In this edition of Litigation Roundup, closing arguments are coming soon in a $55 million pharmacy fraud trial, Porter Hedges gets $15.35 million for a developer client in an eminent domain fight and a jury in Waco on Friday unanimously determined Google owes $339 million for patent infringement.
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Walker County Court at Law
Porter Hedges Gets $15.35M for Developer in Eminent Domain Fight
The developer of a student housing project in Huntsville, Texas, has entered an agreed final judgment that requires the state of Texas pay it $15.35 million in an eminent domain dispute.
Haven at M — an affiliate of Ascendant Development — was developing and constructing a 544-bed student housing project about a mile away from Sam Houston State University when the Texas Department of Transportation in 2019 determined it would be expanding a state highway in a way that interfered with the site.
Initially, TxDOT offered Haven $519,689 for the taking of the land that would impact the developer’s existing plans for where to place the community’s pool, clubhouse, certain apartment buildings, a water detention system and utilities.
After “case analysis and development,” TxDOT and Haven agreed to the $15.35 million figure.
Judge Tracy Sorensen presided over the case and signed off on the agreed final judgment June 29.
Texas is represented by Hunter McKinley of the office of the attorney general.
The case number is 13279CV.
Lubbock County District Court
Lubbock-Based Falcon Healthcare Prevails in Fight with Franchisor
Falcon Healthcare, a home health and hospice business, is entitled recover about $34 million in damages from its franchisor, Interim HealthCare, for the failed and unlawful attempted takeover of the company.
The case was assigned to Lubbock County District Judge Les Hatch, who signed off on the damages award in a July 14 order. About $30 million of the award is for lost profits and about $4.2 million will cover the return of all franchise fees Falcon has paid since Interim began its attempted takeover of the company valued at more than $80 million.
Falcon had alleged Interim had unlawfully attempted to cancel its franchise agreement and “forcibly seize Falcon without paying a dime.” Judge Hatch issued a temporary restraining order in January 2022 that prevented Interim’s takeover, according to court documents.
Interim had alleged it was forced to try to step in and operate the business to protect its goodwill after Falcon breached the franchise agreements “in numerous ways,” including by allegedly sharing confidential and proprietary forms and manuals with third parties, which was then used to “further competing businesses.”
Interim is represented by Timothy P. Ribelin, Thomas H. Watkins and Samuel P. Rajaratnam of Brown, Proctor & Howell.
Falcon Healthcare is represented by William B. Mateja, Jason Hoggan and Jonathan E. Clark of Sheppard, Mullin, Richter & Hampton, Jody D. Jenkins and Philip Andrew “Phil” Johnson of Jenkins & Young and Leonard “Ladd” A. Hirsch and Brian M. Gillett of Bradley Arant Boult Cummings.
The case number is DC-2021-CV-0440.
Travis County District Court
Scott Douglass & McConnico Gets Defense Win at Trial
A Travis County jury recently agreed with Covenant Management Systems in its dispute with landowner Empower School over a failed deal that would have seen Covenant open a specialty clinic on a plot of land in Round Rock, Texas.
Covenant, the management organization for a large physician-owned healthcare provider, had sought a declaratory judgment from the court that the private school had failed to deliver the land with the swimming pool filled-in, as agreed under the lease agreement.
Empower countersued, seeking millions in breach of contract damages that it alleged it was entitled to under the 12-year lease.
The jury issued its 10-2 verdict July 14, finding after two hours of deliberation that Empower failed to satisfy the deadlines in the agreement, which was a condition precedent to commencement of the lease term.
Travis County District Judge Maria Cantú Hexsel presided over the case that began with jury selection July 10.
Covenant Management is represented by Paige Amstutz, David D. Shank and Sara Clark of Scott Douglass & McConnico in Austin.
Empower School is represented by Rekha Roarty, Anthony F. Ciccone and Travis S. Kelley of Bollier Ciccone in Austin.
The case number is D-1-GN-20-002332.
Northern District of Texas
Closings Set for Wednesday in $55M Pharma Trial
After five days, testimony ended Monday in the insurance-fraud trial of Fort Worth pharmacy owner Richard Hall. U.S. District Judge Karen Gren Scholer of Dallas told the jury closing arguments will be Wednesday.
On Monday, Hall testified that he played no role in what federal authorities say was a bribery and kickback scheme that cost U.S. taxpayers $55 million from 2014 to 2016. He blamed any illicit activities on two former business partners, Scott Schuster and Dustin Rall of Fort, with whom he owned two pharmacies at the center if the government’s fraud investigation.
