In this edition of Litigation Roundup, the Federal Trade Commission sees a $37.5 million judgment in its favor trimmed down to $12.2 million by the U.S. Court of Appeals for the Fifth Circuit, and the Second Court of Appeals in Fort Worth sides with a landowner in a condemnation dispute involving golf course operations.
The Litigation Roundup is a weekly feature highlighting the work Texas lawyers are doing inside and outside the state. Have a development we should include next week? Please let us know at tlblitigation@texaslawbook.net.
Eastern District of Texas
McKinney Woman Whose Home Was Destroyed by SWAT Gets $60K
Vicki Baker, whose home was destroyed by McKinney police during a standoff with a suspect, has won a final judgment that covers the cost of the property damage done to her home in July 2020.
Chief U.S. District Judge Amos L. Mazzant entered final judgment in favor of Baker June 5, awarding her $59,659.59 plus interest. Baker had already retired and moved to Montana when a man wanted by police used her home as the scene for a hostage standoff.
A jury had awarded Baker $60,000 following trial in June 2022, but McKinney appealed to the Fifth Circuit, which in October 2023 wiped out the award holding, Baker wasn’t entitled to any compensation in this instance under the Fifth Amendment’s takings clause because it was “objectively necessary” for police to damage or destroy her home in order to prevent “imminent harm.”
In February 2024, the Fifth Circuit denied Baker’s rehearing request. Eleven of the court’s judges voted against rehearing, but six would have agreed to rehear the case that was originally decided by Judges Stephen A. Higginson, Don R. Willett and Jerry E. Smith.
Judges Edith H. Jones, Jennifer Walker Elrod, James E. Graves Jr., James C. Ho, Stuart Kyle Duncan and Andrew S. Oldham voted in favor of rehearing, and Judges Elrod and Oldham joined in authoring a dissent from the majority.
“In sum, while McKinney police acted shrewdly, their actions also left Baker $60,000 in the hole. There is no doubt the McKinney community was better off because its officers ravaged Baker’s home,” the dissenting judges wrote. “But it is at least peculiar to say that because the officers’ conduct benefited the community, the community can avoid compensating Baker for the inconveniences she incurred on its behalf. The panel apparently thought that was the result the law required. If the panel was right, so be it. But there can be no denying that the text of the Fifth Amendment and the Supreme Court’s precedents at least suggest otherwise.”
In July, Baker filed a petition for writ of certiorari with the U.S. Supreme Court, which declined to hear the case in November.
Back in Judge Mazzant’s court, Baker had filed a motion for “reelection of remedy” asking the court to allow her to recover her damages under the Texas Constitution’s takings clause, which provides broader protections than its federal analogue.
The court rejected arguments from McKinney that because the Fifth Circuit wiped out the federal claims Baker’s state law claims also died.
“The Court will not punish Baker for making the wrong choice,” Chief Judge Mazzant wrote. “She prevailed on her Texas Takings claim. She should be allowed to recover on it.”
Baker is represented by Jeffrey H. Redfern, William R. Aronin, Robert McNamara and Suranjan Sen of Institute for Justice.
McKinney is represented by Edwin Voss Jr. and Michael Lee Martin of Brown & Hofmeister.
The case number is 4:21-cv-00176.
Online Scammers Get Prison in $17M Fraud
Five individuals who either pleaded guilty or were convicted by jurors of carrying out a variety of scams online have been sentenced to prison for their roles in defrauding more than 100 victims out of about $17 million.
Damilola Kumapayi, 39, of Plano and Sandra Iribhogbe Popnen, 50, of Plano each pled guilty to conspiracy to commit wire fraud and conspiracy to launder money and were sentenced to 109 and 365 months in prison, respectively.
Three other defendants took their cases to trial and were convicted by a jury of conspiracy to commit wire fraud and conspiracy to launder money. Edgal Iribhogbe, 51, of Allen; Chidindu Okeke, 32, of Houston and Chiagoziem Okeke, 32, of Houston, each received 480-month (40 year) prison sentences.
Chief U.S. District Judge Amos Mazzant III handed down the sentences June 16.
