In this edition of Litigation Roundup, Texas juries find infringement in one case involving smart thermostats and another involving cloud storage, a group of doctors want a Harris County judge to confirm a $153.5 million arbitration award in a dispute with UnitedHealthcare and federal prosecutors in Houston drop a female genital mutilation case.
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Harris County District Court
Doc Group Moves to Confirm $153.5M Award Against UnitedHealthcare
Singleton Associates has asked Harris County District Judge Christine Weems to confirm a $153.5 million award handed down unanimously by an American Arbitration Association panel in a dispute over reimbursement rates with UnitedHealthcare.
Singleton, a medical group practice in Houston, moved for arbitration against United in April 2022, alleging the insurer had failed to pay it reimbursement rates in accordance with a 1998 contract that required formal notice of any changes to reimbursement rates. An AAA panel agreed with that argument, but in Singleton’s request for confirmation filed Oct. 13, the group told the court the dispute isn’t over yet.
United has lodged counterclaims that are still pending against Singleton accusing it of “pass-through billing,” which is when doctors bill insurers for services they didn’t perform.
Judge Weems should confirm the interim award despite the pending counterclaims, Singleton argues, because the breach of contract claim the award rests on is “separate and independent” from United’s claims and because “courts across the country routinely confirm awards on bifurcated interim claims before the completion of all proceedings in the arbitration.”
Singleton Associates is represented by Kevin Leyendecker, Michael Killingsworth, Daryl Moore and John Zavitsanos of Ahmad Zavitsanos & Mensing and Sara Brinkmann, Glenn Solomon and Christopher Jew of King & Spalding.
UnitedHealthcare is represented by Andy Jubinsky, Drew Speicher, Amber Reece and Marcus Guith of Figari + Davenport and Jamie Kurtz, Paul Weller and Kyle Nelson of Robins Kaplan.
The case number is 2023-71562.
Eastern District of Texas
Smart Thermostat Tech Patent Infringement Nets $11.5M Verdict
A jury in Marshall sat through four days of testimony earlier this month before agreeing Ollnova Technologies is entitled to recover $11.5 million in damages from Ecobee Technologies, representing a lump sum royalty for the life of the patents Ollnova holds related to smart thermostat technology.
U.S. District Judge Rodney Gilstrap presided over the trial that began Sept. 29 and ended with a verdict Oct. 5. Ollnova filed suit in March 2022, alleging Ecobee was selling products that infringed its patents, namely a half-dozen iterations of the Ecobee SmartThermostat.
Ollnova is represented by Brett E. Cooper, Drew Hollander, Jonathan Yim and Seth Hasenour of BC Law Group and Andrea Fair and Garrett C. Parish of Ward, Smith & Hill.
Ecobee is represented by Jason Dorsky, Daniel Agpar and Timothy J. Carroll of Venable and Jennifer Ainsworth of Wilson, Robertson & VanDeventer.
The case number is 2:22-cv-00072.
Aetna Hires Hunton AK in $1.35B Kraft Heinz Suit
Aetna Life Insurance Company has hired John Shely of Hunton Andrews Kurth in Houston to defend it against claims that since 2012 the insurer has taken more than $1.35 billion from Kraft Keinz to pay providers for medical services that were provided to plan participants.
Kraft Heinz, who has retained Jennifer Truelove and Samuel Baxter of McKool Smith to bring the claims, filed suit June 30, accusing Aetna of leveraging its role as third-party administrator to “enrich itself to Kraft Heinz’ detriment.”
“Included in that more than $1 billion, Aetna (a) paid millions of dollars in provider claims that never should have been paid, (b) wrongfully retained millions of dollars in undisclosed fees, and (c) engaged in claims processing related misconduct to the detriment of Kraft Heinz,” the suit alleges.
The lawsuit alleges Aetna has breached its fiduciary duty and engaged in prohibited transactions under the Employee Retirement Income Security Act.
The case has been assigned to U.S. District Judge Rodney Gilstrap, who on Friday granted Aetna a 45-day extension to file an answer to the complaint. The response is now due Nov. 30.
The case number is 2:23-cv-00317.
Western District of Texas
Waco Jury Returns $240M Verdict in Cloud Storage Technology Case
A company that owns patents for what it describes as the “cornerstone” of modern data storage has been awarded $240 million in damages by a Waco jury that found three of its patents were infringed.
