» 2013 » April

Texas Jury Finds Against Frito-Lay in Lawsuit over Competitor’s Bowl-Shaped Chips

Frito-Lay has lost a lawsuit in federal court in Texas against a competitor who made bowl-shaped chips similar to the company’s Tostitos Scoops chips.

The Plano, Texas-based snack giant sued Ralcorp Holdings, based in St. Louis, and its subsidiary Medallion Foods over their chips, which like the Frito-Lay product are bowl-shaped for easier scooping. The lawsuit, filed in U.S. District Court in Dallas, sought $4.5 million in damages and a court order prohibiting Ralcorp from making its chips. However, the jury sided with Ralcorp.

Ralcorp is among the largest manufacturers of store-brand foods. The company makes private-label products that carry the names of stores where they are sold. In January, Ralcorp was purchased by ConAgra Foods Inc. for $5 billion.

The chips in question include the Cupz brand sold in Kroger stores and the Bowlz brand sold at Wal-Mart. Frito-Lay, owned by PepsiCo, argued that the Ralcorp chips infringed on its intellectual property, because the design of the chips and packaging were too similar to the Scoops product. Frito-Lay said that Scoops were introduced in 2001 and generate sales in the tens of millions of dollars.

After a two-week trial, the jury of seven women and three men did not find any infringement of patent or trade dress, and awarded no damages to Frito-Lay. The jury deliberated for five-and-a-half hours before returning the verdict for the defendants.

A PepsiCo spokesperson said that the company was reviewing its options for post-trial motions and an appeal.

Frito-Lay had argued that the defendants received trade secrets from a vendor and former employees who worked on the Tostitos Scoops chips. However, the company did not call any witnesses who had seen employees take trade secrets.

The jury’s found that Ralcorp’s manufacturing process is sufficiently different from Frito-Lay’s patented process such that it does not infringe and consumers are not likely to be confused by the similarity between the products.

A Ralcorp spokesperson said that the company made a better chip at a lower cost than Frito-Lay, and that the jury’s verdict would help break a “monopoly.” A Frito-Lay spokesperson countered that the jury’s decision showed that Ralcorp’s product was “not comparable” to Frito-Lay’s superior product.

Frito-Lay North America has been a wholly-owned subsidiary of PepsiCo since 1965, and accounts for 31 percent of PepsiCo’s yearly sales. The company is the world’s largest global snack food firm, with several product lines that generate sales of more than $1 billion per year.

Gregory D. Jordan is an Austin business attorney, Austin employment lawyer, and Austin business litigation lawyer. To learn more, visit Theaustintriallawyer.com.

Nurse Claims Retaliation in Employment Lawsuit

A home health care nurse has filed suit against her former employer, claiming she was fired in retaliation for reporting patient neglect.

Susan Rapp filed the lawsuit naming Maxim Healthcare Services, Inc. as defendant. Rapp was employed by Maxim providing nursing services on the late shift at a patient’s home when she noticed that the day nurse was apparently failing to provide necessary care to the patient. Rapp allegedly reported the neglect to her supervisors, but she claims the situation did not change and that she was told not to document what she had observed in the patient’s medical records.

Approximately two weeks later, Maxim Healthcare terminated Rapp’s employment, allegedly because of unprofessional behavior, inappropriate documentation in medical records and crossing professional boundaries.

Rapp filed suit in Denton Circuit Court and the defendant removed the case to the Eastern District of Texas, Sherman Division, where it is assigned to U.S. District Judge Richard A. Schell.

Rapp alleges violation of the Texas Occupations Code. Rapp claims to have made a report required or authorized under the Code, or that she reasonably believed was required or authorized under it, and to be protected from retaliation.

The lawsuit requests damages for mental anguish, exemplary damages, attorney’s fees, court costs, compensation for lost wages, and reinstatement to Rapp’s former position or three months’ severance pay. A jury trial is requested.

Golf Course Owner Sued For Monopolization of Housing Market

The owner of a housing development adjacent to a golf course outside of Austin has filed a lawsuit against the owners of the course and another development, making various claims including monopolization and interference.

Reserve at Summit Rock, LP is the owner of Golden Bear Reserve, adjacent to the Summit Rock Golf Course in Horseshoe Bay, Texas. The company sued Summit Rock Communities LLC and Horseshoe Bay Resort, the owner of the golf course and the nearby Summit Rock development.

According to allegations in the lawsuit, Douglas Jaffe, Jr., Chairman of Horseshoe Bay Resort, and Douglas Jaffe III, its CEO, engaged in wrongful conduct to the detriment of the plaintiff, including tortious interference with contract, monopolization and conspiracy. The petition demands not less than $5,850,000 in damages.

The plaintiff claims that defendants directed security guards and other workers to steer potential home buyers away from plaintiff’s development, and that defendants were responsible for taking down plaintiff’s signs advertising open houses and homes for sale. In addition, plaintiff claims that defendants gained an unfair advantage in the local housing market through an unusual relationship with their lender, the International Bank of Commerce (IBOC). In addition, the defendants are alleged to have taken action to have the Public Improvement District reformatted for their benefit and to plaintiff’s detriment.

