Embed Size (px)
Citation preview
LEGISLATION THAT COULDIMPACT BUSINESS LITIGATION
Presented by:Chris Hanslik & Andrew Pearce
BoyarMiller713.850.7766
[email protected] [email protected]
ACC Houston May Chapter Meeting May 12, 2015
83RD LEGISLATURE BILL STATISTICS
With 22 days left until the end of the session, the Texas House:
Designated the cowboy hat as the official state hat;
Took up a proposal to exempt the state from observing daylight saving time (it failed, in part, because of concerns about scheduling of Cowboys games); and
Established #Texas as the official hashtag of Texas.
What more could the Texas Legislature possibly hope to accomplish?
Filed by Rep. Jeff Leach (R - Plano), would add section 17.302 to the CPRC and permit a court to authorize service of process via electronic communication through a “social media presence” if substituted service is authorized under the Texas Rules of Civil Procedure.
HB 241 would also require the Supreme Court to promulgate rules to provide for substituted service through social media.
Rep. Leach filed a similar bill in 2013 (HB 1989), but it died in committee. Bill Status:
– Judiciary & Civil Jurisprudence unanimously voted HB 241 out of committee, without amendment, on April 23, 2015.
– The committee conducted a public hearing on March 10, 2015.
– There was a considerable amount of discussion about the appropriateness of serving a defendant via social media.
Principle not too different from service by publication.
HB 241 – SUBSTITUTED SERVICEOF CITATION THROUGH SOCIAL MEDIA
Fleming & Assocs., L.L.P. v. Barton, 425 S.W.3d 560 (Tex. App.--Houston [14th Dist.] 2014, pet. filed)– Dispute between law firms involved in the Fen-Phen pharmaceutical litigation
over what expenses could be charged to a referring lawyer under the parties’ letter agreement.
– Fleming & Associates is a limited liability partnership.
– Trial court awarded Barton Group its attorneys’ fees under section 38.001(8).
– Court of appeals reverses award of attorneys’ fees against Fleming & Associates because it is not a “individual or corporation.”
Stated Background and Purpose – Interested parties point out that a recent court decision held that a recovery of
attorney's fees under certain civil practice and remedies provisions is inapplicable to partnerships, and the parties are concerned that this could also be interpreted to mean that the statute is inapplicable to limited partnerships and limited liability companies as well.
– H.B. 230 seeks to clarify this matter.
HB 230 – RECOVERY OF ATTORNEY’SFEES IN CERTAIN CIVIL CASES
Filed by Rep. Jessica Farrar (D - Houston), would amend Chapter 38.001 of the Civil Practice and Remedies Code to (1) add “other legal entity” to the list of those from whom attorney’s fees can be recovered; and (2) expressly provide that Chapter 38.001 does not authorize the recovery of attorney’s fees from the state, an agency or institution of the state, or a political subdivision.
The bill would further provide that the amendment to Chapter 38.001 does not affect any other statute that permits the recovery of attorney’s fees from the governmental entities listed in the statute.
Bill Status: – HB 230 was passed by the full House on April 9th.
HB 230 – RECOVERY OF ATTORNEY’SFEES IN CERTAIN CIVIL CASES (CONTINUED)
Filed by Rep. Jason Villalba (R - Dallas), would create a statewide specialized civil trial court and an appellate court to hear certain business-related litigation cases, such as actions against businesses, accusations of wrongdoing by businesses or their members, disputes between businesses, violations of Business Organizations Code, Finance Code, and Business & Commerce Code.
This court would have no jurisdiction over governmental entities (absent the government entity invoking or consenting to jurisdiction) or personal injury cases unless agreed to by the parties and the court. Some of the other notable components of the bill are:– The chancery court would be composed of seven (7) judges who are appointed
by the governor for staggered six (6) year terms. The judges would be selected from a list of qualified candidates compiled by a bipartisan advisory council (Chancery Court Nominations Advisory Council) and would be required to have at least 10 years of experience in complex business law.
HB 1603 – CREATION OF THE CHANCERY COURT AND COURT OF CHANCERY APPEALS
– The court clerk would be located in Travis County, but individual judges would be based in the county seat of their respective counties.
