In this edition of Litigation Roundup, we look at the lawyers who helped secure recent rulings barring the federal government from regulating horseracing and from enforcing bans on both noncompete agreements and LNG export approvals.
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Northern District of Texas
Ryan Sees Injunction Granted in Challenge to FTC Noncompete Ban
The Federal Trade Commission has been barred from enforcing its recently announced ban on most noncompete agreements while a lawsuit challenging the rule, brought by tax service and software company Ryan, proceeds before U.S. District Judge Ada Brown.
Judge Brown issued a 33-page ruling July 3 halting implementation of the ban that was set to go into effect Sept. 4. Judge Brown wrote that the “text, structure, and history of the FTC Act reveal that the FTC lacks substantive rulemaking authority with respect to unfair methods of competition under Section 6(g).”
The FTC, which started studying the issue in in 2018, eventually determined noncompete agreements constituted unfair methods of competition. The agency announced its proposed rule banning most noncompete agreements in January 2023 and adopted the final rule being challenged here in April.
The same day the rule was adopted, April 23, this lawsuit was filed. Four groups have intervened in the lawsuit: the Chamber of Commerce of the United States of America, the Business Roundtable, the Texas Association of Business and the Longview Chamber of Commerce.
Ryan’s chief legal officer and general counsel, John Smith, issued a statement calling the ruling an “important step” in the fight to invalidate a rule he said burdens employers and employees across the country.
“This week, Americans celebrate our nation’s Declaration of Independence from an overreaching royal crown,” he wrote. “Non-compete agreements predate the American Revolution, and our lawsuit seeks to preserve a robust freedom of contract for generations of enterprising Americans to come.”
Judge Brown has said she intends to issue a final decision on the merits by Aug. 30.
Ryan is represented by Eugene Scalia, Amir C. Tayrani, Allyson Ho, Andrew Kilberg, Aaron Hauptman, Josh Zuckerman and Elizabeth Kiernan of Gibson, Dunn & Crutcher and Charles W. Fillmore and H. Dustin Fillmore III of Fillmore Law Firm.
The FTC is represented by Rachael Westmoreland of the Department of Justice.
The case number is 3:24-cv-00986.
Longtime, Former TCU Golf Coach Alleges Age Discrimination
Bill Montigel, who for 36 years served as head coach of Texas Christian University’s men’s golf team, has filed a lawsuit against his former employer alleging age discrimination, retaliation and breach of contract.
Montigel, 68, alleges the university decided not to renew his contract in 2023, despite his numerous professional successes, because of his age and replaced him with a 38-year-old coach. Montigel puts blame on Athletic Director Jeremiah Donati for the decision not to renew his contract and for ushering in an atmosphere at the university that constituted a hostile environment.
“The athletic director runs an ‘animal house’ athletic department that does not care about discrimination or sexual harassment,” Montigel alleges.
After he reported the alleged age discrimination to the Equal Employment Opportunity Commission, Montigel alleges there was a campaign of retaliation waged against him, including decisions by those in the athletic department to ignore his expense reports and not reimbursing him in a timely manner.
Donati allegedly told several donors after Montigel filed the EEOC complaint that he would “never” induct the golf coach into the university’s Hall of Fame and “ceased all conversations with Montigel and gave him the silent treatment.”
The case, filed June 30, has been assigned to U.S. District Judge Terry R. Means.
Montigel is represented by R. Rogge Dunn and Kathryn Bernadette Blakey of Rogge Dunn Group.
Counsel for TCU had not filed an appearance as of Tuesday.
The case number is 4:24-cv-00611.
Western District of Texas
Gas Pipeline Contractor Gets Prison, Owes $11.4M
A 72-year-old man who admitted to defrauding two prisons that had hired him as a contractor to construct a pair natural gas pipelines has been sentenced to two years in federal prison.
On July 3, U.S. District Judge David Briones sentenced Jack McCager Kidd to 24 months in prison on one count of wire fraud and ordered him to pay $11.4 million in restitution. Kidd, who was indicted on 72 charges of wire fraud in October 2021, entered a plea deal with the government in August.
Kidd entered a contract with the Bureau of Prisons to build natural gas pipelines that would service a high-security prison in Pennsylvania and a medium-security prison in Alabama. Prosecutors alleged he billed those institutions for more natural gas than his company delivered and that when Kidd was asked for information about the amount of natural gas delivered and how he calculated the invoices he refused to cooperate.
Kidd is represented by Felix Valenzuela of Valenzuela Law Firm in El Paso.
The case was prosecuted by assistant U.S. attorneys Chris Skillern and Sarah Valenzuela of the Department of Justice in El Paso.
The case number is 3:21-cr-01757.
