South Texas Law Review Vol.56 No.3

SOUTH TEXAS LAW REVIEW

SOUTH TEXAS COLLEGE OF LAW HOUSTON, TEXAS

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SOUTH TEXAS LAW REVIEW SPRING 2015

VoL. 56 No. 3

EDITORIAL BOARD 2014-2015 DREW DEL JUNCO

Editor in Chief

MICHAEL F. LEFEVRE

Managing Editor

BENJAMIN L.

s. RITZ

HuGo H. HERNAJ-iDEZ

Executive Editor

Information Editor

MARY K. CIBOROWSKI

ZACHARY CASAS

BLAKE FREENY

DREW ERICKSON

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LAURA J. THETFORD

Articles Editors

Note and Comment Editors KYLE BouDOUSQUIE

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CHELSEA Lu

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DANA HOLMES

DAVID MANN

WILLIAM R. VAUGHN

REBECCA MARSHALL

Assistant Editors AssT. DEAN EuzABETH A. DENNIS

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Faculty Advisor

Faculty Advisor

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Scholarly Publications Coordinator

Faculty Advisor

MEMBER, NATIONAL CONFERENCE OF LAW REVIEWS

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2015

VoL. 56 No. 3

Members JOSEPH ANDERSON

STEPHANIE DENTON

PATRICK McGINNIS

AARON BENDER

JOVAN! DIAZ

BROOKE MILBAUER

ANGELA BURNETT

CARLOS DOROTEO

SALMA CHARANIA

JEREMY DUNBAR

ALEXANDRA pARKER

MICHAEL COHODES

SEAN FARRELL

STEPHEN PASTA

JORDAN CORBITT

MARY BETH GAHRING

AKSHAR pATEL

TYLER CUMMINGS

ALEXANDRA GEORGE

TIM REDDEN, JR.

CRYSTAL DANG

JAMIE GODSEY

ERIN DEBOOY

THANH LE

JARROD L. SMITH

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JANE LEE

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MARCUS MILLER

IVAN SAENZ

Candidates BRIAN BUESCHER DREW NEUMANN KIM ROBARDS CHRISTOPHER Ross

The opinions expressed in the South Texas Law Review are those of the contributors and are not necessarily representative of the views of the editors of the Review or of South Texas College of Law.

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SOUTH TEXAS LAw REVIEW SPRING 2015

VOL. 56

No. 3

ARTICLES THE LIMITS OF CONSENT: VOLUNTARY DISMISSALS, APPEALS OF CLASS CERTIFICATION DENIALS, AND SOME

William P. Barnette 451

ARTICLE III PROBLEMS ...................

JUST VISITING: HEALTH CARE LIABILITY CLAIMS AND NONPATIENT INJURIES IN A

HEALTH CARE SETTING.........................Brandon

Beck

483

LICENSED TO STEAL: TEXAS PRIVATE PROPERTY TOWING REGULATION AND CONSUMER REMEDIES........................

Brian E. Walters 509 David M. Walters Jennifer Shamas

EVERYTHING IS PRESUMED IN TEXAS: ANALYZING THE APPLICATION OF THE PRESUMPTION AGAINST PREEMPTION .......

Xi

Benjamin Walther 579

xi

THE LIMITS OF CONSENT: VOLUNTARY DISMISSALS, APPEALS OF CLASS CERTIFICATION DENIALS, AND SOME ARTICLE III PROBLEMS WILLIAM P. BARNETTE* I. II.

III. IV.

INTRODUCTION ..................................... ...... 452 ARTICLE III JURISDICTION-PRINCIPLES OF STANDING AND MOOTNESS ................................... ........... 454

A.

Standing

...............................

..... 454

B.

Mootness

...............................

.....

C.

GeneralProhibitionon Appealing Voluntary Dismissals

457

and Exceptions ................................

458 SUPREME COURT ARTICLE III JURISPRUDENCE INVOLVING APPEALS FOLLOWING DISMISSALS IN PUTATIVE CLASS CASES.... 461 APPELLATE ARTICLE III JURISPRUDENCE FOLLOWING VOLUNTARY DISMISSALS WITH PREJUDICE IN PUTATIVE CLASS CASES ...................................................

470 A. Cases Focusing on Terms ofRelevant Settlement Agreement/Stipulation...........................

470

B. C.

Appellate Cases Applying StrictArticle Ill Analysis ............. 474 Analysis: Article III Should ProhibitAppeals of the Denial of Class CertificationFollowing Voluntary Dismissals with

Prejudice.......................

1.

............. 477

The Denial of Class CertificationDoes not Operate as

a Ruling on the Merits. Thus, the Exception to the General Prohibitionon Appealing a Voluntary Dismissal with PrejudiceDoes not Apply .....

2.

...... 477

The PartiesCannot Consent to Jurisdiction. Thus, the Terms of a Settlement Agreement or Stipulation Are Irrelevantto DeterminingAppellate Standing.................. 479

3. There is No PracticalDistinction Between a Class Representative's Individual as Opposed to Class Claim Within the Meaning ofArticle III............. ............. 480

* William P. Barnette is Assistant General Counsel-Commercial Litigation for The Home Depot, where over the past decade he has led the successful defense of more than 150 class actions and other complex litigation matters. The views expressed in this Article are the author's alone.

451

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4. An Interest in Shifting Litigation Costs is not a Concrete, Objective Injury Sufficient to Confer Standing Under Article III ....................

V.

CONCLUSION

..................................

I.

[Vol. 56:451

481 ........... 482

INTRODUCTION

The key moment in any putative class action is the certification ruling.'

If certification is granted, the case may transform from a minor individual dispute into a "bet-[the]-company" matter, which can "induce a substantial settlement even if the [plaintiffs] position is weak." 2 Conversely, if certification is denied, the individual plaintiff frequently finds it "economically imprudent" to pursue the case further.' Given the countervailing pressures on each side to either settle or dismiss, in the absence of an interlocutory appeal correct or "erroneous class certification rulings may effectively escape appellate review." Indeed, considering the significance of the certification ruling to the ultimate resolution of the litigation (and, as discussed below, any potential award of attorney's fees), it is not surprising that losing class plaintiffs and, more precisely, their

1. See FTC Workshop-Protecting Consumer Interests in Class Actions, Panel 7: Class Actions as an Alternative to Regulation: The Unique Challenges Presentedby Multiple Enforcers is a and Follow-On Lawsuits, 18 GEO. J. LEGAL ETHICS 1311, 1329 (2005). ("Certification ... critical moment in class actions. It really often is the decisive point in a class action."); Laura J. Hines, Mirroringor Muscling: An ExaminationofState Class Action Appellate Rulemaking, 58 U. KAN. L. REV. 1027, 1032 (2010) (noting class certification is a "critical ruling" of "unique public

importance"). See generally FED. R. Civ. P. 23 (prescribing the timing of, and criteria required for, class certification).

2.

Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 675 (7th Cir. 2001); Castano v. Am. Tobacco Co., 84 F.3d 734, 746 (5th Cir. 1996) ("[C]ertification dramatically affects the stakes for defendants . . . [and may result in settlements that are essentially] judicial blackmail."); In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293, 1298 (7th Cir. 1995) (recognizing that granting certification may place defendants "under intense pressure to settle"); MARTIN H. REDISH, WHOLESALE JUSTICE: CONSTITUTIONAL DEMOCRACY AND THE PROBLEM OF THE CLASS ACTION LAWSUIT, 16 (2009) ("The economic stakes of the modem class action are often so large that the

whole future of a company, if not an entire industry, may be at stake."); FTC Workshop, supra note 1, at 1329 ("Following certification, class actions often head straight down the settlement path because of the very high cost for everybody concerned . . . .").

3. See Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 (1978); Hines, supra note 1, at 1032 ("The defeated individual plaintiff 'must abandon his efforts to represent the alleged class or incur expenses wholly disproportionate to his individual recovery in order to secure appellate review of the certification order'.... ) (quoting Am. Bar Ass'n Section of Litig., Report and Recommendations of the Special Comm. on Class Action Improvements, 110 F.R.D. 195, 210 (1986))).

4.

See Hines, supra note 1, at 1032.

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attorneys, frequently desire immediate appellate review of an adverse order.'

The Supreme Court, however, has held that a district court's ruling on whether a case can be maintained on a class basis is not a final judgment and thus is not subject to appeal as of right pursuant to 28 U.S.C. § 1291.6 Nevertheless, there are a number of available avenues for class litigants to seek review of adverse certification decisions, both on an interlocutory and final-judgment basis. 7 For example, a party may seek interlocutory review of a certification ruling pursuant to Federal Rule of Civil Procedure 23(f) or under 28 U.S.C. § 1292(b).8 Notably, both these provisions provide a court of appeals with discretion in determining whether to accept the appeal, i.e., the appeal is not as of right. 9 Recently, however, unsuccessful class representatives are increasingly attempting to end-run limitations on interlocutory review by voluntarily dismissing their cases with prejudice and seeking to use that consented-to final judgment as a vehicle to appeal the denial of class certification. 0 These appeals raise a fundamental question of jurisdiction under Article III of the Constitution, namely, whether there is still a live case or controversy between the parties following the class representative's voluntary dismissal with prejudice of the case below." A circuit split has developed among the courts of appeals in resolving this critical jurisdictional issue.12

5.

See FED. R. Civ. P. 23 advisory committee's notes. As, of course, do defendants who have had certification orders entered against them.

6.

Coopers & Lybrand, 437 U.S. at 476-77.

7.

AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1752 (2011) ("A [party] may appeal a certification decision on an interlocutory basis and, if unsuccessful, may appeal from a final judgment as well.").

8.

See FED. R. Civ. P. 23(f) ("A court of appeals may permit an appeal from an order granting or denying class-action certification . . . ."); 28 U.S.C. § 1292(b) (2012) ("[Where an order] involves a controlling question of law as to which there is substantial ground for difference of opinion and . . . immediate appeal from the order may materially advance the ultimate termination of the litigation . .. [a court of appeals may] permit an appeal to be taken . . . .").

9.

FED. R. Civ. P. 23(f) (noting that the court of appeals "may permit an appeal" from a grant or denial of class certification); FED. R. CIV. P. 23(f) advisory committee's note ("Appeal from an order granting or denying class certification is permitted in the sole discretion of the court of appeals."); 28 U.S.C. § 1292(b) ("The [c]ourt of [a]ppeals ... in its discretion, [may] permit an appeal to be taken . . . .").

10.

See, e.g., Berger v. Home Depot USA, Inc., 741 F.3d 1061, 1064 (9th Cir. 2014) (appealing a dismissal with prejudice); Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015, 1020-21 (9th Cir. 2012) (appealing a voluntary dismissal after class certification was denied); Espenscheid v. DirectSat USA, LLC, 688 F.3d 872, 874 (7th Cir. 2012) (appealing the voluntary dismissal of individual lawsuits that were originally class actions).

11.

See infra Part II. 12.

Compare, e.g., Rhodes v. E.I. du Pont de Nemours & Co., 636 F.3d 88, 100 (4th Cir. 2011) (holding that plaintiff's voluntary nonsuit eliminated standing because there was no longer a self-interested party), with Berger, 741 F.3d at 1064-65 (distinguishing between a voluntary

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Part II begins by discussing basic principles of standing under Article III, such as the requirements of a concrete injury and adverse parties at all stages of the litigation-including on appeal-as well as the bedrock historical rule that there is no right to appeal from a voluntary dismissal with prejudice. Part III will then discuss the erosion of these general principles over time, such as by allowing appeals from voluntary dismissals in certain limited circumstances, and how these encroachments on the general rule have been applied, particularly in attempted appeals from denials of class certification. Part IV argues that the line of cases finding standing to support such appeals are based on a number of dubious premises, such as the supposed distinction between a class representative's individual, as opposed to class, claim, or the ability of the parties to essentially consent to the existence of jurisdiction for the appeal. Thus, Part V concludes that the appropriate outcome in appeals of class certification denials following a voluntary dismissal with prejudice by the class representative is to find no standing under Article III and therefore no jurisdiction for the appeal.

II.

A.

ARTICLE III JURISDICTION-PRNCIPLES OF STANDING AND MOOTNESS

Standing

Article III prohibits federal courts from issuing advisory opinions.1 3 As put by Supreme Court Justice Robert Jackson in 1948, "This Court early and wisely determined that it would not give advisory opinions even when asked by the Chief Executive. It has also been the firm and unvarying practice of [c]onstitutional [c]ourts to render no judgments not binding and conclusive on the parties."I 4 Instead, the "judicial Power" established under dismissal with and without an underlying settlement; a dismissal with an underlying settlement agreement would destroy adversity between the parties), Espenscheid, 688 F.3d at 874-75 (holding that plaintiff retained a sufficient interest in standing because plaintiff stood to receive an additional incentive award if the class were certified; thus, plaintiff voluntarily dismissed only his individual claims as opposed to class claims), and Evon, 688 F.3d at 1022-23 (holding that plaintiff retained a personal stake in the litigation and therefore had standing because plaintiff settled only individual claims, not class claims).

13. See U.S. CONST. art. Ill; Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101 (1998) ("Hypothetical jurisdiction produces nothing more than a hypothetical judgment-which comes to the same thing as an advisory opinion, disapproved by this Court from the beginning." (citing Muskrat v. United States, 219 U.S. 346, 362 (1911))); Hayburn's Case, 2 U.S. (2 Dall.)

408, 414 (1792); see also Preiser v. Newkirk, 422 U.S. 395, 401 (1975) ("[A] federal court has neither the power to render advisory opinions nor to decide questions that cannot affect the rights of litigants in the case before them." (internal quotation marks omitted)).

14. Chi. & S. Air Lines, Inc. v. Waterman S.S. Corp., 333 U.S. 103, 113-14 (1948) (citing Hayburn's Case, 2 U.S. (2 Dall.) at 414).

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the Constitution "extend[s]" only to "Cases" or "Controversies."" Thus, at a minimum, Article III requires the existence of an "actual, ongoing controvers[y]."l6

But not just any controversy will do-as interpreted by the Supreme Court, the "'case or controversy"' requirement does not encompass "every sort of dispute, but only those 'historically viewed as capable of resolution through the judicial process. "'7 "The imperatives of a dispute capable of judicial resolution are sharply presented issues in a concrete factual setting and self-interested parties vigorously advocating opposing positions.",8 Accordingly, for a "case or controversy [to exist], it is not enough that the party invoking the power of the court have a keen interest in the issue."l 9 Rather, "[t]hat party must also have 'standing,' which requires, among other things, that it have suffered a concrete and particularized injury." 2 0 "[T]he core component of standing is an essential and unchanging part of the case-or-controversy requirement of Article III." 2 1 Standing thus serves "to identify those disputes which are appropriately resolved through the judicial process," 2 2 and functions as an "essential limit on [judicial] power: It ensures that [courts] act as judges, and do not engage in policymaking properly left to elected representatives." 2 3 In so doing, the

.

15.

See U.S. CONST. art. Ill, § 2; see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 559 (1992) ("[Article Ill] limits the jurisdiction of federal courts to 'Cases' and 'Controversies' .

16.

Honig v. Doe, 484 U.S. 305, 317 (1988), superseded on other grounds by statute, Individuals with Disabilities Education Act Amendments of 1997, Pub. L. No. 105-17, Ill Stat.

37.

17.

Hollingsworth v. Perry, 133 S. Ct. 2652, 2659 (2013) (quoting Flast v. Cohen, 392 U.S. 83, 95 (1968)). In Hollingsworth, the Supreme Court considered whether the proponents of Proposition 8, which amended the California Constitution to ensure that only marriage between a man and a woman would be recognized in California, had standing to appeal the district court's ruling that Proposition 8 was unconstitutional. Id Ultimately, the Court concluded that the proponents lacked standing, and thus dismissed their appeal. Id. 18.

U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 403 (1980) (citing Franks v. Bowman Transp. Co., 424 U.S. 747, 753-56 (1976)).

19.

Hollingsworth, 133 S. Ct. at 2659; see also id. at 2662 ("We have repeatedly held that such a 'generalized grievance,' no matter how sincere, is insufficient to confer standing."). A judgment resolving a true case or controversy will provide for "specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts." Preiser v. Newkirk, 422 U.S. 395, 401 (1975) (internal quotations

omitted).

20.

Hollingsworth, 133 S. Ct. at 2659; see also id at 2661 ("One essential aspect of this requirement is that any person invoking the power of a federal court must demonstrate standing to

do so.").

21.

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (citing Allen v. Wright, 468 U.S. 737, 751 (1984)).

22.

Id. (quoting Whitmore v. Arkansas, 495 U.S. 149, 155 (1990)).

23.

Hollingsworth, 133 S. Ct. at 2659; see also id at 2661 ("The doctrine of standing . . 'serves to prevent the judicial process from being used to usurp the powers of the political

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standing doctrine furthers the separation of powers defined by the Constitution. 24 The "irreducible constitutional minimum of standing contains three elements."2 5 Of primary importance, a party must "'demonstrate a personal stake in the outcome' of the case.26 That is, "the injury must affect the plaintiff in a personal and individual way." 27 This "injury in fact" requirement mandates the existence of "an invasion of a legally protected interest which is (a) concrete and particularized, and (b) 'actual or imminent, not 'conjectural' or 'hypothetical."' 28 "Second, there must be a causal connection between the injury and the conduct complained of-the injury has to be 'fairly ... trace[able] to the challenged action of the defendant, and not . . th[e] result [of] the independent action of some third party not before the court."' 29 Finally, "it must be 'likely,' as opposed to merely 'speculative,' that the injury will be 'redressed by a favorable decision."' 30

The "party invoking federal jurisdiction bears the burden of establishing these elements." 31 Because "they are not mere pleading requirements but rather an indispensable part of the plaintiffs case, each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation." 32 Thus, at the "pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice," while at the summary-judgment stage, "the plaintiff can no longer rest on such 'mere allegations,' but must 'set

branches."' (quoting Clapper v. Amnesty Int'l USA, 133 S. Ct. 1138, 1146 (2013)); see also Raines v. Byrd, 521 U.S. 811, 820 (1997) ("[Article Ill standing reflects the] overriding and timehonored concern about keeping the Judiciary's power within its proper constitutional sphere ...

24.

Hollingsworth, 133 S. Ct. at 2661 (quoting Clapper, 133 S. Ct. at 1146)).

25.

Lujan, 504 U.S. at 560.

26.

Id. at 579 (Kennedy, J., concurring) (quoting Los Angeles v. Lyons, 461 U. S. 95, 101 (1983)).

27.

Id at 560 n.1.

28.

Id at 560 (citations omitted) (internal quotation marks omitted).

Id. (quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26,41 (1976)).

29.

30.

Id. at 561 (quoting Simon, 426 U.S. at 38, 43).

31.

Id. 32.

Id (emphasis omitted); cf Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551-52 (2011) ("Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule-that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc. . ..

Nor is there anything unusual about [this]: The necessity of touching aspects of the merits in order to resolve preliminary matters, e.g., jurisdiction and venue, is a familiar feature of litigation." (emphasis omitted)).

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forth' by affidavit or other evidence 'specific facts"' that give rise to a triable issue. 33 B.

Mootness

Closely related to standing is the concept of mootness,3 4 which the Supreme Court has defined as "'the doctrine of standing set in a time frame: The requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence (mootness)."'" 3 More recently, however, the Court recognized that due to "long-recognized exceptions," the "description of mootness as 'standing' set in a time frame' is not comprehensive." 36 For instance, "[a] case might become moot if subsequent events made it absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur."3 7 But if the defendant's wrongful conduct is "capable of repetition, yet evading review," mootness does not exist. 3 8 So, for example, where "a mentally disabled patient files a lawsuit challenging her confinement in a segregated institution, her postcomplaint transfer to a community-based program will not moot the action, despite the fact that she would have lacked initial

33.

Lujan, 504 U.S. at 561. If the case proceeds to trial, any facts supporting the plaintiffs standing "must be 'supported adequately by the evidence adduced . . . .' Id. (quoting Gladstone, Realtors v. Vill. ofBellwood, 441 U.S. 91, 115 n.31 (1979)).

34.

See Friends of the Earth, Inc. v. Laidlaw Enytl. Servs. (TOC), Inc., 528 U.S. 167, 189 (2000) (noting "understandable" confusion in distinguishing between standing and mootness).

35.

U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 397 (1980) (quoting Henry P. Monaghan, Constitutional Adjudication: The Who and When, 82 YALE L.J. 1363, 1384 (1973)).

36.

Friends of the Earth, 528 U.S. at 190.

37.

United States v. Concentrated Phosphate Export Ass'n., 393 U.S. 199, 203 (1968). The party arguing for mootness bears the "'heavy burden of persua[ding]' the court that the challenged conduct cannot reasonably be expected to start up again." Friends of the Earth, 528 U.S. at 189 (quoting ConcentratedPhosphate Export Ass n, 528 U.S. at 203); see also Friends of the Earth, 528 U.S. at 190 ("[The defendant's burden is] formidable ... [and includes] showing that it is absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur.").

Conversely, the plaintiff's burden is to "establish standing by demonstrating that, if unchecked by litigation, the defendant's allegedly wrongful behavior will likely occur or continue, and that the 'threatened injury [is] certainly impending."' Id (quoting Whitmore v. Arkansas, 495 U.S. 149, 158 (1990)).

38.

See DeFunis v. Odegaard, 416 U.S. 312, 318-19 (1974) (per curiam) (holding that a constitutional challenge to a law school's admissions policy was moot where plaintiff was in the final quarter of his studies and would be allowed to graduate no matter how the Court ruled; case not "capable of repetition" as to plaintiff because "he will never again be required to run the gantlet of the" admission process); Roe v. Wade, 410 U.S. 113, 125 (1973) ("Pregnancy provides a classic justification for a conclusion of nonmootness. It truly could be 'capable of repetition, yet evading review."' (quoting So. Pac. Terminal Co. v. Interstate Commerce Comm'n, 219 U.S. 498, 515 (1911))), abrogatedin part by Planned Parenthood of Se. Pa. v. Casey, 505 U.S. 833 (1992).

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standing had she filed the complaint after the transfer." 39 No similar exception exists for standing. 40 Thus, "if a plaintiff lacks standing at the time the action commences, the fact that the dispute is capable of repetition yet evading review will not entitle the [plaintiff] to a federal judicial forum." 4 1

One "important difference between" standing and mootness involves the allocation of judicial resources. 42 Standing ultimately "functions to ensure, among other things, that the scarce resources of the federal courts are devoted to those disputes in which the parties have a concrete stake."43 Mootness, on the other hand, typically arises after a case has been litigated for some period of time, often years.44 In such circumstances, dismissing a case "at an advanced stage may prove more wasteful than frugal." 45 Nevertheless, this "sunk costs" argument "does not license courts to retain jurisdiction over cases in which one or both of the parties plainly lacks a continuing interest.'A6 C.

GeneralProhibitionon Appealing Voluntary Dismissals and Exceptions

According to James Madison, "[I]t is not infrequently a question of real nicety in legislative bodies whether the operation of a particular measure will, or will not, extend beyond the legislative sphere . . . [but] the executive power [is] restrained within a narrower compass and . .. the judiciary [is] described by landmarks still less uncertain.A 7 In reality, jurisprudence reveals these "less uncertain" boundaries of the judicial power have not always been easy to discern.48 Indeed, contrary to Madison, the Supreme Court has noted that the "justiciability doctrine [is] one of uncertain and shifting contours,A9 rather than a "legal concept with a fixed content or susceptible of scientific verification." 50

39.

Friends of the Earth, 528 U.S. at 190-91 (citing Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581, 594 n.6 (1999)).

40.

Id. at 191.

41.

Id. 42.

Id at 191-92.

43.

Id. at 191.

44.

Id. Id. at 191-92.

45.

46.

Id. at 192.

THE FEDERALIST No. 48, at 307 (James Madison) (Clinton Rossiter ed., 2003), quoted 47. in Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).

48.

See infra notes 60-69 and accompanying text.

Flast v. Cohen, 392 U.S. 83, 97 (1968).

49.

50.

Poe v. Ullman, 367 U.S. 497, 508 (1961) (plurality opinion).

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While the boundaries of standing are sometimes uncertain, some scenarios have historically been clearly on the no-case-or-controversy side of the line.5 ' For example, Article III is not satisfied by cases presenting a political question,52 a request for an advisory opinion,5 "or when the case sought to be adjudicated has been mooted by subsequent developments." 5 4 Similarly, when a case lacks "that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination," standing does not exist.55 Perhaps the most prominent, traditional example of the lack of concrete adverseness is where a plaintiff voluntarily dismisses her complaint, the "familiar rule" being that such a plaintiff "may not sue out a writ of error," i.e., may not appeal." Indeed, the Supreme Court recognized from very early on that appellate jurisdiction would not lie where the plaintiff voluntarily dismissed suit below.

Over time, however, an

&

51.

See infra notes 53-58 and accompanying text.

52.

Luther v. Borden, 48 U.S. (7 How.) 1, 56 (1849).

53.

Hayburn's Case, 2 U.S. (2 Dall.) 408, 411 (1792).

54.

Massachusetts v. EPA, 549 U.S. 497, 516 (2007) (citing California v. San Pablo Tulare R.R., 149 U.S. 308, 314 (1893)).

55.

Baker v. Carr, 369 U.S. 186, 204 (1962); see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 581 (1992) (Kennedy, J., concurring) ("[T]he party bringing suit must show that the action injures him in a concrete and personal way. This requirement is not just an empty formality.

It preserves the vitality of the adversarial process by assuring both that the parties before the court have an actual, as opposed to professed, stake in the outcome, and that 'the legal questions presented . . . will be resolved, not in the rarefied atmosphere of a debating society, but in a concrete factual context conducive to a realistic appreciation of the consequences of judicial action."' (quoting Valley Forge Christian Coll. v. Ams. United for Separation of Church & State, Inc., 454 U.S. 464, 472 (1982))).

56.

United States v. Procter & Gamble Co., 356 U.S. 677, 680 (1958); see Bell v. City of Kellogg, 922 F.2d 1418, 1421-22 (9th Cir. 1991) ("Generally, a plaintiff may not appeal a voluntary dismissal because there is no involuntary or adverse judgment against him. Without an adverse impact, there is no standing to contest the voluntary dismissal." (citations omitted)). In analyzing the effect of voluntary dismissals, some cases focus on whether the dismissal is with or without prejudice. See Geaney v. Carlson, 776 F.2d 140, 141-42 (7th Cir. 1985) ("When a plaintiff voluntarily dismisses his action without prejudice, he receives the relief requested and has no rational basis to appeal the dismissal. Although the judgment is final, it is ordinarily not appealable because the dismissal does not qualify as an involuntary adverse judgment." (citation omitted)). Despite the same rationale seemingly being applicable to a voluntary dismissal with prejudice, the Sixth Circuit has noted that the "no appeal from a voluntary dismissal" rule is ironclad only with respect to dismissal without prejudice. A majority of the courts of appeals that have ruled on the issue appear to accept this court's formulation . . . of an exception when the dismissal is with prejudice and 'designed only to expedite review' of a prior order having the effect of a dismissal.

