In this edition of Litigation Roundup, the Texas Supreme Court upholds Texas A&M’s governmental immunity in a crash suit, and Cinemark loses a Covid business interruption claim against an insurer while Baylor University beats back a Covid-related breach of contract claim brought by two students.
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Southern District of Texas
‘Inequitable Conduct’ Ends Long-running Coiled Tubing Patent Battle
Tenaris Coiled Tubes can’t enforce its patents for a type of tubing used in downhole drilling, after a federal judge recently held the company’s “inequitable conduct” — keeping from the U.S. Patent and Trademark Office another company’s 1990s brochure detailing the chemistry used to make the product — rendered the patents unenforceable.
U.S. District Judge Keith P. Ellison granted Global Tubing’s motion for summary judgment March 17, writing that “rarely do courts come across such stark evidence of the intent fork” of inequitable conduct and finding the patents asserted by Tenaris were unenforceable.
“The Court wishes to emphasize that none of the counsel who have participated in the argument of the subject motion before this court is implicated in any of the inequitable conduct discussed,” Judge Ellison wrote in his 10-page order.
Global filed suit in October 2017, seeking a judicial declaration that its products didn’t infringe patents held by Tenaris. The patents covered a type of coiled tubing used in downhole drilling called “quench and temper” that yields more durable, strong and safe tubing.
The allegations of inequitable conduct are rooted in a sales brochure produced by Southwestern Pipe Inc. in the 1990s for a product it called CYMAX 100.
Tenaris filed applications for the at-issue patents in 2014 and 2017 and soon thereafter obtained a copy of the brochure. A Tenaris lead inventor who reviewed it wrote to colleagues ““look at the chemistries… This is essentially our chemistry.”
The Tenaris inventor sent the brochure to in-house counsel, who then forwarded it to outside patent prosecution counsel, but no one provided the brochure to the USPTO.
Tenaris Coiled Tubes is represented by Gregg F. LoCascio, Matthew S. Owen, Nathan S. Mammen, Erin E. Cady, Megan McGlynn, Alanna Horan, Anna Rotman, Daniel Gross, Leslie M. Schmidt, Kylie Feger, Ingrid Petersen and Drew Morrill of Kirkland & Ellis and Alma F. Shields, Wade T. Howard and Jillian Marullo of Liskow & Lewis.
The case number is 4:17-cv-03299.
Eastern District of Texas
Cinemark Can’t Recover Covid-Related Loses from Insurer
Factory Mutual Insurance Company has beaten back claims from Cinemark Holdings that the movie theater chain’s all-risk insurance policy covers business interruption losses Cinemark suffered during the pandemic.
On March 21, U.S. District Judge Amos L. Mazzant III entered final judgment in favor of Factory Mutual, granting its motion for summary judgment and ending the suit that was removed to federal court by the insurer in December 2020.
Cinemark submitted notice of loss to Factory in April 2020 and was eventually paid a total of $1million and $10,000 respectively under its communicable disease response coverage and its interruption by communicable disease coverage policies, according to court documents.
There were nine other policies held by Cinemark that require “physical loss or damage” to trigger coverage and the movie theater argued it was entitled to payouts under those as well. When the parties failed to reach an agreement on coverage under those provisions, Cinemark filed suit in November 2020 in Collin County district court.
“Does the presence of COVID-19 particles, including contagious aerosols and fomites, on Cinemark’s properties constitute ‘physical loss or damage’ within the meaning of the policies?” Judge Mazzant wrote. “The ordinary and generally accepted meaning of ‘physical loss or damage’ and the weight of binding precedent compel the same answer to this question — COVID-19 is a virus that has a profound effect on people, but it does not cause ‘physical harm or damage’ to property as a matter of both law and common sense.”
Cinemark is represented by Michael S. Levine, Casey L. Coffey, Christopher Cunio, Geoffrey B. Fehling, Jarrett L. Hale, Joseph T. Niczky, Kevin V. Small, Nicholas D. Stellakis and Rachel E. Hudgins of Hunton Andrews Kurth, and Melissa Smith and Andrew Gorham of Gillam & Smith.
Factory Mutual Insurance is represented by James V. Chin, Jonathan MacBride, Laura W. Bartlow, Lindsey A. Davis, Michael Patrick O’Brien and Shannon O’Malley of Zelle and Eric Pinker, Holly Stubbs, Rebecca Adams and Ruben Garcia of Lynn Pinker Hurst & Schwegmann.
The case number is 4:21-cv-00011.
