In this edition of Litigation Roundup, a new trial is ordered in a dispute involving heirs of deceased oil tycoon J. Howard Marshall, The Goldwater Institutes asks the Texas Supreme Court to grant review in a public records fight involving Highland Park Independent School District and fine-dining steakhouse Perry’s is found to be in violation of the Fair Labor Standards Act.
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
Mercuria Energy Gets Trial Date in Suit Against Trader
Mercuria Energy America and a former gas trader will get their day in court in a breach of contract lawsuit after a judge in Houston last week set the case for trial in May 2026.
Mercuria filed suit in February, alleging Jason “Jimmy” Michael Powers, who was hired in June 2022 to be head of its South Gas Trading team, cost it “tens of millions of dollars” in damages by mismarking the value of natural gas derivative contracts. Mercuria explained that in 2024 it noticed the marks Powers’ assigned “began to deviate noticeably from the marks given by Totem, a service that provides independent mark-to-market prices” that Mercuria uses to check its book valuations.
“When MEA’s head of natural gas asked Powers to justify the deviation … Power’s cited unexecuted bids for physical natural gas to be delivered years in the future to substantiate his valuation of a financial position in natural gas derivatives,” the lawsuit alleges. “This is not an accepted valuation technique in MEA or the industry.”
Powers lodged counterclaims in April alleging breach of contract and violation of the Texas Theft Liability Act, telling the court while Mercuria had agreed to pay him $3 million “if it terminated him without ‘just cause.’”
“Yet, to date — despite written demand — Mercuria has refused to pay Powers any of his 2022 and 2023 deferred bonus compensation,” Powers alleges in the lawsuit. “Instead, Mercuria expropriated that compensation. Therefore, these counterclaims are designed to remedy Mercuria’s egregious violations of Powers’ rights under his contractual agreements with Mercuria … and thereby prevent Mercuria from subjecting any other employee to similar illegal conduct in the future.”
The case has been assigned to Harris County District Judge Kyle Carter.
Mercuria is represented by Chris Reynolds and Mason C. Malone of Reynolds Frizzell.
Powers is represented by solo practitioner Dennis Herlong of Houston and Scott Newar of Newar Law Firm.
The case number is 2025-11886.
Dallas County District Court
Hand Sanitizer Co. Wins $3.5M Verdict
Jurors in Dallas County last month sided with FiteBac Skincare in a lawsuit it brought against a laboratory it contracted to manufacture and package its products.
FiteBac had filed suit in October 2023 against Dhaliwal Laboratories and Dhaliwal Pharmaceutical Laboratories for breach of contract and breach of implied warranties after customer complaints about the quality and packaging of its hand sanitizer products started rolling in.
According to the lawsuit, the packaging “ruptured easily” and the hand sanitizer was not the clear, homogenous product FiteBac had contracted with Dhaliwal to manufacture, and instead was sometimes sold in “varying shades of orange and yellow.”
FiteBac was awarded nearly $3.5 million in damages, the full amount it was seeking. Jurors awarded damages for loss of inventory, loss of research of development, loss of advertising and promotion expenses and for other out-of-pocket expenses, according to the jury charge.
Dallas County District Judge Aiesha Redmond presided over the case and has set a final disposition hearing for Dec 2.
FiteBac is represented by Jeffrey S. Lowenstein, Beverly A. Whitley and Joshua D. Fuller of Bell Nunnally & Martin.
Dhaliwal Laboratories and Dhaliwal Pharmaceutical Laboratories are represented by Laura Reilly O’Hara and Ashley A. MacNamara of Clark Hill.
The case number is DC-23-17354
Panola County District Court
Judge Tosses Texas’ TUFTA, DTPA Claims in Tylenol Suit
Days after the state of Texas filed a deceptive trade practices lawsuit against Johnson & Johnson and Kenvue over their marketing of Tylenol, the lawsuit has been trimmed by the judge in deep East Texas who is overseeing the case.
Panola County District Judge LeAnn Rafferty signed three separate orders Friday: one denying Texas’ request for a temporary restraining order, one granting Johnson & Johnson and Kenvue’s special appearance for the Texas Deceptive Trade Practices and Consumer Protection Act claims and a third granting both defendants’ special appearance for the Texas Uniform Fraudulent Transfer Act claims.
