In this edition of Litigation Roundup, Phillips 66 must pay $195 million in exemplary damages — on top of nearly $605 million in compensatory damages — in a trade secrets case in California, a federal judge in East Texas sides with female athletes at Stephen F. Austin State University who brought a Title IX lawsuit after the university announced it would end several women’s sports programs, and Amazon is the latest target of a company accusing retail behemoths of infringing barcode technology.
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.
California Superior Court
Phillips 66 ‘Reprehensible’ Misconduct Nets $195M Exemplary Damage Award
A judge in California who presided over a trade secrets jury trial in October that ended with a $604.9 million verdict against Phillips 66 has determined the company must also pay $195 million in exemplary damages for business conduct he called “reprehensible.”
A jury had awarded Propel Fuels $604.9 million after agreeing Phillips 66 had “willfully and maliciously” misappropriated the trade secrets of the low-carbon fuels retailer when it launched its own renewable fuels business.
The jury heard five weeks of testimony. Propel had alleged in its February 2022 lawsuit that, after entering a nondisclosure agreement, it shared certain trade secrets with Phillips during a due diligence period in 2017, when Phillips was considering acquiring Propel.
Propel alleged that in August 2018 Phillips terminated the deal and announced the next day it was entering the renewable diesel market.
Judge Michael Markman issued the 16-page order July 30, explaining the amount of exemplary damages he assessed is “triple the purchase price offered by Phillips 66 for Propel Fuels in March 2018.” The figure is far lower than the $1.2 billion exemplary award Propel was seeking.
“In summary, the court finds that Phillips 66’s misconduct was ‘reprehensible’ from a business perspective,” he wrote. “The evidence at trial reflects that Phillips 66 took advantage of Propel Fuels by abusing its bargaining power during due diligence.”
“Phillips dangled the carrot of an acquisition of $40 million, plus $25 million in milestone-based incentives to Propel’s executive team. After Phillips walked away from the deal, the evidence reflects that Propel nearly imploded,” Judge Markman wrote.
Propel’s proposed $1.2 billion exemplary award, Judge Markman wrote, “would go too far.”
“The jury award is enormous, but not punitive, because it forces Phillips 66 to give up the gains it made at Propel’s expense,” he wrote. “The court’s $195 million figure punishes Phillips for its misconduct because it is directly tied to the real-world value of the benefit of the parties’ bargain.”
Judge Markman has a hearing set for Tuesday where the parties will discuss “the proposed form of judgment” and where he will enter final judgment.
Propel is represented by Michael Ng, Daniel Zaheer and Zachary Ritz of Kobre & Kim.
Phillips 66 is represented by Theodore J. Boutrous Jr., Samuel Eckman, Marcus Curtis and Yan Zhao of Gibson, Dunn & Crutcher and Arman Zahoory and Alexa Solimano of Latham & Watkins.
The case number is 22CV007197.
Northern District of California
Kimberly-Clark Gets Baby Wipes PFAS Suit Tossed
A proposed class action lawsuit alleging Huggies baby wipes failed to disclose they contain polyfluoroalkyl substances, known as “PFAS” or “forever chemicals,” has been dismissed by a federal judge in California.
U.S. District Judge Araceli Martínez-Olguín granted Irving-based Kimberly-Clark’s motion to dismiss the lawsuit on July 28. The lawsuit was filed in October by lead plaintiff Bridget Erickson, who alleged Huggies’ advertising and labeling was misleading and deceived “reasonable customers” who wouldn’t have “paid as much for the product” had they known its contents.
Judge Martínez-Olguín wrote in the 13-page order that the plaintiffs, in order to avoid early dismissal of the suit, must show that the amount of PFAS in the wipes is “harmful or toxic, thus contradicting the label.”
“On this point, plaintiffs have not met their pleading burden under Rule 9(b),” she wrote, before explaining that the plaintiffs’ use of Environmental Protection Agency’s PFAS guidelines for what constitutes safe drinking water don’t apply to baby wipes since they are “used on the skin rather than consumed.”
The judge also rejected the theory that the plaintiffs have been harmed by Kimberly-Clark’s alleged omissions about the presence of PFAS in the baby wipes.
“Plaintiffs do not allege the wipes were labeled ‘PFAS-free,’ and for the reasons stated in the Court’s analysis of the misrepresentation claims, the presence of PFAS is not contrary to labeling that the wipes are ‘plant-based’ or ‘gentle,’” she wrote. “Therefore, plaintiffs have not plausibly stated an omission claim ‘contrary to a representation actually made by the defendant.’”
