In this edition of Litigation Roundup, a poker house’s appellate gamble pays off, Texas draws suit over a three-year old anti-ESG law, and a lawsuit that was seeking more than $7 billion in damages gets booted from Texas courts.
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.
Dallas County District Court
Allen Premium Outlets Sued Over 2023 Mall Shooting
Simon Property Group, Allen Premium Outlets and Allied Universal Security Services have been named as defendants in a lawsuit over the fatal May 2023 mass shooting that left eight dead and seven wounded.
The lawsuit, which alleges the defendants failed to properly staff the mall with security, was brought by some of those injured in the shooting and by the family members of five people who were killed. Simon, the largest owner of shopping malls in the country, owns Allen Premium Outlets where the mass shooting occurred. Allied, the largest provider of security guards in the world, provided security for the mall. The hotel where the shooter stayed and his estate also are defendants.
Killed in the shooting were Elio Cumana-Rivas, Aishwarya Thatikonda, Kyu Cho, Cindy Cho, James Cho, Daniela Mendoza, Sofia Mendoza and Christian LaCour.
The lawsuit is seeking damages in excess of $1 million. Counsel for the defendants had not filed an appearance as of Wednesday.
The case has been assigned to Dallas County District Judge Staci Williams.
The plaintiffs are represented by Jamal Alsaffar and Steven Haspel of National Trial Law and Jeffrey B. Simon, Charles E. Soechting Jr., Iyman N. Strawder and Shreedhar Patel of Simon Greenstone Panatier.
The case number is DC-24-13445.
AG Sues State Fair, City of Dallas Over Gun Ban
The state of Texas is taking aim at a gun ban implemented by the State Fair of Texas banning firearms on the fairgrounds.
Attorney General Ken Paxton has asked a court to bar the fair from enforcing the rule that he argues unconstitutionally infringes the rights of gunowners. The lawsuit, filed Aug. 29, also names the City of Dallas and its interim city manager as defendants.
“Municipalities cannot nullify state law nor can they avoid accountability by contracting official functions to nominally third parties,” Paxton said in a news release announcing the lawsuit. “Neither the City of Dallas nor the State Fair of Texas can infringe on Texans’ right to self-defense. I warned fifteen days ago that if they did not end their unlawful conduct I would see them in court, and now I will.”
Texas is represented by assistant attorneys general Ernest C. Garcia and Cannon Parker Hill.
A case number and counsel information for the defendants was not available Wednesday.
Harris County District Court
County Settles with Arkema following Harvey Incident
Seven years after trailers filled with organic peroxide combusted and burned for days at Arkema’s Crosby, Texas, facility in the wake of Hurricane Harvey, the county recently announced it has reached a settlement.
Under the $1.1 million deal, Arkema will enhance safety and notification procedures that will decrease the likelihood of a future incident and will improve communication with the surrounding community and municipalities in the event of an incident.
Already the company has constructed a detention bond, reinforced its buildings and has elevated its generators out of the floodplain.
“With this settlement, we’re holding Arkema accountable and taking steps to protect the health and safety of Harris County residents,” Harris County Attorney Christian Menefee said in a news release. “The changes Arkema has agreed to has significantly improved how future incidents will be handled, ensuring our community and first responders get the information they need quickly.”
The settlement money will go to the county’s general fund, to be allocated by county commissioners.
Northern District of Texas
American Airlines Accused of Securities Violations Over Marketing, Sales Strategies
New marketing and sales strategies implemented by American Airlines after the global pandemic has drawn a proposed class action lawsuit from its shareholders who accuse the company of violating securities laws.
The lawsuit was filed by lead plaintiff John A. Thornburg Aug. 28 and has been assigned to U.S. District Judge Reed C. O’Connor. The proposed class would include purchasers of American Airlines common stock between July 20, 2023 and May 28, 2024.
Thornburg, who also named six of the airline’s executives as defendants, alleges that the company made false and misleading statements about a new strategy that was supposed to help it financially recover after a dip in business travel during the pandemic actually “were not sustainable because they alienated travel agencies and the corporate customers who were among the airline’s highest spending customers, drove away lucrative corporate customers and ultimately diminished the company’s revenues.”
