In this edition of Litigation Roundup, executives of a Houston-based company that operates strip clubs are indicted on tax fraud charges in New York, and a trio of cities ask the entire Third Court of Appeals to rehear their constitutional challenge to a new state law.
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.
Southern District of Texas
Methodist Hospital Gets Early Win in Data Privacy Suit
A lawsuit filed by patients of Houston Methodist Hospital alleging their personal health information was disclosed in violation of state privacy laws and the federal Wiretap Act was dismissed with prejudice Monday.
Senior Judge Lee H. Rosenthal granted Houston Methodist Hospital’s motion to dismiss with prejudice and granted its motion for summary judgment in the lawsuit filed by a putative class of patients against Houston Methodist Hospital over its use of “Meta Pixel” on its website.
Rosenthal wrote that “the summary judgment evidence demonstrates that Methodist did not use the Pixel with the purpose of committing a crime or a tort.”
Meta Pixel is a snippet of JavaScript code used on websites to track the effectiveness of digital marketing on Meta platforms like Facebook and Instagram. In 2022, Meta Pixel saw a surge in lawsuits due to the belief it could potentially send sensitive health information from hospital websites to Facebook. Hospitals across the country faced class action lawsuits.
The lawsuit filed by plaintiffs Edward and Marie Sweat in March 2024 against Houston Methodist alleged its use of Meta Pixel violated the federal Wiretap Act and sought $1 billion in damages.
“Methodist’s use of the Pixel is a good example of the careful line hospitals must draw between efforts to raise money and promote public health awareness on the one hand and the importance of maintaining privacy for those who seek or obtain medical care on the other,” Rosenthal wrote in the order.
Rosenthal further wrote that there was no basis for liability under the crime-tort exception to the Wiretap Act.
Paul Wickes of Wickes Law and McGuire Law partner Yevgeniy Turin represented Edward and Marie Sweat. Counsel did not immediately respond to a request for comment.
Yetter Coleman partners Mary Bracewell, Tracy LeRoy and R. Paul Yetter represented Houston Methodist Hospital.
The case number is 4:24-cv-775.
Travis County District Court
St. Ed’s Sued Over Alleged Toxic Mold Exposure
A former member of the St. Edward’s University basketball team alleges the university was negligent in how it handled her reports of water damage and toxic mold in her university-owned apartment.
Ainsley Thunell, who was on the basketball team from 2021 through 2024, filed her lawsuit seeking more than $1 million in damages on Sept. 15. She alleges she contracted permanent autoimmune diseases, had to stop her education and “was forced to abandon the apartment and her belongings.”
According to the lawsuit, Thunell, a full-scholarship student-athlete, began experiencing respiratory problems, hair loss and fatigue shortly after moving into the apartment. Eventually she was diagnosed with Raynaud’s syndrome and Sjögren’s syndrome.
“Despite numerous complaints of water damage, visible mold, and declining health, the university failed to obtain a licensed mold inspection or implement lawful remediation procedures,” the suit alleges. “Instead, the University opted for superficial responses such as spraying unknown chemicals into HVAC vents and painting over visible mold, allowing dangerous contamination to persist unchecked. Ultimately, independent investigations revealed the apartment was contaminated with hazardous mold, including cladosporium and aspergillus/penicillium, and was unfit for human habitation.”
The case has been assigned to Travis County District Judge Daniella DeSeta Lyttle.
Thunell is represented by Sabine Wakim, Kristina S. Baehr and Mary Margaret Neusel of Just Well Law.
Counsel information for the university wasn’t available Monday.
The case number is D-1-GN-25-008038.
Delaware Superior Court, New Castle County
Lanier Firm Represents Families of Four Air India Crash Victims
The Boeing Company and Honeywell International have been named in a new lawsuit brought by the families of four people who died in the Air India Flight 171 crash in June.
