In this edition of Litigation Roundup, Haynes Boone helps Fox News escape a defamation lawsuit stemming from the Allen Outlet Mall shooting, a Metroplex resident is sued by the U.S. Securities and Exchange Commission for fraud over his allegedly bogus $200 million offer to buy Richard Branson’s Virgin Orbit and a former San Antonio-area city councilwoman is vindicated by the U.S. Supreme Court.
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Dallas County District Court
Woman Sues Dallas Club in Sexual Assault Case
Dallas firm Aldous Walker is representing an 18-year-old college student in a lawsuit against Club Vivo, a nightclub in the city’s downtown owned by personal injury lawyer and restaurateur Kevin Kelley.
The lawsuit, filed June 18 and assigned to Dallas County Court at Law No. 1 Judge D’Metria Benson, alleges the student was raped in a Club Vivo bathroom on Dec. 3, 2023, after employees served her alcohol despite an “X” stamp on her hand indicated she was under the state’s legal age.
The woman, using a Jane Doe pseudonym, said a male patron forced her across the dance floor and into an upstairs bathroom, passing security personnel who did not intervene, according to the lawsuit.
The woman sent a pleading text message to a friend for help, according to the lawsuit. The friend alerted security, who did nothing, the lawsuit states.
The lawsuit points to negative online reviews of the club that accuse staff of illegally serving alcohol to people under the legal age and admitting women as young as 18 while excluding men under 21 to argue the club is reckless and negligent.
“Club VIVO creates the perfect breeding ground for older, predatory men to exploit and take advantage of the underaged girls who are left intoxicated and vulnerable by Club VIVO employees who wrongly serve them alcohol,” the lawsuit states.
Kelley did not respond to The Lawbook’s request for comment.
The club did not have lawyers listed in court records as of Monday. According to the plaintiff’s complaint, the club’s registered agent is Jason E. Payne of Payne Law Firm in Houston. Payne also did not respond to The Lawbook’s request for comment.
The case number is CC-24-04482-A.
Travis County District Court
Fox Gets Out of Allen Mall Shooting Defamation Suit
A man who filed a defamation suit against many media outlets alleging he was wrongly identified as the Allen Outlet Mall shooter recently decided to drop his claims against Fox News Network.
Mauricio Garcia, who shares the same name as the actual shooter, filed suit March 26 after media outlets published his photograph in connection with the shooting.
In a motion to dismiss, Fox News argued it never published the image and accused Garcia of bringing suit against it based on unverified TikTok posts. Fox had moved to dismiss under the Texas Citizens Participation Act, but Garcia voluntarily dropped the claims against Fox a day before a hearing on the motion was to take place.
Garcia agreed to compensate Fox for costs incurred defending the suit in exchange for Fox agreeing not to pursue sanctions.
The case has been assigned to Travis County District Judge Laurie Eiserloh.
Garcia is represented by Mark Bankston of Farrar & Ball. Garcia still has claims pending against media companies Newsmax Media, Hollywood Unlocked, TelevisaUnivision and Today News Africa.
Fox is represented by Laura Prather, Catherine Robb, Jason Whitney and Reid Pillifant of Haynes Boone.
The case number is D-1-GN-001946.
Northern District of Texas
SEC Says DFW Resident Lied About $200M Virgin Orbit Investment
A man who allegedly sent a doctored screenshot of his bank account to the CEO of Virgin Orbit in an attempt to bolster the credibility of his $200 million offer to buy the company that was teetering on the brink of bankruptcy has been charged with fraud by the U.S. Securities and Exchange Commission.
Matthew Brown and Matthew Brown Companies are accused of publicly touting the bogus offer that resulted in a 33 percent rise in the value of Virgin Orbit stock in the days after the March 2023 offer. The government alleges Brown had a bank account balance of less than $1 when he sent the doctored screenshot purporting to show his balance was more than $182 million.
Brown signed a nondisclosure agreement governing negotiations with Virgin Orbit but then appeared on CNBC to publicize his offer and held himself out as a seasoned investor in “over 13 space companies.”
