In this edition of Litigation Roundup, Texas reaches a tentative settlement with Colorado and New Mexico in a nearly decade-old lawsuit over use of the Lower Rio Grande River’s resources, two major tobacco companies say Texas owes them about $8.6 million in taxes paid under protest, and another trial between VLSI and Intel kicks off.
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Harris County District Court
Baker Botts, Partner Sued by Former Energy Company Client
Baker Botts and Houston partner Scott Looper have yet to retain counsel to defend against a legal malpractice lawsuit recently filed by EQT Production Company and EQT Energy Inc. seeking more than $1 million in damages.
EQT filed suit Nov. 1, according to court records, accusing the law firm and Looper of “breaches and ethical violations” during the negotiation and drafting of a gas gathering agreement between EQT and EQM Gathering Opco.
The company alleges that at the time the agreement was being hammered out, EQM Gathering was a subsidiary of EQT Corp. but it had a separate shareholder base and board of directors than EQT Corp.
“As a result, EQM and EQT had separate negotiating principals and governance structures,” the lawsuit alleges. “Despite the fact that the parties’ interests were adverse to each other — and, upon information and belief, contrary to its professional duties and ethical obligations — Baker Botts failed to obtain a separate engagement agreement for the transaction, did not advise EQT of the risks of its dual representation and did not obtain a knowing waiver from EQT of the conflict.”
Those errors, EQT alleges, resulted in damages to it of more than $100 million “by conservative estimates.”
The case has been assigned to Harris County District Judge Fredericka Phillips.
EQT is represented by Lauren W. Varnado, Corbett L. Enright, Jessica E. Pharis, Sanford L. Michelman and Mona Z. Hanna of Michelman & Robinson.
The case number is 2022-71602.
Travis County District Court
Tobacco Companies Seek Tax Refund
Two cigarette manufacturers who were party to the 1998 Big Tobacco settlement have filed lawsuits against Texas Comptroller Glenn Hegar, seeking a refund of taxes paid under protest.
The state district court lawsuits were filed Oct. 28 by Lorillard Tobacco Company and R.J. Reynolds Tobacco Company, which were among the nation’s four largest tobacco manufacturers that entered into the landmark settlement.
Lorillard alleges it is entitled to recover $1.6 million in taxes and R.J. Reynolds is seeking to recover $7 million with both companies alleging certain costs associated with complying with the master settlement agreement are deductible.
Lorillard and R.J. are represented by David Gilliland of Duggins Wren Mann & Romero.
Counsel information for Texas wasn’t available Monday.
The case numbers are D-1-GN-22-006301 and D-1-GN-22-006303.
Western District of Texas
VLSI, Intel Face Off in Another Patent Infringement Jury Trial
Jury selection is slated to begin today in the third trial between the Fortress Investments-owned company VLSI Technology and Intel before U.S. District Judge Alan Albright. VLSI alleges Intel is infringing certain patents for information processing technology with the server microprocessors it manufactures.
In March 2021, a federal jury in Waco determined Intel had infringed patents owned by VLSI and awarded the company $2.175 billion in damages. A second trial, in April 2021, resulted in a verdict that Intel had not infringed, but that panel of jurors also declined to invalidate the patents that relate to microprocessor technology.
VLSI filed a motion in limine with the court Nov. 1, asking Judge Albright to bar Intel from talking to the jury about “irrelevant and particularly prejudicial trial themes.” Specifically, VLSI asked the court to bar both any discussion from Intel’s attorneys that the products in question don’t infringe the patents because they were independently developed and any discussion that the damages sought should be tied to the value paid for the patent at issue.
“If Intel nevertheless implies that patent damages are based on ‘the value’ of the patent, then although the following will not cure all of the prejudice to VLSI, the court should tell the jury that damages for patent infringement are not based on some perceived ‘value’ of the patent, and that this is exemplified by a recent jury verdict in this court, where the patent owner was awarded over $2 billion in damages for a company’s infringement of two patents that the patent owner purchased, along with 18 other patent families, allegedly for only $3 million,” VLSI argued in the motion.
