84th Texas Legislature
Session Summary
June 19, 2015
Session Overview
Basically ignoring the goings-on in the Senate, the House worked on its own priorities. The House passed the Governor’s pre-kindergarten initiative, substituted its own tax relief plan for the Senate’s, and methodically addressed the budget, major Sunset legislation, ethics, and transportation funding. The mid-point of the session came and went. The House continued on its own trajectory, without regard to the Senate, leading to increased frustration on the east side of the building. Many observers feared we were headed for one or more special sessions.
But, as April faded and the May sunshine emerged, so too did the attitudes around the Capitol improve. The House and Senate budget conferees, led by the Chairman John Otto (House Appropriations) and Chairwoman Jane Nelson (Senate Finance), came to resolution on the major budget items: Medicaid, public and higher education, employee retirement, and public safety (especially increased funding for border security). Agreement was reached on restructuring transportation funding thanks to the leadership of Senator Robert Nichols and Representatives Joe Pickett and Larry Phillips. And, the last big hurdle, tax relief, skillfully negotiated by Ways & Means Chairman, Dennis Bonnen, resulted in a compromise giving each side and the Governor what they wanted: an increase in the school tax homestead exemption (Senate) and a substantial 25% cut in the franchise tax (Governor, House). The Republicans passed plenty of red-meat this session including open-carry, campus concealed carry, and a more stringent parental consent bill for a minor’s abortion; however, constitutional carry, prohibition of same-sex marriage, sanctuary cities, and DREAM Act repeal did not. Of the session’s major leadership initiatives, only ethics reform failed to make the grade, when the House and Senate could not agree over the disclosure of “dark money.” The session ended calmly at mid-day on June 1.
TCJL Scorecard: A’s Across the Board
TCJL’s primary legislative program consisted of five major pieces of legislation, four of which passed and were signed by the Governor, and the fifth will be addressed in a case pending before the Texas Supreme Court. TCJL extends a heartfelt thanks to our bill authors, sponsors and co-authors, without whose leadership we would not have had such a successful session.
Our philosophy of seeking bipartisan support for civil justice reforms has not changed in 30 years. Going into 2015, this philosophy faced a pretty high hurdle, given the more conservative composition of the Legislature in general and the Senate in particular. Longtime stalwart supporters of reasonable civil justice reforms such as Senator Robert Duncan and Representative Tryon Lewis retired from the Legislature, leaving the key committees in new hands. Fortunately, the two key committees—Senate State Affairs and House Judiciary & Civil Jurisprudence—found very capable chairs in Senator Joan Huffman and Representative John Smithee. Recognizing the importance of these committees to the civil justice system, Lt. Governor Patrick and Speaker Straus appointed experienced and knowledgeable members as well, such as Senators Craig Estes, Brandon Creighton, Troy Fraser, Jane Nelson, Judith Zaffirini, and Brian Birdwell, and practicing attorneys Chairman John Smithee, Kenneth Sheets, Travis Clardy, and Mike Schofield in the House. Veteran House member Jodie Laubenberg also made an important contribution to this committee. As the session went on, these members made invaluable contributions to the ultimate success of TCJL’s legislative program.
We would also like to thank the members of Senate State Affairs and House Judiciary & Civil Jurisprudence who may not have seen eye-to-eye with us on individual bills in the committee, but who kept their doors open to us and took a serious interest in the civil justice system. These members include Senator Rodney Ellis and Representatives Senfronia Thompson, Richard Raymond, Ana Hernandez, and Jessica Farrar, all of whom have served on the committees in the past and for whom we have nothing but the greatest respect. These committees are frequently called upon to tackle highly contentious and complex issues with enormous consequences for the Texas economy. They have to mediate between parties with well-grounded and legitimate positions and decide on the best policy result for all Texans. All of these members deserve our gratitude for their dedication to serving and to working with us to move Texas forward.
