In this edition of Litigation Roundup, Texas touts what could be a first-of-its-kind settlement with an artificial intelligence company accused of misleading customers about the reliability of the product, The Wall Street Journal secures a ruling upholding the strength of its subscription agreements, and the full Fifth Circuit agrees to rehear a case involving a Houston personal injury law firm and a former associate.
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
AI Healthcare Company Settles Allegations with Texas
In a settlement touted as the first of its kind, a Dallas-based artificial intelligence company has reached a deal to resolve allegations it has misled Texas hospitals about the reliability of its products.
Pieces Technologies represented to at least four hospitals that if the hospitals provided real-time patient healthcare data its AI product could summarize the condition and treatment plan for hospital staff.
“AI companies offering products used in high-risk settings owe it to the public and to their clients to be transparent about their risks, limitations, and appropriate use. Anything short of that is irresponsible and unnecessarily puts Texans’ safety at risk,” Attorney General Ken Paxton said in a statement. “Hospitals and other healthcare entities must consider whether AI products are appropriate and train their employees accordingly.”
Pieces claimed its AI product had a “severe hallucination rate” of less than .001 percent, which Texas alleged was deceptive.
The case was assigned to Dallas County District Judge Gena Slaughter.
Texas is represented by Tyler Bridegan of the Texas attorney general’s office.
Pieces is represented by Zach Mayer of Mayer LLP, and William Mateja and Jason Hoggan of Sheppard, Mullin, Richter & Hampton.
The case number is DC-24-13476.
Western District of Texas
WSJ Gets Win in Copyright Infringement Case
Dow Jones & Company, the parent company of The Wall Street Journal and Barron’s, has notched a win affirming the strength of its subscription agreements with readers.
The lawsuit was filed in June 2022, accusing Britton Harris — an investment manager and professor who formerly served as chief investment officer at the Texas Retirement System of Texas — of distributing more than 6,000 articles appearing in The Wall Street Journal and Barron’s to hundreds of students and others.
Harris taught a class called “Titans of Investing” to students at Texas A&M University, Baylor University and the University of Texas. He argued that his “unpaid, noncommercial, educational distribution” of the stories constituted fair use.
U.S. District Judge David Alan Ezra wrote that while Harris’ distribution of the content to the students “likely falls under fair use,” the problem is that Harris also sent the content to hundreds of employees at the Teacher Retirement System of Texas and the University of Texas Investment Management Company.
Judge Ezra entered a summary judgment ruling Sept. 17, finding Harris had breached his contract with the media company.
“The evidence is undisputed that Harris distributed copyrighted materials to hundreds of his former Titan students and employees at [Teacher Retirement System of Texas] and [University of Texas Investment Management Company] over the course of many years,” he wrote. “The evidence is also undisputed that Harris never paid a licensing fee to include Dow Jones’s materials in his daily [“Reading With Britt”] emails. Harris had constructive knowledge that he was to contact Dow Jones Reprints to pay the appropriate licensing fee for his non-personal use in distributing the articles and did not do so.”
Haynes Boone partner Laura Prather, who represents Dow Jones & Company, said the win is significant for “publishers across industries.”
“It reinforces the importance of protecting intellectual property and ensures that subscription agreements are taken seriously in today’s digital age,” she said.
Dow Jones & Company is also represented by Michael Lambert and Reid Pillifant of Haynes Boone.
Harris is represented by Hailey L. Suggs, Peter D. Kennedy, Christopher C. Cyrus and James A. Hemphill of Graves, Dougherty, Hearon & Moody.
The case number is 1:22-00564.
Northern District of Texas
Class Action Filed Against Parking Garage Operator
A proposed class of plaintiffs has filed a lawsuit against a parking garage operator accusing the California-based company of bilking drivers out of millions via unwarranted charges.
Lead plaintiff Todd Frankfort accuses Metropolis Technologies of billing itself as a technology driven company that actually “created systems that are designed to intentionally confuse, deceive, and charge unauthorized fines and fees to extract more revenue from consumers.”
