Archive for the ‘Courts of Appeals’ Category

Staying on message….

Monday, October 13th, 2014

I’m not a big fan of arbitration agreements. I’m not talking about a voluntary agreement between parties to litigation to resolve an existing dispute or lawsuit by submitting it to an arbitrator or panel of arbitrators in lieu of litigation. No, I’m talking about pre-suit, pre-dispute agreements whereby parties agree (or are required to agree as a condition of doing business) to forego any remedy in court, in favor of a panel of hired guns, who may be industry insiders or—worse—paid by one of the parties. These kind of agreements require a foresight that most people simply don’t have, and anyone who says that arbitration is always a less expensive, more expeditious solution than litigation is full of it. It just isn’t true. That’s why I’m a little torn about last week’s decision by the Fourteenth Court of Appeals in Mission Petroleum Carriers v. Kelley.

In that case, one David Kelley was seriously injured in an 18-wheeler accident while employed by Mission Petroleum. Kelley wound up in the hospital, hooked up to a morphine drip and—according to his own later testimony—basically incoherent and unable to give legal consent to anything. It was during that time that a Mission representative showed up at his bedside to enroll him in Mission’s Health & Safety Plan, which would pay for his medical care, rehab, wage replacement, etc., presumably as a stand-in for workers’ compensation. The Plan also contained an arbitration provision that covered suits for injury of the kind Kelley had suffered. Kelley signed the agreement and Mission started paying benefits.

Fast forward several months and Kelley filed suit against Mission and a third party for his injuries. Mission moved to compel arbitration under the terms of its agreement but was denied. Mission then took an appeal to the Fourteenth Court.

Kelley argued to the Court that the arbitration provision was unconscionable and shouldn’t bind him because he was too high on painkillers to know what was going on when he signed it. In fact, he said he had no recollection at all of signing anything when he was in the hospital. But Justice Sharon McCally, writing for the appellate court, observed something that he should have noticed, namely, someone was sending him weekly checks of $935 and paying a bunch of his medical bills. Some of those checks even came in after he had already filed suit against Mission. The Fourteenth Court reversed and remanded the case with instructions to the trial court to send the parties to arbitration.

Much as I dislike arbitration as a cookie-cutter solution, it’s easy to see what motivated the Court here and hard to say it got it wrong. In for a penny, in for a pound: if you accept the benefits of a contract, you accept its responsibilities, too. Kelley couldn’t just keep on cashing those checks without asking where the money was coming from. Maybe if he’d at least refused additional payments once he was out of the morphine fog, the Court would have gotten to Mission’s behavior, which seemed a little sleazy. But Kelley just didn’t act like someone who had no idea he’d signed on to an agreement to receive money, and that counted for everything. Don’t contradict your words with your acts. It’s a good lesson to keep in mind for lawyers and non-lawyers, alike.


The Healthcare Express Trainwreck, Part II

Saturday, July 7th, 2012

A year ago this last April, I wrote about a couple of cases that concerned the potential applicability of the Texas Medical Liability Act being accepted for review by the Texas Supreme Court.  At that time, I expressed confidence that the Court would use these cases as an opportunity to put the brakes on the ever and over expansive reach of the Medical Liability Act.  As I noted in other posts, the reach of the Act was growing absurd, with defendants arguing that medical expert reports were needed to deal with matters such as pest control and who-knows-what-else-by-the-time-all-this-is-done.  But never fear.  The high nine in Austin would draw some reasonable boundaries, recognizing that the Medical Liability Act is meant to address claims arising out of a certain sphere of activity and nothing else.  The justices would restore order and common sense with the stroke of a pen.

And then they did this.

In Texas West Oaks Hospital, LP v. Frederick Williams, a hospital employee sued his employer for negligence following a fight with a severely paranoid-schizophrenic patient, prone to violence.  In the altercation between the patient and Williams, the patient died, and Williams was injured.  The patient’s family sued both the hospital and Williams, individually, under a healthcare liability theory, and Williams cross-claimed against the hospital for failure to provide him a safe workplace and train him to deal with severely schizophrenic patients.  Both the trial court and the Fourteenth Court of Appeals rejected the hospital’s argument that Williams’s suit against the hospital was a healthcare liability claim.  The Court of Appeals reasoned that the hospital’s duty to Williams arose out of an employer-employee relationship, not a physician-patient relationship and that claims arising out of safety provided by a healthcare institution deal with safety that is “directly related to healthcare” under the plain language of the statute.  But not according to the high court.

