This edition of Litigation Roundup features a dispute over unlicensed use of a viral video in which a Chevrolet pickup truck drove through a tornado, a claim that the Department of Education’s loan forgiveness program violates the Administrative Procedure Act and a shareholder derivative lawsuit against Energy Transfer.
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Dallas County District Court
Energy Transfer Leadership Hit With Shareholder Derivative Suit
A lawsuit recently filed by an Energy Transfer shareholder alleges company leaders failed to make appropriate disclosures about a Federal Energy Regulatory Commission investigation that resulted in a proposed $40 million penalty for the company’s alleged role in polluting the Tuscarawas River in Ohio.
Gary Elliott filed the lawsuit on behalf of Energy Transfer, alleging breach of fiduciary duty, unjust enrichment, “waste of corporate assets, abuse of control, and gross mismanagement.” The shareholders are suing for damage done to the company by the alleged acts of the defendants between April 13, 2017 and Dec. 20, 2021.
“During the relevant period, the general partner and the individual defendants breached their fiduciary duties to Energy Transfer by allowing the partnership to engage in illegal [horizontal directional drilling] activities, and by personally making and/or causing the partnership to make to the investing public a series of materially false and misleading statements regarding the partnership’s business, operations, and legal and regulatory compliance,” the suit alleges.
The lawsuit was filed Oct. 5 and is assigned to Dallas County District Judge Maricela Moore.
Defendants in the lawsuit include co-founder and executive chairman Kelcy L. Warren, co-CEOs Thomas E. Long and Marshall S. “Mackie” McCrea III, chief financial officer Bradford D. Whitehurst, directors John W. McReynolds, Ray W. Washburne, and Matthew S. Ramsey, and board members Steven R. Anderson, Richard D. Brannon, Ray C. Davis, Michael K. Grimm and James R. “Rick” Perry.
The shareholders are represented by Stuart L. Cochran of Dallas and Timothy Brown of The Brown Law Firm in New York City. The executive defendants had not retained counsel as of Monday.
The cause number is DC-22-14194.
Harris County District Court
Boeing Says Subcontractor’s Sub-Par Work on NASA Deal Is Costing It
The Boeing Company has sued a subcontractor working with it to construct the CST-100 Starliner space vehicle for NASA, accusing it of repeatedly busting deadlines and turning in shoddy work.
Hamilton Sundstrand Co., which does business as Collins Aerospace, is named as the defendant in the lawsuit that was filed Oct. 14. Boeing was awarded the firm, fixed-price contract for the space vehicle that will access the International Space Station after NASA retired a space shuttle in 2011.
It contracted with Collins for $127 million to design, develop and deliver 38 components for the vehicle’s environmental control and life support system — the reusable module that houses astronauts and cargo, according to the lawsuit.
“Over a period of several years, however, Collins has repeatedly and materially breached the purchase contracts by delivering late and defective parts, causing significant and costly extra work on the crew module build process,” Boeing told the court.
The lawsuit is seeking more than $1 million in damages and has been assigned to Harris County District Judge Robert Schaffer.
The cause number is 2022-67734.
Northern District of Texas
DOE Sued Over Loan Forgiveness Program
The Department of Education have been accused of “flagrantly” violating the notice-and-comment requirements of the Administrative Procedure Act with its debt forgiveness program “that will affect tens of millions of Americans and cost more than $400 billion.”
“Instead of providing notice and seeking comment from the public, the Department hammered out the critical details of the program in secret and with an eye toward securing debt forgiveness in time for the November election,” the lawsuit filed Oct. 10 by Myra Brown and Alexander Taylor alleges.
Brown and Taylor don’t qualify for loan forgiveness under the program because Brown’s loan is a commercial loan that’s not in default and Taylor alleges he doesn’t qualify because he didn’t receive a Pell Grant in college, according to the lawsuit.
The plaintiffs argue that their loans should be forgiven as well and allege the DOE program is “irrational, arbitrary, and unfair.”
U.S. District Judge Reed O’Connor recused himself from the case on Oct. 12, according to court documents, and it was reassigned to U.S. District Judge Mark Pittman. Judge O’Connor did not specify in a filing why he recused himself.
The plaintiffs are represented by James Francis Hasson of Virginia and Consovoy McCarthy attorneys J. Michael Connolly, Matthew Pociask and Steven Christopher Begakis.
DOE is represented by Robert Charles Merritt of the Department of Justice.
The cause number is 4:22-cv-00908.