– Current venue rules would apply, but cases could be heard in an agreed-upon county or where the court may decide to be more convenient or necessary.
– There would be a removal procedure for cases filed in a district court.
– The Courts of Chancery Appeals, which would handle appeals from the chancery trial court, would be composed of seven (7) justices from current court of appeals justices that are appointed by the governor based on a list of qualified candidates compiled by the advisory council. Justices would serve six (6) year terms and would hear cases in panels of three (3) randomly-selected justices. Appeals from the CCA would go to the Supreme Court.
HB 1603 – CREATION OF THE CHANCERY COURTAND COURT OF CHANCERY APPEALS (CONTINUED)
Bill Status: – On April 16th, Business & Industry voted HB 1603 out of committee (by a 4-3
vote).
– The bill’s author intends to amend the bill once it reaches the House floor. o The amendments are intended to exempt certain types of cases from the subject
matter jurisdiction of the chancery court and increase the minimum amount in controversy for chancery court cases.
– Several witnesses testified and/or registered as being either for, on, and against the bill. o Those testifying in support of HB 1603 included former Chief Justice Tom Phillips
and a representative from the Texas Business Law Foundation.
o Those testifying against the bill included representatives from TTLA, TADC, and TEX-ABOTAs of the Litigation Section and Judicial Section to oppose HB 1603.
o After the initial public hearing, the SBOT granted the requests of the Litigation Section and Judicial Section to oppose HB 1603. The Business Law Section was given permission to support the bill.
HB 1603 – CREATION OF THE CHANCERY COURTAND COURT OF CHANCERY APPEALS (CONTINUED)
Filed by Sen. Van Taylor (R - Plano), would add Chapter 2005 to the Business & Commerce Code and prohibit bad faith patent infringement claims.
More specifically, SB 1187 would prohibit a person from sending a demand letter that makes, in bad faith, a claim of patent infringement against a Texas resident, and in connection with the claim:
1) files a lawsuit alleging patent infringement; 2) threatens to file a lawsuit if the alleged patent infringement is not resolved;
or 3) makes a demand for compensation or damages or payment of a license fee
based on the alleged patent infringement. For purposes of SB 1187, a person makes a claim of patent infringement in
bad faith if:
1) the claim is objectively baseless, meaning that no reasonable litigant could reasonably expect success on the merits; and
2) the person making the claim knows or should have known that the claim is objectively baseless.
SB 1187 – PATENT INFRINGEMENT CLAIMS (COMPANION: HB 3176) – PART I (CONTINUED)
However, a claim of patent infringement would be presumed to be made in good faith if the claim is made by a person who holds a certificate of authority issued by the Attorney General under Chapter 2005 or is a claim for relief arising under federal law.
SB 1187 would not create a private cause of action, but would authorize the Attorney General to enforce any violations of Chapter 2005.
The bill would also create two information databases – one for persons sending demand letters and another for the demand letters themselves, both of which would be maintained by the Secretary of State.
The companion bill, HB 3176, was filed by Rep. John Smithee (R - Amarillo).
The bill remains pending.
SB 1187 – PATENT INFRINGEMENT CLAIMS (COMPANION: HB 3176) – PART I (CONTINUED)
Filed by Sen. Robert Nichols (R - Jacksonville), would amend the Business and Commerce Code by adding an additional subchapter to the DTPA entitled "Bad Faith Claims of Patent Infringement."
Like SB 1187/HB 3176, the bill would prohibit bad faith claims of patent infringement.
However, unlike SB 1187/HB 3176, SB 1457 would define a bad faith claim as one that includes an allegation of infringement and:
a) falsely states that the sender has filed a lawsuit in connection with the claim;
b) the claim is objectively baseless; and
c) the communication is likely to materially mislead the recipient because it does not include the identity of the person asserting the claim, the patent that is alleged to have been infringed, and at least one product, service or activity that is alleged to infringe the patent.
SB 1457 – BAD FAITH PATENTINFRINGEMENT CLAIMS – PART II
Under SB 1457, "objectively baseless" would mean that:
a) the sender does not have a current right to license the patent or to enforce the patent;
b) the patent has been held invalid or unenforceable in a final judgment or administrative decision; or
c) the infringing activity occurred after the patent expired.