The SEC alleges he has no past or present holdings in the space industry.
According to the complaint, Brown refused to respond to Virgin Orbit’s due diligence inquiries and the company filed for bankruptcy on April 4, 2023.
“Brown knew, or was severely reckless in not knowing, that his misstatements and omissions during the CNBC interview about his background and purported offer were false, would create the false and misleading impression that defendants’ $200 million offer was legitimate, and could impact Virgin Orbit’s stock price,” the SEC alleges.
The case, filed June 17, has been assigned to U.S. District Judge Reed O’Connor.
The SEC is represented by Patrick Disbennett of the SEC’s trial unit in Fort Worth.
Counsel for Brown and his companies had not filed an appearance as of Monday.
The case number is 4:24-cv-00558.
Mootness Ends Exxon’s Suit Against Activist Investor Arjuna
U.S. District Judge Mark T. Pittman entered final judgment June 18, ending a lawsuit Exxon Mobil Corporation filed in January against Arjuna Capital and Follow This.
On May 22, Judge Pittman had granted a motion to dismiss lodged by Follow This, and last week’s order dismissed what remained of the case with prejudice. Exxon had filed suit in a bid to prevent activist shareholders from putting their climate proposal to a shareholder vote in May.
The challenged proposal called for an acceleration of plans to reduce greenhouse gas emissions. Exxon alleged the proposal’s goal is to “shrink the very company in which they are investing by constraining and micromanaging ExxonMobil’s ordinary business operations.”
After this suit was filed, Arjuna “unconditionally and irrevocably” promised to stop submitting those types of proposals, which made Exxon’s claim in this lawsuit moot, Judge Pittman wrote.
“As Exxon and amicus note, the trend of shareholder activism in this country isn’t going anywhere. The SEC is behind the ball on this issue,” he wrote. “But the court cannot advise Exxon of its rights without a live case or controversy to trigger jurisdiction. As Arjuna has eliminated any case or controversy between the Parties here, Exxon’s claim is moot and must be dismissed without prejudice.”
Exxon is represented by Mark W. Rasmussen, Jonathan D. Guynn, Noel J. Francisco, Brett A. Shumate and Megan Lacy Owen of Jones Day and Gregg J. Costa and David Woodcock of Gibson, Dunn & Crutcher.
Arjuna Capital is represented by Veronica Renzi and Matthew Miller of Foley Hoag. Counsel for Follow This had not filed an appearance as of Monday.
The case number is 4:24-cv-00069.
Texas Supreme Court
Oncor’s Multimillion-Dollar Appraisal Dispute Lives On
A unanimous Texas Supreme Court on Friday determined that it is within the purview of lower courts to hear a dispute where Oncor is alleging the value of its electric transmission lines in two counties is incorrect, despite the existence of a settlement agreement.
The ruling returns to Mills and Wilbarger counties a tax appraisal dispute that has been ongoing since 2019 when Oncor’s predecessor, Sharyland, protested the value of its transmission lines but entered into agreements with appraisers in those counties that settled the disputes.
When Oncor acquired the lines, it argued the value listed in Mills and Wilbarger counties was incorrect based on a “clerical error” related to the number of miles of lines traversing each county.
Oncor argued courts had jurisdiction to hear the dispute based on the alleged “mutual mistake” in the settlement.
Justice Brett Busby wrote the opinion of the court, explaining that the effect of the Section 1.111(e) settlement agreement here does not deprive the courts of jurisdiction to hear Oncor’s claim.
But the court’s ruling left much for the lower courts to decide.
“Because proof that a statutory agreement is valid and applicable would not deprive a trial court of subject-matter jurisdiction, we do not reach the merits of the parties’ disputes about whether Oncor has identified errors eligible for correction under Sections 25.25(c) or (d) of the Tax Code, whether any such errors fall within the scope of the parties’ Section 1.111(e) settlement agreements, and whether the doctrine of mutual mistake is an available defense to such agreements, applies here, and affords the remedy Oncor seeks,” Justice Busby wrote.