Laczay v. Ross Adhesives, 855 F.2d 351, 354 (6th Cir. 1988) (quoting Empire Volkswagen Inc. v.

World-Wide Volkswagen Corp., 814 F.2d 90, 94 (2d Cir. 1987)).

57.

See United States v. Babbitt, 104 U.S. 767, 768 (1882) ("[Wlhen a decree was rendered by consent, no errors would be considered here on an appeal . . . ."); Evans v. Phillips, 17 U.S. (4

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exception crept into the jurisprudence: where the dismissal at issue followed a ruling that, although interlocutory in nature, nevertheless essentially ended the case on the merits, the general rule does not apply.

For instance, in United States v. Procter& Gamble Co., in the context of a civil suit under the Sherman Act, 15 U.S.C. § 4, the government challenged certain document-production orders related to a grand jury investigation.5 9 Rather than comply with the orders, the government requested that instead of producing the documents, the district court should simply dismiss the case-which is what occurred.60 Nevertheless, the Supreme Court rejected the defendant's challenge to the government's standing to bring the appeal, finding that when the government "proposed dismissal for failure to obey, it had lost on the merits and was only seeking an expeditious review." 61 Thus, the Court concluded that the general rule prohibiting an appeal from a voluntary dismissal "ha[d] no application here." 62 Likewise, it is well established that "a party who receives all that he has sought generally is not aggrieved by the judgment affording the relief and cannot appeal from it." 6 3 In an early case, Lord v. Veazie, the Supreme Court per Chief Justice Taney rejected an attempt to appeal where there was "no real dispute between the plaintiff and the defendant."64 The Court viewed the role of federal courts as being to "decide the rights of persons and property, when the persons interested cannot adjust them by agreement between themselves."65 Thus, "any attempt . . to obtain the opinion of the Wheat.) 73, 73 (1819) (noting that the appeal from the court below was dismissed through a nonsuit).

See Procter& Gamble Co., 356 U.S. at 680-81.

58.

59.

Id at 679.

60.

Id. at 679-80.

61.

Id. at 681.

62.

Id. at 680. Lower courts have expanded this exception to allow appeals following a voluntary dismissal where the "plaintiff ... deems an interlocutory ruling to be so prejudicial as to deserve immediate review." John's Insulation, Inc. v. L. Addison and Assocs., Inc., 156 F.3d 101, 107 (1st Cir. 1998) ("It is understandable that plaintiffs may sometimes find that an interlocutory ruling has so damaged their case that seeing it to trial would be a waste of resources.... [I]n such situations, the proper course of action is not to delay the proceedings, but to file a motion for voluntary dismissal with prejudice, stating explicitly that the purpose is to seek immediate review of the interlocutory order in question."); see also Omstead v. Dell, Inc., 594 F.3d 1081, 1085 (9th Cir. 2010). Article III, however, requires the presence of an objective harm or injury throughout all stages of the litigation. Laird v. Tatum, 408 U.S. 1, 13-14 (1972). Once a plaintiff has voluntarily dismissed her claim, she no longer has such an injury, regardless of how damaging she "deems" an interlocutory ruling to have been.

63.

INS v. Chadha, 462 U.S. 919, 930 (1983) (internal quotation marks omitted); see also Camreta v. Greene, 131 S. Ct. 2020, 2029-30 (2011) ("As a matter of practice and prudence, we have generally declined to consider cases at the request of the prevailing party, even when the Constitution allowed us to do so.").

Lord v. Veazie, 49 U.S. (8 How.) 251, 254 (1850).

64.

65.

Id at 255.

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court upon a question of law which a party desires to know for his own interest or his own purposes, when there is no real and substantial controversy between those who appear as adverse parties to the suit, is an abuse." 66 Given that the parties' "interest in the question [under consideration was] . . . one and the same, and not adverse," the Court concluded that any judgment rendered under the circumstances would be a "mere form."67 Accordingly, the Court nullified the judgment and dismissed the writ for want of jurisdiction.6 8 III. SUPREME COURT ARTICLE III JURISPRUDENCE INVOLVING APPEALS FOLLOWING DISMISSALS IN PUTATIVE CLASS CASES

While standing typically is contested at the time of filing suit, "Article III demands that an 'actual controversy' persist throughout all stages of litigation." 6 9 Accordingly, "[s]tanding 'must be met by persons seeking appellate review, just as it must be met by persons appearing in courts of first instance."' 70 The Supreme Court has addressed Article III standing and mootness jurisdictional issues in a number of appeals following the resolution of class certification, although not yet in the context of a voluntary dismissal with prejudice.7 ' For example, in Sosna v. Iowa, the plaintiff brought a class action challenging the constitutionality of Iowa's 66.

Id 67.

Id. at 254-55.

68.

Id at 256. Recently, in United States v. Windsor, 133 S. Ct. 2675, 2683, 2685 (2013), the Supreme Court recognized that the government agreed with the plaintiffs position that § 3 of the Defense of Marriage Act, 1 U.S.C. § 7, was unconstitutional and thus both parties sought affirmance of the judgment below. See id. at 2699-2700 (Scalia, J., dissenting) ("One could spend many fruitless afternoons ransacking our library for any other petitioner's brief seeking an affirmance of the judgment against it. What the petitioner United States asks us to do in the case before us is exactly what the respondent Windsor asks us to do: not to provide relief from the judgment below but to say that the judgment was correct." (footnote omitted)). Nevertheless, the Court held there was still sufficient adversity to satisfy Article III in that affirmance of the judgment would order the government to pay money (a tax refund) that it had not yet paid. Id. at 2686 (majority opinion). Accordingly, the Court concluded the case was a "justiciable controversy under Article Ill." Id at 2687.

69.

Hollingsworth v. Perry, 133 S. Ct. 2652, 2661 (2013) (citing Already, LLC v. Nike, Inc., 133 S. Ct. 721, 726 (2013)); see also Lewis v. Cont'l Bank Corp., 494 U.S. 472, 477 (1990) (explaining that an actual case and controversy is required under Article Ill); Preiser v. Newkirk, 422 U.S. 395, 401 (1975) ("The rule in federal cases is that an actual controversy must be extant at all stages of review, not merely at the time the complaint is filed.") (internal quotation marks omitted); Roe v. Wade, 410 U.S. 113, 125 (1973) (requiring an actual case and controversy for adjudication), abrogated in part by Planned Parenthood of Se. Pa. v. Casey, 505 U.S. 833 (1992); S. Pac. Terminal Co. v. ICC, 219 U.S. 498, 514 (1911) (noting that the Court will only review actual case and controversies).

70.

Hollingsworth, 133 S. Ct. at 2661 (quoting Arizonans for Official English v. Arizona, 520 U.S. 43, 64 (1997)).

71.

See infra notes 73-148 and accompanying text.

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one-year residency requirement for divorce.7 2 After the class had been certified, the plaintiff both satisfied the one-year residency requirement and obtained a divorce in another state, thereby mooting her individual case on separate and independent grounds, although the defendant did not move to dismiss for lack of jurisdiction. Recognizing that the parties are not permitted to consent to jurisdiction, the Supreme Court felt "obliged to address the question of mootness."74 According to the Court, upon the district court's certification, "the class of unnamed persons . .. acquired a legal status separate from" the interest asserted by the plaintiff.7 5 This separate status "significantly affect[ed] the mootness determination." 76 In other words, while the "controversy [was] no longer live as to [the plaintiff], it remain[ed] very much alive for the class of persons she ha[d] been certified to represent." 77 In the Court's view, simply because the "issue sought to be litigated escape[d] full appellate review at the behest of any single challenger" due to the mere passage of time, did not mean the case "inexorably [became] moot by the intervening resolution of the controversy as to the named plaintiffs." 78 Rather, an Article III controversy can still "exist . .. between a named defendant and a member of the class represented by the named plaintiff, even though the claim of the named plaintiff has become moot." 7 9 The Court thus concluded the case was not moot.80 Later, in United States Parole Commission v. Geraghty, the Court addressed "whether a trial court's denial of a motion for certification of a class may be reviewed on appeal after the named plaintiffs personal claim has become 'moot."' 8 In Geraghty, a criminal defendant who had been denied parole filed a class action challenging the constitutionality of the federal parole guidelines. 82 While the case was on appeal, the plaintiff was

72.

Sosna v. Iowa, 419 U.S. 393, 397 (1975).

73.

Id at 398 n.7, 399.

74.

Id. at 398.

75.

Id at 399.

76.

Id 77.

Id at 401.

78.

Id. 79.

Id at 402.

80.

Id at 401-02. Similarly, in UnitedAirlines, Inc. v. McDonald, 432 U.S. 385 (1977), the Court permitted a putative absent class member to intervene for the purpose of appealing the denial of class certification following the entry of a final judgment that resulted from the defendant entering individual settlements with the named plaintiffs. Id. at 394-96.

81.

U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 390 (1980).

82.

Id. at 393. The plaintiff had been convicted of both conspiracy to commit extortion and making false declarations to a grand jury, and was sentenced to thirty months' incarceration. Id. at 391-92. "[He] sought certification of a class of 'all federal prisoners who are or who will become eligible for release on parole."' Id. at 393.

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released from prison, mooting his claim.83 Defendants then moved to dismiss the appeal, which the Third Circuit denied.84 On review, the Supreme Court noted that "[a]pplication of the personal-stake requirement to a procedural claim, such as the right to represent a class, is not automatic or readily resolved." 85 In particular, the Court noted that to the extent there is a distinction between the plaintiffs individual claim on the merits on the one hand, and the claim to represent a class on the other,86 the latter "'right' is more analogous to the private attorney general concept than to the type of interest traditionally thought to satisfy the 'personal stake' requirement."87 Nevertheless, after reviewing the relevant jurisprudence, the Court concluded that the personal-stake requirement "can exist with respect to the class certification issue notwithstanding the fact that the named plaintiffs claim on the merits has expired."8 8 Thus, the Court held "that an action brought on behalf of a class does not become moot upon expiration of the named plaintiffs substantive claim, even though class certification has been denied."89 More particularly, 83.

Id at 394. The district court denied the plaintiff's motion for class certification and granted the defendants' motion for summary judgment. Id at 393.

84.

See Geraghty v. U.S. Parole Comm'n, 579 F.2d 238, 244, 268 (3d Cir. 1978), vacated, 445 U.S. 388 (1980).

85.

Geraghty, 445 U.S. at 402.

86.

Whether there is any such distinction in reality, the law is clear that a class representative must establish standing on her own behalf rather than through absent class members. Laird v. Tatum, 408 U.S. 1, 14 n.7 (1972). Indeed, leaving aside the standing issue, the so-called perfect plaintiff approach also implicates the Rules Enabling Act, which prohibits procedural rules, like Rule 23, from "abridg[ing], enlarg[ing], or modify[ing] any substantive right." See 28 U.S.C. § 2072(b) (2012). To illustrate, in Broussardv. Meineke Discount Muffler Shops, Inc., 155 F.3d 331 (4th Cir. 1998), the Fourth Circuit reversed class certification on the basis that the plaintiffs had been permitted to present a "fictional composite" of the class allegations that was "much stronger than any plaintiff's individual action would be," thereby violating the Rules Enabling Act. Id at 345.

87.

Geraghty, 445 U.S. at 403. Again, it is well recognized that standing requires the class representative to have personally suffered an injury and cannot rely on an alleged injury to absent class members. See O'Shea v. Littleton, 414 U.S. 488, 494 (1974) ("[I]f none of the named plaintiffs purporting to represent a class establishes the requisite of a case or controversy with the defendants, none may seek relief on behalf of himself or any other member of the class."); see also Blum v. Yaretsky, 457 U.S. 991, 999 (1982); Laird, 408 U.S. at 14 n.7.

88.

Geraghty, 445 U.S. at 403. In support of this conclusion, the Court noted that the plaintiff "continue[d] vigorously to advocate his right to have a class certified." Id. at 404.

89.

Id. Justice Powell dissented, arguing that the Article III requirement of injury "contain[ed] no exception for class actions." Id. at 413 (Powell, J., dissenting). Further, the dissent noted that no previous case had "premised jurisdiction upon the bare existence of a sharply presented issue in a concrete and vigorously argued case," in the absence of any constitutional injury. Id. at 421. Anticipating where this type of standing analysis has ultimately led, Justice Powell recognized that in a "realistic sense, the only persons before this Court who appear to have an interest are the defendants and a lawyer who no longer has a client." Id. at 424. In response, the majority acknowledged that the issue presented was one of "first impression," but stressed that the relevant jurisprudence under Article IIl had become "riddled with exceptions" and that "each case

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the Court held that "when a [d]istrict [c]ourt erroneously denies a procedural motion, which, if correctly decided, would have prevented the action from becoming moot, an appeal lies from the denial and the corrected ruling 'relates back' to the date of the original denial." 90 In so holding, however, the Court "intimate[d] no view" on "whether a named plaintiff who settles the individual claim after denial of class certification may, consistent with Art. III, appeal from the adverse ruling on class certification." 91 The Court likewise expressed no opinion regarding the propriety of the plaintiff serving as class representative: "Our conclusion that the controversy here is not moot does not automatically establish that the named plaintiff is entitled to continue litigating the interests of the class . . . . We hold only that a case or controversy still

exists. The question of who is to represent the class is a separate issue." 92 The same day Geraghty was issued the Supreme Court also released its opinion in Deposit GuarantyNational Bank v. Roper.93 In Roper, the Court addressed "whether a tender to named plaintiffs in a class action of the amounts claimed in their individual capacities, followed by the entry of judgment in their favor on the basis of that tender, over their objection, moots the case and terminates their right to appeal the denial of class certification." 94 In assessing whether plaintiffs' claims were moot, the Court reasoned that the "right of a litigant to employ Rule 23 is a procedural right only, ancillary to the litigation of substantive claims." 95 Thus, if the "substantive claims become moot in the Art. III sense, by settlement of all

must be decided on its own facts," taking account of the "practicalities and prudential considerations." Id. at 404-06 n. I1 (majority opinion).

90. Id. at 406-07 n.11. That is, assuming the appeal resulted in a "reversal of the class certification denial, and a class subsequently is properly certified, the merits of the class claim then may [relate back and] be adjudicated pursuant to the holding in Sosna." Id. at 404; see also Cnty. of Riverside v. McLaughlin, 500 U.S. 44, 51-52 (1991) (holding that "inherently transitory" claims related to promptness of probable-cause hearings were not moot under the relation-back doctrine).

91. Geraghty, 445 U.S. at 404 n.10.

92. Id. at 405, 407. Leaving aside the jurisdictional issue, it seems beyond question that a class representative with a moot claim could never satisfy Rule 23 requirements, such as adequacy, typicality, commonality, or predominance, given that the class representative would not be similarly situated to absent class members with live claims. See Richardson v. Ramirez, 418 U.S. 24, 39 (1974) ("We have held that in the federal system one may not represent a class of which he is not a part . . . ." (citing Bailey v. Patterson, 369 U.S. 31, 32-33 (1962) (per curiam))); see also Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625-28 (1997); Espenscheid v. DirectSat USA, LLC, 688 F.3d 872, 874-76 (7th Cir. 2012).

93. Deposit Guar. Nat'l Bank v. Roper, 445 U.S 326 (1980).

94. Id at 327. The plaintiffs challenged a monthly service charge imposed by the defendant in connection with certain credit card accounts as being usurious under Mississippi law. Id. at 328-29.

95. Id. at 332.

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personal claims for example, the court retains no jurisdiction over the controversy of the individual plaintiffs." 9 6

'

But in applying these general principles, the Court found the "factual context . . important." 97 In particular, the Court noted that plaintiffs had never "accept[ed] the tender in settlement of the case; instead, judgment was entered in their favor . .. without their consent and the case was dismissed over their continued objections."9 As a result, according to the Court, "so long as [plaintiffs] retained an economic interest in class certification," their claims were not moot. 99 The Court identified such an interest on behalf of plaintiffs in "their desire to shift part of the costs of litigation to those who will share in its benefits if the class is certified and ultimately prevails."1 00 Accordingly, the Court concluded that plaintiffs' "individual interest in the litigation-as distinguished from whatever may be their representative responsibilities to the putative class-is sufficient to permit their appeal of the adverse certification ruling." 0 In contrast, in Lewis v. Continental Bank Corp., the Supreme Court unanimously ruled that an interest in obtaining attorney's fees is not sufficient to satisfy Article III in the absence of an underlying concrete injury.10 In Lewis, the plaintiff, a bank holding company, challenged certain state banking statutes for allegedly violating the Commerce Clause.10 3 Plaintiff prevailed in the district court and then unsuccessfully moved for attorney's fees."3 " While the case was on appeal, Congress amended federal law in a manner that mooted the controversy. o0 Examining the impact of plaintiffs claim for fees on the question of mootness, the Supreme Court concluded that an "interest in attorney's fees is, of course, insufficient to create an Article III case or controversy where 96.

Id

97.

Id 98.

Id 99.

Id at 333.

100.

Id at 336. "[R]espondents have asserted as their personal stake in the appeal their desire to shift to successful class litigants a portion of those fees and expenses that have been incurred in this litigation and for which they assert a continuing obligation." Id. at 334 n.6.

101.

Id at 340. As in Geraghty, Justice Powell dissented, arguing that plaintiffs' interest in sharing litigation costs with absent class members was too "speculative" to satisfy Article Ill. Id. at 345 (Powell, J., dissenting). Interestingly, Justice Powell also anticipated the need for "authorization of interlocutory appeals from the denial of class certification in appropriate circumstances," which later came to fruition with the adoption of Federal Rule of Civil Procedure

23(f). Id. at 355.

102.

Lewis v. Cont'l Bank Corp., 494 U.S. 472, 480 (1990).

103. Id. at 474; see U.S. CONST., art. 1, § 8, cl. 3. The statutes in question prohibited an outof-state bank holding company, like plaintiff, from operating certain types of banks in Florida.

Lewis, 494 U.S. at 475.

104. Lewis, 494 U.S. at 475-76.

105. Id. at 476-78.

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none exists on the merits of the underlying claim."l 06 In other words, if "the only concrete interest in the controversy has terminated, reasonable caution is needed to be sure that mooted litigation is not pressed forward, and unnecessary judicial pronouncements on even constitutional issues obtained, solely in order to obtain reimbursement of sunk costs." 0 7

Read together, Sosna, Geraghty, and Roper stand for the proposition that the postcertification (either successful or attempted) mooting of the class representative's claim by events outside her control will not result in a lack of standing under Article III for any subsequent appeal.'0 o Rather, standing will exist for the appeal, and the decision may "relate back," per Sosna.109 In contrast, however, the Supreme Court recently held that a putative class representative failed to establish Article III jurisdiction on appeal where her claim became moot before the class certification process unfolded." 0 In Genesis Healthcare Corp. v. Symczyk, the Supreme Court addressed standing in the context of a putative class claim under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq."' The plaintiff, a registered nurse, brought suit against her employer on her own behalf and on behalf of similarly situated fellow employees, alleging the defendants "violated the FLSA by automatically deducting 30 minutes of time worked per shift for meal breaks for certain employees, even when the employees performed compensable work during those breaks.""1 2 In response, the defendants served an offer of judgment on the plaintiff to resolve her individual claim

106.

Id. at 480; see also Diamond v. Charles, 476 U.S. 54, 70-71 (1986) ("[The mere fact that continued adjudication would provide a remedy for an injury that is only a byproduct of the suit itself does not mean that the injury is cognizable under Art. Ill."). In addition, the Court noted that the mooting of the plaintiffs claim would also mean it was no longer the prevailing party, thereby defeating the request for fees in any event. Lewis, 494 U.S. at 480.

107.

Lewis, 494 U.S. at 480; see also Vt. Agency of Natural Res. v. United States ex rel.

Stevens, 529 U.S. 765, 773 (2000) ("[A]n interest that is merely a 'byproduct' of the suit itself cannot give rise to a cognizable injury in fact for Article Ill standing purposes." (quoting Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 107 (1998))), abrogatedby Cook Cnty., Ill. v. United States ex rel. Chandler, 538 U.S. 119 (2003); Steel Co., 523 U.S. at 107 ("Obviously ... a plaintiff cannot achieve standing to litigate a substantive issue by bringing suit for the cost of bringing suit.

The litigation must give the plaintiff some other benefit besides reimbursement of costs that are a byproduct of the litigation itself.").

108.

See supra notes 73-102 and accompanying text.

109.

Id. 110.

See infra notes 112-148 and accompanying text.

Ill. Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1526 (2013). "The FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees that cannot be modified by contract." Id. at 1527. Further, the statute "gives employees the right to bring a private cause of action on their own behalf and on behalf of 'other employees similarly situated,"' known as a collective action. Id. 112.

Id. at 1527. Plaintiff sought statutory damages for the alleged violations. Id.

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under Federal Rule of Civil Procedure 68.'13 The time for accepting the offer expired without the plaintiff having responded."1 4 Thus, the offer was deemed withdrawn." 5 The defendants then moved to dismiss for lack of subject-matter jurisdiction, arguing that "because they offered [the plaintiff] complete relief on her individual damages claim, she no longer possessed a personal stake in the outcome of the suit, rendering the action moot.""' in opposition, the plaintiff contended the defendants were improperly "attempting to 'pick off the named plaintiff before the collective-action process could unfold.""' The district court, however, agreed with the defendants, finding that the "offer of judgment fully satisfied [the plaintiffs] individual claim," thereby mooting the suit." 8 On appeal, the Third Circuit reversed.119 While the appellate court agreed that the circumstances presented would generally result in the mooting of a plaintiffs claim, it "explained that calculated attempts by some defendants to 'pick off named plaintiffs with strategic Rule 68 offers before certification could short circuit the process, and, thereby, frustrate the goals of collective actions." 2 0 Thus, the court held the claim was not moot, and remanded the case so the plaintiff could seek conditional certification, which if successful, would relate back to the original filing of the suit.121 The Supreme Court began its analysis by noting the Article III requirement that a plaintiff have a "legally cognizable interest, or 'personal stake,' in the outcome" that exists throughout the life of the matter.1 2 2 The Court then noted that both courts below concluded that the "Rule 68 offer afforded [the plaintiff] complete relief on-and thus mooted-her FLSA

113.

Id "The offer included $7,500 for alleged unpaid wages, in addition to 'such reasonable attorney's fees, costs, and expenses . . . as the Court may determine."' Id. 114.

Id 115.

Id 116.

Id 117.

Id. At the time of the ruling, no other individuals had joined the suit. Id 118.

Id. 119.

See Symczyk v. Genesis Healthcare Corp., 656 F.3d 189, 190 (3d Cir. 2011), rev'd, 133 S. Ct. 1523 (2013).

120.

Symczyk, 133 S. Ct. at 1527.

121.

Id. at 1527-28. While noting "significant differences between certification" under Rule 23 and the collective-action process of the FLSA, the Court recognized that lower courts "have borrowed class-action terminology to describe" the latter. Id at 1527 n.l. For instance, the relation-back doctrine employed by the Third Circuit was "developed in the context of class actions under Rule 23 to address the circumstance in which a named plaintiffs claim becomes moot prior to the certification of the class." Id. at 1528 n.2.

122.

Id. at 1528. That is, "[i]f an intervening circumstance deprives the plaintiff of a 'personal stake in the outcome of the lawsuit,' at any point during litigation, the action can no longer proceed and must be dismissed as moot." Id. (quoting Lewis v. Cont'l Bank Corp., 494 U.S. 472, 477-78 (1990)).

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claim."'23 Although the plaintiff sought to challenge that conclusion, the Court refused to reach the issue because she had waived it.12 4 Thus, the Court "assume[d], without deciding, that [the defendants'] Rule 68 offer mooted [the plaintiff's] individual claim."' 2 5 Next, under a "straightforward application of well-settled mootness principles," the Court concluded that the plaintiffs "suit became moot when her individual claim became moot, because she lacked any personal interest in representing others in th[e] action." 2 6 According to the Court, the "mere presence of collective-action allegations in the complaint [could not] save the suit from mootness once the individual claim [was] satisfied." 27 In so ruling, the Court rejected the plaintiff's attempted reliance on jurisprudence arising in the Rule 23 context, such as Geraghty, supra,12 8 concluding that these cases were "inapposite, both because Rule 23 actions are fundamentally different from collective actions under the FLSA, and because these cases are, by their own terms, inapplicable to these facts." 2 9 Thus, the Court held the "action was appropriately dismissed as moot, "'" as the plaintiff had "no personal interest in representing putative, unnamed claimants, nor any other continuing interest that would '

preserve her suit."' 3

Arguing "merely receiving an offer does not moot any claim," Justice Kagan in dissent propounded essentially a "litigation for litigation's sake" approach.1 32 That is, the dissent contended that "an unaccepted offer of

123.

Id Id at 1529.

124.

125.

Id. While not deciding the issue, the Court noted that numerous courts of appeals have "recognized that a plaintiffs claim may be satisfied even without the plaintiff's consent." Id. at 1529 n.4. Some of these courts have held "that an unaccepted offer of complete relief alone is sufficient to moot the individual's claim," while others in similar circumstances have concluded that "district courts may 'enter judgment in favor of the plaintiffs in accordance with the defendants' Rule 68 offer ofjudgment."' Id. 126.

Id. at 1529.

127.

Id. See supra notes 82-93 and accompanying text. The Court found Geraghty inapposite 128. because that holding was limited, unlike the situation before it, to "cases in which the named plaintiffs claim remains live at the time the district court denies class certification." Symczyk, 133 S. Ct. at 1530. The Court also distinguished Sosna v. Iowa, 419 U.S. 393, 399 (1975), where it had earlier concluded that a "class action is not rendered moot when the named plaintiffs individual claim becomes moot after the class has been duly certified." Id. Symczyk, 133 S. Ct. at 1529. In particular, the Court noted that unlike Rule 23, the 129. "conditional certification" process under the FLSA does not result in a "class with an independent legal status." Id. at 1530.

Id at 1529.

130.

Id at 1532.

131.

Id. at 1535-36 (Kagan, J., dissenting).

