I love covering litigation because regardless of the outcome, there’s usually a good story to tell.
Litigation documents the lifelines of relationships: when they blossom, when they crumble and everything in between. And no matter how big a company is, it’s the people and lawyers behind it who drive the narrative.
The cases that unfolded in 2018 were no exception. One wise commercial litigator once told me: “As long as people continue to lie, cheat and steal, we’ll always be in business.” Although who, exactly, did the cheating and stealing (or other offense) is not always black and white, companies and individuals have an excellent pool of lawyers – and characters – to call upon in the great state of Texas when they need to litigate the issues most important to them.
Some litigation wins made it on this list due to the sheer dollar-value at stake or high-profile nature. Others were rare wins that required extraordinary efforts by the lawyers. And some were such important victories aimed at protecting the broader population that the monetary aspect was irrelevant.
These are my top 10 picks for the most important litigation wins in 2018.
When AT&T announced plans to merge with Time Warner for $85 billion in October 2016, AT&T General Counsel David McAtee knew the company might have to contend with a Department of Justice challenge. Just five years before, the telecom giant had abandoned its bid for T-Mobile over an antitrust claim.
Fast forward to June 2018 when McAtee, AT&T executives, lawyers and support staff crammed in the Washington, D.C. offices of O’Melveny & Myers to toast to a slam-dunk victory. Less than an hour earlier, U.S. District Judge Richard Leon ruled that the DOJ failed to prove in any way the AT&T-Time Warner merger was anti-competitive during a six-week trial in the spring.
“It was a magnificent effort,” one AT&T lawyer told The Texas Lawbook after the ruling. “We tried the case the old-fashioned way: we contested every fact. We challenged every witness. We won every day.”
“When you assemble so many big-name lawyers on one case, you need to orchestrate the personalities and skillsets to make sure they are working together and going in the same direction,” said former American Airlines general counsel Gary Kennedy, who had his own battles with the DOJ. “The lawyers deserve some of the credit for working together and putting their egos aside, but David McAtee deserves most of the praise.”
Another massive win for AT&T
In August, AT&T got another slam-dunk victory, this time against the Federal Trade Commission when a federal judge in California essentially ended a $4 billion FTC lawsuit against the communications giant.
The FTC had sued AT&T on claims that the company’s DIRECTV subsidiary had misled customers in 2015 by failing to disclose key terms regarding its discounted pricing, including: its two-year contract requirement, a $20 early termination fee and an opt-out requirement to avoid monthly charges for premium channels. The FTC asked for $3.95 million in restitution.
This time, AT&T General Counsel David McAtee enlisted Dallas boutique trial lawyers Jeff Tillotson and Pete Marketos to argue in a nine-day bench trial that the FTC had completely failed to prove its case.
U.S. District Judge Haywood Gilliam agreed, finding that “the true terms are adequately and accurately disclosed in the advertisements.” He dismissed most of the government’s claims, and within months all the remaining FTC charges were dismissed.
A showdown between two Dallas parents and Toyota Motor Corp. was the buzz of the George Allen courthouse this summer – not only because of the amount at stake but also because of the cast of lawyers headlining the case.
The three-week trial in District Judge Dale Tillery’s courtroom pitted veteran plaintiffs’ lawyer Frank Branson against Victor Vital, Barnes & Thornburg’s charismatic defense litigator. It was their first time to try a case against each other.
“It is two great trial lawyers, neither of whom are prone to histrionics and bullshit,” Dallas lawyer Randy Johnston told The Texas Lawbook in advance of the trial.
On August 17, the jury awarded Benjamin and Kristi Reavis $242 million, finding that Toyota manufactured a defective seatback failure that caused permanent brain damage to the Revises’ two small children when their family Lexus was rear-ended in 2016 on North Central Expressway.
Judge Tillery preserved most of the verdict when he kept Toyota on the hook for $213 million in his Oct. 26 final judgment. It was Toyota’s first major trial in North Texas since moving its headquarters from California to Plano in 2017.