The lawsuit, filed last week, brings claims for product defect and negligence. A total of 242 people on board the plane died in the crash, and 19 others were killed on the ground. The lawsuit alleges the fuel cutoff switch, which is manufactured by Honeywell and installed by Boeing, is installed in a “high traffic” area of the cockpit near the thrust levers that are continuously manipulated during takeoff.
Air India Flight 171 crashed when the pilot accidentally shut off the fuel to the Boeing 787 Dreamliner’s engines. The lawsuit alleges evidence will show Boeing and Honeywell knew that the cutoff switch’s locking mechanism, meant to prevent unintended cutoff of the fuel supply, could be easily and inadvertently turned off.
The families are represented by Benjamin Major of The Lanier Law Firm.
“It is shocking that Honeywell and Boeing both knew of this danger and did absolutely nothing to prevent the inevitable catastrophe that occurred on June 12,” he said in a statement. “This defect is comparable to an auto manufacturer putting an unprotected emergency brake control next to a radio volume knob in your car. And unlike a car, restarting jet engines takes minutes of time, not seconds. Once these engines shut down, that plane basically became a 250,000-pound lawn dart.”
Counsel information for the defendants wasn’t available Monday.
The case number is N 25C-09-145 PAW
U.S. Securities and Exchange Commission
Dave & Buster’s Tells SEC Disparaging Reviews Arbitration Has Settled
In a Form 10-Q filed with the SEC Sept. 15, Dallas-based Dave & Busters disclosed that it has settled the claims lodged by nearly 1,000 individuals who accused the company of violating California law.
The 980 individuals filed the mass arbitration claim on April 17, according to the disclosure, and alleged Dave & Buster’s Entertainment violated the California Civil Code by requiring visitors to its website and mobile app to agree not to “disparage, tarnish or otherwise harm” the company.
California has a state law prohibiting companies from limiting consumers’ abilities to write negative reviews about a company or products. Dave & Buster’s told the government that the lawyers representing the claimants indicated they also represented “more than 3,000 additional individuals who have similar unasserted claims.”
“On Sept. 2, 2025 the company settled these claims in an amount the company does not consider materials to its financial position or results of operations,” it reads. “The company does not anticipate any further financial obligations related to this matter and considers the issue resolved.”
U.S. District Court of Colorado, Denver Division
McKool Smith Hits Character.AI, Google with Three Suits Over ‘Predatory’ Chatbot
Two lawsuits filed in federal court in Denver and one filed in federal court in Albany, New York, accuse Character Technologies Inc., Google and Alphabet of inflicting “terrible harms” on children, “knowingly and by design.”
The lawsuits are brought on behalf of the families of three teenagers who allege they were harmed by interactions with the companies’ chatbots, a 13-year-old survivor of sexual abuse, a 15-year-old suicide survivor and a 13-year-old girl who died in 2023. McKool Smith principal Jennifer Truelove, who represents the plaintiffs, issued a statement that the lawsuits “underscore the need to hold AI and AI-enabled companies accountable for the harm they inflict on children.”
“Character AI and Google knew minors and other vulnerable consumers would be targeted with sexually explicit, violent and other harmful material,” she said. “They were not only aware of this, but they continued to target minors and other vulnerable users by marketing their platforms as safe, exposing these users to inappropriate and sensitive content, and collecting and processing user data for the sake of profits and ratings.”
Last week, the families of two of the teenage plaintiffs were among those who testified before the Senate Judiciary Committee, addressing members of a subcommittee who are exploring the passage of AI safety bills.
The plaintiffs are also represented by Samuel Baxter and Radu Lelutiu of McKool Smith.
The case numbers are 1:25-cv-02907; 1:25-cv-02906 and 1:25-cv-01295.
New York Supreme Court
Execs of Houston-Based Strip Club Co. Indicted for Tax Fraud, Bribery
Three men who live in the Houston area were among five executives of RCI Hospitality Holdings who were indicted by a grand jury in New York in an alleged multimillion dollar tax fraud scheme.
