In this edition of Litigation Roundup, a team from Susman Godfrey secures a $166 million patent win against AT&T and Nokia, the Texas Supreme Court sides with insurance companies in a dispute brought by emergency room doctors over out-of-network reimbursement payments and the Fifth Circuit chides an attorney’s litigation tactic.
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Eastern District of Texas
Jury Slams AT&T, Nokia with $166M Infringement Verdict
In a trial before Chief U.S. District Judge Rodney Gilstrap that concluded Friday, a jury determined Finesse Wireless was entitled to $166.3 million in damages from AT&T Mobility and Nokia of America for infringement of two patents related to intermodulation interference, a longstanding problem for wireless networks.
The trial began Jan. 9 and deliberations lasted three hours Friday, after jurors heard from eight witnesses over five days of testimony. Joseph Grinstein, who was on Susman Godfrey’s trial team representing Finesse, said the testimony of inventor Francis Smith was “critical” in reaching the favorable result, walking jurors through the inventions “and the problems it was intended to tackle.”
Smith’s patents, which he assigned to his company, Finesse, were for the first effective technique for canceling passive intermodulation products.
Finesse sued AT&T in 2021 and Nokia later intervened in the suit. The jury was told that AT&T infringed Smith’s patents by using certain Nokia radio equipment in its cell towers.
“We are pleased to have achieved this result recognizing the importance and value of our client’s innovations,” he said. “It was an honor to represent Mr. Smith at trial, and we very much appreciate the jury’s careful attention to the facts of the case.”
Grinstein said the jury awarded the top range of damages Finesse asked for.
Finesse was also represented by Meng Xi, Shawn Blackburn, Meg Griffith and Bryce Barcelo of Susman Godfrey and Johnny Ward and Andrea Fair of Ward Smith & Hill.
Nokia was represented by David A. Nelson, Brianne M. Straka, Marc Kaplan, Rajat Khanna and Harrison B. Rose of Quinn Emanuel Urquhart & Sullivan and Deron R. Dacus of The Dacus Law Firm.
The case number is 2:21-cv-00316.
Northern District of Texas
Admissions Suit Against Texas Med Schools Alleges Discrimination
An aspiring medical student has sued six Texas medical schools and numerous medical school officials around the state for racial and gender discrimination, alleging that their affirmative action practices give discriminatory preferences to females and non-Asian minorities.
The lawsuit, filed Jan. 10 in Lubbock federal court, comes as the country awaits a decision by the U.S. Supreme Court over whether affirmative action will stick around in college admissions in two cases brought against Harvard University and the University of North Carolina.
Defendants of the proposed class action lawsuit, brought by a white male, include Texas Tech University Health Sciences Center, the University of Texas at Austin, University of Texas Health Science Center at Houston, University of Texas Medical Branch at Galveston, University of Texas Health Science Center at San Antonio and University of Texas Southwestern Medical Center.
The plaintiff, George Stewart, says in the lawsuit that he graduated from college from UT Austin with a 3.96/4.0 unaudited GPA in biology, scored a 511 on the MCAT and interned/volunteered in medical facilities at MD Anderson Cancer Center in Houston, Neofluidics Laboratory in San Diego and Baylor University Medical School in Dallas in the pursuit of becoming a physician.
He spent two years applying to medical schools but did not get in anywhere, the lawsuit said. After obtaining admissions data from open records requests, the plaintiff learned that more than 450 lesser qualified minority students whose GPAs and MCATs ranged as low as 2.82 and 495, respectively were offered admission.
Former Texas solicitor general Jonathan Mitchell represents Stewart, along with Dallas attorney Stewart Wiegand & Owens’ Bob Wiegand in Dallas, the law partner Stewart’s father, Michael Stewart. Backing the lawsuit is the nonprofit, America First Legal Foundation.
The case has been assigned to U.S. District Judge James Wesley Hendrix.
No lawyers have made an appearance for the medical schools yet.
The case number is 5:23-cv-00007.
U.S. Tax Court
Belmont Interests Beats $120M Tax Liability Case
After five years of litigation, a group of Gray Reed attorneys from Dallas secured a victory for Texas-based corporate group Belmont Interests in a case where the IRS alleged the company owed $120 million in taxes for 2012 and 2013.
On Jan. 9, the court entered a stipulated judgment finding there was no deficiency on behalf of Belmont Interests, relieving it of the proposed $120 million tax liability. That came after the court in September rejected arguments from the IRS and held Belmont didn’t owe $94 million in taxes for 2013 because it wasn’t obligated to include some debt-related items in calculating liabilities.
That finding pushed the parties to enter the stipulation earlier this month that the amount of tax owed for both years was zero.
“We are beyond pleased with the court’s refusal to expand the duty of consistency beyond the legal limits for 2012, just as it did for 2013,” Gray Reed partner Tom Rhodus said. “We’ve been litigating this case for five years and we couldn’t ask for a better outcome for our client.”
The case was before Senior U.S. Tax Court Judge James S. Halpern.
The government was represented by IRS attorneys Kirk S. Chaberski, Candace M. Williams, Sergio Garcia-Pages, Julie P. Gasper, Veronica L. Richards and William D. White.
The case number is 2022-98.
Texas Supreme Court
No Private Damages Action for ER Doctors Over Out-of-Network Payments
Out-of-network emergency room doctors lack statutory authority to pursue damages claims against health insurance providers, the Texas Supreme Court said in a Friday ruling.
Declaring the need for the court to “stay in our lane,” Texas Supreme Court Chief Justice Nathan Hecht said the emergency care statutes in the Insurance Code do not clearly imply a private damages action.