SB 1457 would authorize the Attorney General to bring an action if it believes that the prohibition against bad faith claims of patent infringement has been violated.
The Attorney General could also seek injunctive relief and a civil penalty not to exceed $50,000 for each violation as well as reimbursement to the State of Texas of the “reasonable value of investigating and prosecuting a violation” and restitution to the victim for “legal and professional expenses related to the violation.”
SB 1457 – BAD FAITH PATENTINFRINGEMENT CLAIMS – PART II (CONTINUED)
The bill specifically states that it would not prohibit a person with rights to license and enforce a patent from notifying others of their ownership, offering it for license, notifying any person of infringement under federal law, or seeking compensation for past or present infringement or for a license to the patent.
Finally, SB 1457 also provides that the knowing institution of a suit or claim for patent infringement that constitutes a bad faith claim of patent infringement under the DTPA would be a Class A misdemeanor.
Bill Status: – On April 21, 2015, the full Senate unanimously passed SB 1457.
SB 1457 – BAD FAITH PATENTINFRINGEMENT CLAIMS – PART II (CONTINUED)
Filed by Rep. Ken King (R - Hemphill), the original version of HB 969 would amend section 41.011 of the CPRC and eliminate “the net worth of defendant” as one of the elements considered in determining the amount of exemplary damages.
However, the committee substitute approved by the Judiciary & Civil Jurisprudence committee does two different things:
1) It would define “net worth” to mean “the total assets of a person minus the total liabilities of the person on a date determined appropriate by the trial court;” and
2) it would add section 41.0115 to the CPRC, which generally provides that a trial court may authorize discovery of evidence of a defendant's net worth if the court finds in a written order that the claimant has demonstrated a substantial likelihood of success on the merits of a claim for exemplary damages.
3) Section 41.0115 provides that evidence submitted by a party to the court in support of or in opposition to a motion made under this subsection may be in the form of an affidavit or a response to discovery, and the court may only authorize use of the least burdensome method available to obtain the net worth evidence.
HB 969 – AVAILABILITY AND USE OF CERTAIN EVIDENCE IN CONNECTION WITH ANAWARD OF EXEMPLARY DAMAGES (COMPANION: SB 735)
The companion bill, SB 735, was filed by Sen. Troy Fraser (R - Horseshoe Bay).
Bill Status: – By a 5-4 vote, Judiciary & Civil Jurisprudence voted the committee substitute
for HB 969 out of committee on April 23, 2015.
– Representatives from Texans for Lawsuit Reform, the Texas Public Policy Foundation, and businesses/organizations were in favor of the bill.
– A TTLA representative testified against the bill. A TADC representative also testified, but did not take a position on HB 969.
Status of SB 735: – By a 20-11 vote, the full Senate passed SB 735 on April 28, 2015.
HB 969 – AVAILABILITY AND USE OFCERTAIN EVIDENCE IN CONNECTION WITH AN AWARDOF EXEMPLARY DAMAGES (COMPANION: SB 735) (CONTINUED)
Bill Analysis (Senate Research Center): – In 1888, the Texas Supreme Court determined in Young v. Kuhn, 9 S.W. 860,
862 (Tex. 1888) that the injury inflicted, rather than the defendant’s ability to pay, was the relevant consideration for a jury tasked with assessing exemplary (sometimes called “punitive”) damages.
– In Lunsford v. Morris, 746 S.W.2d 471 (Tex. 1988), the Court overruled Young and permitted the discovery and use of net worth evidence to support a claim for exemplary damages.
– Today, Section 41,011(a), Civil Practice and Remedies Code, codifies the rule in Lunsford, providing that in determining the amount of exemplary damages, the trier of fact “shall” consider (among other things) evidence relating to the defendant’s net worth.
– Many individuals and small businesses strenuously resist this invasive discovery, which results in expensive and unproductive “satellite litigation.”
