Category: 'Case Notes'
April 22nd, 2013 · Comments Off
This week, the Texas Supreme Court chose four more petitions for its fall argument calendar. (orders list).
Shared discovery orders and litigation involving trade secrets
The dispute is over the scope of a protective order for the defendant’s trade secrets. The wrinkle is that the order permits limited sharing with other qualifying litigants beyond this case — so similar plaintiffs in another state might obtain this information and might, in turn, share discovery information that they have gathered. The defendant argues that this is an abuse of discretion and constitutes a taking. The plaintiff side argues that these shared discovery orders are commonly permitted in other jurisdictions and promote judicial efficiency while adequately protecting the producing party.
Expert certifications to sue architects, engineers, and surveyors
Chapter 150 of the Civil Practice and Remedies Code requires those suing architects, engineers, or surveyors to include a certification about the claim from a qualified expert with the original filing or risk dismissal. Here, the two sides reached a Rule 11 agreement about expert deadlines that might extend this time. Before that (new) deadline was reached but after the underlying statute of limitations on the claim had expired, the defendant moved to dismiss under section 150.002. The trial court denied the motion. The court of appeals reversed, concluding that the case did not qualify for a “good cause” extension under the statute. Justice Keyes dissented, arguing that the defendant had waived this right through the Rule 11 agreement.
The petition argues, among other things, that the court of appeals lacked interlocutory appellate jurisdiction over a trial court decision to extend time (rather than to dismiss) and that the Rule 11 agreement should be enforced.
ERISA preemption of severance agreements
The case asks if a group of employees of a company that sold a business unit to another company had, on these facts, a contract claim against their former employer over severance benefits. At the court of appeals level, the three-judge panel split three ways:
an opinion conveying the judgment, which concluded that the claims were not preempted by ERISA but that these facts did not demonstrate any contract breach;
a concurring opinion in the judgment only, which concluded that this claim was preempted by ERISA; and
a dissenting opinion, which concluded the claim was not preempted and that these facts were consistent with a contract claim.
Suits by insurers to recover funds paid out by mistake of fact (with some appellate twists)
This appeal involves a complex tangle of insurance obligations for an oilfield blowout in 1997. The petition is brought by the insurer, seeking to recover some funds previously paid out to certain parties involved in the operation. The petition claims that the payments were made “under a mistake of fact” and seeks restitution from those who ultimately received the funds. The respondents argue that this is an extra-contractual claim that is barred by Excess Underwriters at Lloyd’s v. Frank’s Casing Crew & Rental Tools, 246 S.W.3d 42 (Tex. 2008).
One argument made involves “law of the case.” This case has percolated up and down the appellate chain, with two previous decisions of the court of appeals (Gotham I and Gotham II) resulting in petition denials. The petition argues that the appellate decision below (called Gotham III in the briefing) violated the law-of-the-case doctrine by reversing field on a legal point because of the intervening Frank’s Casing decision.
That points toward an even more arcane lurking issue — how does “law of the case” work in a case that has been transferred by docket equalization? Under Texas Rule of Appellate Procedure 41.3, “the court of appeals to which the case is transferred must decide the case in accordance with the precedent of the transferor court under principles of stare decisis…” The Gotham III version of this appeal was sent from the San Antonio Court to the El Paso Court. It was that transferee court that set aside the San Antonio Court’s holding in Gotham I. If Frank’s Casing represented such a sharp break with the prior law that even the San Antonio Court would have been required to change its result, then the decision seems consistent with both Rule 41.3 and “law of the case.” But if Frank’s Casing did not change the principle upon which Gotham I rested, does Rule 41.3 prevent a transferee court from revisiting the issue?
This last question might be turn out to be academic. The Texas Supreme Court itself is not bound by the law-of-the-case doctrine in regard to the substance of this appeal, because its prior petition denial does not have the effect of blessing the result of Gotham I on the merits. But how the Court’s opinion juggles these doctrines may give some guidance to litigants and judges who dealing with the kind of blockbuster cases that tend to spin off a whole series of appellate sequels.