The court ruled in two cases consolidated for argument. In Texas Medicine Resources, et al. v. Molina Healthcare of Texas, the court upheld a ruling by the Fifth Court of Appeals. In UnitedHealthcare Insurance Co. v. ACS Primary Care Physicians Southwest, et al. the court answered a question from the Fifth U.S. Circuit Court of Appeals.
The laws at issue require a health-insurance company to pay a non-network physician for emergency care rendered to the company’s insureds “at the usual and customary rate.” In Molina, the doctors allege that they were reimbursed less than 15 percent of their usual and customary charges for more than 3,800 of Molina’s insureds during 2017, 2018 and 2019.
Hecht cited the court’s 2004 opinion in Brown v. De La Cruz as the controlling legal standard. That case involved a provision in the Property Code providing for daily penalties for overdue real estate deed transfers but not specifying who was entitled to seek the penalties.
The court rejected the physicians’ argument that the Legislature’s adoption in 2019 of a mandatory binding arbitration process for payment disputes signals an understanding that a private cause of action already existed for claims arising under the old law.
“Indeed, if Chapter 1467 tells us anything about the 86th Legislature’s intent, it is that determining the amount that an out-of-network provider should be paid by an insurer is a technical exercise to be performed by a subject-matter expert — not an issue to be decided by a jury of laymen,” Hecht said.
The court also held that the physician-plaintiffs’ claims for recovery in quantum meruit and for unfair settlement practices fail as a matter of law.
Molina Healthcare of Texas was represented by David M. Gunn of Beck Redden. United Healthcare was represented by Don Colleluori of Figari & Davenport.
Mark Trachtenberg of Haynes and Boone argued on behalf of the doctors in both cases.
The cases numbers are 21-0291 and 22-0138.
U.S. Court of Appeals for the Fifth Circuit
‘No Reasonably Prudent Attorney Could Have Filed This Suit’
A bankruptcy trustee recently convinced the Fifth Circuit that attorney William Gammon committed legal malpractice by filing a lawsuit that a district judge? and an appellate court eventually declared to be “groundless.”
Gammon, who didn’t return a message seeking comment Tuesday, had escaped that finding in the district court.
“Because we hold that no reasonably prudent attorney could have filed this suit, and it caused his client to be sanctioned, we reverse and remand to the district court for the calculation of damages,” the Fifth Circuit wrote in the Jan. 13 opinion.
Gammon was hired by high-end wedding photographer Jerry Hayes after he ran into issues with two other wedding photographers, Jennifer Nichols and Jennifer Lindberg, over exclusivity provisions in their contracts that barred him from taking pictures on behalf of vendors who wanted to capture images of their wedding work.
Gammon brought suit on behalf of Hayes, alleging tortious interference and conspiracy to restrain trade. It was dismissed on summary judgment and Nichols and Lindberg moved to sanction Hayes and his attorney. The trial court agreed only to sanction Hayes’ company, holding that the company should have known it was “groundless” to allege “ two local photographers, control [the] worldwide high-end wedding industry about which he pled.”
When the sanction was upheld on appeal, Hayes’ company filed Chapter 7 bankruptcy and Nichols and Lindberg filed proof of claim seeking the $41,518.75 sanction award. That prompted the trustee, John Patrick Lowe, to sue Gammon for legal malpractice.
After hearing from dueling experts, the bankruptcy judge and a district court judge found the trustee “failed to establish that Gammon breached his duty and caused the trustee’s injury.”
But the Fifth Circuit panel held that a reasonable inquiry into the evidence and the law “would have stopped a reasonably prudent attorney in his tracks before suing” in this case.
“True, what Gammon had in filing Champion’s lawsuit was more than nothing. But it still fails to approach what a reasonable attorney would have needed to file a complex state antitrust lawsuit based on the behavior of two local photographers in Austin, Texas,” the panel wrote. “At best, he could have successfully proven that Nichols and Lindberg interfered with his business. But that is inadequate to support an antitrust cause of action under Texas law.”
Judges Carl E. Stewart, Don R. Willett and Andrew S. Oldham sat on the panel.
Gammon is represented by Stephen W. Sather of Barron & Newburger.
Lowe is represented by Jesse Craig Barker.
The case number is 21-51234.
U.S. Supreme Court
Texas Urges Court to Hear Train Crossing Case
Texas Attorney General Ken Paxton has waded into a dispute between Ohio and CSX Transportation over whether states can limit the amount of time trains block railroad crossings, urging the U.S. Supreme Court to hear the case in an amicus brief.
Texas is one of 19 states asking the nation’s high court to take the case that will determine whether the Ohio Supreme Court got it right when it determined the state’s anti-blocking law — which prohibited trains from blocking crossings for more than five minutes — was preempted by the Federal Railroad Safety Act.
The states argue the FRSA does not preempt the actions of states trying to minimize the blocking of railroad crossings and that expansion of the law by the courts has stripped power from the states to enact anti-blocking laws.
The states have opposed the blocking of railroad crossings on grounds that it impacts the ability of emergency services personnel to do their jobs, and also strains commerce and transportation generally.
“In recent years, too many emergency vehicles have arrived too late to save lives; too many EMTs have risked life and limb climbing over trains to reach those in need; too many fires have burned while emergency crews detoured miles out of the way; and too many communities have been bisected for days waiting for train crews to unblock intersections,” the states argue in the brief filed Dec. 15. “Blocked grade crossings have serious — sometimes life-threatening — consequences for everyday Americans.”
The case number is 22-459.
Editor’s note: Janet Elliott and Natalie Posgate contributed to this report.