In this edition of Litigation Roundup, an improper jury argument wipes out a $222 million award on appeal, a Dallas firm notches a $15 million verdict in a Connecticut mesothelioma case and the Texas Supreme Court declines to revive a lawsuit a couple dozen cities brought against streaming giants Disney+, Hulu and Netflix.
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Connecticut Superior Court, Bridgeport
Dallas-Based Law Firm Obtains $15M Mesothelioma Verdict in Connecticut
The Dallas-based firm Dean Omar Branham Shirley obtained a $15 million jury verdict against talc company Vanderbilt Minerals LLC for the family of a man who died of mesothelioma in 2023, about 60 years after working in a plastics facility where his family argued he was exposed to asbestos.
The law firm, which specializes in asbestos cases, argued to the Connecticut jury that Nicholas Barone’s mesothelioma diagnosis in 2022 could be traced back to the work he did at a General Electric plastics facility in the 1960s.
Barone, a former chemical engineer and military veteran who was 81 when he died, gave a videotaped deposition before his death that was shown to jurors, Dean Omar Branham Shirley partner Benjamin Braly told The Texas Lawbook.
Mesothelioma commonly manifests itself decades after exposure, Braly said.
General Electric purchased hundreds of bags of talc from International Talc that came from a New York pit known to have asbestos contamination during the time Barone worked at the Massachusetts plant, the plaintiffs said. Vanderbilt purchased International Talc in 1974.
The trial before Judge William Clark lasted four weeks after picking a jury, Braly said, and ended Thursday. More than 200 pieces of evidence showed the talc industry was aware of the problem and tried to cover it up, Braly said.
Braly requested $36 million in his closing arguments. The jury awarded compensatory damages and found Vanderbilt should be responsible for punitive damages. Under Connecticut law, the jury determines whether punitive damages are appropriate and the judge decides the amount, Braly said.
Barone’s widow, Kathryn Barone, felt the jury’s verdict was “a measure of accounting,” Braly said.
“We are enormously grateful to the jurors who heard this case and who, through their verdict, are providing some measure of justice for Nick’s family,” Braly said.
Barone’s family was also represented at trial by Sam Iola of Dean Omar Branham Shirley and Brian Kenney of Early, Lucarelli, Sweeney & Meisenkothen.
Vanderbilt Minerals was represented by Matthew J. Zamaloff of Cetrulo and R. Thomas Radcliffe of DeHay & Elliston.
The case number is FBT-CV-22-6116587S.
Southern District of Texas
Minority Investor Cut from FTC’s Monopoly Suit
Private equity firm Welsh, Carson, Anderson & Stowe XI has been dismissed from a lawsuit brought by the Federal Trade Commission accusing it and U.S. Anesthesia Partners of collaborating in a yearslong effort to consolidate anesthesiology practices in Texas to drive up costs and profits.
U.S. District Judge Kenneth M. Hoyt issued a 23-page order May 13 letting Welsh Carson out of the suit but declining to bring an end to the claims brought against U.S. Anesthesia Partners.
Welsh Carson, which had been a minority investor in USAP since 2017, argued in its Nov. 20 motion to dismiss that the lawsuit was an “unprecedented attempt by the Federal Trade Commission to challenge and unravel long-ago investments in a healthcare company that provides vital services in this state.”
Judge Hoyt wrote that the government “does not allege any conduct by Welsh Carson in the past six years that is a plausible antitrust violation.”
The government alleges the scheme had three parts: purchase most of the large anesthesia practices in Texas to create one dominant provider that could charge higher prices; implement price-setting agreements with independent practices to further drive up costs; and ink a deal with a competitor to keep it out of the Texas market.
FTC Chair Lina M. Khan issued a statement when the lawsuit was filed pointing to Welsh Carson as the entity that “spearheaded” the strategy.
“Along with a set of unlawful agreements to set prices and allocate markets, these tactics enabled USAP and Welsh Carson to raise prices for anesthesia services — raking in tens of millions of extra dollars for these executives at the expense of Texas patients and businesses,” Khan said. “The FTC will continue to scrutinize and challenge serial acquisitions, roll-ups, and other stealth consolidation schemes that unlawfully undermine fair competition and harm the American public.”
The FTC is represented by Kara Monahan and Bradley S. Albert, who are both deputy assistant directors of the Federal Trade Commission.
U.S. Anesthesia Partners is represented by Mark C. Hansen, Catherine Redlingshafer, David L. Schwarz, Dennis Howe, Derek Reinbold, Geoffrey Klineberg, Kenneth Fetterman, Kevin B. Huff and Kevin Miller of Kellogg, Hansen, Todd, Figel & Frederick.