According to court documents, the defendants in this case began carrying out various scams targeting elderly individuals beginning in January 2017, including romance, business email compromise, investor fraud and unemployment insurance fraud. Victims of the frauds included individuals, businesses and government entities across the world.
Acting U.S. Attorney for the Eastern District of Texas, Jay R. Combs, called the defendants’ actions, targeting elderly and vulnerable individuals, “simply despicable.”
“The long arm of the American justice system has no limits when it comes to reaching fraudsters who prey on our nation’s most vulnerable populations,” he said in a statement. “The defendants’ lengthy sentences in this case reflect the seriousness of their crimes and the dedication of law enforcement officers and prosecutors to bring them to justice.”
Chiagoziem Okeke is represented by James P. Whalen and Ryne Sandel of Whalen Law Office. Chidindu Okeke is represented by Rafael De La Garza II of Plano. Popnen is represented by Sanjay Biswas of Frisco. Kumapayi is represented by Kambira Jones Morgan of The Jones Legal Defense Group. Iribhogbe is represented by Phillip A. Linder of Barrett Bright Lassiter Linder Perez.
Heather Rattan of the U.S. attorney’s office in Plano was the lead prosecutor.
The case number is 4:21-cv-00253.
Judge Axes Request to Designate Responsible Third Party in Sex Trafficking Case
A federal judge in East Texas has denied a hotel operator’s request to draw the individual who trafficked a Jane Doe plaintiff at its business into a lawsuit accusing the operator of perpetrator and beneficiary liability.
U.S. District Judge Michael J. Truncale issued the 13-page order June 16, denying the October request to designate a responsible third party lodged by Aesha LLC, which operates a Studio 6 hotel in Beaumont where the plaintiff, identified as K.E.C. in court documents, was allegedly trafficked between 2012 and 2016.
Judge Truncale wrote that other courts have held that the use of “state-law apportionment devices would undercut the purpose of the [Trafficking Victims Protection Reauthorization Act’s] beneficiary liability provision.”
“The Court is also convinced that a ruling in Aesha’s favor would inject confusion into TVPRA
jurisprudence. Three cases across two states have already decided that state apportionment statutes do not apply under the TVPRA,” he wrote, explaining that he believed courts in Alaska and Georgia that have ruled on the issue “got the law right.”
“[T]he court will not tread on this germinating consensus,” he wrote.
Aesha is represented by Ernest P. Geiger Jr., Brendan P. Doherty and Carla Lassabe of Gieger, Laborde & Laperouse, Robbie A. Moehlmann and Ian R. Beliveaux of Donato Brown Pool & Moehlmann and Barry Moscowitz and Joseph Dumas of Thompson, Coe, Cousins, and Irons.
Jane Doe is represented by Annie McAdams of Houston, Bryan O. Blevins Jr., Claire Brown, Matthew Matheny and Colin Moore of Provost & Umphrey and David Harris and Preston Burns of Sico Hoelscher Harris.
The case number is 1:23-cv-00270.
Southern District of Texas
W&T Offshore Reaches Settlements in $250M Surety Fight
Houston-based W&T Offshore and W&T Energy VI told a federal judge on June 16 it had reached a settlement that will bring an end to a lawsuit it filed against a group of insurers it alleges were wrongly seeking an additional $250 million in collateral to back its production activities.
In exchange for dropping the lawsuit, the insurers — U.S. Specialty Insurance Company and Philadelphia Indemnity Insurance Company — will drop their request for the $250 million in collateral. The notice of settlement credits retired U.S. District Judge Nancy Atlas, who served as mediator in the case, for “expertly navigat[ing]” the parties toward reaching settlement.
W&T’s Chairman and CEO Tracy W. Krohn praised the settlements in a news release, saying they “illustrate the strength of the legal position that W&T has aggressively advanced since the beginning of these unnecessary surety lawsuits.”
W&T filed suit against the insurers, Endurance Assurance, Lexon Insurance, USSIC, United States Fire Insurance and Pennsylvania Insurance, in August, accusing them of colluding, in violation of the Sherman Antitrust Act, to demand collateral they aren’t entitled to under an indemnity agreement. W&T has also been sued by the insurers in three other related lawsuits.
