In this edition of Litigation Roundup, the Dallas Court of Appeals sets the panel and date for oral arguments in the state bar’s disciplinary lawsuit against Ken Paxton, an oilfield services company’s trade secrets suit against its ex-president gets rolling and an East Texas jury hits LG with a $1.68 million patent infringement verdict.
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Northern District of Texas
Judge Kinkeade Tosses Primexx Investors’ $788M Sale Suit
U.S. District Judge Ed Kinkeade on July 14 issued an order dismissing without prejudice a lawsuit brought by minority investors alleging that one of the largest private equity firms in the world, Blackstone Inc., breached a contract and its fiduciary duty when it forced a “quick” and “rushed” sale of the company to Callon Petroleum in August 2021.
Judge Kinkeade had informed the Primexx Energy Opportunity Fund’s minority investors he didn’t believe he had jurisdiction to hear the lawsuit about a month ago. He pointed to two fatal flaws: the lawsuit alleged only state-law claims against Blackstone Holdings and there was no diversity of citizenship among the parties.
He gave the minority investors time to respond by amending their complaint, but in a July 13 letter counsel for those investors told the court that despite further investigation on the jurisdictional issues “plaintiffs have not obtained any new or different information from that alleged in the complaint regarding the citizenship of the parties.”
The plaintiffs had alleged in the lawsuit filed May 4 that an independent third party had valued the company at $1.43 billion in June 2021, about a month before it was sold for $788 million.
Primexx Energy Opportunity Fund is represented by Stephen Shackelford Jr., Terrell W. Oxford, Bryan J.E. Caforio, Lindsey Godfrey Eccles, Marc M. Seltzer and Sarah Hannigan of Susman Godfrey.
Counsel for the defendants never made an appearance in the suit.
The case number is 3:23-cv-00985.
Eastern District of Texas
LG Hit With $1.68M Verdict in Patent Infringement Case
After hearing five days of testimony and deliberating for about two hours, a jury recently determined that South Korean electronics manufacturer LG Electronics and some of its affiliates infringed four patents held by Constellation Designs for technology related to television broadcasting.
“We brought this case to establish our client’s rights and to set a rate for past damages,” Jason Cassady of Caldwell Cassady & Curry said. “We achieved both, plus an additional finding that LG’s infringement is willful.”
The lawsuit was filed on behalf of Maryland-based Constellation in 2021 and accused LG of infringing four patents in its OLED televisions. On July 11, the jury agreed LG had infringed the patents and awarded $1.68 million in damages. That figure represents $6.75 in damages for each infringing television LG sold.
U.S. District Judge Rodney Gilstrap presided over the case.
Constellation Designs is also represented by Brad Caldwell, Austin Curry, Brian Johnston, Warren McCarty, Daniel Pearson, Seth Reich, Adrienne Dellinger, Aisha Haley, James Smith and Alex Waldrop of Caldwell Cassady & Curry and Andrea Fair of Ward, Smith & Hill.
LG Electronics is represented by Michael J. McKeon, Claire Change, Christian Chu, Benjamin Christoff, Bailey Benedict, Ashley Bolt, Ilya Svetlov, Elizabeth Ranks, Joshua Carrigan, Leeron G. Kalay, Meghana Thadani, Robert Schwentker, Ruffin B. Cordell and Thomas Reger II of Fish & Richardson and Melissa Smith of Gillam & Smith.
The case number is 2:21-cv-00448.
Southern District of Texas
Oil Patch Group Trade Secrets Suits Progress
Three former employees of oilfield housing services company Oil Patch Group who were named as defendants in trade secrets and breach of contract lawsuits filed in federal court last month have hired counsel, and two have filed answers denying any wrongdoing.
Derek Elzner, Dwayne Beran and their startup that Oil Patch alleges is a direct competitor, Titan Accommodations, were sued in Houston June 20. The same day in Victoria, Oil Patch filed a separate suit against a third former employee, Dante Mares. Mares has until July 27 to file an answer.
Oil Patch Group alleges Elzner, its former president, and Beran, a former director and Elzner’s “lieutenant,” stole Oil Patch Group’s trade secrets to launch a startup competitor, Titan.
“This campaign, though long and devious, is quite simple,” Oil Patch alleges. “In 2017, right before OPG was acquired by a new parent company, defendant Elzner … used his position to attempt to ‘terminate’ his own employment agreement with OPG as well as the employment agreements of certain other employees, including defendant Beran,”
Those employment agreements contained noncompete and nonsolicitation agreements, Oil Patch alleges, and the only reason for Elzner to terminate the agreements was that he “tangible plan to compete against OPG — something that has now come to fruition.”