132.

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judgment cannot moot a case."' 33 Indeed, the dissent claimed that individual claims like those of the plaintiff "will never become moot." 34 But no one had argued that "merely receiving an offer" mooted the plaintiffs claim; rather, the lower courts concluded (and the Supreme Court assumed to be correct) "a full settlement offer addresses plaintiffs alleged harm by making the plaintiff whole."' 35 Article III, of course, requires a "concrete and particularized injury"; by definition, a plaintiff that is made whole no longer has such an injury.' 36 The dissent itself conceded that "a court has discretion to halt a lawsuit by entering judgment for the plaintiff when the defendant unconditionally surrenders and only the plaintiffs obstinacy or madness prevents her from accepting total victory."137 Yet it is not clear how that conclusion would follow from the principles laid out earlier in the dissent.' 38 At bottom, the dissent contended that it is the plaintiffs "choice, and not the defendant's or the court's, whether satisfaction of her individual claim, without redress of her viable classwide allegations, is sufficient to bring the lawsuit to an end." 39 Standing, needless to say, is never left to the plaintiffs choice; otherwise, no case would ever be dismissed on such grounds.1 4 0 Rather, Article III is concerned only with the objective existence of an injury, and not the plaintiff s subjective choice as to whether standing exists.141 Further, it is well established that a class representative must have standing individually, rather than derivatively through an absent class

Id. at 1533. In support of this contention, the dissent relied on the principle that if "'the 133. parties have a concrete interest, however small, in the outcome of the litigation, the case is not moot."' Id. (quoting Chafin v. Chafin, 133 S. Ct. 1017, 1023 (2013)). That is, "[a] case becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party." Id (quoting Chafin,133 S. Ct. at 1023).

Id. at 1535.

134.

135.

Id at 1531 (majority opinion); id. atl 535 (Kagan, J., dissenting). Notably, [w]hile settlement may have the collateral effect of foreclosing unjoined claimants from having their rights vindicated in [plaintiffs] suit, such putative plaintiffs remain free to vindicate their rights in their own suits. They are no less able to have their claims settled or adjudicated following [plaintiff's] suit than if her suit had never been filed at all.

Id at 1531 (majority opinion).

Hollingsworth v. Perry, 133 S. Ct. 2652, 2661 (2013).

136.

Symczyk, 133 S. Ct. at 1536 (Kagan, J., dissenting).

137.

Seeidatl533.

138.

Id at 1536.

139.

Laird v. Tatum, 408 U.S. 1, 13-14 (1972) ("Allegations of a subjective 'chill' are not 140. an adequate substitute for a claim of specific present objective harm or a threat of specific future harm; 'the federal courts established pursuant to Article III of the Constitution do not render advisory opinions."' (quoting United Public Workers v. Mitchell, 330 U.S. 75, 89 (1947))).

See id at 13-14; Hollingsworth, 133 S. Ct. at 2661.

141.

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member.1 42 In other words, a litigant "has standing to seek redress for injuries done to him, but may not seek redress for injuries done to others." 43 That is, it "is not enough that the conduct of which the plaintiff complains will injure [or has injured] someone."l44 Instead, the plaintiff must "show that he is within the class of persons who will be concretely affected." 4 5 "Nor does a plaintiff who has been subject to injurious conduct of one kind possess by virtue of that injury the necessary stake in litigating conduct of another kind, although similar, to which he has not been subject." 46 Given these principles, the dissent's implicit conclusion that the plaintiff could establish standing simply by wanting to pursue claims on behalf of a class, without any particularized injury of her own, seems clearly incorrect.1 47 IV. APPELLATE ARTICLE III JURISPRUDENCE FOLLOWING VOLUNTARY DISMISSALS WITH PREJUDICE IN PUTATIVE CLASS CASES

A.

Cases Focusing on Terms ofRelevant Settlement Agreement/Stipulation

.

Ignoring the bedrock rule that parties cannot consent to jurisdiction, a number of appellate courts have examined the terms of relevant settlement agreements or stipulations dismissing the class representative's claim with prejudice to determine whether the parties essentially agreed that jurisdiction for an appeal of the class certification ruling would lie.1 4 8 For example, in Narouz v. Charter Communications, LLC, the Ninth Circuit addressed whether "the settlement and voluntary dismissal by a class representative of his personal claims in a putative class action. .

Blum v. Yaretsky, 457 U.S. 991, 999 (1982) ("It is axiomatic that the judicial power 142. conferred by Art. Ill may not be exercised unless the plaintiff shows 'that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant."' (quoting Gladstone, Realtors v. Vill. of Bellwood, 441 U.S. 91, 99 (1979))).

143. Laird, 408 U.S. at 14 n.7 (quoting Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 166 (1972)); Baker v. Carr, 369 U.S. 186, 204 (1962) ("[T]he gist of the question of standing . . [is] a personal stake in the outcome of the controversy.").

144. Blum, 457 U.S. at 999.

145. Id.; see Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625-26 (1997) ("[C]lass representative[s] must be part of the class and 'possess the same interest and suffer the same injury' as the class members." (quoting E. Tex. Motor Freight Sys., Inc. v. Rodriguez, 431 U.S. 395, 403 (1977))).

146. Blum, 457 U.S. at 999 (citing Moose Lodge, 407 U.S. at 166-67).

147. See id. at 999; O'Shea v. Littleton, 414 U.S. 488, 494 (1974); Laird, 408 U.S. at 14 n.7.

148. See Sosna v. Iowa, 419 U.S. 393, 398 (1975); Toms v. Allied Bond & Collection Agency, Inc., 179 F.3d 103, 107 (4th Cir. 1999) ("No party can create jurisdiction merely by agreement; the Constitution vests authority in the courts only where a concrete interest is present.").

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render[ed] moot his appeal of the denial of class certification." 4 9 Initially, the court noted that the "issue of whether a class representative who voluntarily settles his . .. individual claims in a putative class action" lacks standing to appeal was an open one in both the Ninth Circuit and the Supreme Court.1 50 According to the court, earlier Ninth Circuit precedent, Seidman v. City of Beverly Hills, did not control because there the plaintiff had dismissed the entire action, in contrast to the instant case where the '

plaintiff had merely dismissed his individual claims.1 5

Likewise, the court concluded that Geraghty was not on point because the dismissal there was involuntary.1 52 Nevertheless, the court extended the rationale of Geraghty to the situation before it, holding that "when a class representative voluntarily settles his . . . individual claims, but specifically

retains a personal stake as identified by Geraghty and Roper [e.g., an interest in shifting litigation costs], he . . . retains jurisdiction to appeal the denial of class certification."'1 3 Concluding that the settlement agreement at issue only released the plaintiffs individual claims, the court held that he "maintained a personal stake as required by Geraghty" and thus had standing to appeal.' 54 Similarly, in Evon v. Law Offices of Sidney Mickell, after losing class certification the plaintiff accepted a "Rule 68 offer of judgment on her individual claim," but nevertheless appealed.' 55 The defendant argued "that by voluntarily dismissing her claims after the district court denied class certification, [the plaintiff] extinguished her personal interest in the litigation," thereby mooting her appeal.' 5 6 Relying on Narouz, supra, the court reasoned that a class representative who voluntarily "settles his . . individual claims" may still have standing to appeal provided he has not "contract[ed] away 'any and all interests he . . may have had in class representation through a private settlement agreement.'"" According to the 149.

Narouz v. Charter Commc'ns, LLC, 591 F.3d 1261, 1263 (9th Cir. 2010). Plaintiff brought a number of employment-related claims. Id 150.

Id. at 1264.

151.

Id. (citing Seidman v. City of Beverly Hills, 785 F.2d 1447, 1448 (9th Cir. 1986)).

152.

Id. at 1264 (citing U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 404 n.10 (1980)).

153.

Id According to the court, in "order to retain such a 'personal stake,' a class representative cannot release any and all interests he . . . may have had in class representation through a private settlement agreement." Id. 154.

Id at 1265; see also Richards v. Delta Air Lines, Inc., 453 F.3d 525, 529 (D.C. Cir. 2006) (holding that jurisdiction existed for appeal where plaintiff released her individual claim but preserved her class claim); Love v. Turlington, 733 F.2d 1562, 1564-65 (1 Ith Cir. 1984).

155.

Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015, 1020 (9th Cir. 2012). Plaintiff alleged violations of the Fair Debt Collection Practices Act based on defendant's sending her a dunning letter to her employer. Id. at 1019; see also 15 U.S.C. § 1692c(b) (2012).

156.

Evon, 688 F.3d at 1020-21.

157.

Id. at 1021 (quoting Narouz, 591 F.3d at 1264).

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court, the necessary continuing personal stake in the matter could be provided by either "'an interest in spreading litigation costs and shifting fees and expenses to the other litigants with similar claims' or a "privateattorney general-like interest in having a class certified if the requirements of Rule 23 are met.""58 Thus, whether the plaintiff retained such an interest

"turn[ed] on the language of her settlement agreement." 59 The court found that "[w]hile the language of the offer of judgment [did] not include an express reservation of [the plaintiff s] right to pursue an appeal on behalf of the class, it [was] not so broad that it can be read to release her class claims.,, 6 0 Given that the settlement was not "an

'

unqualified release of [the plaintiffs] class claims," the court concluded that she "preserve[d]" those claims, and thus retained standing to appeal.' 6 Likewise, in Espenscheid v. DirectSat USA, the Seventh Circuit denied the defendants' motion to dismiss the appeal for lack of jurisdiction.' 62 in Espenscheid, after losing certification the plaintiffs entered individual settlements, dismissed their claims, and then appealed the decertification orders.1 6 3 The settlement agreements reserved the plaintiffs' right to appeal the decertification orders.'1 In addition, the agreements stated that the plaintiffs were seeking an incentive award for serving as class representatives, albeit unsuccessfully to date.' 65 Finding that any incentive payment was "contingent on certification of the class," the court agreed with the plaintiffs' argument that "the prospect of such an award gives them a tangible financial stake in getting the denial of class certification revoked and so entitles them to appeal that denial.' 66 Most recently, in Berger v. Home Depot USA, Inc., the Ninth Circuit relied on the lack of a settlement agreement to conclude jurisdiction existed for an appeal filed by a plaintiff who voluntarily dismissed the entire action Id. (quoting Narouz, 591 F.3d at 1264; Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 158.

1090 (9th Cir. 2011)). In Pitts, the court, in light of the above principles, held that a defendant's "unaccepted offer of judgment did not moot [plaintiffs] case because his claim is transitory in nature and may otherwise evade review." Pitts. 653 F.3d at 1090-91. Thus, application of the relation-back doctrine was appropriate. Id. 159.

Evon, 688 F.3d at 1021.

160.

Id at 1022.

161.

Id. at 1023.

162.

Espenscheid v. DirectSat USA, LLC, 688 F.3d 872, 878 (7th Cir. 2012).

Id. at 874. Plaintiffs alleged collective-action claims under the FLSA, 29 U.S.C. § 163.

216(b), and supplemental state-law claims under Rule 23. Id. 164.

Id. 165.

Id Id. at 875. The court also emphasized that judicial economy would be served by 166. allowing the appeal in that the "viability of the class action . .. [would] be authoritatively determined at the earliest opportunity." Id. at 876. Whatever the merits of promoting judicial economy, such an interest is not permitted to override Article III's jurisdictional limitations. See Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 191-92 (2000).

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with prejudice after losing class certification. 167 In so doing, the court distinguished, as had the earlier Narouz decision, the Seidman opinion, which held there was "no jurisdiction to hear an appeal from a stipulated dismissal of a putative class action after the lead plaintiff settled his individual claims against the defendant."' 68 According to the court, while a settlement destroys the adversity required to establish jurisdiction under Article III, a mere voluntary dismissal with prejudice does not.' 69 Thus, the court's analysis went no further than determining whether there had been a settlement between the parties. 17 0 Because there was not, the court concluded that it had jurisdiction to hear the appeal.171 Numerous other courts have employed the same basic analytical approach as those above but, upon interpreting the relevant settlement agreements, have concluded that the plaintiff released her entire interest (both individual and class) in the case, and thus lacked standing to appeal.1 7 2 For instance, in Sanford v. Member Works, Inc., the Ninth Circuit noted that the "broad language" of the release in question mooted not only the plaintiffs individual claims but also any attempt to shift fees and costs to putative class members.1 7 3 Accordingly, the plaintiff lacked standing to

&

167.

Berger v. Home Depot USA, Inc., 741 F.3d 1061, 1065-66 (9th Cir. 2014); see Seidman v. City of Beverly Hills, 785 F.2d 1447, 1448 (9th Cir. 1986) (stipulation dismissed the "action itself' (internal quotation marks omitted)). The Berger court ultimately affirmed the denial of class certification. Berger, 741 F.3d at 1070-71.

168. Berger, 741 F.3d at 1065 (citing Seidman, 785 F.2d at 1447-48). In Huey v. Teledyne, Inc., the court dismissed an appeal for lack of jurisdiction where the dismissal resulted from failure to prosecute. Huey v. Teledyne, Inc., 608 F.2d 1234, 1240 (9th Cir. 1979) ("Where the record shows that the denial of class certification caused the failure to prosecute, that ruling does not merge in the final judgment for purposes of appellate review.").

169. Berger, 741 F.3d at 1065. The court's analysis did not mention the general rule that a plaintiff may not appeal from a voluntary dismissal with prejudice. United States v. Procter Gamble Co., 356 U.S. 677, 680 (1958).

170. Berger, 741 F.3d at 1065-66.

171. Id at 1066. In so concluding, the court relied on a treatise, see 7B CHARLES ALAN WRIGHT, ARTHUR R. MILLER AND MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 1802 (3d ed. 2005), for the proposition that an unsuccessful class representative can refuse to prosecute her individual claim, allow the court to enter a dismissal with prejudice, and then appeal the certification ruling. Berger, 741 F.3d at 1065. Reliance on that treatise, however, is not persuasive, given that it merely analyzed whether the dismissal is a final judgment, not whether the plaintiff retains standing to appeal, which is a separate issue. See WRIGHT ET AL., supra note 171, at 298. Moreover, while perhaps subtle, there is a distinction between the court entering an order of dismissal, even at the invitation of the plaintiff, and the plaintiff voluntarily dismissing on her own. The treatise discusses the former situation, but not the latter, and thus does not address the issue analyzed in this Article. Id 172. See infra notes 173-177 and accompanying text.

173. Sanford v. MemberWorks, Inc., 625 F.3d 550, 557 (9th Cir. 2010); see also Campion v.

Old Republic Prot. Co., 775 F.3d 1144, 1145-46 (9th Cir. 2014) (dismissing appeal where class representative settled individual claims).

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appeal. 174 Likewise, in Toms v. Allied Bond & Collection Agency, Inc., the Fourth Circuit held that the settlement agreement in question "extinguished [the plaintiffs] entire interest in th[e] case," such that he had no standing to appeal.' 75 The court further rejected the plaintiffs argument that Geraghty and Roper permitted the appeal, noting those two cases involved plaintiffs who "lost their interests involuntarily." 76 Similarly, in Dugas v. Trans Union Corp., the Fifth Circuit held there was no jurisdiction for the appeal where the plaintiff "voluntarily settled the entire action, . . . consented to

entry of judgment, and did not indicate that he was settling only his individual claims." 77 B.

Appellate Cases Applying Strict Article III Analysis

In contrast to the above cases, some courts have analyzed the standing issue simply based on the effects that Article III has on a voluntary dismissal with prejudice.1 78 For example, in an early Fourth Circuit decision, Himler v. Comprehensive Care Corp., the court held that it lacked subject-matter jurisdiction to consider an appeal from an unsuccessful class representative who dismissed his case with prejudice.'" 9 Initially, the court rejected the plaintiffs attempts to argue that he was entitled to appeal because the lower court had entered a final judgment dismissing the case with prejudice.' 80 Instead, the court held that the case was governed by the "general rule . . . that 'normally, a plaintiff may not appeal the dismissal of 8

'

his suit with prejudice, which is granted on his own motion.

Further, the court held that the Procter & Gamble exception, which permits an appeal from a voluntary dismissal following an order that

Id. 174.

175.

Toms v. Allied Bond & Collection Agency, Inc., 179 F.3d 103, 106 (4th Cir. 1999).

176.

Id. Dugas v. Trans Union Corp., 99 F.3d 724, 728 (5th Cir. 1996); see also Muro v. Target 177.

Corp., 580 F.3d 485, 492 (7th Cir. 2009); Potter v. Norwest Mortg., Inc., 329 F.3d 608, 614 (8th Cir. 2003) ("[Plaintiff] failed to establish a clear interest in attorney fees, . . . [and therefore lacked] a continuing personal stake in the litigation."); Shores v. Sklar, 885 F.2d 760, 762 (1lth Cir. 1989) (en banc).

178.

See infra notes 180-205 and accompanying text.

Himler v. Comprehensive Care Corp., No. 92-1672, 1993 U.S. App. Lexis 10032, at 179. *2-4 (4th Cir. Apr. 28, 1993) (per curiam). The case involved allegations relating to a failed merger between defendant and another entity. Id at *2.

180.

Id. at *7-8.

Id at *11 (quoting Distaff, Inc. v. Springfield Contracting, Corp., 984 F.2d 108, 110 181.

(4th Cir. 1993)). In so holding, the court distinguished two cases that allowed appeals of certification orders following involuntary dismissals of the plaintiffs' lawsuits. Id. at *10 (citing Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 903 F.2d 176 (2d Cir. 1990); Nichols v. Mobile Bd. of Realtors, Inc., 675 F.2d 671 (5th Cir. 1982)).

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effectively operates as a ruling on the merits, did not apply.' 82 The court noted that this exception only applies when the interlocutory ruling "affects the merits of the case or imposes a significant legal burden on the plaintiffs ability to proceed with the litigation."' 8 3 According to the court, it was "unquestionably clear that the denial of class certification . . . did not 'have the effect of a dismissal."'l 84 In particular, the "order had no effect on the merits of, nor imposed any legal impediment on, the underlying individual claims. Rather, the denial of class certification only affected the economic feasibility of the litigation," which is insufficient to satisfy Article 111.85 Thus, the court dismissed the appeal for lack ofjurisdiction.1 86 More recently, in Rhodes v. E.I. du Pont de Nemours & Co., the Fourth Circuit again addressed whether a plaintiff who voluntarily dismissed his individual claims with prejudice in order to appeal the denial of class certification had standing to do so.' 87 Turning to Supreme Court jurisprudence first, the court noted that Geraghty's apparent relaxation of the standing requirements in class appeals had only been applied to involuntary dismissals, unlike the case before it.' 88 Then, although noting that several relevant appellate cases based their analysis on the language of the plaintiffs settlement agreement, the court chose instead to "focus [its] review on the standing requirements of Article III."'" Recognizing that "when a putative class representative voluntarily dismisses the individual claims underlying a request for class certification ... there is no longer a 'self-interested party advocating' for class treatment in the manner necessary to satisfy Article III standing requirements," the court concluded that it lacked jurisdiction over the appeal.' 90 Similarly, in Ruppert v. Principal Life Insurance Co., the Eighth Circuit held it lacked jurisdiction to hear an appeal from a denial of class certification following the plaintiffs voluntary dismissal of his individual claims.191 The plaintiff argued that the settlement agreement "expressly reserved his right to appeal the class certification ruling" and contended he 182.

Himler, 1993 U.S. App. Lexis 10032, at *4-7; see United States v. Procter & Gamble Co., 356 U.S. 677, 681 (1958).

183.

Himler, 1993 U.S. App. Lexis 10032, at *6.

184.

Id. at *7 (quoting Laczay v. Ross Adhesives, 855 F.2d 351, 354 (6th Cir. 1988)).

185.

Id 186.

Id at *11-12.

187.

Rhodes v. E.I. du Pont de Nemours & Co., 636 F.3d 88, 98 (4th Cir. 2011). On behalf of a class, plaintiffs sought, among other things, medical monitoring based on alleged toxic exposures resulting from contamination of a public water supply. Id at 92-93.

188.

Id at 99.

189.

Id at 100.

190.

Id (citing U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 403 (1980)).

191.

Ruppert v. Principal Life Ins. Co., 705 F.3d 839, 841, 844 (8th Cir. 2013), cert. denied, 134 S. Ct. 152 (2013).

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had a continuing interest in "shift[ing] costs and attorneys' fees to the class."l92 However, the court disagreed, concluding that the plaintiffs "voluntary dismissal of his individual claims render[ed] the case moot."1 93 That is, the plaintiff had "relinquished his claims, [such that there was] no longer an Article III case or controversy."' 94 In particular, on the issue of the plaintiffs supposed personal interest in shifting costs, the court ruled that the voluntary (rather than involuntary, as in Geraghty) dismissal mooted any such personal stake.1 95 Accordingly, the court dismissed the appeal. 196 Likewise, in Camesi v. University of Pittsburgh Medical Center, the Third Circuit dismissed appeals filed by named plaintiffs who voluntarily dismissed their individual claims to seek review of orders decertifying collective actions that had been conditionally certified.1 97 The plaintiffs claimed an interest in appealing on behalf of persons who opted into the litigation before the collective actions were decertified.' 98 The court first concluded that the plaintiffs could not appeal the decertification orders because they were interlocutory in nature and thus not reviewable even as part of the final judgment resulting from the plaintiffs' voluntary dismissals.1 9 9 Turning its analysis to Article III, the court ruled that "the claims that [the plaintiffs] dismissed with prejudice are gone forever-they are not reviewable by this [c]ourt and may not be recaptured at the district court level." 200 Consequently, the claims were moot. 20 1

Moreover, the court rejected the plaintiffs' argument that they had an "interest in representing others who ha[d] opted into the collective action[s]."202 Because the plaintiffs had voluntarily dismissed their claims, they had no "personal stake in the matter," and thus could "not be permitted

192.

Id. at 842.

193.

Id at 843.

194.

Id 195.

Id at 844. In doing so, the court answered the question it had left open in Anderson v.

CNH U.S. Pension Plan, 515 F.3d 823 (8th Cir. 2008), of whether a plaintiff who voluntarily dismissed her case for the purpose of bringing an appeal could rely on a supposed interest in shifting litigation costs to establish standing. Id. at 826-27.

196.

Ruppert, 705 F.3d at 844.

197.

Camesi v. Univ. of Pittsburgh Med. Ctr., 729 F.3d 239, 242 (3d Cir. 2013). Plaintiffs brought FLSA claims pursuant to 29 U.S.C. § 216(b). Id. 198.

Id. at 242, 247.

199.

Id. at 247.

200.

Id 201.

Id 202.

Id

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to represent opt-in plaintiffs" on the appeal.203 Therefore, the court dismissed for lack ofjurisdiction. 2 0 C.

Analysis: Article III Should ProhibitAppeals of the Denial of Class CertificationFollowing Voluntary Dismissalswith Prejudice

Having reviewed the relevant cases, it is appropriate to examine a number of recurring issues that courts have faced in assessing standing for appeals from the denial of class certification following a voluntary dismissal with prejudice. The proper resolution of any one of these issues should result in the conclusion that no standing exists for any such appeal.

1.

The Denial of Class CertificationDoes not Operate as a Ruling on the Merits. Thus, the Exception to the General Prohibitionon Appealing a Voluntary Dismissalwith PrejudiceDoes not Apply

As noted above, the long-standing general rule is that a party may not appeal a voluntary dismissal with prejudice. 2 05 The only exception is where the interlocutory ruling being challenged effectively operates as a ruling on the merits-that is, if the plaintiff goes forward with her case, she is certain to lose.206 By definition, a ruling denying class certification is procedural in nature and does not resolve the merits of the named plaintiffs individual claim. 2 0 7 Indeed, the Supreme Court has recognized that simply because a plaintiff loses class certification does not mean that he will lose his individual claim: "An order refusing to certify, or decertifying, a class does not of its own force terminate the entire litigation because the plaintiff is free to proceed on his individual claim." 2 08 As a result, the Court refused to 203.

Id. at 248.

204.

Id. The court reserved for "another day the difficult question of whether an interest in representing opt-in collective-action plaintiffs alone may satisfy the personal-stake requirement of Article III." Id 205.

United States v. Procter & Gamble Co., 356 U.S. 677, 680 (1958).

206.

Id. at 681; see Laczay v. Ross Adhesives, 855 F.2d 351, 354 (6th Cir. 1988) ( "[The exception applies] when the dismissal is with prejudice and 'designed only to expedite review' of a prior order having the effect of a dismissal." (quoting Empire Volkswagen Inc. v. World-Wide Volkswagen Corp., 814 F.2d 90, 94 (2d Cir. 1987))).

207.

See generally FED. R. Civ. P. 23 (discussing the procedural requirements for class certification). Nor is this conclusion impacted by the fact that the class-certification analysis will frequently "entail some overlap with the merits of the plaintiffs underlying claim." Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011). The "necessity of touching aspects of the merits in order to resolve preliminary matters," such as certification, does not mean that the merits are conclusively determined one way or the other by the resolution of the preliminary matters. Id. at 2552; see Himler v. Comprehensive Care Corp., No. 92-1672, 1993 U.S. App. Lexis 10032, at *7 (4th Cir. Apr. 28, 1993) (per curiam) ("The order [denying certification] had no effect on the merits of, nor imposed any legal impediment on, the underlying individual claims.").

208.

Coopers & Lybrand v. Livesay, 437 U.S. 463, 467 (1978).

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apply the "death knell" doctrine and allow the appeal of a class certification denial as an exception to the final judgment rule.209 Nor does the assumed lack of financial viability of pursuing the individual claim suffice to establish an effective loss on the merits that comes within the standing requirements of Article 111.2 10 To begin with, the common perception that if certification is denied the individual plaintiff will find it "economically imprudent" to pursue the case further is not entirely accurate.211 In reality, the cost of litigation will not always lead an unsuccessful class representative to stop litigating.212 For example, an individual plaintiff who is alleging a consumer-fraud claim, which is a typical basis for class allegations, would not necessarily be dissuaded from pursuing the matter, given that a prevailing plaintiff in such a case is often entitled to recover attorney's fees.2 13 But the foregoing assumes that the real party in interest in such a case is the plaintiff, which in truth is typically not the case. 2 14 Rather, much if not most consumer class litigation is created and driven by the putative class counsel. 2 15 Thus, the fact that plaintiffs frequently abandon cases following the denial of certification likely says more about the putative class lawyer's fee, rather than the individual plaintiffs potential recovery. 2 16 In any event, whether accurate or not, the perceived economic

.

209.

Id. at 472, 477.

