In this edition of Litigation Roundup, a Whistleblower who sued Kellogg, Brown and Root sees his $1.1 million recovery wiped out on appeal, another class action lawsuit over a data breach is filed against AT&T and a Uri-related gas delivery fight against Pioneer Natural Resources is revived.
The Litigation Roundup is a weekly feature highlighting the work Texas lawyers are doing inside and outside the state. Have a development we should include next week? Please let us know at tlblitigation@texaslawbook.net.
Northern District of Texas
Latest Data Breach Draws Another Class Action Against AT&T
The same day AT&T announced there had been an illegal download of customer data that affected “nearly all” of its cellular customers, a class action lawsuit was filed seeking more than $5 million in damages from the telecommunications giant.
The suit, filed July 12, stems from a data breach that occurred in April and resulted in the exposure of information from about more than 100 million customers’ phone calls and texts.
“AT&T has not been transparent about the nature and extent of data security lapses impacting its customers,” the suit alleges.
“Notwithstanding its history of massive data breaches, AT&T has not done enough to protect its affected customers, which are again Data Breach victims, even now,” the suit alleges.
The case has been assigned to U.S. District Judge Ada Brown, who is also overseeing multidistrict litigation that was filed following a separate data breach earlier this year. AT&T announced in March that the personal information of about 56.4 million customers had been leaked on the dark web.
Lead plaintiff, Florida resident Dina Winger, is represented by Patrick Yarborough of Foster Yarborough, Damon Mathias and Ori Raphael of Mathias Raphael and Lori Feldman of George Feldman McDonald.
Counsel for AT&T had not filed an appearance as of Monday.
The case number is 3:24-cv-01797.
Superior Court, Placer County, California
Jury Awards $17.3M in Dealership Fraud Case
After 10 weeks of trial, a jury in California recently determined a man was entitled to $17.3 million in damages from his former longtime business partner in a defamation and breach of contract lawsuit.
The jury found John L. Sullivan, of Sullivan Automotive Group, had promised his nephew and business partner, David Rodgers, an ownership stake in a lucrative automotive dealership but never intended to follow through with the deal.
Sullivan also defamed Rodgers by saying Rodgers had a gambling problem, stole from him, put his hands on him, pushed him, held him and “butted his chest up against me,” the jury found.
The jurors found Sullivan acted with “malice, oppression or fraud” in his dealings with Rodgers and also acted with “hatred or ill will” toward Rodgers by making the statements.
Rodgers was awarded about $11.3 million in economic loss damages stemming from the false promise, about $5 million in actual damages related to the defamation and an additional $1 million in punitive damages on that claim.
In his fourth amended complaint, Rodgers said his uncle “portrays himself as an upstanding member of the business community.”
“But that’s a lie,” the suit alleged. “Underneath the façade, is he is a liar, a cheat and a vindictive tyrant. He lied to his nephew … for years about promises of partnership to gain unfair advantage of Rodgers’ skills and service, then purportedly changed his mind, provoked a fight, assaulted Rodgers and then launched an all-out attack on Rodgers’ reputation.”
Judge Trisha Hirashima presided over the case that ended May 20.
Rodgers is represented by Jennifer G. Redmond, Amanda L. Cottrell, Juthamas J. Suwatanapongched, Julia Anderson and Susan Haines of Sheppard, Mullin, Richter & Hampton.
Sullivan is represented by Carl J. Calnero and Martin N. Jensen of Porter Scott in Sacramento.
The case number is S-CV-0044695.
U.S. District Court, New Jersey
Dallas-Based Reese Marketos Helps Nab $100M False Claims Act Settlement with PharMerica
Dallas lawyers from trial boutique Reese Marketos helped secure a recent $100 million False Claims Act settlement against pharmacy operator PharMerica Corp.
The lawsuit was brought in 2011 by a nursing home owner, Marc Silver, who alleged PharMerica charged below-cost prices for medications in order to obtain lucrative Medicare business for dozens of nursing homes in violation of the Anti-Kickback Statute and False Claims Act.
Philadelphia-based Berger Montague brought Reese Marketos in on the 13-year-old case last year, about six months before the case was scheduled for trial in December. The parties reached a settlement in principle in November, said Berger Montague shareholder Sherrie R. Savett. The addition of Reese Marketos likely influenced the settlement, she added.
