In this edition of Litigation Roundup, a hedge fund manager goes to prison for failing to report millions in income, and a bankruptcy law firm operating in Texas is pinged for filing cases with false financial information.
Also, last week the Department of Justice announced an investigation had revealed Duke University School of Law intentionally discriminated against certain applicants based on race between 2023 and 2025. The findings, sent in a letter to the school’s lawyer, Marc P. Berger of Latham & Watkins, explains that as a recipient of federal funds, the school must come into compliance with Title VI or will face litigation.
The five-page letter, signed by Department of Justice lawyer Harmeet K. Dhillon, explains that the government investigation showed “highly qualified white, Asian, and other students were denied admission on the basis of their race.” According to the government, 2025 applicant data showed a Black student seeking admission had a roughly three-and-a-half times higher probability of acceptance than “an equally strong Asian applicant with similar academic credentials.”
Duke Law issued a statement that it is “reviewing the letter and its conclusions carefully” and is “committed to complying with the law and will continue to do so in a manner that is consistent with our academic mission.”
The Litigation Roundup is a weekly feature highlighting the work Texas lawyers are doing inside and outside the state. Have a development we should include next week? Please let us know at tlblitigation@texaslawbook.net.
Southern District of Texas
Judge Finalizes $47.6M Win in Drilling Tool Patent Case
On Thursday, U.S. District Judge Keith P. Ellison found that a company fighting a $47.6 million infringement verdict rendered against it in March had “failed to show deceptive intent” in the prosecution of two patents.
Judge Ellison issued his order, granting a Rule 52(c) motion filed by Impulse Downhole Tools USA, after presiding over a three-day bench trial in mid-July on Downhole Well Solutions’ defense of inequitable conduct.
In March, a Houston jury heard eight days of testimony and deliberated for about two hours before agreeing with Impulse that its competitor, Downhole, infringed its patents via two tools it makes — the PowerGLIDE and the PowerGLIDE On Demand. The friction reduction tools are used to aid in horizontal drilling for oil and gas.
Downhole had argued the inventor of the patents, Troy Lorenson, committed inequitable conduct by “intentionally failing to disclose material information about another tool in the prosecution of the patents.”
At the bench trial, Lorenson testified he had trusted his patent attorneys throughout the prosecution of the patents, and Judge Ellison wrote he “found Mr. Lorenson’s statements to be credible” and could not conclude that he had “a specific intent to deceive the [U.S. Patent and Trademark Office].”
“It is at least as likely that Mr. Lorenson believed he had disclosed all relevant information to his patent attorneys and felt secure in relying on their expertise,” Judge Ellison wrote.
Impulse is represented by John Keville, Michelle Replogle, Robert Green, Michael Krill, Chante B. Westmoreland, Michael K. Heins, Usayd Siddiqi and Evan Lim of Sheppard.
Downhole is represented by Michael D. Karson, Nadia Haghighatian, Austin C. Teng, Cody Carter, Eugene Massad III, Jamie McDole, Kyle Watson, Matthew Vitale, Miranda Jones, Omar A. Marawi and Phillip B. Philbin of Winstead and Steven Mitby of Mitby Pacholder Johnson.
The case number is 4:23-cv-02954.
Western District of Texas
Former Austin Resident Gets 3 Years for $7M Tax Fraud
A man who used to live in Austin before renouncing his U.S. citizenship and moving to the Cayman Islands will spend the next 37 months in federal prison after he admitted he failed to report $7 million in hedge fund earnings.
Justin Ryan Schmidt pleaded guilty to tax evasion in April, and U.S. District Judge Robert Pitman sentenced him in late July. The government alleged Schmidt, who managed a hedge fund focused on cryptocurrency investments, failed to report millions in income he earned in 2020, 2021 and 2022, and instead reported to the government on tax returns he earned $5,000 or less for each of those years.
Judge Pitman also ordered Schmidt pay $3.4 million in restitution.
“Today’s sentence makes clear that renouncing U.S. citizenship does not shield you from American justice,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division. “Mr. Schmidt deliberately hid millions in income and assets from the IRS, filed false statements, and cheated America’s tax system. Despite his best efforts to evade the reach of the Justice Department, Mr. Schmidt will now begin to reap the true reward of his crimes.”
Schmidt is represented by Brian Roark of Botsford & Roark and Mark Hull of The Hull Firm.
The case is being prosecuted by Michael C. Boteler and Michael Jones of the Department of Justice.
The case number is 1:26-cr-00094.
