In this edition of Litigation Roundup, Exxon Mobil sues two activist investors, a propane company draws a $150 million lawsuit over a fatal crash and the Texas Supreme Court issues an opinion clarifying premises liability law.
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Harris County District Court
Propane Co. Hit with $150M Wrongful Death Lawsuit
Pinnacle Propane and an employee have been sued by the family of a woman who was killed on a road in Spring, Texas, after being struck by the company’s truck.
Pinnacle and Daniel Dunbar are named as defendants in the lawsuit seeking $150 million in damages brought by the family of Yuliana Castillo, the 19-year-old driver who died, and her passenger and brother, Jonathan Castillo, who was injured.
The family alleges Dunbar failed to reduce his speed as traffic on F.M. 2920 slowed the afternoon of Jan. 8, sent his truck into a skid when he did attempt to slow down and crossed the median, striking the Castillos’ Toyota Corolla.
“Other cars on the road in front of Mr. Dunbar that day on F.M. 2920 were able to stop without incident,” the lawsuit alleges. “But not Mr. Dunbar — his failure to be attentive and his failure to control his speed under the circumstances was reckless, extremely dangerous given the number of cars on the busy road, which caused several collisions, including his collision with plaintiffs.”
Jonathan Castillo suffered whiplash, a broken arm and was taken to the hospital by ambulance. His sister, a sophomore studying chemical engineering at Texas A&M University Kingsville, died at the scene.
The case has been assigned to Harris County District Judge Fredericka Phillips.
The family is represented by Benny Agosto Jr. and Ben Agosto III of Abraham, Watkins, Nichols, Agosto, Aziz & Stogner.
Counsel for the defendants had not filed an appearance as of Monday.
The case number is 2024-03312.
Sunglass Hut, Macy’s Sued for False Imprisonment related to Facial Recognition
A man has filed a lawsuit alleging he was wrongly identified as an armed robbery suspect by facial recognition software used by Sunglass Hut’s parent company and was subsequently imprisoned in the Harris County jail where he was sexually assaulted.
EssilorLuxottica and Macy’s are named as defendants in the lawsuit filed by Harvey Eugene Murphy Jr. Jan. 18. According to the lawsuit, there was a robbery at a Sunglass Hut store in Houston in January 2022.
Houston police investigating the crime were approached by the loss prevention officer for EssilorLuxottica who said that the company, working with its retail partner Macy’s, had used the software and identified Murphy as the culprit.
Murphy was subsequently arrested when he went to renew his driver’s license.
Daniel Dutko of Rusty Hardin & Associates, who represents Murphy, issued a statement attacking the use of the “error-prone” facial recognition software that often uses low-quality cameras that increase the risk of false identification.
“Mr. Murphy’s story is troubling for every citizen in this country,” he said. “Any person could be improperly charged with a crime based on error-prone facial recognition just as he was.”
Murphy alleges he was raped by three men while detained in the Harris County jail. He was released and the charge against him dropped after prosecutors corroborated his alibi that he was 2,000 miles away from the Houston Sunglass Hut when the robbery occurred.
The case has been assigned to Harris County District Judge Kyle Carter.
Murphy is also represented by Rusty Hardin, Leah Graham and Ryan Higgins of Rusty Hardin & Associates.
Counsel for the companies had not filed an appearance as of Monday.
The case number is 2024-03265.
Northern District of Texas
Exxon Sues Activist Investors over Climate Proposal
On Sunday, ExxonMobil Corporation filed a lawsuit against two activist investors, asking the court to prevent Arjuna Capital and Follow This from putting their climate proposal to a shareholder vote in May.
The case was originally assigned to U.S. District Judge Reed O’Connor, who voluntarily recused himself for reasons not disclosed in court filings. It has been reassigned to U.S. District Judge Mark Pittman.
