In this week’s edition of litigation roundup, appellate rulings take center stage. The Texas Supreme Court granted review in a tax dispute between Kinder Morgan and a school district and allowed a sex trafficking lawsuit against Salesforce to proceed. In the Fifth Circuit, a former general counsel and staff attorney at a Louisiana college appeal to revive their pay discrimination and retaliation suit.
Have a development you think is worthy of a mention in the next Litigation Roundup? Please let us know at tlblitigation@texaslawbook.net. Because of the holidays, The Texas Lawbook will not be publishing the roundup the next two Mondays and will return Jan. 9.
Eastern District of Arkansas
Poultry Preparation Patent Invalidated
A patent that antimicrobial and biocidal products manufacturer Enviro Tech Chemical Service Inc. had told poultry processing competitors it planned to enforce industrywide has been invalidated.
The Dec. 15 ruling means the poultry industry “has been spared from any further litigation” involving the patent, said Amir H. Alavi of Alavi & Anaipakos, who represented Safe Foods Corporation. The patent-at-issue in this suit was for a chemical and water mixture that is used to sanitize poultry after it has been slaughtered.
Alavi said while he can’t divulge specific figures, Enviro Tech was “demanding exorbitant royalties.”
“They were ultimately going to enforce this against the entire industry,” he said. “I can tell you that the industrywide perception was that it was not economical.”
U.S. District Judge Lee P. Rudofsky issued his opinion following a claim construction hearing — a.k.a. a Markman hearing — and found two of the words in Enviro Tech’s patent that he was asked to rule on the meaning of were “indefinite.”
Safe Foods is also represented by Brian E. Simmons, Joshua S. Wyde, Justin Y. Chen, Scott W. Clark and Steven T. Jugle of Alavi & Anaipakos.
Enviro Tech is represented by Nathan I. North, Ryan D. Levy and Seth R. Ogden of Patterson Intellectual Property Law.
The case number is 4:21-CV-00601.
Fifth Court of Appeals
Dispute Over Apollo-Era Astronaut’s Artifacts Decided
In a case of first impression, a three-justice panel recently decided a probate court correctly awarded possession of Apollo-era astronaut Alan Bean’s space artifacts to his daughter, Amy Bean.
Alan Bean’s second wife, Leslie Bean, had argued that the 39 artifacts were community property at the time of his death in May 2018. Alan Bean was the fourth man to walk on the moon and a member of the Apollo 12 crew in 1969.
In the Dec. 13 ruling, the panel had to interpret HR 4158, which was passed by Congress in 2012 and gave astronauts full ownership rights for certain artifacts from their space missions. Leslie Bean had argued that despite a prenuptial agreement with her and a property settlement with his first wife where Alan Bean declared the artifacts were his separate property, he didn’t actually own the property until HR 4158 went into effect, after they married, making them community property.
The appellate panel held that the law didn’t give astronauts new rights but “confirmed” the property was theirs.
Justices Robbie Partida-Kipness, Amanda L. Reichek and Bonnie Lee Goldstein sat on the panel.
Amy Bean is represented by David S. Cook of Cook Law and Frank H. Newton of Norton Rose Fulbright.
Leslie Bean is represented by Steven J. Knight of Chamberlain Hrdlicka White Williams & Aughtry.
The case number is 05-21-00286-CV.
IIED Damages Upheld in Less-Than-Neighborly Easement Dispute
An appellate panel recently trimmed but largely upheld a damages award for Lisa Coulter in a dispute over an easement with her former neighbor, MQ Prosper North and Donald Silverman.
The trial court awarded Coulter $5,000 for intentional infliction of emotional distress, and the appellate panel Dec. 12 upheld those damages, finding Silverman’s “conduct toward Coulter affected her in the sanctuary of her home.”
Coulter lived on a two-acre plot within a larger 14-acre piece of property that was formerly owned by one individual. Silverman, who had a home and ran a drywall business on the property, bought the other 12 acres and, unlike the previous owner, refused to allow Coulter to continue using an existing driveway that bisected his property to get to her home, insisting instead she build a new driveway on an easement.
Alexander Brauer of Bailey Brauer, who represents Coulter, told The Texas Lawbook that things came to a head when Coulter tried to get home one day and found Silverman blocking the driveway with his truck.
“He threw a no-trespassing letter in her face and said she can’t use [the driveway] anymore,” Brauer said.
The dispute continued while Coulter worked to get the new driveway constructed, according to court documents, and Silverman cut her internet and water lines and threatened to cut the electricity as well.