This session was a little different than its predecessors in that a substantial part of TCJL’s legislative agenda involved environmental legislation passing through the Senate Natural Resources Committee and the House Committee on Environmental Regulation. These committees, ably chaired by Senator Troy Fraser and Representative Geanie Morrison, were likewise populated by thoughtful and experienced members from both sides of the aisle. On the Senate side, in addition to Chairman Fraser, we had the good fortune of working with veterans such as Senators Craig Estes, Brian Birdwell, Juan “Chuy” Hinojosa, Eddie Lucio Jr., Robert Nichols, Kel Seliger, Carlos Uresti, and Judith Zaffirini, all of whom deserve a great deal of gratitude from the business community for their work this session. We also appreciate freshman Senator Bob Hall’s important contributions to the work of the committee. In the House, our thanks go out to Chairwoman Geanie Morrison, Vice Chair Eddie Rodriguez, and members Jason Isaac, Kyle Kacal, Ken King, Phil King, J.M. Lozano, Ron Reynolds, and Ed Thompson. Each of these members was willing to work with us (even those who didn’t agree with us on all things all the time) and help us get across the finish line on some very important legislation.
Good Faith Remediation
Signed by the Governor.
HB 1794/SB 1509
Representative Charlie Geren, Senator Kelly Hancock (lead authors); Representatives Patricia Harless, Cindy Burkett, Oscar Longoria, Jim Murphy, and Pat Fallon (co-authors)
In recent years, Harris County has filed a number of lawsuits against several companies, a number of which are TCJL members, for alleged violations of the state’s environmental laws. Although the authorizing statute enabling local governments to bring these types of lawsuits has been on the books for decades, Harris County’s aggressive application of the statute would have dramatically altered the face of environmental enforcement in Texas.
Harris County did not sue the companies for actual damages; but rather, penalties that were punitive in nature. These penalties, in the billions of dollars, were assessed regardless of the fact that the alleged violations occurred decades before the company owned and operated a facility and without regard to the company’s actions to voluntarily report and remediate the violations. Such lawsuits neither deter misconduct nor give a business any incentive to work with the federal, state, and local environmental authorities to remediate pollution. Unlike other civil and criminal lawsuits, these actions had no statute of limitations and no limit on the total amount of penalties that could be assessed. Lawsuits of the magnitude brought by Harris County posed a grave threat to the fairness of the environmental enforcement system and to Texas’ economic competitiveness in the long run.
HB 1794 addresses these problems in two ways. First, the bill limits the amount of maximum penalties that a local government may recover in a suit to recover civil penalties to $4.3 million (divided equally between the state and the local government). The limit is high enough to punish polluters who act knowingly and intentionally and to deter ongoing violations, but does not permit a local government to seek limitless, punitive penalties. The bill also establishes a five-year statute of limitations on lawsuits for penalties, running from the earlier of the date the alleged violator notifies the TCEQ of the violation or the date the alleged violator receives a notice of enforcement from the TCEQ. Thus, the bill encourages violators to report and remediate violations as quickly as possible.
One of the primary reasons that Texas leads the nation in job creation is a balanced and reasonable regulatory environment. Subjecting individuals and businesses to unfair and punitive lawsuits, however, even when they take swift action to repair the damage, is neither balanced nor reasonable. HB 1794 strikes the right balance between vigorously enforcing environmental standards and encouraging good faith remediation whenever it is necessary.
forum non conveniens
Signed by the Governor.
HB 1692/SB 1942
Representative Kenneth Sheets, Senator Joan Huffman
HB 1692 reforms the doctrine of forum non conveniens to preserve Texas courts for cases with a significant connection to the state. After intense negotiations during the session between TCJL, the Texas Association of Defense Counsel (TADC), and the Texas Trial Lawyer Association (TTLA), an agreement was reached on the final form of this legislation.
Under the doctrine of forum non conveniens, a trial court may dismiss a lawsuit if another court is a more appropriate forum to hear the case. The doctrine allows a Texas court to dismiss a lawsuit with little or no connection to the state. For example, if an Illinois resident sues a national company in Harris County based on an event that occurred in Illinois and involved Illinois residents and witnesses, the Harris County district court could dismiss the case based on a finding that it makes more sense for the litigation to be brought to an Illinois court. The doctrine likewise applies to lawsuits that should be litigated in another country.