Mills and Wilbarger counties are represented by James Robert Evans of Swinney Evans & James.
Oncor is represented by Marnie McCormick of Duggins Wren Mann & Romero.
The case numbers are 23-0138 and 23-0145.
Justices Pass on Ex-Husband’s Subpoena Fight in Suit Over Former Wife’s Alleged Abortion
On Friday, the state’s high court denied a request from a man who is suing his ex-wife’s friends for allegedly assisting her in getting an abortion, to reinstate a trial court’s order that compelled the woman to comply with his subpoena request.
The unanimous decision denying Marcus Silva’s request to force Brittni Silva, who is not a party to the lawsuit, to hand over certain communications with the defendants did generate a concurrence authored by Justice Jimmy Blacklock and joined by Justice John Devine.
Justice Blacklock wrote that the “basic rules of civil discovery have not yet been followed in this case, in either the trial court or the court of appeals,” and that he disagrees with the court’s decision “not to dispose of this mandamus petition in a way that vacates the court of appeals’ opinion.”
“However, because the outcome in the trial court may not have been correct either — and because Mr. Silva’s atrocious treatment of his ex-wife during this litigation makes him a particularly unsuitable beneficiary of this court’s discretionary exercise of mandamus jurisdiction — I concur in the court’s decision to leave in place the court of appeals’ vacatur of the trial court’s broad discovery order,” he wrote.
Brittni Silva, who has not conceded that she ever was pregnant, declined to comply with the subpoena request seeking all communications she had with the defendants concerning abortion or abortion-inducing drugs, arguing it violated her right to avoid self-incrimination under the Fifth Amendment.
Marcus Silva had argued in the lower court that his ex-wife had to “make a document-by-document or item-by-item showing that the Fifth Amendment’s self-incrimination privilege applies” and that she was required to give the trial judge “an opportunity to examine disputed documents and items in camera, in order to successfully claim the privilege.”
The Fourteenth Court of Appeals in Houston had issued a per curiam opinion April 9, siding with Brittni Silva, a third-party in the underlying lawsuit. Marcus Silva is suing Aracely Garcia, Jackie Noyola and Amy Carpenter.
Marcus Silva is represented by solo practitioner Briscoe Cain, Jonathan F. Mitchell of Mitchell Law and John C. Sullivan and Jace Yarbrough of S|L Law.
Brittni Silva is represented by Alexander M. Wolf, Samantha Jarvis and Drew M. Padley of Steptoe.
Jackie Noyola and Amy Carpenter are represented by Rusty Hardin, Daniel Dutko, John MacVane, Leah Graham, Aisha Dennis, and Kendall Speer of Rusty Hardin & Associates and by Elizabeth Myers and Jennifer Ecklund of Thompson & Coburn.
Aracely Garcia is represented by Katherine Treistman, Amanda S. Thomson and Leah Schultz of Arnold & Porter Kaye Scholer and Marc Hearron of the Center for Reproductive Rights.
The case number in the Texas Supreme Court is 24-0284.
U.S. Supreme Court
Water Agreement Between Texas and New Mexico Halted
In a 5-4 ruling issued June 21, the U.S. Supreme Court determined that an agreement reached between Texas and New Mexico over water rights to the Rio Grande River cannot be approved in its current form because a federal agency with a stake in the matter was cut out of the negotiations.
The United States Bureau of Reclamation had opposed the proposed consent decree reached between the states, arguing that it wrongly disposed of the agency’s claim that New Mexico was violating the terms of the 1938 Rio Grande Compact with its groundwater pumping operations.
The divided court held that the settlement reached between Texas and New Mexico — which have been litigating over the water rights since 2013 — wrongly disposes of the federal government’s 2018 claim.
“Through the consent decree, the states would settle all parties’ compact claims and, in the process, cut off the United States’ requested relief as to New Mexican groundwater pumping,” Justice Ketanji Brown Jackson wrote for the majority. “Because our precedent does not permit that result, the States’ motion to enter the consent decree is denied.”
