In this edition of Litigation Roundup, a bankruptcy judge in Houston approves a $52 million insurance settlement for victims of factory explosion, the Texas Supreme Court adds several cases to its oral argument calendar and Jackson Walker nets a win against the Federal Aviation Administration.
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Southern District of Texas
$52M Insurance Settlement Approved in Houston Explosion Case
U.S. Bankruptcy Judge Marvin Isgur recently approved a $52 million insurance settlement for victims of the Watson Grinding and Manufacturing explosion on the three-year anniversary of the fatal west Houston incident.
In a 13-page order issued Jan. 24, Judge Isgur determined that Indian Harbor Insurance must pay $11 million into the qualified settlement fund, RSUI Indemnity must pay $35 million into the fund, United Fire Lloyd’s must pay $1 million and Navigators Insurance must pay $5 million
Watson filed for Chapter 11 in February 2020, soon after a 2,000-gallon propylene tank exploded at its northwest Houston facility killing two workers and one nearby resident and damaging 450 homes, including some a half mile away from the business.
At a hearing approving the settlement, Judge Isgur took time to commend the work of the attorneys involved in the case for their “community action” and “organized effort” to “maximize the recovery to the clients.”
“So, the bankruptcy lawyers, the personal injury lawyers, the trustees, everyone that has worked on the case, I give my recognition to, my applause to, thank them for their work,” he said.
The plaintiffs are represented by Muhammed Aziz of Abraham Watkins Nichols Agosto Aziz & Stogner.
Indian Harbor is represented by Rick Shelby of Phelps Dunbar; UFL is represented by John V. McCoy of McCoy Leavitt Laskey; Navigators is represented by Joshua D. Weinberg of Ruggeri Parks Weinberg; RSUI is represented by Karl D. Burrer of Greenberg Traurig.
The case number is 20-30967.
Harris County District Court
More Women Join Suit Against Janitor
A lawsuit against a nighttime janitor who is accused of urinating in water bottles in the office he cleaned, infecting several employees with herpes, was expanded on Jan. 26 to include 13 women bringing claims.
Initially four women brought suit against Lucio Diaz, who was caught on a hidden camera allegedly urinating in the water bottles and placing them back on the desks of employees in the east Houston office building.
One employee purchased the hidden camera after noticing her water smelled and tasted foul. Diaz is also facing a criminal charge of aggravated assault with a deadly weapon.
Th civil lawsuit also names Diaz’s employer, the owner of the building and the building’s management and maintenance company.
The case has been assigned to Harris County District Judge Ravi K. Sandill.
The plaintiffs are represented by Mo Aziz and Morgan Mills of Abraham Watkins Nichols Agosto Aziz & Stogner and Kimberly Spurlock and Samantha Spencer of Spurlock & Associates.
Counsel had not appeared for the defendants as of Monday.
The case number is 2023-05095.
Fourteenth Court of Appeals
City of Houston Appeals $1.2M Attorney Fee Judgment
The city of Houston is appealing a judgment requiring it to pay $1.2 million in attorney fees to a team of Mayer Brown associates in a lawsuit alleging the city violated the Texas Public Information Act.
The crux of the dispute dates back to 2004, when the law firm, on behalf of death row inmate Larry Estrada, requested information under the TPIA relevant to Estrada’s writ of habeas corpus. When the city failed to comply, this lawsuit followed. After 10 years of motion practice, the court sided with Estrada granting summary judgment and awarding $1.2 million in attorney fees.
Judgment was entered in favor of Estrada Dec. 16 and the city filed notice of appeal Jan. 17, court records show. Houston argued it shouldn’t have to pay the bill because under the TPIA it’s not required to comply with requests from incarcerated individuals. Estrada countered that there’s an exception carved out when that request is made by an attorney on behalf of a prisoner.
Estrada is represented by Christopher Watts, Marjan Batchelor and Anna Durham of Mayer Brown.
The city is represented by Donald Hightower of the City of Houston legal department.
The case number is 14-23-00035-CV.
Texas Supreme Court
Plant Explosion MDL Targets Private Equity Investor
The Supreme Court will review a trial court’s refusal to dismiss a group of investors in a petrochemical manufacturing company from claims related to explosions at a plant in southeast Texas. Lawyers for the First Reserve investors say the ruling, upheld by the Beaumont Court of Appeals, puts the private equity industry at risk of losing limited liability in Texas.
The mandamus petition arises from an MDL proceeding before District Judge Courtney Arkeen of Orange County. The MDL contains over 2,100 lawsuits involving approximately 7,000 residents against First Reserve Management and a group of six investors in TPC, the plant owner. The lawsuits were filed after widespread property damage and injuries caused by a November 2019 explosion at the TPC Port Neches facility.
Plaintiffs allege that the First Reserve investors exercised control over TPC because they appointed two of five directors to TPC’s board. They say the two explosions could have been prevented if those managing the plant had complied with long-established industry safety standards.
