In this edition of the Litigation Roundup, the U.S. Supreme Court unanimously ruled in favor of a Mississippi street preacher, a Gibson Dunn partner and former judge led an amicus brief in Anthropic case against the Department of War, as well as the Fifth Circuit held Corelle Brands retained indemnification rights tied to previously completed purchase orders following its Chapter 11 reorganization and more.
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.
U.S. Supreme Court
SCOTUS Rules Street Preacher’s Suit Can Advance
The U.S. Supreme Court Friday unanimously ruled in favor of a Mississippi street preacher who sued the city of Brandon’s ordinance, claiming it violated the First Amendment.
Gabriel Olivier was arrested in 2021 for violating the city’s ordinance requiring that individuals or groups engaging in protests or demonstrations during scheduled amphitheater events to stay within the designated protest area.
Olivier pleaded no contest, paid a $304 fine and served one year of probation. He didn’t appeal. Because he still wanted to preach near the amphitheater, he filed a federal lawsuit against the city.
The district court held the suit was barred and cited the U.S. Supreme Court’s decision in Heck v. Humphrey. The Fifth Circuit affirmed on the same reasoning.
The country’s highest court disagrees.
Heck is about Roy Heck, who had been convicted in state court of manslaughter and was serving a fifteen-year prison sentence. While his appeal was pending, he filed a section 1983 suit in federal court naming two prosecutors and a police investigator as defendants. Heck alleged that they had committed misconduct, such as destroying exculpatory evidence, to gain his conviction. He sought as a remedy monetary “damages attributable to [his] unconstitutional conviction.”
The U.S. Supreme Court held the suit was barred.
But because Olivier is seeking “wholly prospective” relief, it falls outside habeas and Heck’s concerns.
Justice Elena Kagan wrote the opinion for the court.
“Olivier’s suit does not, as habeas suits do, ‘collateral[ly] attack’ the old conviction,” Justice Kagan wrote. “It thus cannot give rise, as Heck feared, to ‘parallel litigation’ respecting his prior conduct. Nor does it risk ‘conflicting’ judgments over how that conduct was prosecuted or punished.”
The court looked at Wooley v. Maynard after Heck was eliminated from possible precedents.
In Wooley, George Maynard viewed the “Live Free or Die” motto on his New Hampshire license plate as “repugnant to [his] moral and religious beliefs.” So he covered those words with reflective tape, in violation of a state statute. Maynard was convicted for that conduct three times over in state court, receiving sentences involving small fines and short jail terms. Maynard then filed a federal suit seeking a declaration that the state statute violated the First Amendment.
The court ruled against New Hampshire because Maynard was seeking “wholly prospective” relief and found the suit provided an avenue for him to bring his claim.
“Were it otherwise, the Court reasoned, Maynard would have no good way to vindicate his First
Amendment rights: He would be trapped ‘between the Scylla of intentionally flouting state law and the Charybdis of forgoing what he believes to be constitutionally protected activity’ so as to avoid yet another criminal prosecution,” Justice Kagan wrote.
The justices ruled Olivier’s suit to enjoin the ordinance may proceed so he can return to the amphitheater.
“The same rule allows Olivier to sue under §1983 to enjoin future prosecutions under the city ordinance, despite his prior conviction. Were that not so, Olivier would face the same dilemma as Maynard: flout the law and risk another prosecution, or else forgo speech he believes is constitutionally protected,” Justice Kagan wrote. “We declined to put Maynard to that choice, and we will not put Olivier to it either.”
Gibson Dunn partner Allyson Ho represented Olivier.
“We’re delighted that the Supreme Court unanimously affirmed Gabe’s right to his day in court. It’s just common sense that a citizen who is arrested under an unconstitutional law should be able to challenge that law. As people of faith, we look to the judiciary to protect our constitutional right to spread the gospel,” Ho said in a statement.
