In this edition of Litigation Roundup, a Dallas law firm gets another favorable verdict in a mesothelioma trial against Johnson & Johnson, a federal judge in McAllen hands out prison sentences for participants in a $110 million kickback scheme, and the Texas Supreme Court clarifies the limitations of a state law that prohibits the unlawful solicitation of legal clients.
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.
Orleans Parish District Court, Louisiana
After 2-Month Trial, Jury Awards $3M in Fatal Mesothelioma Case
Dallas-based law firm Dean Omar Branham Shirley secured a $3 million jury verdict in Louisiana on Wednesday in favor of the family of a woman who died from mesothelioma.
The jury for the two-month trial found Jeanine Henderson, who died at age 72, had “significant exposure” to asbestos from products manufactured or sold by Johnson & Johnson and Pecos River Talc. Jurors were told Henderson was a lifetime user of J&J’s baby powder.
According to the jury charge, the panel found J&J, Pecos River Talc, Avon Products and insulation and roofing company Johns-Manville all were negligent and that their negligence “was a substantial factor in the development” of Jeannine Henderson’s mesothelioma. The panel also found those entities’ products were “unreasonably dangerous.”
The jury apportioned liability as follows: J&J 45 percent, Pecos River Talc 2 percent, Avon Products 8 percent and Johns-Manville 45 percent.
The family is represented by Jay Stuemke, Darren McDowell and Tray Branham of DOBS and Philip C. Hoffman of New Orleans.
The defendants were represented by Will Stute and Mel Bailey of King & Spalding.
The case number is 2022-10279.
Southern District of Texas
Participants in $110M Kickback Conspiracy Get Prison
The Department of Justice announced Thursday that Chief U.S. District Judge Randy Crane sentenced to prison four individuals who pleaded guilty to orchestrating a $110 million prescription referral kickback scheme.
John Ageundo Rodriguez, 55, received a 60-month sentence; Mohammad Imtiaz Chowdhury, 44, received a 30-month sentence, and Hector de la Cruz Jr., 54, and Alex Flores Jr., 55, each received 46-month sentences. All four men are from Edinburg.
U.S. Attorney Nicholas J. Ganjei issued a statement calling illegal kickbacks “the engine that drives health care fraud.”
“Our office will aggressively pursue fraud, waste and abuse that cost taxpayers millions, if not billions, every year,” he said.
According to court documents, Rodriguez, a former pharmacist, owned and operated Pharr Family Pharmacy. Prosecutors alleged he conspired with the other three defendants to pay kickbacks to medical providers who referred prescriptions to his pharmacy and that Rodriguez billed the Department of Labor, TRICARE and Medicare for more than $110 million in claims between 2014 and 2016.
Chowdhury is represented by Jaime Peña and Michael Saldaña of Peña Aleczander. De la Cruz is represented by Michael Lowe of Dallas. Rodriguez is represented by Jason Davis and Stephanie L. Dodge of Davis Santos in San Antonio. Flores is represented by Ricardo L. Salinas of Mission and Ricardo Perez of The Perez Law Firm.
The prosecutors are Andrew Swartz and Asha Natarajan of the Department of Justice.
The case number is 7:21-cr-01228.
Fifth Court of Appeals, Dallas
Panel Sides with Luxottica in Fraud, Conspiracy Case
In a dispute between the world’s largest eyewear manufacturer, Luxottica, and Plano-based Brave Optical, arising from the sale of two Pearle Vision franchise stores, a three-justice panel recently undid a final judgment against Luxottica and reversed a $1.5 million sanctions order against the Italian company.
The May 5 opinion was issued by Justices Nancy Kennedy, Cynthia Barbare and Mike Lee and wiped out findings that Luxottica had committed common-law fraud, civil conspiracy and statutory fraud. According to court documents, Brave sued Luxottica, the franchisor of the Pearle Vision stores, in March 2019, alleging fraud, conspiracy to commit fraud and negligent misrepresentation in connection with the sale of the two eyewear stores. Luxottica counterclaimed for unpaid royalties.
