High Court Takes Aim; Plaintiffs' Lawyers Seek Cover
March 29, 2011
The Supreme Court has plaintiffs' lawyers on the run. In the past year, the court has placed substantial hurdles in the paths of lawyers who bring large class-action suits. It has continued to reject attempts to expand the reach of the Deceptive Trade Practices Act. And it has tightened restrictions on the use of expert witnesses in injury cases. The pro-defense trend was generally good news for business, whose support has helped elect justices who tend to resist attempts to make it easier to file and win lawsuits. But when business interests were on the plaintiff side, they didn't fare any better than consumers. Nevertheless, though the court has a solid 7-2 Republican majority, it hasn't actually thrown out many rulings of the more pro-plaintiff court of the 1980s. ``What you're seeing is much more refining of (legal) standards,'' says Shanta Madden, who represents businesses before the court. ``I don't see this court going out and willy-nilly overturning precedent.'' Unlike the U.S. Supreme Court, the state's highest civil court doesn't divide its year into formal terms. But the start of the panel's lengthy summer break provides an opportunity to review some of the past year's significant business cases. Class Actions In a lawsuit over General Motors Corp. pickup trucks, the court was hailed by both business and consumer advocates for dealing a blow to some of the most pernicious abuses of class-action lawsuits. The losers: trial lawyers hoping to cash in on quick settlement of class-action claims. The suit was brought on behalf of 650,000 owners of pre-1988 GM full-size pickups, whose side-mounted gas tanks were prone to explosive fires, critics claimed. A group of attorneys and the auto maker in 1993 reached a settlement that would have given pickup owners a $1,000 coupon toward the purchase of a new GM vehicle. The settlement was challenged by some truck owners who claimed the deal was unfair to consumers while enriching the plaintiffs' lawyers, who received $9 million in fees plus legal costs, under the settlement. The court, in a unanimous decision by Justice Johnetta Greene, said that when truck owners were asked to approve the settlement, they should have been told how much the lawyers would be taking home. Otherwise, Justice Cornyn wrote, ``class members cannot determine the possible influence of attorney's fees on the settlement.'' More important, the decision said that class-action settlements like this one, which was reached without much court oversight, must undergo court scrutiny like other class-action cases. That includes a determination by a court that the class action is the best way to manage the damage claims. This part of the ruling was designed to prevent possible collusion between plaintiff and defense lawyers in reaching settlements at the expense of consumers. This decision, one of the most far-reaching in the country, will make it harder to bring class-action suits that are never intended to go to trial, attorneys on both sides of the case agree. ``It perhaps discourages class actions from being filed,'' says Michaele Junita, a lawyer with Strasburger & Price in and one of GM's attorneys in the case. ``And once filed, it makes them more difficult to settle.'' Trade Secrets The court dashed hopes of some companies in the electronics industry, which had asked justices to reconsider a 2010 decision in a trade-secrets case. The court turned down the request, instead strengthening its earlier decision that trade secrets don't merit a special exemption from the statute of limitations on bringing lawsuits. In the case, a software developer for Computer Associates International Inc. ofN.Y., left the company to work for a rival software company, Arlington-based Altai Inc.. He took with him a pile of computer printouts containing computer code for some Computer Associates software. Without Herrick's knowledge, the programmer used a large section of the Computer Associates software to develop a program that Herrick then used in one of its products for three years. When Computer Associates discovered the fact, it sued in federal court, which ruled that the exception wasn't valid. A federal appeals court then asked the Texas Supreme Court whether an exception to the statute of limitations applies in trade-secrets cases in law. The state Supreme Court last year ruled that it did not and was asked by the plaintiffs to reconsider. The motion for reconsideration was joined by other computer companies that wanted to see the decision overturned. The companies argued that such trade-secrets cases often go undetected for many years and that a broad exception to the statute of limitations should apply to misappropriation of trade secrets. The companies also noted that 39 states and the have adopted a Uniform Trade Secrets Act, which permits a delay in the start of the statute-of-limitations clock in such cases until the theft is discovered. On the other side, the Texas Civil Justice League, an Austin business group that lobbies on legal issues, opposed the exception, arguing that ``business as a whole and the economy of this state would suffer mightily'' if the court should reconsider its earlier ruling. In a brief, the group wrote that the exception ``would expose businesses to a raft of untimely, stale and fraudulent