Hicks Thomas LLP Urges U.S. Supreme Court to Pick Up Business Fraud Dispute

Hicks Thomas LLP attorneys J. Stephen Barrick, Stewart Hoffer, and Eric Grant are spurring the U.S. Supreme Court to take up a fraud dispute between Falcon Express International Inc. and DHL Express (USA) Inc.

After Texas courts overruled a jury award forcing DHL to pay Falcon $5 million in damages for fraud, Falcon is claiming a misinterpretation of federal laws is responsible for the court’s decision.

Falcon filed a reply brief with the Court today. In it, Falcon says DHL is trying to confuse the standard for preemption under the ADA (Airline Deregulation Act of 1978) and the FAAAA (Federal Aviation Administration Authorization Act).

According to Falcon, circuit courts limit preemption because they necessitate a strong connection between fraud claims – such as Falcon’s – and federal laws. DHL, on the other hand, hopes to nullify Falcon’s fraud assertion by claiming preemption in any claim related to carrier rates, routes, and services.

In the fraud claim, Falcon said DHL persuaded it to enter a $1.5 million agreement, but destroyed Falcon’s business by disguising plans to halt shipping operations in the U.S. four months into the contract.

Eric Grant, who represents Falcon, said “DHL would like a ‘rule’ that a claim is preempted whenever it has a vague ‘connection with’ a carrier’s rates, routes or services. That would be good for carriers like DHL, but bad for the rule of law.”

In April, Falcon filed a cert petition asserting Texas courts deviated from federal interpretations of the FAAAA and ADA. In the petition, Falcon claims preemption cannot block a fraud claim unless it expressly references carrier rates, routes, and services.

On May 29, DHL opposed the petition, claiming preemption does not require an “express reference” to block a fraud claim.

In 2010, a jury in Houston agreed with Falcon, awarding the transportation company $1.7 million in financial damages and $3.2 million in punitive damages. The jury also found that Falcon failed to comply with the agreement, but did not award damages to DHL.

The jury verdict was reversed in 2013 when a divided panel of the First Court of Appeals in Houston determined the claim was preempted by the FAAAA and ADA. The Texas Supreme Court declined to hear the dispute in November and, in January, denied a motion to re-hear the case.

The case is Falcon Express International Inc. v. DHL Express (USA) Inc., case number 14-1225, in the Supreme Court of the United States.