In this edition of Litigation Roundup, investigators with the SEC’s Fort Worth regional office accuse a Houston-area man of running a Ponzi-like scheme that defrauded about 150 investors out of $12.3 million, and the fight between Texas and Discord heats up.
Plus, starting in July, former Texas solicitor general and founding partner of Lehotsky Keller Cohn, Scott Keller, will be leaving the firm to start his new job as general counsel of Chevron.
“He brings to the role a rare combination of legal judgment, business acumen, strategic instinct and integrity,” Steve Lehotsky said in a news release. “Chevron is gaining the finest lawyer of his generation.”
Keller, a graduate of the University of Texas School of Law, formerly chaired the Supreme Court and constitutional law practice at Baker Botts.
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.
Collin County District Court
Discord Taps Lehotsky Keller to Defend DTPA Suit
Discord has hired Todd Disher and Will Thompson of Lehotsky Keller Cohn to defend it against a lawsuit lodged by the state of Texas accusing the platform of repeatedly violating the Texas Deceptive Trade Practices Act by building and maintaining “one of the internet’s most efficient hunting grounds for manipulation, grooming, and predatory behavior towards children.”
Texas filed its lawsuit May 22 and obtained from the court an emergency ex parte temporary restraining order the same day that required the company to change the default security settings for Texans’ accounts. According to the court’s order, Discord is enjoined from:
- Representing to Texas consumers that safety is “at the core of everything” the platform does;
- Defaulting certain security settings to their lowest levels;
- Allowing records of user violations to expire after 90 days.
A hearing was scheduled to take place Monday morning on Discord’s motion to dissolve the TRO, which is to remain in effect until June 5. As of Monday afternoon, the docket did not reflect the result of the hearing.
The lawsuit alleges Discord’s combination of anonymous users, real-time voice and video, private group channels, direct messaging and a community invitation system make it a “uniquely efficient environment for bad actors.” In a press release issued Friday announcing the lawsuit, Texas tied Discord’s “design choices” to the sexual assault of a 13-year-old Texas girl at the hands of a “predator who groomed her on Discord over several years,” the suicide of a 13-year-old boy, and a 15-year-old boy who committed suicide after allegedly being coerced into producing explicit material.
Through the lawsuit, Texas is seeking to force Discord to make maximum protection the default safety setting for new accounts, implement age verification and pay back revenue derived from its allegedly unlawful conduct.
The case has been assigned to Collin County District Judge Angela Tucker.
Texas is represented by Jonathan Stone, Jerry Bergman, John C. Hernandez and Hina Halepota of the Texas attorney general’s office.
The case number is 199-03546-2026.
Southern District of Texas
Houston Area Man Accused in Crypto Asset Fraud
The U.S. Securities and Exchange Commission has filed a lawsuit against a Cypress, Texas, man who allegedly defrauded about 150 investors out of $12.3 million.
Nathan Fuller allegedly told the victims he would use his proprietary AI trading bots to engage in high-frequency arbitrage trading of crypto assets. He operated the alleged scheme, starting as early as October 2022, through two of his companies, Privvy and Gateway Digital Investments.
“But Fuller did not engage in high-frequency arbitrage trading on crypto asset trading platforms, and his purported trading bots did not function as represented,” the government alleges in its lawsuit. “Ultimately, he misappropriated approximately half of the investment proceeds for personal spending, used most of the remainder to make Ponzi-like payments, and lulled investors using fake account statements and fabricated correspondence from phony entities.”
The case, filed May 28, has been assigned to Senior U.S. District Judge Lee Rosenthal. An initial conference in the case has been set for Sept. 11.
The SEC is represented by its own Tyson Lies.
Counsel for Fuller had not filed an appearance as of Monday.
The case number is 4:26-cv-04237.
Texas Business Court, First Division
Pizza Hut Sued for $100M by East Coast Franchisee
A franchisee operating about 111 Pizza Hut restaurants in New York, New Jersey, Maryland and Washington, D.C., has sued Plano-based Pizza Hut for $100 million in damages, alleging its mandated use of a particular software program caused the avoidable “destruction” of its business.
Chaac Pizza Northeast turned to the Texas Business Court to lodge the claims against Pizza Hut last month, alleging in a 23-page lawsuit that the mandate to use Dragontail software upended its delivery model, which relied exclusively on DoorDash drivers, and also impacted the efficiency of its kitchen operations.