Tags: Case Notes
April 5th, 2013 · Comments Off
The case asks if the Medlen family, who argued that its pet was euthanized due to the negligence of an animal-control shelter, could seek damages for their emotional loss or whether they were limited to the (presumably much lower) economic value of the dog.
The court of appeals held that Texas law permitted a claim for emotional damages as an aspect of the “intrinsic value” of the dog as property. The court of appeals reasoned that Texas law had changed a great deal since 1891 (when the Texas Supreme Court first confronted this question) and that sentimental damages had been permitted for some other narrow classes of property claims. This court of appeals decision created a split with other Texas courts of appeals and triggered this petition for review, which attracted an understandable amount of press attention.
The Texas Supreme Court reversed the court of appeals. holding that Texas’s general common-law does not provide for the recovery of emotional-loss damages in this situation.
>> Read more about this case
Tags: Case Notes
February 20th, 2013 · Comments Off
The U.S. Supreme Court has released its decision in Gunn v. Minton, No. 11-1118 (opinion docket), reversing the decision from the Texas Supreme Court.
This is a legal malpractice suit about a patent issue. The defendant argued that the presence of an issue over which federal courts had special jurisdiction (patent law) meant that Texas state courts lacked the power to render a complete decision. The Texas Supreme Court agreed, concluding that the appeal raised an issue of federal law over which Texas courts had no authority and thus should defer to federal courts. The U.S. Supreme Court accepted the case for review and heard arguments in January.
Chief Justice Roberts wrote today for a unanimous Court, holding that federal law did not in these circumstances require the Texas legal-malpractice claim to have been brought in federal court. The Court thus reversed the Texas Supreme Court’s 6-3 decision in VERNON F. MINTON v. JERRY W. GUNN, INDIVIDUALLY, WILLIAMS SQUIRE & WREN..., No. 10-0141
and remanded to the Texas state courts for further proceedings.
The nub of the reasoning begins at page 8 of the slip opinion, which frames the relevant test as whether the particular issue of federal law involved here was substantial to the federal system (not to the parties):
Minton’s argument founders on [Grable & Sons Metal Products, Inc. v. Darue Engineering]‘s next requirement, however, for the federal issue in this case is not substantial in the relevant sense. In reaching the opposite conclusion, the Supreme Court of Texas focused on the importance of the issue to the plaintiff’s case and to the parties before it. … As our past cases show, however, it is not enough that the federal issue be significant to the particular parties in the immediate suit; that will always be true when the state claim “necessarily raise[s]” a disputed federal issue, as Grable separately requires. The substantiality inquiry under Grable looks instead to the importance of the issue to the federal system as a whole.
Having thus reframed the dispute between these parties into a vastly bigger context — the federal system, and federal-state relations — the Court concluded that there was no bar to the Texas courts adjudicating this claim.
This may be, in part, because it was an unusually retrospective kind of claim — legal malpractice — which involves determining hypothetical questions in the past tense about what might have happened in litigation. Any holdings that state courts might reach in such a narrowly defined context are unlikely to disturb the uniformity of federal patent law. See slip op. 9-10.
The Court also rejected the argument that the unique expertise of the Federal Circuit was a reason for the federal courts to be the exclusive forum for patent-malpractice cases. See Slip op. 11-12. The Court’s reasoning here again echoed the opinion’s theme: “[T]he possibility that a state court will incorrectly resolve a state claim [malpractice] is not, by itself, enough to trigger the federal courts’ exclusive patent jurisdiction …. [R]esolution of a patent issue in the context of a state legal malpractice action can be vitally important to the particular parties in that case. But something more, demonstrating that the question is significant to the federal system as a whole, is needed.”
The immediate effect of Gunn v. Minton is of course to clarify that state courts can resolve legal-malpractice issues that touch upon federal patent law.