Justice Neil Gorsuch authored a dissent arguing the majority’s decision “defies 100 years of this court’s water law jurisprudence.”
“And it represents a serious assault on the power of states to govern, as they always have, the water rights of users in their jurisdictions,” he wrote.
Justice Brown Jackson was joined by Chief Justice John Roberts and Justices Sonia Sotomayor, Elena Kagan and Brett Kavanaugh. Justice Gorsuch was joined by Justices Clarence Thomas, Samuel Alito and Amy Coney Barrett.
Assistant Solicitor General Frederick Liu argued on behalf of the United States before the court on March 20. Lanora C. Pettit of the state’s attorney general’s office argued for Texas, and Jeffrey J. Wechsler of Montgomery & Andrews in Santa Fe, New Mexico, argued for New Mexico.
The case number is 220141.
Fifth Circuit Got It Wrong in Political Arrest Case
When the U.S. Court of Appeals for the Fifth Circuit ended a city councilwoman’s suit alleging she was arrested for criticizing the city manager, it did so based on an “overly cramped view” of precedent that applies the case, the U.S. Supreme Court determined on Thursday.
“The existence of probable cause does not defeat a plaintiff ’s claim if he produces ‘objective evidence that he was arrested when otherwise similarly situated individuals not engaged in the same sort of protected speech had not been,’” the high court wrote in its per curiam opinion. “We granted certiorari in this case to consider whether the Fifth Circuit properly applied these principles. It did not.”
The ruling revives the lawsuit brought by former city councilwoman Sylvia Gonzalez against the police chief and mayor of Castle Hills — an enclave of San Antonio with a population of about 5,000 — alleging she was arrested in retaliation for circulating a petition to remove the city manager.
In July 2022, a three-judge panel of the Fifth Circuit issued a 2-1 ruling ending Gonzalez’ lawsuit after finding she failed to establish there had been a violation of her constitutional rights. In February 2023, that same court denied a request for rehearing en banc.
According to the opinion, Gonzalez was arrested following a contentious council meeting where the petition was introduced after the mayor, Edward Trevino, reported to the chief of police, John Siemens, that he wanted to have Gonzalez arrested for allegedly taking the petition without consent.
After the meeting, Trevino asked Gonzalez for the petition, and she allegedly found it in her binder of other materials and handed it to Trevino who said that she “probably picked it up by mistake.”
A Castle Hills Police sergeant tasked by Siemens with investigating the alleged crime found no wrongdoing, so a “special investigator,” local lawyer Alex Wright, was directed to take over the investigation.
Wright found Gonzalez violated Texas Penal Code Section 37.10(a)(3) and (c)(1) by intentionally concealing, removing or otherwise impairing the “verity, legibility, or availability of a governmental record.”
Wright went about securing an arrest warrant for Gonzalez in an unusual way that bypassed any involvement from the district attorney’s office and ensured Gonzalez, then 72-years-old, would spend the night in jail rather than getting to post bond immediately.
In a lengthy dissent from the July 2022 panel ruling, Judge Andrew Oldham referred to the city officials investigating Gonzalez as “conspirators” and wrote that Gonzalez had “alleged numerous facts to show that the conspirators arrested her for petitioning the government.”
Justice Clarence Thomas was the lone dissenter in the ruling, arguing that Gonzalez’ failure to prove “the absence of probable cause” should have doomed her lawsuit.
“I would adhere to the only rule grounded in history: Probable cause defeats a retaliatory-arrest claim,” he wrote. “I respectfully dissent.”
Gonzalez is represented by Anya Bidwell, William Aronin, Patrick Jaicomo and Marie Miller of the Institute for Justice.
The city officials are represented by Lisa S. Blatt of Williams & Connolly and Scott Tschirhart of Denton Navarro Rodriguez Bernal Santee & Zech.
The case number is 22-1025.
Editor’s note: Krista Torralva contributed to this report.