“Dragontail’s integration with kitchen workflow and aggregator dispatch predictably stripped Chaac’s managers of operational control, introduced delays and invited stacking and other algorithmic behaviors that slowed production and delivery,” the lawsuit alleges. “Despite the predictable incompatibilities and the immediate deterioration in rack time, delivery time and on-time performance, Pizza Hut demanded the continued use of Dragontail, causing cascading operational breakdowns and customer dissatisfaction.”
The lawsuit alleges the software was touted by Pizza Hut as a “technology company for the food industry that uses artificial intelligence to optimize food delivery.” When it was using its old system, where managers would manually input information on deliveries to DoorDash directly, 90 percent of pizzas were delivered within 30 minutes, the lawsuit alleges, while now only about 50 percent are delivered within that time frame.
The case has been assigned to Judge Andrea Bouressa.
Chaac Pizza is represented by Brant C. Martin and Christopher J. Cooper of Wick Phillips Gould & Martin and Robert Salkowski, Robert Zarco and Sabrina Zarco of Zarco Einhorn Salkowski.
Counsel for Pizza Hut had not filed an appearance as of Monday.
The case number is 26-BC01A-0037.
Texas Business Court, Eleventh Division
Pilot Travel Centers Gets $21.9M Final Judgment in Breach Case
About two weeks after Pilot Travel Centers reached an agreement to end its lawsuit against James Ballengee and Meridian Equipment Leasing, a business court judge has entered final judgment in its favor.
Pilot filed notice with the court May 11 that the parties had reached a settlement in the case. Judge Marialyn Barnard, who sits in the Fourth Division that covers San Antonio and surrounding counties, presided over this case, which was filed in Houston, by assignment as part of docket equalization measures.
She entered final judgment May 26 awarding Pilot $21.9 million in damages and about $115,000 in attorney fees.
Pilot filed suit June 24, 2025, alleging that in November 2023, Meridian entered an agreement with one of Pilot’s wholly owned subsidiaries, Equipment Transport, under which Meridian was going to buy its crude transportation assets. Ballengee personally guaranteed the obligations, according to the lawsuit.
Then in December 2023, Pilot and Meridian entered an agreement under which Pilot would sell its interests in Equipment Transport for $12.5 million. Ballengee personally guaranteed those obligations as well, according to the lawsuit.
The lawsuit alleged the defendants defaulted on both notes by failing to make payments on time or by failing to make payments at all.
A bench trial had been set for June 15, which would have been nine days short of a full year since the case was filed in the court that’s been touted as a venue to quickly resolve high-dollar, complex business disputes.
Pilot is represented by Carlos Soltero, Gregory P. Sapire and Christian Pereyda of Maynard Nexsen.
The defendants are represented by David M. Ross of Dallas.
The case number is 25-BC11A-0035.
Texas Supreme Court
Justices Will Hear Lawyers’ Bid to Undo $126K Sanction
The Texas Supreme Court on Friday set oral arguments in a case where Chamblee Ryan and The Deaton Law Firm are fighting a $126,590 sanctions order.
In the underlying case, Robyn Herring sued Delta Equine Center over alleged damages related to her horse, a champion barrel racing stallion named Happy. Angelina County District Judge Robert Inselmann met with the parties to discuss multiple motions in limine before trial, including one about barring discussion of insurance, but counsel for Delta argued on appeal the court “never entered any order on any limine, either in writing or orally.”
During the August 2024 trial, a lawyer for Delta Equine asked a witness about a text message that had been admitted into evidence by Herring regarding insurance coverage for the horse. The text message, between Herring and a Delta employee, asked about faxing the vet an examination form for Happy’s insurance renewal. The lawyer at trial asked the witness whether the text contained any discussion of insurance.
“The witness never answered that question,” Delta wrote in its petition for writ of mandamus. “The mere mention of the word ‘insurance’ caused Herring to immediately move for and obtain a mistrial, and the trial court described it as a more serious affront to the judicial process than ‘somebody us[ing] the F Word.’”
The court concluded a curative instruction was insufficient. Herring later moved for and was granted a request for sanctions against the lawyers for Delta in the amount of $126,590 to cover attorney fees and costs.
In seeking review, Delta told the court the case is “about cascading trial court errors.”