“We conclude Coulter’s evidence — described above — supports the trial court’s award of damages on both the intentional infliction of emotional distress and the assault claims,” the panel held. “Coulter also testified that she feared for herself and her daughter, she was terrified, she stayed away from her home as much as possible, she had trouble sleeping and had to take pills to do so, and she suffered chest pains, crying spells, and incurred $500 in medical bills. This evidence describes not mere anxiety but instead a ‘high degree of mental pain and distress.’”
The panel found Coulter wasn’t entitled to $2,000 in construction delay damages she suffered after having to pause work on the new driveway to remove rocks, poles, barricades and fencing MQ placed on the easement, but it upheld $4,700 in actual damages related to the same conduct, finding MQ had breached the easement.
Justices Ken Molberg, Lana Myers and Dennise Garcia sat on the panel.
Coulter is also represented by Benjamin L. Stewart of Bailey Brauer.
MQ Prosper is represented by Ernest Leonard and Melissa Kingston of Friedman & Feiger.
The case number is 05-20-00800-CV.
Texas Supreme Court
Contingent-Fee Contract in Kinder Morgan School Tax Case Under Review
The Supreme Court on Friday accepted the petition of Kinder Morgan and the Pecos County Appraisal District in an appeal that turns on the authority of a school district to enter into a contingent-fee agreement for collection of “delinquent” taxes under state property tax laws.
The Iraan-Sheffield Independent School District contracted with Dallas attorney D. Brent Lemon to pursue claims that Kinder Morgan inaccurately or fraudulently valued its mineral interests, resulting in underpayment of property taxes. After losing the school district’s challenge to the valuation at the appraisal district, Lemon turned to the district court.
Kinder Morgan and the appraisal district argue the school district lacks statutory authority to hire Lemon on a contingent-fee basis. They say Lemon’s contract is not to collect delinquent taxes but is a “tax ferret contract” to identify property not on the tax rolls. The trial court agreed and dismissed the school district’s suit with prejudice.
The Eighth Court of Appeals reversed and remanded the case, holding that the fee contract was authorized by Section 6.30(c) of the Texas Tax Code, which permits taxing units to hire private counsel on a contingent-fee basis “to represent the unit to enforce the collection of delinquent taxes.”
At the Supreme Court, the appeal has attracted an amicus brief from Texas Taxpayers and Research Organization, filed by George S. Christian. The business group argues that taxes on omitted property are not defined as delinquent. It points to an unbinding legal opinion from then-Attorney General John Cornyn issued more than 20 years ago.
“In response to a request for an opinion on the very issue raised in this appeal, General Cornyn found no specific or implied statutory authority for a taxing unit to enter into a contingent fee, tax ferret contract, concluding: ‘In light of the legislative policy against a taxing unit entering a contingent fee contract, authority to do so should not be implied,’” the brief states.
In briefs by Lemon and Robert N. Grisham II, the school district contends that Kinder Morgan is “seeking to escape tax fraud liability by asking the Court to disqualify Attorney Lemon because he (Lemon) may get 20% of the 100% of taxes Kinder Morgan evaded by way of fraud and misrepresentation.”
In its response, Kinder Morgan says the school district ignores the trial court’s fact findings that the taxing unit failed to establish any fraud by Kinder Morgan. The pipeline company says that its taxes cannot be delinquent under the tax code, which would only happen once a taxpayer became liable for taxes and after a lengthy window of time from receiving the tax bill to pay the taxes.
Kinder Morgan is represented by Michael A. Heidler, Ethan Nutter, Christopher Popov, and James L. Leader Jr. of Vinson & Elkins and Harper Estes and B. Jack Shepherd of Lynch, Chappell & Alsup. The appraisal district is represented by James R. Evans Jr of Low Swinney Evans & James.
Oral argument is scheduled for Feb. 2. The case number is 22-0313.
Salesforce Can’t Duck Sex Trafficking Suit
In a list of orders issued Friday, the court denied a request from Salesforce.com — which is facing claims it helped facilitate sex trafficking through its technology and support services on Backpage.com — to bring an end to the lawsuit against it.
The case, which alleges Salesforce violated Chapter 98 of the Texas Civil Practice and Remedies Code with its conduct, now returns to Harris County.
“After three years of delay by Salesforce, we are pleased to finally proceed on the merits and give the victims their day in court,” said Annie McAdams, who represents the Jane Does who allege they were victims of sex trafficking.
In June 2021, McAdams won a similar victory against Facebook in a lawsuit alleging that company provided an unrestricted platform for predators to recruit sex trafficking victims when the Texas Supreme Court declined to dismiss the claim.
The Jane Does also are represented by David E. Harris of Sico Hoelscher Harris.