ExxonMobil is seeking a declaration from the court that would allow it to exclude Arjuna and Follow This’ shareholder proposal — which calls for acceleration of plans to reduce greenhouse gas emissions — from its proxy statement and block it from going to a shareholder vote. Exxon alleges the proposal’s goal is to “shrink the very company in which they are investing by constraining and micromanaging ExxonMobil’s ordinary business operations.”
Follow This has submitted similar proposals in 2022 and 2023, according to the lawsuit, which were “overwhelmingly rejected” by shareholders. In 2023, for example, 89.5 percent of voting shareholders voted against the proposal.
“By calling for an acceleration in the pace of medium-term reductions across Scope 1, 2, and 3 greenhouse gas emissions, defendants are asking ExxonMobil to change its day-to-day business by altering the mix of — or even eliminating — certain of the products that it sells,” the complaint alleges. “Defendants’ overarching objective is to force ExxonMobil to change the nature of its ordinary business or to go out of business entirely.”
Exxon is represented by Mark W. Rasmussen, Jonathan D. Guynn, Noel J. Francisco, Brett A. Shumate and Megan Lacy Owen of Jones Day and Gregg J. Costa and David Woodcock of Gibson, Dunn & Crutcher.
Counsel for Arjuna Capital and Follow This had not filed an appearance as of Monday.
The case number is 4:24-cv-00069.
Western District of Texas
Austin Jury Awards $57M in Patent Trial
Ravgen Inc., a biotech company, has been awarded $57 million in damages by an Austin jury that agreed Natera Inc. had infringed the company’s patent covering a type of prenatal testing technology.
U.S. District Judge Alan Albright presided over the trial that ended Jan. 16 with the verdict in favor of Ravgen. Jurors began hearing testimony Jan. 8, according to the docket, and heard closing arguments Jan. 12.
Ravgen filed suit in June 2020, seeking damages in excess of $410 million. The jury found Natera had not willfully infringed the patent.
Ravgen is represented by a team of 20 lawyers from Desmarais LLP and by Deron R. Dacus of The Dacus Firm.
Natera is represented by a team of 16 lawyers from Wilmer Cutler Pickering Hale and Dorr, Baker Botts, McDermott Will & Emery and Prichard Young.
The case number is 1:20-cv-00692.
Third Court of Appeals
Panel Rejects Appeal of Abbott, Paxton Over Jan. 6, Uvalde Email Disclosures
The intermediate appellate court on Jan. 17 ruled that a government watchdog group may proceed with its lawsuit seeking emails and texts from the Texas governor and attorney general, including about the Jan. 6, 2021, attack on the U.S. Capitol and communications with gun lobbyists after the May 2022 Uvalde school shooting.
In its lawsuit, American Oversight alleged that Attorney General Ken Paxton spoke at the Jan. 6 political rally that preceded the attack on the Capitol but that no information regarding travel or communications was produced.
The nonprofit in 2021 and 2022 submitted public information requests to the offices of the governor and attorney general seeking years of official communications with any non-governmental email addresses attributed to Paxton and Gov. Greg Abbott. They also sought both officials’ communications with gun industry lobbyists in the aftermath of the mass shooting at Robb Elementary School when Abbott cancelled an in-person appearance at an NRA convention in Houston and Paxton dismissed proposals to enact stricter gun control measures.
Both Abbott and Paxton said they found no information responsive to the request about gun groups. In a letter ruling, the AG’s Open Records Division said the other records requested could be withheld as privileged attorney-client communications and, in the case of Abbott, requirements of the Homeland Security Act.
The Austin-based court of appeals affirmed a trial court’s order that denied the state officials’ pleas to the jurisdiction.
“Viewing American Oversight’s unnegated factual allegations in its pleadings and the jurisdictional evidence in the light most favorable to it, we conclude that respondents’ jurisdictional evidence has not negated American Oversight’s allegations that respondents have not complied with the PIA, including its allegations describing records that should have been produced but have not been, identifying gaps in respondent’s process for searching for and identifying public information subject to the PIA, and identifying facts that support that the PIA exceptions have been misapplied,” said the opinion by Justice Rosa Lopez Theofanis.