“I think that both of our firms are at the top level of firms that do this kind of work and our results prove it,” Savett said.
U.S. District Judge Edward S. Kiel of New Jersey entered an order this month finalizing the agreement.
PharMerica did not extend any settlement offers until November, about four months after Reese Marketos filed their notice of appearance in the case, firm partner Josh Russ said.
PharMerica’s lawyers, in a written statement, underscored the settlement did not include an admission of wrongdoing and the company maintained it did not violate the law.
“PharMerica is pleased to put this previously disclosed matter from many years ago behind it,” the lawyers wrote. “The company believes, and has maintained at all times, that it acted appropriately and in conformity with all applicable laws, including the Antikickback Statute and the False Claims Act. PharMerica continually evaluates and updates its compliance policies and procedures to ensure that it always operates within the law and in the best interests of the patients it serves.”
Last month, the two firms won a $150 million jury verdict in another False Claims Act case. The firms represented two former Janssen Products sales representatives who sued the company over its off-label promotion of HIV drugs. Berger Montague first hired Reese Marketos in 2022 to try the Janssen case.
Silver was also represented by Pete Marketos, Adam Sanderson, Brett Rosenthal, Andrew Wirmani of Reese Marketos and Michael Fantini and William Ellerbe of Berger Montague and Lisa Rodriguez of Dilworth Paxson.
PharMerica was represented by Judith H. Germano of Germano Law, Michael R. Manthei of Holland & Knight and Peter J. Kocoras of Thompson Hine.
The case is United States ex rel. Silver v. Omnicare, Inc., PharMerica Corp, et al., No. 11-01326 in the U.S. District Court for the District of New Jersey.
U.S. District Court, Massachusetts
Markman Hearing Goes Nike’s Way in Sports Bra Patent Case
In a fight over how to construe three key terms in a patent fight over sports bras that contain pockets, a federal judge in Massachusetts recently sided with Nike following a Markman hearing in the lawsuit brought by SherryWear.
SherryWear filed suit in July 2023, accusing Nike of selling three sports bras infringing eight of its patents covering bras with pockets in various locations.
U.S. District Judge Leo T. Sorokin issued an order July 14 siding with Nike’s proposed meaning of all three disputed terms.
“In each case, SherryWear proposes a meaning that is substantially broader than what Nike urges laypeople and artisans alike would view as the ‘widely accepted meaning of’ the ‘commonly understood words’ at issue,” Judge Sorokin wrote in the 14-page order.
The three disputed terms are:
- “A pocketed bra assembly comprising . . . a left cup and a right cup, each cup being an area to receive a breast of a wearer and having inside and outside surfaces.”
- “Chest strap”
- “A central patch attached intermediate to the left and right cups”
A status conference is currently scheduled to take place Oct. 7, after the close of fact discovery.
SherryWear is represented by James Murphy, Jameson J. Pasek and Kara Grogan of Caldwell Intellectual Property Law in Boston.
Nike is represented by Jeannie Heffernan, Nathaniel DeLucia, Noah Frank, and Emily Sheffield of Kirkland & Ellis.
The case number is 1:23-cv-11599.
First Court of Appeals, Houston
Settlement Reached in Defamation Suit Against Houston Chronicle, ProPublica
A heart surgeon who had planned to ask an appellate panel to reconsider its April choice to dismiss a defamation lawsuit he brought against ProPublica and the Houston Chronicle, has informed the court that the parties have settled the dispute.
Dr. O. Howard “Bud” Frazier filed notice with the court July 3 and July 10 that he wouldn’t be pursuing rehearing en banc after the court dismissed the lawsuit under the Texas Citizens Participation Act.
Frazier sued the news outlets after they published a joint article in 2018 investigating Frazier’s research and his patient outcomes, alleging the article was false and damaged his reputation. ProPublica and the Chronicle argued the article was substantially true and moved to dismiss the suit under the TCPA.
The article, headlined “A Pioneering Heart Surgeon’s Secret History of Research Violations, Conflict of Interest and Poor Outcomes,” reported that Frazier had placed experimental heart pumps in patients who weren’t eligible for the devices, failed to disclose potential financial conflicts with device makers and had high mortality rates among Medicare patients receiving the devices compared to national averages.