Eastern District of Texas
Injunction Entered in Fight Between Competing Investment Advisors
A federal judge last week partially granted a request for a preliminary injunction in a fight between competing investment advisory companies Peak American Financial Companies and Secure Income Management.
In 2014, according to court documents, Peak became the investment advisor to National Association of Family Benefits in an agreement that gave Peak exclusive marketing rights to certain clients, as well as the rights to market and service NAFB-generated clients and leads.
Later, NAFB entered an agreement with Peak’s competitor, SIM, that gave that company access to NAFB client information. In its lawsuit, Peak accuses NAFB of breach of contract and tortious interference and alleges SIM improperly solicited its clients, in part by telling some that Peak was going out of business.
The case was filed in Collin County District Court in January and removed to federal court by the defendants in February. The parties went to mediation in March and told the court in early May it had not resulted in resolution.
Then, in late May, Peak moved for a temporary restraining order and preliminary injunction. Judge Schroeder held a three-and-a-half-hour hearing on the motion July 24. Peak presented the court with evidence at that time that SIM had contacted 32 clients in violation of its agreement.
In a 30-page order issued Aug. 3, U.S. District Judge Robert W. Schroeder III held Peak “presented evidence that defendants continue to improperly solicit plaintiffs’ clients based on misappropriated confidential information,” and found the company “presented a prima facie breach of contract claim sufficient to demonstrate a substantial likelihood of success on the merits.”
The judge ordered the defendants to stop “disclosing, distributing, disseminating or transmitting the client lists or client contact information previously provided to plaintiffs,” and refrain from saying that Peak is out of business or engages in deceptive business practices.
In the same order, Judge Schroeder also denied a request from SIM to dismiss the lawsuit on jurisdictional grounds.
Peak is represented by Heath Cheek, Nathan Cox and Mason Jones of Bell Nunnally & Martin.
NAFB and SIM are represented by Dane Steffenson of Dane Law, David Babb of Nelson Mullins, Geoffrey Culbertson and Kelly Tidwell of Patton Tidwell & Culbertson and Kirstie M. Simmerman of Gordon Rees Scully Mansukhani.
The case number is 4:26-cv-00142.
Northern District of Illinois
Bankruptcy Law Firm with Texas Office Waives $90K in Fees
A law firm focusing on bankruptcy work, with offices in Texas, Georgia and Illinois, agreed last week to waive about $90,000 in fees after an investigation by the U.S. Trustee’s Program.
The investigation into Semrad Law Firm, which is also known as DebtStoppers, revealed the firm had filed several bankruptcy cases with false financial information that did not match the debtors’ federal tax returns.
“Semrad cannot justify its fees for its lax approach to preparing these 31 cases,” said Acting U.S. Trustee Adam Brief of Region 11, which includes the Northern District of Illinois. “The firm failed its clients and the courts by allowing the spread of false information. The USTP will continue to aggressively pursue consumer debtors’ attorneys who fail to fulfill their basic obligations.”
Under the agreement reached with the federal bankruptcy system watchdog, two of Semrad’s lawyers must complete three hours of continuing legal education on professional responsibility in bankruptcy.
The firm’s sole Texas office is located in Dallas.
Fifteenth Court of Appeals
Justices Side with State Fair in Gun Case
In a 16-page opinion issued Aug. 6, a three-justice panel found Dallas County District Judge Emily Tobolowsky got it right when she upheld the State Fair of Texas’ policy of prohibiting patrons from carrying handguns onto the fairgrounds.
Texas had argued the city of Dallas and the State Fair violated Texas Government Code Section 411.209, which bars a state agency or political subdivision from stating or implying that “a license holder who is carrying a handgun under the authority of this subchapter is prohibited from entering or remaining on a premises or other place owned or leased by the governmental entity.”
Dallas argued on appeal that it took “no action” prohibiting firearms at the State Fair and that governmental immunity bars the state’s claim.
“We agree with the city appellees that the appellants’ Section 411.209 claim is barred by governmental immunity because the city took no prohibited ‘action’ under that provision,” the panel wrote.
The justices also determined the state had failed to “articulate how the State Fair’s conduct violates” the statute.
“Appellants argue that the City’s failure to stop the State Fair from implementing the handgun ban and maintaining a lease with the State Fair when the ban was in place are violations by the city. The State Fair’s gun ban serves as the basis for how the city’s conduct allegedly violates Section 411.209, but appellants do not explain how the State Fair violated that provision through implementing its ban.”
Justice April Farris authored the court’s opinion, joined by Chief Justice Scott Brister and Justice Scott Field.
