In this edition of Litigation Roundup, Boeing gets a second chance to bring an end to a Southwest Airlines Pilots Association’s lawsuit, American Airlines is dealt a blow in a lawsuit over its 401(k) plan investing, and Attorney General Ken Paxton — in the wake of an appellate panel tossing his Texas Deceptive Trade Practices Act suit against Google — has filed new lawsuits accusing TikTok of violating the same law and Allstate Insurance of using technology to unlawfully collect driving data to justify premium increases.
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.
Montgomery County District Court
Texas Says Allstate Insurance Unlawfully Selling Driving Data
On Monday, Allstate Insurance and its subsidiary, Arity, were accused of violating state laws in the way it collected and sold the driving data of 45 million people to insurance companies that then used that information to raise Texans’ insurance rates.
The lawsuit alleges violations of the Texas Data Privacy and Security Act and names as defendants The Allstate Corporation, Allstate Insurance Company, Allstate Vehicle and Property Insurance Company, data analytics subsidiary Arity, Arity 875 and Arity Services. The lawsuit is seeking civil penalties in excess of $1 million.
Texas alleges Allstate and Arity pulled off the plan by partnering with app developers who would embed their monitoring technology into third-party apps, such as Life360, Routley, GasBuddy and Fuel Rewards.
“Defendants … conspired to secretly collect and sell ‘trillions of miles’ of consumers’ ‘driving behavior’ data from mobile devices, in-car devices, and vehicles,” the lawsuit alleges. “Defendants used the illicitly obtained data to build the ‘world’s largest driving behavior database’… for two main purposes: (1) to support Allstate defendants’ car insurance business and (2) profit from selling the driving behavior data to third parties, including other car insurance carriers. Millions of Americans, including Texans, were never informed about, nor consented to, defendants’ continuous collection and sale of their data.”
An investigation revealed Allstate “paid app developers millions of dollars” to have its technology integrated into the third-party apps, the suit alleges. Allstate allegedly used the collected location data as if it were “driving data,” the suit alleges, but has recently begun purchasing driving data directly from car manufacturers.
“The manufacturers that defendants purchased data from included Toyota, Lexus, Mazda, Chrysler, Dodge, Fiat, Jeep, Maserati, and Ram,” the suit alleges. “Allstate defendants have used this data for their own insurance underwriting purposes”
In August, Texas filed suit against General Motors for allegedly collecting drivers’ private data and selling it to insurance companies. That lawsuit also was filed in Montgomery County District Court.
Texas is represented by Tyler Bridegan, Richard R. McCutcheon, Robert H. Nordstrom, Madeline Forel, Summer R. Lee, Monica Wadleigh, Adam Holtz, Gabriella Gonzalez and John C. Hernandez of the attorney general’s office.
Counsel information for the defendants and a case number wasn’t available Monday afternoon.
Galveston County District Court
TikTok Draws TDTPA Suit From AG’s Office
Social media platform TikTok has been accused of “inaccurately and deceptively” representing that the app is safe for minors to use in violation of a state law, Texas alleged in a lawsuit filed Jan. 9.
The lawsuit accuses the company of violations of the Texas Deceptive Trade Practices Act as well as the Securing Children Online Through Parental Empowerment Act
“While TikTok has established itself as one of the most popular apps in Texas, it has utterly disregarded the health and safety of Texas minors in the process,” the suit alleges. “TikTok is rife with profanity, sexual content, violence, mature themes, and drug and alcohol content. In an investigation of TikTok, the State discovered virtually endless amounts of extreme and mature videos presented to minors as young as thirteen — some with millions of views. Much of this content would shock the conscience of an individual of any age, let alone impressionable minors.”
In a statement announcing the lawsuit, Paxton accused TikTok of “actively” working “to deceive parents and lure children onto their app.” In part, the lawsuit alleges the company has “relentlessly sought and maintained an app age rating of 12+” on the Apple app store and a “T for Teen” rating in the Microsoft and Google app store equivalents.