210. Himler, 1993 U.S. App. Lexis 10032, at *7.

211. See Hines, supra note 1, at 1032.

212. See Coopers & Lybrand, 437 U.S. at 470, 471 & n.15 ("Though a refusal to certify a class is inherently interlocutory, it may induce a plaintiff to abandon his individual claim. On the other hand, the litigation will often survive an adverse class determination . . . [given the plaintiffs] prospect of prevailing on the merits and reversing an order denying class certification.").

See, e.g., Marino v. Home Depot U.S.A., Inc. 245 F.R.D. 729, 737 (S.D. Fla. 2007) 213. (stating that even when there is a small amount of damages, the prospect of recovering fees ensures that the cost of bringing suit does not deter plaintiffs); see also Pastor v. State Farm Mut. Auto. Ins. Co., 487 F.3d 1042, 1047 (7th Cir. 2007) ("[The denial of class certification] does not mean that the class members are remediless, but they will have to seek their remedies in smallclaims courts."). But cf Butler v. Sears, Roebuck & Co., 727 F.3d 796, 800, 801 (7th Cir. 2013), cert. denied, 134 S. Ct. 1277 (2013) (relying on an efficiency argument to support class certification because the defendants would otherwise escape liability due to the inability to bring individual suits); Carnegie v. Household Int'l, Inc., 376 F.3d 656, 661 (7th Cir. 2004) ("The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.").

Phillips v. Asset Acceptance, LLC, 736 F.3d 1076, 1080 (7th Cir. 2013) ("[C]ass action 214. attorneys are the real principals and the class representative/clients their agents" (internal quotation marks omitted)); Espenscheid v. DirectSat USA, LLC, 688 F.3d 872, 876 (7th Cir. 2012) ("It is true that class actions are almost always the brainchild of lawyers who specialize in bringing such actions.").

215.

Phillips, 736 F.3d at 1080; Espenscheid, 688 F.3d at 876.

216.

See Amchem Prods. v. Windsor, 521 U.S. 591, 617 (1997) ("A class action . . aggregate[es] the relatively paltry potential recoveries into something worth someone's (usually

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feasibility of ongoing individual litigation is not a substitute for the concrete injury necessary to establish and maintain jurisdiction under Article 111.217 2.

The PartiesCannot Consent to Jurisdiction. Thus, the Terms of a Settlement Agreement or StipulationAre Irrelevantto Determining Appellate Standing

It is axiomatic that the parties cannot create federal jurisdiction by agreement. 21 8 Thus, the terms of any settlement agreement or stipulation (aside from the provision for a voluntary dismissal with prejudice) should be irrelevant to determine standing. 219 Nevertheless, as discussed above, a number of courts have examined the precise terms of the settlement or stipulation at issue in determining whether the plaintiff retained some interest that would support standing, despite having voluntarily dismissed her claim with prejudice. 220 Indeed, even some of the cases that came to the correct outcome-a conclusion that there was no standing for the appealdid so only after reviewing the terms of the parties' agreement.22 1 Other courts, of course, have applied a pure Article III analysis and simply examined whether, in light of the voluntary dismissal with prejudice, there remained standing, i.e., a concrete injury and adverse parties to support an appeal, regardless of what the parties may have said in any agreement. 2 2 2 Given that jurisdiction cannot be created by agreement, the latter clearly seems the better-reasoned analytical approach.223

an attorney's) labor." (quoting Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997)); Thorogood v. Sears, Roebuck and Co., 624 F.3d 842, 848 (7th Cir. 2010) ("[C]lass members are interested in relief for the class but the lawyers are primarily interested in their fees . . . ."), vacated, 131 S. Ct. 3060 (2011); Himler v. Comprehensive Care Corp., No. 92-1672, 1993 U.S. App. Lexis 10032, at *2 (4th Cir. Apr. 28, 1993) (per curiam).

217.

Himler, 1993 U.S. App. LEXIS 10032, at *2 (explaining that the denial of class certification only affects the economic feasibility of the litigation, which is not sufficient to establish standing for appeal); see also Coopers & Lybrand, 437 U.S. at 470-71.

218.

Sosna v. Iowa, 419 U.S. 393, 398 (1975); see also Toms v. Allied Bond & Collection Agency, Inc., 179 F.3d 103, 107 (4th Cir. 1999); Haase v. Sessions, 835 F.2d 902, 904 (D.C. Cir. 1987) ("[T]he ultimate responsibility to ensure subject matter jurisdiction always lies with the court, not the parties.").

219.

Sosna, 419 U.S. at 398; Toms, 170 F.3d at 107; Haase, 835 F.2d at 904.

See supra notes 150-178 and accompanying text.

220.

221.

See supra notes 174-178 and accompanying text.

222.

See supra notes 180-205 and accompanying text.

See, e.g., Rhodes v. E.I. du Pont de Nemours & Co., 636 F.3d 88, 100 (4th Cir. 2011).

223.

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There is No PracticalDistinction Between a Class Representative's Individual as Opposed to Class Claim Within the Meaning ofArticle

III Relatedly, some of the cases that have concluded standing exists on appeal following a voluntary dismissal with prejudice appear to be based on a supposed distinction between the named plaintiffs individual, as opposed to class, claim.2 2 4 But in reality, within the meaning of Article III there is only the class representative's individual claim that she is seeking to prove on behalf of the class. 2 25 That is, there is no amorphous "class" claim floating free of the named plaintiffs individual claim. 22 6 Indeed, in Geraghty, the Supreme Court recognized that the alleged procedural right to represent a class is typically not considered the kind of interest sufficient to satisfy the personal-stake requirement for standing. 227 Thus, the named plaintiff must have standing individually, not through some absent class member.228 In evaluating the standing of a putative class representative, then, the focus should simply be on whether that plaintiff herself has a concrete, objective injury and is proceeding against adverse parties. 22 9 As noted, the general rule is that a party who voluntarily dismisses her claim with prejudice lacks both an injury and adversity within the meaning of Article 111.230 There is nothing unique about the role of an

See, e.g., Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015, 1022 (9th Cir. 2012) 224. (holding that the release did not reach plaintiffs class claims); Narouz v. Charter Commc'ns, LLC, 591 F.3d 1261, 1263 (9th Cir. 2010) (holding that the settlement affected plaintiff's personal claims but not plaintiff's class claims).

See FED. R. Civ. P. 23(a) ("One or more members of a class may sue . . . as 225. representative parties on behalf of all members . . . ."); Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208, 216 (1974) ("To have standing to sue as a class representative it is essential that a plaintiff must be part of that class, that is, he must possess the same interest and suffer the same injury shared by all members of the class he represents."); Bailey v. Patterson, 369 U.S. 31, 32-33 (1962) (per curiam) ("[Plaintiffs] cannot represent a class of whom they are not a part.").

FED. R. Civ. P. 23. That is not to say that a class, once certified, does not acquire a 226. separate legal status from the interests of the named plaintiff, but that separate legal status does not somehow untether the substantive rights of the class members from the claim of the class representative. See Sosna v. Iowa, 419 U.S. 393, 399 (1975). Rather, it simply serves to allow the class to continue with a new class representative if the claim of the original named plaintiff becomes moot. See U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 405, 407 (1980) (holding that the question of who would represent the class on remand is different from whether the class claim was moot). In any event, the separate legal status of a class is only an issue upon the grant of certification, and therefore is not relevant where certification is denied and is followed by a voluntary dismissal with prejudice of the plaintiff's claim. Sosna, 419 U.S. at 399.

Geraghty, 445 U.S. at 402.

227.

228.

Blum v. Yaretsky, 457 U.S. 991, 999 (1982); Schlesinger, 418 U.S. at 216.

229.

Laird v. Tatum, 408 U.S. 1, 13 (1972).

United States v. Procter & Gamble Co., 356 U.S. 677, 680 (1958).

230.

THE LIMITS OF CONSENT

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'

unsuccessful class representative that should change the application of the general rule.23 4.

An Interest in Shifting Litigation Costs is not a Concrete, Objective Injury Sufficient to Confer Standing Under Article III

In Roper, the Supreme Court held there was standing for an appeal based on the named plaintiffs alleged interest in shifting litigation costs to the absent class members. 2 32 Later cases have limited Roper (and Geraghty) to their specific factual context, i.e., an involuntary rather than voluntary dismissal.23 3 And, of course, Geraghty itself reserved the question of whether a named plaintiff who settled her individual claim following a certification loss would have standing under Article III to appeal.234 Thus, there is no precedent or even persuasive reason to think that the Supreme Court would, for standing purposes, look favorably on a named plaintiff who voluntarily dismissed her claim with prejudice following a denial of certification.235 Leaving that aside, later Supreme Court decisions repudiate the notion that an interest in shifting litigation costs would satisfy Article III's requirement of a concrete, objective injury.236 That is, the Court has held that a mere interest in obtaining attorney's fees without an underlying claim does not satisfy Article 111.237 The rationale is that an injury that is only a "byproduct" of the suit itself is not sufficient to establish standing to appeal. 2 38 An interest in shifting litigation costs, by definition, arises solely from the suit itself and thus can only be considered a byproduct of the litigation. 23 9 As a result, such an interest would not satisfy Article III's

231.

See, e.g., Rhodes v. E.I. du Pont de Nemours & Co., 636 F.3d 88, 100 (4th Cir. 2011) ("[W]e conclude that when a putative class plaintiff voluntarily dismisses the individual claims underlying a request for class certification, as happened in this case, there is no longer a 'selfinterested party advocating' for class treatment in the manner necessary to satisfy Article III standing requirements." (citing Geraghty, 445 U.S. at 403)).

232.

Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326, 334 n.6, 336, 340.

233.

See, e.g., Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1530 (2013); Rhodes, 636 F.3d at 99.

234.

U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 404 n. 10 (1980).

235.

See, e.g., Rhodes, 636 F.3d at 99-100.

236.

See Laird v. Tatum, 408 U.S. 1, 13-14 (1972). In Symczk, the Court noted later decisions holding that an interest in attorney's fees alone does not provide standing "where none exists on the merits of the underlying claim," but did not reach the "continuing validity" of Roper's opposite conclusion. Symczyk, 133 S. Ct. at 1532 n.5.

237.

Lewis v. Cont'l Bank Corp., 494 U.S. 472, 480 (1990).

238.

Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 773 (2000), abrogatedby Cook Cnty., Ill. v. United States ex rel. Chandler, 538 U.S. 119 (2003); Diamond v.

Charles, 476 U.S. 54, 70-71 (1986) (O'Connor, J., concurring); see Lewis, 494 U.S. at 480.

239.

See Lewis, 494 U.S. at 480.

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standing requirements.240 Thus, even if it is assumed that standing initially exists to appeal a voluntary dismissal with prejudice, which is a dubious proposition to begin with, it seems clear that an interest in shifting litigation costs alone would not provide the concrete injury required by Article 111.241 V.

CONCLUSION

Based on this discussion, a named plaintiff who voluntarily dismisses with prejudice following the denial of class certification lacks case her standing under Article III to appeal.242 Thus, any such appeals should be dismissed for lack of jurisdiction.24 3

240.

Id. 241.

Id. 242.

See, e.g., Rhodes v. E.I. du Pont de Nemours & Co., 636 F.3d 88, 100 (4th Cir. 2011) (holding that the voluntary dismissal of a claim underlying a class certification request eliminates standing under Article Ill).

243.

Id

JUST VISITING: HEALTH CARE LIABILITY CLAIMS AND NONPATIENT INJURIES IN A HEALTH CARE SETTING BRANDON BECK* I. II. III.

INTRODUCTION .................................... .......

484 A BRIEF HISTORY OF "HEALTH CARE LIABILITY CLAIM" AND THE EXPERT-REPORT REQUIREMENT ................... ..... 485 WHEN IS A PREMISES-LIABILITY CLAIM A HEALTH CARE LIABILITY CLAIM? GUIDANCE FROM THE TEXAS SUPREME COURT ..................................................

487

A. B. IV.

VI.

487 ..... 489

WHEN IS A PREMISES-LIABILITY CLAIM A HEALTH CARE LIABILITY CLAIM? MIXED MESSAGES FROM THE INTERMEDIATE APPELLATE COURTS ........... .............. 491

A. B. C. V.

The Gravamen Analysis .........................

Directly Related to Health Care? ..............

The Twilley Standard ...................................

492 The Ross Standard.. .............................

494 The Impact of the Twilley and Ross Standards on the IntermediateAppellate Courts ................. ..... 494

WHEN THE SETTING REALLY MATTERS: THE HOSPITAL/NURSING HOME DISTINCTION .....................

WEAKNESSES AND ABSURDITIES WITHIN THE CURRENT APPROACH(ES) ..........................................

496

498 The Ross Standard'sInability to Answer for Absurd Results. 498 The Twilley Standard'sAmorphous Distinction.... ..... 499 TOWARD A UNIFIED APPROACH: RECOMMENDATIONS................. 501 A. A Second Look at the Definition ofHealth Care Liability Claim......................................

501 B. Jettison the Hospital/NursingHome Distinction.... ..... 502 C. Double Down on the Gravamen Analysis ......... ......... 503 A. B.

VII.

VIII.

IX.

CONCLUSION POSTSCRIPT

.............................................

..............................................

503 504

* Brandon Beck is a Research and Writing Specialist for the Federal Public Defender's Office. He previously practiced civil appellate law and served as lead counsel in Watson v. Good Shepherd before the Texarkana Court of Appeals in 2014. He received a B.A. in Classics from the University of Texas in 2004, a M.T.S. in Biblical and Historical Studies from Boston University in 2007, and a J.D. from Texas Tech University School of Law in 2012.

483

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A.

The Ross Holding and Its "Considerations.......

...... 504

B. C. D.

Statutory Construction:A Patchfor Williams..... ....................

The Elevation of Loaisiga .....................

The Ross Concurrence

...... 505 ..... 506 ...... 507

I.

INTRODUCTION

.

As litigators are keenly aware, no locale is immune from potential tort liability. People are injured in day-to-day activities such as driving, shopping, and-as this Article will explore-even visiting a loved one at the hospital. Specifically, this Article examines the sometimes-slippery world of premises-liability litigation involving hospitals with particular focus on claims brought by visitors and employees. This has been a topic of immense interest among the intermediate appellate courts since March 2013, when two competing and highly influential standards were created within twenty days of one another in the wake of the Texas Supreme Court's unwillingness to fully resolve all applicable interpretive problems.' As of this writing, the Texas Supreme Court is considering another case that yet again may prove to be the final word on the matter.2 Time will tell.

Part II of this Article will briefly describe the history behind the Texas Legislature's definition of "health care liability claim" and the expert-report requirement within the context of tort reform legislation. Part III will discuss the Texas Supreme Court's guidance on when a premises-liability claim is a health care liability claim. Part IV discusses the approaches that the intermediate appellate courts have developed to identify such claims.

Part V explores the frequently implicit distinction between hospitals and nursing homes when making a health care liability determination. Part VI addresses the weaknesses and absurdities that lurk within the current approaches. Finally, Part VII provides recommendations for solving the primary issues in this corner of the law in anticipation of the Texas Supreme Court's opinion in Ross v. St. Luke's Episcopal Hospital, a case for which the court heard oral argument on November 5, 2014

Compare Good Shepherd Med. Ctr.-Linden, Inc. v. Twilley, 422 S.W.3d 782, 789 (Tex. 1.

App.-Texarkana 2013, pet. denied) (explaining that an expert report is not needed if it would be "difficult," futile, or "impossible" to obtain), with Ross v. St. Luke's Episcopal Hosp., No. 14-1200885-CV, 2013 Tex. App. LEXIS 2796, at *2 (Tex. App.-Houston [14th Dist.] Mar. 19, 2013) (mem. op.) (specifying that no exceptions apply to the expert-report requirement), rev'd, 2015 Tex. LEXIS 361 (May 1, 2015).

2. See Ross v. St. Luke's Episcopal Hosp., No. 13-0439, 2014 Tex. LEXIS 538, at *1 (argued Nov. 5, 2014).

3. Id.

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A BRIEF HISTORY OF "HEALTH CARE LIABILITY CLAIM" AND THE EXPERT-REPORT REQUIREMENT

The Texas Legislature first addressed concerns over medical malpractice in 1977 by passing the Medical Liability and Insurance Improvement Act (MLIIA), which was later codified in Article 4590i of Vernon's Texas Revised Civil Statutes.4 Article 4590i, the precursor to Texas Civil Practice & Remedies Code Chapter 74, did not refer to "medical malpractice," but instead used the somewhat vaguer (and possibly broader) term "health care

liability claim" (HCLC).5 Article 4590i defined HCLC as follows: [A] cause of action against a health care provider or physician for treatment, lack of treatment, or other claimed departure from accepted standards of medical care or health care or safety which proximately results in injury to or death to the patient, whether the patient's claim or cause of action sounds in tort or contract.

The primary concern, at that time, of determining whether a claim was a HCLC was the applicability of a $500,000 damages cap for claims that satisfied Article 4590i's definition. 7 In 1995, however, the legislature erected a new hurdle for prospective plaintiffs when it revised Article 4590i to include a requirement that they serve an expert report on the defendant doctor or health care provider within 180 days of filing suit.8 If this expert-report requirement were not met, assuming the claim was a HCLC, the defendant could move to dismiss the suit with prejudice and seek sanctions.9 Then, in 2003, the Texas Legislature passed the Texas Medical Liability Act (TMLA), which was the crown jewel of its sweeping tort reform legislation.10 This new law shifted everything in favor of defendant health

4.

Act of June 16, 1977, 65th Leg., R.S., ch. 817, § 1.02(b)(1), 1977 Tex. Gen. Laws 2039, 2040, repealed by Act of June I1, 2003, 78th Leg., R.S., ch. 204, 2003 Tex. Gen. Laws 204;

Jonathan D. Nowlin, Comment, Scalpel, Please: Why the Definition of "Health Care Liability Claim" in Chapter 74 of the Civil Practice and Remedies Code Is Not as Clean-Cut as it Could Be, 43 TEX. TECH L. REV. 1247, 1250-51 (2011).

5.

Nowlin, supra note 4, at 1252. Mr. Nowlin's comment is a great source for a more indepth historical background and discussion of this corner of the law prior to 2013, which is when this Article more or less begins.

6.

Act of June 16, 1977 § 1.03(a)(4).

7.

Id. § 11.02(a)-(b).

8.

Act of May 18, 1995, 74th Leg., R.S., ch. 140, § 1(d), 1995 Tex. Gen. Laws 985, 986, repealed by Act of June 11, 2003, 78th Leg., R.S., ch. 204, 2003 Tex. Gen. Laws 204.

9.

Id § (1)(e).

10.

Nowlin, supra note 4, at 1248-49.

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care providers and, rhetorically, against frivolous claims." Three changes affected a plaintiff s ability to bring suit.

First, the TMLA cast a wider net by providing a broader definition of HCLC as follows: [A] cause of action against a health care provider or physician for treatment, lack of treatment, or other claimed departure from accepted standards of medical care, or health care, or safety or professional or administrative services directly related to health care, which proximately results in injury to or death of a claimant, whether the claimant's claim or cause of action sounds in tort or contract. 12 Apparent on the face of the statute, the legislature broadened this definition by adding two additional types of claims, "professional or administrative services," and replacing "patient" with "claimant."l 3 Second, the TMLA shortened the deadline to serve an expert report from 180 days to 120 days.1 4 Third, and of equal note, if a claim is a HCLC and a claimant does not file a timely and sufficient expert report, the TMLA requires the trial judge to both dismiss the suit with prejudice and award the defendant reasonable attorney's fees.' 5 Taken together, there are now more claims that qualify as HCLCs and the consequences of not serving an expert report have become more drastic. But despite the legislature's broader definition of HCLC in the TMLA, trial and appellate courts continue to be confronted with locating the line that separates HCLCs from claims involving only ordinary negligence.

11.

See, e.g., Richard W. Weekly, Tort Reform Is Good for Texas, Hous. CHRON., (last http://www.chron.com/opinion/outlook/article/Tort-reform-is-good-for-Texas-4708265.php updated Aug. 5, 2013, 6:31 PM).

TEX. CIv. PRAC. & REM. CODE ANN. § 74.001(a)(13) (West 2011 & Supp. 2014).

12.

13.

Compare Act of June 16, 1977, 65th Leg., R.S., ch. 817, § 1.03(a)(4), 1977 Tex. Gen. Laws 2039, 2041, repealed by Act of June 11, 2003, 78th Leg., R.S., ch. 204, 2003 Tex. Gen. Laws 204 (defining HCLC narrowly), with Civ. PRAc. & REM. CODE § 74.001 (a)(13) (expanding the definition of HCLC by requiring more than just patients to bring a claim under the statute and by adding new types of claims).

14.

Compare Act of May 18, 1995 § 1(d) (allowing claimant 180 days to serve the expert report), with TEX. CIV. PRAC. & REM. CODE ANN. § 74.351(a) (West 2011 & Supp. 2014) (reducing the deadline to 120 days to serve an expert report).

15.

TEX. CIv. PRAC. & REM. § 74.351(b).

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III. WHEN IS A PREMISES-LIABILITY CLAIM A HEALTH CARE LIABILITY CLAIM? GUIDANCE FROM THE TEXAS SUPREME COURT

A.

The Gravamen Analysis

The Texas Supreme Court, in a series of cases spanning from 2004 to 2012, suggested that it is the gravamen, or "underlying nature," of a claim that determines whether it is an HCLC or an ordinary negligence claim.16 This distinction is critical because only HCLCs are subject to the Chapter 74 expert-report requirement.17 How then does one determine whether the gravamen of a claim implicates health care and thus triggers the statute?

The Texas Supreme Court, piecemeal through various opinions, has provided three nondispositive factors to consider when evaluating a claim's gravamen.

The first factor a court should consider is whether expert testimony would be necessary to prove or refute the plaintiff s claim.' 8 In Diversicare v. Rubio, the Texas Supreme Court first identified this as an "important factor," stating, "The necessity of expert testimony from a medical or health care professional to prove a claim may also be an important factor in determining whether a cause of action is an inseparable part of the rendition of medical or health care services."' 9 Later, in Texas West Oaks v. Williams, the Texas Supreme Court dampened the effect of this factor, now treating it as noteworthy but inconclusive, holding that "[tihe necessity of expert testimony to support or refute the allegations at issue is a factor in assessing the nature of a claim against a health care provider or physician.... We have indicated that even when expert medical testimony is not necessary, 16.

Tex. W. Oaks Hosp., LP v. Williams, 371 S.W.3d 171, 178 (Tex. 2012) ("[Olur focus in determining whether claims come under the TMLA is not the status of the claimant, but the gravamen of the claim or claims against the health care provider." (citing Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 854 (Tex. 2005)); Marks v. St. Luke's Episcopal Hosp., 319 S.W.3d 658, 664 (Tex. 2010) ("The determination of whether a cause of action is a[n HCLC] therefore requires an examination of the claim's underlying nature. As we indicated in Diversicare, it is the gravamen of the claim, not the form of the pleadings, that controls this determination." (citation omitted) (citing Diversicare Gen. Partner, Inc., 185 S.W.3d at 854)); Diversicare

Gen. Partner, Inc., 185 S.W.3d at 854 ("We do not distinguish [the claimant's] health care claims from premises liability claims 'simply because the landowner is a health care provider' but because the gravamen of [the claimant's] complaint is the alleged failure of [the defendant] to implement adequate policies to care for, supervise, and protect its residents who require special, medical care."); Garland Cmty. Hosp. v. Rose, 156 S.W.3d 541, 543 (Tex. 2004) ("To determine whether a cause of action falls under the MLIIA's definition of a[n HCLC], we examine the claim's underlying nature." (citing Sorokolit v. Rhodes, 889 S.W.2d 239, 242 (Tex. 1994))).

17. See Civ. PRAC. & REM. CODE § 74.35 1(a) ("In a health care liability claim .... .").

18. Diversicare Gen. Partner, Inc., 185 S.W.3d at 848 (citing Garland Cmty. Hosp., 156 S.W.3d at 544).

19. Id. (citing GarlandCmty. Hosp., 156 S.W.3d at 544).

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the claim may still be an HCLC." 20 Regardless, the need for an expert beyond the perfunctory task of drafting an initial report is a valuable consider*21 ation.

The second factor a court should consider is "the nature of the [specif22 ic] acts or omissions" that caused the claimant's injuries. This instruction arises from Williams and is, in this author's opinion, the most effective means of ascertaining a claim's gravamen. The inquiry is twofold, observing: (1) the exact alleged negligent act (or omission), and (2) its relationship to health care.23 Noteworthy here is the Texas Supreme Court's tone, which implies-by explaining that the legislature intended the TMLA to be broad and that HCLCs cannot be transformed into ordinary negligence claims through artful pleading-that any close calls should be weighed in favor of categorizing a claim as an HCLC.24 Irrespective of tone, an examination of the specific acts or omissions complained of is an important part of the larger gravamen analysis not only for its insight but also because it demonstrates that the analysis is not driven merely by the location of the accident or the identity of the defendant. This is reinforced in the Texas Supreme Court's next TMLA opinion, Loaisiga v. Cerda, in which the court implied that a claim is not an HCLC if the only relationship between health care and the injury is "the health care setting." 25 The third factor a court should consider is whether the alleged negligent or wrongful conduct is "separable from" the provision of health care.26 This stems from Loaisiga, the facts of which required the court to look closely at whether the defendant doctor's conduct was intertwined with, or separable from, the provision of health care. 27 In Loaisiga, two female patients sued a doctor for assault, alleging that he groped their breasts during a sinus and flu examination. 28 The defendant doctor stated that the alleged asWilliams, 371 S.W.3d at 182 (citing Murphy v. Russell, 167 S.W.3d 835, 838 (Tex. 20.

2005) (per curiam)).

21.

Diversicare Gen. Partner, Inc., 185 S.W.3d at 848 (citing Garland Cmty. Hosp., 156 S.W.3d at 544).

22.

Williams, 371 S.W.3d at 176.

23.

At the time of this Article, the Texas Supreme Court has not articulated what exactly the relationship with health must be. This matter, however, has been a frequent topic among the

intermediate appellate courts. See discussion infra Part IV. 24.

See Williams, 371 S.W.3d at 176 (citing TEX. CIV. PRAC. & REM. CODE ANN. § 74.001(a)(13) (West 2012)); Omaha Healthcare Ctr., L.L.C. v. Johnson, 344 S.W.3d 392, 394 (Tex. 2011), overruled in part by Williams, 371 S.W.3d at 171; Diversicare Gen. Partner, Inc.,

185 S.W.3d at 851; see also Act of June 16, 1977, 65th Leg., R.S., ch. 817, § 1.02(6), 1977 Tex. Gen. Laws 2039, 2040 repealedby Act of June I1, 2003, 78th Leg., R.S., ch. 204, 2003 Tex. Gen. Laws 204.