HB 969 – AVAILABILITY AND USE OFCERTAIN EVIDENCE IN CONNECTION WITH AN AWARDOF EXEMPLARY DAMAGES (COMPANION: SB 735) (CONTINUED)
Bill Analysis (Senate Research Center): – Opponents of the current law note that application of the Lunsford rule in light
of the statutory changes governing the award of exemplary damages makes the defendant’s financial condition largely irrelevant and often produces a litigation burden far exceeding any potential benefit. Further, current law gives rise to extensive, contentious pretrial discovery, including requests to reveal income tax returns, profit-and-loss statements, balance sheets, loan applications, HUD-1 settlement statements (reflecting the sale or purchase of real estate), inventories exchanged in a divorce, and other similar documents.
– C.S.S.B. 735 requires a trial court to serve as a gatekeeper for the discoverability and admissibility of net worth evidence on the issue of exemplary damages. C.S.S.B. 735 amends current law relating to discovery of evidence of the net worth of a defendant in connection with a claim for exemplary damages.
HB 969 – AVAILABILITY AND USE OFCERTAIN EVIDENCE IN CONNECTION WITH AN AWARDOF EXEMPLARY DAMAGES (COMPANION: SB 735) (CONTINUED)
Author’s / Sponsor’s Statement of Intent (Senate Research Center) – Texas' unique geographical location increases its propensity to catastrophic
weather-related events and natural disasters such as hurricanes, tornadoes, wild fires, and hailstorms.
– Over the last few years, various hailstorms have resulted in tens of thousands of claims filed against property and casualty insurers statewide, resulting in mass litigation.
– In many cases, third-party contractors, adjusters, and attorneys canvass consumers in post-event areas to solicit business and/or representation to take legal action on behalf of the policyholder against the insurer.
– As a result, policyholders are misinformed, contractors are circumventing statutory and policy guidelines, adjusters inflate actual damages, and attorneys are applying mass tort models to simple property damage claims.
HB 3646 – INSURANCE CLAIMS AND CERTAINPROHIBITED ACTS AND PRACTICES RELATING TO THEBUSINESS OF INSURANCE (COMPANION: SB 1628)
– An insured seeking damages in an action against an insurer would be required to provide written notice to the insurer at least 61 days prior to filing suit that includes a sworn statement containing the following information:
1) the specific damage items and the amount alleged to be owed by the insurer;
2) the amount of attorney’s fees the insured reasonably incurred in asserting the claim against the insurer; and
3) the amount that the insured will accept in full and final satisfaction of the claim.
HB 3646 – INSURANCE CLAIMS AND CERTAINPROHIBITED ACTS AND PRACTICES RELATING TO THEBUSINESS OF INSURANCE (COMPANION: SB 1628) (CONTINUED)
If the sworn statement included damage amounts sought by the insured not previously submitted to the insurer, the notice must contain:
1) a sworn statement signed by the insured stating the specific damage items, the amount alleged to be owed by the insured, and the reason the damage items were not previously submitted to the insurer;
2) copies of reports, estimates, photographs, and other items reasonably supporting the insured ’s additional damage items;
3) a statement that the insured will cooperate in allowing the insurer to inspect the insured property for purposes of investigating the additional damage items;
4) the amount of attorney’s fees the insured reasonably incurred in asserting the claim against the insurer; and
5) a stated amount that the insured will accept in full and final satisfaction of the claim.
HB 3646 – INSURANCE CLAIMS AND CERTAINPROHIBITED ACTS AND PRACTICES RELATING TO THEBUSINESS OF INSURANCE (COMPANION: SB 1628) (CONTINUED)
– Establish a requirement in which a failure to provide requisite notice prior to filing suit would, in certain circumstances, be subject to dismissal.
– Establish a 2-year statute of limitations for providing notice to an insurer of certain claims for damages to or loss of real property or tangible personal property.
Status of HB 3646:
– Insurance conducted a public hearing on April 22, 2015. There were numerous individuals and groups registered to testify for HB 3646, but the witness list has yet to be posted.
– The bill was left pending.