Western District of Louisiana
16 States Get LNG Export Ban Halted
A lawsuit filed by Louisiana and joined by more than a dozen other states that argued a ban on approving applications to export liquefied natural gas to counties without a free trade agreement was a violation of the Administrative Procedure Act and the Constitution have been granted an injunction temporarily barring the rule from taking effect.
The court determined that prior to implementing the ban, the federal government “did not realistically consider the cost/benefit analysis with regard to plaintiff states’ concerns about the impact on national security, state revenues, employment opportunities, funding for schools and charities, and pollution allegedly caused by increased reliance on foreign energy sources.”
The states that joined Louisiana in the lawsuit are: Alabama, Alaska, Arkansas, Florida, Georgia, Kansas, Mississippi, Montana, Nebraska, Oklahoma, South Carolina, Texas, Utah, West Virginia, and Wyoming.
Texas Attorney General Ken Paxton issued a press release praising U.S. District Judge James D. Cain Jr.’s July 1 ruling in the case.
“While I continue fighting for Texans against the Biden Administration, producers can take their natural gas to market instead of flaring it,” he said. “This will protect Texas jobs and keep our critical energy industry running.”
Louisiana and the coalition of states took the fight to court in March 2024.
The federal government is represented by Jeffrey Scott Thomas of the Department of Justice.
Louisiana is represented by its own Morgan Brungard, Daniel Shapiro and Tyler R. Green of Consovoy McCarthy in Salt Lake City and Autumn Hamit Patterson of Plano.
The case number is 2:24-cv-00406.
U.S. Court of Appeals for the Fifth Circuit
Guitar Maker Gibson’s Infringement Win Can’t Stand
A jury’s verdict in favor of Gibson in a lawsuit where the company accused competitors of trademark infringement and counterfeiting cannot stand, an appellate court determined in a July 8 ruling that ordered a new trial take place.
The panel determined that U.S. District Judge Amos L. Mazzant wrongly excluded “wholesale” evidence Armadillo Distribution Enterprises and Concordia Investment Partners presented regarding decades of third-party use of the guitar designs at issue. The jury that heard 10 days of testimony before siding with Gibson didn’t hear Armadillo and Concordia’s arguments that Gibson’s trademarks were commercially weak or generic.
“In sum, we hold that the district court abused its discretion in excluding wholesale all pre-1992 evidence of third-party use of the Gibson Trademarks pursuant to Rule 403,” the panel held. “Rule 403’s ambit does not contemplate broad, case-dispositive exclusions that severely restrict a party’s ability to advance its primary defense to a cause of action.”
Armadillo and Concordia filed notice of appeal in August 2022. Oral arguments took place in February
Judges Carl E. Stewart, James C. Ho and Edith Brown Clement sat on the panel.
Gibson is represented by Stephen D. Howen of Waco and Andrea Bates and Kurt Schuettinger of Bates & Bates in Atlanta.
Armadillo and Concordia are represented by Ronald Bienstock of Scarinci Hollenbeck in New Jersey and Vic Jenry and Emileigh S. Hubbard of Henry, Oddo, Austin & Fletcher in Dallas.
The case number is 22-40587.
Horseracing Integrity & Safety Authority Ruled Unconstitutional, Again
On July 5, a unanimous three-judge panel determined the enforcement provisions of the Horseracing Integrity & Safety Authority violate the Constitution’s nondelegation doctrine, its second such ruling against the federal agency created to set national standards to protect race horses.
“The statute empowers the Authority to investigate, issue subpoenas, conduct searches, levy fines, and seek injunctions — all without the FTC’s say-so,” the panel recently held. “That is forbidden by the Constitution.”
In November 2022, the same three-judge panel had determined that it was the power structure of HISA that doomed the agency because it delegated government power to a private entity “without sufficient agency supervision.” Specifically, the agency’s rulemaking was found by the Fifth Circuit to not be sufficiently under the Federal Trade Commissions’ authority.
This most recent ruling creates a circuit split on the issue. The Sixth Circuit issued a ruling siding with HISA in 2023.
HISA was established by Congress in 2020, in response to numerous doping scandals and racetrack fatalities.
Judges Stuart Kyle Duncan, Carolyn Dineen King and Kurt D. Engelhardt sat on the panel.
At oral arguments in October, the FTC was represented by Joseph Busa of the Department of Justice; Texas was represented by William Cole of the state attorney general’s office; HISA members were represented by Pratik A. Shah of Akin Gump; the National Horsemen’s Benevolent and Protective Association was represented by Daniel Suhr of the National Center for Justice and Liberty in Chicago; and Gulf Coast Racing was represented by Ilan Wurman of Arizona State University’s Sandra Day O’Connor College of Law.
The case number is 23-10520.