David Casazza, Aaron Smith, Patrick Fuster, Giuliana Carozza Cipollone, Jack Reed, Aly Cox, Andrew Ebrahem and Savannah Silver also represented Olivier.
Gregory Butler of Phelps Dunbar represented the city of Brandon.
The case number is 24–993.
U.S. Court of Appeals for the District of Columbia Circuit
Amicus Brief Filed in Support of Anthropic
Gibson Dunn partner and former judge Gregg Costa led an amicus brief on behalf of Democracy Defenders and 149 former judges in Anthropic PBC’s case against the Department of War.
The case was filed earlier this month by the AI company regarding the department’s designation that its AI is a national security risk. Anthropic has refused to allow its Claude AI models to be used for lethal weapons or mass domestic surveillance. It alleges government retaliation and First and Fifth Amendment violations.
“Honored to work on this brief for Democracy Defenders, which 149 judges joined, in support of Anthropic. As the brief explains, the judiciary has a constitutional duty to enforce the law even when the government invokes security concerns,” Gibson Dunn’s Gregg Costa posted on LinkedIn. “Some of Article III’s most heralded decisions — see the Steel Seizure Case; Pentagon Papers—honor that principle. Some of its most shameful — see Korematsu — do not.”
The amicus brief argues that the executive branch’s invocation of national security authorities does not displace the judiciary’s indispensable role.
“Ensuring that private parties have been afforded the procedural protections required by statute and by the Due Process Clause is — like interpreting a statute—a quintessential judicial exercise,” the brief reads. “Even when the Executive Branch invokes weighty interests like neutralizing terrorist organizations or keeping foreign adversaries away from military airspace, it cannot act rashly, and it cannot disregard the fundamental requirements of adequate notice and an opportunity to respond.”
The brief further argues that the remedy sought by Anthropic would not require judicial encroachment upon the executive branch’s national security prerogatives.
“More fundamentally, as a practical matter, no one is trying to force the Department to contract with Anthropic. To the contrary, Anthropic and the Department have already agreed that the Department is not interested in Anthropic’s services in the form that Anthropic is willing to provide them. Instead, Anthropic is asking only that it not be punished on its way out the door,” the brief reads. “The Department is welcome to continue to decide who it does and does not want to contract with. But it cannot use Section 4713 to punish Anthropic in its dealings with the rest of the world — including other government agencies whose functions are unrelated to national defense and private businesses.”
Martie Kutscher Clark, Lauren Goldman, Sophia Brill and Connor P. Mui of Gibson Dunn also participated in the brief.
The case number is 26-1049.
Fifth Circuit Court of Appeals
Bankruptcy Court did not Err in Corelle Brands Reorganization, Fifth Circuit Finds
The Fifth Circuit held Corelle Brands properly retained indemnification rights tied to previously completed purchase orders following its Chapter 11 bankruptcy reorganization.
“This decision reinforces that courts will look closely at the structure of commercial relationships when determining whether contracts are divisible,” Haynes Boone restructuring partner Charles Beckham said in a news release.
The decision rejects objections by the Midea entities and confirms that the individual purchase orders under the master supply agreement constituted separate, divisible contracts. As a result, Corelle Brands was entitled to retain indemnification rights associated with those completed transactions, even after assigning the supply agreement as part of its restructuring.
The ruling affirms both the bankruptcy court and the district court and provides important guidance on contract divisibility and the treatment of indemnification rights in Chapter 11 cases.
“It provides meaningful clarity for companies navigating how rights and liabilities are allocated in complex restructurings, particularly in transactions involving supply agreements,” appellate partner Natasha Breaux said in a news release.
Prior to the bankruptcy, Corelle purchased Instapots from Midea.
The confirmed plan became effective in February 2024 and included the sale of the company’s appliance business.