25. See Loaisiga v. Cerda, 379 S.W.3d 248, 256 (Tex. 2012).

26. Id. at 257 (quoting TEX. CIV. PRAC. & REM. 74.001(a)(13)).

27. Id. at 258-59.

28. Id at 252-53.

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sault would have occurred at a time when he was also administering care by listening to one of the patient's heart through a stethoscope. 29 Therefore, the doctor argued that "[t]hese allegations establish that [the patient's] claims are inextricably interwoven with the rendition of medical care or health care." 30 The court found the doctor's argument persuasive and ultimately concluded that the patient was unable to show conclusively that "the only relationship between the alleged touching of [her] breasts and [the doctor's] rendition of medical services was the physical location of the examinations at the [doctor's] offices . . . and his status as a doctor or health care provid-

er." 3' The converse inference is that if the patient were to show that a health care setting was the only link between the actions and the provision of health care, then the claim would fall outside the ambit of the TMLA.32 Although the Texas Supreme Court has yet to systematize its gravamen analysis, these piecemeal observations from that court have established the following three factors: (1) the necessity of expert testimony to prove or refute the claimant's allegations; (2) the specific nature of the acts or omissions and their relationship to health care; and (3) the separability of the alleged negligent or wrongful conduct from the provision of health care. But the second, and arguably most important, factor is still incomplete: What degree of relationship to health care is required?

B.

Directly Related to Health Care?

Between 2003 and 2012, the Texas Supreme Court issued a line of opinions that resolved some issues in interpreting the TMLA's definition of HCLCs while convoluting other issues further. The single most important of these opinions was Texas West Oaks Hospital v. Williams, in which the Texas Supreme Court unambiguously resolved a major interpretive issue.

However, its resolution gave rise to a second issue that has caused a split among the intermediate appellate courts and birthed two irreconcilable and competing legal standards.

In Williams, a psychiatric technician at a private mental hospital was supervising a patient in an unmonitored hospital smoking area. 33 An altercation occurred between the technician and the patient, "resulting in [the patient's] death and injuries to" the technician.34 The technician sued the hos-

29.

Petitioners' Brief on the Merits at 14, Loaisiga v. Cerda, 379 S.W.3d 248 (Tex. 2012) (No. 10-0928).

30.

Id. 31.

Loaisiga, 379 S.W.3d at 259.

32.

See id.

33.

Tex. W. Oaks Hosp., LP v. Williams, 371 S.W.3d 171, 174-75 (Tex. 2012).

34.

Id. at 175.

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pital, asserting several theories of negligence. After more than 120 days had elapsed, the hospital filed a motion to dismiss under section 74.351(a) of the Texas Civil Practice and Remedies Code because the technician had not served it with an expert report.36 The technician argued that he was not required to serve an expert report because his claims were not HCLCs. 3 7 After the trial court had denied the hospital's motion to dismiss, the hospital filed an interlocutory appeal.38 The Fourteenth District Court of Appeals in Houston affirmed on the basis that the technician's "safety claims" were not "directly related to health care"; therefore, the claims were not HCLCs.39 The hospital then appealed to the Texas Supreme Court.

The Texas Supreme Court reversed and remanded with instructions that the trial court dismiss the technician's claims and evaluate the amount of the hospital's attorney's fees. 4 0 The court arrived at its holding primarily through an alternative means of construing the Chapter 74 definition of HCLC such that the phrase "directly related to health care" did not modify "safety" claims.4' Instead, according to the court, "directly related to health care" only modified the last two types of claims listed, "professional or administrative services."4 2 In other words, the Williams court held that safety claims need not be "directly related" to health care to be HCLCs and consequently trigger section 74.35 1(a)'s expert-report requirement.43 The court arrived at this conclusion in two ways. First, the court applied a variation of the doctrine of the "last antecedent," under which a "qualifying phrase should apply only to the portion of the sentence 'immediately preceding it.""" Under this rule of construction, because "professional or administrative services" immediately precedes "directly related to health care" but "safety" does not, the modifying phrase cannot reach "safe-

35.

Id. Specifically, the technician asserted that the hospital was negligent for (1) failing to train him properly; (2) failing to supervise its employees while working with unstable patients; (3) failing to provide an adequate protocol to decrease employee-patient altercations; (4) failing to provide employees with emergency notification devices; (5) failing to warn him of danger; and (6) failing to provide a safe workplace for the hospital's employees. Id. 36.

Id 37.

Id at 175-76.

38.

Id at 176. Section 51.014(a)(9) of the Texas Civil Practice & Remedies Code allows a defendant to file an interlocutory appeal following the denial of a motion to dismiss for failure to serve an expert report. TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(9) (West 2015).

39.

Williams, 371 S.W.3d at 176 (quoting TEX. CIV. PRAC. & REM. ANN. § 74.001(a)(13) (West 2012)).

40.

Id. at 193.

41.

Id at 186.

42.

Id at 185.

43.

Id. at 186.

44.

Id at 184-85 (quoting City of Dallas v. Stewart, 361 S.W.3d 562, 571 n.14 (Tex. 2012)).

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ty."a Second, the court leaned toward an expansive definition of HCLC be-

cause it surmised that a broader approach would be more consistent with the legislature's intent behind its 2003 revisions.46 By resolving the relationship between "safety" and "directly related to health care" within the definition of HCLC, Williams settled an interpretive dispute among the intermediate appellate courts. At that time, the courts were plainly divided. On the majority side, the First and Fourteenth Court of Appeals in Houston, as well as the appellate courts in Fort Worth, Austin, Dallas, Texarkana, and Corpus Christi, believed that "directly related to health care" should modify "safety."A7 On the minority side, the San Antonio Court of Appeals saw no need for "safety" to be "directly related to health care."A The Texas Supreme Court ultimately sided with the minority and all Texas appellate courts today profess to apply the Williams rule. But as we shall see, new complications have arisen because courts are now divided on how to fill a perceived gap in Williams's analysis.

IV. WHEN IS A PREMISES-LIABILITY CLAIM A HEALTH CARE LIABILITY CLAIM? MIXED MESSAGES FROM THE INTERMEDIATE APPELLATE COURTS

Intermediate appellate courts immediately felt the impact of Williams but were puzzled by its reach because the Texas Supreme Court appeared to have left a gap in its holding. 49 Courts now know that HCLCs based on

&

45.

See id. at 185.

46.

See id. at 184. Specifically, the court noted the legislature's change from "patient" to "claimant," as well as the approaches of other courts. Id. 47.

See Christus Health v. Beal, 240 S.W.3d 282, 289 (Tex. App.-Houston [1st Dist.]

2007, no pet.), overruled in part by Williams, 371 S.W.3d at 171; Appell v. Muguerza, 329 S.W.3d 104, 115 (Tex. App.-Houston [14th Dist.] 2010, pet. denied), overruled in part by Williams, 371 S.W.3d at 171; Harris Methodist Fort Worth v. Ollie, 270 S.W.3d 720, 723 (Tex. App.-Fort Worth 2008) (citing Yamada v. Friend, 335 S.W.3d 201, 204 (Tex. App.-Fort Worth 2008), aff'd in part and rev'd in part, 335 S.W.3d 192 (Tex. 2010)), rev'd per curiam on other grounds, 342 S.W.3d 525 (Tex. 2011), overruledin part by Williams, 371 S.W.3d at 171; St. David's Healthcare P'ship v. Esparza, 315 S.W.3d 601, 604 (Tex. App.-Austin 2010) (quoting Civ. PRAC. & REM. CODE § 74.001(a)(13)), rev'dper curiam on othergrounds, 348 S.W.3d 904 (Tex. 2011), overruled in part by Williams, 371 S.W.3d at 171; Dual D Healthcare Operations, Inc. v.

Kenyon, 291 S.W.3d 486, 488-89 n.2 (Tex. App.-Dallas 2009, no pet.) (quoting Civ. PRAC. REM. CODE § 74.001(a)(13)), overruled in part by Williams, 371 S.W.3d at 171; Omaha Healthcare Ctr., L.L.C. v. Johnson, 246 S.W.3d 278, 284 (Tex. App.-Texarkana 2008), rev'don other grounds, 344 S.W.3d 392 (Tex. 2011), overruled in part by Williams, 371 S.W.3d at 171; Valley Baptist Med. Ctr. v. Stradley, 210 S.W.3d 770, 775 (Tex. App.-Corpus Christi 2006, pet. denied), overruledin part by Williams, 371 S.W.3d at 171.

48.

See Emeritus Corp. v. Highsmith, 211 S.W.3d 321, 328 (Tex. App.-San Antonio 2006, pet. denied); Holguin v. Laredo Reg'1 Med. Ctr., L.P., 256 S.W.3d 349, 354-55 (Tex. App.-San Antonio 2008, no pet.) (citing Emeritus Corp., 211 S.W.3d at 328).

49.

See Good Shepherd Med. Ctr.-Linden, Inc. v. Twilley, 422 S.W.3d 782, 789 (Tex. App.-Texarkana 2013, pet. denied).

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safety need not be directly related to health care, but the Texas Supreme Court never expressly stated the converse-that safety claims entirely unrelated to health care could still be HCLCs.50 Further, what about claims that are only indirectly related to health care? The driving issue in this area of the law among intermediate appellate courts today is how to resolve the perceived gap left in the Williams rule. How a court fills this gap is very meaningful because it is invariably outcome determinative: under similar facts, courts that follow the Twilley standard tend to hold that claims are not HCLCs, whereas courts that follow the Ross standard tend to hold otherwise."

A.

The Twilley Standard

In Good Shepherd Medical Center-Linden v. Twilley, the Texarkana Court of Appeals became the first Texas court to propose a means of filling the analytical gap left by the Williams rule.5 2 This so-called Twilley standard requires that a safety-based HCLC be at least indirectly related to health care. 5 3 Under Twilley, if a claim is entirely unrelated to health care, it is not an HCLC and therefore not subject to the expert-report requirement.54 Twilley arose from two premises-related accidents suffered by a hospital employee.5 5 In one accident, the employee tripped over hardened concrete outside on hospital grounds.5 6 In another accident, the employee fell off a ladder while scaling the hospital's exterior walls.5 7 The employee sued his employer-the hospital-asserting various theories of negligence.5 ' After the case proceeded for over a year, the hospital filed a motion to dismiss for want of an expert report under Texas Civil Practice & Remedies Code section 74.351(a), which the district court denied.59 The hospital then filed Id. at 787 ("The high court did not, however, address the precise issue here-whether 50. safety claims fall within the purview of the TMLA when they are entirely unrelated to health care.").

51.

Compare Methodist Healthcare Sys. of San Antonio, Ltd. v. Dewey, 423 S.W.3d 516, 520 (Tex. App.-San Antonio 2014, pet. filed) (following the Twilley standard and holding that a hospital visitor's slip and fall was not an HCLC), with Mem'l Hermann Hosp. Sys. v. Galvan, 434 S.W.3d 176, 182, 187 (Tex. App.-Houston [14th dist.] 2014, pet. filed) (following the Ross standard and holding that a hospital visitor's slip and fall was an HCLC).

52.

Twilley, 422 S.W.3d at 784.

53.

Id at 789 (holding that a claim was beyond the scope of the TMLA because it was not even indirectly related to health care).

Id. 54.

55.

Id. at 783.

56.

Id. 57.

Id. Id. ("His lawsuit against [the hospital] asserts claims of negligence per se, negligence 58. (premises liability to an invitee), and gross negligence.").

59.

Id. at 783-84.

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an interlocutory appeal, relying primarily on Williams as its legal authori0 6

ty

On appeal, the Texarkana Court of Appeals took Williams at face value to stand for the proposition that the legislature did not intend to require that safety-based HCLCs be directly related to health care. 6 ' But according to Twilley, neither the Texas Legislature nor the Texas Supreme Court intended for claims entirely "untethered from health care" to fall within the HCLC definition. 62 The court drew this conclusion after reading Williams in tandem with Loaisiga v. Cerda, which the Texas Supreme Court had decided only two months after Williams.

Although Loaisiga is factually distinguishable from all other cases relevant to this Article,6 the opinion is very important because the court commented on the breadth of safety claims with respect to the TMLA umbrella. In dicta, the court stated: In some instances the only possible relationship between the conduct underlying a claim and the rendition of medical services or healthcare will be the healthcare setting (i.e., the physical location of the conduct in a health care facility), the defendant's status as a doctor or health care provider, or both.

The implication of this language, at least according to the Twilley court, is that if the only relationship between a safety claim and health care is the health care setting, then the claim is not an HCLC.66 But not every appellate 67 jurisdiction sees it similarly.

60.

Id at 784 (citing Tex. W. Oaks Hosp., LP v. Williams, 371 S.W.3d 171, 176 (Tex. 2012)).

61.

Id. at 785 (citing Williams, 371 S.W.3d at 186).

62.

Id. at 788-89.

63.

Id at 788 (quoting Loaisiga v. Cerda, 379 S.W.3d 248, 256 (Tex. 2012)).

64.

Loaisiga involved assault claims brought by patients against their treating physician who allegedly groped their breasts during an examination for sinus and flu symptoms. Loaisiga, 379 S.W.3d at 252.

65.

Id. at 256 (emphasis omitted).

66.

See Twilley, 422 SW.3d at 788-89.

67.

The two dissenting jurisdictions are the Tyler Court of Appeals and the Fourteenth Court of Appeals in Houston. E.g., E. Tex. Med. Ctr. Reg'l Health Care Sys. v. Reddic, 426 S.W.3d 343, 348 (Tex. App.-Tyler 2014, pet. filed) ("We agree with Ross that a fall, even by a visitor, in a hospital lobby meets the TMLA's safety prong so that [the plaintiffs] claims in this case are properly classified as HCLCs."); Mem'l Hermann Hosp. Sys. v. Galvan, 434 S.W.3d 176, 182 (Tex. App.-Houston [14th Dist.] 2014, pet. filed) ("[A] claim based upon an alleged departure from accepted standards of safety, broadly defined, may constitute a[n HCLC], even if no patient-physician relationship is involved and the allegedly negligent conduct does not relate to health care." (citing Ross v. St. Luke's Episcopal Hosp., No. 14-12-00885-CV, 2013 Tex. App. LEXIS 2796, at *1-2 (Tex. App.-Houston [14th Dist.] Mar. 19, 2013) (mem. op.)), rev'd, 2015 Tex. LEXIS 361 (May 1, 2015)).

494 B.

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The Ross Standard

In Ross v. St. Luke's EpiscopalHospital, the Fourteenth Court of Appeals in Houston considered a visitor's safety claim stemming from a slip and fall in a hospital lobby.68 The claimant had been visiting a patient and, while about to exit the building through the lobby entrance, slipped on a floor that a maintenance worker was buffing. 69 The visitor sued the hospital but did not provide an expert report.70 The district court dismissed the visitor's case, and the visitor appealed." On appeal, as in Twilley, the court looked to Williams for guidance.7 2 The court of appeals, however, saw a different picture, finding that "the Texas Supreme Court instructs that a connection between the act or omission and health care is unnecessary for purposes of determining whether [the visitor has] br[ought] an HCLC. An allegation pertaining to safety, standing alone and broadly defined, is sufficient."

In other words, according to Ross, no connection is needed-direct or indirect-between the claim and the provision of health care. 7 4 Even entirely unrelated claims, as long as they are related to safety and are against a hospital, are HCLCs." This constitutes the competing Ross standard under which the court of appeals affirmed the district court's decision to grant the hospital's motion to dismiss. 76 C.

The Impact of the Twilley and Ross Standards on the Intermediate Appellate Courts

The Texas Supreme Court has taken up Ross for review 77 but has yet to comment on either Twilley or Ross. Nearly every intermediate appellate court, however, has been confronted with a visitor or employee injury within a hospital and thus been forced to choose an applicable standard. At this

68.

69.

70.

71.

72.

2012)).

73.

74.

75.

76.

77.

5,2014).

Ross, 2013 Tex. App. LEXIS 2796, at *1.

Id at *1 & n.1.

Id. at *2.

Id. at *1.

Id. at *2-3 (citing Tex. W. Oaks Hosp., LP v. Williams, 371 S.W.3d 171, 188-89 (Tex. Id. (footnote omitted) (citing Williams, 371 S.W.3d at 184).

See id (citing Williams, 371 S.W.3d at 184, 186).

See id. (citing Williams, 371 S.W.3d at 184).

Id at *4.

Ross v. St. Luke's Episcopal Hosp., No. 13-0439, 2014 Tex. LEXIS 538 (argued Nov.

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time, the majority of appellate courts have embraced the Twilley standard, although the Ross adherents show no signs of relenting in their approach.7 8 The courts following Twilley include the First Court of Appeals in Houston, as well as the courts of appeals in Fort Worth, San Antonio, Dallas, Texarkana, El Paso, Beaumont, and Corpus Christi. 7 9 The courts following Ross include the Tyler Court of Appeals and Fourteenth Court of Appeals in Houston,80 although the Tyler Court of Appeals is somewhat inconsistent in its approach.8 1 The courts of appeals in Austin and Amarillo have, at this time, not been presented with a case compelling it to adopt either standard.

Within each camp, courts continue to contribute improvements in argumentation or nuance to the analysis of these cases, which has been interesting to follow. One example is the notion of a "garden-variety" claim, which was first coined in the TMLA context by the Corpus Christi Court of Appeals in Mejia to describe claims whose gravamen bear no relationship to health care. 8 2 A second example, from the Fourteenth Court of Appeals in Houston, emphasizes dicta in Williams to justify an inability to depart

.

78.

Mem'l Hermann Hosp. Sys. v. Galvan, 434 S.W.3d 176, 186 (Tex. App.-Houston [14th Dist.] 2014, pet. filed) ("This court already has interpreted the judicial dicta in Williams more broadly than the Twilley court and three other courts of appeals, and we are bound by these prior panel opinions." (citing Glassman v. Goodfriend, 347 S.W.3d 772, 781-82 & n.8 (Tex. App.-Houston [14th Dist.] 2011, pet. denied) (en bane)); CHCA Bayshore, L.P. v. Salazar, No. 14-12-00928-CV, 2013 Tex. App. LEXIS 5558, at *1-5 (Tex. App. -Houston [14th Dist. May 7, 2013, pet. denied) (mem. op.); Ross, 2013 Tex. App. LEXIS 2796, at *1-2).

79.

Williams v. Riverside Gen. Hosp., Inc., No. 01-13-00335-CV, 2014 Tex. App. LEXIS 9681, at *20-21 (Tex. App.-Houston [1st Dist.] Aug. 28, 2014, no pet.) (mem. op.); Weatherford Tex. Hosp. Co. v. Smart, 423 S.W.3d 462, 467 (Tex. App.-Fort Worth 2014, pet. filed); Methodist Healthcare Sys. of San Antonio, Ltd. v. Dewey, 423 S.W.3d 516, 520 (Tex. App.-San Antonio 2014, pet. filed); Baylor Univ. Med. Ctr. v. Lawton, 442 S.W.3d 483, 485-86 (Tex. App.Dallas 2013, no pet.); Watson v. Good Shepherd Med. Ctr., No. 06-14-00025-CV, 2015 Tex. App. LEXIS 307, at *13-14 (Tex. App.-Texarkana Jan. 15, 2015, pet. filed); E. El Paso Physicians Med. Ctr., L.L.C. v. Vargas, No. 08-13-00358-CV, 2014 Tex. App. LEXIS 12201, at *8 (Tex. App.-El Paso Nov. 7, 2014, pet. filed); see Christus St. Elizabeth Hosp. v. Guillory, 415 S.W.3d 900, 903 (Tex. App.-Beaumont 2013, pet. filed); Doctors Hosp. at Renaissance, Ltd. v. Mejia, No. 13-12-00602-CV, 2013 Tex. App. LEXIS 9633, at *11-12 (Tex. App.-Corpus Christi Aug. 1, 2013, pet. filed) (mem. op.).

80.

E. Tex. Med. Ctr. Reg'l Health Care Sys. v. Reddic, 426 S.W.3d 343, 348 (Tex. App.Tyler 2014, pet. filed); Mem'1 Hermann Hosp. Sys., 434 S.W.3d at 186.

81.

In Reddic, the Tyler Court of Appeals adopted Ross. E. Tex. Med Ctr. Reg 7 Health Care Sys., 426 S.W.3d at 348. ("We agree with Ross that a fall, even by a visitor, in a hospital lobby meets the TMLA's safety prong . . . ."). However, the court sometimes speaks using the same language used in Twilley. Id. ("[T]he care of the floor around an area frequented by numerous patients throughout the day has an indirect relationship to the provision of health care . . (citing Tex. W. Oaks Hosp., LP v. Williams, 371 S.W.3d 171, 186 (Tex. 2012))).

82.

Doctors Hosp. at Renaissance, Ltd., 2013 Tex. App. LEXIS 9633, at *17. As many as nine other courts have referred to ordinary negligence claims as "garden-variety." (citing Ross, 2013 Tex. App. LEXIS 2796, at *3-4).

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from the Ross standard." Such examples of innovation by the intermediate courts continue to refresh this developing area of law.

WHEN THE SETTrING REALLY MATTERS: THE HOSPITAL/NURSING HOME DISTINCTION

V.

Despite the wide adoption of the Twilley standard, the Texarkana Court of Appeals, which decided Twilley, issued a subsequent opinionMorrison v. Whispering Pines Lodge-that puzzled many observers because it appeared to undermine Twilley, although it stopped short of overturning it. 84 Included among those observers was at least one member of the Texas Court of Appeals itself who, in a dissenting opinion, wrote, "I am not sure what has changed in a few months."85 In Morrison, a nursing home employee suffered an injury when she slipped and fell on a wet floor in a shower area while retrieving a towel for a resident.86 She sued the nursing home for premises liability and the nursing home responded by filing a section 74.351(a) motion to dismiss. 87 The district court granted the motion and the employee appealed.

Despite the seemingly nonexistent relationship between slipping on a wet floor and health care, the Texarkana Court of Appeals affirmed. 89 In its opinion, the court explored the regulations and laws that govern sanitation in nursing homes, specifically provisions within the Texas Health & Safety Code and the Texas Administrative Code. 90 The Health & Safety Code, for example, requires convalescent and nursing homes to provide "quality care," which includes addressing the "safety of the environment." 1 Similarly, the Administrative Code states: "The [nursing] facility must provide a safe, functional, sanitary, and comfortable environment for residents, staff, and the public." 92 Based on its analysis of these regulations, the Texarkana

83.

Mem'I Hermann Hosp. Sys., 434 S.W.3d at 186 ("[T]his court must apply the judicial dicta from Williams." (citing Williams, 371 S.W.3d at 189-91)).

Morrison v. Whispering Pines Lodge 1, L.L.P., 428 S.W.3d 327, 336 (Tex. App.84.

Texarkana 2014, pet. filed) (Carter, J., dissenting) (discussing that the majority's holding seems to depart from the Twilley standard).

85.

86.

87.

88.

Id. Id at 329 (majority opinion).

Id. Id.

89.

90.

Id. at 335.

Id. at 333-34 (citing TEX. HEALTH & SAFETY CODE ANN. § 242.001(a) (West 2010);

40 TEX. ADMIN. CODE § 19.1701(8) (2014) (Tex. Dep't of Aging & Disability Servs., Physical Environment)).

91.

HEALTH & SAFETY § 242.001(a).

92.

ADMIN. CODE § 19.1701(8).

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Court of Appeals concluded that the employee's claim bore at least an indirect relationship to health care. 9 3 The court's reasoning in Morrison was heavily influenced by an earlier Texas Supreme Court case styled Omaha Healthcare Center v. Johnson, in which a nursing home resident died after being bitten by a brown recluse spider.9 4 In Omaha, like Morrison, the court examined Texas statutory provisions governing nursing homes, ultimately concluding that the claim by the estate of the resident was an HCLC because "nursing homes are required to provide more than physical care and treatment. They are required to take actions to provide 'quality care' which includes things such as safety of the environment." 5 Although Morrison's analysis mirrored that of Omaha, the Texarkana Court of Appeals still only implicitly recognized the distinction between nursing homes and hospitals .96 The implication, however, soon became explicit.

Watson v. Good ShepherdMedical Center, the next TMLA case before

the Texarkana Court of Appeals, confirmed the court's regulatory distinction between hospitals and nursing homes.97 In Watson, a hospital visitor slipped on a wet floor in a hospital triage room while accompanying her sick grandson. 98 After the district court had dismissed her case, the visitor appealed on the basis that her claim was not related to health care. 99 Among other things, the hospital argued that the court should affirm because Morrison controlled.' 0 0 The court disagreed and reversed; in doing so, it expressly stated the previously implied distinction between the regulation of nursing homes and the regulation of hospitals.' 0' The court concluded: Morrison was a nursing home case focusing on Whispering Pine's compliance with regulations governing nursing homes, as these regulations brought Morrison's claims within the ambit of the 93.

Morrison, 428 S.W.3d at 335.

94.

Id. at 333-34; Omaha Healthcare Ctr., L.L.C. v. Johnson, 344 S.W.3d 392, 393 (Tex. 2011), overruled in part by Tex. W. Oaks Hosp., LP v. Williams, 371 S.W.3d 171 (Tex. 2012).

This case is colloquially referred to as "the spider bite case."

95.

Omaha Healthcare Ctr., L.L.C, 344 S.W.3d at 395 (quoting HEALTH & SAFETY CODE § 242.001(a)(1), (8)).

96.

Id. 97.

Watson v. Good Shepherd Med. Ctr., No. 06-14-00025-CV, 2015 Tex. App. LEXIS 307, at *6-8 (Tex. App.-Texarkana Jan. 15, 2015, pet. filed).

98.

Id. at *1.

99.

Id. at *2.

100.

Appellee's Brief at 20, Watson v. Good Shepherd Med. Ctr., No. 06-14-00025-CV, 2015 Tex. App. LEXIS 307 (Tex. App.-Texarkana Jan. 15, 2015, pet. filed) ("Because the hospital has substantially similar obligations to a nursing home to provide for a safe environment and a dry floor, Morrison proves that Watson's claims fall within Chapter 74. As in Morrison, the trial court properly dismissed this case when Watson failed to serve an expert report. This Court should affirm.").

101.

Watson, Tex. App. LEXIS 307, at *6-8.