In a majority opinion authored by Justice Wainwright, the Court managed to divorce a claimant in “healthcare” from any sort of physician-patient or provider-patient relationship and safety under the Medical Liability Act from safety having any relationship to healthcare.  The Court held that Williams was a “claimant” under the Act, regardless of the fact that he never sought healthcare, never received healthcare, and his damages had nothing to do with receiving healthcare.  Justice Wainwright observed that “[T]raining and staffing policies and supervision and protection of [patients] . . . are integral components of a [health care facility’s] rendition of health care services . . . .”  (Those are his brackets, not mine.)  And thus, friends, are massive cans of worms opened.  Because, if training and staffing–things that every employer does–are “integral components of the rendition of health care services” when done by a healthcare facility, what isn’t?  Is payroll a healthcare function?  What about trash pick-up?  How about contracting for food service for patients?

And what happens when a hospital gets sued for allowing a sexually or racially hostile work environment?  Well, according to the EEOC, a charge gets filed and then you get a right to sue in federal court.  But, according to the logic of the Texas Supreme Court (assuming it follows the logic of Williams), that’s a healthcare liability claim.  Why?  Because “training and staffing policies” are part of healthcare, and those almost always come into play in employment cases.  And what happens when someone trips in the parking lot on the way to see his doctor?  Or slips in the hallway?  Because safe parking lots and hallways are needed to “protect patients” and are thus a part of healthcare.  So, if you’re suing a hospital for a slip-and-fall, be prepared to have a medical expert—a physician unless you want to bring in two experts—on waxing floors in a medical setting.  Or fixing potholes in the parking lot.  Or putting up warning signs.  Or policing the place for thugs that might assault patients.  And, of course, contracts to purchase treatment modalities and therapies under contract is pretty clearly related to patient care.  [*head explodes*]

Whatever, it’s all healthcare.

And that’s where the Court is really subject to criticism here.  The Medical Liability Act isn’t meant to encompass every single case against a healthcare provider.  That’s not my opinion; that’s the Court’s own explicit statement.  But when the Court expands the coverage of the Act this much, what doesn’t fall under its purview?  Answer:  nothing.  If it’s brought against a physician or healthcare provider, it’s healthcare.

So why should this matter to you, the consumer of healthcare?  Because part of the Legislature’s whole [stated] purpose in enacting the Medical Liability Act was to reduce the cost of malpractice insurance for physicians and healthcare providers in Texas.  How does ensuring that a whole mess of stuff that has virtually no connection to patient care gets treated as the subject of a malpractice policy advance that goal?  (Hint:  It doesn’t.)  Insurance companies write policies based on risk.  The Court has made the risk undertaken by Texas medical liability insurers a constantly moving target.  Moreover, they’ve made it a vastly larger target.  As Justice Lehrmann—rapidly becoming one of the only sensible members of the high nine in Austin—noted in her dissent in Williams, the upshot of the decision is that professional medical liability insurers will now be responsible for many claims that previously would have been handled by workers’ compensation or general liability insurers.  And what happens when an insurer has to handle whole new categories of claims, whether or not it becomes liable on them?  It takes on more risk and more defense costs.  And what happens when it takes on more risk?  It raises its rates to pay for that risk.  And what happens to those raised rates?  Well, they get passed on to the ultimate consumers of healthcare.  That’s simple economics.  And that flies in the face of the goals of the Medical Liability Act–to reduce the cost of medical liability insurance and thus drive down the cost of healthcare to Texans and make it more easily available.  (Recent statistics show that the Legislature is failing on that last one, too.)  And, apparently, it’s beyond the understanding of a majority of the Texas Supreme Court.


Pulling up the ladder

Thursday, March 1st, 2012

The Texas Board of Legal Specialization exists to certify to the public that certain lawyers who meet its criteria have particular expertise in the areas where the Board certifies them.  That is an admirable goal.  There are a limited number of lawyers who meet the Board’s standards and have applied for certification—approximately 10 per cent of currently practicing Texas lawyers, according to the Board’s own figures.  That places any lawyer with Board certification in an elite group.