More interesting to appellate lawyers, perhaps, is how the Court shifted the focus of a jurisdictional inquiry from analysis of the parties’ claims to a broader question that, to my eyes, reads more like a discussion of discretionary review. The focus in the Chief Justice’s opinion is on whether the issue is important to federal jurisprudence, something that echoes how the Supreme Court resolves cert petitions. Indeed, the opinion employs some argumentative devices that one might find in a solid Brief in Opposition arguing against the Court taking certiorari of a state-law patent issue:
the evergreen argument that “If the question arises frequently, it will soon be [presented in a better case, in federal court]“, slip op. 10;
explaining how rarely state court decisions about federal issues are viewed as authority in federal court or by federal agencies, slip op. 11; and
explaining that, even if there were some issue preclusion from a mistake made by a state court about a patent-law issue, that effect would be limited to the parties and thus not important to the jurisprudence, slip op. 11-12.
I do not envy the state court having to guess which claims might, at the margin, meet that test.
But although the edges of this jurisprudential test are perhaps less crisply defined than before, the Supreme Court’s framing results in such a smaller zone of preemption that, for most cases involving routine disputes, it will not matter precisely where the line falls.
Tags: Case Notes · News and Links
October 19th, 2012 · Comments Off
The most recent challenge to the Texas franchise tax system comes up short on today’s orders list. That was the only decision issued by the Court; it did not grant review in any new cases.
Divided 6-2, the Texas Supreme Court upheld the state franchise tax (now known as the “margins tax”) against a constitutional challenge brought by Nestle.
Read (much) more
Tags: Case Notes · Order Lists
October 5th, 2012 · Comments Off
The big news of the day comes from the U.S. Supreme Court, which has granted review of Gunn v. Minton, No. 11-1118, a case originating from the Texas Supreme Court:
VERNON F. MINTON v. JERRY W. GUNN, INDIVIDUALLY, WILLIAMS SQUIRE & WREN, L.L.P., JAMES E. WREN, INDIVIDUALLY, SLUSSER & FROST, L.L.P., WILLIAM C. SLUSSER, INDIVIDUALLY, SLUSSER WILSON & PARTRIDGE, L.L.P., AND MICHAEL E. WILSON, INDIVIDUALLY, No. 10-0141
This was the case about whether state courts could hear a claim for malpractice involving a patent or whether federal courts have exclusive jurisdiction. Divided 5-3, the Texas Supreme Court held that the federal courts had exclusive jurisdiction.
The U.S. Supreme Court will take up that question early next year.
Jane Webre is counsel of record for Gunn and the other petitioners in the U.S. Supreme Court.
Tags: Case Notes
September 5th, 2012 · 1 Comment
As the Court gets ready to begin its fall argument calendar, you might be wondering which Texas Supreme Court cases were argued last term but are still awaiting an initial decision on the merits. (No cases are left from previous terms.)
I count seven, which are listed below. This total is roughly the same as last year.
Read this year’s list
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July 29th, 2012 · Comments Off
As noted over on 600camp.com, the Fifth Circuit has just certified a question to the Texas Supreme Court about the at-will employment doctrine in Texas.
The case involves former the employees at a DuPont facility in LaPort, Texas who were covered by a collective-bargaining agreement. Their claim is that they were fraudulently induced to give up their employment with DuPont and instead enter employment with “DTI,” a newly formed subsidiary. (The fraud theory appears to be that DuPont knew it was planning to sell DTI but represented the opposite to its employees.)
The panel originally decided 2-1 in favor of DuPont, making an Erie guess that Texas law would bar these claims. It reasoned that the existing contract was not sufficient to remove them from “at will” status under Texas law. Judge Elrod dissented, taking issue with the majority’s analytical framework: “There is no such thing as somewhat at-will, or as the majority puts it ‘sufficiently non-at-will.’ In fact, the majority’s conclusion brings to mind Miracle Max’s diagnosis that Westley was ‘mostly dead.’”
On Friday, the Fifth Circuit withdrew its opinion and issued an order certifying two questions to the Texas Supreme Court:
Under Texas law, may at-will employees bring fraud claims against their employers for loss of their employment?