Texas law entitles a plaintiff who is a “legal resident” of Texas to maintain a lawsuit in Texas on the basis of residency alone. This exception assures that a bona fide Texas resident can seek an available remedy in a Texas court for a claim governed by the statute. Texas law is unique because most jurisdictions consider the legal residency of the plaintiff as one of the factors in the balancing test, but not as an absolute bar to dismissal of the case.
In a recent case, the Texas Supreme Court was faced with a lawsuit that arose from an automobile accident involving legal residents of another country and that occurred in the other country. Under ordinary circumstances, the proper application of the doctrine of forum non conveniens would probably dictate that the lawsuit be dismissed because the other country would be a more appropriate forum to hear the case. In that case, the plaintiffs were citizens and residents of a foreign country where the accident occurred and all the witnesses and evidence were all located. Unfortunately, however, the Court held by a 5-4 vote that the case could not be dismissed because the current law is unclear.
This problem is not isolated to a single lawsuit. Over the past five years, one automobile manufacturer alone has faced 57 similar cases in Texas, and others are now seeking to use the loophole in the current statute to bring foreign claims to our courts. While Texas may be a more attractive forum than some other countries, given the nature of our civil justice system, Texas should not entertain cases with little to no connection to our state.
As agreed by the stakeholders, HB 1692 amends the Texas forum non conveniens statute, §71.051, Civil Practice & Remedies Code, to:
- maintain the current exception to the application of the doctrine if the plaintiff is a legal resident of the state or if the plaintiff is a derivative claimant of a legal resident;
- allow the court, in its sound discretion, to determine whether a non-resident plaintiff’s claim has a significant connection to Texas, without regard to the person’s national origin or country of citizenship; and
- clarify that the definition of “plaintiff” does not include peripheral parties, such as representatives, guardians, next friends, or administrators.
These straightforward reforms will retain the open access of legal residents of this state to their own courts, while requiring non-residents to establish that claims arising in another state or country have a significant connection to Texas before availing themselves of our taxpayer-supported court system. The legislation will also bring Texas law closer into line with the law of every other state and the federal courts. Finally, it will close an inadvertent loophole in Texas law that could once again have made Texas “the courthouse for the world.”
Standing in Contested Cases
HB 1113/SB 941
Representative Travis Clardy, Senator Brandon Creighton
(Incorporated into SB 709 by Senator Fraser and Representative Morrison. Signed by the Governor.)
A series of recent Texas Court of Appeals decisions reaffirm longstanding Texas law that the Texas Commission on Environmental Quality (TCEQ) has broad discretion to grant or deny requests for contested case hearings in licensing and permitting matters. Despite these rulings, however, parties such as the Sierra Club continue to challenge the Commission’s discretion through expensive and repetitive litigation against the agency. These lawsuits generally urge the courts to restrict the agency’s authority to determine whether a party is entitled to a contested-case hearing under statutory standards enacted by the Texas Legislature. They have also tried to force the agency to hold evidentiary hearings on the issue of standing, despite the fact that the statute does not require such hearings and leaves the decision within the Commission’s discretion. Though these challenges have been uniformly unsuccessful, they continue to cause unnecessary and costly delays in permitting and divert agency and judicial resources.
As eventually incorporated into the general contested case hearing reform bill, SB 709, HB 1113 addresses the problem by clarifying that the Commission need not grant “affected person” status to a group or association, such as the Sierra Club, unless the group or association identifies, by name and physical address in a timely request for a contested case hearing, a member of the group or association who would qualify as an affected person in the person’s own right. The bill also requires the person making the request for a hearing to have timely submitted comments on the permit application itself. Finally, the bill outlines the items the Commission may consider when determining affected person status, which generally involve the materials, expert opinions, and analysis used by the executive director with respect to the underlying permit application.
Contested Case Procedures
HB 1247
Representatives Wayne Smith, Patricia Harless, and Tracy King
(Incorporated into SB 709 by Senator Fraser and Representative Morrison. Signed by the Governor.)
Under current practice in contested case hearings on environmental permits, a permit applicant, who has already presented all technical and other evidence on the entire permit through the lengthy (and costly) review at the agency and received a draft permit, must do the same thing again before the State Office of Administrative Hearings. As it stands today, the applicant must prove its case twice: once to the commission staff and then again to an administrative law judge who has not been privy to the lengthy and exhaustive technical review already conducted by the staff.
