In this edition of Litigation Roundup, Ken Paxton returns to office and sues Yelp over disclaimers the company affixed to listings for “pregnancy resource centers,” the SEC accuses an Austin oil and gas promotor of defrauding investors out of $5 million and Dallas law firm Caldwell Cassady & Curry is tapped to bring a trade secrets lawsuit for a financial technology client in Chicago.
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Harris County District Court
Houston Jury Returns Purported First Bad-Faith Judgment Under 2013 TUTSA
A final judgment was recently entered in a trade secrets case that defense counsel has said is the first known judgment based on a jury’s bad-faith finding under the Texas Uniform Trade Secret Act.
The judgment, signed Sept. 21 by Harris County District Judge Beau A. Miller, awarded San Antonio-based cybersecurity and telecommunications company Advanced Personal Computing, which does business as Liquid Networx, nearly $765,000 in attorney fees and $325,000 for conditional appellate attorney fees and interest.
Liquid Networx was sued by Teligistics Inc. in February 2019. Teligistics was seeking $23 million in damages for alleged misappropriation of a request-for-proposal document that it alleged was a trade secret.
Teligistics told the court it “exclusively developed” the form to distribute to customers, expending significant “time, effort and money” to do so. The form, Teligistics alleged, contained information “created solely by plaintiff, to allow potential bidders to submit responses for telecom-related products and services.”
A jury determined Teligistics didn’t own the trade secret and that the lawsuit was brought in bad faith.
The jury trial ended in June with a unanimous verdict in favor of Liquid Networx.
Hunter Barrow of Andrew Myers, who represents Liquid Networx, issued a statement praising the outcome.
“We are extremely pleased with the verdict and the judgment in favor of Liquid Networx and thankful for their vindication of our client,” he said.
Teligistics is represented by Misty A. Hataway-Coné and Patricia D. McDade of Coné PLLC.
Liquid Networx is also represented by Andrew Bender of Andrew Myers and San Antonio solo practitioner Brian Steward.
The case number is 2019-15000.
Bastrop County District Court
Back in the Saddle, AG Paxton Sues Yelp
Attorney General Ken Paxton issued his first lawsuit-related press release Thursday since being reinstated to the office last week in the wake of his acquittal on 16 articles of impeachment.
Texas filed suit against the crowd-sourced review website Yelp for allegedly violating Texas’ Deceptive Trade Practice Act “by appending inaccurate and misleading language to listings on pregnancy resource centers appearing in the search results on Yelp’s app and website.”
The lawsuit comes in the wake of comments made by Yelp’s CEO after the U.S. Supreme Court overturned Roe v. Wade in support of those fighting “the legal battle against abortion bans.” The basis of the lawsuit is Yelp’s disclaimer on listings for “pregnancy resource centers” explaining to site visitors that the centers “typically provide limited medical services and may not have licensed medical professionals onsite.”
Texas calls the disclaimer misleading.
Texas is represented by Scott Froman and Christin Cobe Vasquez of the OAG’s Consumer Protection Division.
Counsel information for Yelp and a case number were not immediately available.
Northern District of Texas
SEC Goes After Texas O&G Promoter for $5M Fraud
Stephen L. Bailey, 61, of Austin, and two of his companies — Austin-based Sapphire Exploration and Frisco-based Harris Exploration — have been sued by the U.S. Securities and Exchange Commission for allegedly orchestrating fraudulent oil and gas offerings that raised $7.8 million from 51 duped investors.
The government alleges $5 million of those funds, which were raised between November 2017 and May 2023, were misused by Bailey. Bailey had told investors the funds would be used for specific oil and gas investments and acquisitions but instead used $4.1 million for personal expenses and used $900,000 for “unauthorized purposes,” including $670,000 for “Ponzi-like payments to other investors.”
Other misrepresentations Bailey allegedly made to investors include inflating the management experience of Sapphire’s leadership team and telling investors that Harris Exploration acquired an oil and gas company in Oklahoma.
The SEC is alleging Bailey violated antifraud provisions of the Securities Act of 1933 and seeks permanent injunctions and disgorgement from Bailey and his companies, as well as civil penalties, an officer-and-director bar and a penny-stock bar against Bailey.