Other panel members were Chief Justice Darlene Byrne and Justice Chari L. Kelly.
On its website, American Oversight called the ruling “a tremendous victory for transparency in Texas.” The group is represented by Catherine Lewis Robb and Reid Pillifant of Haynes Boone and Emma Lewis and Mehreen Rasheed of American Oversight in Washington, D.C.
The state officials are represented by attorneys from the OAG, including Kathryn M. Cherry, Lanora C. Pettit and Brent Webster.
The case is No. 3-23-90-CV.
Texas Supreme Court
Justices Undo Win for Family of Nurse Killed in Crosswalk
The duty of property owners was clarified by the state’s high court in an opinion issued Friday that sided with a company that owns a hospital and ended a wrongful death lawsuit brought by the family of a nurse who was killed crossing the street to go to work in 2015.
“We hold that courts should not attempt to craft case-specific duties when recognized duty rules apply to the factual situation at hand,” the opinion reads. “Under these recognized rules, the hospital had a limited duty as a premises occupier based on its exercise of control over certain parts of the adjoining public right-of-way. But there is no evidence that any dangerous condition the hospital controlled in the right-of-way caused the nurse’s harm.”
Leny Chan was struck by a car while crossing a public roadway that divided HNMC’s hospital from its parking lot.
A jury had determined the driver was 40 percent liable, Harris County was 30 percent liable, HNMC was 20 percent liable and Chan was 10 percent liable for the fatal accident. A three-justice panel of the Fourteenth Court of Appeals reversed the ruling after finding HNMC had no duty to ensure Chan’s safety while crossing the street.
The court reheard the case en banc and in a 5-4 ruling affirmed the trial court’s judgment.
“The en banc majority noted the general rule that property owners owe no duty to make safe public roadways appurtenant to their property and identified four exceptions to that rule,” the Texas Supreme Court opinion reads. “Instead of applying any of these rules, however, the majority recognized a new duty specific to this situation by analyzing the factors listed in Greater Houston Transportation Co. v. Phillips.”
Justice Brett Busby, who authored the court’s opinion, wrote “This was error.”
“Generally, a property owner or occupier owes no duty to make an adjoining public road safe or to warn of potential danger in the roadway,” Justice Busby wrote. “But when a property owner exercises actual control over adjacent property, it does owe premises liability duties to those injured by conditions in the controlled area. Here, HNMC exercised control over limited areas of the public right-of-way abutting Cali Drive. But Chan was not injured by conditions in the controlled area. Instead, she was tragically killed by the careless acts of a third-party driver, a risk for which HNMC was not responsible and from which it had no duty to protect Chan.”
The Chan family is represented by Sharon McCally of McCally Law, Andrew B. Bender of Andrews Myers, Richard P. Hogan Jr. and Jennifer B. Hogan of Hogan & Hogan, Jim S. Hart of Williams Hart Boundas Easterby and David Salazar of The Salazar Law Firm.
HNMC is represented by Curry L. Cooksey of Cooksey, Marcin & Huston and P. Michael Jung of Clark Hill.
The case number is 22-0053.
U.S. Court of Appeals for the Fifth Circuit
Southwest Airlines Gets Insurance Dispute Revived
A lawsuit where Southwest Airlines is seeking reimbursement under its cyber risk insurance — related to a July 2016 computer failure that saw about half a million flights delayed or canceled — has been revived by a Fifth Circuit panel that undid Liberty Insurance’s summary judgment win.
U.S. District Judge Sam R. Cummings had granted the insurer summary judgment and dismissed the case with prejudice in September 2022, concluding that because the costs Southwest was seeking reimbursement for were purely discretionary they were either not covered by the policy or barred by its exclusions.