“In his affidavit, Dr. Frazier states that a ‘properly risk-adjusted ranking would not show [his] patients’ outcomes so low.’ He did not, however, present any evidence of what properly risk-adjusted data would have shown,” the appellate panel held. “We conclude that the allegedly defamatory statements, when compared against the record before us, are not more damaging to Dr. Frazier’s reputation than a truthful statement would have been. They, too, are substantially true.”
Chief Justice Terry Adams and Justices Amparo Monique Guerra and April L. Farris sat on the panel.
Frazier is represented by David H. Berg, James Quinn and Caroline K. Gorman of Berg & Androphy and Michael Adams-Hurta of Wright Close & Barger.
The publications are represented by Laura Prather and Catherine Robb of Haynes Boone.
The case number is 01-22-00281-CV.
U.S. Court of Appeals for the Fifth Circuit
Panel Partially Revives Uri-Related Fight Between MIECO, Pioneer
An incorrect interpretation of a force majeure clause in a natural gas delivery contract between energy trading firm MIECO and producer Pioneer Natural Resources mandates the revival of a dispute between the companies, a panel recently determined.
In a July 16 opinion, the court determined U.S. District Judge Jane J. Boyle had wrongly granted a summary judgment win to Pioneer in the litigation spawned by 2021’s Winter Storm Uri.
“The force majeure clause required Pioneer to exercise due diligence to overcome Uri’s impact on its ability to deliver gas to MIECO,” the panel held. “Fact disputes remain over whether Pioneer did so. Summary judgment was therefore improper. The case must be remanded for fact finding on that issue.”
But the panel agreed with Judge Boyle and Pioneer that the terms of the agreement do not require Pioneer prove that its performance under the contract was “literally impossible,” as MIECO had argued.
Judges Stuart Kyle Duncan, Carl E. Stewart and Kurt D. Engelhardt sat on the panel.
MIECO is represented by Creighton Magid and James Vanderwoude of Dorsey & Whitney.
Pioneer is represented by Tom Melsheimer, Chase Cooper, Christopher R.J. Pace and Thomas B. Walsh IV of Winston & Strawn.
The case number is 23-10575.
KBR Whistleblower’s $1.1M Award Wiped Out
A former truck driver who worked for Kellogg, Brown and Root and filed a Whistleblower action against the company cannot keep a $1.1 million award, a panel recently determined, because the claims he brought are not the ones the government settled in a $13.6 million deal.
Both Bud Conyers and the federal government appealed to the Fifth Circuit after U.S. District Judge Kenneth M. Hoyt awarded Conyers a portion of the recovery in the qui tam suit, with Conyers arguing he was entitled to $3.5 million and the government arguing he was entitled to nothing.
Conyers, who worked in Kuwait and Iraq in 2003, sued KBR in 2006, alleging the contractor was using mortuary trailers to deliver “consumable supplies” to U.S. soldiers, that two employees accepted kickbacks and that KBR managers in Kuwait “billed prostitutes to the United States.”
The government intervened in 2013 and filed its own complaint the following year.
“During discovery, however, the government notified the parties and the district court that it was no longer pursuing Conyers’s original claims. At that point, Conyers could have continued litigating those claims himself,” the panel wrote in its July 16 opinion. “But he did not.”
The case settled before trial. Despite the government’s objections, Judge Hoyt awarded Conyers part of the recovery after finding there was “sufficient factual overlap” in the claims Conyers brought and the ones settled by the government.
“Our court has not adopted this ‘factual overlap’ test for § 3730(d)(1) settlements,” the panel wrote. “We need not consider whether to do so in this case. That is because the facts of the settled claims and the facts of Conyers’s own claims do not “overlap” in any relevant way.”
Judges Stuart Kyle Duncan, Carl E. Stewart and Kurt D. Engelhardt sat on the panel.
Conyers is represented by Alan Grayson of Indialantic, Florida, and Victor Kubli of Germantown, Maryland.
The government is represented by Graham White of the Department of Justice in Washington, D.C.
The case number is 23-20227.
Krista Torralva contributed to this report.