As incorporated into SB 709, HB 1247 addresses this “double jeopardy” aspect of contested cases. It establishes that the draft permit, executive director’s recommendation, and supporting documentation create a prima facie showing that the permit complies with all applicable laws and regulations. The protesting party must rebut this showing by demonstrating the specific parts of the draft permit that violate environmental laws or standards. The executive director and permit applicant may then present additional evidence supporting the permit.
Consolidated Insurance Programs (CIPs)
Pending before the Texas Supreme Court.
HB 1668/SB 666
Representative Paul Workman, Senator Kevin Eltife (lead authors); Representatives Rene Oliveira, Ron Simmons, Pat Fallon (co-authors)
The Texas Workers’ Compensation Act has long permitted a general contractor to provide a consolidated insurance program (CIP) that covers a subcontractor and the subcontractor’s employees on a job site. These consolidated insurance programs (CIPs) are a common feature of construction projects in Texas and help ensure that every contractor and contractor’s employee on a construction site have workers’ compensation insurance coverage for workplace injuries. If a general contractor provides a CIP, the law provides that the subcontractor and subcontractor’s employees are deemed to be employees of the general contractor solely for the purpose of workers’ compensation coverage.
Despite well-established legal authority to the contrary, a recent case decided by the Corpus Christi Court of Appeals, TIC Energy and Chemical, Inc. v. Martin (No. 13-14-00278-CV), determined that the section of the Workers’ Compensation Act authorizing CIPs conflicts with another section of the Act, which establishes the general rule that contractors are independent. This opinion has created uncertainty regarding the status of contractors and their employees under consolidated insurance programs. HB 1668 simply clarifies that the two statutes do not conflict, so that CIPs may continue to operate in Texas as they have for many years. Though time ran out on HB 1668 as it made its way through the process, TCJL has filed an amicus curiae brief in the TIC Energy case currently pending before the Texas Supreme Court. We trust the Court will correct this aberrant ruling.
Other Noteworthy Liability Legislation
The five bills discussed above comprised of TCJL’s major initiatives for the 84th legislative session. Additionally, a number of other bills were of significant interest to our membership. TCJL played a supporting role as needed in each of these pieces of legislation.
HB 1492 by Representative Doug Miller and Senator Charles Schwertner makes significant, positive changes to the law governing disclosure of asbestos and silica bankruptcy trust claims, as well as extends the deadline for the MDL court to dismiss inactive asbestos claims from August 31 to December 31 of this year. The bill primarily deals with the timing and discoverability of asbestos bankruptcy trust claims. It generally mandates that claimants file claims with each trust that may owe compensation to the plaintiff, provided that it doesn’t cost more to pursue the claim than the trust fund is likely to pay. Claimants must file claims in advance of trial and give notice to each defendant of each claim and the amount of compensation paid. The bill allows a defendant who receives information regarding the claimant’s exposure to move for a stay of trial in order for the claimant to seek recovery from a trust fund from which the claimant has not previously applied for compensation. Finally, the bill deems trust claim information authentic, relevant, and discoverable and not privileged, regardless of the existence of a confidentiality agreement. The bill takes effect on September 1, 2015, and applies to claims pending on and filed after that date. Signed by the Governor.
SB 1457 by Senator Robert Nichols and Representative Travis Clardy deals with the high volume of patent litigation in federal district court in Marshall, Texas, and the need to protect consumers from aggressive “patent trolling” by law firms. Typically, the firms send mass demand letters threatening businesses with patent infringement lawsuits if they don’t pay a specified “settlement” amount. While everyone agrees that federal law virtually pre-empts most patent law issues, several states have enacted statutes imposing liability on a patent troll for “bad faith” patent infringement claims. We can add Texas to the list of these states taking action to shut down these operations. SB 1457 gives the attorney general the authority to sue a bad faith patent troll for up to $50,000 in civil penalties per violation. Signed by the Governor.