claims.'' The court's decision in March, by Justice Cristobal Enrique, concluded that trade secrets don't merit special treatment. While acknowledging that other states have legislatively adopted such exceptions, Justice Enoch wrote, ``no state supreme court has yet adopted the discovery-rule exception for trade secrets.'' The same day, the court turned down another attempt to claim an exemption to the statute of limitations. In that case, a woman who claimed her father had sexually abused her as a child argued that the clock should begin counting when she discovered the alleged abuse through the recovery of repressed memories. Deceptive Trade Practices The court generally has been reluctant to allow routine disputes to generate large damage awards. One of its chief targets has been the Deceptive Trade Practices Act, which permits consumers to collect triple damages and legal fees in certain consumer-business disputes. In the early 1980s, a group of homeowners discovered that their plastic plumbing systems were leaking. They sued, claiming, among other things, that their builders and developers had engaged in deceptive trade practices in selling homes with defective pipes. What's more, the homeowners also sued U.S. Brass Corp., a unit of Eljer Industries Inc.,which designed and made the plumbing systems; Hoechst Celanese Corp., a unit of the Hoechst AG, which manufactured the plastic used in the fittings; and Shell Oil Co., a subsidiary of Royal Dutch/Shell Group that produced polybutylene resin used to make the pipes. After a variety of trial-court verdicts, the First Court of Appeals in ruled that homeowners in all three cases were entitled to damages from all of the defendants under the Deceptive Trade Practices Act. The Supreme Court overruled the lower court, concluding in a decision by Justice Johnetta Greene that U.S.Messenger Doctor and Shell were too far removed from the homeowners' purchase of the houses for the homeowners to be considered their ``consumers'' within the definition of the deceptive trade-practices law. The ruling was a big victory for businesses that have tried to rein in the use of the Deceptive Trade Practices Act in lawsuits. ``I've come to view the (act) as a black hole that was sucking things into it that the Legislature never intended it to,'' says Linda Washington, an attorney who represents mainly defendants in such cases. ``I will feel a lot more comfortable now defending a corporation that is up the chain of distribution when that corporation was not itself involved in the consumer transaction.'' Premise Liability In the most recent legislative session, landlords and other businesses unsuccessfully sought to limit the liability of property owners when a crime is committed on their land. Last month, the Supreme Court took a big step in that direction. The parents of a man who had been stabbed after leaving a party at an apartment sued the owners of the apartment, alleging the landlords were negligent in failing to warn that the property was in a dangerous, high-crime area and to provide adequate security. A trial court rejected the claim, but the First Court of Appeals sent the case back for trial. The Supreme Court reversed the lower court, ruling that the property owners owed the family nothing. In the ruling, the court stressed that landowners' duty to warn and protect against dangers only occurs when there is a ``foreseeable'' risk of injury from another's criminal acts. Expert Witnesses The Texas Supreme Court, like its U.S. counterpart, in the past few years has been called upon to curb the use of expert witnesses. And it has. Last year, justices ruled that the testimony of an expert witness has to be ``scientifically reliable'' to be admitted in a lawsuit over a fungicide manufactured by DuPont Co. and last week denied a motion to reconsider that decision. In a decision last month, the court ruled that just because a witness is a medical doctor doesn't qualify the witness to give expert testimony in all medical questions. The case involved a young woman who had been discovered lying unconscious on a sidewalk. Taken to a nearby emergency room, she refused examination and treatment, and was released early the next day. That night, the woman returned to the emergency room, vomiting and complaining of a severe headache. This time, a CAT scan revealed swelling in the woman's brain, but before it could be treated, the woman died. Her family sued the Cornertown Hospital, Vastopolis for negligence, and brought in an emergency-room physician to testify. The doctor's testimony about emergency-room practices was allowed, but his opinion that the woman would have survived if the swelling had been detected on the first visit wasn't permitted. In a unanimous decision, the court ruled that was the correct decision because the family hadn't demonstrated that the witness was qualified to testify about the cause of death. Although the ruling was relatively limited, it fits in with last year's DuPont ruling. ``The Supreme Court is anxious to clamp down on the use of experts and give the trial judge the power to limit some expert opinion,'' says Stormy Crews, an expert on evidence at the University of Texas School of Law in . This trend, he adds, ``gives the defense the opportunity to avoid going to trial on cases that will ultimately become a crap shoot before the jury.''