Eastern District of Texas
Use of Viral Chevy v. Tornado Video Draws Suit
Unlicensed use of a video of a red Chevrolet pickup truck taking on a tornado in Elgin, Texas, in March of this year has drawn a federal copyright infringement lawsuit.
Viral DRM, the owner of the video footage, filed suit on Oct. 11 and the lawsuit has been assigned to U.S. District Judge Michael J. Truncale. Viral DRM purchased the video from Ronald Emfinger, who captured the footage, and licenses the content to others for a fee, according to the lawsuit.
But on March 23, Cutshaw Chevrolet, a dealership in Grapevine, posted the video on its Instagram account “without permission or authorization” from Viral DRM. The company said it discovered the unlicensed use in April.
The lawsuit is seeking unspecified damages to include disgorgement.
Viral DRM is represented by Craig B. Sanders of Sanders Law Group and Cutshaw Chevrolet hadn’t retained counsel as of Monday.
The cause number is 9:22-cv-00157.
First Court of Appeals
Weatherford Can’t End Wrongful Death Suit
Weatherford International has been twice denied a bid to dismiss a wrongful death lawsuit that it argues has no place in Texas courts.
In a brief order issued Oct. 13, a three-justice panel denied the company’s petition for writ of mandamus, upholding the ruling of Harris County District Judge Kristen Brauchle Hawkins who also rejected Weatherford’s argument that the suit should be dismissed based on improper venue.
The family of Kevin Milne filed suit against Weatherford following his November 2019 death, alleging the company failed to timely disclose the results of a medical exam he underwent in Egypt before being on long-term assignment in the country while working for Weatherford.
The exam showed Milne had a mass on his kidney, and his family alleges had he received the results sooner, he would have survived, and that Weatherford has a global policy “to not provide the employees with the results of any medical exams and to keep the results internally with the human resources department.”
Weatherford argued that the case had “no connection to Texas,” because Milne was a resident of the United Kingdom, and his widow a resident of South Africa, the exam that spurred the lawsuit took place in Egypt and his subsequent medical treatment prior to his death took place in South Africa.
“Moreover, even though the initial examination resulted from a Weatherford Egypt contract, plaintiffs did not sue Weatherford Egypt,” Weatherford told the appellate court. “Instead, they sued two Weatherford companies who are neither the parent companies of Weatherford Egypt, nor who exercise control over Weatherford Egypt or its policies of which plaintiffs complain. In light of these undisputed facts, and because all of the material witnesses are located in Egypt and outside the subpoena power of a Texas court, plaintiffs created a fantastical liability theory for which they have no evidence: an alleged ‘global policy’ exists regarding the nefarious handling of medical examinations which emanated from and is administered in Houston, Texas.”
The appellate court did not explain its reasoning in the brief order that also lifted a stay that court had entered in January.
Chief Justice Sherry Radack and Justices Sarah Beth Landau and Richard Hightower sat on the panel.
The Milnes are represented by Marlon Portes of New York City, Samantha Trahan of Trahan Kornegay Partners, solo practitioner Denyse Renee Ward and Karen Alvarado of Brothers Alvarado Piazza & Cozort.
The cause number is 01-21-00570-CV.
Eighth Court of Appeals
Conservative Activist Loses Appeal in Texas Ethics Commission Case
Michael Quinn Sullivan, a well-known conservative activist in Texas, was denied a bid to have declared unconstitutional certain sections of the Texas Government Code that he alleged violated the Separation of Powers Clause.
Sullivan and the advocacy group where he serves as CEO, Empower Texans, filed a lawsuit against the Texas Ethics Commission in 2014.
He lodged this appeal in June 2020, after the trial judge agreed with the Ethics Commission that “the Legislature did not intend to create a legislative agency with statutory executive powers. Instead, it created an executive agency with additional legislative powers constitutionally granted.”
TEC argued its executive powers, delegated by the Legislature, are not a violation of the separation of powers clause because the commission is a “unique body” and its enforcement powers “are expressly permitted” by the Constitution.
Sullivan has a fraught history with the TEC after being ordered by a court to pay a fine TEC levied against him for failing to register as a lobbyist in 2010 and 2011.
Sullivan is represented by Tony K. McDonald and Garret McMillan of Leander, Texas.
TEC is represented by Eric J.R. Nichols, Christopher Cowan and Amanda G. Taylor of Butler Snow.
Chief Justice Yvonne T. Rodriguez, and Justices Gina M. Palafox and Justice Jeff Alley sat on the panel for the Eighth Court of Appeals.
The cause number is 08-20-00153-CV.