In this week’s edition of Litigation Roundup, the San Antonio Spurs beat back a lawsuit alleging it infringed two ticket sales technology patents, the SEC pursues a Texas duo in a $12 million Ponzi scheme suit, and the Texas Supreme Court gears up to hear a case involving the intersection of public information and attorney-client privilege.
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Dallas County District Court
Medical Group Sues Insurer Over Covid Cancelation
The American Congress of Rehabilitation Medicine filed a lawsuit on Sept. 26 against its insurer, Certain Underwriters at Lloyd’s, seeking coverage for $2.6 million it lost after an insured event was canceled during the pandemic.
The nonprofit that is focused on improving the lives of disabled individuals told the court that the policy limit for the covered event — an annual conference for about 5,000 participants at the Hilton Anatole — is $3.7 million. The conference was scheduled to take place from Sept. 22, 2021 through Oct. 1, 2021.
Because of the pandemic, organizers made the choice to cancel the event in March 2021, according to the lawsuit. By September 2021, the threat level for Covid remained “at level red,” and the number of reported cases in Dallas County were increasing.
On Feb. 4, 2022, Underwriters denied ACRM’s claim for coverage, explaining in the denial letter that “there was no inability to proceed with the event.”
The American Congress of Rehabilitation Medicine is represented by Jeffrey S. Lowenstein and Laura K. Lavernia of Bell Nunnally & Martin.
Counsel information for the insurer wasn’t available Monday.
The case number is DC-22-13480.
Southern District of Texas
SEC Accuses Duo of Perpetrating $12M Ponzi Scheme
A complaint lodged by the U.S. Securities and Exchange Commission on Sept. 19 accusing two individuals of perpetrating a $12 million fraud targeting the Hispanic community was unsealed on Sept. 29.
Mauricio Chavez, Giorgio Benevunto, CryptoFX and CBT Group all were named as defendants in the lawsuit that’s been assigned to U.S. District Judge Andrew Hanen.
The government alleges the duo raised more than $12 million from 5,000 investors by claiming the money would be used to invest in crypto assets and foreign exchange markets. But in actuality, the SEC says those funds were used on Chavez’ unrelated real estate company and his “extravagant lifestyle.”
The SEC’s Matthew J. Gulde represents the agency and Chavez has retained John H. Sklar of Magallon & Sklar to defend him.
The case number is 4:22-cv-03359.
Eastern District of Texas
Chamber of Commerce Says CFPB Overstepping Authority
The U.S. Chamber of Commerce and six other groups have sued the Consumer Financial Protection Bureau, alleging its March 2022 guidance that added discrimination to a list of “unfair, deceptive or abusive acts” is a violation of the Administrative Procedure Act.
The Chamber — alongside its Longview affiliate, the American Bankers Association, Consumer Bankers Association, Independent Bankers Association of Texas, Texas Association of Business and Texas Bankers Association — filed suit on Sept. 28.
The plaintiffs allege that the Dodd-Frank Act doesn’t give the CFPB authority to regulate discrimination.
The Chamber is represented by Bryan K. Weir, Cameron Thomas Norris and David Leighton Rosenthal of Consovoy McCarthy.
Counsel information for the government wasn’t available Monday.
The case number is 6:22-cv-00381.
Western District of Texas
San Antonio Spurs Beat Infringement Suit Over Ticket Sales
The same entity that last month sued Major League Soccer team FC Dallas for patent infringement over technology used to resell tickets had a similar lawsuit against the San Antonio Spurs tossed by U.S. District Judge Alan Albright on Sept. 26.
Judge Albright granted a motion to dismiss after agreeing Alvao Digital had failed to state a claim in the lawsuit that accused the basketball team of infringing two patents.
Alvao has until Oct. 10 to file an amended complaint. The company brought this lawsuit in December 2021 and named the University of Texas at Austin and StubHub as defendants alongside the Spurs. Alvao voluntarily dismissed those defendants from the suit in March and June, respectively, according to court records.
Alvao is represented by Christopher Honea, M. Schoot Fuller, Rene A. Vazquez and Randall T. Garteiser of Garteiser Honea.
The Spurs are represented by Hilary Lovett Preston and Erik Shallman of Vinson & Elkins.
The case number is 6:21-cv-01321.
Fourteenth Court of Appeals
Split Panel Holds Unsigned Agreement Compels Arbitration
On Sept. 27 a three-justice panel undid a trial court’s ruling keeping in court a personal injury lawsuit Zach Young brought against his former employer, GSC Wholesale, which does business as Grocers Supply.
