In this edition of Litigation Roundup, the Texas Attorney General’s Office — fresh off securing a $1.4B settlement with Meta in a similar lawsuit — has filed a data privacy suit against General Motors, U.S. District Judge Reed O’Connor recuses from one X Corp. lawsuit but hangs on to another, and we offer an update on the lawsuits CenterPoint is facing from customers in the wake of Hurricane Beryl and which firms have been tapped to defend the utility company.
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.
Harris County District Court
CenterPoint Hires Counsel in Beryl-Related Proposed Class Actions
CenterPoint has hired counsel and is asking a Harris County judge to move to a multidistrict litigation pretrial court a trio of proposed class-action lawsuits filed against it by groups of customers seeking more than $100 million in damages for the lengthy power outages after Hurricane Beryl.
According to CenterPoint’s motion filed with the MDL panel on Aug. 14, since Beryl made landfall on July 8, it has been named in four separate lawsuits accusing it of inadequately preparing for the storm. Three of the suits are putative class actions and one is an individual personal injury lawsuit.
“As discussed below, these cases all involve common questions of fact regarding defendants’ alleged conduct in preparing for and responding to Hurricane Beryl … CenterPoint anticipates that additional plaintiffs will file lawsuits, and that those lawsuits will similarly involve common questions of fact concerning the preparation for and response to Hurricane Beryl,” CenterPoint told the panel. “Therefore, as with other litigation arising from natural disasters and large catastrophic events, creating an MDL pretrial court and transferring the actions to that court will serve the convenience of the parties and promote the just and efficient conduct of the related cases.”
CenterPoint has retained Joel Z. Montgomery, Amy L. Snell, Jonathan B. Smith and Brooksie Boutet of Shipley Snell Montgomery and Patrick W. Mizell, Quentin L. Smith, Stacey N. Vu, Brooke A. Noble, Aamir Siddik and Maggie Eller of Vinson & Elkins. Vineet Bhatia, Shawn L. Raymond and Weston O’Black of Susman Godfrey are also representing CenterPoint in the MDL.
Delmy Flores and the other residential customer plaintiffs are represented by Sarah Givens, Michael Fertitta and Elizabeth McEntee of Fertitta & Givens.
Tony Buzbee and his law firm are representing a group of restaurants in one of the proposed class action lawsuits against CenterPoint and Charles K. Sanders and Erica H. Rose of Rose Sanders Law Firm are representing a group of other businesses in the other proposed class action lawsuit against CenterPoint. Jason A. Itkin, Cory D. Itkin and Alexandra F. Poulson of Arnold & Itkin are representing the individual personal injury plaintiff.
The Harris County putative class action case numbers are 2024-44198; 2024-44700; 2024-45632. The MDL case number is 24-0659.
Montgomery County District Court
AG Paxton Sues GM Over Data Collection
The state of Texas is accusing General Motors of surreptitiously collecting the personal driving data of more than 1.5 million Texas drivers and selling it to third parties.
The lawsuit was filed Aug. 13 and names GM and OnStar as defendants. It has been assigned to Montgomery County District Judge Vince Santini. The lawsuit comes about two months after the office of the attorney general announced it had opened an investigation into several car manufacturers suspected of violating the law through data collection efforts.
“Companies are using invasive technology to violate the rights of our citizens in unthinkable ways,” Attorney General Ken Paxton said in a news release. “Millions of American drivers wanted to buy a car, not a comprehensive surveillance system that unlawfully records information about every drive they take and sells their data to any company willing to pay for it.”
According to the lawsuit, cars manufactured in 2015 or later are equipped with technology that records, analyzes and transmits detailed driving data.
Texas is represented by Tyler Bridegan, Roberta H. Nordstrom and Summer R. Lee of the attorney general’s office.
Counsel information for the defendants was not available Monday.
The case number is 24-08-12392.
U.S. Patent and Trademark Office
McKool Smith Prevails for Patent Holder Against Google
Parus Holdings had its patent for voice processing systems upheld recently in an inter partes review dispute with Google at the Patent Trial and Appeal Board.
The Aug. 1 ruling upholds Parus’ right to use the technology that captures voice commands and then accesses the requested information on the internet. Parus maintained the technology was invented by its Chief Scientist Alex Kurganov. Google had argued the technology wasn’t patentable.
Google is represented by Benjamin M. Haber of O’Melveny & Myers.
Parus is represented by Scott Hejny, James Quigley, and Charles Fowler of McKool Smith.
The case number is IPR2022-00279.
Northern District of Texas
O’Connor Recuses in One, Stays on Another X Case
One day after NPR reported that U.S. District Judge Reed O’Connor owned Tesla stock, he recused himself from a lawsuit where Elon Musk’s X Corp. is accusing a group of advertisers of antitrust violations for conspiring to boycott advertising on the social media site.
Judge O’Connor did not provide a reason for recusing himself from the case that has since been assigned to U.S. District Judge Ed Kinkeade. Judge O’Connor is currently presiding over another lawsuit brought by X, where the social media website is accusing Media Matters for America of business disparagement and interference.