The case, filed Sept. 25, has been assigned to U.S. District Judge Sam A. Lindsay.
The SEC is represented by its own Matthew J. Gulde in Fort Worth.
Bailey, Sapphire and Harris have not yet retained counsel.
The case number is 3:23-cv-2130.
Northern District of Illinois
Caldwell Cassady & Curry Tapped by Fintech Co. To Bring Trade Secret Suit
London-based financial technology company RVassets Ltd. has hired Dallas law firm Caldwell Cassady & Curry to bring a trade secret misappropriation lawsuit against Marex Capital Markets Inc. stemming from its alleged surreptitious creation of a competing software platform.
RVassets alleges in the lawsuit filed Sept. 27 that two Marex employees took advantage of access they had to RVassets’ cloud-based platform for algorithmic pricing and execution of listed options to create a competing software platform.
The suit includes claims for tortious interference, fraud, fraudulent concealment and unjust enrichment and seeks compensatory and punitive damages and attorney fees. RVassets alleges that soon after it was created in 2014, it developed a proprietary software platform used to price and execute listed options, such as U.S. Treasurys options traded on the Chicago Mercantile Exchange.
RVassets licensed its software to other companies, including Marex’s predecessor ED&F Man Capital Markets, and the agreement prohibited unauthorized use or reverse engineering of the tool.
But in 2020, before Marex acquired the company, ED&F launched its competing software platform, OptionsLive.
The case has been assigned to U.S. District Judge Sara L. Ellis.
“We take trade secret protection seriously and are fully committed to pursuing all available legal remedies to ensure that Marex is held accountable for its textbook misappropriation,” RVassets’ attorney, Jason Cassady said in a statement. “Our objective is clear: to protect our client’s valuable intellectual property. We look forward to presenting our case in court.”
RVassets is also represented by Brad Caldwell, Austin Curry, Brian Johnston, Seth Reich and Bailey Blaies of Caldwell Cassady & Curry.
Marex has not yet retained counsel.
The case number is 1:23-cv-14192.
Texas Supreme Court
OAG Whistleblowers Want Abatement Lifted
Four former top aides to Attorney General Ken Paxton who are bringing whistleblower claims against their old boss recently asked the Texas Supreme Court to lift an abatement in the case.
James Blake Brickman, J. Mark Penley, David Maxwell and Ryan M. Vassar had originally filed a motion to lift the abatement in March and filed a supplement in support of that request Sept. 25. The parties had agreed to abate the case in February while they worked to finalize the terms of a settlement agreement.
Under the agreement, the whistleblowers — who allege they were fired in retaliation for reporting to the FBI their belief that Paxton had abused the power of his office to benefit a campaign donor — were set to get a $3 million payout and an apology from Paxton for calling them “rogue employees” after their departure from his office.
State lawmakers are required to approve the settlement but have yet to do so. It has been widely reported that Paxton’s request for approval of that settlement prompted the Texas House investigation that led to his impeachment.
“The Legislature has adjourned without funding approval, and, for reasons unrelated to the merits of respondents’ case, some key members have expressed hostility toward funding approval,” the whistleblowers told the court in their latest filing.
“After seven months and after the positions taken at the impeachment trial, there is no reason to believe a final settlement agreement is achievable at this point,” the supplement argues. “OAG has never cited, and respondents have been unable to find, any precedent for a perpetual abatement premised on mere hope or speculation that settlement negotiations might someday succeed. The court should not impose such an unprecedented abatement here, especially considering that the parties have made no progress whatsoever over the last seven months.”
Paxton is represented by William S. Helfand and Sean O’Neal Braun of Lewis Brisbois Bisgaard & Smith and Judd E. Stone II, Lanora C. Pettit and William F. Cole of the Texas attorney general’s office.
The whistleblowers are represented by Thomas A. Nesbitt and William T. Palmer of DeShazo & Nesbitt, T.J. Turner of Cain & Skarnulis, Don Tittle and Roger Topham of Law Offices of Don Tittle and Joseph R. Knight of Ewell Brown Blanke & Knight.
The case number is 21-1027.