Texas had accused the defendants of violating the Texas DTPA by deceptively marketing the medicine to pregnant mothers without regard to the alleged dangers the drug poses to unborn children and of violating TUFTA via its 2023 spinoff of Kenvue, which Texas alleged was a fraudulent transfer of Tylenol-related liabilities.
The state had requested the TRO to prevent Kenvue from paying a dividend Nov. 26, arguing it would drain the company of hundreds of millions of dollars that it would need to pay future civil liabilities.
Johnson & Johnson and Kenvue are represented by Kim Bueno, Jessica Davidson, Kristen Fournier, Geoff Wyatt, Jordan Schwartz and Eugene Temchenko of Kirkland & Ellis.
Texas is represented by John J. Snidow, John M. Masslon II, Roseann R. Romano and Ashley Keller of Keller Postman and Jonathan Stone, Jerry Bergman and Kelley Owens of the attorney general’s office.
The case number is 2025-348.
Western District of Texas
Judge Pitman: Houston-Based Perry’s Steakhouse & Grille Violated FLSA
A federal judge in Texas has found that Perry’s Steakhouse & Grille violated the Fair Labor Standards Act in the way it operated a tip pool and will determine what damages are owed to the hundreds of workers who filed suit later this year.
The plaintiffs, representing 750 servers who worked at the restaurant between January 2019 and January 2022, filed suit in January 2022, alleging management violated the Fair Labor Standards Act by routinely taking a portion of their tips to pay employees who were working morning shifts before the fine dining restaurant opened to the public.
U.S. District Judge Robert Pitman held a bench trial March 31 and April 1 and heard closing arguments July 10. He issued his 33-page findings of fact and conclusions of law Nov. 10.
He wrote that Perry’s “has been involved in FLSA litigation continuously since 2009” and that in 2003 the restaurant chain was subject to a full investigation by the Department of Labor “and was found in violation of the FLSA on multiple grounds including operating an unlawful tip pool.” Judge Pitman also noted Perry’s had fired an employee who raised questions about the legality of the tip pool after it received a National Labor Relations Board complaint.
“In this case, Perry’s committed a willful violation of the FLSA when it paid off-hour employees who were primarily performing cleaning and restaurant setup tasks from the tip pool, based on (1) its actual knowledge of FLSA requirements from prior DOL investigations; (2) its actual knowledge of FLSA requirements from prior litigation, as demonstrated at trial; and (3) its receipt of employee complaints,” he wrote.
Because Perry’s has been found to be in violation of the FLSA’s tip credit requirements, “Perry’s demonstrated either knowledge or reckless disregard for the law when it improperly distributed servers’ tips to non-tipped, off-hours employees,” Judge Pitman wrote.
As for damages, the servers “are entitled to minimum wage and reimbursement of all tips contributed to the unlawful tip pool for each week in which there was a violation.” The servers were paid $2.13 an hour and minimum wage is $7.25.”
Briefing on the exact amount of damages to be paid is due in December.
The plaintiffs are represented by Drew N. Herrmann and Pamela Herrmann of Herrmann Law and Harold Lichten and Matthew Thomson of Lichten & Liss-Riordan.
Perry’s and its founder Christopher V. Perry are represented by Matt Dow, Jamila M. Brinson, Lionel M. Schooler, Jackie C. Staple and Michael A. Drab of Jackson Walker.
The case number is 1:22-cv-00027.
Fourteenth Court of Appeals, Houston
New Trial Ordered in Dispute Over J. Howard Marshall’s Trust
A panel of justices in Houston recently determined that a new trial is required in the dispute between the grandson of J. Howard Marshall, Preston Marshall and Preston’s mother, Elaine Marshall, because of insufficient evidence to support the jury’s award of $2.3 million in damages.
“Because the record contains sufficient evidence of some lesser amount damages, the remedy is a remand for a new trial on both liability and damages,” the panel wrote.
Preston Marshall had sued his mother, challenging some of her actions as trustee of The Marshall Grandchildren’s Trust, which the patriarch established in 1987 for the benefit of his grandchildren. Elaine Marshall, J. Howard Marshall’s daughter-in-law, served as trustee until resigning in 2021, and the trust terminated in 2023 when Preston turned 50.