The plaintiffs argue in their briefs that the Supreme Court should deny mandamus because the Rule 91a dismissal standard requires First Reserve to demonstrate that the plaintiff’s recovery is legally impossible, which they have not attempted to do.
First Reserve says in its briefing that plaintiffs allege that TPC has exhausted its insurance coverage and lacks assets to cover damages, “which is presumably why Plaintiffs have sued the First Reserve Investors.” But the proceedings are fatally flawed, according to First Reserve, because the appointed directors hold a minority of board seats.
In separate amicus filings, American Investment Council and the U.S. Chamber of Commerce argue that failure by the Supreme Court to grant the mandamus would chill private equity investment.
“Allowing the plaintiffs’ veil-piercing and negligent-undertaking claims against the First Reserve Investors to proceed would instantly make Texas a legal outlier,” said Scott A. Keller in an amicus letter brief submitted for the U.S. Chamber of Commerce.
First Reserve is represented by Michael A. Heidler, James T. Dawson, Christopher V. Popov, George Wilkinson, Stacey Neumann Vu and John Greil of Vinson Elkins along with Jack Carroll and J.B. Whittenburg of Orgain Bell and Tucker.
Plaintiff real-parties-in-interest are represented by Mark Sparks, Paul F. “Chip” Ferguson Jr., Jane S. Leger, Cody A. Dishon, Tripp Jones and Claire Brown of The Ferguson Law Firm.
The case, 22-0227, is set for oral argument Feb. 22.
Appeal to Test Whether Obesity a Disability Under Texas Law
Employers and disability rights groups are closely watching as the Supreme Court takes up an employment discrimination case filed by a severely obese resident physician who was dismissed by Texas Tech University Health Sciences Center-El Paso.
The court is reviewing whether morbid obesity qualifies as a disability under the Texas Commission on Human Rights Act if the employer does not regard the obesity as caused by a separate condition, and whether the employer waived attorney-client privilege in a key deposition.
Dr. Lindsey Niehay contends she was “regarded as” disabled because of her morbid obesity. Deposition testimony shows that her weight was discussed at a meeting attended by the acting director of the residency program and a Texas Tech assistant general counsel, who cautioned against using obesity as a reason to terminate Niehay from the program.
The university hospital says it dismissed Niehay from its emergency-medicine residency program based on issues concerning her professional conduct and performance, which she failed to improve under her probation plan.
The trial court overruled Texas Tech’s objection to the deposition testimony and denied its plea to the jurisdiction and motion for summary judgment. The Eighth Court of Appeals affirmed, holding that morbid obesity may be regarding as a physical impairment without evidence of an underlying physiological cause. The court held that the university waived any privilege claim and that Niehay presented direct evidence of discriminatory intent.
Texas Tech has warned that the court of appeals ruling may unleash discrimination claims under state law against countless employers. BSNF Railway Company, in an amicus filing, sided with the university, saying it evaluates applicants’ body mass index in hiring for safety-sensitive work. The brief says it is important that state law be aligned with federal circuit court rulings that held obesity can only qualify as an impairment under the Americans with Disabilities Act if it is the result of an underlying medical condition.
A joint amicus brief from the AARP, American Diabetes Association and Disability Rights Texas supports Niehay. According to the entities, current medical consensus considers severe obesity to be a disease due to the adverse effects of excess fat tissue on multiple body systems. Niehay says the obesity affects her walking, running, climbing, breathing and muscle function and causes a rapid heartbeat.
Texas Tech is represented by lawyers from the Office of the Attorney General, including Deputy Solicitor General Ari Cuenin.
Niehay represented by Todd Slobin and Dorian Vandenberg-Rodes of Shellist Lazarz Slobin and Stewart W. Forbes and Susan M. Forbes of Forbes & Forbes.
Case No 22-0179 is set for oral argument Feb. 21.
U.S. Court of Appeals for the Fifth Circuit
Jackson Walker Nets Win Against FAA
The Fifth Circuit has once again struck down an agency rule as a violation of the Administrative Procedure Act, this time in a lawsuit brought by Texas-based Flight Training International against the Federal Aviation Administration.
In a ruling issued Jan. 24, a three-judge panel determined a rule promulgated by the FAA in 2020 regarding the two types of pilot credentials cannot stand because it was enacted without a notice and comment period to solicit feedback from the public.
The case centers on two types of pilot credentials: airline transport pilot certificates, which authorizes a pilot to fly for airlines, and “type ratings,” which authorize pilots to command certain complex aircraft called “type-rated aircraft.”
FTI for years offered a training course that would use a type-rated aircraft but result in the participant receiving an airline transport pilot certificate. But after the 2020 rule went into effect, that was no longer allowed, so FTI filed suit alleging a violation of the APA.
Judges Carolyn Dineen King, James L. Dennis and James C. Ho sat on the panel.
The FAA is represented by Dana Kaersvang, Russell B. Christensen, Alisa Klein and Abby Wright of the Department of Justice.
The case number is 20-60676.
Editor’s note: Janet Elliott contributed to this report.