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TMLA ... . Due to the unique status of nursing homes as residential facilities, we limit the holding of Morrisonto the facts presented in that case and decline to apply it to the current case.'o Such strong language reflects that the pendulum has swung back within the vanguard of the Twilley court. While observers may have been concerned about the continued viability of Twilley in light of Morrison, it is now clear that Morrisontakes a distant back seat. 103 VI. WEAKNESSES AND ABSURDITIES WITHIN THE CURRENT APPROACH(ES) The Ross Standard'sInability to Answer for Absurd Results

A.

The genius of the Ross standard lies in its simplicity, or so it seems at first blush. The Ross standard's proponents may speak of precedential judicial dicta' 0 4 or the doctrine of stare decisis,'os but the real draw is that Ross provides a bright line, which judges will invariably entertain as an appealing possibility.1 0 6 Ross's fruit may be tantalizing but, alas, it is rotten. The Ross standard is unsustainable because it elicits a rigid, cookie-cutter approach that will inevitably lead to patently absurd results. Several majority and dissenting opinions that oppose the application of the Ross standard pose the same question, which Ross cannot answer: Are we truly willing to characterize a car accident in a hospital parking lot as an HCLC? 07 Until very recently, the car accident hypothetical may have been criticized as an unfair exaggeration of what the Ross standard implies. Specifically, on February 10, 2015, the Fourteenth Court of Appeals in Houston

Id. at *7-8.

See id.

Mem'l Hermann Hosp. Sys. v. Galvan, 434 S.W.3d 176, 186 (Tex. App.-Houston 104.

[14th Dist.] 2014, pet. filed) ("[T]his court must apply the judicial dicta from Williams.").

Id. at 187 (Boyce, J., concurring) ("I agree with the majority's disposition because we 105. already have crossed this bridge; the result here is dictated by Ross . . . .").

See Watson, 2015 Tex. App. LEXIS 307, at *20 (Moseley, J., concurring) ("For the 106. sake of the general public, I would call upon those who have more power than the intermediate appellate courts possess to somehow resolve this question in some way that is easily discernible.

There is a need for a 'bright red line' for the public and the profession to employ.").

See, e.g., Doctors Hosp. at Renaissance, Ltd. v. Mejia, No. 13-12-00602-CV, 2013 Tex. 107.

App. LEXIS 9633, at *8 (Tex. App-Corpus Christi Aug. 1, 2013, pet. filed) (mem. op.)

Furthermore, we ask the same hypothetical question posed by the Twilley [clourt: [D]oes a suit against a health care provider for negligence in causing a car accident in a hospital parking lot involve a safety claim and thus requires a report from a healthcare expert? We believe it would not, because a safety claim must 'involve a more logical coherent nexus to health care. (quoting Good Shepherd Med. Ctr.-Linden, Inc. v. Twilley, 422 S.W.3d 782, 788 (Tex. App.Texarkana 2013, pet. denied))).

102.

103.

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held that a retirement community visitor's negligent-hiring claim against a valet, whose actions caused her arm to be crushed by a car, was an HCLC.'s The hypothetical that was meant to illustrate the potential absurdity resulting from the Ross standard is now a reality, but the Ross adherents have no answer to this criticism-they must simply say, "Life's not fair, neither is the law."'1 09 But fairness should be an aspect of justice, even in situations where other aspects take precedence. If a legal standard cannot account for situations that are patently absurd-a car accident in a hospital parking lot-where everyone recognizes that there is no relationship to the provision of health care,"o then the legal standard has little or no value in our system. It is a court's responsibility to interpret a statute in such a way as to avoid the absurdity."

B.

The Twilley Standard'sAmorphous Distinction

If the flaw of Ross is its hyperrigidity, the Twilley standard's flaw is its insistence on differentiating between claims that have no relationship to health care and claims that bear an indirect relationship to health care."12 How do courts locate the line between unrelated and indirectly related? The answer will lie in the eye of the beholder, which becomes apparent when comparing the Tyler Court of Appeals's opinion in East Texas Medical Center Regional Health Care System v. Reddic-a curious case that pur108.

Brazos Presbyterian Homes, Inc. v. Lander, No. 14-14-00478-CV, 2015 Tex. App. LEXIS 1239, at *1-2, *5 (Tex. App.-Houston [14th Dist.] Feb. 10, 2015) (maj. mem. op.) ("These allegations concern [the retirement community's] failure to make prospective residents such as [the visitor] 'untouched by danger; not exposed to danger; secure from danger, harm or loss.' Accordingly, [the visitor's] claim is based on 'a departure from accepted standards of ... safety,' and is a[n HCLC]." (quoting Tex. W. Oaks Hosp., LP v. Williams, 371 S.W.3d 171, 18384 (Tex. 2012))), vacated per curiam, 2015 Tex. App. LEXIS 3978 (Tex. App.-Houston [14th Dist.] Apr. 21, 2015, no pet.).

109.

See Ross v. St. Luke's Episcopal Hosp., No. 14-12-00885-CV, 2013 Tex. App. LEXIS 2796, at *3-4 (Tex. App.-Houston [14th Dist.] Mar. 19, 2013) (mem. op.) ("Ross likely never imagined that, under the Texas Supreme Court's construction, the plain language of the [TMLA] would swallow her garden-variety slip and fall case. But it has."), rev'd, 2015 Tex. LEXIS 361 (May 1, 2015); see also E. Tex. Med. Ctr. Reg'l Health Care Sys. v. Reddic, 426 S.W.3d 343, 348 (Tex. App.-Tyler 2014, pet. filed) ("We agree with Ross that a fall, even by a visitor, in a hospital lobby meets the TMLA's safety prong so that Reddic's claims in this case are properly classified as HCLCs.").

110.

Brazos PresbyterianHomes, Inc., 2015 Tex. App. LEXIS 1239, at *4 ("'[S]afety' need not be directly or indirectly related to health care." (citing Mem'l Hermann Hosp. Sys. v. Galvan, 434 S.W.3d 176, 184 (Tex. App.-Houston [14th Dist.] 2014, pet. filed))).

Ill. Id. ("General terms should be so limited in their application as not to lead to injustice, oppression, or an absurd consequence. It will always, therefore, be presumed that the legislature intended exceptions to its language, which would avoid results of this character. The reason of the law in such cases should prevail over its letter.").

112.

Good Shepherd Med. Ctr.-Linden, Inc. v. Twilley, 422 S.W.3d 782, 789 (Tex. App.Texarkana 2013, pet. denied).

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ports to adopt both Ross and Twilley-with a clear Twilley case such as Williams v. Riverside General Hospital before the First Court of Appeals in Houston. 13 In Reddic, a visitor slipped on a wet mat between the entrance and front desk of the hospital lobby. 114 In Riverside, a nursing assistant slipped on a wet substance emitted from lab equipment deep inside the hospital." 5 While the Tyler Court of Appeals viewed the injury in the lobby as indirectly related to health care,"l 6 the First Court of Appeals viewed the injury from lab equipment as unrelated to health care." 7 If it were a close call, one would expect the outcomes to be reversed. But it is neither a close call nor a clear choice; instead, the Twilley standard permits courts to reach the conclusion they wish because its distinction (no relationship vs. indirect relationship) is cloaked in subjectivity. This is a problem yet to be solved. But what is the alternative?

In Watson v. Good Shepherd Medical Center, before the Texarkana Court of Appeals, the hospital argued for a third option, yet to be adopted by any court, that was based on location with some allowance for a caseby-case approach.'"8 Watson concerned a visitor's slip and fall on a freshly mopped floor in a hospital triage room, where it was undisputed that no medical care was being administered at the time." 9 But the hospital argued that the claim should be an HCLC because the location-a triage roomwas the place a patient ordinarily receives treatment, and the injured visitor would not have been in that particular room but for the accompanying patient's health care need.1 20 This location-oriented approach is tempting because it provides the closest thing to a bright-line rule while maintaining some degree of flexibility. The hospital's proposal in Watson, however, Williams v. Riverside Gen. Hosp., Inc., No. 0l-13-00335-CV, 2014 Tex. App. LEXIS 113.

9681, at *20-22 (Tex. App.-Houston [1st Dist.] Aug. 28, 2014, no pet.) (mem. op.); see also Reddic, 426 S.W.3d at 347-48.

Reddic, 426 S.W.3d at 345.

114.

115.

See Williams, 2014 Tex. App. LEXIS 9681, at *2.

Reddic, 426 S.W.3d at 348 ("[Alt the very least, Reddic's claims have a strong indirect 116. relationship to the safe provision of health care for patients.").

117.

Williams, 2014 Tex. App. LEXIS 9681, at *21-22.

118.

Appellee's Brief, supra note 100, at 14.

Watson v. Good Shepherd Med. Ctr., No. 06-14-00025-CV, 2015 Tex. App. LEXIS 119.

307, at *1, *9 (Tex. App.-Texarkana Jan. 15, 2015, pet. filed).

120.

See id. at *8-9 ("[The hospital] does not contend that any particular hospital regulations provide a sufficient nexus to health care to render [the visitor's] claim one for health care liability.

Instead, [the hospital] contends that the location of the fall is the key factor in determining whether [the visitor's] claim is for health care liability."); see also Appellee's Brief, supra note 100, at 14.

[Alt least some of the cases can be reconciled, and a reasonable approach exists as a guidepost for these cases. That approach looks to whether the injury occurred in a location where patient care occurs - if so, the case is a[n HCLC]; if not, it is not.

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does not withstand scrutiny because it runs the risk of confusing causation with correlation. In other words, sometimes a room is just a room, regardless of its typical use. Courts need to look at what happened, not where. In doing so, it is certainly possible that an HCLC could arise in a hospital lobby (although unlikely), or that an ordinary negligence claim could arise in an operating room (although highly unlikely). 12 ' A location-centric approach cannot account for this. As such, there is no question that the gravamen analysis, coupled with the Twilley standard, is the best approach courts have used to date.

VII. A.

TOWARD A UNIFIED APPROACH: RECOMMENDATIONS

A Second Look at the Definition ofHealth Care Liability Claim

The Texas Supreme Court is currently considering Ross on appeal from the Fourteenth Court of Appeals, in which the petitioner is asking the court to re-evaluate its construction of Chapter 74's definition of HCLC, particularly the relationship between "safety" and "directly related to health care." 1 2 2 This is a worthwhile endeavor because the court's application of the doctrine of the last antecedent is contradicted by the punctuation the legislature chose.12 3 Although there are commas after "medical care" and "health care," the Texas Legislature did not include any commas in the phrase "or safety or professional or administrative services directed related to health care." 24 This decision by the legislature syntactically grouped "safety" with "professional or administrative services," suggesting that "directly related to health care" should modify all three.1 25 The counterargument-the legislature simply does not use the socalled Oxford comma-does not withstand scrutiny because the legislature

121.

See Appellant's Reply Brief at 1, Watson v. Good Shepherd Med. Ctr., No. 06-1400025-CV, 2015 Tex. App. LEXIS 307 (Tex. App.-Texarkana Jan. 15, 2015, pet. filed).

By analogy, it is possible that one could drown in two inches of water, but more likely that one would drown in the ocean. But it is still drowning that is occurring-not because the person is in two inches of water or millions of gallons of water but because the person has inhaled water and is unable to breathe.

Id. 122.

Petitioner's Brief on the Merits at 36, Ross v. St. Luke's Episcopal Hosp., 2015 Tex. LEXIS 361 (May 1, 2015) (No. 13-0439) ("The Williams majority applied a rule of grammar that disregarded the context of the Act that resulted in an improper construction of the Act.").

123.

See TEX. CIV. PRAC. & REM. CODE ANN. § 74.001(13) (West 2011 & Supp. 2014).

124.

Id. 125.

See id

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made use of the Oxford comma in many neighboring provisions.126 A reasonable inference from this observation is that the legislature, which often used the Oxford comma, chose not to in section 74.001(13) for a specific reason, i.e., "directly related to health care" modifies "safety or professional or administrative services" in its entirety.127 As such, the Texas Supreme Court should reverse course and hold that under the TMLA, safety claims must be directly related to health care.

B.

Jettison the Hospital/NursingHome Distinction

The hospital/nursing home distinction was borne out of an attempt by the intermediate appellate courts, particularly the Texarkana Court of Appeals, to make sense of Omaha, in which a spider bite implicated health care liability.128 The Texarkana Court of Appeals adopted Omaha's tacit

distinction between hospitals and nursing homes in Morrison v. Whispering Pines,12 9 and then formally recognized the distinction in Watson v. Good Shepherd.130 The distinction is premised on the observation that (1) nursing homes serve a different function than hospitals,13 ' and (2) nursing homes are subject to heightened safety-related regulations. 132 While these observa-

See, e.g., id. § 74.001(19) ("'Medical care' means any act defined as practicing medi126. cine under Section 151.002, Occupations Code, performed or furnished, or which should have been performed, by one licensed to practice medicine in this state for, to, or on behalf of a patient during the patient's care, treatment, or confinement.").

127.

See id § 74.001(13).

See Morrison v. Whispering Pines Lodge I, L.L.P., 428 S.W.3d 327, 332-34 (Tex. 128.

App.-Texarkana 2014, pet. filed); Omaha Healthcare Ctr., L.L.C. v. Johnson, 344 S.W.3d 392, 396 (Tex. 2011) overruledin part by Tex. W. Oaks Hosp., LP v. Williams, 371 S.W.3d 171 (Tex. 2012).

.

It is not absurd or nonsensical for the Legislature to have required that a party filing suit against a health care provider must timely serve a statutory expert report.

In a suit against a nursing home-a health care provider-based on allegations that the facility failed to take proper actions it should have 'performed or furnished, . . for, to, or on behalf of a patient during the patient's . . . confinement,' a claimant must timely serve a statutory expert report. Johnson did not do so and her claim must be dismissed.

Id. 129. See Morrison, 428 S.W.3d at 334 ("As in Johnson, Whispering Pines was required by Texas law to provide a safe and clean environment for its residents.").

130. See Watson v. Good Shepherd Med. Ctr., No. 06-14-00025-CV, 2015 Tex. App. LEXIS 307, at *8 (Tex. App.-Texarkana Jan. 15, 2015, pet. filed) ("Due to the unique status of nursing homes as residential facilities, we limit the holding of Morrison to the facts presented in that case and decline to apply it to the current case.").

131. Id. at *7 ("[T]he nursing home setting is fundamentally distinct from that of a hospital.").

132. See id. at *8 ("[T]he Legislature ... has taken steps to ensure that the living environment for such residents meets certain required, minimum standards in order to protect the health, safety, welfare, dignity, and rights of each resident.").

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tions are true, the distinction is academic. When applying the gravamen analysis coupled with the Twilley standard, what do regulations have to do with what actually happened and whether these acts or omissions bear a relationship to health care? Additionally, what does the fact that nursing homes tend to provide longer-term care than hospitals have to do with a claim's relationship to health care? The answer to both questions is nothing.

As it stands, there is a default assumption that nearly anything within a nursing home is related to health care because it is state regulated, even if these regulations could not have been for the purpose of separating HCLCs from ordinary negligence claims. Therefore, because the distinction is not meaningful, courts should treat all safety claims without regard to location, instead focusing on the claims' underlying nature.

C.

Double Down on the Gravamen Analysis

The Texas Supreme Court's gravamen analysis, which looks to the acts or omissions underlying a claim with an eye toward separability and the necessity of expert testimony, is simply the best approach developed at this point. It lacks a bright line, but with certain questions it is important to avoid the rigidity of a bright line. In fact, simply identifying the defendant or focusing on the geographical location of the injury provides more problems than solutions.1 33 But the Texas Supreme Court needs to systematize the gravamen analysis into an explicit series of factors rather than relying on analysts and commentators to group them together from piecemeal opinions. That way, courts could approach the question of whether a claim is an HCLC more objectively while still allowing for a case-by-case sensitivity.

The methodology could be as simple. For example, to determine whether a claim is an HCLC, courts should consider three factors. First, would proving or refuting the claim require medical expertise? Second, are the acts of the defendant interwoven with the provision of health care? Finally, are the specific wrongful acts or omissions directly related to health care? If these factors tend toward an answer of "yes," then the claim is an HCLC. VIII.

CONCLUSION

Clear guidance has consistently been lacking by the Texas Supreme Court on the issues discussed in this Article. The court has provided factors piecemeal, inconsistently applied those factors, and failed to address fully the pertinent issues. In many ways, this Article is about what happens when leadership fails, and the intermediate courts must take up the banner. Per-

133.

See discussion supra Part VI.

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haps it is difficult for the Texas Supreme Court to toe the line between reason and the strong desire to protect doctors and hospitals from litigation.

But in the end, reason must prevail.

IX. POSTSCRIPT

This Article was written before the Texas Supreme Court decided Ross v. St. Luke's EpiscopalHospital, and was largely in anticipation of that decision. Therefore, it is appropriate to make some brief concluding remarks about the Ross opinion, which the court delivered on May 1, 2015.134 The Ross Holding and Its "Considerations"

A.

As this Article has discussed, the Texas Supreme Court was at a crossroads with the intermediate appellate court's decision in Ross: it could either (1) follow Twilley's delicate balancing of Williams and common sense, or (2) embrace the appellate court's bright-line approach that carried the baggage of absurd results. 135 Meanwhile, the court also had another opportunity, if it so chose, to revisit its construction of section 74.001(a)(13), the statutory definition of HCLC. 136 In the end, the court followed the path in Twilley, although not by name and in its own way. At the same time, the court indirectly reined in Williams through its construction of a different aspect of section 74.001(a)(13). 137 The primary holding of Ross is as follows: "[F]or a safety standardsbased claim to be an HCLC there must be a substantive nexus between the 1 38 To safety standards allegedly violated and the provision of health care." ascertain the existence of a substantive nexus, the court provided a set of seven "non-exclusive considerations": 1. Did the alleged negligence of the defendant occur in the course of the defendant's performing tasks with the purpose of protecting patients from harm; 2. Did the injuries occur in a place where patients might be during the time they were receiving care, so that the obligation of

134.

Ross v. St. Luke's Episcopal Hosp., No. 13-0439, 2015 Tex. LEXIS 361 (May 1, 2015).

See generally Brazos Presbyterian Homes, Inc. v. Lander, No. 14-14-00478-CV, 2015 135.

Tex. App. LEXIS 1239 (Tex. App.-Houston [14th Dist.] Feb. 10, 2015) (maj. mem. op., no pet.) (holding that a retirement community visitor's negligent-hiring claim against a valet was an HCLC), vacated per curiam, 2015 Tex. App. LEXIS 3978 (Tex. App.-Houston [14th Dist.] Apr. 21, 2015, no pet.).

TEX. CIV. PRAC. & REM. CODE § 74.001(a)(13) (West 2011 & Supp. 2014).

136.

See Ross, 2015 Tex. LEXIS 361, at *15-17.

137.

138.

Id. at * 17-18.

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the provider to protect persons who require special, medical care was implicated; 3. At the time of the injury was the claimant in the process of seeking or receiving health care; 4. At the time of the injury was the claimant providing or assisting in providing health care; 5. Is the alleged negligence based on safety standards arising from professional duties owed by the health care provider; 6. If an instrumentality was involved in the defendant's alleged negligence, was it a type used in providing health care; or 7. Did the alleged negligence occur in the course of the defendant's taking action or failing to take action necessary to comply with safety-related requirements set for health care providers by governmental or accrediting agencies?l 39 While these considerations were not part of Twilley, they lay silently behind Twilley's rationale, bearing on the relationship between a claimant's allegations and the provision of health care. But thanks to Ross, they are now articulated expressly and with more precision.

The considerations represent a positive step in this area of the law, for they give the intermediate appellate courts something more tangible to grasp rather than the nebulous category of "indirectly related to health care" from Twilley and its progeny. 140 At the same time, factor-based tests such as this can be unruly to apply; however, there is simply no logical place for a bright-line rule for nonpatient premises claims in a hospital.141 Therefore, Ross's holding and considerations represent a positive step forward from Twilley.

B.

Statutory Construction:A Patchfor Williams

Although Ross did not directly critique Williams, it did dampen the impact of Williams substantially by revisiting and reinterpreting section 74.001(a)(13)'s definition of HCLC.1 4 2 Instead of reversing Williams's interpretation of the relationship between "safety" and "directly related to health care," as some advocates had been demanding, 14 the court focused 139.

Id. at *19-20.

140.

See Good Shepherd Med. Ctr.-Linden, Inc. v. Twilley, 422 S.W.3d 782, 785 (Tex. App.-Texarkana 2013, pet. denied).

141.

See Watson v. Good Shepherd Med. Ctr., No. 06-14-00025-CV, 2015 Tex. App. LEXIS 307, *17-20 (Tex. App.-Texarkana 2015, pet. filed) (Moseley, J., concurring) (discussing the difficulties in drawing a bright line while at the same time avoiding absurd results).

142.

Ross, 2015 Tex. LEXIS 361, at *15-17.

143.

See Petitioner's Brief on the Merits, supra note 122, at 36-41; Ross, 2015 Tex. LEXIS 361, at *15-17.

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on a preceding section of the HCLC definition, particularly the phrase "or other claimed departure from . .. safety."'" After concluding that "medical care, or health care, or safety" forms a conceptual group, each component of which is modified by "other," 45 the court applied the ejusdem generis canon of construction to hold that safety claims must have a "substantive relationship with . .. medical or health care."l46 This interpretive decision effectively patched the problem the court created in Williams when it held that safety claims need not be "directly related" to health care. While Williams is still good law, safety claims are now tethered to the provision of health care by virtue of their textual relationship to medical care and health care.' 47 Depending on how much emphasis future opinions place on this approach, it could effectively nullify one of the largest takeaways from Williams. We shall see.

C.

The Elevation of Loaisiga

One of the most remarkable characteristics of the Ross majority opinion is its reliance on Loaisiga v. Cerda, which the court decided in 2012.148 The reliance is noteworthy because Loaisiga is factually distinguishable from Ross, yet provided some of the best language (in dicta) for plaintiffs injured in a health care setting. In his majority opinion, Justice Johnson brushed aside the clear factual differences between Ross and Loaisiga and mined Loaisiga for its principles, which he used as the foundation of Ross's reasoning.1 49 In total, the majority opinion cites Loaisiga eight times, including a lengthy block quote.1 50 In fact, it was a citation to Loaisiga that was the death knell to the intermediate appellate court's holding in Ross: "A safety standards-based claim does not come within the TMLA's provisions just because the underlying occurrence took place in a health care facility, the claim is against a health care provider, or both."'"' This reliance, particularly the sentence quoted above, took the plaintiff-friendly language in 144.

Ross, 2015 Tex. LEXIS 361, at *15-17.

Id. at *16 ("And here, the catchall 'other' itself refers to standards of 'medical care' or 145. 'health care' or 'safety."').

146. Id. ("[W]e conclude that the safety standards referred to in the definition are those that have a substantive relationship with the providing of medical or health care.").

147. Id. 148.

See generally Loaisiga v. Cerda, 379 S.W.3d 248 (Tex. 2012) (implying that a claim is not an HCLC if the only relationship between health care and the injury is "the health care setting").

149.

Ross, 2015 Tex. LEXIS 361, at *14 ("As to the hospital's first contention, even though the claims in Loaisiga were by a patient and the nature of the claims differ from Ross's safety standards-based claim, the principle we explicated there applies here.").

150.

Id. at *13.

Id. at *14 (citing Loaisiga, 379 S.W.3d at 257).

151.

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Loaisiga further than it had been before, elevating it from dicta to binding precedent. As such, Loaisigacan no longer be brushed aside.

D.

The Ross Concurrence

Justice Lehrmann, joined by Justice Devine, wrote a concurring opinion lamenting that HCLCs may still continue to extend to nonpatients, Ross notwithstanding, even when the claims "have nothing to do with medical liability."l52 The concurrence is, in substance, rearguing Justice Lehrmann's dissent in Williams.1 53 Justice Lehrmann believes, even in light of the court's correct holding in Ross, that the majority's "considerations" do not sufficiently limit the TMLA to its intended purpose of addressing frivolous medical malpractice lawsuits.1 54 Justice Lehrmann would modify the Ross approach by placing added emphasis on the third and fifth considerations, which examine whether the claimant was in the process of seeking or receiving health care at the time of the injury, and whether the provider's negligence arose from professional duties owed by the health care provider.,55 As much as Justice Lehrmann's recommendations align with the views of this author, they are better directed at the Texas Legislature rather than the courts. The legislature, not the court, replaced "patient" with "claimant" in the statute, thus broadening the statute's scope. The legislature can fix the statute by narrowing its language, although it does not appear willing to move in that direction at this time. But as this area of the law continues to develop, we can hope that reason will continue to prevail, as in Ross, and those injured on hospital property will always have an avenue for redress.

152.

Ross, 2015 Tex. LEXIS 361, at *22 (Lehrmann, J., concurring).

153.

Tex. West Oaks Hosp., LP v. Williams, 371 S.W.3d 171, 193-200 (Tex. 2012).

154.

See Ross, 2015 Tex. LEXIS 361, at *21 (Lehrmann, J., concurring) ("I write separately, however, to emphasize my concern that a statute intended to address the insurance crisis stemming from the volume of frivolous medical-malpractice lawsuits has become a nebulous barrier to what were once ordinary negligence suits brought by plaintiffs alleging no breach of any professional duty of care.").

155.

See id. at *21-23 ("I write separately to emphasize the significance of the third and fifth

factors....").

LICENSED TO STEAL: TEXAS PRIVATE PROPERTY TOWING REGULATION AND CONSUMER REMEDIES BRIAN E. WALTERS COAUTHORS: DAVID M. WALTERS* AND JENNIFER SHAMAS 1.

II.

INTRODUCTION.

.................................

...... 510

BACKGROUND AND HISTORY OF THE TTBA .................

512

A.

III.

What Is the TTBA and Where Did it Come From? ................. 512 1. History of the TTBA ..................... ..... 512 2. How Does the TTBA Work?........... ..... ..... 512

TTBA REGULATION OF PRIVATE PROPERTY TOWS.....

...... 513

A.

Towing 101: The Three Types of Tows ...........

..... 513

B.

Authorization to Tow: PermittingandLicensing.................... 515

C.

1. Permitting........................ ......... 515 2. Licensing ........................... ...... 517 a. Towing Operator Licenses. ....................... 518 b. Towing Company Licenses ........... ........

519 c. License-Permit Coordination ............ ..... 519 Regulation of Towing Company Ownership and Control....... 520 1. Change of Ownership.................... 520 2. Change of Control... .................................... 521 3.

4.

ProfitsInterests .......................