“Companies may not jeopardize the health and wellbeing of Texas children by blatantly lying about the products they provide,” he said in a statement.
The 66-page lawsuit includes significant portions that have been redacted.
The attorney general has turned to outside counsel from Cooper & Kirk in D.C. — David H. Thompson, Adam P. Laxalt, Brian W. Barnes and Megan M. Wold — to assist with the case. The state is also represented by Tyler Bridegan of the attorney general’s office.
Counsel information for the defendants and a case number wasn’t available Monday afternoon.
Eastern District of Texas
Exxon Sues Cali AG in Texas Court
Exxon Mobil Corporation is going after the attorney general of California as well as environmental groups in a new federal lawsuit, accusing the defendants of conspiring to attack its advanced recycling program.
Rob Bonta is among the defendants named in the lawsuit, alongside the Sierra Club, Surfrider Foundation, Heal The Bay, Baykeeper Inc. and the Intergenerational Environment Justice Fund.
“Why would Mr. Bonta or anyone who claims to be serious about cleaning up the environment and helping solve the plastic waste issue take such extreme measures to shut down the emerging and developing advanced recycling industry?” the lawsuit asks. “The answer is foreign influence, personal ambition, and a murky source of financing rife with conflicting business interests. With apparently no appreciation for the irony of their claim, Mr. Bonta and his cohorts are now engaging in reverse greenwashing; while posing under the banner of environmentalism, they do damage to genuine recycling programs and to meaningful innovation.”
Exxon’s lawsuit comes after the state of California in September accused the oil and gas giant of “engaging in a decades-long campaign of deception that caused and exacerbated the global plastics pollution crisis.”
The 40-page lawsuit, filed Jan. 6, brings claims for business disparagement, defamation, tortious interference with contract and prospective business and civil conspiracy while seeking a declaration from the court that its “advanced recycling is recognized and permitted by law in multiple states, including Texas, and that ExxonMobil is lawfully permitted to engage in and promote advanced recycling at its Texas facility.”
Exxon alleges that the “attacks on advanced recycling” at the hands of the defendants is harming its relationships with business partners and the public.
“These attacks hinder ExxonMobil’s ability to fulfill its contractual obligations and defendants are intentionally impeding the growth of this market and causing great uncertainty for existing and prospective customers,” the suit alleges. “These attacks further threaten to derail advanced recycling by preventing it from achieving the scale necessary to ensure effective and efficient recycling.”
The case has been assigned to U.S. District Judge Michael J. Truncale.
Exxon is represented by Michael Cash and Wade Howard of Liskow & Lewis.
Counsel for the defendants had not filed an appearance as of Monday.
The case number is 1:25-cv-00011.
Northern District of Texas
Judge Finds American Airlines Breached ‘Duty of Loyalty’
In a class action lawsuit brought by a group of plaintiffs who allege American Airlines’ pursuit of environmental, social and governance goals damaged retirement plan participants, a federal judge has partially agreed.
The lawsuit accused AA of violating the Employee Retirement Income Security Act in its pursuit of ESG goals when it gave fund managers like BlackRock plan assets. Those fund managers, the suit alleges, “ignored financial returns as the exclusive purpose and lowered the value of plan participants’ investments.”
In a 70-page findings of fact and conclusions of law issued Friday, U.S. District Judge Reed O’Connor, who presided over a four-day bench trial in June, determined “that the facts compellingly demonstrated that defendants breached their fiduciary duty by failing to loyally act solely in the retirement plan’s best financial interests by allowing their corporate interests, as well as BlackRock’s ESG interests, to influence management of the plan.”
“However, the facts do not compel the same result for the duty of prudence,” Judge O’Connor wrote. “Defendants acted according to prevailing industry practices, even if leaders in the fiduciary industry contrived to set the standard. This is fatal to plaintiff’s breach of prudence claim. Accordingly, plaintiff prevails on the merits of his breach of loyalty claim but not on the breach of prudence claim.”
