In this edition of Litigation Roundup, the Texas Supreme Court answered a burning question about the jurisdiction of the Fifteenth Court of Appeals, and Google moves to arbitrate a negligence lawsuit over an AI chatbot.
On Friday, the Texas Supreme Court issued two orders that gave litigants in the state certainty about which cases the Fifteenth Court of Appeals can hear and kicked two cases that had been before the Fifteenth back to the intermediate appellate courts in Houston and Corpus Christi, respectively.
Until Friday, it was unclear whether the new appellate court, which under state law has exclusive jurisdiction over certain appeals involving the state and appeals from the business courts, could still hear appeals in other cases not within its exclusive jurisdiction.
In both cases — Kelley et al. v. Homminga et al. and Devon Energy et al. v. Oliver et al. — the Chief Justice of the Fifteenth Court of Appeals, Scott Brister, dissented from his colleagues’ decision to keep the cases and deny transfer back to the First or Fourteenth of the Thirteenth Courts of Appeal. In his January dissent in Kelley v. Homminga, Chief Justice Brister explained that lawmakers outlined two types of cases within the exclusive jurisdiction of the Fifteenth Court of Appeals and fifteen types of cases that were not.
“This appeal falls into neither category,” he wrote.
“But even if it would be proper to file such cases here, it would be inappropriate for this Court to entertain hundreds of appeals in family law, criminal law, and personal injury cases as they would inevitably shift time and attention away from our primary tasks,” he wrote. “Furthermore, allowing litigants to routinely opt into one court of appeals instead of another could create a practice that, ‘if tolerated, breeds disrespect for and threatens the integrity of our judicial system.’”
In his January dissent in Devon Energy, he noted the appellants in the case didn’t argue that the dispute presented an issue of statewide importance or constituted a complex business dispute, which would put it in the exclusive jurisdiction of the Fifteenth Court of Appeals. They argued instead that they “were entitled to choose between the courts.”
“My colleagues say that does not make this appeal ‘inappropriately filed’ since appellants may choose between two overlapping appellate courts in some cases,” Chief Justice Brister wrote. “But the Legislature has restricted that choice when it involves large numbers of appeals. And choosing between two neighboring courts in appeals from a handful of smaller counties is different from choosing between one statewide court with specific jurisdiction and fourteen others handling every kind of appeal in the State. I doubt the Legislature intended appellant’s choice on a large scale to be appropriate.”
The Texas Supreme Court consolidated the cases and issued a per curiam opinion answering the jurisdiction question Friday morning.
“We conclude S.B. 1045 is susceptible of only one reasonable construction: the Legislature did not intend the Fifteenth Court to hear every civil appeal within its statewide jurisdiction,” the high court wrote. “Rather, the fair meaning of the act, discerned through a contextual reading of all its provisions, is that the Legislature intended that court to hear (1) appeals and writs within its exclusive intermediate appellate jurisdiction, and (2) appeals we transfer into the court for docket-equalization purposes. This is the only interpretation of the statutory scheme that harmonizes all its provisions into a cohesive whole.”
Harris County District Court
Lawsuits Against OQ Chemicals Pile Up After Ammonia Leak
Four lawsuits have been filed against chemical refinery owner OQ Chemicals Corporation in the week and a half since a chemical release allegedly injured several workers in Matagorda County.
The chemical release of allegedly toxic gases, including ammonia, happened March 7 and sent at least 10 people to the hospital. Nearly two dozen plaintiffs have filed lawsuits against the company. Alongside OQ, Roehm America and Roehm Texas Chemicals have also been named as defendants. According to the lawsuits, OQ manufactures alcohols, polyols, carboxylic acids and acetate esters.
“In the days leading up to March 7, 2025, defendants were aware of several leaks, yet did not stop operations at the plant,” one of the lawsuits alleges. “Based on initial investigation by authorities, a valve failure in a brine cooler was one of the causes of the chemical release. Defendants, however, failed to properly address the issue. After this incident, another leak occurred at the site in the following days.”