Texas is represented by Ernest C. Garcia, Steven Ogle and Keegan Howe of the state’s attorney general’s office.
Dallas is represented by Jeff Tillotson, Jonathan Patton, Nathaniel Buchheit and Austen Irrobali of Tillotson Patton.
The Fair is represented by Jim Harris, Bryan Neal and Dina McKenney of Holland & Knight and Robert B. Smith of Dallas.
The case number is 15-25-00122-CV.
U.S. Court of Appeals for the Federal Circuit
Collision Communications Tells Court Samsung Injunction is Needed
A team of lawyers from Clement & Murphy and Caldwell Cassady & Curry has filed an opening brief on appeal that argues the continuing infringement on Collision Communications’ patents by Samsung Electronics is a “paradigmatic case for a permanent injunction.”
A jury in East Texas determined in October that Samsung willfully infringed four patents held by Collision that cover technology that reduces signal interference in cellular network communications and awarded the company $445.5 million in damages. The Aug. 4 opening brief filed by Collision argues that traditional principles of equitable remedies require the entry of a permanent injunction to end the ongoing infringement.
“The undisputed record evidence shows that Samsung could comply with that proposed injunction by simply sending a software update to its existing products, without any need to recall or redesign any of its devices, and that Samsung would have no difficulty coming into compliance with the one-month grace period that the proposed injunction allows,” the brief argues.
After a hearing in May, U.S. District Judge Rodney Gilstrap denied Collision’s request, finding the company failed to show it was entitled to a permanent injunction prohibiting ongoing infringement. Judge Gilstrap did find that Collision would suffer irreparable harm from the ongoing infringement and that monetary damages were inadequate to remedy the harm.
“But at that point, the court went inexplicably astray,” Collision argued in its opening brief. “Despite recognizing just a few pages earlier in its opinion that Collision would suffer irreparable harm absent an injunction, the court held that the balance of hardships tipped against a permanent injunction — not because of any countervailing hardship to Samsung (on the contrary, the court correctly found that Samsung’s claims of hardship were unpersuasive), but simply because the court ignored the irreparable harm that Collison had already established.”
Last week, the United States asked the court for a 14-day extension so it can consider whether to file an amicus brief. The court granted the motion Aug. 4.
And on Aug. 10, a group of nine individuals who told the court they are patent law experts (including retired Judge Paul Michel of the U.S. Court of Appeals for the Federal Circuit), filed a motion seeking to file an amicus brief in support of Collision. In the motion, the group told the court Judge Gilstrap had “mistakenly assumed that eBay barred the use of historically grounded rebuttable presumptions,” referencing the U.S. Supreme Court’s 2006 holding in eBay v. MercExchange that laid out a four-factor test for obtaining permanent injunctive relief in a patent case.
Collision is represented by Austin Curry, Brad Caldwell, Aisha Haley, James Smith and Hamad Hamad of Caldwell Cassady & Curry and Paul D. Clement, C. Harker Rhodes IV and Camilo Garcia of Clement & Murphy.
Samsung is represented by John Bash, Kevin Hardy, Arian Koochesfahani, Victoria Maroulis, John McKee and Sean Pak of Quinn Emanuel Urquhart & Sullivan.
The case number is 26-1893.
Craving more Texas Lawbook litigation coverage? Don’t worry, we’ve got you covered. Take a look at these stories you may have missed in the past few days.
As the Texas Business Court prepares to enter its third year, legal experts say one case really stands out as an exemplar for the new commercial litigation system’s potential: Dallas Mavericks v. Dallas Stars. Texas business litigation expert Ben Barnes, in an interview with The Texas Lawbook, said the business court judge’s trial order in the fight between Dallas’ sports franchises shows the court’s ability to compress complex, high-stakes commercial disputes when the circumstances demand it.
For most of a two-and-a-half-hour scheduling conference last week in the Jackson Walker bankruptcy fee case, the parties sat in silence, while Chief U.S. Bankruptcy Judge Eduardo V. Rodriguez drafted and signed a pair of orders governing when the parties will be back for a hearing and when trial in the case will begin.
Following a two-week trial before Bexar County Judge Nadine Nieto, a jury awarded $8.45 million to a woman who claimed she was defamed by statements made in the Netflix documentary Dirty Money.
Arena Development Intermediate has removed to the Texas Business Court a Rule 202 proceeding in which Mark Cuban is seeking a presuit deposition of its corporate representative. Cuban has told the court he is seeking information about how the Mavericks struck a deal to buy the Valley View Mall property and whether that has impacted any of his contractual rights.