When patrons enter parking garages managed by Metropolis, according to the lawsuit, they don’t encounter barriers or ticket dispensers; instead, QR codes are on signs at the entrance and exit points. Customers are supposed to scan the QR code and pay that way.
But Frankfort alleges many customers don’t notice the sign and are later mailed parking fines of as much as $70 for failing to pay at the time they parked. The lawsuit brings claims for violations of the Texas Deceptive Trade Practices Act and the Federal Fair Debt Collection Practices Act.
“Our lawsuit alleges that Metropolis’s business model seems to be based on tricking and threatening consumers to generate revenue for the company and any other parking facility owners,” said Craig Haynes of Vartabedian Hester & Haynes in Dallas, co-counsel for the plaintiffs. “Consumers are protected by law from such scams, and we intend to have those protections upheld.”
The case, filed Sept. 6, has been assigned to U.S. District Judge Sam A. Lindsay.
The plaintiffs are also represented by Alex Brown, Mark Lanier, Kevin P. Parker and Alfred Mackenzie of The Lanier Law Firm and Robert C. Vartabedian and Daniella P. Main of Vartabedian Hester & Haynes.
Counsel for Metropolis had not filed an appearance as of Monday.
The case number is 3:24-cv-02283.
Fourteenth Court of Appeals, Houston
Split Panel Tosses Ambulance Crash Suit for Lack of Expert Report
A divided panel of justices has affirmed the dismissal of a lawsuit stemming from a crash with an ambulance after agreeing the lawsuit should have been filed with an expert report required in healthcare liability cases.
Dexter Fernil and his spouse sued Allegiance Mobile Health and the driver of one of the company’s ambulances after he was struck in an intersection by the emergency vehicle that had run a red light. The ambulance was driving through the intersection with lights activated and its sirens off. The impact killed the ambulance’s passenger, Donald Willis, who was being taken to the hospital with complaints of chest pains, according to the opinion.
The trial court tossed Fernil’s suit after finding the failure to file an expert report — explaining the standard of care, how it was deviated from and how that deviation caused the alleged injuries at issue — was fatal to his lawsuit.
On appeal, Fernil argued his personal injury suit was wrongly classified as a health care liability claim.
Chief Justice Tracy Christopher and Justice Randy Wilson joined in the majority opinion issued Sept. 19, affirming dismissal of the lawsuit.
“We conclude that the Fernils’ claims against the defendant health care providers implicates the defendants’ conduct during the course of Willis’s care or treatment,” the justices wrote. “Thus, the presumption arose that the Fernils’ claims are HCLCs, and the burden shifted to the Fernils to rebut that presumption.”
In a two-page dissent, Justice Jerry Zimmerer wrote the majority had expanded the scope of the Texas Health Care Liability Act, which was “originally enacted by the Legislature to protect physicians from questionable medical malpractice lawsuits.”
“Today’s majority opinion expands this protection to ambulance drivers who negligently violate rules of the road,” he wrote. “A medical opinion is not required to either establish the rules of the road or common negligence. To the extent that the majority extends the HCLA to the facts of this case, I respectfully dissent.”
Allegiance Mobile Health is represented by Phillip W. Bechter and John S. Collins of Vorys, Sater, Seymour and Pease.
The Fernils are represented by Ted B. Lyon Jr. and Ben Taylor of Ted B. Lyon & Associates and David J. LaRue and Brandon Ramsey of Loncar Lyon Jenkins.
The case number is 14-23-00910-CV.
U.S. Patent Trial and Appeal Board
Haynes Boone Gets Win for Fracking Tech Client
Downing Wellhead Equipment recently prevailed in an inter partes review proceeding against a competitor that was challenging two patents covering certain fracking technology.
The two recent decisions in favor of Downing Wellhead are part of a larger dispute between Downing and competitor Intelligent Wellhead Systems over pressure control technologies used in hydraulic fracturing operations. In particular, Intelligent Wellhead Systems was challenging the validity of two patents covering a technique called “continuous pumping.”
