Texas Court Dismisses All Claims Against Firm Client in $45 Million Civil Insider Trading Case

A Texas District Court entered an order dismissing all civil claims brought by Dean Foods Company against its former Chairman of the Board, Tom Davis, arising from criminal charges against Davis for providing insider tips for trading of Dean Foods’ stock. Dean Foods alleged that it was owed in excess of $8 million in expenses for providing the criminal legal defense to Davis, who later plead guilty to the charges, as well as costs expended conducting an internal investigation. Additionally, Dean Foods sought judgment against Davis to disgorge all profits made by Billy Walters, who alongside Phil Mickelson received insider information provided by Davis. In total, Dean Foods sought an amount exceeding $45 million.

Lead civil trial counsel for Davis, Cody Towns, filed a Motion to Dismiss the case asserting the provisions of an agreement between Dean Foods and Davis which required the case to be construed under Delaware law and brought in a Delaware court. Pursuant to Delaware law, Towns argued to the Texas court that the statute of limitations had expired and that Dean Foods filed in Texas in violation of the agreement to attempt to utilize a longer limitations period in the State of Texas. On August 19, 2019, the Texas court issued an order agreeing with Towns’ argument, and dismissed all claims brought against Davis. The case matter is styled as: Dean Foods Company v. Thomas C. Davis, et al., Cause No. DC-18-04998 in the 95th Judicial District Court, Dallas, Texas.