Elzner, Beran and seven other Oil Patch employees resigned within days of each other earlier this year, according to the lawsuit, and all joined Titan. Mares is accused of directly helping the other defendants steal Oil Patch’s trade secrets.
“Within days of the coordinated departure, two of OPG’s biggest customers — accounting for millions in annual revenue for OPG — informed OPG they were moving business from OPG to Titan,” Oil Patch alleges. “In the wake of that coordinated departure, Defendant also deleted large amounts of emails from her OPG account, in the days leading up to and in particular on the date of her resignation.”
The Houston case has been assigned to U.S. District Judge Charles Eskridge, and the Victoria case has been assigned to U.S. District Judge Nelva Gonzales Ramos.
Beran and Mares are represented by Bryan S. Dumesnil and Joshua Windsor of Bracewell. Elzner is represented by Gaines West and John Rudinger Jr. of West, Webb, Allbritton & Gentry.
Titan Accommodations is represented by Matthew Veech, Alexandra Wolf and Andrew Pearce of BoyarMiller.
The case numbers are 4:23-cv-2268 for the Houston suit and 6:23-cv-0029 for the Victoria suit.
Western District of Texas
Conservative Think Tank Reps Homeowners Who Want KKK Decoration Gone
Two San Marcos homeowners are being represented by attorneys with the Texas Public Policy Foundation in their challenge to a city ordinance that is prohibiting them from removing from the front of their home a metal balcony with the initial of a previous homeowner who had historical ties to the Ku Klux Klan.
Kristy Kay Money and Rolf Jacob Straubhaar filed suit against San Marcos and its director of planning and development services June 23 alleging the ordinance is unconstitutional.
Because their home is in a historic district, the ordinance requires they seek approval prior to removing the decorative balcony — emblazoned with the letter “Z” for Frank Zimmerman who owned a local theater and hosted a Ku Klux Klan day in the 1920s — or face criminal penalties and fines.
They sought and were denied approval in May. In the lawsuit the homeowners are alleging that the government’s mandate that the balcony stay in place is an unconstitutional taking, or occupation, of the homeowners’ property.
The homeowners argue the ordinance is unconstitutional in another way as well.
“Under the Texas Constitution restrictions on private property rights must be based on nuisance or incompatibility,” the suit alleges. “Texas cities lack authority to regulate private property for aesthetic purposes.”
The lawsuit has been assigned to U.S. District Judge Robert Pitman.
The homeowners are represented by Christian G. Townsend, Robert E. Henneke and Chance D. Weldon of the Texas Public Policy Foundation.
Counsel for the City of San Marcos had not filed an appearance as of Monday.
The case number is 1:23-cv-00718.
Los Angeles County Superior Court
Houston-Based Union Carbide Liable In $107M Mesothelioma Case
A trial team from the Dallas-based law firm of Dean Omar Branham Shirley recently secured a $107 million jury verdict in Los Angeles on behalf of the family of a janitor who died at age 45 from pleural mesothelioma, which is caused by exposure to asbestos.
The unanimous verdict, returned July 11, found Union Carbide, Elementis Chemicals and E.F. Brady Co. negligent in the death of Joel Hernandezcueva and found Union Carbide had acted with malice. Hernandezcueva was a father of four living in Long Beach, California, prior to his death in 2014.
The jury awarded $32 million in compensatory damages and $75 million in punitive damages.
The family had alleged that during his employment at the Park Place complex in Irvine, California, he was required to clean up dust during renovations and was exposed to asbestos fibers at that time. This lawsuit was originally filed in 2011 and tried in 2013 but ended with a verdict in favor of the companies.
That was reversed on appeal, paving the way for this trial.
Judge Cary H. Nishimoto presided over the trial.
The Hernandezcueva family is represented by Benjamin Adams, Rachel Gross and Jonathan George of Dean Omar Branham Shirley and Simona A. Farrise of Farrise Law Firm.
Union Carbide is represented by Stephen M. Nichols, Mary T. McKelvey and David K. Schultz of Polsinelli. Elementis Chemicals is represented by Heather L. Weakley of Dehay & Elliston. E.F. Brady Company is represented by Jerry C. Popovich of Hawkins Parnell & Young.
The case number is BC475956.
Fifth Court of Appeals
Panel, Date Set for Oral Arguments in Paxton Discipline Case
Justices Ken Molberg, Bill Pedersen III and Erin A. Nowell will hear oral arguments Sept. 13 in the state bar’s Commission for Lawyer Discipline’s lawsuit against Ken Paxton, according to an order the court issued Friday.