HB 3646 – INSURANCE CLAIMS AND CERTAINPROHIBITED ACTS AND PRACTICES RELATING TO THEBUSINESS OF INSURANCE (COMPANION: SB 1628) (CONTINUED)
– S.B. 1628 establishes a clear deadline for an initial claim to be filed, prohibits certain public adjuster activity, requires notice of policyholder suit and proof of loss, creates a practical standard for bona fide disputes, defines actual damages, addresses liability for a person working on the adjustment of a claim on behalf of the insurer, clarifies illegal insurance practices and estimate practices, eliminates improper solicitation by public adjusters and others including but not limited to the purpose of attorney referral, and enforces the current policy appraisal process.
Status of SB 1628:– Business & Commerce voted a committee substitute for SB 1628 out of
committee on April 20, 2015.
– The committee conducted its first public hearing on SB 1628 on March 31, 2015. Many witnesses either testified (or registered a position without testifying) about the bill. Most of those who testified were against the bill; most who registered a position without testifying supported the bill.
– A public hearing on the committee substitute for SB 1628 was conducted on April 14, 2015. Much like the first hearing, many witnesses either testified (or registered a position without testifying) about the bill.
–
HB 3646 – INSURANCE CLAIMS AND CERTAINPROHIBITED ACTS AND PRACTICES RELATING TO THEBUSINESS OF INSURANCE (COMPANION: SB 1628) (CONTINUED)
Filed by Rep. Kenneth Sheets (R - Dallas), would reserve Texas courts for Texas residents by making sure that plaintiffs are residents, or have some connection to the state.
The bill addresses In Re Ford Motor, a 2014 Texas Supreme Court case in which a Mexican national died in a car accident in Texas. His wrongful death beneficiaries sued Ford Motor Co. in a Texas court.
The company argued that the beneficiaries were not plaintiffs under forum non conveniens, but the high court disagreed, noting that it relied on a Texas-resident exception in the law.
HB 1692 undoes the exception.
The House on May 11th voted 132-5 to pass HB 1692.
HB 1692 – DOCTRINE OF FORUM NON-CONVENIENS (COMPANION: SB 1492)
As environmental groups held a mock funeral to mourn the deathof local control, the Texas Senateon Monday approved limitingmunicipal control over oil and gasdrilling and prohibiting any city frombanning hydraulic fracturing.
Without any substantive discussion,the Senate voted 24-7 for HouseBill 40 that reasserts state control over drilling while spelling out some limited powers that cities have in regulating surface operations.
The push for the bill came after Denton residents approved a ban on hydraulic fracturing in November. It was the first Texas city to do so.
The bill will now go to Gov. Greg Abbott’s desk for his signature. The governor has 10 days to sign it or veto it, but because it passed by large margins in both chambers, it would become effective immediately after Abbott signs it.
GET THE FRACK OUT OF HERE
The bill includes a four-part test for allowing cities to regulate operations above the ground, such as fire and emergency response, noise and setbacks. But the bill says those controls must be “economically reasonable” and can’t hinder or “effectively prohibit” the work of a “prudent operator.”
To provide some comfort to cities with longstanding ordinances, such as Fort Worth, the bill contains a “safe harbor” provision that says any ordinance or other measure in effect for five years that has allowed drilling to take place should be considered commercially reasonable.
City officials said the bill was too ambiguous and would create problems, not solve them.
Source: http://www.star-telegram.com/news/business/barnett-shale/article20199849.html#storylink=cpy
GET THE FRACK OUT OF HERE
The Texas House gave final approvallast Monday to legislation allowing gunowners with concealed weaponslicenses to carry their side arms openly.
House Bill 910, by Rep. Larry Phillips, R- Sherman, passed on third reading101-42. Similar legislation has alreadypassed the Senate, and Gov. Greg Abbott has promised to signopen carry legislation.
Lawmakers opposed to open carry made last-ditch efforts to soften the legislation. Rep. Rafael Anchia, D-Dallas, filed an amendment that would allow large cities to vote to opt in or out of open carry.
Rep. Chris Turner, D-Grand Prairie, proposed a similar amendment. Phillips and the House rejected them both, and Democrats against the legislation were not able to stop the bill from passing on Monday.
Source: www.texastribune.org/2015/04/20/open-carry-headed-governors-desk/
SAY HELLO TO MY LITTLE FRIEND
![Genetica [Pearce]](https://img.pdfslide.net/doc/110x75/55cf9759550346d033912206/genetica-pearce.jpg)