The plaintiffs are represented by Joshua Glatt, Joshua Wilner and Timothy Fisher of Bursor & Fisher.
Kimberly-Clark is represented by Timothy Loose of Gibson, Dunn & Crutcher.
The case number is 3:24-cv-07032.
Western District of Texas
Austin-based Company Sues Amazon for Patent Infringement
Wolverine Barcode IP has accused Amazon of infringing its patents related to conducting offline transactions that use a barcode as a method of personal identification.
The Austin-based company filed its seven-page complaint Wednesday, which has been assigned to U.S. District Judge David Counts.
Wolverine Barcode IP also accuses the retailer of inducing and contributory infringement by encouraging customers to use infringing products and providing services with no substantial non-infringing uses.
Wolverine Barcode IP is seeking a permanent injunction against Amazon from using the patented technology, damages of a reasonable royalty or lost profits, and a jury trial.
A search of federal court records shows that Wolverine’s suit against Amazon is the ninth it has filed in Texas, having previously accused Albertson’s, Costco, CVS, 7-Eleven, McDonald’s, Best Buy and Dunkin’ Donuts of patent infringement. Wolverine voluntarily dropped its suit against CVS in April, but the other suits remain active.
Wolverine Barcode IP is represented by William Ramey of Houston.
Attorneys for Amazon have not filed an appearance with the court.
The case number is 7:25-cv-330.
Eastern District of Texas
Judge Truncale Deals SFA a Blow in Title IX Suit
On Friday U.S. District Judge Michael J. Truncale sided with a group of plaintiffs who asked the court to block Stephen F. Austin State University’s plans to axe three women’s sports teams: beach volleyball, bowling and golf.
Sophia Myers and a handful of other plaintiffs filed their proposed class action Title IX lawsuit in June after the university in May announced it would eliminate the three women’s sports as well as men’s golf.
“This belated notification left plaintiffs scrambling to arrange alternative plans for the upcoming academic year,” Judge Truncale wrote in the 17-page order. “According to the athletes, the transfer windows for women’s bowling, beach volleyball and golf had already closed or were imminently closing after the announcement, with many alternative teams already having filled rosters and allocated their scholarship budgets.”
Judge Truncale held a two-day hearing on the emergency motion for a temporary injunction where he heard testimony from a plaintiffs’ expert that women make up 63 percent of the undergraduate population at SFA but receive only 45.6 percent of the athletic opportunities. That expert also testified that if SFA went through with its plan to eliminate the women’s teams, it would increase the number of varsity intercollegiate athletic opportunities for women it needs to add to reach proportionality from 223 to 245.
The plaintiffs are likely to succeed with their claim that SFA is not in compliance with its obligation to provide a substantially proportionate opportunity to men and women respective to their enrollments, Judge Truncale held.
And the plaintiffs also showed they will suffer irreparable injury without an injunction, he wrote.
“SFA argues that plaintiffs do not suffer from irreparable injury because their harm ‘is both speculative and self-inflicted.’ This callous assertion stems from its claim that plaintiffs delayed in filing the suit and from the fact that some of their teammates already transferred,” Judge Truncale wrote.
He rejected the idea that there was delay in filing suit, noting the announcement came May 22, legal counsel for the plaintiffs sent notice to SFA of their Title IX allegations on June 5, and this lawsuit was filed June 30, three days after settlement negotiations fell through.
“Nor can the Court say their injury was ‘self-inflicted’ when the athletes were forced to make an impossible decision between remaining at SFA with no opportunity to play their sport or to transfer and potentially prolong their academic careers and not receive the same financial compensation,” the judge wrote.
The plaintiffs are represented by Arthur Bryant of Arthur Bryant Law, James Sowder and Ellen Platt of Thompson, Coe, Cousins & Irons and Ashlyn Hare and John Clune of Hutchinson Black and Cook.
SFA is represented by Marlayna Ellis and Sheaffer Fennessey of the Texas attorney general’s office.
The case number is 9:25-cv-00187.
Court Trims ‘Energy Manipulation’ Suit against Blackrock, Others
A lawsuit the state of Texas brought against BlackRock, State Street and Vanguard Capital accusing the asset managers of conspiring to manipulate the coal market via anticompetitive trade practices will not be dismissed early in its entirety, a federal judge who trimmed some claims has determined.
U.S. District Judge Jeremy D. Kernodle issued a 61-page order Aug., largely leaving the lawsuit intact but tossing three claims: one alleging that the defendants violated the Louisiana Unfair Trade Practices Act, and two alleging violations of the Nebraska Consumer Protection Act. Texas Attorney General Ken Paxton issued a news release calling the ruling a “major victory.”