StreamScale’s patents cover “accelerated erasure coding” and are related to cloud storage technology.
U.S. District Judge Alan Albright presided over the trial that began Oct. 10 and ended Oct. 13. Jurors determined a data management company based in California, Cloudera, had infringed the patents through its data management platform.
StreamScale sued Cloudera in March 2021.
Winstead shareholder Jamie McDole, who represented StreamScale, issued a statement praising the verdict.
“Entrepreneurs should also take heart knowing that regardless of the size or scale of their company, patents will be enforced and protected by the courts,” he said. “The system works.”
StreamScale is represented by Jamie McDole, Mike Karson, Phillip Philbin, Dave Higer, Grant Tucker, Matt Vitale, Nikki Becraft, Amanda Johnson and Pam Jones of Winstead, Jason G. Sheasby, Lisa Glasser and Stephen M. Payne of Irell & Manella and Massimo Ciccarelli of Ciccarelli Law Firm.
Cloudera is represented by Audrey Lo, Brock S. Weber, Christopher Kao, John J. Steger, Steven P. Tepera, Surui Ou, Benjamin L. Bernell and Christopher Lee Drymalla of Pillsbury Winthrop Shaw Pittman.
The case number is 6:21-cv-00198.
Southern District of Texas
Feds Dismissal Female Genital Mutilation Case
A woman who was indicted in January 2021 on charges she transported a minor to a foreign country for the purpose of female genital mutilation is no longer facing prosecution from the federal government.
U.S. District Judge Alfred Bennett granted a motion from the United States to dismiss the case against Zahra Badri Oct. 2.
The government sought dismissal Sept. 29, telling the court prosecutors had recently been made aware of “new medical evidence which calls into question the government’s ability to meet its burden of proving beyond a reasonable doubt that defendant’s alleged conduct meets the “elements under the statute in effect at the time as it relates to ‘circumcising, excising, and infibulating the whole and any part of the labia majora, labia minora and clitoris.’”
Ashley Kaper of Gerger Hennessy & Martin, who represented Badri, issued a statement to The Lawbook that the defense team presented medical evidence to the government that “there simply was no injury at all, and DOJ reconsidered the case.”
Had she been convicted, Badri could have served as many as 10 years in federal prison. She was the first person indicted under a 2013 amendment to the law that banned transporting someone from the United States to another country for the purposes of female genital mutilation.
“It is a fact that innocent people get indicted,” David Gerger of Gerger Hennessy & Martin said in a statement. “We are relieved that prosecutors were willing to look at the evidence and do the right thing.”
Before the government moved to toss the case in light of the medical evidence, Badri had argued the charges against her should be dismissed because the law she was charged under violated her right to equal protection.
The statute, Badri argued in a May motion, criminalizes all female “‘circumcision,’ even forms of circumcision that are equal to or less severe than male circumcision, such as pricking, piercing or scraping. This disparate treatment of males and females, without compelling justification, violates equal protection.”
Badri is also represented by Ashlee Martin of Gerger Hennessy & Martin.
The government is represented by Rami Badawy, Elizabeth Nielsen, Susan Masling, Sherri Zack and Kim Leo of the Department of Justice.
The case number is 4:21-cr-00024.
First Court of Appeals, Houston
Split Panel Undoes $3.1M Award in Cow Crash Suit
A man who crashed into a cow while driving on a state highway is not entitled to keep the $3.1 million award a Harris County district judge handed down after a bench trial, an appellate panel recently held.
In an Oct. 10 opinion, a panel sided against Paul Brown 2-1, finding that because there was no evidence showing Arraby Properties had knowingly allowed the cow to roam onto the roadway, the award couldn’t stand. Arraby didn’t own the cow but owned the land on which the cow was pastured.
“Because there is legally insufficient evidence supporting the trial court’s finding that Arraby was responsible for control of the cow or that it knowingly permitted the cow to roam at large on a state highway, we hold the trial court erred in concluding Arraby owed a duty to Brown under Section 143.102 of the Texas Agriculture Code,” the majority held.
Justice Gordon Goodman wrote in dissent that he believed Arraby failed to make any effort to keep the cow on its property confined and in that way had “knowingly permitted the cow to roam at large.”
