Western District of Texas Court Summaries

By Soledad Valenciano, Melanie Fry, and Jeffrie Lewis

Munis v. Harbor Freight Tools, USA, Inc., SA-21-CV-00318-OLG (Chestney, E., June 24, 2021). The plaintiff served initial disclosures in a personal injury suit and included three section 18.001 affidavits from his medical providers, attesting to the reasonableness and necessity of certain medical expenses. The defendant moved to strike the unfiled affidavits, alleging that section 18.001 of the Texas Civil Practices and Remedies Code is a procedural statute inapplicable in a diversity suit in federal court. The court explained that district courts are divided as to whether section 18.001 applies in federal court, but that it is this court’s practice to permit use of section 18.001 if both parties agree to such procedure. The court also indicated that it had “recently sided with those courts finding [s]ection 18.001 to be a procedural provision of state law inapplicable in federal court in cases involving the Federal Torts Claims Act.” The court denied the defendant’s motion to strike without prejudice.

Laborfest LLC v. City of San Antonio, SA- 19-CV-00060-JKP (Pulliam, J., June 24, 2021). A magistrate judge granted the defendant’s Motion to Quash Subpoena and Order Forbidding Deposition, stating his reasons for his order on the record at the hearing. On the same day, a minute entry was entered on the docket indicating that a hearing was held and that the motion was granted. The hearing was also recorded. The magistrate judge then entered a text order granting the motion for the reasons stated on the record at the hearing. The plaintiffs appealed the text order to the district court. A magistrate judge’s ruling on a nondispositive matter may be reversed when the order is clearly erroneous or contrary to law, and factual findings should be affirmed unless the district court has a definite and firm conviction that a mistake was committed. Because the plaintiffs failed to provide the hearing transcript and did not indicate a reason why the transcript was not provided, the court did not have the opportunity to review the magistrate judge’s findings and the basis for his conclusions and, therefore, affirmed the order. The court also undertook a discretionary, de novo review of the record, which confirmed the court’s decision to affirm.

Windmill Wellness Ranch, LLC v. Meritain Health, Inc., SA-20-CV-01388-XR (Rodriguez, X., June 25, 2021). The court granted the defendants’ motion to dismiss the plaintiff’s second amended complaint with prejudice. The plaintiff, a healthcare provider, asserted claims for underpayment of its out-of-network provider claims submitted under an ERISA plan. The plaintiff claimed it had standing to assert its claims because the patient in question executed an “assignment and authorization to appeal.” Healthcare providers do not have standing in their own right to sue under ERISA but may derivatively bring ERISA suits on behalf of their patients. Here, however, the ERISA plan contained a valid anti-assignment clause. Because the defendants’ motion to dismiss relied on documents outside of the plaintiff’s amended complaint, the attack is considered a factual attack, and thus there is no presumption of truth to the plaintiff’s jurisdictional allegations and the court is free to weigh the evidence, including the plan documents. The plaintiff also failed to meet the elements of its ERISA estoppel claim because the plaintiff did not bring its claims as an ERISA assignee until its second amended complaint, and therefore, the defendants did not materially misrepresent their intention to challenge plaintiff’s jurisdictional standing assertion based on the anti-assignment clause. The plaintiff did not detrimentally rely on an acquiescence of assignee status because it did not assert such status until the second amended complaint, and further, any reliance was not reasonable given the anti-assignment clause. The defendants did not waive the antiassignment clause by paying the plaintiff as a direct payee. Department of Labor regulations did not allow the plaintiff to act on behalf of the patient in question because the care involved “urgent care.” Department of Labor regulations do not prevent an authorized representative of a claimant to pursue a benefit claim or appeal; however, authorized representative status does not convey standing to sue in federal court.

Cantu v. Guerra, SA-20-CV-0746-JKP (Pulliam, June 28, 2021). The court denied the defendant’s motion to dismiss a defamation claim under the Defamation Mitigation Act (DMA). The DMA provides a mechanism by which a person who has been defamed may attempt to mitigate any perceived damage or injury by bringing to the defendant’s attention the alleged defamatory actions and request that the defendant take corrective action. The defendants argued that the plaintiff failed to comply with the DMA’s provision requiring such a notification, and thus, the statute required dismissal. The court examined whether the plain language of the statute required dismissal of claims where the defendant did not receive sufficient request for corrective action. The court looked to a Supreme Court of Texas plurality opinion and outlined a split of authority in other courts where some courts require dismissal, and others find that the consequence of failure to make a request under the DMA is not dismissal, but instead preclusion of recovery of exemplary damages. While ultimately the court decided not to weigh in on the issue because it would require consideration of matters outside the pleadings, which is not appropriate at the Rule 12(b)(6) motion to dismiss stage, it did make clear that courts may decline to dismiss defamation claims solely because of noncompliance with the DMA.

United Biologics, L.L.C. v. Allergy & Asthma Network/Mothers of Asthmatics, Inc., 5:14-cv-35-RCL (Lamberth, May 17, 2021). The court held that the defendants were not entitled to recover costs incurred by their trial technology consultant under 28 U.S.C. § 1920(4), which allows taxing as costs “fees for exemplification.” The court awarded costs for stenographic transcripts and videos of depositions, as well as trial transcripts and exhibit binders for the court under other subsections of 28 U.S.C. § 1920. However, the court stopped short of awarding costs for the trial technology consultant and noted that the Seventh Circuit’s precedent regarding 28 U.S.C. § 1920(4) has “transform[ed] § 1920(4) from a tool to recover relatively minor, incidental expenses into a roving warrant to recover potentially millions of dollars expended on graphics and demonstrations.” The court pointed to case law, dictionaries, and treatises published at or before the enactment of § 1920(4) to show that “exemplification” was understood to mean an authenticated copy of a public record for use as evidence. Thus, an audiovisual technician expense could not qualify as an exemplification cost. The court also held that expenses incurred for graphics used during trial were likewise not an exemplification under § 1920(4), even though they were pre-approved by the court. In so ruling, the court found that just because the trial court pre-approved the exhibits does not mean that the costs associated with those exhibits may be taxed, as this would allow “courts [to] enlarge their own authority on . . . an ad hoc basis,” which would serve to “degenerate” Congress’s attempt to strictly limit taxation of costs “to no limit at all.”

If you are aware of a Western District of Texas order that you believe would be of interest to the local bar and should be summarized in this column, please contact Soledad Valenciano (svalenciano@svtxlaw.com, 210-787-4654) or Melanie Fry (mfry@dykema.com, 210-554-5500) with the style and cause number of the case, and the entry date and docket number of the order.