Texas and 10 other states filed suit against the asset managers in November, accusing them of leveraging their shareholdings in competing coal companies to influence the management of those companies to reduce coal production. The goal, the lawsuit alleges, was to see the output of coal reduced by half by 2030 to further “green energy” goals at the expense of consumers, who paid more for energy as a result.
Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Montana, Nebraska, West Virginia and Wyoming are plaintiffs as well.
Texas is represented by Brian Barnes, Harold Reeves, John Ramer and David H. Thompson of Cooper & Kirk.
The FTC is represented by its own William Adkinson, Kelse Moen, Anupama Sawkar and Daniel Guarnera. The DOJ is represented by its own G. Charles Beller, Alice A. Wang and David B. Lawrence.
BlackRock is represented by David Gringer, Jennifer Milici, John O’Toole, Lauren Ige, Perry Lange and Thomas Mueller of Wilmer Cutler Pickering Hale and Dorr and Gregg Costa, Prerak Shah and Rachel S. Brass of Gibson Dunn & Crutcher.
State Street is represented by Jason M. Powers, George Kryder III, Mackenzie Newman, Megan Cloud, Stacey Vuand Stephen M. Medlock of Vinson & Elkins.
The Vanguard Group is represented by Robert D. Wick, John Playforth and Shadman Zaman of Covington & Burling and Bradley Weber and Chase Cobb of Troutman Pepper Locke.
The case number is 6:24-cv-00437.
Sixth Court of Appeals, Texarkana
Samsung Settles $287M Breach Dispute With Dutch Telecom Company
Samsung Electronics and Dutch telecommunications company Koninklijke KPN N.V. have reached a deal that will end the litigation between them.
The announcement, made Thursday, comes while Samsung was appealing the $287 million jury verdict rendered against it in February 2024. Koninklijke had accused the company in a 2022 lawsuit of breaching the terms of a 2016 settlement agreement that included a license for certain patents.
After the jury sided with Koninklijke, Samsung filed suit in the Eastern District of Texas, arguing it was the victim of an “about face” because Koninklijke maintained it wasn’t suing for patent infringement, even though that claim underpinned the state district court case.
The federal court remanded the case back to state court in April 2024, and Samsung appealed the verdict to the Texarkana appellate court.
Samsung is represented by Melissa R. Smith and Harry Lee “Gil” Gillam Jr. of Gillam & Smith, Neil P. Sirota, Paul A. Ragusa, Thomas E. O’Brien and Monica H. Smith of Baker Botts and John Bash, Sean S. Pak and Kevin Hardy of Quinn Emanuel Urquhart & Sullivan.
Koninklijke is represented by Alexandra G. White and Hunter Vance of Susman Godfrey, Warren Harris of Bracewell and Kurt Truelove of Truelove Law Firm.
The case number is 06-24-00059-CV.
Alexa Shrake contributed to this report.
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.
Dallas-based law firm Dean Omar Branham Shirley secured a $42 million jury verdict against Johnson & Johnson in Boston for a couple who alleged the patriarch’s mesothelioma stemmed from his use of the company’s baby powder. The firm has brought several successful lawsuits against J&J and most recently, in June, won another $8 million verdict.
Another company whose Chapter 11 bankruptcy proceeding is one of a handful being examined by the U.S. Trustee in the Jackson Walker dispute announced it had reached a settlement with the law firm. The $385,000 settlement, if approved by Chief U.S. District Judge for the Western District of Texas Alia Moses, would completely resolve all claims between Sungard AS New Holdings and JW. The announcement marked back-to-back weeks companies have sought approval of settlements with Jackson Walker.
A jury trial that the judge decided before closing arguments has been revived by the Federal Circuit Court in a case where Reese Marketos is representing WhereverTV in a patent infringement lawsuit against Comcast.
A couple of other noteworthy bankruptcy petitions were filed in Texas last week, too. Fracking sand miner FCI Sand Operation filed in the Northern District of Texas, citing between $100 million and $500 million in liabilities and assets, while industrial 3D printer Desktop Metal Operating opted to filed in the Southern District of Texas.
The Fourteenth Court of Appeals recently issued an opinion in a trade secrets dispute that offers litigants a roadmap on preemption and jury charge issues. The lawyer who represents a dozen former DNOW employees said the opinion reshapes the legal landscape in Texas for trade secret and fiduciary duty claims.