“The central disputes in this case have been about the appointment of a successor cotrustee, Preston’s request for an accounting of the Trust, the income distributions Elaine made to Preston in 2015 and 2016, and Elaine’s withdrawal of Trust funds to pay her litigation expenses,” according to the opinion.
A jury sided with Preston and awarded $350,652.23 in actual damages and $2 million in attorney fees, according to the opinion. The damages were based on Preston Marshall’s claim that delayed distributions in 2015 and 2016 deprived him of the opportunity to make an investment return on the funds. A damages expert testified the grandson would have made a 15 percent return on the roughly $1.6 million.
“When, as here, the evidence is legally insufficient to support the amount of damages awarded but legally sufficient to support a lesser amount, the remedy is to reverse the trial court’s judgment and remand for a new trial; and because Elaine contested liability, the remand encompasses both liability and damages,” the panel wrote.
Justices Ken Wise, Kevin Jewell and Brad Hart sat on the panel that issued the 44-page ruling Nov. 13.
Elaine Marshall is represented by Reagan W. Simpson, Bryce L. Callahan, Constance H. Pfeiffer, R. Paul Yetterand Grant B. Martinez of Yetter Coleman.
Preston Marshall is represented by Max L. Tribble, Neal S. Manne, Shawn D. Blackburn, Sylvanus M. Polky and Katherine E. Drews of Susman Godfrey and Wallace B. Jefferson, Rachel A. Ekery, Nicholas Bacarisse and Kayla E. Oliver of Alexander Dubose & Jefferson.
The case number is 14-23-00276-CV.
Texas Supreme Court
Justices Says Shareholders Can’t Bring Individual Claims
On Friday, the Texas Supreme Court unanimously determined that a lawsuit against United Development Fund IV, a publicly traded Maryland real estate investment trust, that was brought by a group of shareholders cannot proceed because an advisory agreement between the parties “does not confer individual rights upon trust shareholders to sue advisors directly.”
NexPoint Diversified Real Estate Trust sued UDF, its officers, trustees, managers and advisors and UMTH General Services, alleging that since 2010 the group “operated a Ponzi scheme under the guise of a multitude of ‘investment fund’ entities called ‘United Development Funding.’” The entities were supposed to make high-interest loans to developments and pay monthly dividends to investors from the interest, but NexPoint alleges that, “in reality,” funds received from new investors were used to pay “fake dividends to older investors.”
After Dallas County District Judge Maria Aceves and the Fifth Court of Appeals rejected UMTH’s arguments as to why the suit should be dismissed, it appealed to the Texas Supreme Court in January 2024.
UMTH told the court in its petition that it’s a “bedrock commercial principle” in Texas law that “individual stockholders have no separate and independent right of action for injuries suffered by the corporation which merely result in the depreciation of the value of their stock.”
“This lawsuit flouts that settled law,” UMTH argued. “[NexPoint] brought this suit for individual recovery of textbook collective shareholder harms, claiming more than $60 million in harm to UDF IV.”
The Texas Supreme Court agreed.
“The defect in capacity is incurable, insofar as the litigation in Texas improperly seeks derivative relief through individual causes of action,” the court held. “The trial court therefore erred in failing to dismiss the shareholders’ suit with prejudice.”
UMTH is represented by Pete Marketos, Joel Reese, Tyler J. Bexley and Kendal C. Simpson of Reese Marketos and Leah F. Bower of Lehotsky Keller Cohn.
NexPoint is represented by Jeff Tillotson, Anne M. Johnson, Jonathan R. Patton and Stephani A. Michel of Tillotson Johnson & Patton.
The case number is 24-0024.
Goldwater Institute Urges SCOTX Review in Highland Park ISD Case
The Goldwater Institute, a conservative public policy think tank, filed an amicus brief on Friday with the Texas Supreme Court, urging the state’s high court to grant a petition for review in a fight over public information involving Highland Park Independent School District.
Represented by Katrina G. Eash and Matthew Wurst of Winston & Strawn, The Goldwater Institute told the court in its 26-page brief that it “specializes in litigating cases at the intersection os states’ open records acts, school districts’ refusal to comply with requests for information and open records requests seeking information about how tax dollars are spent.”
“This case — which involves a request for records related to an investigation about a school district’s financial management — fits exactly within this intersection of Goldwater’s interests,” the brief reads.