But do the Board’s criteria for certification make sense?  It’s one thing for an organization to choose its membership and advertise it to the public and another thing for it to hold out that choice as being an indicator of superiority over non-members.  In the case of the Board of Legal Specialization, it seems like its membership criteria are distinctly behind the times.  I’ll confess up front that I am an aspiring member of the Civil Appellate section of the Board’s certified members.  I don’t meet all of the Board’s criteria, though I expect to be able to meet most of them within the next year.  But there’s one criterion that I don’t expect—in any kind of realistic forecast—to be able to meet any time within the next few years.

The Board spells out a number of specific requirements for membership.  One of those is that an applicant for certification “must have presented oral argument to an appellate court on one significant issue of substantive or procedural law” in at least four of his or her cases before Texas or federal appellate courts.  The problem with this requirement for those of us—including myself—whose practice is state-court centered, is that, since 1997, Texas appellate courts have not been required to allow oral argument in any civil case.  Thus, one of the requirements for board certification is placed at the mercy of often-variable court docketing.  Appellate courts are not required to disclose why argument may be granted in one case and denied in another, but it may have as much to do with the volume of cases at a particular time as it does with any merit.  They can decide that oral argument is unnecessary simply because oral argument would not be of significant aid to the court’s decision or because the facts and legal arguments are sufficiently presented in the written briefs.  In other words, the better the job you do on your brief, the less likely you are to be granted oral argument.  (Also, when I represent an appellee in the appellate courts, I frequently avoid asking for oral argument or avoid asking for it on anything other than a conditional basis–i.e., if you grant it to the appellant, I want my time.  There’s little to be gained from drawing the court’s attention to a trial court decision, if you want it to stand up.  Winning is winning, whatever the level.)

Since the Texas Rules of Appellate Procedure changed to allow courts to pick and choose what cases they hear in oral argument, the number of those arguments has dropped drastically.  (The other side of the argument is here, provided by Todd Smith, an excellent appellate lawyer and blogger.)  This suggests, not so much a problem with the courts, as a problem with the Board’s criteria.  Our state’s appellate courts are overworked, and, given the recent budget crisis, that situation is likely to become worse before it gets better.  The courts have made adjustments that the Board simply hasn’t.

I realize that much of this may sound like sour grapes from an outsider.  But, if oral argument were an integral, central part of civil appellate practice, it would make sense to have it as an integral, central part of Board certification.  The Board should certainly ensure that candidates have demonstrated their chops in all relevant areas of the practice.  But, if oral argument has fallen by the wayside—and the changes to the appellate rules and appellate court practice suggest that it has—the Board should change with the times.  Its current posture misrepresents the nature of civil appellate practice and risks its own irrelevancy.


Don’t trust your chiropractor…at least, in Amarillo

Saturday, February 25th, 2012

The Texas Supreme Court recently granted oral argument in the case of Aaron Felton v. Brock Lovett, D.C., a chiropractic malpractice case where the plaintiff—Felton—suffered a dissection of his vertebral artery, resulting in a stroke, allegedly due to overly rough manipulation by his chiropractor, Lovett.  At trial, Felton asserted three theories of negligence:  (1) that Lovett was too forceful in his manipulation; (2) that Felton was already suffering a dissection when he came to see Lovett, and Lovett should have avoided any manipulation, as a result; and (3) that Lovett failed to inform Felton of the risks and dangers of chiropractic treatment.  The truth of the matter is that the third of these was probably just Felton’s fall-back position.  Informed consent usually is.  But it was also the only ground on which the jury found for him.

On appeal, the Amarillo Court of Appeals noted that “the procedure at bar involved a manipulation of the cervical spine, while the risk consisted of a ruptured or dissected artery as a result of the manipulation.”  It then concentrated its focus on Lovett’s expert’s testimony that stated that “if there is a problem with the vertebral artery,” bad things can happen, dissection being one of them.  The expert also noted that a properly administered adjustment cannot injure a healthy artery.  From this, the Amarillo Court concluded that the injury suffered by Felton was not an inherent risk of chiropractic manipulation.  And that means, Lovett had no duty to disclose it.