“In sum, the intent of the parties, the subject matter of the agreement, and the parties’ course of performance all support the finding that the POs were divisible from the MSA,” Judge Stuart Kyle Duncan wrote in his March 18 opinion. “Accordingly, the bankruptcy court did not err in denying Midea’s objection to Corelle’s reorganization plan based on contract divisibility.”
Haynes Boone restructuring counsel Kourtney Lyda and restructuring associate David Trausch also represented Corelle Brands.
The case number is 25-20119.
Western District of Texas
San Antonio Woman Pleads Guilty to Ponzi Scheme
A San Antonio woman pleaded guilty Thursday for her role in a Ponzi scheme, U.S. Attorney for the Western District of Texas Justin R. Simmons announced.
Brooklynn Chandler Willy, 46, was the owner of a San Antonio-based company named Queen B Advisors LLC, doing business as Texas Financial Advisory and Chandler Capital Holdings. Among other services, TFA purported to provide asset management and financial planning services.
At Willy’s recommendation, a married couple invested money into an investment company named Ferrum Capital in March 2018. Ferrum Capital was one of four investment companies allegedly run by co-defendants Joshua Allen and Michael Cox. In May of 2021, Willy again advised the couple to invest $500,000 with another Ferrum entity, using Chandler Capital Holdings as the agent to execute and deliver contracts. Rather than investing the funds as intended, Willy used the $500,000 for her own purposes, including personal credit card payments, payments to other investors, and payments to another business owned and controlled by Willy.
According to court documents, Willy convinced a separate married couple to invest approximately $2 million dollars in an associate’s company by promising that the investment would be used for the purchase of bad debt and other legitimate investments. Willy used the money for her own benefit, such as payments to herself, payments to her associate and payments to other investors. Willy also convinced two other investors to invest $75,000 and $600,000, respectively, into what Willy claimed were legitimate business investments. Willy used their investments for her own benefit. During the course of the federal investigation, Willy forged the signatures of various victims on documents and provided those documents to federal agents.
Court documents further indicate Willy conspired with Allen and Cox by giving false information to investors concerning their investment in entities owned and controlled by Allen and Cox. Working with Cox and Allen, Willy convinced numerous investors to invest in an entity controlled by Cox and Allen by falsely stating those investments were investments into legitimate business activities. Much of that money went to the benefit of Cox, Allen and Willy.
Willy faces up to 20 years in prison on each of the six wire fraud charges, on a single wire fraud conspiracy charge and on the one money laundering conspiracy charge. She also faces up to 10 years for engaging in monetary transactions in property derived from the wire fraud scheme and a mandatory minimum of two years in prison for aggravated identity theft, which, by statute, would run consecutive to any other punishment.
A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Allen and Cox are scheduled for a jury trial in August.
Roy Barrera of Nicholas & Barrera represented Willy. He did not immediately respond to a request for comment.
Joseph Blackwell and Mary Valadez of the U.S. attorney’s office represented the government.
The case number is 5:25-cr-00399.
Southern District of Texas
Summary Judgment Granted in Favor of WorldVue
U.S. District Judge Kenneth Hoyt granted WorldVue’s motion for summary judgment and permanent injunction Friday against Szuch Holdings in a breach of confidentiality case.
The case had previously been kicked up to the Fifth Circuit, which issued a preliminary injunction mandate.
WorldVue argues that it is entitled to summary judgment and a permanent injunction,
claiming that the law-of-the-case doctrine and waiver bar relitigation of all material issues. It claimed that agreements were in connection with the sale and buyout of a business and only sought equitable relief.
The Szuch parties argued that there was no clear authority supporting WorldVue’s claims and that granting summary judgment is premature due to ongoing discovery and unresolved facts. It also claimed that WorldVue had not met its burden on contract claims or for a permanent injunction.
“The Court finds that no genuine dispute exists regarding any material facts that would prevent granting summary judgment to WorldVue because the Szuch Parties, in truth, violated the confidentiality, non-compete, and non-solicitation provisions of the Confidential Settlement Agreement,” Judge Hoyt wrote. “The Court also holds that WorldVue has satisfied all the necessary factors for granting permanent injunctive relief. Finally, this Court concludes that all relevant issues have been addressed in accordance with the mandate.”