Weeks before the computer failure, according to the opinion, Southwest purchased a cyber risk insurance policy from AIG that included a provision for “system failure coverage” that required the insurer “pay all loss” incurred by the insured that is “solely as a result of a system failure.” Southwest also purchased excess policies, including one from Liberty that would cover up to $10 million in losses if Southwest’s losses exceeded $50 million.
Southwest determined its losses exceeded $77 million as a result of the system failure and flight disruptions and collected $50 million from AIG and other insurers before Liberty denied its claim.
Liberty challenged five categories of losses and determined that if those were excluded Southwest’s losses would not reach the $50 million threshold. Those categories included FareSaver promo codes, travel vouchers, cover refunds, rapid rewards points and advertising costs.
“Liberty submitted evidence showing that Southwest’s executives expected its insurance claims to meet opposition from insurers. In turn, Southwest submitted evidence showing that Liberty insistently pursued the argument — which Southwest calls ‘preposterous’ — that the system failure and business interruption were not the ‘but for’ cause of four of the five categories of loss now in dispute,” the panel wrote. “It is not clear from the district court’s order how it viewed that evidence. Regardless, we conclude that Southwest satisfied its burden of showing that a genuine dispute of material fact exists as to whether Liberty had a reasonable basis to deny Southwest’s claims.”
Judges James E. Graves Jr., Stephen A. Higginson and James C. Ho sat on the panel.
Southwest is represented by Russell S. Post and Parth Gejji of Beck Redden and Andrew Ryan of Ryan Law Partners.
Liberty Insurance is represented by Levon G. Hovnatanian, Brad Allen and Christopher Martin of Martin, Disiere, Jefferson & Wisdom.
The case number is 22-10942.
Panel Splits on ‘For Cause Removal Protection’ Case
A three-judge panel issued a ruling Jan. 17 holding that the Consumer Product Safety Commission’s structure is not unconstitutional, but wrote that the case “tees up one of the fiercest (and oldest) fights in administrative law” and may attract the attention of the U.S. Supreme Court.
A district court judge had sided with arguments from Consumers’ Research and By Two that because the members of the independent CPSC may only be removed by the president for cause, there is a separation of powers violation that renders the agency unconstitutional.
The crux of the case is the so-called Humphrey’s Executor exception to the general rule that allows a president to remove subordinates at will. Consumers’ Research and By Two had argued that under the U.S. Supreme Court’s 2020 ruling in Selia Law, for-cause removal always constitutes a violation of the separation of powers.
Judge Don R. Willett, writing for the majority, said that while the CPSC wields “substantial executive power,” it is “structurally identical to the agency that the Supreme Court deemed constitutional in Humphrey’s.”
“Yet the district court concluded that the Commission’s structure is unconstitutional under Seila Law. We disagree,” he wrote. “The Supreme Court expressly ‘d[id] not revisit Humphrey’s Executor or any other precedent” in Seila Law. As middle-management circuit judges, we must follow binding precedent, even if that precedent strikes us as out of step with prevailing Supreme Court sentiment. The logic of Humphrey’s may have been overtaken, but the decision has not been overruled—at least not yet.”
Judge Edith H. Jones authored a partial concurrence, partial dissent, explaining she agrees the plaintiffs here have standing to bring the suit and that the Fifth Circuit has jurisdiction to hear the case.
“With some trepidation, in recognition of his careful exegesis of Seila Law as it applies to this case, I respectfully dissent,” she wrote. “The Supreme Court has created uncertainty that only it can ultimately alleviate.”
Judge Jones wrote that she believes that the “CPSC members’ for-cause removal protection violates the constitutional separation-of-powers so long as they also exercise executive power.”
Judge James L. Dennis also sat on the panel.
Consumers’ Research is represented by Brett Shumate, Anthony J. Dick, John Gore and Brinton Lucas of Jones Day.
CPSC is represented by Amanda Mundell of the Department of Justice.
The case number is 22-40328.
Editor’s Note: Janet Elliott contributed to this report.