While the newspapers, news broadcasters, and social media may highlight the most high-profile examples of corporate collapses and scandal, they are hardly isolated incidents. Well known corporations are behind some of the biggest scandals of the decade, some corporations include Wells Fargo, McKession Corp., and Equifax. Each story is result of a corporate culture that values profit over accountability, integrity, and opportunity, or in other words wants more "bang for its buck." The potential negative impact for corporate misconduct is the legal consequences, such as penalty, fines, and/or jail time. Despite this, corrupt corporations are willing to commit wrongful acts in order to gain large incentives. "The world's 20 leading banks spent an estimate $350 billion on costs related to misconduct over the last five years, including penalties, fines, settlements, and other legal expenses."
In the fine print of credit card agreements and bank deposit agreements, banks and credit card companies frequently require consumers to agree to give up their right to sue the bank in court-even for serious violations of consumer rights-and submit any claims to arbitration. In July, the Consumer Financial Protection Bureau adopted a rule placing a rather mild restriction on such agreements-they could not prevent consumers from filing or joining class action lawsuits. However, a joint resolution has been proposed in Congress to block the rule under the Congressional Review Act, a law that provides an expedited process for Congress to overrule regulations issued by agencies of the executive branch. The resolution has already passed in the House of Representatives and is pending in the Senate.
Harris County, represented by firm attorneys Benny Agosto, Jr. and Brian S. Humphrey II, received an important win from a Houston appellate court in a property tax case involving a Houston oil refinery. In a 2-1 decision handed down last Thursday, the First Court of Appeals in Harris County v. Harris County Appraisal District reversed the trial court's ruling and rendered judgment that inventory held in a refinery operated by Pasadena Refining System, Inc. was not exempt from local property taxes under the federal Foreign Trade Zones Act. The exemption was claimed on crude oil, refined products, and other inventory valued at over $100 million during the relevant tax years, representing millions in tax revenue for Harris County and the other taxing jurisdictions.
The financial crisis of 2008, widely considered the worst since the Great Depression, stemmed from the securitization of risky mortgage loans sold to investors at wildly inflated prices. In essence, mortgage companies eager for even more business began encouraging borrowers to take out mortgages on homes they could not afford. These subprime mortgages - called "liar loans" by some because they were often based on falsified paperwork and inflated incomes - were then bought by investment banks that bundled them up and sold to big investors at prices that did not reflect the creditworthiness of the borrowers. When the housing bubble burst and borrowers began defaulting on their mortgage payments, the value of those investments declined, throwing the entire financial system into chaos and millions out of their homes.
In an opinion issued today, the Texas First Court of Appeals in Houston held that the trial judge in an underinsured motorist insurance case did not abuse his discretion by declining to sever and abate the plaintiff's claims under the Texas Insurance Code for misrepresentation of policy terms. This case is a significant development in an area where such "extra-contractual" claims have routinely be held to be severable.
In an ongoing lawsuit by the Securities and Exchange Commission (SEC) against a Texas man it has accused of defrauding investors in a Ponzi scheme involving the popular "virtual currency" Bitcoin, Federal Magistrate Judge Amos Mazzant of the Eastern District of Texas re-affirmed in August his earlier denial of the defendants' motion to dismiss. In his ruling, Judgef Mazzant held that Bitcoin is "money" and that contracts involving the investment of Bitcoin rather than traditional currency are nonetheless subject to federal securities law. In an ironic twist, the ruling lends credibility to Bitcoin as a currency while simultaneously allowing the government to proceed in a case highlighting Bitcoin's risks and to potentially subject it to closer regulation-certainly an uncomfortable situation for a currency whose entire point is to serve as an alternative to government-sponsored legal tender.
After years of litigation, and a month long trial in December, a Houston jury has ruled that the Ashby high-rise project constitutes a nuisance for some of the neighboring residents. In its decision, the jury awarded almost $1.7 million to 20 of the 30 households that filed suit. The plaintiffs who were awarded damages will only receive them if the high-rise is actually built.
In early August 6, 2015, Tyson Foods, citing "ambulatory" or "behavioral" problems, announced that its slaughterhouses would no longer accept cattle that had been fed Zilmax, leading Merck & Co. to suspend sales of the popular feed additive. Details on the "ambulatory problems" that prompted Tyson's decision were not forthcoming until today's report by Reuters: The day before the announcement, fifteen Zilmax-fed cattle delivered to a Tyson slaughterhouse in Washington state were discovered to have lost their hooves. Two more were discovered the next day.
According to a series of reports from ABC News 8 in Dallas, public records reveal that Yellow Cab may be in violation of a statewide passenger safety requirement that mandates taxi companies carry $750,000 in insurance when transporting Medicaid patients. The state of Texas is now investigating News 8's findings to determine if Yellow Cab is in compliance with insurance standards for a contract that's paid the taxi company nearly $82 million over a four-and-a-half year period. This follows a series of reports, from News 8 that the city of Dallas has given Yellow special treatment for 12 years, allowing the taxi company to operate without sufficient insurance intended to ensure the safety of passengers. The city of Dallas forced Yellow to obtain new insurance coverage after it learned Yellow's existing policy was insufficient.
This week, Rep. Lamar Smith of Texas introduced into Congress a bill entitled the "Lawsuit Abuse Reduction Act" ("LARA"). If passed, this bill will amend Rule 11 of the Federal Rules of Civil Procedure to remove federal judges' discretion in awarding sanctions for improper pleadings and remove the "safe harbor" provision of the rule which allows parties or lawyers to voluntarily withdraw or amend pleadings when the other party has filed a motion for sanctions. While the purpose of this bill is purportedly to combat "lawsuit abuse," its only effects will be to clog our courts with unnecessary hearings and to increase litigation costs for both plaintiffs and defendants.