In this edition of Litigation Roundup, Jerry Jones hires a Jackson Walker First Amendment pro to defend him in a defamation suit, Texas reaches multimillion-dollar settlements with Audi, Volkswagen and Walgreens and a chemical company lost a bid on appeal to saddle an insurer with a $16 million bill after paying fraudulent invoices.
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Harris County District Court
Jury Rejects Doc’s Fraud Claim Against Radiology Group
A jury in Houston deliberated for about an hour before returning an 11-1 defense verdict in favor of Houston Radiology Associated, which had been sued by one of its former doctors, Amitabha Banerjee.
Banerjee had sued HRA, which provides imaging for Methodist Hospitals, and Radiology Partners Management Group in February 2020, alleging he had been defrauded when a partnership he had been guaranteed was withheld after he joined the group.
The doctor was seeking more than $1 million in damages from HRA, in addition to punitive damages. The jury heard four days of testimony before reaching its decision.
The case was assigned to Harris County District Judge Michael Gomez.
Banerjee is represented by Walter L. Taylor of The Hart Law Firm.
The case number is 2020-13621.
Southern District of Texas
SEC Enters Settlement Agreement with ‘Stock-Picking Guru’
The U.S. Securities and Exchange Commission entered a settlement agreement May 25 with Francis Sabo, also known as “Ricky Bobby,” who is accused alongside eight others of orchestrating a pump and dump scheme.
Sabo pled guilty to one count of conspiracy to commit securities fraud.
In December, Sabo’s coconspirators were indicted on charges of stock manipulation in a scheme where they inflated the price of various stocks by promoting them on Twitter and another online forum, Atlas Trading, and then would sell the shares into the demand they had generated.
Sabo, who served as moderator on the Atlas Trading forum, was not named in the indictment, but has since agreed to disgorge $1.6 million in ill-gotten gains.
He is set to be sentenced for the crime in January and faces a maximum of 25 years in prison. Sabo’s coconspirators are described as social media influencers and are accused of pulling off a $100 million scam to manipulate the price of certain stocks.
“To their legions of followers on social media, the eight defendants have, for years, promoted themselves as trustworthy stock-picking gurus,” the SEC alleged in the December complaint. “In reality, they are seasoned stock manipulators.”
The civil case was assigned to U.S. District Judge Lee H. Rosenthal; the criminal case was assigned to U.S. District Judge Andrew S. Hanen.
Sabo is represented by Dewayne R. Boyd and Jeffrey Lee Edison of Dulo Legal Services.
The SEC is represented by David D’Addio of its Boston regional office. The federal government is represented by Thomas Heyward Carter and John J. Liolos of the Department of Justice.
The case numbers are 4:23-cv-01935 and 4:23-cr-00206.
Insurer Says It’s Not on Hook For $3.2M Jury Verdict for Roger Clemens’ Son
Golden Bear Insurance Company has asked a federal judge in Houston to declare it does not have to cover the $3.2 million in damages a jury assessed against a Houston nightclub and its owner in a lawsuit over the assault of a former Major League Baseball pitcher’s son.
Golden Bear filed the suit seeking a judicial declaration May 25, arguing that, under the terms of the policy with Daniel Joseph Wierck and the now-shuttered Concrete Cowboy club, it had covered defense costs at trial but has no obligation to pay the judgment beyond what remains on the $1 million policy.
A jury in 2021 sided with Kacy Clemens, the son of Roger Clemens, and Roger Clemen’s godson, Conner Capel, finding they had been assaulted without cause by a bouncer at the club in 2019. Capel, the son of former MLB pitcher Mike Capel and who at the time was a minor league baseball player, suffered a fractured skull and Clemens, who also was in the minor leagues at the time, injured his ribs and elbow in the attack.
“Concrete Cowboy and Wierck have sought indemnification under the policy for the judgment entered in the underlying lawsuit,” Golden Bear told the court. “While Golden Bear does not dispute that indemnity coverage is owed, the amount of indemnity coverage to which the insureds are entitled is a matter of contention among all of the parties to this lawsuit.”
The case has been assigned to U.S. District Judge David Hittner.
Randy Sorrels of Sorrels Law represented Clemens and Capel in the trial. Wierck and Concrete Cowboy were represented at trial by Claire W. Parsons, Kent M. Adams and Jennafer G. Groswith of Wilson Elser Moskowitz Edelman & Dicker.
Golden Bear is represented by George S. McCall and Sondra S. Sylva of Faegre Drinker Biddle Reath.
Counsel information for the defendants was not available Tuesday.
The case number is 4:23-cv-01933.
Eastern District of Texas
Jerry Jones Taps Jackson Walker for Defamation Defense
Jackson Walker’s Charles “Chip” Babcock, a noted First Amendment lawyer, has been hired by Jerry Jones and the Dallas Cowboys to defend against claims the NFL owner defamed a woman who says she is his daughter.
Alexandra Davis, 26, filed suit March 27 against Jones, the Cowboys, communications consultant James Wilkinson, Wilkinson’s business Trailrunner International and attorney Donald Jack Jr., alleging each had participated in “a deliberate plan and scheme to publicly defame plaintiff.”
Davis had filed a prior declaratory judgment action in Dallas County court seeking a ruling that she wasn’t bound by the settlement agreement her mother and Jones allegedly entered into when she was an infant. When that was reported by the Dallas Morning News and others, Davis alleges, the attacks against her began.