The law firms representing plaintiffs in the lawsuits include Arnold & Itkin, Abraham, Watkins, Nichols, Agosto, Aziz & Stormy, the law Offices of Hilda L. Sibrian, J.D. Silva & Associates, Kherkher Garcia, and Daly & Black.
The case numbers are 2025-16370; 2025-16740; 2025-17331 and 2025-17135.
Eastern District of Texas
Judge Gilstrap to Weigh Google, Alphabet Motion to Arbitrate AI Chatbot Suit
U.S. District Judge Rodney Gilstrap has scheduled a hearing to take place next month on Google and Alphabet’s request to kick to arbitration a lawsuit brought by the parents of two minors who allege they were harmed by a Character.AI, described in the suit as a “defective and deadly” chatbot marketed to children.
In a notice issued March 11, Judge Gilstrap set the hearing for April 23. The plaintiffs filed suit in December against Character Technologies, two founders of that organization and Google and Alphabet, which the suit alleges paid $2.7 billion in cash to license the product. The suit alleges the chatbot encouraged one of the plaintiffs to self-harm and normalized the idea of being violent toward his parents.
“C.AI hooks many of their customers onto the site with highly sexual and violent content, including content that rises to the level of incitement to violence,” the lawsuit alleges. “Defendants know that such content is particularly compelling for adolescents curious about but inexperienced with sex, naturally insecure and driven by their desire for attention and approval, and/or unhappy about the types of rules and safeguards their parents put in place for their safety. The constant sexual, as well as the self-harm and violence promoting, interactions C.AI initiates and has with minor and other vulnerable consumers is not a matter of customer choice, but is instead the foreseeable, even anticipated, result of how Defendants decided to program, train, and operate their product.”
In a motion to stay and to compel arbitration filed March 10, Google and Alphabet as well as the two creators of Character.AI, Noam Shazeer and Daniel De Freitas, told the court that the lawsuit must be sent to arbitration because the plaintiffs entered into terms of service agreements with CharacterAI that require it.
“The [terms of service] include an arbitration agreement expressly encompassing ‘all disputes or claims that have arisen or may arise between you and Character.AI,’” the motion reads.
Three days after this lawsuit was filed, Texas Attorney General Ken Paxton issued a news release announcing investigations had been launched into CharacterAI and other entities to determine whether there had been violations of the Securing Children Online Through Parental Empowerment Act, known as the SCOPE Act, or the Texas Data Privacy and Security Act.
“Technology companies are on notice that my office is vigorously enforcing Texas’ strong data privacy laws,” Paxton said in a statement. “These investigations are a critical step toward ensuring that social media and AI companies comply with our laws designed to protect children from exploitation and harm.”
Google and Alphabet are represented by Michael E. Jones and Shaun W. Hassett of Potter Minton and Lauren White, Fred A. Rowley Jr. and Matthew K. Donohue of Wilson Sonsini Goodrich & Rosati.
The plaintiffs are represented by Matthew P. Bergman, Glenn Draper and Laura Marquez-Garrett of the Social Media Victims Law Center, Samuel Baxter, Jennifer Truelove and Radu A. Lelutiu of McKool Smith and Meetali Jain of Goldstein, Demchak, Baller, Borgen & Dardarian.
The case number is 2:24-cv-01014.
Texas Supreme Court
No Tax Exemption for Private, For-Profit Prison Co. Geo Group
The Texas Supreme Court on Friday determined The Geo Group and Geo Corrections and Detention is not entitled to a tax refund of nearly $4 million because “it is neither a government ‘agent’ nor ‘instrumentality’ under the statute and rules.”
The state’s comptroller had assessed a sales and use tax deficiency against Geo, a Florida corporation that contracts with federal and state governments to house inmates, after the prison failed to pay tax on certain purchases to operate the prisons, such as electricity, natural gas, food and furniture.
