In this edition of Litigation Roundup, Texas sues over a data breach that targeted students and teachers, a Susman Godfrey partner in Houston helps secure a $1.5 billion settlement for authors in an AI copyright lawsuit, and a final judgment is entered in favor of a luxury home designer who alleged a competitor copied its designs.
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.
Montgomery County District Court
Nurse Who Says She Was Secretly Recorded in Restroom Sues
A man who is facing criminal charges for allegedly secretly recording at least seven people in hospital restrooms has been hit with a civil lawsuit by a nurse who says she is among the victims.
The nurse, identified only as A.D. in the lawsuit, lodged her claims against Robert Pinon Shrader, who formerly served as the patient care director in charge of managing surgical unit nurses at Memorial Hermann Hospital in The Woodlands, a suburb north of Houston. The lawsuit alleges Shrader’s hidden cameras were uncovered in August 2025 by construction crews performing routine maintenance.
A subsequent investigation revealed more than 300 images of at least seven victims on Shrader’s SD card and also included footage of Shrader installing the camera. He is facing seven felony charges of invasive visual recording. The civil suit brings a claim for invasion and seeks unspecified damages for past and future medical expenses and mental anguish.
The nurse is represented by Anna Greenberg of Blizzard Greenberg and John C. Ramsey and K. Grace Hooten of Ramsey Law Group.
Counsel information for the defendant was not immediately available Monday.
The case number is 25-09-14572.
Collin County District Court
Texas Sues K-12 Cloud Company Over Data Breach
A California-based company that provides cloud services for schools has been sued by the state of Texas in a new lawsuit that alleges violations of the Texas Deceptive Trade Practices Act and the Identity Theft Enforcement and Protection Act in the wake of a data breach that compromised the data of 880,000 school children and teachers.
Texas Attorney General Ken Paxton announced the lawsuit against PowerSchool Holdings and PowerSchool Group Sept. 3. The data breach that gave rise to the lawsuit occurred in December 2024, and exposed personal information including social security numbers and health information. The lawsuit alleges hackers obtained the data by using a subcontractor’s account to gain administrative access to the website that’s used as a platform to manage student information and employee data.
“If Big Tech thinks they can profit off managing children’s data while cutting corners on security, they are dead wrong,” he said in a news release. “Parents should never have to worry that the information they provide to enroll their children in school could be stolen and misused.”
Texas is represented by John C. Hernandez, Matthew Childrey and Adam Holtz of the attorney general’s office.
A case number for the lawsuit and counsel information for the defendants wasn’t immediately available Monday.
Southern District of Texas
Home Designer Gets Win in Copyright Trial Against Competitor
Last week U.S. District Judge David Hittner entered a nearly $856,000 final judgment after a jury in Houston recently determined a luxury home builder’s design for suburban residential homes had been infringed by a competitor who built a development north of the city.
AIS Designs Co. filed its lawsuit in March 2024 and alleged four homes in the residential development built by J.J.S. Custom Built Homes in Montgomery, Texas, infringed a design copyright it obtained in 2020. The infringing homes were built between 2021 and 2023, according to court records.
The trial began Aug. 4, and the jury heard two weeks of testimony before it returned a verdict in favor of AIS on Aug. 18. J.J.S. filed a motion for judgment as a matter of law on Aug. 12 arguing AIS had “presented no evidence of actionable distribution or reproduction of the plans, and no reasonable juror could find substantial similarity between the copyrighted plans and allegedly infringing homes.”
The jury disagreed and awarded damages against J.J.S. and its owners, Jose de Jesus Salazar and Valleri Salazar.
AIS designs has another copyright infringement lawsuit pending against other companies owned by the Salazars, including Top Tier Custom Homes and J.J.S, in the Southern District of Texas.
AIS Designs is represented by Patrick Zummo of the Law Offices of Patrick Zummo and Califf T. Cooper of Osha Bergman Watanabe & Burton.
“Protecting the work and intellectual property of companies like AIS Designs protects the integrity of the design and building professions,” Cooper said in a statement. “The jury’s decision sent a clear message: Taking copyrighted architectural designs has real consequences.”
J.J.S. Custom is represented by Jason McManis, Michael Killingsworth, Justin Kenney, Brittainie Zinsmeyer and Spencer Packard of Ahmad, Zavitsanos & Mensing.