Western District of Texas
Baylor Beats Students’ Covid Remote Learning Breach Claims
A proposed class action lawsuit brought against Baylor University by students Allison King and Joshua Roop, alleging breach of contract based on the school’s move to remote learning during the pandemic, has been tossed by a federal judge.
U.S. District Judge David Counts entered final judgment in favor of Baylor March 14. He explained the case boiled down to whether the Pandemic Liability Protection Act — signed by Gov. Greg Abbott in June 2021 to shield universities from monetary liability arising from the move to remote learning — is constitutional and applies to the students’ claims.
“If the Act doesn’t apply to plaintiffs’ claim or is unconstitutional, Baylor — and every other educational institution that moved to remote learning — becomes monetarily liable for seeking to protect students and faculty during an unprecedented health emergency,” he wrote. “On the other hand, if the Act does apply and is constitutional as applied, plaintiffs will be left holding any empty bag almost three years later. Although that outcome might be unfair; unfair does not always equal unconstitutional.”
Judge Counts concluded that because the plaintiffs here were seeking monetary damages barred by the PLPA, which he held was constitutional as applied, they failed to state a claim for relief, dooming the suit.
“Now one could argue, like plaintiffs do, that shielding universities from monetary liability from suits already in progress isn’t fair. The Court doesn’t disagree,” he wrote. “But the tests for whether the PLPA is constitutional in this case go deeper than ‘fairness.’ Indeed, as the Court reasons above, the PLPA protects compelling public interests through a narrowly tailored shield against only monetary remedies. And that is enough to bar plaintiffs’ claim.”
King and Roop are represented by Jeffrey S. Edwards and David James of Edwards Law, Jeff Ostrow and Kristen Lake Cardoso of Kopelowitz Ostrow Ferguson Weiselberg Gilbert, Daniel L. Warshaw of Pearson Simon & Warshaw, Hassan A. Zavareei and Anna Haac of Tycko & Zavareei and Eric M. Poulin and Roy T. Willey IV of Anastopoulo Law Firm.
The case number is 6:20-cv-00504.
Southern District of Mississippi
Doc Accused in $18M Fraud Acquitted of Felony, Pleads to Misdemeanor
Dr. Gregory Alvin Auzenne, who was accused of defrauding the government out of millions via a scheme involving unnecessary prescriptions for pain cream, has agreed to a plea deal that saw him convicted of a misdemeanor after he was cleared by a jury on seven out of eight felony charges.
On March 20, U.S. District Judge Keith Starrett ordered Auzenne to serve five years of probation and pay $116,623 in restitution after he pleaded guilty to one count of failure to disclose to authorities the conduct of a pharmacist also involved in the alleged scheme. Auzenne’s lead attorney, Dallas-based Brandon N. McCarthy of Katten Muchin Rosenman, issued a statement that his client was “fortunate” he could hire attorneys to fight the case.
“To our knowledge, this was the first time the Department of Justice has charged someone for failing to tell the federal government that someone else committed a misdemeanor,” McCarthy said. “This guilty plea to a paltry misdemeanor was the only way to wrap up this ordeal.”
Department of Justice attorneys Erin O’Leary Chalk, Sara Porter and Justin Woodard prosecuted the case for the government.
The case number is 3:23-cr-00020.
Texas Supreme Court
Deputy Sheriff Can’t Sue A&M Over Campus Crash
Brazos County Sheriff’s Deputy Kristopher Fraley lost a bid to revive his lawsuit against Texas A&M University stemming from an on-campus incident at an unlit intersection that left him crashed in a drainage ditch with serious injuries.
Fraley had argued the unlit, unbarricaded intersection — converted from a four-way to a “T” intersection — where he crashed constituted an unreasonably dangerous condition that should waive governmental immunity from suit.
On Friday the court unanimously agreed with the Seventh Court of Appeals that the university is immune from such claims under the Texas Tort Claims Act. Fraley had appealed to the state’s high court in September 2021, according to court records, urging the justices to side with the Brazos County district court judge who found immunity was waived in this case.
The Texas Supreme Court held that Fraley’s complaints about the intersection’s design and alleged lack of safety mechanisms implicated the university’s “discretionary” design decisions, which are covered by immunity.
“Further, Fraley does not point to any discovery that reveals facts to avoid the discretionary decision-making exception to the waiver of immunity the Act provides,” the court held. “Given the opportunity to replead, Fraley did not raise negligent implementation.”
Fraley is represented by Angus E. “Andy” McSwain of Beard Kultgen Brophy Bostwick & Dickson.
TAMU is represented by Michael Shaunessy of McGinnis Lochridge and the Office of the Attorney General.
The case number is 21-0784.