The crux of the claims relates to a decision to “slash its sales staff and remove some fares from the channels that corporate customers historically had used, aiming to coax more corporate travelers to book directly on American Airlines’ own website or web app.”
Thornburg alleges American Airlines removed 40 percent of the lowest fares it offered from the platforms used by travel agencies and channels used by corporate customers. That in turn alienated and drove away corporate customers and hurt the company’s revenues and earnings.
Counsel for American Airlines had not filed an appearance as of Wednesday.
The proposed class is represented by Joe Kendall of Kendall Law Group and Juan Sanchez, Mary K. Blasy and Samuel H. Rudman of Robbins Geller Rudman & Dowd.
The case number is 4:24-cv-00823.
Energy Services, Staffing Co. Sees $150M Suit Tossed
BHI Energy I Power Services will not get to proceed with a lawsuit against competitor KVP Holdings accusing it of unfair business practices that was filed after several of its employees went to work for KVP.
U.S. District Judge Sam A. Lindsay dismissed the suit that was filed in September 2022 on summary judgment Aug. 29. Many documents in the case have been filed under seal.
In an 18-page order granting summary judgment to KVP, Judge Lindsay noted that BHI hadn’t provided sufficient evidence to support its damages model. KVP argued the damages model was too speculative to be submitted to a jury and that it had failed to disclose certain information supporting its theory or methodology for calculating alleged damages.
“Additionally, plaintiff’s assertions regarding damages based on lost profits and equipment are simply not supported by the evidence that it cites and on which it relies,” the judge wrote. “Plaintiff has, therefore, failed to raise a genuine dispute of material fact regarding its damages as required for each of its claims because, even viewing all facts and inferences in the light most favorable to BHI and resolving all disputed facts in its favor, the court determines that the record as a whole would not lead a rational trier of fact to find for it.”
KVP is represented by John Sanders, Chase Cooper, Matt Durfee, Nathan Lee, Ashley Wright, and Alex Nowakowski of Winston and Strawn.
BHI is represented by Michael S. Forshey of Squire Patton Boggs and Ryan Wood and Sheldon Richie of Richie & Gueringer.
The case number is 3:22-cv-01981.
Western District of Texas
Texas’ Anti-ESG Law Targeted by Biz Group
The American Sustainable Business Council is asking a court to block a three-year-old Texas law that prohibits the state from contracting with or investing in companies that “boycott energy companies.”
The law, S.B. 13, was passed during the 2021 session and bars Texas from investing in or contracting with companies that refuse to do business with energy companies that engage “in the exploration, production, utilization, transportation, sale, or manufacturing of fossil fuel-based energy and does not commit or pledge to meet environmental standards beyond applicable federal and state law.”
The ASBC alleges the law is intended to “coerce and punish” businesses intent on reducing reliance on fossil fuels, that it doesn’t actually help energy businesses and that “its impact on the state has been negative.”
“According to a recent study conducted for the Texas Association of Business, SB 13 and a companion law related to firearms cost Texans approximately $668 million in lost economic activity and 3,034 fewer jobs in the 2022–2023 fiscal year, as well as reduced competition and directly increased state entities’ costs for banking, investment, and finance by approximately $270 million,” the lawsuit alleges.
The law violates the First and Fourteenth Amendments, ASBC alleges, because it infringes free speech and “encourages arbitrary enforcement and fails to give regulated entities fair notice of prohibited conduct.”
ASBC, which represents more than 200,000 businesses and business groups, filed the lawsuit Aug. 29, and it has been assigned to U.S. District Judge Robert Pitman.
Texas Comptroller Glenn Hegar, whom ASBC alleges maintains a blacklist of companies that cannot contract with Texas, is named as a defendant in the lawsuit.
“The comptroller has also blacklisted entities holding large stakes in fossil fuel companies because those entities express support for sustainable climate goals,” the suit alleges. “It is clear the comptroller is committed to punishing voices that are opposed to fossil fuel reliance.”
