On the docket: cities being sued for back pay; remedies for breaching duty to a partner; who must a manufacturer of defective products reimburse

December 17, 2009 Don Cruse

The Court is hearing three oral arguments this morning. The issues include:

whether cities have sovereign immunity against claims for back pay;</p>
whether someone who professionally installs a defective product is a "seller" that must be reimbursed by the manufacturer for their losses;
when a party suing for breach of fiduciary duty can get disgorgement of the money they paid.

Does the city have immunity against lawsuits seeking back pay?

City of Dallas v. Kenneth E. Albert, et al., No. 07-0284 (more info) This case involves a group of firefighters suing the city arguing for back pay that — considering the number of plaintiffs and the time periods involved — could be a billion-dollar case. The court of appeals concluded that the City did not have immunity against this suit. I wrote about the briefing requests in this case in this earlier post). As I noted in that post, the Court had been holding these petitions until it could decide City of El Paso v. Heinrich, No. 06-0778 (more info), which dealt with sovereign immunity against claims trying to recoup older public benefits. [The Heinrich case concluded that the remedy of retrospective damages for those benefits was barred by immunity.]

Scope of Texas statute shifting liability between manufacturers and sellers of defective goods

Fresh Coat, Inc. v. K-2, Inc., No. 08-0592 (more info) This case involves the scope of Texas's statute that requires manufacturers to reimburse sellers of their goods after a products-liability claim. I wrote more about it in this previous post.

Is disgorgement a possible remedy for fiduciary breaches outside of the context of professional fees?

ERI Consulting Engineers Inc. and Larry G. Snodgrass v. Mark Swinnea, et al., No. 07-1042 (more info) This case asks how to compute damages when one business partner breaches a fiduciary duty to the other. The trial court used the equitable remedy of disgorgement, ordering that the deal be unwound by returning the funds. That made the plaintiff's proof of damages straightforward. The court of appeals reversed, holding that disgorgement of the funds received was not a proper measure and that, instead, lost profits must actually be shown. It's hard to prove lost profits, and the court of appeals held that the plaintiff had not met that burden.