Earlier this month, the court denied a motion to disqualify Vinson & Elkins from representing Endurance and Lexon. In October, it asked the court to disqualify Vinson & Elkins from representing Endurance and Lexon, based on the firm’s previous work representing W&T for nearly a decade “in a vast and wide ranging web of corporate legal matters, including but not limited to, arranging and structuring its corporate financing, negotiating credit facilities, and negotiating second lien notes.”
U.S. Magistrate Judge Dena Palermo entered an order June 2 denying the motion, writing W&T had failed to adequately support its arguments that V&E possessed “relevant confidential information” or that the subject matter of this case is substantially related to matters V&E previously represented the company in.
“W&T has failed to provide support for their argument that V&E holds confidential information capable of harming W&T in the instant case. Furthermore, there is no indication as to why the ethical wall that V&E put in place is ineffective, putting W&T’s confidential information at risk,” Judge Palermo wrote.
W&T is represented by Yasser A. Madriz, Jason Huebinger and Miles I. Indest of McGuire Woods.
USSIC is represented by Bradon K. Bains of Aledo. Endurance and Lexon are represented by Jason Halper, Alyx Eva, Christopher Popov and Sara Brauerman of Vinson & Elkins.
U.S. Fire Insurance and Pennsylvania Insurance are represented by Steven Cannon, Steven Beauchamp and Ryan Dry of Dry Law in Plano.
The case numbers are 4:24-cv-03047, 4:24-cv-04113, 4:24-cv-04395 and 4:24-cv-04400.
Second Court of Appeals, Fort Worth
Panel Sides with Landowner in Golf Condemnation Suit
The city of Westworth Village has hit a roadblock in its quest to condemn private property near the city-operated Hawks Creek Golf Course that would have been developed into a golf facility and driving range by a private company.
In a June 19 opinion, a three-justice panel determined property owner Jim Burgess had presented evidence “that the government did not stay in its lane” when it decided to condemn his 3.5-acre plot that was formerly part of Carswell Air Force Base and lease it to UnderPar Life, a golf course developer. Bryson DeChambeau is a founder of and investor in the company.
“The court rightfully recognized the multiple violations of state law in the city’s attempted acquisition and proposed use for this property,” said Burgess’ lead appellate lawyer, Chad Baruch of Johnston Tobey Baruch. “We are delighted with the court’s ruling, which will permit our client to continue his challenge to the taking in the trial court.”
The city had tried to purchase Burgess’ property for $1.1 million, an offer he rejected, and special commissioners later offered $1.5 million, which he also rejected.
After the city-initiated condemnation proceedings in court, it was granted summary judgment on the issue of whether it established liability for eminent domain and the issue of how much the land was worth was tried to a jury. In May 2024 jurors determined the value of the property was $1.3 million. Burgess filed notice of appeal in June 2024.
“As noted above, the question of whether a taking is for a ‘public use’ is a question of law,” the appellate panel wrote. “But, ‘public use’ does not include a taking ‘for transfer to a private entity for the primary purpose of economic development or enhancement of tax revenues.’ The determination of ‘purpose’ is a fact question, and where the evidence on summary judgment regarding a person’s purpose in his actions is conflicting, summary judgment is improper.”
The court concluded that the fact issue on the “purpose” of the condemnation is a fact issue that should have been decided by a jury, not the judge, and remanded the case back to County Court-at-Law No. 2 Judge Jennifer A. Rymell.
Justices Elizabeth Kerr, Mike Wallach and Brian Walker sat on the panel.
Westworth Village is represented by Clarissa L. Levingston and Daniel P. Tobin of McFarland PLLC.
The case number is 02-24-00252-CV.
Texas Supreme Court
Houston Officer Not Reckless in Causing Collision
The Supreme Court on Friday continued to apply recent precedents limiting cities’ liability for injuries caused by cop car crashes, dismissing a case filed by a Houston motorist involved in an accident on the morning of Christmas Eve 2011.
Officer Bobby Joe Simmons was responding to a reported armed robbery when he collided with a car driven by Maria Christina Gomez. Simmons did not activate his siren, and it was unclear whether his emergency lights were on. Although Simmons was not speeding, he testified that he reached down to raise the volume on his police radio only to notice a traffic light had turned yellow. Simmons applied his brake but slid into an intersection due to a wet road, according to the court’s June 20 per curiam opinion.