Harris County District Judge Donna Roth denied the company’s bid to kick the forklift injury suit to arbitration in December 2020, finding that the employer’s failure to sign the arbitration provision in the employment provision meant there was no agreement to arbitrate.
But on appeal, two justices found there was no language in the agreement indicating assent to it “may only be made by signature or that signatures by the parties are a condition precedent to the enforceability of the agreement.”
“The unambiguous text of the arbitration agreement explicitly states various times that the parties may assent to the agreement by conduct, without any signature,” the majority held.
Justice Margaret “Meg” Poissant penned a dissent that she would have sided with the trial court’s decision to keep the lawsuit in court.
“A party cannot accept by conduct a contract that requires a signature as a condition precedent,” she wrote. “Accordingly, we cannot conclude as a matter of law that the arbitration agreement allowed for assent by the parties by conduct.”
Justices Randy Wilson and Ken Wise joined in the majority opinion.
Young is represented by Alex W. Horton and Scott C. Krist of The Krist Law Firm.
GSC is represented by Kevin M. Long and Rick Lee Oldenettel of Oldenettel & Long.
The number is 14-20-00871-CV.
Texas Supreme Court
State’s High Court to Decide UT Attorney-Client Privilege Case
The Texas Supreme Court on Friday agreed to weigh in on the confidentiality of communications underlying The University of Texas System’s investigation into allegations of improper admissions practices at UT Austin. The court will review a 2020 ruling from the Third Court of Appeals that some of the requested documents must be disclosed because they are not protected by the attorney-client privilege.
Oral argument is scheduled for Jan. 11.
The dispute dates to 2013, when UT System Board of Regents member Wallace Hall raised concerns about possible undue influence on the student admissions process at UT Austin. The system hired Kroll Associates, a consulting firm, to investigate. The Kroll investigation found that under UT Austin President Bill Powers, the university admitted certain students over the objections of the admissions office after receiving requests from influential individuals. Kroll concluded that the practice violated no law, rule or policy and no disciplinary action was taken against Powers.
In 2015 the Franklin Center for Government and Public Integrity and Jon Cassidy filed a Public Information Act request seeking all documents that Kroll obtained during its investigation. The center ultimately narrowed its request to certain documents listed on a privilege log the university system sent the Attorney General. The trial court agreed with UT that all the requested documents were protected by attorney-client privilege and that the privilege was not waived because Kroll acted as a “lawyer’s representative.”
The Third Court of Appeals reversed the trial court’s judgment and required disclosure. It held that the UT System did not present evidence sufficient to meet its burden to show that Kroll was employed by the system’s general counsel to assist in providing legal services to the system.
The UT System is represented by members of Attorney General Ken Paxton’s Office, including Assistant Solicitor General Lisa A. Bennett. The Franklin Center is represented by Joseph R. Larsen of Gregor Wynne Arney.
The cause number is 21-0534.
U.S. Court of Appeals for the Fifth Circuit
JP Wayne Mack Beats Suit Over Courtroom Prayer
Montgomery County Justice of the Peace Wayne Mack secured a ruling that his practice of opening court proceedings with prayer did not constitute coercion, bringing an end to a lawsuit brought by the Freedom From Religion Foundation.
A divided panel issued the Sept. 29 ruling and Judge E. Grady Jolly authored a dissent that he disagreed with the majority’s decision to grant Mack summary judgment in the face of “factual disputes that could be material in evaluating the religious practices of Judge Mack in his courtroom.”
Judge Jolly wrote that in Mack’s own words he said the prayer ceremony was intended to set a tone for “everybody that’s in the courtroom.”
“That the prayer ceremony is directed at the audience Judge Mack holds power over further demonstrates the likelihood of coercion. …For the majority to find that there is no evidence of coercion, suggests, in my opinion, willful blindness and indisputable error,” he wrote.
The Foundation is represented by its own Samuel Troxell Grover and Ayesha N. Kahn of the Potomac Law Group.
Mack is represented by a Gibson Dunn & Crutcher team that includes Allyson Ho, Stephen J. Hammer, Bradley G. Hubbard, Elizabeth Ashley Kiernan, Katherine Leigh Montoya and Matthew Scorcio.
Judges Jerry E. Smith and Kurt D. Elgelhardt also sat on the panel.
The case number is 21-20279.
Editor’s Note: Janet Elliott contributed to this article.