Welsh, Carson, Anderson & Stowe XI is represented by Paul Yetter of Yetter Coleman, Kenneth Field of Hogan Lovells, Perry A. Lange of Wilmer Cutler Pickering Hale and Door and David B. Hennes, Jane E. Willis, C. Thomas Brown, Douglas Hallward-Driemeier and Kathryn Caldwell of Ropes & Gray.
The case number is 4:23-cv-03560.
First Court of Appeals, Houston
Panel Wipes Out $222M Wrongful Death Jury Award
A jury trial that took place in Fort Bend County and resulted in a $222 million verdict in favor of a widow whose husband died on the job should have never taken place in Texas because the dispute belongs in Kansas, an appellate panel recently held.
In a 60-page opinion issued May 16, a three-justice panel agreed with Team Industrial Services that Kansas resident Kelli Most, whose husband Jesse Henson died in an on-the-job incident in Kansas, should have brought suit in Kansas and wiped out the jury’s award in her favor.
Henson, who was employed by coal-fired power plant Jeffrey Energy Center, died in June 2018 when a pressure relief valve failed and exposed him to a “steam release.” Team had recently serviced the pressure relief valves, and Most accused the company of negligence and gross negligence in her lawsuit.
Venue wasn’t the only thing that doomed the massive award. The panel also agreed with Team that improper jury arguments had “left the jury with no sound guidance for deciding the amount of compensation to award Most for mental anguish and loss of companionship.”
Referencing the Texas Supreme Court’s 2023 ruling in Gregory v. Chohan — which held a new trial was required in a wrongful death trucking case because of improper jury argument that tethered damages to the cost of a fighter jet and a Mark Rothko painting — the panel wrote that Most’s trial counsel in this case “did exactly what the Gregory court deemed improper.”
“For instance, in his opening argument, counsel stated:
You may see a headline, painting sells for $350 million, right. That’s what somebody who owned it was willing to sell it for. It’s a bargain. It’s a deal. It’s a price, fair and reasonable. I don’t think there is a person that would say that a painting is more valuable than a human life.
“And Most’s counsel returned to this theme in his closing argument, suggesting that ‘[t]he hard part of [the jury’s] job . . . [was] valuing the whole person, [and] valuing the entire loss,’” the panel wrote. “And counsel stated, ‘if you picked 300 million because you can make an exchange for a painting, then that’s okay.’”
Most was awarded $27 million for physical pain and $30 million for mental anguish on her wrongful death claim, as well as $75 million for past and future loss of companionship and $90 million for past and future mental anguish on her survival claim.
The panel found the damages award wasn’t supported by the evidence and dismissed the lawsuit for forum non conveniens.
Chief Justice Terry Adams and Justices Julie Countiss and April L. Farris sat on the panel.
Team Industrial is represented by R. Russell Hollenbeck, Brian J. Cathey and Michael J. Adams-Hurta of Wright Close & Barger, Wallace B. Jefferson, Robert B. Dubose and William J. Boyce of Alexander Dubose & Jefferson and Eileen F. O’Neill and Paul W. Smith of Ware, Jackson, Lee, O’Neil, Smith & Barrow.
Most is represented by Jason A. Itkin, Andrew R. Gould and Cory D. Itkin of Arnold & Itkin, Daryl L. Moore of Ahmad, Zavitsanos & Mensing and S. Scott West of The West Law Firm in Sugar Land.
The case number is 01-22-00313-CV.
Fifth Court of Appeals, Dallas
SCOTUS’ Mallory Ruling Ends Automotive Repair Co.’s Texas Suit
Automotive repair company Repairify Inc. cannot proceed with its lawsuit against a Michigan-based competitor, a Dallas appellate panel recently determined in a ruling that was the first by Texas appellate court to cite the U.S. Supreme Court’s 2023 ruling in Mallory v. Norfolk Southern Railway Co.
The May 16 ruling in favor of Opus IVS affirms a trial court’s ruling that while Opus had registered to do business in Texas, it had not subjected itself to personal jurisdiction in Texas. The ruling affirmed dismissal of a lawsuit Repairify had brought against Opus over its hiring of one of Repairify’s employees.
In Mallory, the high court held a Pennsylvania statute requiring nonresident corporations to consent to general jurisdiction in Pennsylvania was not a violation of due process. In this case, Repairify had argued that the Mallory ruling meant Texas courts have jurisdiction to hear its lawsuit against Opus because Opus had registered to do business in Texas.
“The Mallory court answered only that question, whether consent jurisdiction for non-resident corporate defendants comports with due process,” the appellate panel wrote in its 8-page ruling. “Mallory never sought to instruct how to read a state’s statutes or whether to intuit from them that they meant a registering business consented to general jurisdiction in the absence of a clear statement of that consent.”
The ruling leaves in place Texas case law that registering to do business in Texas only potentially subjects a foreign corporation to jurisdiction in Texas.
Justices Cory L. Carlyle, Robbie Partida-Kipness and Bill Pedersen III sat on the panel.
Repairify is represented by Pamela Abbate-Dattilo and Harry N. Niska of Crosscastle PLLC in Minneapolis and Darren L. McCarty of McCarty Law in Austin.
Opus is represented by Justin VandenBout, Warren Huang, Charlotte Kelly and Patrick Doyle of Norton Rose Fulbright.
The case number is 05-23-00921-CV.
Texas Supreme Court
SCOTX Passes on Municipalities’ Suit Against Streamers
A group of 31 cities in Texas, including Dallas and Houston, will not get to proceed with their lawsuit accusing streaming providers Disney+, Hulu and Netflix of violating a state law by not paying them five percent of their gross revenues derived from operations in each respective municipality.
The Texas Supreme Court on May 13 denied the cities’ petition for writ of mandamus, leaving in place a January ruling from the Fifth Court of Appeals granting the streaming companies’ Rule 91a motion to dismiss the lawsuit that alleged violations of the Texas Public Utility Regulatory Act.
“Today the Supreme Court of Texas denied the petition for writ of mandamus and emergency motion for temporary stay because, without regard to the merits, relators have an adequate remedy by appeal,” the court’s one-sentence order reads.
The cities argued that under PURA, they were owed franchise fees from the streaming companies. The companies moved to dismiss the suit, arguing that they aren’t franchise holders and aren’t required to obtain franchises because they don’t “construct or operate facilities on public rights-of-way.”
Dallas County District Judge Eric V. Moyé had in April 2023 allowed the suit to proceed and denied the streaming companies’ motion to dismiss.
The cities are represented by lead counsel Steven D. Wolens and Gary Cruciani of McKool Smith.
The streaming companies are represented by E. Leon Carter and Joshua J. Bennett of Carter Arnett Bennett & Perez and Michael K. Hurst, Mary Goodrich Nix and David Coale of Lynn Pinker Hurst & Schwegmann.
Fifth Circuit’s Question Answered in Royalty Dispute
On Friday, the Texas Supreme Court answered one of two certified questions from the Fifth Circuit in a dispute between Hilcorp Energy Company and two royalty holders, finding Hilcorp had not erred in calculating what it owed the couple.
Anne Carl and Anderson White, who are successors in interest to a mineral lease covering two wells in Brazoria County, appealed to the Fifth Circuit in May 2022, trying to overturn a ruling from U.S. District Judge Keith P. Ellison granting Hilcorp’s motion to dismiss the case. The Fifth Circuit turned to the Texas Supreme Court in January, explaining it couldn’t confidently venture an Erie guess in the dispute.
Carl and White sued Hilcorp, alleging it was required to pay them royalties on gas it used off-lease for post-production services like transport and processing.
The questions are:
1) After Randle, can a market-value-at-the well lease containing an off-lease-use-of-gas clause and free-on-lease-use clause be interpreted to allow for the deduction of gas used off lease in the post-production process?
2) If such gas can be deducted, does the deduction influence the value per unit of gas, the units of gas on which royalties must be paid, or both?
Randle refers to the Texas Supreme Court’s 2021 ruling in BlueStone Natural Resources II v. Randle, where the justices determined BlueStone had improperly deducted post-production costs from royalties paid to lessors.
Carl and White argued the Randle decision entitles them to the royalties they seek, while Hilcorp argues Randle doesn’t apply here because that case dealt with “a gross-value-received lease, rather than a value-at-the well lease.”
In answering “yes” to the first question, the court explained the Randle ruling doesn’t favor Carl and White in this case.
“The parties certainly could have contracted for the outcome Carl seeks by allocating post-production costs differently, but none of the provisions Carl cites have any effect on the extent to which this royalty bears post-production costs,” the court held. “By creating an ‘at-the-well’ royalty, the parties indicated that the royalty would bear those costs. None of the lease language Carl relies on alters that arrangement.”
In an unusual move, the court declined to answer the second question, noting both that the parties didn’t brief that issue while the case was pending before the Texas Supreme Court.
“Our rough mathematical calculations indicate that, in a situation like this one, either of the two accounting methods described in the second question would yield the same royalty payment,” the court held. “The parties’ lack of interest in the second question seems to confirm our calculations. Without assistance from the parties, we decline to offer further thoughts on the second question, other than to emphasize that nothing in this opinion should be understood to state a preference for any particular method of royalty accounting, so long as the accounting results in the royalty holder being paid what he is lawfully owed.”
Judges James L. Dennis, Jennifer Walker Elrod and James C. Ho sat on the panel.
Hilcorp is represented by Stephen Crain and Jeffrey L. Oldham of Bracewell and Andrew Zeve of White & Case.
The landowners are represented by Rex A. Sharp, Heather Hacker, Hammons P. Hepner, Ruan Hudson and Greg Wright of Sharp Law.
The case number is 24-0036.
Editor’s Note: Krista Torralva contributed to this report.