But here’s the problem.  Any good physician, any good chiropractor, and, for that matter, any good health care provider asks questions.  They look for what could happen, and they look for what might exist.  They don’t assume that the ideal condition exists.  The Amarillo Court’s opinion discourages a chiropractor (or, for that matter, any other health care provider) from looking beyond the limited boundaries of his own discipline, and it discourages him from looking for the aberration—thinking about the case that doesn’t fit the standard operating procedure.  Felton’s chiropractor dove into a manipulation, apparently without checking the lie of the land.  Lovett assumed everything was “normal”; that there was no possibility of harm because Felton had a healthy artery.  But is that a reasonable assumption?  It seems like a jury felt it wasn’t.  Nevertheless, three judges in Amarillo decided to outvote twelve jurors.  We’ll see what the high court has to say.


Politics, bias, and the law

Thursday, January 5th, 2012

There’s something a little weird about members of Congress accusing Supreme Court justices of being overly political.  Republican lawmakers and their supporters have demanded that Justice Elena Kagan recuse herself from any case involving “Obamacare” or the “Affordable Health Care Act.” (Really, what you call it depends on whether you’re for or against it.)  Similarly, Democratic members of Congress and their supporters have called for Justice Clarence Thomas to recuse himself, in light of his wife’s campaigning against the new law.  As tempting as it is to try to weed out any and all possibilities of bias from a judicial panel before allowing it to hear a case, it’s a futile task and a pointless one, too.  No one goes through life without forming opinions on a whole lot of subjects, whether or not they’re qualified to opine on those subjects.  The combined efforts of plaintiffs’ and defendants’ trial lawyers try to choose jury panels that are roughly balanced, but it’s a given that predilections still exist.  When those predilections serve our opponents’ purposes, we call them “biases.”  When they serve ours, we call them “life experience.”

So it was good to see Chief Justice John Roberts stand up for the integrity of the Court in his year-end report on the Court’s activities.  Roberts didn’t mention the healthcare debate—or any particular case, for that matter—but he dismissed the notion that Supreme Court justices are subject to laxer rules than other judges.  “I have complete confidence in the capability of my colleagues to determine when recusal is warranted,” wrote Roberts. “They are jurists of exceptional integrity and experience whose character and fitness have been examined through a rigorous appointment and confirmation process. I know that they each give careful consideration to any recusal questions that arise in the course of their judicial duties.”

The truth is, Roberts may be flat wrong.  But it doesn’t matter.  The good of our judicial system (and our governmental system, as a whole) dictates that we maintain a few fictions, and Supreme Court impartiality is one of them.  The Constitutional scheme of life tenure for federal judges creates the best chance it can of an impartial judiciary.  On the federal level, we’ve done our best.  In Texas, where we have a long history of allegations of “justice for sale”—on both sides of the party aisle, whether the characterization is correct or not—we’re still working on it.  Roberts’s report recognizes that an ethical judiciary requires appointing ethical people.  All else is faith.


This is getting ridiculous….

Friday, July 1st, 2011

The definition of what constitutes “health care” for purposes of the Texas Medical Liability law just keeps on growing.  When you go to the doctor, and he makes a decision on how to treat you, there’s not anyone who can argue with a straight face that that’s not health care.  When you’re a patient at a hospital, and the nursing staff puts an IV in your arm and gives you medicine, same thing.  But now, any stay in a hospital, any visit to a doctor’s office, would appear to be “health care” by virtue of the latest opinion out of the Texas Supreme Court, Omaha Healthcare Center LLC v. Wilma Johnson.

In that case, the titular appellee, Wilma Johnson, sued on behalf of her deceased sister Classie Mae Reed, who died as a result of a bite from a brown recluse spider sustained while a resident of a nursing home run by Omaha Healthcare. Johnson sued for negligence, claiming the nursing home breached a duty to inspect, clean and use proper pest-control measures to thwart spider and insect infestations.  Viewing her case as a straight negligence case, instead of a health care liability claim covered by the expert report requirements of the Texas Medical Liability statutes, Johnson’s attorney did not serve the sort of expert report—detailing the standard of care, breach of the standard, and causation information—that the medical liability law requires in such a case.  Omaha moved to dismiss the case on the grounds of Johnson’s failure to provide the report.  The trial court denied the motion, and the Texarkana court of appeals agreed that this was the correct decision.  But the Texas Supreme Court disagreed.