The trial turned, not only on expert testimony, but also by Tillery’s decision to allow the jury access to documents leaked by a former Toyota in-house-lawyer-turned whistleblower. The documents detailed Toyota’s 2014 deferred adjudication agreement with the Justice Department over misrepresentations about unintended acceleration complaints.
In April, an East Texas federal jury ruled Apple wrongly appropriated technology owned by Nevada-based VirnetX that is vital to its FaceTime technology. The verdict was the fourth round of an ongoing series of patent disputes between the two companies.
Notably, VirnetX’s trial team was led by Caldwell Cassady Curry, a budding Dallas-based litigation powerhouse that has made quite the living chewing up Apple in the courtroom. So far, they have won more than $1 billion in jury verdicts against Apple alone.
The firm is currently pursuing another case against Apple on behalf of a group of California residents who allege Apple purposely broke FaceTime in 2014 to force users of older iPhone operating systems to upgrade to their newest operating system.
In August, Apple lost a multimillion-dollar patent infringement verdict to yet another Texas firm – this time, McKool Smith.
Ottowa-based WiLAN won a $145 million verdict on claims that Apple infringed on the company’s patented voice-over-LTE wireless communications technology in several of its iPhone 6 and iPhone 7 devices. Even sweeter, the win came in California, Apple’s home state.
“Beating Apple in California is a tough task and made this case quite special,” WiLAN lead lawyer Mike McKool told The Texas Lawbook in August. “We had several iPhone users on the jury. But we kept our arguments to the facts and we did not demonize Apple at all.”
The jury deliberated for only an hour, which normally signals a victory for the defense.
Said McKool: “I was not that surprised. I was confident in our case. I feel very confident about our case on appeal.”
It’s a case that has been going on since at least 2005, and it could possibly still be far from over.
Nevertheless, a team of Houston and Dallas lawyers were handed a significant victory Oct. 18, when a three-judge panel from the U.S. Court of Appeals for the Fifth Circuit upheld a lower court decision that Texas officials were “deliberately indifferent” to decades of child abuse in the state’s long-term foster care system.
The ruling affirmed U.S. District Judge Janice Graham Jack’s assessment that thousands of children in state-sponsored custody have suffered conditions in which “rape, abuse, psychotropic medication and instability are the norm.”
After a bench trial, Jack found the State of Texas liable in 2015 for violating the constitutional rights of a class of 12,000 children under long-term custody of the state. She also appointed a special master to craft reforms for the system and oversee implementation, then ordered remedies in January 2018 based on the special master’s recommendations.
The state appealed, and Texas Assistant Solicitor General Jody Hughes faced off in New Orleans last spring against Houston attorney Paul Yetter, the lead appellate lawyer for the class of foster care children.
Though elements of Judge Jack’s ruling were remanded to the trial court as overly broad, Yetter says the appellate decision was watershed in reforming foster care worker caseload and oversight.
“They said unequivocally that Texas children are not safe in foster care in two critical areas,” he said.
Lawyers from Yetter Coleman and Haynes and Boone are involved in the case pro bono level and are partnering with A Better Childhood and Children’s Rights, two advocacy organizations founded by veteran foster care reform lawyer Marcia Robinson Lowry, who is a co-counsel in the case.
The lawyers investigated the state system for six years before filing the pending class action lawsuit in 2011.
“It’s fair to say no state has been more recalcitrant and defiant in battling foster care reform than Texas has,” Yetter said. “Many states have resisted reform but once it’s become clear that children were at risk, many of them have voluntarily started to fix their systems. And many are much better today because of those changes.”
Beaumont firm Provost Umphrey in late October won a total of $178.5 million for a class of 2,299 plaintiffs – primarily residents of the Beaumont area – who were exposed to asbestos between 1985 and 1987 while working at refinery and chemical plants in Southeast Texas.