Schuster and Rall testified last week for the prosecution under plea agreements. Both said Hall was their co-conspirator in a scheme to pay kickbacks to a network of marketers who recruited doctors to write thousands of high-dollar prescriptions through their pharmacies. The pharmacies in turn filed claims with patients’ insurers, both private and governmental, for filling the prescriptions for so-called “‘compounded drugs,” expensive, custom-made formulations tailored to the needs of individual patients.
A 2020 federal indictment said most of the public money involved was siphoned from TRICARE, the federal health insurance program for military personnel. A former chief pharmacist for the men testified that the pharmacies sometimes generated more than $1 million a day in insurance claims.
Hall’s defense lawyers are Marlo Cadeddu of Dallas and John D. Cline of San Francisco.
Representing the government are Lee Michael Hirsch from the Justice Department’s health care fraud unit in Dallas, and DOJ criminal fraud prosecutors Jacqueline Zee DerOvanesian and Kate Payerle from Broward County, Florida, and Washington, D.C., respectively.
Hall is the only one of eight defendants originally indicted in the case. In addition to Schuster and Rall, four of the eight cut plea deals with the government and testified against Hall. They described his participation in numerous meetings, conversations, text chains and email exchanges about the pharmacies’ operations and finances, including activities later deemed illegal by authorities.
The eighth defendant, Quintan Cockrell, a Southern California drug marketer, is awaiting trial.
The case number is 3:18-CR-00623.
Western District of Texas
Waco Jury Hits Google with $338.7M Verdict
A jury in Waco recently determined that Google infringed three video casting patents held by Touchstream Technologies with its Chromecast product and must pay $338.7 million in damages.
U.S. District Judge Alan Albright presided over the trial that began with jury selection July 17 and ended July 21 with the unanimous decision in favor of Touchstream.
Touchstream, which does business as Shodogg and obtained the patents from the inventor David Strober in 2011, filed suit in June 2021 alleging Chromecast uses the patents Strober obtained in 2013 and 2014, respectively.
Strober developed the technology when he was working as an e-learning instructional designer at Westchester Community College, according to court documents. Google initially was interested in a potential partnership with Strober, but after about a year of discussions, in February 2012, Google told Touchstream it was no longer interested in pursuing the business partnership.
In July 2013, Google unveiled Chromecast with a retail price of $35 per unit.
The jury rejected Google’s arguments that the three patents it was accused of infringing were invalid.
Google is represented by Gregory Lanier, Michael C. Hendershot, Evan M. McLean, Gurneet Singh, Tracy Ann Stitt, Jennifer L. Swize, Edwin O. Garcia and John R. Boulé III of Jones Day and Michael E. Jones and Shaun W. Hassett of Potter Minton.
Touchstream Technologies is represented by B. Trent Webb. Ryan D. Dykal, Lauren Douville, Jordan T. Bergsten, Robert A. McClendon, Philip A. Eckert, Sharon A. Israel, Michael W. Gray, Andrew M. Long and Robert H. Reckers of Shook, Hardy & Bacon.
The case number is 6:21-cv-00569.
Jury Hands Trustee Seeking Millions Nothing in Damages
A bankruptcy trustee who filed suit against the former owner-officers of Little River Healthcare Holdings in an attempt to recoup as much as $93 million he alleged was wrongly paid out in distributions was denied any damages by a Waco jury.
The central-Texas based healthcare system filed for bankruptcy in 2018. Trustee James Studensky filed suit against Peggy Borgfeld, Ryan Downton, Jeffery Madison and Kevin Owens in January 2021, alleging the distributions paid out to them in 2016 constituted breach of fiduciary duty and fraud and led to the company’s bankruptcy.
The defendants argued that the funds had been paid out when the company was thriving and solvent, and the jury seemingly agreed.
U.S. Magistrate Judge Derek T. Gilliland presided over the weeklong trial that ended with a unanimous 7-0 verdict July 14. The jury deliberated for about two-and-a-half hours following five days of testimony.
The trustee is represented by Michael Roberts, Jennifer F. Wertz and Joshua A. Romero of Jackson Walker and Brian T. Cumings, Matthew C. Powers and Marianne W. Nitsch of Graves, Dougherty, Hearon & Moody.
Borgfeld, Downton, Madison and Owens are represented by Chris Lewis of Chris Lewis + Associates and Sam Johnson, Robyn Hargrove and Robby Earle of Scott Douglass & McConnico.
The case number is 6:21-cv-00028.
Eastern District of New York
American Airlines Taps O’Melveny for Class Action Defense
Two attorneys for O’Melveny & Myers filed notice July 19 that they’ve been retained by American Airlines to defend against a proposed class action lawsuit brought by New York-based flight attendants alleging their paychecks are routinely late.