In an administrative proceeding challenging that assessment, Geo argued that the purchases were tax exempt because they were made on behalf of its government clients. After the administrative proceeding ended in the state’s favor, a Travis County trial judge and the Seventh Court of Appeals agreed that Geo had failed to show by “clear and convincing evidence” that it was acting as an “agent” or “instrumentality” of the government.
Geo had argued on appeal to the Texas Supreme Court that because it performs a “quintessential government function” it should be entitled to the exemption. But the justices rejected that argument, holding that performing a governmental function wasn’t enough to “clearly show its entitlement to an exemption” and noted that the law requires “all doubts are resolved against granting” a taxpayer an exemption.
“Many of the contracts GEO entered into with its government clients include provisions recognizing that ‘GEO is an independent contractor,’ that ‘[n]othing contained in this Agreement shall be deemed or construed to create a … principal-agent relationship between the [government] and GEO,’ and that GEO ‘shall be responsible for any taxes … imposed on the Facility and related property,’” the court held. “Like the trial court and the court of appeals, we agree with the contracting parties’ characterization of GEO’s role.”
Justice Debra Lehrmann did not participate in the decision.
GEO Group is represented by Danielle Ahlrich and Josh Veith of Ryan Law Firm.
The Comptroller is represented by Kathryn M. Cherry of the Texas solicitor general’s office.
The case number is 23-0149.
U.S. Court of Appeals for the Fifth Circuit
Panel Rejects Insurer’s ‘Misuse’ of Declaratory Judgment Act
The insurer of a now-shuttered Houston bar that declined a Stowers settlement demand before two patrons filed an assault lawsuit — and before a jury returned a verdict exceeding policy limits — cannot use the Declaratory Judgment Act to duck liability, a three-judge panel recently held.
In a seven-page ruling against Golden Bear Insurance Company, issued March 14, the judges determined U.S. District Judge David Hittner got it wrong in June 2024 when he granted the insurer’s motion for summary judgment in the lawsuit against Concrete Cowboy, its owner and the two patrons.
The panel wrote that Golden Bear’s filing of the DJA action after trial was a “misuse” of a tool that’s supposed to be used “before the dispute ripens into misconduct.”
“Under Stowers, Golden Bear’s alleged misconduct — negligently refusing to settle the claim — is already complete; the original jury returned a verdict exceeding the policy limit,” the panel wrote. “Golden Bear cannot invoke the Act to retroactively argue that it never had a duty to begin with because the demand letter was too vague. Instead, that is an appropriate defense for Golden Bear to raise in the state forum chosen by the allegedly injured parties.”
In May 2023, Golden Bear filed suit seeking a judicial declaration that it didn’t have to cover the roughly $2.24 million portion of a $3.2 million in damages a jury assessed against the Concrete Cowboy. The policy limit was $1 million.
A Harris County jury in 2021 sided with Kacy Clemens, the son of Roger Clemens, and Roger Clemen’s godson, Conner Capel, finding they had been assaulted without cause by a bouncer at the club in 2019. Capel, the son of former MLB pitcher Mike Capel and who at the time was a minor league baseball player, suffered a fractured skull. Clemens, who also was in the minor leagues at the time, injured his ribs and elbow in the attack.
In a social media post, Concrete Cowboy’s attorney Randy Sorrels praised the Fifth Circuit’s decision and said it clears the way for the related Stowers’ and legal malpractice lawsuit he filed in state court to move forward.
“This is big for all Texas Stowers cases,” he wrote.
Judges Catharina Haynes, Stuart Kyle Duncan and Cory T. Wilson sat on the panel.
Golden Bear is represented by George S. McCall, Sondra S. Sylva and Erin M. Turner of Phelps Dunbar.
Concrete Cowboy is also represented by Dylan B. Russell of H. Victor Thomas Jr. of Sorrels Law.
The case number is 24-20332.