The lawsuit was originally filed in 1990, but the case took a 16-year hiatus when the defendant, Pittsburgh Corning Corp., filed for Chapter 11 bankruptcy. After a $4 billion trust was created as a result of the bankruptcy, Provost Umphrey lawyer Bryan Blevins re-filed his clients’ claims, arguing they were subject to pre-petition liquidated claims, which are riskier to recover on but pay out more if a group of plaintiffs adequately proves it.
The bankruptcy then had to be re-opened for the judge to consider the request, where he ruled the parties to go to mediation, where they reached a “high-low” settlement agreement of $37.9 million.
If a 28-year legal battle wasn’t enough of a challenge, Blevins said another difficult aspect of the case was tracking down all of his clients – many of whom had already died – as well as their heirs, many of whom had been displaced from Hurricane Harvey.
It was a case that had $30 million at stake, but the lawyers involved admit money was the last thing this case was about.
A Houston jury on Oct. 4 awarded a take-nothing verdict to three brothers who were accused by their two other brothers of fraud, securities violations and breach of fiduciary duty of their family business, Compressor Engineering Corp (CECO for short).
The company considers itself the world’s largest independent manufacturer of engine and compressor replacement parts.
The case pitted the three defendant brothers – Mark, Richard and Dr. Steven Hotze – against plaintiff brothers David Bruce Hotze and David’s wife, Donna.
The dispute arose in 2016 after CECO had recovered from a financial crisis caused by a $6 million fraudulent invoice that got approved in the company’s Ohio and Pennsylvania operations. It caused CECO to face foreclosure and jeopardized more than 400 jobs.
The defendant brothers argued that they put together $2.5 million of their own money to save the company while the plaintiff brothers abandoned the family business once the financial situation got tough.
“I always say all cases go to trial for only one of two reasons: either one or both lawyers grossly overvalue the case, or it’s not about the money,” said John Zavitsanos, who was Dr. Steven Hotze’s lead lawyer. “And although this case involved a lot of money… it wasn’t about the money.”
“When families fight it’s a lot more vicious than when strangers fight or when casual friends fight, because families know where all the bodies are buried,” he said.
Though tort reform over the past couple decades has made it difficult for victims of medical malpractice to recover damages, one case early last year made it to a Tyler, Texas jury and resulted in a multimillion-dollar verdict.
On Jan. 30, 2018, the jury ruled that Tyler-based East Texas Medical Center committed gross negligence when it violated its own bylaws to allow a doctor who had been on probation with the Texas Medical Board since 2013 to treat a patient who had been admitted for cholangitis.
The jury awarded $46 million to the patient, Billy Pierce, a former senior vice president at X-Chem who has been unable to return to work and provide for his family since his 2014 hospitalization.
The jury’s verdict included $18.57 million in actual damages and, because the “evidence was so egregious,” $25 million in punitive damages. Pierce’s attorneys said they had asked for only $20 million.
After the verdict, Pierce said the parties settled for $9 million due to a high-low agreement they had reached, but he still considered the case a win.
Reid Martin and Jack Walker, both of Tyler-based Martin Walker, represented Pierce.
Fort Worth-based Pier 1 Imports had a rough 2018. After unveiling a turnaround plan last April, the struggling home furnishings chain saw its sales slump continue and its CEO depart after only two years.
However, there remained at least one silver lining on the year. On June 25, the newly appointed U.S. District Judge Karen Gren Scholer dismissed a putative shareholder class action brought by the Municipal Employees’ Retirement System of Michigan that alleged two of Pier 1’s former executives misrepresented the company’s financial health.
MERS alleged they concealed from the market that Pier 1 had acquired excess inventory that exceeded customer demand, which put the company at risk of incurring significant expenses.
Judge Scholer’s ruling was the second time the lawsuit was dismissed. It had originally been dismissed by U.S. District Judge Sidney Fitzwater, who allowed MERS to replead its claims as is standard in securities litigation.
In her June 25 ruling, Judge Scholer determined MERS still had not presented enough evidence that Pier 1 had violated securities laws.