SB 735 by Senator Troy Fraser and Representative Ken King began its journey through the legislative process as an absolute bar to net worth discovery. As the bill ground its way through the legislative sausage-maker, negotiators replaced the total bar with a threshold test. Under the bill, the plaintiff must show a “substantial likelihood of success on the merits” in order to get discovery of net worth evidence for purposes of punitive damages. The bill also defines “net worth” as total assets less total liabilities on a date the trial court deems appropriate. The bill passed over the objections of TTLA. Sent to the Governor, awaiting action.
Hailstorm Insurance Reform Fails Despite Great Effort
For the last several years, the trickle of hailstorm-related first party claims against private insurers has grown into a flood. A handful of plaintiff’s attorneys have used the TWIA playbook to leverage settlements of mass claims in storm-damaged areas of the state from Amarillo to the Rio Grande Valley. Property damage claims from storm damage skyrocketed from about 2% of claims to 30-35% in affected parts of the state, a significant number of which were generated by public insurance adjusters going door-to-door in neighborhoods recently raked by hailstorms. In an effort that really began back in 2011, carriers and independent agents petitioned the Legislature for a package of changes to reduce litigation incentives (Chapters 541 and 542) and to crack down on case running by public adjusters. Consumer groups and the plaintiff’s bar protested that these changes were so restrictive that consumers would be cut off from the courthouse if they could not reach a satisfactory settlement with their insurers.
As the session wore on, it became increasingly apparent that no consensus or agreement could be reached between carrier and consumer advocates. Some of the major business groups, troubled by the potential effect of the changes on business as an insurance consumer, declined to take sides in the fight. The Senate passed a strong bill, SB 1628 by Senator Larry Taylor, which did not get a hearing in the House Insurance Committee. Instead, Representative John Smithee laid out a more moderate version of the bill as a starting point toward a bill that could muster enough support in the House to pass. The bill got out of committee late in the session, but neither side could be brought on board. SB 1628 died in House Calendars.
SB 1628 may have faltered in part because it ran parallel to major legislation overhauling the financing structure of TWIA. For the past several sessions, efforts by legislators from the coastal areas of the state to “fix” TWIA could not overcome the determined opposition from the non-coastal legislators and the carriers. This session, however, produced a different outcome. Despite heavy opposition, SB 900 by Senator Larry Taylor and Representative Greg Bonnen passed the Legislature late in the session and now sits on the Governor’s desk. The bill establishes a tiered system of premium assessments designed to stabilize TWIA’s financial position. The bill also reduces carrier representation and reallocates positions on the TWIA board, authorizes the TDI commissioner to contract with a third party to administer TWIA, and gives TWIA the ability to use alternative risk financing mechanisms (in addition to purchasing reinsurance). If the commissioner contracts with a third party administrator, the administrator is not subject to Chapter 542.
Despite the failure of SB 1628, the Legislature made some progress in addressing the first party litigation problem. SB 1060 by Senator Juan Hinojosa and Representative Ed Thompson subjects public insurance adjusters to the criminal barratry statute, bars them from receiving referral fees or running cases for attorneys, and prohibits financial ties with contractors. HB 1265 by Representative Gene Wu and Senator Kevin Eltife similarly prohibits a licensed public insurance adjuster from directly or indirectly soliciting employment for an attorney or entering into a contract with the insured for the primary purpose of referring the insured to an attorney without the intent to perform the services customarily provided by the adjuster. We do expect, however, that first party litigation will be on the agenda when the Legislature meets again in 2017.
Other Bills of Interest
County Court Juries Unchanged
SB 824 by Senator Joan Huffman and HB 1122 Representative Travis Clardy would have required a 12-member jury in a county court civil case involving an amount over $200,000. It also would have allowed a party to formally request a 12-person jury if the amount in question exceeded $100,000. TCJL strongly supported this bill, which easily passed the Senate but bogged down in the House when several members requested exemptions for their local county courts. We applaud Representative Clardy and Senator Huffman for trying to keep this bill clean throughout the process, and look forward to a renewed effort to pass it in 2017.
Three Judge Specialty Courts
SB 455 by Senator Brandon Creighton and Representative Mike Schofield allows the attorney general to petition the chief justice of the Supreme Court to appoint a special three-judge district court to hear matters related to public school finance and redistricting in which the state is a defendant. Appeal of a decision of the special court goes directly to the Supreme Court. As originally filed, this bill contained a discretionary provision allowing the OAG to petition the Supreme Court for a 3-judge court in any matter of statewide significance. Signed by the Governor.