“The legislature has determined that, when the dangerous condition is livestock, the owner or other person responsible for the livestock is liable. The owners of and those responsible for livestock have a statutory duty to not knowingly permit the livestock to roam on a highway,” he wrote. “But when there is a complete absence of evidence establishing an owner or other person responsible for a livestock animal, I believe the owner of the property who knowingly allows the animal to stay on the property is liable.”
Justices Veronica Rivas-Molloy and April L. Farris sat on the panel.
Arraby is represented by Dan MacLemore, Andy McSwain and Lauren Olivarez of Beard Kultgen Brophy Bostwick & Dickson and Herrick L. Sovany and Victoria G. Whiddon of Sovany Law Firm.
Brown is represented by Timothy F. Lee and Michaelle R. Meriam Blair of Ware, Jackson, Lee, O’Neill, Smith & Barrow, solo practitioner Reginald E. McKamie Sr. and Paxton N. Crew of The Crew Law Firm.
The case number is 01-20-00610-CV.
U.S. Court of Appeals for the Fifth Circuit
No New Trial for UDF Execs
Because the error in instructions given to jurors who convicted former United Development Funding executives Hollis Greenlaw, Benjamin Wissink, Cara Obert and Jeffrey Jester was “harmless,” they are not entitled to a new trial, the Fifth Circuit recently held.
The circuit court had originally upheld the convictions for all four defendants in July. In an opinion issued Oct. 11, the court denied a petition for rehearing en banc, withdrew its earlier opinion and issued a substitute opinion.
“Here, appellants fail to highlight the multiple errors that they allege occurred throughout their trial,” the panel held. “The only error they point to involves the district court’s jury instructions, and we have already determined that this error was, at most, harmless and does not warrant reversal of their convictions.”
A Fort Worth jury in January 2022 convicted the executives on all 10 counts of wire fraud, securities fraud and aiding and abetting securities fraud for their roles in what the government said was a Ponzi scheme. Greenlaw was sentenced to seven years in prison, Obert and Wissink each received five-year prison sentences, and Jester was sentenced to three years in prison.
Judges Carl E. Stewart, James L. Dennis and Leslie H. Southwick sat on the panel.
The government is represented by Amy Mitchell, Amanda R. Burch and Brian McKay of the U.S. Attorney’s Office for the Northern District of Texas.
Greenlaw is represented by Kannon K. Shanmugam, Hillary Black and Brian M. Lipshutz of Paul, Weiss, Rifkind, Wharton & Garrison.
Wissink is represented by Matthew Nielsen of Bracewell and solo practitioner Guy Lewis of Pinecrest, Florida.
The case number is 22-10511.
Death Penalty Sanctions for Destroying Evidence Upheld
Ashish Dabral was unable to convince a three-judge panel that litigation-ending sanctions entered against him in a trade secrets misappropriation lawsuit brought by software company Calsep should be walked back.
In an opinion issued Oct. 11, the court determined U.S. District Judge Keith P. Ellison had not erred by entering default judgment in favor of Calsep and awarding the company more than $5 million damages plus attorney fees.
Calsep provides simulator software used in the oil and gas industry and had sued Dabral alleging he stole its trade secrets and confidential information, namely the code used to create the software. During discovery, Calsep alleged Dabral destroyed electronic evidence that would have supported its claims.
After Judge Ellison entered final judgment in favor of Calsep, Dabral asked the court to reconsider, arguing he had recently discovered “forensic images that ‘vindicated’ him,” according to the opinion.
Those images, which Dabral said he discovered in a storage unit in India, contained “exact copies of the source code and [its] history” that Calsep had sought during discovery. Judge Ellison denied the request, holding the evidence could have been discovered earlier with due diligence.
“Although Dabral argues that the images change the game, Calsep’s expert insists that too much data is still missing from the source code control system, rendering a proper review impossible. The district court credited that testimony in its order, and there’s no reason to question that now,” the panel held. “Not to mention, the district court rested the sanctions order on far more than the portion of destroyed evidence seen in these forensic images.”
Judges Edith Brown Clement, Jennifer Walker Elrod and Don R. Willett sat on the panel.
Dabral is represented by Andrew Pearce, Whitney Brieck and Christopher Hanslik of BoyarMiller.
The case number is 22-20440.