Salesforce is represented by Allyson N. Ho, Bradley G. Hubbard, Stephen J. Hammer, Katherine L. Montoya and Kristin A. Linsley of Gibson Dunn & Crutcher and Katherine M. Silver of Jackson Walker.
The case number is 22-0232.
Mold Claim Case Tests Scope of Arbitration Agreements
Homebuilders are closely watching a case — accepted for review by the Supreme Court Friday — that tests the validity of arbitration agreements with successor homeowners.
The court will review an opinion from the Fourteenth Court of Appeals that said Kara Whiteley, who sued Lennar Homes over mold in her Dickinson dwelling, was not bound by the arbitration provision in the deed and home warranty she acquired from the original homebuyer.
The trial court had initially stayed the case for arbitration over Whiteley’s objection. After a seven-day hearing, the arbitrator denied Whiteley all relief and awarded attorney’s fees to Lennar. Lennar says that the trial court, without explanation, vacated the arbitration award.
The court of appeals affirmed, holding that the arbitration provision in the original homebuyer’s deed could not bind subsequent purchasers.
The Texas Association of Builders filed an amicus brief written by Dylan B. Russell and Manuel “Ned” Muñoz Jr. They said the court of appeals failed to conduct a textual analysis of the Lennar warranty, which would have established Whiteley as a third-party beneficiary of the warranty and accompanying arbitration provision.
Lennar Homes is represented by Wallace B. Jefferson, Rachel A. Ekery and Nicholas Bacarisse of Alexander Dubose & Jefferson and Timothy F. Lee, Margaret Bryant and Don Jackson of Ware, Jackson, Lee, O’Neill, Smith & Barrow.
Kara Whiteley is represented by Dax O. Faubus.
Oral argument is scheduled for Jan. 31. The case is number 21-0783.
You Can’t Do That, Judge
In a ruling issued Dec. 14, the court determined Dallas County Court-at-Law No. 4 Judge Paula Rosales abused her discretion when she ordered the parties — over objections — to push forward with a jury trial by having a juror who tested positive for COVID participate remotely.
Ethicon Inc. and Johnson & Johnson, facing products liability claims brought by Jennifer Snowden over its pelvic mesh product, had petitioned the court for review Dec. 13. Trial began Nov. 28, but in the first week of December, the companies said, two jurors were dismissed from the panel—one for COVID-19, and one who realized after trial began that he had “a close affiliation with one of the law firms involved in the case.”
Then on Dec. 12, two more jurors tested positive for the virus. The court dismissed one of those jurors then mandated the trial to proceed with the other juror participating remotely.
Ethicon objected and moved for a mistrial. The Texas Supreme Court sided with the companies.
“The trial court abused its discretion because section 4(a) of this Court’s Fifty-Seventh Emergency Order Regarding the COVID-19 State of Disaster provides that a court “must not require a lawyer, party, or juror to appear remotely, absent the agreement of the parties,” the court held.
Ethicon and J&J are represented by Victor D. Vital of Barnes & Thornburg, Mashall A. Bowen and Christopher Cowan of Butler Snow, Mary Kate Raffetto of Beck Redden and Kathleen A. Gallagher of Rodman & Rodman.
Snowden is represented by Matthew J. Kita.
The case number is 22-1121.
U.S. Court of Appeals for the Fifth Circuit
Ex-GC, Staff Attorney Appeal LSU Pay Discrimination Suit
Katherine Muslow, who served as the general counsel of Louisiana State University Health Sciences Center in New Orleans for 16 years, and Meredith Cunningham, a staff attorney who reported to Muslow, are asking to have their pay discrimination and retaliation lawsuit revived.
In an opening brief on appeal filed Dec. 15, Muslow and Cunningham argued that the judge who granted summary judgment dismissing their case did so in the face of factual disputes that should have precluded the early win for LSUHSC-NO.
“But, at every turn, the district court resolved clear fact disputes as a matter of law, refused to consider evidence in the light most favorable to Muslow and Cunningham, and held them to incorrect, unduly rigid standards,” the brief reads.
Muslow and Cunningham have argued the salaries they received were below their paygrade and lower than what male colleagues were making. Muslow, for example, was paid $182,475 in 2015 while general counsel at other academic health-science centers averaged $308,000.
After the women filed complaints with the Equal Employment Opportunity Commission, they allege they were fired in retaliation.
Muslow and Cunningham are represented by Kelli Benham Bills and Anne McGowan Johnson of Tillotson Johnson & Patton.
LSU is represented by the Louisiana Department of Justice.
The case number is 22-30585.
Editor’s Note: Janet Elliott contributed to this report.