In the lawsuit, filed in Collin County in May 2022, the Commission alleges Paxton violated the rules of professional conduct that every attorney in Texas must abide by when he made misrepresentations to the U.S. Supreme Court in a lawsuit he brought attempting to overturn the results of the 2020 election.
The panel of justices will decide whether Collin County District Judge Andrea K. Bouressa was correct in denying Paxton’s bid to have the suit dismissed. On appeal, Paxton has called the Commission’s actions “unprecedented” and argues it doesn’t have jurisdiction to bring the suit, citing both sovereign immunity and the separation of powers.
Paxton is represented by Christopher Hilton, William F. Cole and Judd E. Stone II of the office of the attorney general.
The Commission is represented by its own Royce LeMoine, Michael G. Graham and Amanda Kates.
The case number is 05-23-00128-CV.
U.S. Court of Appeals for the Fifth Circuit
Texas Supreme Court Sent Another Certified Question
More homework was doled out to the Texas Supreme Court by the U.S. Court of Appeals for the Fifth Circuit, in a July 12 opinion issued days after two other certified questions were sent to the state’s high court.
This time, the Fifth Circuit wants the Texas Supreme Court to answer a question about state insurance law related to attorney fees in a dispute between Mario Rodriguez and Safeco Insurance Company of Indiana that originated in the Northern District of Texas.
The Fifth Circuit is seeking guidance on how a 2017 amendment to the insurance code impacts a plaintiff’s ability to recover damages, including attorney fees, under the Texas Prompt Payment of Claims Act.
The question is:
- In an action under Chapter 542A of the Texas Prompt Payment of Claims Act, does an insurer’s payment of the full appraisal award plus any possible statutory interest preclude recovery of attorney’s fees?
After a dispute arose over the cost to repair tornado damage caused to Rodriguez home, Rodriguez filed a lawsuit. Safeco then moved for summary judgment, arguing that because it ended up paying the appraisal award and interest, Rodriguez wasn’t permitted to seek attorney fees.
U.S. District Judge Sam R. Cummings granted the insurer summary judgment in October 2022, this appeal followed the next month.
On July 7, the Fifth Circuit sent two questions to the Texas Supreme Court seeking guidance on how to interpret Texas Civil Practice and Remedies Code section 16.038 in a loan and foreclosure dispute between Wells Fargo and Linda and Thomas Moore Jr.
Rodriguez is represented by Melissa Wray and James Willis of Daly & Black.
Safeco is represented by Mark D. Tillman and Michael Diksa of Tillman Batchelor.
The case number is 22-11070.
Fifth Circ. Won’t Rehear ‘State-Created Danger’ Student Sex Assault Case
In a 7-9 split, the Fifth Circuit recently voted against rehearing en banc a case that asked the court whether a disabled public-school student — who was twice sexually assaulted on campus by a student with known violent tendencies — should be allowed to proceed with her claims against Fort Bend school officials.
Judges Stephen A. Higginson, Dana M. Douglas, Carl E. Stewart, Jennifer Walker Elrod, Catharina Haynes, James E. Graves and Don R. Willett voted in favor of rehearing en banc.
Chief Judge Priscilla Richman and judges Edith H. Jones, Jerry E. Smith, Leslie H. Southwick, James C. Ho, Stuart Kyle Duncan, Kurt D. Engelhardt, Andrew S. Oldham and Cory T. Wilson voted against rehearing en banc.
The student will still be able to proceed with her Title IX claim against the school district, but the court’s July 14 ruling leaves in place a March 16 panel opinion that now-retired U.S. District Judge Vanessa D. Gilmore should have tossed the student’s 42 U.S.C. section 1983 claim.
In March, Judge Jacques L. Wiener Jr. wrote an impassioned concurrence that, while he agreed with the majority that the Fifth Circuit has yet to adopt the “state-created danger” exception under that law that would waive immunity for suits against the government, he believed it was “well past time for this circuit to be dragged screaming into the 21st century by joining all of the other  circuits that have now recognized the state-created danger cause of action.”
“I acknowledge that we can only do so by taking this case en banc,” he wrote, acknowledging that as a senior judge he could not call for an en banc poll or vote in one should another judge call for it. “The extreme and uncontested facts of this case present an excellent opportunity for us to do so.”
On the original panel with Judge Weiner were Judge Willett and Chief Judge Richman.
The plaintiff is represented by Steven Sanfelippo and Michael Cunningham of Cunningham Swaim and Joseph Alexander Jr. of Alexander Firm.
The school officials are represented by Clay Grover, Jonathan Brush and Alexa Gould of Rogers Morris & Grover.
The case number is 21-20553.