Judge Albright entered a sealed omnibus order on all pending motions Nov. 4. His ruling on the issue wasn’t publicly available through PACER.
Intel is represented by J. Stephen Ravel and Kelly Ransom of Kelly Hart & Hallman, William F. Lee, Louis W. Tompros, Kate Saxton, Gregory H. Lantier and Amanda L. Major of WilmerHale.
VLSI is represented by Andy Tindel, J. Mark Mann and G. Blake Thompson of Mann Tindel Thompson and Morgan Chu, Benjamin W. Hattenbach, Iian D. Jablon, Alan J. Heinrich, Ian Robert Washburn, Amy E. Proctor, Elizabeth C. Tuan, Dominik Slusarczyk, Charlotte J. Wen, Benjamin Monnin, Jordan Nafekh and Babak Redjaian of Irell & Manella.
The case number is 1:19-cv-00977.
Third Court of Appeals
Waco JP Who Refused to Perform Same-Sex Wedding Loses Appeal
Dianne Hensley, a justice of the peace who was sanctioned by the State Commission on Judicial Conduct for her refusal to perform same-sex marriages, lost a bid to revive her lawsuit alleging the commission violated the Texas Religious Freedom Restoration Act with the disciplinary action.
Hensley argued the SCJC had acted outside its authority in issuing a public warning to her in November 2019. In the lawsuit, she alleged the punishment was a violation of the TRFRA because she had recused herself from officiating same-sex weddings “in accordance with the commands of her Christian faith.”
She was also seeking a declaration that officiating weddings doesn’t count as a “judicial duty” under the judicial canons she was found to have violated and that her refusal to officiate the ceremonies didn’t constitute “willful or persistent conduct clearly inconsistent with the proper performance of [a judge’s] duties or casts public discredit upon the judiciary or administration of justice.”
The SCJC argued the trial court didn’t have jurisdiction to hear the claim because Hensley hadn’t gone through the exclusive statutory review process to challenge its findings. The trial court agreed, as did the intermediate appellate court in its unanimous Nov. 3 ruling affirming dismissal.
Justices Thomas J. Baker, Melissa Goodwin and Edward Smith sat on the panel.
Hensley is represented by Jonathan F. Mitchell of Mitchell Law, Kelly J. Shackelford, Hiram S. Sasser III and Justin Butterfield of the First Liberty Institute.
The SCJC is represented by Douglas S. Lang of Thompson & Coburn, David Schleicher of Schleicher Law Firm, Ronald K. Johnson of Harris Finley & Bogle and Ross G. Reyes of Littler Mendelson.
The case number is 03-21-00305-CV.
U.S. Supreme Court
Texas, New Mexico, Colorado Reach Agreement in Lower Rio Grande Suit
An impending January trial has been put on hold by a special master overseeing a dispute between Texas, New Mexico and Colorado after the states recently announced an agreement had been reached over how to apportion the water resources of the Lower Rio Grande River.
U.S. Circuit Judge Michael J. Melloy gave the parties until Nov. 14 to file with the court a proposed motion to adopt the settlement in an order he issued Oct. 26, according to court records.
The order came two days after Texas, New Mexico and Colorado filed a joint status report announcing a proposed agreement had finally been reached. Texas filed suit in 2013, and the U.S. Supreme Court appointed a special master over the case in November 2014.
Texas had alleged New Mexico and Colorado were unfairly siphoning water from the river before it reached Texas.
The federal government has said it objects to the settlement, and Judge Melloy set a deadline of Jan. 6 for the United States to file a motion explaining why the settlement shouldn’t be approved.
Texas is represented by Stuart L. Somach, Francis M. Goldsberry II, Theresa C. Barfield, Sarah A. Klahn and Richard S. Deitchman of Somach Simmons & Dunn.
Colorado is represented by Chad W. Wallace, Philip J. Weiser, Lain Leoniak and Preston V. Hartman of its own attorney general’s office.
New Mexico is represented by Hector H. Balderas, Cholla Khoury and Zachary E. Ogaz of its attorney general’s office, Marcus J. Rael Jr. and Louis Robles of Robles Rael & Anaya.
The case number is 141.