A jury found for Brave Optical, and the court entered a final judgment of $4.6 million against Luxottica. The court also sanctioned the company $1.5 million for allegedly violating a temporary injunction.
The Fifth Court of Appeals found that the trial judge, Dallas County District Judge Staci Williams, had entered an “impermissibly vague” injunction and imposed the sanctions despite a failure to “identify specific violations of the March injunctions.”
“The sanctions and contempt order, to the extent it sounds in contempt, was issued in an arbitrary and unreasonable manner without reference to any guiding rules or principles,” the panel wrote. “The trial court therefore abused its discretion in finding contempt and rendering the order as a contempt order.”
The panel’s opinion also directed the trial court to enter a nearly $400,000 judgment in favor of Luxottica on its counterclaim alleging Brave Optical failed to pay royalty and advertising fees.
Luxottica is represented by David Coale and P. Campbell Sode of Lynn Pinker Hurst & Schwegmann.
Brave Optical is represented by Theodore C. Anderson, Clark B. Will and Robert M. Thornton of Kilgore Law in Dallas.
The case number is 05-23-00020-CV.
Texas Supreme Court
Civil Barratry Law Does Not Extend Beyond State Borders
Legal clients in Louisiana and Arkansas who sued Texas attorneys under the Texas civil barratry law will take nothing on their claims because the alleged solicitation occurred outside the state, a divided court said May 9.
The clients may pursue claims for breach of fiduciary duty against lawyers Michael Pohl and Robert Ammons, the court said.
Family members of four victims in a fatal Louisiana car crash sued the attorneys in Harris County in 2017, alleging the attorneys paid a financing company run by Pohl’s wife to offer $18,000 in a “settlement advance” for funeral expenses and as an incentive to hire Pohl and Ammons.
Similar allegations were made by an Arkansas woman whose husband died in a 2014 accident in north Texas. Both crashes were allegedly caused by defective tires and were settled, with attorney’s fees and expenses taken out of the settlement proceeds.
The Cheatham and Reese families contended that the barratry statute entitles them to void the legal-services contracts in the underlying personal injury cases and to recover fees and penalties.
The trial court dismissed the claims, but the First Court of Appeals reversed, concluding that the barratry statute applied because at least part of the lawyers’ alleged conduct occurred in Texas.
Justice Rebeca A. Huddle was joined in the 5-3 majority opinion by Chief Justice Jimmy Blacklock and Justices Jane Bland, Evan Young and James Sullivan.
Huddle said the court has long recognized that Texas statutes are presumed not to have extraterritorial effect.
“The court of appeals concluded Section 82.0651(a)’s application here would not be impermissibly extraterritorial because some of the defendants’ alleged acts of barratry — knowingly financing the improper solicitation and knowingly accepting employment that resulted from that solicitation — occurred in Texas,” she said.
But the majority decided to home in on the core conduct the Legislature sought to address.
“Because Section 82.0651’s focus is on the solicitation of the legal-services contract, and the solicitation undisputedly occurred outside Texas, the fact that some unlawful conduct, such as the solicitation’s financing, occurred in Texas does not make the application of Section 82.0651(a) in this case any less extraterritorial,” Huddle said.
Justice Brett Busby dissented in an opinion joined by Justices Debra Lehrmann and Jeff Boyd. Justice John Devine did not participate in the decision.
Busby said the majority “rewrites the statute,” which was enacted by the Legislature in 2011 to protect the public from unscrupulous lawyers. Busby said the focus should be on all conduct that violates the criminal barratry laws or the state bar disciplinary rule prohibiting barratry, which he said includes alleged conduct by the attorneys that occurred in Texas to pay case runners to solicit the clients’ business in Arkansas and Louisiana.
Thomas R. Phillips of Baker Botts represented The Ammons Law Firm.
David Eric Kassab of The Kassab Law Firm argued the case for the Cheatham plaintiffs.
The case number is 23-0045.
Janet Elliott contributed to this report.