The ASBC is represented by Ananda V. Burra, Kristen Miller, Rachel L. Fried, Skye Perryman and Victoria Nugent of the Democracy Forward Foundation, Ketan Kharod, Marco Guerrero and Mary whittle of Guerrero & Whittle and Matthew D. Brinckerhoff, Sana F. Mayat and Vasudha Talla of Emery Celli Brinckerhoff Abady Ward &Maazel.
The case number is 1:24-cv-01010.
Trade Secret Lawsuit Seeking $7.8B in Damages Gets Tossed
A team from Holland & Knight recently secured dismissal of a lawsuit where one Israeli electric vehicle company was suing another, after U.S. District Judge Alan D. Albright agreed the suit doesn’t belong in Texas.
OSR Enterprises had sued REE Automotive in December 2022 seeking $2.6 billion in compensatory damages and $5.2 billion in exemplary damages for REE’s alleged theft of its source code and proprietary files to develop a platform for electric vehicles, according to the lawsuit. OSR also accused REE of poaching nine employees who live in Israel, including its head of research and development.
“Having carefully considered the nearly 150 pages of briefing and more than 1,200 pages of evidence submitted by the parties, including dueling expert declarations, this Magistrate Judge finds that Israel would be a more convenient forum for this dispute and recommends dismissal,” Judge Susan Hightower wrote in a Jan. 4 report and recommendation.
OSR had alleged that REE used the trade secrets to enter into an eight-year economic development agreement with the city of Pflugerville to employ 125 people at a facility there.
“The court finds that this is an Israeli dispute, not a controversy localized to this district and REE USA’s plans in Pflugerville create little or no local interest in having this case resolved here,” Judge Hightower wrote. “Israel—where most of the parties are based, the relevant activities took place, and a related criminal investigation is underway — has a much stronger interest.”
REE is represented by Brad Hancock, Anthony Sirven, Mark Davis, Robert Hill, Gabriel Godoy and Maria Gil of Holland & Knight and Deron R. Dacus of The Dacus Firm.
OSR is represented by Marc. E. Kasowitz, Daniel J. Koevary, Paul J. Burgo, Rachel Bandli and Constantine Z. Pamphilis of Kasowitz Benson Torres.
The case number is 1:22-cv-01327.
Fifth Court of Appeals, Dallas
Texas Card House Gets Certificate of Occupancy Reinstated
A company that operates a commercial poker business in Dallas has had its certificate of occupancy reinstated by a three-justice panel.
TCHDallas 2, which operates as Texas Card House, alleged that for two years it worked diligently with the Dallas city attorney and city council to make sure its plans for a commercial poker house wouldn’t run afoul of the law, and in October 2020 it was issued the certificate of occupancy.
Then in December 2021, the chief building official for the city revoked the certificate on grounds that the poker house “violated Texas Penal Code section 47.04,” according to court documents.
Texas Card House appealed that decision to the Board of Adjustment, which, after hearings, unanimously voted to reinstate the certificate of occupancy.
That’s when the dispute made it to court. The city building official filed a petition in April 2022 seeking to reverse the Board of Adjustment’s ruling and Dallas County District Judge Eric V. Moyé did just that after a bench trial in October 2022.
Judge Moyé wrote that the Board “abused its discretion and made an illegal decision” in reinstating the certificate of occupancy.
Texas Card House appealed in November 2022. In a 12-page ruling issued Aug. 27, the justices explained the trial court had failed to “afford the required deference to the BOA’s decision.”
“If reasonable minds could have reached the conclusion the BOA must have reached to justify its action, the trial court must uphold the BOA’s order,” the panel wrote. “In other words, the party challenging the BOA’s findings must establish that the BOA could only have reasonably reached one decision. We conclude the trial court effectively substituted its discretion for that of the BOA in this case in which the BOA could have reached multiple decisions.”
Justices Bonnie Lee Goldstein, Maricela Moore Breedlove and Cory L. Carlyle sat on the panel.
Texas Card House is represented by Mike Gruber, Brian E. Mason, Zachary Tobolowsky, Dale Wainwright and Justin Bernstein of Greenberg Traurig.
Dallas is represented by Thomas P. Brandt, John D. Husted and Laura O’Leary of Fanning Harper Martinson Brandt & Kutchin.
The case number is 05-22-01278.