“Applying the Court’s precedents, we conclude the evidence demonstrates, at most, a momentary lapse of judgment amounting to ordinary negligence, and there was thus no fact issue as to the officer’s recklessness,” the court said.
Justice Brett Busby did not participate in the case.
In 2023, the court decided City of Houston v. Green, in which an officer ran a red light and collided with another vehicle. The court held that reckless disregard involves more than a momentary judgment lapse.
The court last December absolved the cities of Austin and Houston of liability in police chase crashes that injured men in stopped vehicles. Appellate lawyers said those cases confirmed a very demanding standard that built on the framework for analyzing the emergency exception to the Texas Tort Claims Act that the court outlined in its 2022 ruling in City of San Antonio v. Maspero. In that case, San Antonio police officers engaged in a chase that reached nearly 100 mph pursuing a drug trafficking suspect that ended in a crash into the Maspero family car, killing two of their young sons and injuring two other children as well as the parents. The Supreme Court dismissed the family’s claims.
In one of the December cases, City of Austin v. Noel Powell, the court addressed a high-speed chase through the streets of Austin that injured the driver of a minivan stopped at an intersection when an officer lost control of his vehicle. The court established that mere inattentiveness does not establish recklessness.
The decision in Gomez reversed the Fourteenth Court of Appeals, which twice concluded that a material issue of fact existed as to whether Simmons acted recklessly.
“Our decisions in Maspero and Green, both of which issued after Gomez I, should have guided the court’s analysis to conclude, contrary to its earlier holding, that there was no material fact issue as to whether Officer Simmons acted with reckless disregard,” the Supreme Court said.
Gomez is represented by Kevin A. Murray of Houston.
Houston is represented by Christy L. Martin of the city’s legal department.
The case is No. 23-0858.
Janet Elliott contributed to this report.
U.S. Court of Appeals for the Fifth Circuit
Panel Cuts FTC’s $37.5M Award Down to $12.2M
A company that started selling personal protective equipment during the pandemic and was found to have engaged in unfair and deceptive trade practices has seen a $37.5 million damages award against it slashed.
Online retailer Zaappaaz found itself in the Federal Trade Commission’s crosshairs after it was unable to meet guarantees that it would ship PPE equipment the same day an order was placed. The FTC alleged Zaappaaz wasn’t sending customers what they ordered and paid for by the promised delivery date and that the company was refusing to give refunds.
The FTC sought $37.5 million in damages, which it said represented “the total of all revenue Defendants received from late or unshipped PPE orders from March to December 2020, minus any refunds or chargebacks issued for those orders.”
The case against Zaappaaz proceeded to a bench trial before U.S. District Judge Keith P. Ellison. He entered a final judgment awarding the FTC total damages of $37.5 million — $12.2 million for customers who paid but received nothing and $25.3 million that will be held by the FTC in an escrow account while case-by-case determinations were made as to what amount would compensate other customers who received late orders but who may have still been satisfied with what they got.
Any leftover funds were to be returned to Zaappaaz after 120 days, according to the opinion. Zaappaaz appealed, arguing in part that the $25.3 million award was improper because giving a full refund to all customers who received late orders is irreconcilable with the law’s instruction that courts only grant relief “necessary to redress injury.”
In a June 16 ruling a three-judge panel determined there were issues with the redress plan implemented by the district court, including that it doesn’t safeguard against some customers receiving a “windfall” by getting a refund and retaining the product they ordered, and doesn’t account for customers who paid for expedited shipping but received orders late.
“In sum, we agree with the district court that Zaappaaz is liable for misrepresentations made to its customers who received their orders late,” the panel wrote. “But we are not satisfied that the $25,308,436.45 portion of the damages award complies with § 57b(b)’s requirement that the remedy be ‘necessary to redress’ that injury, or its prohibition on ‘exemplary or punitive damages.’ Accordingly, we remand for a more cohesive review and application of § 57b(b) to this portion of the judgment.”
