shareholder of GRIL. Groenke is a resident of Texas; SGIC and GRIL are both Delaware corporations with their principal places of business in Texas.

      . HEGO System-Gastronomie GmbH & Co. KG and its subsidiaries, herein ("HEGO”).

      . SAVE Vermogensverwoltungs GmbH & Co., Holding KG, herein ("SAVE"),

      . Burger King Europe GmbH, herein (“BKE”).

      . The text of the forum selection clause states; "The exclusive venue for any disputes arising out of this Agreement, its application or its termination shall be Munich_This agreement and its interpretation are governed by the laws of the Federal Republic of Germany.”

      . Burger King Beteiligungs GmbH, herein (“BKB”).

      . BK HEGRO-SAGRO Holding GmbH & Co. KG, herein ("SAGRO”).

      . American Restaurant Holding, LP, herein (“ARH”).

      .BKC is a Florida corporation with its principal place of business in Miami, Florida.

      . While this appeal was pending, a district court entered judgment in favor of BKE in the Personal Guarantee Litigation. Burger King Eur. Gmbh v. Groenke, No. 3:14-cv-1417, 2015 WL 6751121 (N.D. Tex. Nov. 5, 2015).

      . Although German law could potentially govern the interpretation of the forum selection clauses at issue based on the choice of law provisions in the franchise agreements, neither party advances that argument. Thus, we do not address it here.

      .This circuit has not yet determined whether waiver is a matter of enforceability or interpretation, but because we conclude that BKE did not waive the forum selection clause under either standard, we do not reach this issue here.

      . In support of their argument, Plaintiffs-Appellants cite to a district court case out of Virginia, which holds that a forum selection clause is waived when a party files suit in a forum inconsistent with a contract’s forum selection clause. Kettler Int’l, Inc. v. Starbucks Corp., 55 F.Supp.3d 839, 849-51 (E.D. Va. 2014). Plaintiffs-Appellants' reliance on Kett-ler is misplaced. In Kettler, both parties brought claims under the same contract. Id. at 843-44. Not so here. BKE filed the earlier lawsuit for breach of the Personal Guarantee. This lawsuit, however, involves the franchise agreements themselves. See Bancroft Life & Cas. ICC, Ltd. v. Davnic Ventures, LP, No. 12-2015, 2013 WL 1222112, *3 (S.D. Tex. Mar. 25, 2013) (finding that a forum selection clause in an insurance policy did not extend to separate promissory notes executed between the parties).

      . Plaintiffs-Appellants’ argument that the forum selection clause should be read broadly to include the Personal Guarantee because it encompasses all disputes "arising out of this [franchise] [a]greement, its application, or its termination” is also unconvincing. The two out-of-circuit cases relied on by Plaintiffs-Appellants do not support their contention. Simula, a Ninth Circuit arbitration case, distinguishes contracts with the phrase "arising in connection with” as having a broader reach than those contracts with the more limiting “arising out of” language present in BKE’s franchise agreements. Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 720 (9th Cir. 1999). Electro-Mechanical found waiver of a forum selection clause when two parties sued under a single sales contract. Electro-Mechanical Corp. v. Riter Eng'g Co., No. 2:10-CV-975, 2011 WL 2118704, at *4 (D. Utah May 25, 2011). Nothing in Electro-Mechanical, however, suggests that the forum selection clause in the sales contract would extend to claims under a separate contract, such as the Personal Guarantee here.

      . The amended complaint sought to add additional parties and claims that were not fully addressed in the court's analysis of forum non conveniens and direct benefits estoppel. To be clear, nothing in this opinion should be construed as reaching the viability of such claims.

      . We recognize that this court has upheld the denial of a motion for leave to amend, when the motion was filed on the eve of the court’s disposition of that case on summary judgement. Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139-40 (5th Cir. 1993). In Wimm, the plaintiffs also filed the motion within the court’s scheduling order deadline. Id. at 138. However, the court in Wimm made express findings of bad faith and dilatory motive. Id. at 142. Although bad faith or dilatory motive may be present in the instant case to warrant denial of'the motion for léave to amend, it is not "ample and obvious” on the record before us. Marucci, 751 F.3d at 378.