“Despite being manual workers, defendant failed to properly pay plaintiff and other flight attendants their wages within seven calendar days after the end of the week in which these wages were earned,” Himes alleges. “In this regard, defendant failed to provide timely wages to, and have taken unlawful deductions from the wages of, plaintiff and all other similar flight attendants.”
It was not clear from the complaint, which alleges “thousands” of American Airline flight attendants are based in New York, how many plaintiffs could be part of the class bringing this suit.
The case has been assigned to U.S. District Judge Kiyo A. Matsumoto and U.S. Magistrate Judge James R. Cho.
Himes is represented by Josef Nussbaum, Denise Schulman and Daniel Kirschenbaum of Joseph Herzfeld Hester & Kirschenbaum.
The case number is 1:23-cv-04892.
Fifth Court of Appeals
Ex-Dallas Cowboy Loses Appeal in Workers’ Comp Case
Alcus Reshod Fortenberry, who injured his knee during training camp his rookie season in 2015, is not entitled to workers’ compensation benefits, an appellate panel recently ruled in a fight with Great Divide Insurance Co. that’s already been to the Texas Supreme Court on venue challenges.
An appeals panel of the Texas Department of Insurance, Division of Workers’ Compensation had sided with Great Divide, prompting Fortenberry to file suit.
A jury reached the opposite conclusion, and Dallas County District Judge Dale Tillery entered final judgment awarding Fortenberry temporary income benefits, according to the opinion.
The panel wrote that typically the insurer would carry the burden of showing whether Fortenberry elected to receive benefits under the National Football League’s collective bargaining agreement, which would preclude him from receiving disability benefits.
“But here, in seeking judicial review of the DWC appeals panel’s decision, Fortenberry, not GDI, had the burden of establishing he did not elect to receive benefits under the NFL collective bargaining agreement or he was not required to make an election,” the panel wrote.
And at trial Fortenberry presented no evidence as to whether he would have received more benefits under workers’ compensation or the NFL’s collective bargaining agreement.
“Absent a predicate finding that the benefits under Fortenberry’s NFL Player Contract or the NFL collective bargaining agreement were not greater than the benefits he would have received under the Workers’ Compensation Act, findings of disability and [maximum medical improvement] have no impact on Fortenberry’s entitlement to benefits,” the panel held. “No basis remains for Fortenberry to recover under the Workers’ Compensation Act.”
Justices Nancy Kennedy, Amanda L. Reichek and Cory L. Carlyle sat on the panel that issued the July 17 opinion.
Great Divide is represented by David Brenner and Belinda May Arambula of Burns Anderson Jury & Brenner.
Fortenberry is represented by John E. Collins of Burleson Pate & Gibson.
The case number is 05-19-01541-CV.
U.S. Court of Appeals for the Fifth Circuit
Qualified Immunity Reeled in Over Repeat Tasering of Seizing Inmate
A group of police officers in Pasadena, Texas, will have to face a lawsuit brought by the family of a man who died after he was repeatedly tasered while he was suffering an epileptic seizure in the city jail cell where he was being detained on a public intoxication charge.
In a July 18 ruling, a panel of judges undid the summary judgment ruling that had found qualified immunity shielded Martin Aguirre, Joanna Marroquin, Darlene “Rita” McCain and Ryan W. Whitehead from the lawsuit brought by Shamarian Austin on behalf of Jamal Ali Shaw, who died in March 2019.
“A genuine dispute of material fact exists as to whether the officers intentionally treated Shaw incorrectly in responding to his seizure and whether the officers’ actions constituted a harmful delay in Shaw’s accessing emergency medical care,” the panel held.
According to the 29-page opinion, Shaw was arrested and taken to the city jail in March 2019 and hours later, around 6:15 a.m., suffered an epileptic seizure. The officers who entered his cell to respond to the situation alleged he was rolling, kicking and trying to bite them as they tried to restrain his limbs, resulting in two of the officers, Marroquin and Whitehead, repeatedly tasing him as the others stood by.
After about 15 minutes, he was strapped into a restraint chair where he was detained for another 17 minutes, calling for his mother and crying “help me,” before he was moved to a gurney and placed in the ambulance at 6:57 a.m.
He suffered cardiac arrest and died the following day due to cardiopulmonary arrest.
U.S. District Judge David Hittner entered judgment in March 2021 and the family filed notice of appeal in July 2022.
Judges Leslie H. Southwick, Patrick E. Higginbotham and Don R. Willett sat on the panel.
Austin is represented by Bruce K. Thomas and Thomas Dean Malone, solo practitioners in Dallas.
Pasadena is represented by William Helfand, Norman Giles, Randy Lopez and Justin Pfeiffer of Lewis Brisbois Bisgaard & Smith.
The case number is 22-20341.
Editor’s Note: Bruce Tomaso contributed to this report.