In May Judge O’Connor had granted class certification to the group of more than 100,000 participants and beneficiaries of AA’s 401(k) plan, who are led by named plaintiff Bryan P. Spence, an American Airlines pilot from Aledo, Texas.
In his findings of fact, Judge O’Connor wrote that the evidence presented in the case “paints a convincing picture that defendants breached the duty of loyalty — either in service of BlackRock’s demands, in pursuit of American’s own corporate goals, or both.”
“At the end of the day, whether efforts to influence BlackRock could have been successful is not what determines whether the duty of loyalty is satisfied,” he wrote. “Through that lens, the evidence made clear that defendants’ incestuous relationship with BlackRock and its own corporate goals disloyally influenced administration of the plan.”
American Airlines is represented by Russell D. Cawyer and Dee J. Kelly Jr. of Kelly Hart & Hallman and Shannon Barrett, Brian D. Boyle, Jeffrey A. N. Kopczynski, William Pollak, Charles Mahoney and Mark W. Robertson of O’Melveny & Myers.
The plaintiffs are represented by Andrew Stephens and Heather Hacker of Hacker Stephens and Isaac Diel, Hammons P. Hepner, Nathan A. Kakazu and Rex A. Sharp of Sharp Law.
The case number is 4:23-cv-00552.
Texas Supreme Court
SCOTX to Review Southwest Airlines Pilot Union Suit Against Boeing
Second time’s the charm for The Boeing Company, which on Friday successfully petitioned the Texas Supreme Court for rehearing in a lawsuit brought by the Southwest Airlines Pilots Association.
In July, Boeing asked the Texas Supreme Court to reconsider its May decision that had cleared the way for SWAPA, a 9,000-member labor union, to proceed with a lawsuit alleging the company cost it millions of dollars via its false representations about the airworthiness of the 737 MAX aircraft.
The initial decision by the Texas Supreme Court to pass on the case would have allowed a March 2022 ruling from the Fifth Court of Appeals in Dallas, which revived the case, to stand. Boeing had argued that the ruling made Texas “a national outlier on conflict preemption under the federal Railway Labor Act.”
SWAPA has argued that because Boeing is not an airline carrier, the RLA doesn’t apply to the state law tort claims the union members have lodged with the court. The Fifth Court of Appeals determined that because this dispute isn’t between “a carrier and its employees,” the RLA doesn’t apply.
In the motion for rehearing, Boeing told the court that the Second, Fourth, Sixth, Seventh, Eighth and Ninth Circuits have all concluded that the RLA or Labor Management Relations Act preempts any claims requiring collective bargaining agreement interpretation, “even when the claim is not between a carrier and its employees.”
Boeing also said that the Second, Fourth, Fifth, Sixth, Seven and Ninth Circuits have all determined the RLA preempts a claim “against a third-party to the CBA.” Boeing explained in a footnote that the Fifth Circuit’s ruling in Kaufman v. Allied Pilots Association held that RLA preemption extends to “all types of state regulation that conflicts with federal labor relations law … , whether in litigation between parties to the labor relationship or between downstream injured persons and parties to the labor relationship.”
As of Monday afternoon, the court had not set a date and time for oral arguments.
Boeing is represented by Nina Cortell and Christopher Knight of Haynes Boone, Anne M. Johnson and Kelli Bills of Tillotson Johnson & Patton, Craig S. Primis and Ronald K. Anguas Jr. of Kirkland & Ellis, E. Leon Carter of Carter Arnett, and Courtney Barksdale Perez of BakerHostetler (formerly of Carter Arnett).
The SWAPA is represented by David S. Coale and Jamie R. Drillette of Lynn Pinker Hurst & Schwegmann, Jeffrey W. Hellberg Jr. of Wick Phillips Gould & Martin and Anthony U. Battista and Mary Dow of Condon & Forsyth.
The case number is 22-0631.