“We’re thrilled the PTAB recognized these patents stand on solid legal and technical ground. These were complex but critically important cases,” Haynes Boone partner Scott Jarratt said. “As the energy industry evolves, we remain committed to defending Downing’s pioneering technologies in whatever forum is necessary.”
Downing is also represented by Russ Emerson, Tiffany Cooke, Lee Johnston, Alan Herda, Zachary Halbur, Andrew Drott, Laura Vu, Brooke Parker and Marron Frith of Haynes Boone.
Intelligent Wellhead Systems is represented by Tammy J. Terry of Osha Bergman Watanabe & Burton.
The case numbers are IPR2024-00583 and IPR2024-00584.
U.S. Court of Appeals for the Ninth Circuit
Panel Hands Exxon Mobil, Chevron Win in Gas Price Collusion Suit
A group of gasoline consumers who accused major oil companies of colluding to violate antitrust laws in order to inflate the price of gas will not get to proceed with their lawsuit after a federal appellate court recently affirmed dismissal of the claims.
The ruling came in the proposed class action lawsuit brought by lead plaintiff Rosemary D’Augusta against several defendants — the American Petroleum Institute, Exxon Mobil, ChevronTexaco Capital Corporation, Phillips 66, Occidental Petroleum, Devon Energy, Energy Transfer, Hilcorp Energy and Continental Resources.
“Plaintiffs allege that defendants colluded with the U.S. government, including then-President Trump, to negotiate with Russia and Saudi Arabia to end their price war on oil,” the 21-page opinion reads. “These claims are largely barred by the political question and act of state doctrines. Plaintiffs’ separate allegations — that defendants conspired among themselves to raise oil prices — fail to plead an antitrust conspiracy.”
Judges Ronald M. Gould, Richard C. Tallman and Ryan D. Nelson sat on the panel that issued the Sept. 16 opinion.
Chevron is represented by Ginger Anders of Munger, Tolles & Olson in D.C. Exxon Mobil is represented by Stephen McIntyre of O’Melveny & Myers.
The plaintiffs are represented by Joseph M. Alioto Sr. of San Francisco.
The case number is 23-15878.
U.S. Court of Appeals for the Federal Circuit
Sheppard Mullin Gets a Win in Suit Against GoPro
GoPro was wrongly granted an early win in a patent infringement lawsuit, a panel of judges recently determined, reviving the litigation between the wearable camera company and Contour IP Holdings.
A panel of judges on the Federal Circuit determined U.S. District Judge William H. Orrick of the Northern District of California should not have granted GoPro summary judgment on grounds that Contour’s patents were ineligible.
Contour, which sued GoPro in 2015 and 2021, owns two patents covering technology used in “portable, point-of-view video cameras.” GoPro alleged the patents covered “known or conventional components that existed in the prior art at the time of the invention.”
The court held that the patents “provide a technological improvement to the real time viewing capabilities of a POV camera’s recordings on a remote device.”
Judges Sharon Prost, Alvin A. Schall and Jimmie V. Reyna sat on the panel that issued the Sept. 9 decision.
Contour is represented by John R. Keville and Michael Krill of Sheppard, Mullin, Richter & Hampton and Richard L. Stanley of Houston.
GoPro is represented by Sean S. Pak, William Adams, Nathan Hamstra and Marc L. Kaplan of Quinn Emanuel Urquhart & Sullivan.
The case number is 22-1654.
U.S. Court of Appeals for the Fifth Circuit
Anadarko’s Win Against Wells Fargo in $30M Stock Fight Upheld
Wells Fargo has lost a bid to undo an early win handed to Anadarko Petroleum stemming from an agreement it had with the bank to sell Occidental stock pursuant to a trust agreement.
According to the lawsuit, Anadarko, which in 2019 was acquired by Occidental Petroleum, entered an agreement under which Wells Fargo acted as the trustee of a trust that held a “substantial amount” of Occidental stock. Anadarko alleged Wells Fargo agreed to sell the stock by Jan. 10, 2020, and when the bank didn’t sell the stock until March 2020 — when the value had dropped by more than $30 million — the oil and gas company filed suit for breach of contract.
