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Appellate

Ex-Highland Capital Management CEO Can’t Duck Contempt Finding

James Dondero had appealed to the Fifth Circuit in September 2022, arguing the bankruptcy judge wrongly found him in contempt of a temporary restraining order and awarded compensatory damages to Highland. Judge Leslie H. Southwick wrote that the “minor factual issues” Dondero raised on appeal weren’t enough to undo the sanction. “Undergirding our analysis of the sanctions award here is a recognition of the goal of such awards everywhere: ‘to do rough justice,’” he wrote.

Litigation Roundup: Primexx Energy Wants Suit Over $788M Sale Tossed

In this edition of Litigation Roundup, we offer an update from the most recent hearing in the lawsuit stemming from the $788 million sale of Primexx Energy, a threatened lawsuit over the death of Congresswoman Eddie Bernice Johnson yields a settlement, and six officers and directors of a Houston-based clinic see an end to a $285 million breach claim.

SCOTUS Vacates Fifth Circuit Decision in Social Media Case

In a decision Monday by the U.S. Supreme Court, the justices ruled that the U.S. Court of Appeals for the Fifth Circuit failed to “conduct a proper analysis of the First Amendment challenges” to a Texas law that regulates content posted on large internet platforms, such as Facebook and YouTube. The Supreme Court vacated and remanded NetChoice v. Paxton — a case in which the Fifth Circuit upheld a Texas law prohibiting websites and social media outlets from editing or deleting posts deemed to be false or harmful.

Texas Experts: SCOTUS’ Jarkesy Decision to Have Limited Impact on SEC Enforcement 

The U.S. Supreme Court’s decision Thursday that defendants in fraud cases have the right to a civil jury trial in cases in which the U.S. Securities and Exchange Commission seeks financial penalties appears to be broad and sweeping but may have only minimal impact on SEC enforcement actions. But legal experts say that the decision could have a significant impact on settlements with the SEC. The SEC’s case against George Jarkesy, a Texas hedge fund manager and conservative radio talk show host, dates back to 2013 when the government claims that Jarkesy defrauded investors by falsely leading them to believe that KPMG was auditing two funds he launched. The SEC brought their case in an administrative proceeding before an SEC-appointed ALJ. The SEC hit Jarkesy and a co-defendant with $300,000 in penalties and ordered Jarkesy’s fund, Patriot28, to disgorge about $685,000 in ill-gotten gains.

Also, click here to see the list of Fifth Circuit cases handled by the Supreme Court this term.

Landfill Dispute Returned to District Court Minus Fair Market Value Claim

The Texas Supreme Court kept alive the lawsuit filed by Travis Central Appraisal District over a landfill’s slashed property valuation but returned the case to the district court on substantially narrowed grounds. The court sided with Texas Disposal System in removing the appraiser’s fair market value claim but will allow market value evidence to be heard. The tax dispute centers on an unusual property that also houses exotic animals and hosts private parties.

Divided Court Wipes Out Dentist’s $16M Medicaid Fraud Penalty

During oral arguments, much of the court’s questioning centered around whether Texas had proven scienter, or that Dr. Richard Malouf knew he was violating the statute when he submitted 1,842 claims for reimbursement, which is required for the judgment against Malouf to stand. But that was not the issue that carried the day for Malouf.

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