In July, the Fifth Court of Appeals in Dallas determined the district would not have to hand over a report regarding financial operations of its Seay Tennis Center, finding the document was protected by the attorney-client privilege.
The Texas Public Policy Foundation had argued that the report wasn’t covered by the attorney-client privilege, and even if it was that the district had waived the privilege. The report was completed by the accounting firm Whitley Penn and provided to the law firm Thompson & Knight, which the district hired to “investigate and provide legal advice” about the district’s operation of the tennis center and its employees’ “handling of the financial operations of the center.”
When TPPF filed a Texas Public Information Act request for the report, the district asked the attorney general for an opinion that it was covered by the attorney-client privilege. The attorney general agreed with the district, and TPPF took its fight to court.
The Dallas appellate court issued a 21-page opinion July 16 upholding Dallas County District Judge Eric V. Moyé’s ruling that the report is privileged and that the district did not waive privilege.
The Goldwater Institute told the court in its brief that its 2001 opinion in In re Georgetown “eviscerated” the Texas Public Information Act “by penciling into it a policy-motivated, attorney-client privilege exemption.”
“More than two decades later, this judge-created loophole has become a sinkhole: The exemption the court announced is sweeping and universal,” the brief reads. “Today, government entities routinely take advantage of it to hide audits and financial reports.”
“Put simply, the specters In re Georgetown imagined have not arisen in other jurisdictions — but the exemption that decision manufactured has instead drastically undermined the policy behind the public records laws. This court should overturn it.”
TPPF is represented by its own Robert Henneke, Chance Weldon and Christian Townsend.
Highland Park ISD is represented by Meredith Walker of Walsh Gallegos Kyle Robinson & Roalson.
The case number is 25-0759.
Craving more Texas Lawbook litigation coverage? Don’t worry, we’ve got you covered. Take a look at these stories you may have missed in the past few days.
The first bench trial in the Texas Business Court concluded last week and resulted in a win for Marathon Oil in a dispute over gas delivery during Winter Storm Uri. Marathon filed suit seeking a declaration it owed nothing after Mercuria Energy America sent it a $17.4 million invoice. At trial, Mercuria asked Third Division Judge Melissa Andrews to award $26.5 million in damages.
The state of New Jersey and McKool Smith announced Friday that the state has settled its 2021 lawsuit against Horizon Healthcare Services for $100 million. New Jersey claimed that the healthcare services provider had been submitting false funding claims to the state for years. Horizon says it never retained any of the money charged to the state for healthcare provider claims.
Chief U.S. District Judge for the Western District of Texas Alia Moses issued an order last week denying Jackson Walker’s bid for a jury trial in the 34 bankruptcy cases where the U.S. Trustee is trying to claw back millions in fees awarded to the firm. The eight-page order also returned the cases back to the Southern District of Texas bankruptcy judge who had been overseeing the cases until April and hit pause on several proposed settlements the law firm has reached with its former bankruptcy clients.
A jury in Houston awarded $118 million in damages to a group of victims of the Watson Grinding explosion in a lawsuit against 3M Company. The lawyers who secured that verdict told The Lawbook they have “995 more individuals waiting for their day in court.”
So far, 20 families who lost their daughters in the July 4 flood of Camp Mystic have filed lawsuits. We reported on three of those lawsuits, filed on behalf of nine victims, Monday, and learned Tuesday of a fourth lawsuit filed on behalf of six victims. On Friday, one of the earlier-filed lawsuits was amended to add the families of five more victims. The law firms involved include: Yetter Coleman, Arnold & Itkin, Howry Breen & Herman, Tefteller Law, The Armstrong Firm and The Lanier Law Firm. Plaintiff lawyer Mikal Watts is representing the camp and the family that owns it pro bono.
Sanderson Farms, five East Texas poultry and cattle farms and the Consolidated Water Supply Corporation asked an Anderson County judge to reject legal efforts by Dallas businessman Kyle Bass to intervene in their water rights litigation. Lawyers for Bass complained that their client’s rights were violated when Sanderson Farms and the water district reached an agreement prohibiting the drilling for water that Bass seeks to do. The settlement agreement was part of the final judgment entered Oct. 24 by the Anderson County judge.