The 79-count indictment accuses RCI, which operates strip clubs Rick’s Cabaret, Vivid Cabaret and Hoops Cabaret and Sports Bar, of bribing an auditor with the New York Department of Taxation and Finance to avoid paying more than $8 million in sales taxes.
Named in the indictment are RCI’s president and CEO Eric Langan, 57, of Bellaire, Texas; chief financial officer Bradley Chhay, 41, of Conroe; director of operations Ahmed “Ed” Anakar, 58, of Plantation, Florida; and Shaun Kevlin, 45, of Warwick, New York, the regional manager of RCI’s clubs in New York City. The executives are charged with conspiracy, bribery and criminal tax fraud.
Prosecutors allege the scheme spanned 13 years and that in exchange for favorable treatment during sales tax audits, the executives sent the auditor on more than a dozen complimentary trips to Florida, where the auditor also received as much as $5,000 a day for private dances at RCI’s strip clubs in Miami.
New York is represented by assistant attorneys general Matthew Luongo, Gregory Morril and Gary Fishman.
Counsel information for the defendants wasn’t available Monday.
The indictment number is 73671/2025.
Third Court of Appeals, Austin
Cities Urge Rehearing in Challenge to ‘Death Star’ Bill
Houston, San Antonio and El Paso have asked the Third Court of Appeals to rehear en banc its challenge to the Texas Regulatory Consistency Act, which has also been called the “Death Star Bill” by detractors.
The cities filed the motion Sept. 17, arguing the panel’s July opinion that dismissed the case on jurisdictional grounds was flawed. Lawmakers in 2023 passed the act that preempts municipalities from passing any ordinances or rules in the areas of agriculture, business, commerce, finance, insurance, labor, natural resources, occupations and property “unless expressly authorized by another statute.”
“Appellee cities’ injuries in having to implement HB2127 are directly traceable to the Legislature’s drafting a vague and unconstitutional superpreemption law which improperly attempts to withdraw constitutional regulatory power from home-rule cities and place it back with the Legislature,” the motion reads.
Travis County District Judge Maya Guerra Gamble signed an order in August 2023 that held the act unconstitutional. But on appeal, the justices agreed with the state of Texas that the pleadings from the cities challenging the Act “affirmatively negates their standing to sue.”
The panel found the cities “failed to show an injury-in-fact,” meaning they failed to allege the act caused them injuries.
“Instead, they allege that the Act is unconstitutional on its face and that they will have to review their charters, repeal preempted regulations, and suffer other such generalized injuries if forced to comply with its terms. These injuries lack sufficient concreteness and particularization for standing purposes,” the panel wrote.
The cities also “failed to show that their alleged injuries are fairly traceable to the state,” the panel held.
“The cities do not allege that the state has threatened to enforce the Act against them,” the panel wrote. “And the various pre-enforcement injuries the cities have alleged are traceable not to anything the state has done but to the coercive impact of the Act itself (coercive in that it exposes the cities to civil litigation brought by parties injured by preempted regulations).”
Houston filed suit after passage of the Act, seeking a declaration that it was unconstitutional. San Antonio and El Paso intervened, making similar arguments. Texas argued the suit should be dismissed on jurisdictional grounds.
Judge Gamble denied the state’s motion to dismiss, granted Houston’s motion for summary judgment, declared the Act unconstitutional and determined that ruling also resolved claims brought by San Antonio and El Paso.
Houston is represented by Arturo G. Michel, Collyn A. Peddie and Lydia S. Zinkhan of the city’s legal department. San Antonio and El Paso are represented by Jane Webre, Kennon L. Wooten and Lauren Ditty of Scott Douglass & McConnico and city attorneys Deborah Klein and Evan D. Reed.
Texas is represented by Rance Craft of the attorney general’s office.
The case number is 03-23-00531-CV.