Medical Liability
Concerns over the expanding scope of Chapter 74 medical liability claims drew some legislative attention this session, though few changes were made. HB 1403 by Representative Kenneth Sheets and Senator Craig Estes clarifies that a “health care liability claim” under §74.001, Civil Practices & Remedies Code excludes a workers compensation action for death or injury that occurred in the course of employment duties. Signed by the Governor.
Condo Defect Construction Liability
HB 1455 by Representative Phil King and Senator Brandon Creighton requires that condo owners be notified of proposed litigation related to construction defect claims; requires a majority vote of condo owners before legal action initiated by the condo board can proceed; requires a complying engineer report; and allows affected parties an opportunity to address defects. This bill takes effect September 1, 2015. Signed by the Governor.
Immunity from Civil Liability
Several bills affecting immunity from liability for various activities passed and were sent to the Governor. Some of the more notable of these include:
HB 1510 by Representative Senfronia Thompson and Senator Sylvia Garcia, adds §92.025, Property Code, which provides that a cause of action against a landlord does not accrue solely on the basis that the landlord leases to a tenant, based on evidence that the tenant has been convicted of, or arrested or placed on deferred adjudication for, an offense. The section does not preclude a suit for negligent leasing if the tenant was convicted of certain offenses or has a reportable conviction or adjudication and the landlord knew or should have known of the conviction or adjudication. This section does create a cause of action or expand an existing cause of action. Passed without the Governor’s signature, effective January 1, 2016.
HB 1666 by Representative Dennis Bonnen and Senator Joan Huffman, extends liability protection related to first responder performance in a training exercise to match the protections in place related to first responder performance of duties during an actual emergency. Sent to the Governor, awaiting action.
HB 2303 by Representative John Kuempel and Senator Joan Huffman provides liability protection for private landowners by covering recreational off-road vehicles. Sent to the Governor, awaiting action.
HB 2390 by Representative Dwayne Bohac and Senator Brandon Creighton prohibits a suit against an employer that establishes, maintains, or requires participation in an employee wellness program unless: (1) the program discriminates on the basis of a prior medical condition, age, gender, or income level; or (2) the cause of action is based on intentional or reckless conduct. The bill explicitly does not create a cause of action or expand an existing cause of action. Signed by the Governor.
SB 627 by Senator Joan Huffman and Representative Todd Hunter applies the truth defense to an accurate reporting in the media of allegations regarding a matter of public concern. The bill specifically does not limit any other defense or remedy available. Signed by the Governor.
New Causes of Action
Of particular importance to TCJL are bills that create new causes of action. This session, we closely monitored those and a record number — approximately 120 bills – fell into that category. Of those, only ten made their way to the Governor’s desk. Three have become law, including one related to a state bullion repository, one related to human trafficking, and one related to the Business Organizations Code. For those keeping track, we have provided a list below, bolding those already signed into law. Note: we still have a few days left for a bill to become law by way of the Governor’s signature or passage without a signature.
Legislation creating new causes of action:
HB 311 Relating to an executory contract for the conveyance of real property.
HB 483 Relating to the establishment and administration of a state bullion depository.
HB 968 Relating to civil liability of shareholders and members of certain legal entities that engage in the trafficking of persons.
HB 1265 Relating to a deceptive act or practice related to an unsolicited advertisement of goods and services sent by mail.
HB 2066 Relating to the rescission of non-judicial foreclosure sales.
HB 2573 Relating to a deceptive trade practice related to the use of certain words to imply that a person who is not an attorney is authorized to practice law and the prosecution of a cause of action arising from that practice.
HB 2590 Relating to providing a remedy for fraud committed in certain real estate and stock transactions.
SB 860 Relating to corporations and fundamental business transactions.
SB 1135 Relating to civil and criminal liability for the disclosure or promotion of certain intimate visual material.
SB 1213 Relating to prohibiting the re-identification of certain de-identified information and the release of any re-identified information.