If the above question is answered in the negative, may employees covered under a 60-day cancellation-upon-notice collective bargaining agreement that limits the employer’s ability to discharge its employees only for just cause, bring Texas fraud claims against their employer based on allegations that the employer fraudulently induced them to terminate their employment?
See: GARY SAWYER, DOUG KEMPF, PETER BARNABA, SR., GEOFF RORREV, TIM GREGORY, ET AL. v. E. I. DUPONT DE NEMOURS & CO., No. 12-0626
Tags: Case Notes
July 13th, 2012 · Comments Off
You may remember In re Nestle USA, Inc., No. 11-0855 (DB), one of this term’s cases challenging the Texas business-margins tax.
The first of those cases was In re Allcat Claims Services, No. 11-0589 (DB), which argued that the tax was actually an income tax and thus was invalid under the Texas Constitution without an additional public vote. The Court rejected the substance of that challenge last November. Along the way, the Court split 7-2 about how to interpret a statute that granted the Court authority to resolve these questions — but set an unusual 120-day deadline on its consideration of them. The majority held that, although the Legislature lacked power to confer jurisdiction beyond the boundaries set in the Texas Constitution, this could still qualify under the Court’s more general mandamus jurisdiction.
A few months later, the Court resolved In re Nestle, which was brought under the same legislative grant. This case challenged the legality of how the Texas margins tax is calculated (rather than how the statute was enacted). The Court ruled that it lacked jurisdiction to consider Nestle’s claim because the taxpayer had not paid the tax under protest, as the statute requires in a typical tax case.
Now, Nestle is back. It paid the tax under protest and, on June 25, 2012, filed a new mandamus proceeding styled In re Nestle USA, Inc., No. 12-0518 (DB). The Court is proceeding on an accelerated schedule similar to before. It requested a response from the Comptroller, which was filed on July 3, 2012. The Court requested full briefing on the merits on July 5, 2012.
The thrust of Nestle’s argument is that the margins tax violates the requirement that taxes be “equal and uniform,” in particular by varying which expenses a taxpayer can deduct based on its line of business. The petition also argues that setting a 0.5% rate for retailers and wholesalers is unconstitutional when other taxpayers are subjected to a 1.0% rate. You can read the mandamus petition and response.
The Court has not yet selected this petition for oral argument. If chosen, its argument date is likely to be in September, so that the Court can once again beat the Legislature’s 120-day clock.
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April 27th, 2012 · Comments Off
With today’s orders list, the Texas Supreme Court issued a per curiam opinion explaining its March 28th order in the Palomo elections case.
In re Rebecca Ramirez Palomo, No. 12-0208 (per curiam)
On March 28th, the Texas Supreme Court ordered that a judicial candidate (Rebecca Ramirez Palomo) be returned to the primary ballot. I wrote a short post about the order, which was accompanied by the notation “Opinion to follow.”
Today, the Court is issuing that opinion (PDF).
This case grows out of a judicial election in Webb County. One of the candidates for a district court seat, Fernando Sanchez, objected to the eligibility of his opponent, Rebecca Ramirez Palomo, arguing that she had not (as required) been a practicing lawyer for the four years preceding the November 2012 election date. Sanchez noted that Palomo had briefly claimed an exemption from mandatory continuing legal education (MCLE) requirements. The local county party chair refused to remove Palomo from the ballot.
Sanchez sought a writ of mandamus in the court of appeals. The court of appeals granted that relief, ordering the party official to remove Palomo’s name from the ballot. The heart of the court of appeals’s reasoning was that Palomo was ineligible to practice until the time that she actually notified the state bar that she intended to reassume her MCLE responsibilities. Because that notice was sent within the four-year window, the court concluded that the public records conclusively established that she was not eligible.
The Texas Supreme Court disagreed about whether this notice to the bar should be given dispositive weight. The Court explained that attorneys report their MCLE status only at the end of the relevant year. Before that time, they can change their mind about whether or not they intend to do the hours: “A lawyer might claim the non-practicing exemption early in the compliance year, fully intending not to practice, yet change her mind before the compliance deadline, withdraw the claim, and complete all MCLE requirements for the year. Or a lawyer can wait until the compliance deadline — or perhaps even later — to claim an exemption from MCLE for the preceding year. All that matters is whether the lawyer is entitled to an exemption from MCLE requirements by the deadline for completion.”