The case number is 4:24-cv-00837. The case number for the still-pending copyright lawsuit is 4:25-cv-02631.
Western District of Texas
McGuireWoods Leads Challenge to Texas’ New Marketing Texts Law
Three companies on Friday asked a federal judge in Austin to enter a preliminary injunction against a new state law targeting marketing text messages that they allege “goes further than its drafters intended.”
Ecommerce Marketers Alliance, which does business as Ecommerce Innovation Alliance, Flux Footwear and Stodge, which does business as Postscript, told U.S. District Judge Robert Pitman in the lawsuit filed Sept. 1 that the new law was intended to protect consumers from receiving “unwanted and unsolicited text messages.”
The sponsors of the bill, SB 140, represented during the legislative session that the law was “intended to only impact unwanted text messages,” the businesses allege.
But the language of the law, which expanded the reporting and disclosure requirements in Chapter 302 of the Texas Business and Commerce Code, “has the potential to put businesses that text only with the consent of their customers on the hook for hundreds of thousands of dollars in litigation expenses and damages, not to mention potential criminal liability,” the lawsuit alleges.
“Under the new language of Chapter 302, businesses can only avoid these Draconian results by undertaking an extremely burdensome registration process and making lengthy disclosures in their text-messaging campaigns,” the suit alleges. “These disclosures may make sense for voice calls but are impractical in the context of character-limited text messages.”
The case has been assigned to U.S. District Judge Robert Pitman.
The plaintiffs are represented by Thomas M. Farrell, Matthew A. Fitzgerald and Hannah K. Caison of McGuireWoods.
Counsel for the state of Texas had not filed an appearance as of Monday.
The case number is 1:25-cv-01401.
Northern District of Texas
Collin County Man Gets 12 Years for $4M Oil & Gas Fraud
A 42-year-old man from Murphy, Texas, has been sentenced to 151 months in federal prison for orchestrating an oil and gas scheme that defrauded investors out of more than $4 million.
Sameer Praveen Sethi was sentenced by U.S. District Judge Sean D. Jordan on Aug. 28 after a jury convicted him on seven counts of wire fraud and one count of money laundering during a December trial. He was indicted in March 2020, according to court records.
“The sentence handed down by Judge Jordan follows years of investigation by Internal Revenue Service-Criminal Investigation and a lengthy trial, and shows the serious nature of Sameer Sethi’s crimes,” Acting U.S. Attorney Jay R. Combs said in a news release. “The U.S. Attorney’s Office will continue to work closely with the IRS-Criminal Investigation office and the FBI to investigate and prosecute the kinds of investor fraud that occurred in this case and to seek justice for the public and for the innocent victims of these crimes.”
Prosecutors alleged that Sethi targeted investors in oil and gas joint ventures, who received “almost no returns,” according to the Department of Justice. Most of the $4 million was used by Sethi on business and personal expenses, the jury was told.
Judge Jordan has set a hearing on a motion for a restitution order in the case to take place Oct. 2.
Sethi represented himself.
The federal government is represented by Thomas Gibson and William Tatum of the U.S. attorney’s offices in Plano and Sherman, and by Suzanne Steinmetz of the Texas State Securities Board.
The case number is 4:20-cr-00077.
Northern District of California
AI Company Anthropic Agrees to $1.5B Settlement in Author Copyright Suit
Anthropic has agreed to pay $1.5 billion plus interest to settle authors’ copyright lawsuit over the AI company’s downloading of millions of pirated books.
“This landmark settlement far surpasses any other known copyright recovery. It is the first of its kind in the AI era. It will provide meaningful compensation for each class work and sets a precedent requiring AI companies to pay copyright owners,” Susman Godfrey partner Justin Nelson said in a news release. “This settlement sends a powerful message to AI companies and creators alike that taking copyrighted works from these pirate websites is wrong.”
The case was originally filed by authors Andrea Bartz, Kirk Wallace Johnson and Charles Graeber in August 2024. The class action covers 500,000 pieces of work. The case was set to go to trial in December.
“Piracy harms those who devote their lives to writing and publishing books that benefit us all, and companies that exploit piracy and endanger the creative industries must be accountable,” co-lead plaintiffs’ Rachel Geman of Lieff Cabraser Heimann & Bernstein said in a news release.