“This plan, as set forth below, centered upon attacking his own daughter in the world-wide public domain as an ‘extortionist’ and a ‘shakedown artist’ whose motivation was money and greed and who was ‘conspiring’ in concert with other ‘extortionists’ to exact money from defendant Jones and his family,” Davis alleges. “This designed campaign was based knowingly on false statements and accusations alleged by defendant Jones and his agents to be truthful facts both in court filings and in public statements to the media.”
On Friday, Babcock filed a motion to dismiss and also lodged counterclaims against Davis, accusing her of breaching a binding settlement agreement between Davis, Jones and Davis’ mother, Cynthia Davis-Spencer.
“That settlement agreement barred plaintiff from suing Jones to establish paternity and obligated the parties to maintain confidentiality regarding the facts and terms of the settlement agreement,” Jones alleges in the countersuit. “In exchange, plaintiff received as consideration millions of dollars from early childhood through adulthood.”
The case has been assigned to U.S. District Judge Robert W. Schroeder III.
Davis is represented by Jay Gray and Andrew Bergman of BergmanGray, Erin Keil and Donald “Matt” Keil of Keil Law Firm and Hailee M. Amox of Atchley Russell Waldrop & Hlavinka.
The case number is 5:23-cv-00032.
First Court of Appeals
Chemical Co.’s $16M Loss Not Covered by Insurance
Westlake Chemical Corporation lost a bid to have Zurich American Insurance and Berkley Regional Insurance foot the $16.4 million bill for losses it suffered after paying fraudulent invoices for shipping bags used to export its products.
On May 25, an appellate panel unanimously affirmed a trial court’s ruling that Westlake’s loss wasn’t covered by the insurance policy’s computer fraud clause and that the policy contained an exclusion barring coverage for such a loss.
According to court documents, between March 2010 and October 2014, Westlake paid several false invoices submitted by John Tinkle and his company Tinkle Management for plastic shipping bags he purportedly delivered to a warehouse.
Tinkle was sentenced to 48 months in federal prison for the scam in April 2017 and ordered to pay about $15.6 million in restitution. Westlake initiated this litigation against the insurers for allegedly breaching the policy in June 2017.
The trial court agreed with the insurers that the computer fraud policy only covered losses that were the result of computer hacking and that the policy included an exclusion for losses resulting from “theft” or dishonesty by any Westlake employees or authorized representatives.
The panel agreed that Tinkle was an “authorized representative” of Westlake in this case.
Justices Veronica Rivas-Molloy, Richard Hightower and April Farris sat on the panel.
Westlake is represented by Robert M. “Randy” Roach Jr. and Daniel W. Davis of Roach & Newton and James D. Wilson of Wilson Group Law.
Berkley Regional and Zurich American are represented by Michael Keeley and Jadd F. Masso Clark Hill and Gary C. Crapster of Steidley & Neal.
The case number is 01-21-00225-CV.
State of Texas
Walgreens Agrees to $340M Opioid Settlement with Texas
More than 100 cities, counties, hospital districts and school districts in Texas inked a deal with Walgreens that will see them split $340 million in exchange for a settlement of claims the drug store chain contributed to the nationwide opioid epidemic.
The settlement agreement and release was signed May 25 and is part of a larger $5.7 billion nationwide settlement Walgreens agreed to.
Attorney General Ken Paxton issued a press release about the settlement May 27, the same day the House voted 121-23 to impeach the state’s top law enforcement officer on charges of bribery, abuse of office and obstruction. That move suspended him from office.
“Pharmaceutical companies are being held responsible for the damage caused by the opioid epidemic,” Paxton said. “Walgreens will help prevent this tragic epidemic from taking more lives in the future, and it will also provide treatment for those still struggling.”
Texas has recovered a total of about $2.9 billion in opioid settlements with entities including Allergan, Mallinckrodt, Teva, Endo, Johnson & Johnson and McKinsey.
Walgreens is represented by its own Michael J. Freeman, Wayne B. Mason of Faegre Drinker Biddle & Reath and Harlan Levy and Kristyn DeFilipp of Foley Hoag.
Texas is represented by Dara Hegar of The Lanier Law Firm, Jeffrey B. Simon of Simon Greenstone Panatier and Shelly A. Sanford of Watts Guerra.
Volkswagen, Audi Agree to $85M Settlement with Texas
Twenty days after the Texas Supreme Court agreed the state could pursue litigation against Audi and Volkswagen over alleged violations of Texas environmental laws committed during the emissions-cheating software scandal perpetrated by the companies, a settlement was announced May 25.
According to the Office of the Attorney General, the German car makers have agreed to pay a civil penalty of $85 million to end the lawsuit. The companies declined to comment on the settlement but had told The Lawbook at the time of the Texas Supreme Court’s 6-3 ruling in early May they intended to appeal to the U.S. Supreme Court.
As of Tuesday, online records did not reflect that any notice of the settlement filed with the Travis County district court.
VW and Audi had argued that Texas courts didn’t have jurisdiction to hear the lawsuit against the German car makers because their contacts with Texas were insufficient. The manufacturers have also been punished for the software scandal by the federal government, previously agreeing to a $1.3 billion settlement that included $209 million earmarked for Texas environmental remediation.
On appeal, Audi and Volkswagen were represented by Jeffrey B. Wall, Arnaud Camu, Nicholas Menillo, Jason Barnes and William B. Monahan of Sullivan & Cromwell; Robert L. Sayles, Samuel T. Acker, William Snyder, David C. Miller, Madeleine Bourdon and Richard Sayles of Bradley; and Jeffrey S. Levinger.
Texas was represented on appeal by its own Judd E. Stone II, Rance Craft, Lisa Bennett, Nanette DiNunzio and Patrick K. Sweeten.
The case numbers in the Texas Supreme Court are 21-0130 and 21-0133.