Thus, unlike other types of “inactive” status, an attorney does not need to formally notify the bar in advance to resume active status after an MCLE exemption. For that reason, the Court held, the date on Palomo’s letter to the bar does not control this question.
Instead, the Court reviewed the other public records and concluded that they did not meet the heavy burden of “conclusively” showing that Palomo was ineligible during the four years preceding the general election in November 2012. The Court explained that Palomo probably did not intend to claim an exemption for the year ending October 2009 at all (“a year in which she actually met her MCLE requirements”) but instead for the previous year ending October 2008, which would not affect her eligibility for this election.
Tags: Case Notes · Order Lists
April 10th, 2012 · Comments Off
On Tuesday afternoon, I heard an NPR story about a legal battle in Virginia that reminded me of some cases that will be heard by the Texas Supreme Court this fall.
The Texas cases are Masterson v. Dicocese of Northwest Texas, No. 11-0332, and The Episcopal Diocese of Fort Worth v. The Episcopal Church, No. 11-0265 (direct appeal). Both involve questions about how to divide property when a local diocese splits from a national church organization — and how the First Amendment might limit the ability of Texas courts to speak to these questions.
The Virginia lawsuit actually ended about two years ago with The Protestant Episcopal Church v. Truro Church, 694 S.E.2d 555 (Va. 2010). The court there sided with the umbrella entity (the “hierarchical church”), concluding as a matter of Virginia statutory law that the requirements to show a property division had not been established. For that reason, the Virginia court did not reach the federal constitutional question.
The NPR story isn’t strictly a legal story — there’s no discussion of the merits of the suit. The focus is on how the Virginia lawsuit has affected congregations on both sides of the suit as they now try to disentangle their property and move forward.
Source: “A Church Divided: Ruling Ends Va.’s Episcopal Battle”
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April 10th, 2012 · Comments Off
On Wednesday March 28th, the Texas Supreme Court granted a judicial candidate’s request to be restored to the ballot.
The case is In re Rebecca Ramirez Palomo, No. 12-0208, a mandamus petition that is the first elections case of this cycle. The Court granted relief by order, with a notation that the Court’s opinion will be issued at a later time.
The Interim Webb County Democratic Party Chair, Sylvia G. Palumbo, is directed to take all actions necessary under, or required by, the Texas Election Code to certify Rebecca Ramirez Palomo as a candidate for the 341st Judicial District Court and to place her name on the ballot for that office.
The Texas Constitution requires that a judicial candidate for the district court “has been a practicing lawyer or a Judge of a Court in this State, or both combined, for four (4) years next preceding his election.” Tex. Const. art. V, §7. Based on the parties’ briefs (candidate: PDF (13 MB); party official: PDF (15 MB) ), it looks like the main substantive dispute was whether the candidate had continuously practiced law for the previous four years (as required for district court judges). The main procedural dispute was whether the local party official had authority to strike a name from the ballot without stronger evidence.
We’ll find out what arguments persuaded the Court when it issues its opinion.
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March 23rd, 2012 · Comments Off
The Texas Supreme Court did not issue any opinions with today’s orders list.
The Court did issue two preliminary orders related to the El Paso mayor-recall case Tom Brown Ministries v. John F. Cook, No. 12-0193. (previous blog post) After challengers obtained enough signatures to force a recall election, the El Paso Court held that some of the signatures had been gathered in violation of Texas campaign-finance law and that the scheduled recall election should not be held. Today, the Texas Supreme Court denied a request to temporarily “stay” the judgment of the court of appeals (which would have had the effect of re-instituting the recall election). The Court also denied what the docket sheet describes as “respondent’s request for damages.” The Court has not yet decided the merits of the petition, which remains pending.
Tags: Case Notes · Order Lists