Anthropic will pay $1.5 billion plus interest into a settlement fund, equating to approximately $3,000 for each work covered by the settlement. As part of the settlement, Anthropic has agreed to destroy the original files of works torrented/downloaded from Library Genesis or Pirate Library Mirror, and any copies that originate from the torrented copies
“I believe that settlement as presented is beneficial to all class members and I am hopeful that the settlement will receive wide support from copyright owners,” President and CEO of the Association of American Publishers Maria Pallante said in a news release. “Beyond the monetary terms, the proposed settlement provides enormous value in sending the message that Artificial Intelligence companies cannot unlawfully acquire content from shadow libraries or other pirate sources as the building blocks for their models.”
The court is scheduled to hold a hearing today to preliminarily approve the settlement. The court may schedule a final approval hearing for 2026. The settlement cannot take effect until the court approves.
Counsel for Anthropic did not immediately respond to request for comment.
Attorneys representing Anthropic are Arnold & Porter Kaye Scholer associates Estayvaine Bragg, Jessica Gillotte, Jack Lane and Ally Myers, senior associate Pieter de Ganon, partners Joseph Farris, Andel Tang Nakamura, Ryan Nishimoto and Douglas Winthrop, and counsel Assad Rajani and Oscar Ramallo; Morrison & Foerster partners Fitz Collings, Daralyn Durie, Whitney O’Byrne and Mary Prendergast, and associates Ramsey Fisher and Adi Kamdar; Latham & Watkins partners Andrew Gass and Joe Wetzel; and Cooley partner Kathleen Hartnett and associate Alex Kasner.
Attorneys representing the authors are Susman Godfrey partners Michael Adamson, Jordan Connors, Rohit Nath, Justin Nelson and Alejandra Salinas, associates Samir Doshi and J. Craig Smyser, and of counsel Molly Karlin; Cowan, DeBaets, Abrahams & Sheppard associate CeCe Cole and partner Scott Sholder; Lieff Cabraser Heimann & Bernstein partners Jallé Dafa, Rachel Geman, Daniel Hutchinson and Reilly Stoler, associates Wesley Dozier, Danna Elmasry, Anna Freymann, Amelia Haselkorn, Jacob Miller and Betsy Sugar; Edelson founder Jay Edelson, managing partner Brandt Silverkorn and global managing partner J. Eli Wade-Scott; and Oppenheim & Zebrak partners Jeff Gould, Corey Miller and Matt Oppenheim.
The case number is 3:24-cv-05417.
Fifth Court of Appeals, Dallas
Lack of Contacts with Texas Dooms $34M Default Judgment
A nearly $34 million default judgment entered against Polaris Electronic Co. Ltd. was undone by a Dallas appellate panel that determined the company’s lack of contacts with Texas meant courts here have no jurisdiction over it.
The 22-page Aug. 29 ruling undoes the $33.9 million final default judgment entered by Dallas County District Judge Bridgett N. Whitmore in January 2023 in favor of Raspberry 353 in a conspiracy and fraud lawsuit.
According to the opinion, in an earlier lawsuit, Razberi Technologies obtained a $25 million judgment against DynaColor and its CEO Warren Chen. Razberi then assigned its rights to collect that prior judgment to Raspberry, which filed suit against Polaris alleging DynaColor was using that company as a means to avoid paying the $25 million judgment.
Raspberry lodged claims for conspiracy, tortious interference and fraudulent transfer and sought an injunction that would bar “further disposition of assets.” Raspberry served Polaris through its last known address in Taiwan. After no answer was received, Judge Whitmore entered a final default judgment awarding Raspberry $33.9 million, which included actual damages, post-judgment interest and court costs.
Polaris then filed a special appearance and a motion for a new trial, both of which were denied by the trial court.
The appellate panel wrote: “On this record, with these parties, there are no Texas activities upon which to establish specific jurisdiction over Polaris, as all Texas-directed contacts were the unilateral actions of a third-party, non-party.”
Justices Bonnie Lee Goldstein and Nancy Kennedy sat on the panel, alongside the Hon. Barbara Rosenberg, who sat by assignment.
Raspberry 353 is represented by Jeffrey Goldfarb and Keith Koshkin of Goldfarb PLLC.
Polaris Electronic is represented by Mary H. Barkley, Sean R. Looney and Scharli Branch of Cantey Hanger.
The case number is 05-23-00382-CV.
Alexa Shrake contributed to this report.