Writing for a seven-justice majority, Hon. Phil Johnson noted that “the underlying nature of [Wilma Johnson’s] claim was that Omaha should have but did not exercise the care required of an ordinarily prudent nursing home to protect and care for Reed while she was confined there.”  But this begs the question, “what does a nursing home do that is not the ‘ordinary activity of a nursing home’?”  If everything it does is toward the ultimate goal of patient care, can it ever perform acts that are outside that scope and that are, thus, not “health care”?

In a dissent, Hon. Debra Lehrmann, joined by Hon. David Medina, called out the majority.  Noting that the Court has not—at least, not explicitly—stated that all injuries occurring in a health care setting are necessarily subject to the Medical Liability law, Justice Lehrmann suggested the Court’s decision does just that.  By bringing pest control—yes, pest control—within the ambit of “health care,” the Court changed the focus of the statute from the activity of the actor to the status of the actor.  As Justice Lehrmann noted, under the majority’s holding, a medical expert—someone with appropriate experience working in nursing homes—would need to testify concerning the proper standards of pest control for nursing homes as it relates to providing a safe environment.

But isn’t providing a safe environment a goal of every business, health-related or not?  What makes nursing homes, hospitals, and doctor’s offices so special?  The answer is—as is so often the case—our Texas Legislature at work, stacking the deck to favor those who they believe should win lawsuits, rather than leaving that decision to the juries properly empowered to decide.  Courts—even our highest—have little discretion when the Legislature tells them what to do.  But, Justice Lehrmann’s dissent injects a welcome note of common sense to the debate.  One can only hope that it is heeded at some point.


The elephant in the room

Tuesday, March 29th, 2011

As anyone who has ever been involved in the litigation of one will tell you, intra-church disputes are the worst.  Disputes within a religious congregation involve deep-seated beliefs about everything from the control of church assets to the very nature of belief and worship, itself.  Argument gets passionate because it’s not about base things like money.  It’s about the reason to be and the reason things are.  From a legal standpoint, they are also a sticky thing.  They involve the First Amendment—freedom of speech, freedom of religion, and freedom of association—and a whole lot of other stuff that is just plain messy.  When you introduce ecclesiastical law—the rules churches make to govern themselves and that courts, under the aforesaid First Amendment, have very little business messing with—things get even stickier.

Most of the time, litigation—both at the trial and the appellate level—deals with the issues that are of genuine concern to the parties.  One side goes away happy; the other goes away sad.  Sometimes both of them go away sad.  But, as a general rule, the case gets resolved in one way or another because the court digs down to the root of the problem and makes a decision.  Inevitably, someone (sometimes, everyone) is unhappy with the decision, but that’s what happens when you place your satisfaction in the hands of a neutral party.

And then there are those times when everyone talks about a lot of different things, but the real source of friction—the elephant in the room—gets ignored.  Such was the case in the recent Austin court of appeals decision in Masterson v. Diocese of Northwest Texas. Having already raised race as an issue on this blog, religion seems like a logical next step, so if your sensibilities were offended the last time around, you might want to tune out now.

The appeal arose from a property dispute among parishioners of the Episcopal Church of the Good Shepherd in San Angelo, Texas.  In late 2006, a majority of the Good Shepherd parishioners voted to withdraw the church from the Episcopal Diocese of Northwest Texas and, instead, affiliate the church with the Diocese of Uganda, Africa.  Effective January 6, 2007, the Rev. Celia Ellery—a woman—was appointed priest-in-charge of the church.  Is this a coincidence?

The “flying bishop” phenomenon is now a less-than-rare occurrence in both the Anglican and Episcopal churches.  When a congregation decides that it doesn’t like a decision of its current bishop, it tries to withdraw itself from its geographical diocese and connect itself with another one that shares its particular view of scripture and philosophy.  Since the churches began ordaining women—and now, the first openly gay bishop in the United States Episcopal church—the maneuver is more common, and it was the tack taken by the breakaway parishioners.

In reviewing the record, the Austin court observed that the Episcopal Church is a hierarchical one, and property like church buildings, etc., is owned, not by individual parishes and churches, but by the broad corporate entity that is the Episcopal Church.  So when a group like the parishioners of Good Shepherd decides it wants out, the Church has the option of saying, “fine, but leave the keys.”  That’s what it did in this instance.