“A trial court cannot punish someone for violating an order that it never ordered,” the petition reads. “The trial court did. A party cannot seek a mistrial based on evidence they voluntarily put into the record. Herring did.”
The court is scheduled to hear oral arguments in the case Sept. 17.
Delta Equine Center and the law firms are represented by Jessica Z. Barger, Rachel H. Stinson and Kyle C. Steingreaber of Wright Close & Barger.
Herring is represented by solo practitioner Don Cruse of Austin, Amy B. Ganci of Heath, Texas, and Erika L. Neill of Lufkin.
The case number is 25-0340.
U.S. Court of Appeals for the Federal Circuit
Versata Wins Big in Appeal of Ford IP Case
The litigation between Austin-based software company Versata and Ford Motor Company in an intellectual property dispute has been a rollercoaster ride.
In October 2022, lead lawyer for Versata, Steve Mitby of Mitby Pacholder Johnson, convinced a federal jury in Detroit that his client was owed $105 million in damages for trade secret misappropriation and breach of contract.
The jury had agreed with Versata that Ford misused its patented software, called the Automotive Configuration Manager, that’s used to configure cars and trucks from billions of possible combinations of parts, features and options by solving mathematical, logical and logistical problems that arise in designing and configuring vehicles.
Versata alleged that some Ford engineers who had worked with its software stole those trade secrets to create a replacement software system Ford called Product Definition and Offer. Ford unsuccessfully argued at trial that its software used “entirely different technologies” and not than Versata’s.
Then, in May 2023, U.S. District Judge Matthew F. Leitman wiped out nearly the entirety of that win based on what he said was a lack of evidence supporting the verdict.
“The court recognizes that, as Versata points out, ‘[o]verturning a jury verdict is difficult by design.’ But here, as explained in detail above, the lack of evidence presented by Versata forced the jury to rest its damages awards on nothing more than speculation,” the court held.
Instead of the $82.2 million in breach of contract damages and $22.3 million in trade secret misappropriation damages doled out by the jury, Judge Leitman entered judgment awarding Versata $3 — $1 for each breach of contract found by the jury.
“While Versata did show that Ford’s breaches caused it (Versata) to suffer damages, it did not present sufficient evidence to permit the jury to quantify those damages in compliance with Michigan law,” the court held. “For that reason, the jury’s award of contract damages cannot stand.”
And then, a couple of weeks ago, the U.S. Court of Appeals for the Federal Circuit added its own twist, reinstating the jury’s $82.2 million award for breach of contract and remanding the case back to Judge Leitman for a new trial on damages for trade secret misappropriation.
“Versata’s and Ford’s expert testimony, the submission of the [master subscription and services agreement] and the 2011 addendum, and the jury instructions given by Versata’s counsel during closing arguments all amount to sufficient evidence that provided the jury with a discernible path to properly calculate damages,” the panel wrote. “Accordingly, we reverse the district court’s reduction of breach of contract damages and reinstate the jury award of $82,260,000 to Versata.”
The appellate panel also determined Judge Leitman incorrectly interpreted Sixth Circuit precedent when he used it to prevent Versata from seeking damages except those that could be tied to the parties’ licensing history.
“The district court’s preclusion of unjust enrichment damages impacted Versata’s ability to seek damages throughout this case, including at trial and during posttrial proceedings,” the panel wrote. “Accordingly, we partially vacate the district court’s JMOL zeroing out the jury’s damages award and remand for a new trial on damages for trade secret misappropriation. We also instruct the district court to reconsider Versata’s reasonable-royalty models it previously excluded because they were not solely based on the parties’ licensing history.”
Chief Judge Kimberly A. Moore and Judges Todd M. Hughes and Richard G. Taranto sat on the panel that decided the case May 22.
Versata is represented by Jeffrey A. Lamken of MoloLamken, Jennifer Fischell, Michael Pattillo Jr. and Thomas P. Schubert of Eugene Alexis Sokoloff, Dan K. Webb and Samuel Zuidema of Winston & Strawn, Steve Mitby of Mitby Pacholder Johnson, Jaye Quadrozzi of Varnum and Sharoon Saleem of JonesSpross.
Ford is represented by Jessica L. Ellsworth of Hogan Lovells, Dana A. Raphael and William Havemann of Milbank and John S. LeRoy, Thomas A. Lewry and Christopher C. Smith of Brooks Kushman.
The case number is 24-1140.
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