Commercial Litigation Developments
FBFK’s weekly look at notable developments in commercial disputes, trials, appeals, class actions and technology litigation, with an emphasis on Texas and California.
This week’s developments share a common thread: courts are deciding who gets to sue, and on what terms. Texas courts are testing the new corporate-litigation rules that come with leaving Delaware, while federal courts in California are setting the boundaries of patent, antitrust and class exposure for technology companies.
Apple Hit With $5.7 Billion Haptics Patent Verdict as Funder Burford Claims $1.4 Billion Share
A federal jury in the Southern District of California found on Sept. 26 that the haptic-feedback technology in Apple’s iPhones and Apple Watches infringes two Taction Technology patents, awarding more than $5.7 billion, which Reuters described as the largest U.S. patent award ever. Litigation funder Burford Capital then disclosed that its funding agreement would entitle it to roughly $1.4 billion of any recovery, while cautioning that post-trial motions, appeal or settlement could shrink that figure considerably. Apple says it disagrees with the verdict and plans to appeal. Taction sued in 2021 and lost the first trial before the Federal Circuit revived the case. The takeaway: funded plaintiffs can outlast early defeats, so companies should plan for longer timelines and higher settlement floors.
Sources: Reuters, “Litigation funder Burford says it would be entitled to $1.4 billion of Apple patent verdict” (Subscription required); AppleInsider, “Apple’s haptic feedback $5.7B trial loss likely to get pared way back”
Related: Intellectual Property & Technology
Texas Business Court Dismisses Coinbase Derivative Suit, Applying Texas Demand Rule to Pre-Move Conduct
On Oct. 2, Judge Andrea Bouressa of the Texas Business Court dismissed without prejudice a shareholder derivative suit against Coinbase CEO Brian Armstrong and other insiders. The plaintiff, Gary Guillaume, challenged conduct from 2021 to 2023, when Coinbase was a Delaware corporation, and relied on Delaware’s demand-futility doctrine rather than first asking the board to act. Coinbase reincorporated in Texas in December 2025. The court held that Texas law governs a shareholder’s standing to sue derivatively on behalf of a Texas corporation, even for claims arising under another state’s law, and Texas requires a pre-suit demand in every case. For companies weighing a move from Delaware, the ruling suggests Texas procedural protections apply upon reincorporation, including to earlier conduct.
Sources: Bloomberg Law, “Coinbase Secures Texas Derivative Dismissal Citing Delaware Exit” (Subscription required); Texas Business Court, “Guillaume v. Armstrong, 2026 Tex. Bus. 70”
Related: Corporate, Securities & M&A
Business Groups Urge Fifth Circuit to Uphold Southwest Airlines’ 3% Derivative-Suit Threshold
The U.S. Chamber of Commerce and the Texas Association of Business have asked the Fifth Circuit to affirm dismissal of Gusinsky v. Reynolds, a derivative suit against Southwest Airlines’ directors over ending the carrier’s “Bags Fly Free” policy. The plaintiff held about 100 shares. In March, U.S. District Judge Ed Kinkeade of the Northern District of Texas dismissed the case with prejudice, enforcing a Southwest bylaw, adopted two days after Texas Senate Bill 29 became law, that requires derivative plaintiffs to hold at least 3% of outstanding shares. An affirmance would give Texas companies more confidence that ownership-threshold bylaws can screen out small-stake derivative suits, a key factor for boards weighing reincorporation.
Sources: Law360, “Biz Groups Urge 5th Circ. To Back Texas Derivative-Suits Limit” (Subscription required); The National Law Review, “Meritless Lawsuits No Longer Fly Free in Texas”
Related: Corporate, Securities & M&A
Judge Trims ChatGPT Subscribers’ Antitrust Suit Against Microsoft but Keeps California Claims Alive
U.S. District Judge P. Casey Pitts of the Northern District of California dismissed the federal antitrust claim in a proposed class action brought by ChatGPT Plus subscribers against Microsoft. The subscribers allege that Microsoft’s computing-capacity arrangement with OpenAI restricted OpenAI’s output and propped up consumer AI prices. The court found the consumers had not pleaded the kind of antitrust injury a rival compute provider or AI competitor might claim, and granted leave to amend. Microsoft’s motion to compel arbitration was denied, and claims under California competition law will proceed. The practical point: AI partnership terms now draw challenges from consumers, not just competitors, and California state-law claims can survive even when federal claims fail.
Sources: Law360, “ChatGPT Users’ Antitrust Suit Against Microsoft Gets Trimmed” (Subscription required); PYMNTS, “Microsoft Wins Partial Dismissal of ChatGPT Users’ Antitrust Case”
Related: Intellectual Property & Technology
Ninth Circuit Affirms Class Certification in Right-of-Publicity Suit Against Classmates.com Operator PeopleConnect
In Nolen v. PeopleConnect, Inc., a Ninth Circuit panel, in a Sept. 24 opinion by Judge Marsha S. Berzon, affirmed certification of injunctive and damages classes of Californians who allege that Classmates.com used their names from digitized yearbooks to promote paid subscriptions, in violation of California Civil Code section 3344. The court rejected arguments that class treatment required individual proof of searches, mental anguish or economic harm. It also held that PeopleConnect’s post-suit move to make the named plaintiff’s name unsearchable did not defeat her adequacy or moot the case. Companies that use names or likenesses in marketing face class-wide exposure in California, and fixing the named plaintiff’s problem after suit will not end the case.
Sources: Metropolitan News-Enterprise, “Ninth Circuit Upholds Class Certification in Case Against Online Yearbook Company”; Duane Morris Class Action Defense Blog, “Ninth Circuit Signals That Strong Merits Defenses And Post-Suit Remediation May Not Be Enough To Defeat Class Certification”
Related: Intellectual Property & Technology
Houston Bankruptcy Judge Orders Jackson Walker to Show Cause in Diebold Case
On Oct. 2, Chief U.S. Bankruptcy Judge Eduardo V. Rodriguez of the Southern District of Texas ordered Jackson Walker to show cause why it should not be sanctioned in the Diebold Holding Co. bankruptcy. The order concerns the firm’s failure to disclose the romantic relationship between former partner Elizabeth Freeman and former U.S. Bankruptcy Judge David R. Jones, who approved the firm’s retention. Judge Rodriguez called the matter an “extraordinary and unprecedented challenge” to judicial integrity. It is separate from 33 other cases in which the U.S. Trustee is pursuing fees paid to the firm. For Chapter 11 debtors, the lesson is to scrutinize professional-retention disclosures, since undisclosed conflicts can reopen fee awards years later.
Sources: The Texas Lawbook, “Another Bankruptcy Case Draws Threat of Sanctions Against Jackson Walker” (Subscription required); Law360, “Jackson Walker May Face New Sanctions Over Old Romance” (Subscription required)
Related: Bankruptcy & Restructuring
About FBFK Litigation
FBFK’s litigation and trial lawyers represent businesses in commercial disputes, trials, appeals, class actions and technology litigation. Learn more about FBFK Litigation & Trial.
This summary is provided for informational purposes only and does not constitute legal advice.