The Austin court did what it could with this case.  It examined the arguments from the standpoint of both deference to an ecclesiastical decision and applying neutral rules of law.  While the deed to the property was made out to “Good Shepherd Episcopal Church,” the court concluded that—because of the hierarchical nature of the Episcopal Church—the Church and its parishioners were not one and the same.  Indeed, because of their voluntary accession to the canons of the Episcopal Church, the court held in essence that the parishioners were the Church only so long as they remained a part of the larger Church body.  Thus, their split from the Episcopal Church ceded any right they might have had to the church property.  As far as ecclesiastical deference was concerned, the argument was easier.  The larger Church body claimed title to the property under its established rules and thus, it retained title to the individual church property.

But the elephant in the room—a fundamental disagreement over the proper role for women in the priesthood—went unaddressed.  That was no fault of the Court.  Indeed, courts are singularly ill-equipped to address such disputes as they run deeper even than our fundamental notions of law and order.  Our court system has its limits, and deep-seated matters of religion and philosophy are among them.  There are times when going to war or going to court is simply not the answer.



Be careful what you ask for….

Wednesday, March 9th, 2011

Anyone who reads this blog regularly (I’m sure there must be someone . . . Mom?) or who has perused a substantial number of entries here may note that I have a slight hostility to the process of arbitration.  This is because I see it as a generally one-sided proceeding, forced upon a party with lesser bargaining power, that usurps the proper position of judges who are answerable to the people (or, at the very least, to the government they serve) and juries who are actually the peers of those who bring cases before them.  Arbitration replaces the hallowed place of Title III and duly-elected judges with industry stooges.  The great myth of arbitration is that it is always less expensive and more efficient than those nasty court cases where everyone spends so much time gathering evidence and discussing the facts and the law.  Who needs that stuff, anyway?

So it gives me a warm fuzzy when I read a case like Thomas Petroleum v. Morris, a recent decision from Houston’s First Court of Appeals.  Morris sued Thomas Petroleum, his employer, for wrongful discharge under the Family Medical Leave Act and Americans with Disabilities Act, negligence, and defamation after it terminated him following his serious injury in a knife attack by another employee.  While Thomas Petroleum appears to have had little or nothing to do with the attack itself, it terminated Morris when his wife—after informing Thomas that her husband was recovering from surgery—inquired about his medical leave and disability benefits.

As a condition of his employment, Morris signed a “Dispute Resolution Program & Binding Arbitration Agreement Between All Employees & Thomas Fuels, Lubricants and Chemicals, Inc., Employer.”  (Omission of serial comma, theirs.)  Under the agreement—drafted by Thomas Petroleum—the parties—in this case, Morris and Thomas—agree to submit any employment disputes they cannot resolve through mediation to the American Arbitration Association for resolution.  The agreement also provides that any award rendered by an arbitral tribunal is final and that the agreement is governed by the Federal Arbitration Act, 9 U.S.C. § 1, et seq. In a classic, “having-your-cake-and-eating-it-too” maneuver, Thomas Petroleum’s agreement also provides for a right of appeal having the same scope and standard of review as the Texas Supreme Court’s review of a civil judgment following a bench trial without a jury in cases where the arbitral award exceeds $50,000—that is, a review as to whether the correct law was applied and whether it was done so correctly.  In contrast, the Federal Arbitration Act allows for a court to vacate an arbitral award in very limited circumstances, primarily those involving arbitrators’ misconduct, corruption, or exceeding the scope of their contractually defined powers.

Morris won his claim before the arbitral panel and filed suit in Harris County district court to confirm the arbitral award.  When it did so—other than denying Morris’s claim for pre- and post-judgment interest—Thomas appealed.

A united panel of Chief Justice Sherry Radack, Justice Elsa Alcala, and Justice Jane Bland (Justice Bland writing for the panel) upheld the trial court’s confirmation of the arbitral award.  The court held that Thomas waived any complaint about application of the Federal Arbitration Act by its own express stipulation in its own contract drafted—most likely—by its own lawyers.  As Justice Bland wrote, “The parties expressly stipulated in the agreement that the FAA governs their dispute.  The United States Supreme Court has held that parties may not contractually agree to a more stringent standard of review in arbitration agreements governed by the FAA; the statutory grounds for judicial review of arbitration are exclusive.”  By entering into an agreement that expressly made itself subject to the Federal Arbitration Act, the court ruled that Thomas Petroleum had waived any right of appeal beyond that specified by the Act.  So, all in all, arbitration turned out to be a pretty bad idea for Thomas.

