In this edition of Litigation Roundup, a jury sides with a Baylor graduate in a lawsuit over the alleged mishandling of her sexual assault complaints, a woman sexually assaulted by her masseuse has a $1.8 million punitive award wiped out on appeal, and a judge in Texas puts a nationwide halt to a new Consumer Financial Protection Bureau rule that would require lenders collect certain data from small business borrowers.
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Southern District of Texas
Federal Judge in Texas Halts CFPB Small Business Lending Rule
Chief U.S. District Judge Randy Crane has entered a nationwide preliminary injunction that will prevent the Consumer Financial Protection Bureau’s rule imposing new small business lending requirements on financial institutions from taking effect, pending review by the U.S. Supreme Court in a related case.
The ruling issued Oct. 26 broadens an injunction Judge Crane entered in July that had previously only applied to Texas Bankers Association, Rio Bank in McAllen and American Bankers Association. The broadened injunction was requested by intervenors Farm Credit Council, Texas Farm Credit and Capital Farm Credit.
The CFPB rule being challenged here requires lenders that make at least 100 small business loans a year to collect data on the race and gender of borrowers.
The rule will remain enjoined until the U.S. Supreme Court rules on the constitutionality of the CFPB’s funding mechanism, an issue which is before it in Community Financial Services Association of America v. CFPB.
CFPB is represented by its own Kevin E. Friedl and Karen S. Bloom.
The intervenors are represented by Daniel G. Gurwitz of Atlas, Hall & Rodriguez and Misha Tseytlin and Joseph J. Reilly of Troutman Pepper Hamilton Sanders.
The case number is 7:23-cv-00144.
Western District of Texas
Paxton Gets TRO Against Feds Over ‘Border Barrier Destruction’
Chief U.S. District Judge Alia Moses on Monday granted a request from Texas for a temporary restraining order that prohibits the federal government from “damaging, destroying or otherwise interfering” with the state’s use of razor wire fencing along the southern border with Mexico.
“The only ‘harm’ before this court at the moment is the cost of the destruction of the plaintiff’s property, which is the wire barrier,” Judge Moses wrote in finding Texas had shown it was being irreparably harmed by the federal government’s actions. “The injuries alleged by the plaintiff are irreparable because they undermine the plaintiff’s control over its property and impose costs, which sovereign immunity precludes the plaintiff from ever recovering.”
The temporary restraining order remains in effect until Nov. 13, according to the order. A preliminary injunction hearing before Judge Moses has been set for Nov. 7.
Texas filed suit Oct. 24 against the Department of Homeland Security, alleging the destruction of the razor wire barrier — which Texas placed along the border with the consent of private property owners — has contributed to an “unprecedented influx of illegal migration.”
This lawsuit, Texas told Judge Moses in pleading for the TRO, has not deterred the federal government’s actions.
“Instead, just two days after Texas notified them of this lawsuit, federal agents escalated matters, trading bolt cutters for an industrial-strength telehandler forklift to dismantle Texas’s border fence,” Texas alleged. “Federal agents used hydraulic-powered pallet forks to rip Texas’s fence — concertina wire, fencing posts, clamps, and all — out of the ground, holding it suspended in the air in order to wave more than 300 migrants illegally into Texas.”
Texas is represented by special litigation division chief Ryan D. Walters and special counsel Susanna Dokupil, Munera Al-Fuhaid, Amy S. Hilton and Heather L. Dyer of the office of the attorney general.
The federal government is represented by Mary F. Kruger and Lacy L. McAndrew of the Department of Justice.
The case number is 2:23-cv-00055.
Baylor Alum Prevails Against University in Sexual Assault Case
Baylor University “maintained a policy of deliberate indifference” to reports of sexual harassment and sexual assault, according to a jury that recently awarded a former student $270,000 in damages.
Dolores Lozano, who since graduating from Baylor has been elected to serve as a justice of the peace in Harris County, had filed suit in 2016 alleging the university had mishandled her 2014 complaints that her then-boyfriend, a member of the Baylor Bears football team, assaulted her.
Trial began before U.S. District Judge Robert Pitman Oct. 16, and the jury returned its verdict in Lozano’s favor Oct. 24.
Lozano is represented by Zeke Fortenberry of Fortenberry Firm and Sheila P. Haddock, Alexander S. Zalkin and Irwin M. Zalkin of The Zalkin Law Firm.
Baylor is represented by Julie A. Springer and Sara E. Janes of Weisbart Springer Hayes and Lisa Brown, James E. Byrom and Holly McIntush of Thompson & Horton.