NontransferabilityofLicenses ..............

...... 522 .....

523

5. ProposedModifications to the TTBA and Regulations..... 524 D.

Storage ofNonconsent Towed Vehicles and Coordination with Texas Occupations Code Chapter 2303...... ....... 525

* David M. Walters is a litigation attorney at Walters Hull, PLLC. He is a graduate of South Texas College of Law in Houston, Texas, where he received a pro-bono honors award. Mr. Walters is also rated Excellent by Avvo.com and a member of the College of the State Bar of Texas. He regularly handles a high volume caseload involving towing disputes and has extensive experience litigating those cases from inception to conclusion. ** Jennifer Shamas is a corporate transactional attorney at Walters Hull, PLLC. She is a graduate of South Texas College of Law in Houston, Texas, and was licensed to practice law in 2012. While in law school, she attained various honors including Dean's List, the Amicus Achievement in Excellence Award, and membership on the South Texas Law Review. During school she also interned under Justice Seymore at the 14th Court of Appeals of Texas, where she assisted in drafting appellate court opinions. Ms. Shamas is also a member of the College of the State Bar of Texas. As an undergraduate, she attended the University of North Texas, where she obtained dual degrees in strategic management and marketing.

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Booting Company Regulation

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............................ 526 527 ............................

527 .........................

527 A. The BalancingAct..............................

B. Preparationfor a Private Property Tow..................... 528 C. Towing Compliance: The "Towing Two-Step .............. 528 ...... 529 D. Removal of Unauthorized Vehicles ............

E. Additional Non-TTBA Requirements for Multiunit 530 ............................................

Complexes V.

CONSUMER REMEDIES

A.

.....................................

532

The 452 Hearing(aka the "Tow Hearing')................. 532 532 1. What Is a 452 Hearing?. ........ ......

533 Deadlines ...... and 2. 452 HearingProcedures 535 Hearings ..................... in Tow 3. Issues to Adjudicate 4. Res Judicataand PreclusiveEffects of a Tow Hearing .... 537

B. VI.

FEDERAL PREEMPTION AND STATE TOWING LAWS.......................

A. B. C. D. E. VII.

TTBA Section 2308.404: A Quasi-Qui Tam Cause of ..... 538 ..................................

Action 539

......... 539 The Originof the PreemptionArgument ......

540 ................

Defense Preemption as an Affirmative 541 ..... .......................

The Safety Exception Preemption and Causes ofAction Related to Towing............. 544 The UnitedStates Supreme Court's Take on Preemption: ........... 544 Dan's City Used Cars, Inc. v. Pelkey......

CONCLUSION

.................................................

551

552 APPENDIX A: CASE LAW SUMMARY.................. ........ 564 APPENDIX B: GLOSSARY OF DEFINED TERMS..........

APPENDIX C: STATUTORY CAUSE OF ACTION COMPARISON ... 568 ............. 569 APPENDIX D: MODEL FINDINGS OF FACT AND I.

INTRODUCTION

"This is the first law review article examining this area of law in Texas." Most practitioners never get to use that phrase in a law review article. I doubt that I would have ever had the chance to do so but for an unfortunate towing incident during law school. Typically, both usual and unusual activities have been thoroughly analyzed from a legal perspective.

We have articles discussing the intricacies of maritime law, the division of miniscule mineral interests, professional business entities, and even equine law. Somehow, though, getting your car towed for parking in the wrong lot has generally escaped review.

Think about the mindset of a person who returns to a parking lot only to find her car missing. If you have experienced this firsthand, you will no doubt recall confusion and concern as to the whereabouts of your car. This

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concern usually turns to anger upon discovering that your car is being held

hostage. Posts on consumer-review websites reflect this frustration.'

Interfering with another person's property is a frequent source of litigation. Commonly, litigation leads to judgments and appeals from those judgments lead to the publication of case law establishing precedent.

Towing case law, however, is an area noticeably absent from the South Western Reporter. It is rarely, if ever, examined by courts of record, and the limited published case law in existence has not adequately clarified the rules governing this activity.

The Texas Towing and Booting Act (TTBA) regulates towing in Texas. 2 Its rules not only govern towing companies but also vehicle owners, property management companies, property owners' associations, apartment complex owners, and parking facility operators.3 While this statute is seldom discussed, its provisions contain an intricate interplay between personal and commercial property rights, corporate law, regulatory compliance, and even federal preemption of state regulatory authority.

This Article analyzes several aspects of the TTBA with a focus on private property towing. Part II discusses the history of the TTBA. Part III explores state regulation of the towing industry and examines several existing problems with the current statutory regime. Part IV explains the requirements for conducting private property tows. Part V reviews consumer remedies for private property tows that violate one or more provisions of the TTBA. Part VI analyzes federal preemption of the TTBA in light of Dan 's City Used Cars, Inc. v. Pelkey.4 Appendices attached to this Article include a towing case law summary (Appendix A), defined towing terms (Appendix B), a statutory cause of action comparison table (Appendix C), and a Model Findings of Fact and Conclusions of Law with Commentary for a 452 Hearing (Appendix D).

While private property towing is a highly contentious activity, this Article does not take sides. It is a guide for practitioners working with tow companies, consumers, parking facility owners, and parking facility

I. See, e.g., Austin A., Austin Express Towing, YELP (July 30, 2009), http://www.yelp.com/biz/austin-express-towing-austin-2 ("Scum of the earth."); Jen C., J & J Towing, YELP (June I1, 2007), http://www.yelp.com/biz/j-and-j-towing-austin-2 ("I'm a nice (and as mentioned previously, occasionally passionate) girl, and I was already giving you your $200[]were my tears the icing on your [expletive]-filled cake?"); Sarah P., Austin Express Towing, YELP (Dec. 17, 2013), http://www.yelp.com/biz/austin-express-towing-austin-2 ("If HELL were on Earth, it would be at [this company's address] . . . ."); Evelyn Y., Austin Express Towing, YELP (May28, 2011), http://www.yelp.com/biz/austin-express-towing-austin-2 ("Thieves and crooks.").

2.

See TEx. OCC. CODE ANN. § 2308.001 (West 2012).

3.

See id. § 2308.002(3), (7).

4.

Dan's City Used Cars, Inc. v. Pelkey, 133 S. Ct. 1769 (2013).

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operators, as well as our dedicated members of the judiciary who regularly encounter these cases.

II. BACKGROUND AND HISTORY OF THE TTBA A.

What Is the TTBA and Where Did it Come From?

1.

History of the TTBA

In the beginning, the Texas Occupations Code did not regulate private property tows in Texas. Instead, the Texas Transportation Code governed this activity, and enforcement was the job of the Texas Department of Transportation. The Texas Legislature, believing that towing activity was more properly regulated by the Texas Department of Licensing and Regulation (TDLR), repealed the Transportation Code provisions related to towing regulation and added Chapter 2308 to the Texas Occupations Code, 6 creating the TTBA. The TTBA retained much of the text from the Transportation Code.

This made for an easy transition to the new statute, but it also resulted in a transfer of many defects from the Transportation Code to the Occupations Code. While some of these defects have been addressed by the legislature or examined by the courts, many remain.

2.

How Does the TTBA Work?

The TTBA grants certain persons license to engage in an activity that would otherwise constitute conversion (in a civil context) or theft (in a criminal context) of another person's vehicle.7 This description may sound somewhat biased in favor of a consumer who is towed, but it is an accurate description of a violation tow. It also illustrates the seriousness of this licensed activity.

Consider the following scenario: If I drive to your house, throw some tow straps on your car, and drive away with your vehicle, what would your first response be? You no doubt would call the police and report the car stolen. You might also sue me to recover civil damages in the event that your vehicle was damaged or destroyed. Plainly, if I had no legal right to take your vehicle, I have engaged in a very serious interference with your property rights in your vehicle. As at least one court has stated, "[A] person

See Fidelis v. Smith, No. 14-08-00224-CV, 2009 Tex. App. LEXIS 7815, at *2 n.1 5.

(Tex. App.-Houston [14th Dist.] Sept. 24, 2009, no pet.) (mem. op.) (per curiam).

6.

See Tex. H.B. 2094, 80th Leg., R.S. (2007).

See Tex. Att'y Gen. Op. No. GA-0316 (2005).

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cannot legitimize a vehicle theft by using a tow truck to perpetrate the theft."'

The TTBA regulates towing by creating a rigid regulatory framework in which tow companies and parking facility owners must operate or risk substantial liability. These regulations are enforced both by the State of Texas through TDLR as well as through private litigation.9 On the state level, the TTBA established an advisory board to the Texas Commission of Licensing and Regulation (the Commission), which adopts rules regulating towing operators, towing companies, booting companies, and booting operators, as well as the fees they may charge for services.' 0 It authorizes TDLR to employ personnel to enforce the terms of the TTBA and the regulations promulgated thereunder (the Regulations)." The TTBA and the Regulations permit TDLR to mandate basic standards of conduct for licensed persons engaged in towing activity and to enforce those standards.1 2 Most interestingly, the TTBA also grants private individual vehicle owners a statutory cause of action against towing companies and parking facility owners and operators who violate the TTBA during a private property tow.' 3 III. TTBA REGULATION OF PRIVATE PROPERTY Tows

A.

Towing 101: The Three Types of Tows The TTBA classifies all towing activity into one of two primary

categories: (1) consent tows,1 4 and (2) nonconsent tows.' 5 Of these two

categories, the latter is further broken down into two subcategories: (a) incident management towings, and (b) private property towings.1 6 For purposes of this Article, the two primary categories will be disregarded, and discussion will focus on the three primary tow subcategories. A visual breakdown of the three towing subcategory types is found below:

8. Wehbe v. State, No. 02-07-00407-CR, 2011 Tex. App. LEXIS 3419, at *9 (Tex. App.-Fort Worth May 5, 2011, pet. ref d) (mem. op., not designated for publication).

9. See Occ. §§ 2308.404, 2308.460.

10. Occ. §§ 2308.057, .0575.

11. Id §§ 2308.060-061.

12. See id. §§ 2308.057, 2308.460.

13. See id. § 2308.404.

14. Id. § 2308.002(3).

15. Id § 2308.002(6).

16.

Id. § 2308.002(6)(A)-(B).

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TOWING AUTHORITY UNDER TEX. OCC. CODE

CH. 2308

Consent Towing

Consent Tow

Nonconsent Towing Nonconsent Towing

Private Property Tow

Incident Management Tow

The first tow category is the incident management tow. Incident management towing occurs when a tow truck is "summoned to the scene of a traffic accident or to an incident, including the removal of a vehicle, commercial cargo, and commercial debris from an accident or incident scene." 1 7 While a car accident is a fairly straightforward concept, the Regulations clarify the statute by defining "[i]ncident" as an "unplanned randomly occurring traffic event that adversely affects normal traffic operations." 18 Through this language, one may think of an incident management tow as a "tow by necessity," where a car has been immobilized by damage in an accident or abandoned. The vehicle must be removed to keep traffic flowing, and the owner has no say in the matter other than where the vehicle will be towed.

The second category of towing is the private property tow. A private property tow is the removal of a vehicle authorized by a parking facility 19 owner without the consent of the operator or owner of the vehicle. This is the most contentious towing activity in Texas and the subject of much litigation in the justice of the peace courts. Due to their confrontational nature, private property tows are strictly regulated under both the TTBA 20 and the Regulations.

Id. § 2308.002(5-a).

18.

16 TEX. ADMIN. CODE § 86.10(10) (2014) (Tex. Dep't of Licensing & Reg., Definitions).

19. Occ. § 2308.002(8-a).

20. Private property tows are also the inspiration for the tongue-in-cheek title of this Article.

17.

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Consent tow is the third category of towing activity in Texas. A consent tow is the removal of a vehicle where the owner, operator, or a person who has possession, custody, and control of the vehicle summons the tow truck. 2 1 This tow occurs most commonly when someone's car breaks down and a tow truck is needed to transport the vehicle to a mechanic. There is little to no contention in this category of tow, except perhaps in the case of vehicle damage that occurs during its transport due to negligence.

B.

Authorization to Tow: Permittingand Licensing

Towing regulation in Texas includes both a permitting and licensing system. Generally, permitting is an uncomplicated process. It requires that each tow truck be registered with TDLR, and properly permitted and identified prior to its use in towing vehicles.22 Licensing, on the other hand, has two distinct levels. First, each towing operator must be licensed by TDLR to engage in towing operations. 23 Second, the company itself must be licensed to operate as a towing company in the State of Texas.24 Note that the term "company" is used not in the sense of a filing entity under the Texas Business Organizations Code, but rather as a defined term in the TTBA to mean both an individual and a business entity. 25 TDLR's regulatory system keeps track of each truck, company, and person licensed or permitted by TDLR, as well as the specific type of towing activity in which towing companies may engage. 2 6 1.

Permitting

The TTBA authorizes the use of a permitted truck to conduct towing activities based on the specific permit type.27 As one might imagine, the three types of permits correspond with the three tow categories found in the TTBA: (1) incident management towing permits, (2) private property

21.

Id. § 2308.002(3).

22.

Id. § 2308.101.

23.

Id §2308.151(1)-(2).

24.

Id. § 2308.151(2).

25.

See id. § 2308.002(12) ("'Towing Company' means an individual, association, corporation, or other legal entity that controls, operates, or directs the operation of one or more tow trucks over a public roadway in this state but does not include a political subdivision of the state.").

26.

See Tow Trucks, Operators, and Vehicle Storage Facilities: Frequently Asked DEP'T LICENSING Questions, TEX. http://www.tdlr.texas.gov/towing/towingfaq.htm (last visited Mar. 15, 2015).

27.

Occ. § 2308.101; see also id. §§ 2308.103-105.

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towing permits, and (3) consent towing permits.2 8 One permit is required per tow truck. 29 Note, however, that possession of one type of towing permit may, but will not necessarily, allow a tow truck to be used to perform other types of towing activities. 0 Certain permits issued by TDLR allow one tow truck to be used in some or all other types of regulated towing activities; others are limited in scope. For example, the Regulations provide that a permit for an incident management tow may also be used for private property tows and consent tows. 3 ' A private property tow truck

permit, on the other hand, may also be used for consent tows, but not incident management tows. 32 Thus, it is critical that each truck be properly permitted for the specific tow activity in which it is used. Improper truck permitting can subject the towing company to liability under the TTBA both from TDLR and by the individual whose vehicle is towed.

Tow truck permits are valid for one year.34 TDLR must notify a permit holder at least thirty days prior to the permit's expiration. Expiration notice is mailed to the permit holder at the address on file with TDLR.36 Accordingly, care should be taken to ensure that permit holders keep all address information with TDLR current. Permit renewal is a fairly simple process. It involves paying a fee for each tow truck and providing TDLR with "evidence of continuing insurance or financial responsibility."37 TDLR issues a "cab card" that is tied to each tow truck permit. 38 The cab card contains the permit number for the towing permit issued, a description of the permit type, the vehicle unit number, the vehicle identification number, and a statement that the vehicle has been issued a permit under the TTBA. 39 As the name implies, cab cards must be kept in the cab of each permitted tow truck at all times.40 Cab cards expire on the

28.

Id. §§ 2308.103-105.

29.

Id. § 2308.101.

30.

See id § 2308.103(c) (allowing a tow truck with an incident management towing permit to also perform private property towing and consent towing); Id. § 2308.014(c) (allowing a tow truck with a private property towing permit to also perform consent towing, but not incident management towing); Id § 2308.015(c) (prohibiting a tow truck with a consent towing permit to perform either incident management towing or private property towing).

31.

16 TEX. ADMIN. CODE § 86.201(c) (2014) (Tex. Dep't of Licensing & Reg., Tow Truck Permit-Incident Management Towing).

32.

Id § 86.202(c).

33.

See Occ. § 2308.404.

34.

Occ. § 2308.107(a).

35.

Id. § 2308.107(b).

36.

Id. 37.

Id. § 2308.107(c)(1)-(2).

38.

Id. § 2308.108(a).

39.

Id. § 2308.108(a)(1)-(5).

40.

Id. § 2308.108(c).

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same date as their corresponding permits. 4 1The cab card may be thought of as the physical evidence of the license for a tow truck to operate in Texas.

This comparison is useful because just as an individual can be ticketed for driving without a driver's license, failure to keep the cab card in the tow truck can result in administrative penalties from TDLR.42 In addition to permits cab cards, the TTBA requires that certain information about the permit holder be displayed on each tow truck. This information includes the permit holder's name and telephone number, the city and state in which the permit holder is located, and the tow truck's permit number.43 Because this requirement is intended to identify both the tow truck and permit holder, the information must be in letters that are at least two inches high and in contrast to the color of the background surface." The printed information cannot be temporary-it must be permanently affixed and appear conspicuously on both sides of the tow truck.45 2.

Licensing

As with other activities regulated by the Texas Occupations Code, the TTBA licensing section begins with the prohibition of unlicensed activity.4 6 The rule is that unless a person holds an appropriate license under the TTBA, that person may not perform towing or booting operations, or operate a towing or booting company. 47 Thus, any person who tows, boots, or operates a towing or booting company without a valid license will be subject to administrative action for violating the TTBA, as well as potential criminal liability. 48

Licenses are limited in scope. Black's Law Dictionarydefines the term "license" as: A permission, usu[ally] revocable, to commit some act that would otherwise be unlawful; esp[ecially], an agreement (not amounting to a lease or profit A prendre) that it is lawful for the licensee to enter the licensor's land to do some act that would-otherwise be illegal, such as hunting game.49

41.

42.

43.

44.

45.

46.

47.

48.

49.

See id § 2308.108(b).

See id § 2308.501 Id. § 2308.109(a)(1)-(4).

Id § 2308.109(b)(1).

Id § 2308.109(b)(2).

See id. § 2308.151.

Id § 2308.151(1)-(4).

See id. § 2308.501, .504.

BLACK'S LAW DICTIONARY 1059 (10th ed. 2014).

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In the case of a towing company, the TTBA grants authority to issue licenses to perform private property tows from parking facilities only if: (1) the company is properly licensed and its vehicles properly permitted, and (2) the parking facility is in compliance with TTBA Subchapter G." One can readily think of the proper preparation of a parking facility as a quasilicensing process-one in which a piece of property is made ready for use by a licensee for what would otherwise be an illegal activity, like stealing cars. Another way to think of this is like having a state hunting license, but hunting in a national park. If the location of the activity is not where the license may be used, then the license is useless and will not protect the actor from liability. a.

Towing Operator Licenses

There are two types of towing licenses issued under the TTBA: (1) the towing operator license, and (2) the towing company license.5' Towing operator licenses are further broken down into three subcategories that track the three subcategories of tows discussed above.52 These licenses include: (a) the incident management towing operator's license, (b) the private property towing operator's license, and (c) the consent towing operator's license." Each license grants the licensee authority to perform the corresponding type of tow. 54 In addition to these operator licenses, the TTBA provides for a "training license" under section 2308.1551.55 A training license may be issued if an applicant: (1) holds a valid driver's license, (2) is currently learning and assisting a towing operator under the supervision of a licensed operator, and (3) meets the other qualifications established by the Commission.5 6 However, unlike other licenses, a training license is only good for ninety days. Additionally, a training licensee may not operate independently; a licensed tow operator must supervise the training licensee at all times.

50.

51.

52.

53.

54.

55.

56.

57.

58.

See Occ. § §2308.154,.301.

See Occ. § 2308.151(1)-{2).

Id. §§ 2308.153(a), .154(a), .155(a); see also discussion supra Part IlIl.A. Occ. §§ 2308.153(a), .154(a), .155(a).

Id. Id. § 2308.1551.

Id § 2308.1551(a)(1)-(3).

Id. § 2308.1551(c).

See id. §2308.1551(a)(3), (b).

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Towing Company Licenses

A towing company license is required before a person may operate a towing company in Texas. 59 The TTBA does not define the word "person." 6 0 Thus, practitioners should rely on the definition of that term as found in the Code Construction Act.6 Under this definition, both individuals and business entities may be issued towing operator's licenses.62 Thus, licenses may be issued to corporations, partnerships, limited liability companies, and other entities, as well as natural persons. This interpretation is supported by the TTBA's language that tow company licenses may be issued to "an individual, association, corporation, or other legal entity that controls, operates, or directs the operation of one or more tow trucks over a public roadway in [Texas]."6 While the exact language of the Code Construction Act and TTBA are not mirror images, the intent of each is aligned.

The TTBA also contains a "dual license" provision, where any person may be licensed as both a towing operator and a vehicle storage facility.64 This provision, however, is not the most useful addition to the TTBA because it allows the expansion of liability for two licensed business activities rather than the isolation of each licensed activity in separate business entities. To explain, while it is possible for the same "person" to hold both licenses, it is probably not advisable from an asset-protection standpoint. This is because dual licensure of any person, whether an individual or business entity, would incur liability for activities as a towing operator and as a vehicle storage facility for the same business. Absent a substantial financial advantage to operating under dual licensure, or an effective means of isolating liability for each separate activity, it is unlikely that practitioners would advise their clients to obtain dual licensure. c.

License-Permit Coordination

Towing licenses correspond to permitted tow trucks. 65 Thus, a licensee with only a consent towing license would not be able to perform incident management tows, regardless of whether the tow truck used is permitted to

59.

Id § 2308.151(2).

60.

See id § 2308.002.

61.

See TEX. GOv'T CODE ANN. § 311.005(2) (West 2013) ("'Person' includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity.").

62.

See id; Occ. § 2308.151 (stating that a person may not perform regulated activities until licensed).

63.

Occ. § 2308.002(12).

64.

Id. § 2308.1521(a).

65.

See id. §§ 2308.153(a), .154(a), .155(a).

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perform private property tows. 66 Similarly, an incident management licensee operating a tow truck with an incident management permit would not be allowed to perform a consent tow. 67 This license-permit coordination creates the potential for inadvertent violations, and places a particular burden on tow companies to ensure that each of their licensees is using the appropriate tow truck. It also disregards the potential unemployment of licensees simply because the truck required for their licensed towing activity is broken down. Nevertheless, failure to use the right license with the right truck for a particular type of tow can trigger liability under the TTBA. C.

Regulation of Towing Company Ownership and Control

The TTBA falls short in regulating ownership and control of towing companies. It ignores some tenets of Texas business law that, if employed, could improve regulatory reporting requirements. It also fails to address creative corporate drafting, which could easily circumvent the goals of the TTBA. 1.

Change of Ownership

While the TTBA does not go into extensive detail on business entity regulation, the Texas Administrative Code provides some clarification.

First, licenses issued under the TTBA are nontransferable.6 8 Second, a towing company that has a change in ownership "must file an original application for licensure" with TDLR. 69 This requirement is in the Texas Administrative Code under section 86.703, which is an oddly worded provision stating that an original license application is required "when there is a change in the ownership of the company, including but not limited to, a corporate merger or a change in the sole proprietorship or partnership." 70 This statutory language reflects a lack of familiarity with several basic concepts of corporate law. First, a merger does not necessarily result in a change of ownership. Depending on the structure of the merger, a business entity licensed as a tow company could have the exact same ownership both pre- and postmerger. The same is true for a conversion from one business entity type to another. Ownership changes in each of these events depend not on the occurrence of the event itself, but rather on the terms contained 66.

See id. §§ 2308.155(a), 2308.105(c).

67.

See id §§ 2308.153(a), 2308.103(c).

68.

Id. § 2308.156.

69.

16 TEX. ADMIN. CODE § 86.703 (2014) (Tex. Responsibilities of Towing Company-Change of Ownership).

70.

Id

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in the plan of conversion or merger. Second, the Texas Administrative Code states that there could be a "change in [a] sole proprietorship." 7 Change in a sole proprietorship is nearly a legal impossibility. A sole proprietorship is not a business entity. Instead, it is a natural person carrying on a business for profit.72 While sole proprietorships are commonly confused with business entities due to their operation under an assumed name or "DBA," the filing of an assumed name certificate by an individual does not change the fundamental nature of a sole proprietorship any more than it changes the entity status of a limited liability company operating under an assumed name. Sole proprietorships are not legally separate from the individual conducting the business.7 Thus, the only "change" that could occur to a sole proprietorship would be the death of the individual, or such individual's cessation of business operations.

2.

Change of Control

Unlike a change in ownership, there is no clear, immediate statutory reporting requirement for a change in the control of a towing company. A review of the reporting requirements is necessary to demonstrate this reporting gap. As discussed above, the TTBA prohibits an unlicensed person from operating a towing company.74 Thus, it is clear that one cannot simply file a certificate of formation, buy a tow truck, and begin performing towing operations. In order to operate, a towing company application must be completed, submitted, and approved by TDLR.7 ' The application to operate a towing company requires that the partners in a partnership and the officers of a corporation be reported to TDLR.76 The name and address of each corporate officer must also be reported to TDLR.n Furthermore, owners and their corresponding ownership interests must be reported.7 Finally, if the towing company is not operated or managed by one of the

71.

Id. 72.

See CU Lloyd's of Tex. v. Hatfield, 126 S.W.3d 679, 684 (Tex. App.-Houston [14th Dist.] 2004, pet. denied).

73.

Id 74.

Occ. § 2308.151(2).

75.

See ADMIN. § 86.215(b)(1).

76.

ADMIN. § 86.215(b)(4)-(5).

77.

Id. § 86.215(b)(5).

78.

Id. § 86.215(b)(6). Note, however, that while the Regulations require reporting of each owner, the application only requires reporting of ownership interests greater than ten percent. Tow Truck Company License Application Instructions, TEX. DEP'T LICENSING & REG., http://www.tdlr.texas.gov/towing/forms/TOWOOl%2OTow%20Truck%20Company/o20License% 20Application.pdf (last updated Feb. 2014).

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owners, the name and address of the person who operates or manages the towing company must be included in the application.79 Unlike a change in ownership, neither the TTBA nor the Regulations require that changes in company officers be immediately reported to TDLR. The same is true for changes in managers of a manager-managed limited liability company and directors of a for-profit corporation. Thus, an individual could be appointed as a principal, or even the president, of a licensed tow company during a year when the towing company's license was valid without triggering any reporting requirement, so long as such person's appointment was not accompanied by a transfer of equity. This means that another party may be able to operate the business without TDLR's knowledge, provided that the same "person" owned a licensed towing company. This reporting gap also presents an opportunity for someone prohibited from operating a towing company to do so by simply avoiding being listed as a company officer or principal at the time of the original application or renewal.

3.