As of Monday, he had not recused himself in that case. X sued Media Matters in November after the outlet published a report accusing X of placing advertisements from several well-known companies next to “pro-Nazi content.” Many of those companies — Apple, Comcast, NBCUniversal and IBM among them — withdrew all ads from the platform in response.
Experts who spoke to The Texas Lawbook earlier this month when X launched the litigation against the World Federation of Advertisers suggested the Cedar Hill lawyers representing X strategically chose to file suit in the Wichita Falls Division of the Northern District of Texas, where all suits are assigned to Judge O’Connor.
In the lawsuit against the WFA, X is represented by John Sullivan and Jace Yarbrough of S|L Law, Christopher G. Renner, Jonathan M. Shaw, Andrew K. Mann and Harmeet K. Dhillon of Dhillon Law Group in Alexandria, Virginia and San Francisco.
Counsel for WFA had not filed an appearance as of Monday.
In the lawsuit against Media Matters, X is represented by John Sullivan of S|L Law, and Alexander Dvorscak, Ari Cuenin, Christopher D. Hilton, Cody C. Coll, Judd E. Stone II and Michael Abrams of Stone Hilton.
Media Matters is represented by Abha Khanna, Aria C. Branch, Christopher D. Dodge, Elena Rodriguez Armenta, Omeed Alerasool and Tina Meng Morrison of Elias Law Group in D.C.
The cases are X Corp. v. WFA et al., case number 7:24-cv-00114; and X Corp. v. Media Matters for America, case number 4:23-cv-01175.
U.S Court of Appeals for the Fifth Circuit
A $10.3M Win is Upheld on Appeal
A bankruptcy trustee who recovered $10.3 million in funds fraudulently transferred from Black Elk Energy Offshore Operation to two hedge fund investors recently convinced a three-judge panel not to disturb the ruling.
The Aug. 14 opinion was issued in a lawsuit stemming from Mark Nordlicht’s $80 million fraud against Black Elk creditors. Nordlicht, who was later convicted of securities fraud, had transferred $10.3 million in funds to Shlomo and Tamar Rechnitz. After Black Elk declared bankruptcy, the trustee moved to recover those funds from the Rechnitzes.
On appeal, the Rechnitzes argued that they had received those funds in good faith and that the trustee had not “properly traced” those funds to the fraud perpetrated by Nordlicht.
“In sum, we reject the Rechnitzes’ argument that, under 11 U.S.C. § 550(b)(1), a transferee’s good faith cannot be defeated by knowledge imputed from the transferee’s agent,” the panel wrote.
Judges Jennifer Walker Elrod, Stuart Kyle Duncan and Irma Carrillo Ramirez sat on the panel.
The Rechnitzes are represented by Vineet Bhatia, Ryan Caughey and Eve Levin of Susman Godfrey.
Litigation trustee Richard Schmidt and Black Elk are represented by Michelle Stratton of Murphy Ball Stratton and Jeffrey Potts, Jarod Stewart and Justin M. Waggoner of Steptoe.
The case number is 23-20386.
WDTX Judge Gets Bench Trial Ruling Reversed
U.S. District Judge Jason Pulliam got it wrong when he determined after a bench trial that no breach of contract had occurred in a dispute between a pharmaceutical start-up and its third-party logistics provider, the Fifth Circuit recently determined.
In an Aug. 15 ruling, the panel explained that Judge Pulliam reached that conclusion after determining the contract between start-up Molecular Biologicals and logistics company Mission Pharmacal did not contain any provisions requiring Molecular to reimburse Mission for credits Mission issued to customers when products were returned.
Molecular sells a product that helps wounds and sores heal called Keragel. When it entered into a contract with Mission in 2017, Mission had established business relationships with the “Big Three” pharmaceutical wholesalers: AmerisourceBergen, Cardinal Health and Irving-based McKesson Corp.
Under the deal, wholesalers would buy products through Mission and pay Mission, which would, in turn, remit proceeds to Molecular. In 2018, Mission sold about $2.4 million worth of Molecular’s products to the Big Three, but due to a lack of sales, the Big Three returned about $1.8 million in Molecular’s products in 2019.
The dispute is rooted in whether Molecular is obligated to reimburse Mission for the value of the chargebacks.
Mission filed suit for breach of contract and, after Judge Pulliam’s adverse ruling, filed notice of appeal in May 2023, according to court records.
“The district court focused on the lack of an explicit promise that Molecular would reimburse Mission for the cost of the refunds without considering what that interpretation implied about the meaning of the rest of the contract,” the panel held.
“We hold that the contract is clear and unambiguous that chargeback services require Mission to process returns and issue credit on Molecular’s behalf, not to assume the cost of those returns. Because the returns were made on Molecular’s behalf, absent assumption of costs by Mission, Molecular was responsible for the cost of returns. Therefore, Molecular breached the contract by failing to reimburse Mission for the costs of the returns that Mission processed.”
On the panel were Judges Jennifer Walker Elrod, James E. Graves Jr. and U.S. District Judge for the Eastern District of Louisianna, Barry W. Ashe, sitting by assignment.
Mission is represented by John Fox, Stacey R. Obenhaus and John A. Tucker of Foley & Lardner.
Molecular is represented by James E. Zucker and Andrew Ingram of Yetter Coleman.
The case number is 23-50321.