Judges James L. Dennis, Catharina Haynes and Kurt D. Engelhardt sat on the panel.
In a partial concurrence and partial dissent, Judge Engelhardt wrote that he would have remanded the entire judgment back to the trial court. Judge Engelhardt explained his decision is rooted in Judge Ellison’s issuance of conflicting orders regarding whether $12.2 million had been established “as the amount that would address customer injury from undelivered and unrefunded orders.”
“To be sure, the district court’s unexplained reversal may be attributed to FTC’s own puzzling change in position,” he wrote. “But the FTC’s flip-flop is not in itself a justification for the district court to follow suit.”
The FTC is represented by its own Matthew Hoffman, Mariel Goetz, Michael D. Bergman, Adrienne Lighten and H. Thomas Byron III.
Zaappaaz is represented by Michael Pattillo Jr., Jennifer Fischell and Kayvon Ghayoumi of MoloLamken and Ernest W. Boyd of MehaffyWeber.
The case number is 24-20234.
Can you not get enough Texas Lawbook litigation coverage? Don’t worry, we’ve got you covered. Take a look at these stories you may have missed in the past few days.
Nine months ago, skeptics questioned whether Texas’ ambitious new business court would survive infancy. On June 1 — in the final hour of the final day of the legislative session — the Legislature passed House Bill 40 with significant support, considerably expanding the Texas Business Court’s jurisdiction. The law demonstrates Texas’ commitment to position itself as the premier destination for business litigation, writes Dowd Bennett’s Ben Barnes and Kirkland’s Nick Brown in this Expert Voices article.
The Texas Supreme Court delivered some bad news for The Boeing Company when it issued an opinion clearing the way for the Southwest Airlines Pilots Association to sue the company for damages caused by its alleged misrepresentations about the airworthiness of the 737 MAX. Even with the court’s ruling, the union could face an uphill climb to prove and collect any damages in the case.
During a daylong hearing in Martin County, a judge was told Pioneer Natural Resources had “fabricated” the basis for its lawsuit seeking $534 million in damages from a smaller Dallas-based competitor that it accused of interfering with its West Texas leases. Pioneer says the request for sanctions and dismissal are “baseless” and that Pony Oil’s allegations are sanctionable on their own.
The Austrian manufacturer of an allegedly defective airplane engine cannot be sued in Texas by a woman who was severely injured in a small plane crash at an airport in Addison, the Texas Supreme Court said in a unanimous opinion.
Stephanie Hockridge and her husband, Nathan Reis, were indicted on federal fraud charges in connection with their efforts to help small businesses obtain forgivable loans under the Paycheck Protection Program. Tried before U.S. District Judge Reed O’Connor in Fort Worth, Hockridge was convicted of conspiracy. Reis is scheduled for trial in August.
Lawyers with Dallas-based Dean Omar Branham Shirley battled a Houston partner from King & Spalding in a Boston courtroom over the past month in the latest trial over whether Johnson & Johnson’s talcum powder caused the plaintiff’s life-threatening mesothelioma. The Massachusetts jury apparently decided that both Texas lawyers doing battle in their courtroom made strong arguments.
The first contested final judgment in a case before the Texas Business Court was entered this month. Proponents of the new court argued it would provide an avenue for parties to obtain quick decisions in complex business disputes and the final judgment, issued just shy of eight months after the case was filed in the business court, seems to support that.
E. Lawrence “Larry” Vincent has been hired by Sorrels Law after nine years at Burns Charest. During his time there, he was the co-lead attorney in a successful representation of a group of Houston homeowners alleging government mismanagement of reservoirs lead to flooding of their properties during Hurricane Harvey.
At the very end of the series Mad Men, the yoga instructor encourages his class, which includes the show’s protagonist, Don Draper, with the following words: “A new day. New ideas. A new you.” From the perspective of the defense team at least, that’s a fitting introduction to the retrial of United States v. Hamilton, which resulted this month in an acquittal on all charges of conspiracy to commit bribery and two substantive counts of bribery. In the retrial, the government tried precisely the same case it tried four years ago. And why not? That case resulted in a conviction on three of four charges, which led to an eight-year prison sentence imposed by the district court.