Fifteenth Court of Appeals
Solar Power Co. Loses Appeal in $520M Project Tax Case
A three-justice panel has upheld a ruling that the Texas comptroller did not act outside the scope of his authority when he rescinded a certificate approving a property tax break for a solar power company.
The Sept. 18 ruling against ENGIE IR Holdings affirms a trial court’s October 2023 holding that the comptroller was entitled to immunity from the suit because ENGIE failed to show the rescission was an ultra vires act. According to the opinion, ENGIE submitted an application for a property tax break, called a value limitation agreement, for a $520 million solar power project it planned to build within the boundaries of Hamlin Collegiate Independent School District.
The comptroller canceled the deal after realizing the name on the application was ENGIE Solar NA instead of ENGIE IR Holdings. The company completed a merger after submitting the application and changed its name, and the certificate stated it would “no longer be valid” if “the information presented in the application changes,” according to the opinion.
That means, according to the opinion, the certificate was invalid on its face before the comptroller withdrew it.
“The errors involved here appear to have been relatively insignificant, and the project might have benefitted local schools with relatively little harm to state or local taxpayers,” the court wrote. “But that decision was not ours to make, and the Comptroller’s office did only what they had warned ENGIE IR could happen if an application was not correct in every detail.”
Chief Justice Scott A. Brister authored the court’s opinion, joined by Justices April Farris and Scott Field.
ENGIE is represented by Benjamin A. Geslison of Baker Botts.
The Comptroller is represented by assistant attorney general Zachary L. Rhines. Hamlin Collegiate ISD is represented by David J. Campbell of O’Hanlon, Demerath & Castillo.
The case number is 15-24-00058-CV.
Alexa Shrake contributed to this report.
Craving more 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.
Dallas law firm Iola, Gross & Forbes-King won an $83 million jury verdict in Boston for the family of a woman who died of mesothelioma. The family alleged she contracted the cancer from American Art Clay Company’s asbestos-laden products. The win in Boston was the firm’s second multimillion-dollar mesothelioma verdict in three weeks.
American Airlines was found liable by a jury for $9.6 million in damages in a federal lawsuit in California brought by a man who was left profoundly disabled after suffering a stroke while on board a flight to Madrid. Dallas law firm Burns Charest represented the man in the litigation against Fort Worth-based American Airlines.
The owners of a luxury home furnishings store in Conroe were granted a temporary injunction that, for now, puts a stop to construction of a natural gas pipeline and compressor station next door. Montgomery County District Judge Vincenzo Santini granted that relief to family-run Bartholet Properties following a two-day evidentiary hearing where Blackfin Pipeline had argued forcing it to stop construction would cost it millions in damages each day.
A dayslong hearing began last week in the bankruptcy proceedings of Dr. Phil McGraw’s Merit Street Media. Lawyers will be back in Judge Scott Evertt’s courtroom this week to continue arguments over whether the celebrity television psychologist acted in bad faith by filing for bankruptcy. He is expected to testify.
David Jones, the former jurist who resigned his position in the Southern District of Texas in the wake of reporting about his previously secret romantic relationship with a bankruptcy lawyer, told the court he is entitled to complete immunity from the lawsuit brought by aggrieved GWG bondholders. “There can be no genuine dispute that Jones is entitled to absolute immunity from civil lawsuits arising from his role as a judicial mediator in the GWG bankruptcy cases under applicable law,” the motion to dismiss reads. Elizabeth Freeman, who is also a defendant, has also moved for dismissal.
The trustee of a bankrupt financial services startup aimed at conservative customers that Winston & Strawn represented is suing the law firm and one of its partners for alleged malpractice. The trustee for GloriFi, seeking more than $1.7 billion in damages, claims Winston & Strawn schemed with the company’s founder, putting his interests over those of the business. Winston & Strawn said it “will vigorously defend against these meritless claims, including the fanciful, billion-dollar lost value claim for a company that never opened its doors for business.”