Anadarko, pointing to an email chain and the trust agreement, argued U.S. District Judge Lee Rosenthal’s summary judgment ruling in its favor should stand. The Fifth Circuit determined that the email chain doesn’t constitute a contract but affirmed Anadarko’s win by also holding “Wells Fargo is judicially estopped from arguing that the trust agreement is not a contract.”
“In sum, while the 2019 e-mail plan was not a contract, it is evidence that Wells Fargo breached its obligations to Occidental under the Trust Agreement. The court therefore properly granted summary judgment for Occidental as to Wells Fargo’s breach of the trust agreement,” the panel wrote.
“Wells Fargo is bound by its assertion in the district court that the trust agreement was a contract. Because Wells Fargo breached that agreement by botching the liquidation of the Occidental shares held by the Trust, the district court properly granted summary judgment for Occidental.”
In an opinion partially concurring and partially dissenting from the panel’s decision, Judge Irma C. Ramirez wrote that “the application of judicial estoppel in this case does not achieve substantial justice” in this case.
“We are not faced with a strictly binary choice of either (1) resolving this claim on judicial-estoppel grounds, or (2) allowing Wells Fargo to make inconsistent statements with impunity,” she wrote. “Courts possess precise tools to regulate litigant conduct, which may be utilized harmoniously while also effectuating this Court’s strong policy favoring “resol[ution] [of] cases on their merits.”
Judges Cory T. Wilson and Don R. Willett also sat on the panel that issued the Sept. 18 ruling.
Anadarko and Occidental are represented by Kathy Patrick, Mark Doré, Denise Drake and Ayesha Najam of Gibbs & Bruns.
Wells Fargo is represented by Christian Kemnitz, Johnjerica Hodge, and Rebecca Lindahl of Katten Muchin Rosenman.
The case number is 23-20318.
Spat Between Houston Plaintiffs Firm, Ex-Associate To Be Reheard En Banc
Less than two months after Judge Stuart Kyle Duncan urged his colleagues on the Fifth Circuit to rehear en banc a dispute between a Houston personal injury law firm and a former associate, the court on Sept. 11 voted to do just that.
The decision vacates a Fifth Circuit panel’s July 25 ruling and means that Edward Festeryga, formerly an associate at Abraham Watkins Nichols Agosto Aziz & Stogner, will get another chance to argue the lawsuit his former firm brought against him — accusing him of trying to take its clients with him when he left — belongs in federal court and not state court.
After litigation began in the state court, Festeryga attempted to remove the case to federal court on the basis that he’s a Canadian citizen.
U.S. District Judge George C. Hanks Jr. ruled that Festeryga had waived his right to remove the case by agreeing to a protective order and by filing a motion to dismiss in the state court. A unanimous three-judge panel agreed with that ruling, though Judge Duncan wrote in a concurrence he was “gritting [his] teeth” in the process.
His displeasure is rooted in the court’s 1980 ruling in In re Weaver, where a panel determined it didn’t have jurisdiction to hear a business dispute involving claims of slander, fraud, breach and interference with contract.
Judge Duncan wrote that the panel hearing this appeal — including Judges Don R. Willett and James L. Dennis — “convincingly” laid out an argument as to why Weaver is incorrect and that two sister circuits have also “thrown shade at Weaver.” But despite that, the panel followed Weaver here “under the rule of orderliness.”
“Gritting my teeth, I concur. The removal statutes have shifted over the years, but not enough to erase the stubborn fact that Weaver transformed a remand for waiver-by-participation into a remand for lack of federal jurisdiction,” he wrote. “That is incorrect, as two circuits (and now our panel) have confirmed. We should be able to review the waiver-based remand here under settled precedent. Only Weaver bars the way. The proper course is for our en banc Court to unweave Weaver.”
Abraham Watkins is represented by Robert Owen and Dale Jefferson of Martin, Disiere, Jefferson & Wisdom and by its own Muhammad Aziz.
Festeryga is represented by Guillermo Alarcon of Armbrust & Brown in Austin.
The case number is 23-20337.