The case number is 6:16-cv-00403.
Eastern District of Texas
Jury Awards $45M In Doorbell Patent Trial
A jury recently determined Vivint, a maker of smart-home products, willfully infringed two patents related to video doorbells belonging to SB IP Holdings and awarded $45.4 million in damages for the infringement that began in November 2020.
SB IP’s parent company is SkyBell and identifies itself in court documents as “an industry leader in video doorbell and home security solutions.” The company has been in the video doorbell industry since January 2014. SB filed suit in November 2020, accusing Vivint of selling video doorbell products that infringe its patents.
U.S. District Judge Amos L. Mazzant III presided over the trial that began with jury selection Oct. 16. Jurors heard six days of testimony before returning a verdict Oct. 23. The jury rejected arguments from Vivint that the patents were invalid.
SB IP is represented by Gary R. Sorden, Aaron Davidson, Niky R. Bagley, Timothy J.H. Craddock, Brian L. King and James R. Perkins of Cole Schotz.
Vivint is represented by David R. Wright, Michelle Y. Ku, Jared J. Braithwaite, Michael A. Manookin, Adam R. Aquino, Trevor L. Clark and Hannah L. Andrews of Foley & Lardner.
The case number is 4:20-cv-00886.
Fourteenth Court of Appeals, Houston
Justices Wipe Out $1.8M Punitive Award in Massage Sexual Assault Case
Because it was the criminal actions of her masseuse who sexually assaulted her that caused Danette Hagman’s injuries, she can’t recover punitive damages, a three-justice panel determined.
In a ruling issued Oct. 26, the panel sided with Massage Heights Franchising and wiped out a $1.8 million punitive award handed down by a Harris County jury. Hagman had sued after she was sexually assaulted by masseuse Mario Rubio in September 2017.
The jury awarded $1.5 million in compensatory damages and $1.8 million in punitive damages. Hagman had argued that the jury awarded her punitive damages based on the harm Massage Heights’ gross negligence caused and not based on the criminal conduct of Rubio. But the appellate panel wrote the “injury to Hagman is indivisible between MH Franchising’s negligence and the concurrent criminal act of Rubio.”
Justices Margaret “Meg” Poissant, Frances Bourliot and Randy Wilson sat on the panel.
Massage Heights is represented by Jessica Z. Barger and Rachel H. Stinson of Wright Close & Barger and Forrest J. Wynn and Pamela C. Hicks of Hicks Davis Wynn.
Hagman is represented by Timothy F. Lee of Ware, Jackson, Lee, O’Neill, Smith & Barrow, Anjali Nigam of The Nigam Law Firm and Patrick Scott of Scott Law Firm.
The case number is 14-22-00160-CV.
U.S. Court of Appeals for the Fifth Circuit
ITC Win Against Oil Pollution Act Claims Upheld
Intercontinental Terminals Company, whose storage tanks in Deer Park, Texas, caught fire in March 2019 and burned for three days, sending up a dark column of smoke that could be seen for miles, won’t have to face claims it violated the Oil Pollution Act, an appellate panel recently affirmed.
A three-judge panel on Friday upheld a 2022 summary judgment ruling by U.S. District Judge Kenneth M. Hoyt that the corporate plaintiffs suing ITC for damages, stemming from the fire that also caused the closure of the Houston Ship Channel for days, cannot recover economic-loss damages. The fire resulted in discharges of oil and other hazardous materials into the ship channel.
Because the closure of the ship channel was due to a “comingled” spill of oil and other substances, ITC argued that the OPA didn’t apply to this case. Instead, the plaintiffs should have sued under the Comprehensive Environmental Response, Compensation and Liability Act, which does apply to comingled spills but does not allow for plaintiffs to recover economic-loss damages.
In a case of first impression, the Fifth Circuit sided with ITC and held that OPA doesn’t apply to commingled spills.
“ITC is pleased that the Fifth Circuit affirmed the dismissal of these claims under the Oil Pollution Act, thereby settling an important issue of first impression regarding commingled spills,” said Aaron Streett of Baker Botts, who represented ITC.
Judges Leslie H. Southwick, Andrew S. Oldham and E. Grady Jolly sat on the panel.
The plaintiffs are represented by Ian Shelton and David Baay of Eversheds Sutherland, Julia Haines and David Hornbeak of Holland & Knight and Raymond Waid, Benjamin Allums, Kathryn Gonski, Elizabeth McIntosh and Emily A. von Qualen of Liskow & Lewis.
The case number is 22-20456.