The Szuch parties are permanently enjoined from “manipulating, deleting, copying, or destroying any emails, text or voice messages, instant messages and social medial communications (to include, without limitation, instant messages using Google Talk, Facebook and Facebook Messenger, LinkedIn, Twitter, AOL Instant Messenger, Yahoo Messenger, or any other instant messaging or social media platform), or any electronic files or communications related to the subject matter of this lawsuit from Szuch Parties’ personal or work computer(s), laptop(s), tablet(s), phone(s), electronic storage devices, and/or any other electronic device” after the 2022 and 2024 transactions.
They are also enjoined from accessing and destroying any of WorldVue’s confidential information stored on any electronic device.
WorldVue may terminate that bond previously paid in the Harris County proceeding. It may also move for attorney fees and costs.
Carolyn R. Raines, Michael McCabe, Chase Cobern, John Cain and Luke Dombroski of Munck Wilson Mandala represented WorldVue.
C. Larry Carbo, Amy Foreman, Steven Knight and Kellen Scott of Chamberlain Hrdlicka represented the Szuch parties.
The case number is 4:24-CV-04790.
Supreme Court of Texas
SCOTX Delivers Criticisms of Appellate Court
In a per curiam opinion, the Supreme Court of Texas ruled Friday that the Fifth Court of Appeals has erred twice in overturning the trial court’s judgment in a divorce proceeding.
The court stated the first time the appellate court erred, it had misread the record. Now, the court holds the appellate court has erred on the law.
The high court found that the appellate court did not carry out its prior instruction to “perform a new sufficiency analysis,” including the four months of account statements that were before the trial court as fact-finder.
“This exemplifies the type of appellate second-guessing our precedents forbid,” the court wrote.
The ruling was issued without hearing oral argument. The high court reversed the court of appeals’ judgment and reinstated the trial court’s judgment for the husband, Theodore Landry.
Misty Cole of Hargrave Family Law, Erin Bogdanowicz of Bogdanowicz Family Law, and Carla De La Cruz of Albin Oldner Law represented Landry.
Nita Hight, Morgan Whisenhunt, Karri Betrand and Victoria Jones of KB Family Law, and Megan Nordyke represented Janelle Landry.
The case number is 24-0910.
Travis County, 250th District Court
Temporary Restraining Order Granted in Sewage Disposal Case
A Travis County judge found evidence that the Angelina County Water Control and Improvement District No. 4 discharged sewage and municipal solid waste into Cedar Creek. A temporary restraining order has been issued to stop the unauthorized discharge.
“Illegal sewage dumping that threatens the health of Texans and harms our beautiful Texas waterways will not be tolerated,” Attorney General Ken Paxton said in a news release. “I will ensure that no corners are cut and that any entity responsible for managing essential public infrastructure follows Texas law.”
The Office of the Attorney General filed suit earlier this month after investigating the district’s process of sewage treatment and disposal. The investigation showed the district discharged sewage from its leaking lift station into a tributary of Cedar Creek, which is part of the Neches River Basin.
“This Court enters the temporary restraining order ex parte, without notice, Tex. R. Civ. P. 680, because the discharge of sewage, wastewater, or municipal solid waste, which tested positive for E. coli, poses a serious risk to human health and the environment, causing irreparable injury as untreated wastewater and raw sewage continue to enter Cedar Creek, which is part of the Neches River Basin used by the public,” Judge Cory Liu wrote in his March 6 order.
Since Judge Liu issued the temporary restraining order, the parties agreed to extend the order on March 10.
The temporary restraining order requires the district to stop all unauthorized sewage discharges and to clean up all areas affected.
The case number is D-1-GN-26-001603.
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