Lucas Energy Settles Lawsuit

Lucas Energy Inc., a Houston-based oil and gas company, has settled a lawsuit filed by Seidler Oil & Gas LP.

Under the terms of the January 28, 2013 settlement agreement, Lucas agreed to release certain revenues that had been suspended to Seidler, to participate in a joint operating agreement with the company, and to return approximately $1.38 million to Seidler and other investors. The money is associated with the Hagen Unit 5-H well, which was not drilled. Lucas also agreed to join Seidler in defending against any legal action taken against either company in connection with the well.

Lucas Energy further agreed that if executed releases are received from certain investors, the company will reimburse Seidler $85,000 and release it from claims connected to the lawsuit. Seidler, based in Alvarado, Texas, agreed to dismiss its lawsuit against Lucas. The lawsuit was filed in the District Court for the 25th Judicial District of Texas, which is located in Gonzales County, on August 13, 2012. On December 21 of last year, Lucas negotiated a stay of the lawsuit to discuss a settlement.

Lucas Energy is an independent oil and gas company that attempts to restore production to underdeveloped properties that it acquires. The company claims to have taken action to reduce its staff by about 40 percent, hoping to cut its expenses by about the same amount. The staff cuts will include office and operations employees. According to SEC filings, the company had a total of 19 employees in September of 2012.

Lucas has said that it is pursuing alternative strategies for delivering value to shareholders and will seek to generate a positive cash flow. The company said it has already reduced expenses by $1.7 million and will reduce by another $500,000 during 2013.

William Sawyer, the co-founder and CEO of Lucas Energy, resigned in December. Anthony Schnur, who had been hired as CFO in November, replaced Sawyer.

Lucas Energy is active in the Eagle Ford, Austin Chalk, Eaglebine and Buda trends. The company is traded publicly on the New York Stock Exchange. During fiscal year 2011-12, Lucas was involved in joint ventures with Marathon Oil Company and Nordic Oil, as well as with Seidler Oil & Gas. The company also drilled new wells in the Austin Chalk trend during the same period.

Gregory D. Jordan is an Austin oil and gas attorney, Texas oil and gas lawyer, Austin employment lawyer, and Austin business litigation lawyer. To learn more, visit http://www.theaustintriallawyer.com.

Gregory D. Jordan is an Austin oil and gas attorney, Texas oil and gas lawyer, Austin employment lawyer, and Austin business litigation lawyer. To learn more, visit theaustintriallawyer.com.

U.S. Supreme Court Agrees to Hear Texas Case on Retaliation by Employer

The U.S. Supreme Court will hear a Texas case on retaliation by an employer.

The case, University of Texas Southwestern Medical Center v. Nassar, deals with whether an employee plaintiff must show that retaliation was the only factor in an adverse action by the employer, or that it was simply one among a number of possible factors.

Naiel Nassar, the original plaintiff in the case, was an assistant professor at the medical school of the University of Texas Southwestern (UTSW) Medical Center. Nassar sought a transfer from the medical school to the hospital, because he believed he was treated differently by his supervisor at the medical school due to his Middle Eastern heritage.

Nassar was informed that such a transfer would constitute a violation of the operating agreement between the medical school and the hospital. However, Nassar worked through other channels to obtain the position he wanted and got an offer from the hospital. Thinking he had gained the hospital position, Nassar resigned from the medical school and accused his supervisor of discriminating against him based on his national origin. However, the employment agreement was terminated.

In his lawsuit, Nassar claimed that his employer retaliated against him for his discrimination claim by withdrawing the offer, while the employer said that the offer was withdrawn because it went against the operating agreement between the hospital and the medical school.

The case was tried in the U.S. District Court for the Northern District of Texas. UTSW requested a jury instruction that would allow the jury to find liability only if retaliation was the sole reason for the withdrawal of the offer. However, the court allowed the jury to find liability as long as retaliation was one of the motives for the actions by the school. The jury found for Nassar and awarded him $3.5 million in damages, later reduced to $735,000.

The jury instruction was at issue on appeal to the U.S. Court of Appeals for the Fifth Circuit, which affirmed on that issue. The school filed a petition for writ of certiorari, which the Supreme Court granted. UTSW argues that there is a question as to whether a decision in a 1989 case, Price Waterhouse v. Hopkins, establishes a rule for statutes such as the retaliation provision of Title VII, which do not specifically allow a claim based on mixed motives, or whether the rule in such cases should be that a plaintiff must prove “but for” causation.

The case will be heard this spring, with a decision expected in June of this year.

Gregory D. Jordan is an Austin business attorney, Austin employment lawyer, and Austin business litigation lawyer. To learn more, visit Theaustintriallawyer.com.

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