At this point, I could probably say something catty about how only a fool would assign the decision of his rights under the law to someone whose primary experience and interest is in something far removed from people’s rights under the law.  But this is what happens all the time in arbitration.  The benefits of arbitration are often stated with no reference to any factual support or by persons with a vested interest in its success.  The detriments can become all too clear, and—as the Thomas Petroleum decision reflects—they are not limited to one side of the bar.


Lawyers and the media

Tuesday, February 1st, 2011

Does a lawyer in a high-profile dispute become a “public figure” for purposes of a defamation suit?  The question was addressed recently by the San Antonio Court of Appeals in ZYZY Corp. v. Hernandez. The titular Hernandez is Gloria Hernandez, the plaintiff in the trial court and a lawyer who represented the Kickapoo Traditional Tribe of Texas (say that three times fast) over a number of years.  ZYZY Corporation is the owner of the Eagle Pass News-Guide.

At a hearing in tribal court, Hernandez testified that she made “roughly ten percent of my income from the tribe.”  In a classic piece of bad reporting, the News-Guide published a statement that Hernandez “rakes off a 10% share of Lucky Eagle Casino profits for her services to the handful of remaining Kickapoo insurgents.”  The same news item went on to brand this a “clear cut” violation of National Indian Gaming Commission rules and thus brought on Hernandez’s subsequent libel suit.

ZYZY sought summary judgment on the ground that Hernandez had made herself a “limited purpose” public figure—and thus, subject to an actual malice standard of proof in libel cases related to that purpose—by virtue of her representation of the tribe in meetings with elected officials and agency representatives.  It also pointed to instances where Hernandez was named in articles where she responded to press inquiries about legal matters affecting the tribe.

In rejecting this contention, the Court noted that ZYZY never showed that Hernandez “became involved in the controversy regarding the tribe leadership beyond her role as a legal advocate, that she thrust herself into the public eye by engaging the media, had any special access to the media, or that she used the media in an attempt to influence the outcome of the controversy.”  That she may have been interviewed by various media about tribal matters was inapposite.  In short, the media could not create a public figure out of a private one.

Thanks to the Supreme Court of Texas Blog and Courthouse News Service.

The San Antonio Court’s opinion is here:  ZYZY Corp. v. Hernandez


Arbitration and enforcement

Monday, December 27th, 2010

In the recent decision of Atlas Gulf-Coast, Inc. v. Stanford, Houston’s Fourteenth Court of Appeals opined on the enforceability of an arbitration agreement in a contract for foundation repair services.  Such provisions are more and more common in commercial agreements of all stripes, and Texas law provides for their enforceability in most instances.  But the Fourteenth Court held this particular provision unenforceable, based on section 171.002 of the Texas Civil Practice and Remedies Code–a portion of the Texas General Arbitration Act (TGAA).

That section provides that a mandatory arbitration clause contained in any agreement in which the consideration provided is less than $50,000 is unenforceable, absent the agreement being in writing and signed by each party to be bound and each party’s attorney. Because the agreement in question was indisputably for less than $50,000 worth of services and no attorney had signed off on the arbitration provision, the Court held the provision unenforceable.

Atlas–the party seeking enforcement of the arbitration clause–protested that such a reading of the TGAA would require all parties who enter into any contract containing arbitration clause enforceable under the TGAA to engage counsel to sign the contract even if there is no other reason to engage counsel at that time.  Justice Mirabal, sitting by assignment, countered that this was not the case because section 171.002 applies only to agreements to provide “property, services, money, or credit” in which the total consideration is less than $50,000.  The remaining question would seem to be:  what else is there?

Texas courts have opined at length on the state’s policy favoring arbitration, but rather than trying to argue that section 171.002 leaves some kind of smaller dispute more susceptible to arbitration, it seems to make more sense to say that Texas’ enthusiasm for arbitration has a $50,000 threshold.  Smaller consumer contracts are much less appropriate for arbitration than large commercial disputes where expertise in specific technical fields may provide better understanding of the issues, so it makes sense to exempt them from enforceability.  Moreover, it is a comforting thought that the myth that arbitration is always a less expensive and more efficient alternative to the court system has not been bought hook, line, and sinker–at least not entirely–by the Legislature.

The Atlas opinion is here: