Two jury verdicts that exceed $1 billion, including abortion issues involving Southwest Airlines and the adjudication of long-anticipated Dallas Police and Fire Pension dispute. Two new lawsuits against two major North Texas corporations — one involving alleged illegal horizontal drilling and another involving boiling water poured on customers. Nike defaults in a patent lawsuit in the Eastern District of Texas. Extradited Ukrainian nationals plead guilty to money laundering and other white collar charges. A Houston-based energy company wins in Delaware.
As the summer temperatures continue to heat up across the state, so, too, does Texas litigation.
Dallas Police and Fire-Pension Verdict
A Dallas jury cleared investment firm The Townsend Group of $1.2 billion in liability in a long-running dispute with the Dallas Police & Fire System over poor investments made between 2005 and 2008.
After after 16 days of trial, 14 witnesses and a full workday of deliberation, a jury ruled 11-1 that Townsend did not breach any contractual obligations or fiduciary duties to the pension system. The jury found Townsend 10% responsible for the poor investment decisions and the pension system 75%, but because the pension system was more than 50% responsible, Townsend owes nothing under Texas law.
The pension system’s lawyers are Greg Taylor, Bart Sloan, Mark Sales, David Reynolds and Clifton Hutchinson of Diamond McCarthy.
Dallas County District Judge Emily Tobolowsky presided over the trial. The cause number is DC-17-11306 in Dallas County’s 298th district court.
Taco Bell, Yum! Brands Sued Over Fast Food Order Violence
Taco Bell, parent company Yum! Brands, Taco Bell franchisee North Texas Bells and two unidentified Taco Bell employees were sued July 13 for negligence after a manager poured boiling water on two customers.
According to the lawsuit, plaintiffs Brittany Davis, Kira Davis and her daughter — identified only as C.T. because she is a minor — used the Taco Bell drive-thru at 11829 Abrams Road three times June 17 before going inside to ask the staff in-person to correct their order, which was overcharged and missing food items. After they were inside, an employee locked the door behind them. C.T. and Brittany Davis spent 10 minutes attempting to get the employees to prepare the missing food they had ordered, the lawsuit said, and as the conversation became “combative,” the store manager emerged from the counter with a “scalding bucket of water” and poured it on C.T. and Davis. As the plaintiffs fumbled with the lock of the Taco Bell entrance, the manager poured a second bucket of boiling water on them.
They escaped to their family’s car as “a Taco Bell employee came outside … laughing, clapping and taunting the family — and as family members drove them to the emergency room, Davis suffered at least 10 seizures from the trauma, the lawsuit says. C.T., who had removed her clothing to prevent further burning and was suffering third-degree burns of her own, ran naked into Parkland Hospital to get help for Davis. According to the lawsuit, Davis has also suffered memory loss and Parkland personnel had to cut her clothes off with her skin still attached.
“All of this could have been prevented had Taco Bell placed human decency and customer service over a few dollars that it would have cost to get plaintiffs’ order right,” says the lawsuit, filed by Dallas lawyer Paul Grinke at the McCathern firm. “C.T. and Brittany now bring these claims to seek justice for their injuries and to punish defendants for their life-altering actions.”
After a July 14 hearing, Dallas County District Judge Eric Moyé entered a temporary injunction order that bans the defendants from destroying or deleting any photos or video surveillance captured between June 16 and June 22 and orders the defendants to produce the photos and surveillance to the court by July 22.
Other McCathern lawyers on the case include Carl Evans Jr. and Aaron Dekle. Florida lawyer Ben Crump of Ben Crump Law also represents the plaintiffs.
No lawyer has made an appearance for Yum! Brands, Taco Bell or the two Taco Bell employees, but North Texas Bells General Counsel Haley DeVault was listed on a filing on behalf of the franchisee. DeVault previously practiced at Kane Russell Coleman & Logan and Hunton & Williams before going in-house.
The cause number is DC-22-07815 in Dallas County’s 14th District Court.
Ukrainian Fraudsters Plead Guilty
Two Ukrainian nationals who provided cash-out and money laundering services to cyber actors struck a plea deal with federal prosecutors in the Northern District of Texas, the Department of Justice announced July 12.
Viktor Vorontsov, 40, and Zlata Hanska Muzhuk, 41 pleaded guilty to three counts each: conspiracy to commit money laundering, wire fraud and bank fraud. The pair were extradited from the Czech Republic to Dallas in March 2021, a year after they were indicted. Sentencing has been scheduled for November and both face up to 37 months in federal prison.
The case is being prosecuted by Assistant U.S. Attorney Nicole Dana and was investigated by the FBI’s Dallas field office with assistance from the Czech government and FBI’s Pittsburgh field office.
The defendants’ lawyers are Stephen Green of Dallas and Jeff Daniel Clark of Southlake.
The cause number is 3:20-cr-00090-E and has been assigned to U.S. District Judge Ada Brown.
Energy Transfer, General Partner, Executives and Directors Sued
An Energy Transfer shareholder has filed a derivative lawsuit against the company’s general partner, LE GP, and a number of executives and directors of GE, including Kelcy Warren, John McReynolds and Ray Washburne.
The plaintiff, Gary Elliott, alleges the executives and board members breached their fiduciary duties to Energy Transfer by allowing the company to engage in illegal horizontal drilling activities while constructing the 700-mile Rover Pipeline, which extends from southeastern Ohio to southern Michigan.
The plaintiff’s lawyers are Stuart Cochran in Dallas and Timothy Brown in New York. No lawyers have appeared for LE GP, Energy Transfer or the individual defendants.
The cause number is 3:22-cv-01527-B and has been assigned to U.S. District Judge Jane Boyle.
Jury Orders Southwest, Union to Pay $5.3m to Anti-Abortion Ex-Flight Attendant
A Dallas federal jury found July 14 that Southwest Airlines and a local union violated former Southwest flight attendant Charlene Carter’s rights as a worker to advocate against her union when it fired her after she sent anti-abortion messages to her union’s president.
Carter was fired in March 2017 after sending a series of confrontational emails to TWU Local 556 President Audrey Stone for attending the Women’s March in Washington, D.C., earlier that year, the Dallas Morning News reported. Carter argued that the Railway Labor Act, which governs labor agreements, protected her speech.
Dallas lawyers Michael Correll, Paulo McKeeby and Brian Morris of Reed Smith and Jonathan Clark of Sheppard Mullin represented Southwest at trial. Dallas lawyer Adam Greenfield of Cloutman & Greenfield represented the union. Carter’s legal team included Virginia lawyer Matthew Gilliam of the National Right to Work Legal Defense Foundation, Dallas lawyer David Watkins of Jenkins & Watkins and Rockwall lawyers Bobby Pryor and Matthew Hill of Pryor & Bruce.
U.S. District Judge Brantley Starr presided over the eighty-day trial. The cause number is 3:17-cv-02278-X.
Nike Ghosts Patent Lawsuit Against Adidas
Nike Inc. has defaulted in a patent lawsuit brought last month by competitor Adidas and Austria-based affiliate Runtastic that alleges Nike’s Run Club, Training Club and SNKRS mobile apps infringe on nine of the plaintiffs’ intelligent running shoe patents.
In a July 7 filing, Marshall-based lawyer Melissa Smith of Gilliam Smith said Nike was served with the lawsuit “upon information and belief” and was required to file an answer by July 4. She said Nike had not responded by that date nor asked for a deadline extension.
Smith filed a proposed “clerk’s entry of default” the same day, and it was signed by EDTX Deputy Clerk Nakisha Love July 14.
In addition to Smith, Adidas’ lawyers are Mitchell Stockwell, Andrea Anderson, Christopher Damitio, Edward Mayle, Matias Ferrario and Michael Morlock of Kilpatrick Townsend & Stockton. They are based in Atlanta, Winston-Salem, Seattle and Denver.
No one appeared for Nike.
The cause number is 2:22-cv-00198-JRG and was assigned to District Judge Rodney Gilstrap.
Former Tennis Star-Turned-Law Student Loses Retaliation Case Against Baylor
Former Baylor University student Julia Bonnewitz failed to prove that she was prevented from playing for the college tennis team because she cooperated with a Title IX investigation involving the school’s tennis coach, a federal magistrate judge ruled July 12.
U.S. Magistrate Judge Derek T. Gilliland ruled that the complaint by Bonnewitz, who was a nationally ranked tennis player in high school and who is now a law student at South Texas College of Law in Houston, should be dismissed for two reasons: She doesn’t show that she was denied the opportunity to try out for the Baylor team because of the Title IX probe and because she failed to show that Baylor had a policy or procedure that is prohibited under Title IX.
Judge Gilliland recommended that the plaintiff be allowed to amend her complaint.
Judge Gilliland’s recommendation will now go to U.S. District Judge Alan Albright. Morgan & Morgan partner Phillip N. Sanov of Houston is representing Bonnewitz. Baylor is represented by Dan N. MacLemore at Beard Kultgen Brophy Bostwick & Dickson in Waco.
The cause number is 6:21-cv-00491.
Editor’s Note: Mark Curriden contributed to this report.
DISTRICT OF DELAWARE
Southwestern Energy Wins in Delaware Federal Court
A group of Skadden Arps lawyers led by Houston partner Noelle Reed secured a win for Houston-based Southwestern Energy Co. July 12 when a Delaware federal judge denied attorneys’ fees for Southwestern’s courtroom opponent, shareholder Nathaniel Sommer.
Sommer sued Southwestern last August in wake of the company’s announced plans to purchase Indigo Natural Resources and alleged that the proxy statement that announced the transaction omitted material information. Sommer voluntarily dismissed the lawsuit in September after Southwestern made amended disclosures that mooted the pending claims in the lawsuit.
The plaintiff’s lawyer, Blake Bennett of Delaware firm Cooch and Taylor, requested $165,000 in attorneys’ fees for efforts in obtaining the amended disclosures. But in his July 12 order, Visiting Judge Stephanos Bibas (normally of the U.S. Court of Appeals for the Third Circuit) denied the motion after ruling that the “complaint was not meritorious and [the] resulting disclosures were unhelpful” and immaterial because the information provided in the amended disclosures were already public information and not news to shareholders.
In addition to Reed, the Skadden team representing Southwestern in the case included partners Scott Musoff, Edward Micheletti and Virginia Milstead and associate Mayra Aguilera. The rest of the team is based in New York, Wilmington and Los Angeles.
The cause number is 1:21-cv-01177-LPS.