ProfitsInterests

Another concept of corporate law overlooked by the TTBA and the Regulations is profits interests. For example, assume that XYZ Towing is a limited liability company wholly owned by John, its sole member. John's business associate, Ralph, gave John the funding to start the towing company, but has a criminal conviction on his record that prohibits Ralph from owning an equity interest in XYZ Towing under the TTBA. To get around this, John agrees that while Ralph has no equity ownership interest in the company, Ralph is entitled to split the profits of the company fiftyfifty with John, and these terms are incorporated into the XYZ's Towing's operating agreement. This structure would not trigger any reporting requirements under the TTBA, the Regulations, or the requirements of a towing company application. At the same time, it would entitle someone to earn profits from a licensed company who would not otherwise be able to obtain a license, effectively circumventing the TTBA and the Regulations.

Those experienced in towing law may point to the requirement of the tow company application for disclosure of any person who owns more than $25,000 of the value of the business as a remedy for the loophole described above.so It is true that the application contains this requirement, but it presents only a potential hurdle, not a true barrier. For example, the term "$25,000 of the value of the business" pertains only to "corporate officers"

79.

80.

ADMIN. § 86.215(b)(7).

Tow Truck Company License ApplicationInstructions, supra note 78.

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who own that value according to the application.8 ' Thus, if the person is not an officer but holds a profits interest, reporting is not required by the application. Also, even if that person were an officer, an argument could be made that the value of the phantom interest does not exceed $25,000 based on the officer's lack of true equity in the business entity, control of the business, and rights to declare distributions in the company. In fact, the officer might argue that the value of such interest is well below that amount by applying a lack-of-control discount to the value of the interest. Thus, TDLR would be stuck arguing business valuation, which can be computed based on any number of different models, in order to trigger the reporting requirement.

4.

NontransferabilityofLicenses

As stated above, licenses issued under the TTBA are nontransferable.82 This creates an interesting problem in the event a towing company's right to transact business in Texas is forfeited under Texas Tax Code section 171.251.83 For example, assume that a limited liability company loses its right to transact business in Texas and that the limited liability company, rather than any individual member of the company, holds the towing company license. One might presume that the company's license passes to the individual owner via a liquidating distribution, permitting the owner to continue in their activity as a towing company-but that is not the case. If licenses issued by TDLR are truly nontransferable, then the transfer from

81.

82.

83.

Id. TEX. Occ. CODE ANN. § 2308.156 (West 2012).

The Texas Tax Code provides: The comptroller shall forfeit the corporate privileges of a corporation on which the franchise tax is imposed if the corporation: (1) does not file, in accordance with this Chapter and within 45 days after the date notice of forfeiture is mailed, a report required by this Chapter; (2) does not pay, within 45 days after the date notice of forfeiture is mailed, a tax imposed by this Chapter or does not pay, within those 45 days, a penalty imposed by this Chapter relating to that tax; or (3) does not permit the comptroller to examine under Section 171.211 of this code the corporation's records.

The comptroller may, for the same reasons and using the same procedures the comptroller uses in relation to the forfeiture of the corporate privileges of a corporation, forfeit the right of a taxable entity to transact business in this state.

If the corporate privileges of a corporation are forfeited under this Subchapter: (1) the corporation shall be denied the right to sue or defend in a court of this state; and (2) each director or officer of the corporation is liable for a debt of the corporation as provided by Section 171.255 of this code.

TEX. TAX CODE ANN. §§ 171.251, .2515(a), .252 (West 2008).

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the limited liability company to the individual owner would be prohibited by the TTBA. 84 The result of this is that if the licensee company "dies" through forfeiture, its individual owners must likewise cease towing activities. Any towing activity that occurs during forfeiture would be engaging in towing activity by an unlicensed person, which is prohibited by the TTBA." While this may not have been the intent of the TTBA, it is the result when viewed in light of the Texas Tax Code.86 Reinstatement of a filing entity's forfeited status under the Texas Tax Code could cure this issue by permitting operation as a de facto entity, so long as the entity is reinstated. However, no such de facto entity provision exists in the Texas Tax Code. Without a coordinating provision in the TTBA, this could create a major problem for tow companies.

5.

ProposedModifications to the TTBA andRegulations

Amendments to the TTBA or modifications to the Regulations could easily address each of the reporting issues listed in Part III.C. First, to address the problems with change of control and phantom ownership interests, towing companies should be required to submit a current, complete copy of their company books along with an initial application for licensure. TDLR could then review not only the publicly available documents describing the entity but also accurately analyze the financial and governance structure of an entity applicant. This system is commonly employed by municipal authorities that certify minority- and women-owned business enterprises and has proved to be an effective deterrent against attempts to avoid regulation. While this is admittedly an additional burden on the applicant and TDLR, if TDLR is truly concerned with knowing who operates towing companies in Texas, it is a necessary burden.

Second, TDLR should implement regulations whereby a licensee must update its company books on file whenever there is a material change in ownership, management, control, or distribution rights. This would prevent interim modifications to company documents that are intended to avoid detection by current regulatory requirements. In the event that TDLR discovered modifications that were not timely reported, it could assess administrative penalties commensurate with the nature and duration of the failure to report.

Enacting these policies would provide several immediate benefits to both TDLR and tow companies. First, TDLR would be more aware as to exactly who is currently operating each of its entity licensees. Second, these 84.

85.

86.

See Occ. § 2308.156.

See id. § 2308.151.

See TAX CODE §§ 171.251, 171.2515(a), 171.252.

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policies would discourage creative corporate drafting to circumvent statutory requirements. Third, a simplified reporting system postmerger or postconversion would eliminate the necessity for a new application and filing fee when there is no effective change in a licensee's ownership, management, control, or distribution rights. Finally, this simplified reporting would ease restraints on equity-based acquisitions in the towing industry as well as the sale of towing companies operating as sole proprietorships.

D.

Storage ofNonconsent Towed Vehicles and Coordinationwith Texas Occupations Code Chapter 2303

'

While an analysis of Chapter 2303 of the Texas Occupations Code is beyond the scope of this Article, a brief examination of the complementary provisions of the TTBA is necessary. One of the most important complementary requirements is that nonconsent towed vehicles must be taken to either: (1) a vehicle storage facility licensed under Chapter 2303 of the Texas Occupations Code, or (2) a place designated by the vehicle's owner. 8 7 No other location is permitted. 8 It should also be noted that if the owner of the vehicle is not present and no licensed vehicle storage facility is available, the TTBA would be violated if the vehicle were removed. Unlike other sections of the TTBA that permit activity by the owner or operator of the vehicle, this section requires the owner's designation of the location to which the vehicle is to be taken. 89 While the TTBA does not discuss what constitutes a "tow," the statute could be interpreted to mean an activity constituting one continuous movement of the vehicle from one location to another. 90 Thus, the temporary storage of a vehicle at a non-2303 licensed location would violate the TTBA. This activity, sometimes referred to as "stashing," 9 would violate the letter and intent of the TTBA. Stashing occurs when a vehicle is temporarily towed to a non-2303 licensed location. 92 In doing so, the towing operator has placed valuable private property in a position to be vandalized, stolen, or otherwise damaged. It is, therefore, imperative that any nonconsent towed vehicle be taken directly to a licensed facility.

87.

Id. § 2308.205(a).

88.

See id 89.

Id. 90.

See id 91.

Pat Johnson, Impound Stashing-Illegal Practice by Predatory Towing Companies, TEX. TOWING COMPLIANCE (Aug. 1, 2013), https://texastowingcompliance.org/impound-stashingillegal-practice-by-predatory-towing-companies/.

92.

Id

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Otherwise, the towing company and licensee may be liable to the vehicle's owner in addition to other TTBA violations. 93 Another complementary provision in the TTBA involves fees charged by a vehicle storage facility. The TTBA simply states that Chapter 2303 of the Texas Occupations Code and the Texas Code of Criminal Procedure govern fees charged by a vehicle storage facility, to the extent not addressed in the TTBA.9 4 E.

Municipal Towing Regulation

The TTBA grants political subdivisions authority to regulate the operation of a tow truck. 95 However, there are several limitations on this authority. First, the local regulations must comply with federal law. 96 Second, political subdivisions may not issue more restrictive regulations concerning the use of lighting equipment on a tow truck than is required by Title 7 of the Texas Transportation Code.97 Third, "[a] political subdivision may not require the registration of a tow truck that performs consent tows in the political subdivision unless the owner of the tow truck has a place of business in the territory of the political subdivision." 98 However, this limitation does not apply to nonconsent tows, even if they are performed in the territory of the political subdivision.99 Finally, the political subdivision may not require a person to obtain a license or permit to operate a tow truck as long as that person holds a driver's license, unless that person engages in nonconsent tows within that subdivision's territory. 00 If the subdivision does require such a permit or license, the fee may not exceed $15.101 While there are numerous limitations placed on political subdivisions relating to licensing and permitting, a political subdivision may regulate the fees charged for nonconsent towing originating in its territory.102 Fee regulation is permissible as long as the fees generated from private property tows in the political subdivision are "authorized by commission rule" and "do not exceed the maximum amount authorized by commission rule." 0 3

93.

94.

95.

96.

97.

98.

99.

100.

See Occ. §§ 2308.404 -. 405.

Id. § 2308.205(c).

Id § 2308.201(a).

Id Id Id § 2308.201(b).

Id § 2308.201(c).

Id § 2308.201(d).

101.

Id.

102.

103.

Id. § 2308.202.

Id. § 2308.202(l)-(2).

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Regulation of fees by a political subdivision is not without cost. In the event that a political subdivision elects to regulate fees, the TTBA requires that such subdivision conduct towing fee studies to ensure that the regulated rate corresponds with the "fair value" of the services performed by a towing company.'" A municipality's governing body, or the commissioners of a county, may also adopt identical or added restrictions on removal of unauthorized vehicles.' 0 5 However, the restrictions may not conflict with the TTBA.1 0 6 F.

Booting Company Regulation

A discussion of booting company regulation is beyond the scope of this Article. However, towing and booting regulation are addressed in parallel throughout the TTBA. 0 7 While there are certain provisions that apply only to booting,'0 8 the permitting, licensure, regulation, and the majority of restrictions on towing activity also apply to booting activity. 109 IV. PRIVATE PROPERTY TOWING A.

The Balancing Act

Towing regulation in Texas is a balancing act. The TTBA contains an implicit assumption that unauthorized vehicles on private property can be a nuisance' 10 Under that assumption, the TTBA provides for various means of removing unauthorized vehicles under specific circumstances."' However, the right to have a nuisance removed from the landowner's property directly competes with the vehicle owner's property rights. From the vehicle owner's perspective, a vehicle is valuable personal property, and it should not be taken away without due process and proper legal authority.

In addition to the competing property interests, a third variable is present-the towing company. A private towing company has two incentives to remove vehicles from a parking facility. First, the towing company has contracted with the parking facility owner or operator to keep the facility clear of unauthorized vehicles.1 2 Thus, the towing company 104.

Id. § 2308.203(a)-(b).

105.

Id. § 2308.208.

106.

Id. 107.

See, e.g., id. § 2308.151.

108.

See, e.g., id § 2308.1555.

109.

See, e.g., id. § 2308.301(a) 110.

See id. §§ 2308.002(8-a), 2308.251-253.

111.

See, e.g., id. § 2308.252.

112.

See Amy Silverstein, The Kings ofthe Apartment Lot Tow, DALL. OBSERVER (Aug. 22, 2013), http://www.dallasobserver.com/news/the-kings-of-the-apartment-lot-tow-6430453.

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must remove vehicles to fulfill its contractual obligations to the parking facility owner. Second, it seems apparent that a towing company's income is directly tied to the number of vehicles it impounds. Therefore, it would have little, if any, incentive to consider the property rights of the vehicle owner, so long as it meets the minimum requirements for a tow under the

TTBA. These financial incentives to remove vehicles are counterbalanced by both TDLR enforcement and private lawsuits, which deter regulatory noncompliance. Unfortunately, these deterrents are remedial in nature. That is, they only take place after a towing company has violated the TTBA." 3 Adding to this difficulty is the fact that the onus to establish such deterrents is placed squarely upon the victim of a noncompliant tow. The victim must initiate enforcement on both fronts. Thus, if a person believes her car was towed in violation of the TTBA, that person must: (1) file a report with TDLR, (2) apply for a 452 Hearing,"1 4 and (3) potentially file a lawsuit against the towing company." 5 Items (1) and (3) are lengthy processes, and items (2) and (3) are very risky without the assistance of counsel and proper research.

B.

Preparationfor a PrivateProperty Tow

Private property tows require preparation, license compliance, permit compliance, and parking facility compliance. Disregarding any of these requirements can result in a violation tow. Violation tows subject towing companies, parking facility owners, and parking facility operators to liability for potential statutory and regulatory damages."' Essentially, they should be avoided at all costs. Under any other circumstance, the removal of someone's vehicle without her authority constitutes theft under the criminal law and is actionable in civil court. Thus, property owners and towing companies should not tow a vehicle unless they are certain they can legally remove the vehicle.

C.

Towing Compliance: The "Towing Two-Step"

Private property towing requires proper execution of the "towing twostep." The first step involves licensing with TDLR. Thus, in order to perform a private property tow, a towing company, towing operator, and

113.

See Occ. § 2308.404(a) ("A towing company, booting company, or parking facility owner who violates this Chapteris liable. . . ." (emphasis added)).

114. See discussion infra Part V.A. 115.

Id. §§ 2308.404,.452.

116.

See id. §§ 2308.501-505.

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tow truck must be properly licensed and permitted for the type of private property tow.11 7 The second step involves taking adequate action to ensure that a parking facility contains all TTBA-required sign placement and that the content of the signs is TTBA-compliant or, in the alternative, that notice is properly delivered."'8 Only after completing both steps is a towing company authorized to perform a private property tow in Texas. Parking facility compliance and signage are every bit as important as TDLR licensure. Just as an unlicensed person may not perform towing activities, a compliant licensee may not perform private property tows from a nonTTBA compliant parking facility. Ignoring either of these steps is a recipe

for litigation and liability.

D.

Removal of Unauthorized Vehicles

The TTBA authorizes properly licensed persons to remove unauthorized vehicles without the owner or operator's consent in four limited circumstances. First, an unauthorized vehicle may be removed from a parking facility if "signs that comply with Subchapter G . . . are located on the parking facility at the time of towing and for the preceding 24 hours and remain installed at the time of towing." 11 9 Second, an unauthorized vehicle may be removed if the "owner or operator of the vehicle has received actual notice from the parking facility owner that the vehicle will be towed ... if it is in or not removed from an unauthorized space." 1 20 Third, an unauthorized vehicle may be removed if a parking facility owner gives notice of intent to remove the vehicle to its owner or operator under section 2308.252(b). 12 Finally, an unauthorized vehicle may be removed if

117.

See discussion supra Part Ill.B.2.

118.

See Occ. §§ 2308.301-.305.

119.

TEX. OCC. CODE ANN. § 2308.252(a)(1) (Supp. 2014).

120.

Id § 2308.252(a)(2).

121.

Id. § 2308.252(a)(3).

A parking facility owner is considered to have given notice under Subsection (a)(3) if: (1) a conspicuous notice has been attached to the vehicle's front windshield or, if the vehicle has no front windshield, to a conspicuous part of the vehicle stating: (A) that the vehicle is in a parking space in which the vehicle is not authorized to park; (B) a description of all other unauthorized areas in the parking facility; (C) that the vehicle will be towed at the expense of the owner or operator of the vehicle if it remains in an unauthorized area of the parking facility; and (D) a telephone number that is answered 24 hours a day to enable the owner or operator of the vehicle to locate the vehicle; and (2) a notice is mailed after the notice is attached to the vehicle as provided by Subdivision (1) to the owner of the vehicle by certified mail, return receipt requested, to the last address shown for the owner according to the vehicle registration records of the

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"the parking facility owner provides to the owner or operator of the vehicle information on the name of the towing company and vehicle storage facility that will be used to remove and store the vehicle and the vehicle is" left in violation of TTBA sections 2308.251 or 2308.253.122 E.

Additional Non-TTBA Requirementsfor Multiunit Complexes

Landlords of multiunit complexes are parking facility owners and have the authority to remove unauthorized vehicles without the owner's consent, as prescribed by the TTBA;' 2 3 however, they also require compliance with section 92.0131 of the Texas Property Code. Notice is an express requirement for all landlords of multiunit complexes that intend to impose parking and towing regulations.1 24 Section 92.151 of the Texas Property Code defines "multiunit complex" as "two or more dwellings in one or more buildings that are: (A) under common ownership; (B) managed by the same owner, agent, or management company; and (C) located on the same lot or tract or adjacent lots or tracts of land." 1 2 5 If the landlord has towing or parking rules or policies that pertain to a tenant at the time the leasing agreement is executed, the landlord must provide the tenant with a copy before the lease agreement is signed. 126 These rules must be: (1) signed by the tenant; and (2) either (a) included in a lease agreement, or (b) included in an attachment to the lease agreement, but only if it is expressly referred to in the lease agreement. 12 7 A landlord may only require a tenant to provide the "make, model, color, year, license number, and state of registration of the vehicle to be parked" at the parking facility.1 28 A landlord must provide written notice to a tenant before any changes to the policy are made and before the tenant is required to comply with the change. 129 It is the landlord's burden to establish that the tenant received notice of the policy change.1 3 0 The landlord may satisfy this burden by providing evidence that the landlord: "(1) delivered the notice by certified mail, return receipt requested, addressed to the tenant at the tenant's dwelling; or (2) made a notation in the landlord's files of the time, place, Texas Department of Transportation, or if the vehicle is registered in another state, the appropriate agency of that state.

Id. § 2308.252(b).

122.

Id § 2308.252(a)(4).

123.

See id.§ 2308.253.

124.

TEX. PROP. CODE ANN. § 92.0131(b) (West 2014).

125.

Id § 92.151(8).

126.

Id. § 92.0131(b).

127.

Id § 92.0131(b)(l)-(3).

128.

129.

Id. § 92.0131(c-1).

Id. § 92.0131(d).

130.

Id

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and method of providing the notice and the name of the person who delivered the notice."' 3 ' Acceptable methods of delivery are limited to the following: (A) hand delivery to the tenant or any occupant of the tenant's dwelling over the age of 16 years at the tenant's dwelling; (B) facsimile to a facsimile number the tenant provided to the landlord for the purpose of receiving notices; or (C) taping the notice to the inside of the main entry door of the tenant's dwelling.1 32 Any change in the landlord's parking and towing policies must apply to all of the tenants in the same multiunit complex.' 33 If a change to the policy is made, it must be based on specific reasons, including: (1) necessity, (2) safety or security of tenants, (3) construction on the premises, or (4) respect for other tenants' parking rights.1 34 Policy changes could also be adopted based on the tenant's written consent.' 35 Changes in the policy have no effect until the fourteenth day after the notice date of the change is delivered to the tenant, unless the change is the result of a construction or utility emergency.136 A landlord's failure to comply with these requirements can result in substantial civil liability. The Texas Property Code holds landlords liable who authorize the towing of a tenant's vehicle in violation of these statutory provisions."' For example, a landlord is liable in damages for violating the Texas Property Code in the amount of a $100, plus costs incurred by the tenant for towing or storing the vehicle.' 3 8 Further, the nonprevailing party is statutorily liable for the prevailing party's "reasonable attorney's fees and court costs." 3 9 This provision makes it easier for an individual to bring a

claim for unscrupulous towing practices regardless of the amount in controversy. Additionally, the Texas Property Code holds landlords liable for damage caused to their tenants' vehicles by the negligence of the towing company the landlord hired if the towing company is not insured to cover the damage.1 40 Accordingly, landlords should take heed of these legislative requirements. Otherwise, they expose themselves to substantial liability under the Texas Property Code as well as the TTBA. 131.

132.

133.

134.

135.

136.

137.

138.

139.

140.

Id. § 92.0131(d)(1)-(2).

Id § 92.0131(d)(2)(A)-(C).

Id. §92.0131(e)(1)(A).

Id. Id § 92.0131(e)(1)(B).

Id § 92.0131(e)(2).

Id. § 92.0131(f).

Id Id Id § 92.0131(g).

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CONSUMER REMEDIES

A.

The 452 Hearing(aka the "Tow Hearing')

1.

What Is a 452 Hearing?

Owners of wrongfully towed vehicles have a unique tool at their disposal to seek the refund of their towing fees-the 452 Hearing.

Commonly referred to as a "Tow Hearing," the 452 Hearing is an expedited and low-cost judicial process that exists by statute only.141 This remedy is so named for section 2308.452 of the Texas Occupations Code under which it is authorized. The most noteworthy characteristic of the 452 Hearing is that, according to the Texas Attorney General, it is neither a criminal nor a civil proceeding.1 42 It is a creature of statute.1 4 3 Thus, there is an ongoing question as to what, if any, rules of civil procedure apply to a 452 Hearing.

452 Hearings lack the usual parties found in a lawsuit. Additionally, unlike a lawsuit, they do not result in a judgment. A party requesting relief at a Tow Hearing is not a plaintiff, but rather "[t]he owner or operator of [the] vehicle."'" There are no defendants. Instead, the court provides notice of the hearing to the vehicle owner or operator, "the parking facility owner or law enforcement agency that authorized the removal of the vehicle, the towing company, and the vehicle storage facility in which the vehicle was placed." 4 5 Instead of a judgment, an "award" is issued under the TTBA that is deemed to be enforceable as a judgment for a debt.1 4 6 This award must be accompanied by findings of fact and conclusions of law issued by the justice court.1 47 This award may be against either: (1) the vehicle owner or operator, or (2) "the towing company, vehicle storage facility, or parking facility owner or law enforcement agency that authorized the removal" of the vehicle.1 4 8 Finally, justices of the peace have discretion to award 49 attorney's fees and court costs to a prevailing party in a 452 Hearing.1

141.

See, e.g., Wilt v. City of Greenville Police Dep't, No. 06-10-00107-CV, 2011 WL 1600509 (Tex. App.-Texarkana Apr. 29, 2011, no pet.) (mem. op.).

142.

Tex. Att'y Gen. Op. No. GA-0316 (2005).

143.

See TEX. OCC. CODE ANN. § 2308.452 (West 2012).

144.

Id. 145.

Id § 2308.458(b).

146.

See id § 2308.458(e).

Id § 2308.458(d).

147.

148.

Id § 2308.45 1(a)-(b).

149.

Id. § 2308.458(e)(1).

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452 HearingProceduresand Deadlines

As stated above, a 452 Hearing is an expedited judicial process. A written hearing request is due to the court within two weeks after the vehicle was towed or booted, excluding weekends and legal holidays.150 However, if the tow company or vehicle storage facility does not give the owner or operator of the towed vehicle notice of her right to a Tow Hearing, the fourteen-day deadline for request does not apply, and the owner or operator can submit a hearing request at any time.' 5 1 Moreover, the fourteen-day deadline for a hearing request does not begin to run until the tow company or vehicle storage facility provides the owner or operator with the necessary information to complete the hearing request.1 52 The hearing on the application must be conducted within twenty-one days after the date the application is received by the court.1 53 The fourteen-day hearing request deadline is, to say the least, poorly worded. The text of the TTBA appears as follows: Except as provided by Subsections (c) and (c-1), a person entitled to a hearing under this Chapter must deliver a written request for the hearing to the court before the 14th day after the date the vehicle was removed and placed in the vehicle storage facility or booted, excluding Saturdays, Sundays, and legal holidays.1 54 The language of the statute requires the request for a Tow Hearing to be delivered to the court before the fourteenth day after the vehicle was towed or booted.' 55 The Texas Code Construction Act requires courts to construe words and phrases in context, based on grammar rules and common usage. 15 6 Webster's Dictionary defines "before" to mean "in advance" or "at an earlier time."' 57 Thus, reading section 2308.456(a) in plain English seems to imply that the request deadline is not the fourteenth day, but rather one day in advance of the fourteenth day. In other words, the deadline appears to be 11:59 p.m. on the thirteenth day following the date the vehicle was towed or booted.

This interpretation is further supported by the fact that the Texas Legislature chose not to include the wording "on or before" or "within 14 days" from the date the vehicle was towed or booted in the TTBA. A fundamental canon of statutory construction is "expressio unius est exclusio 150.

151.

152.

153.

154.

155.

156.

Id. § 2308.456(a).

Id. § 2308.456(c).

Id § 2308.456(c-1).

Id § 2308.458(a).

Id. § 2308.456(a).

Id. TEX. Gov'T CODE ANN. § 311.011(a) (West 2013).

157.

MERRIAM-WEBSTER'S COLLEGIATE DICTIONARY 110 (1 Ith ed. 2003).

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alterius," which means "to express or include one thing implies the exclusion of the other." 58 Conceivably, therefore, had the legislature intended that the TTBA provide for a request for a Tow Hearing "on or before the 14th day" or "before the end of the 14th day" following the date the vehicle was towed, it would have chosen that language. Instead, section 2308.456(a) simply says "before the 14th day."l5 9 By including "before," the legislature excluded the idea of "on or before."

Adding to the confusion, section 2308.456(a) of the Texas Occupations Code appears to exclude all weekends and legal holidays from its deadline calculation.160 If weekends and legal holidays are not "counting days," then the TTBA grants more than thirteen (or fourteen) calendar days to file because at least four days (the weekends) will be skipped in calculating the filing deadline. However, even this filing deadline calculus is not without its quirks.

Excluding weekends and holidays would grant additional filing time to those who are towed on a Saturday versus those who are towed the following Monday. For example, assume that John is towed on Saturday and Susan's car was towed on the following Monday. Both John and Susan will have to file their respective applications for a Tow Hearing "before the 14th day after the date" each was towed.161 However, despite the fact that John was towed two days prior to Susan, John's filing deadline would be only one day before Susan's. While this results in each person having the same number weekdays and nonholidays, it results in one applicant having an additional weekend day to prepare and locate counsel for the hearing.

In the example above, John would have eighteen calendar days to file the response if weekends and the day the car was towed are excluded. Similarly, Susan would have seventeen calendar days until the deadline. Both John and Susan would have more than fourteen calendar days to request the 452 Hearing, but in order to know that, they would have had to engage in a thorough analysis of the TTBA, learned to skip weekends, and known the court's holiday schedule. Additionally, because the hearings are located in justice courts, they would also have to follow a similar TTBA analysis. This is far too complex a system for a statute designed to protect everyday Texans. It would be much simpler for the statute to give a round number, such as twenty days, include weekends and holidays in day counting, and extend the filing deadline in the event that the 158.

BLACK'S LAW DICTIONARY, supranote 49, 701.

159.

Occ. § 2308.456(a).

160.

Id. ("A person entitled to a hearing under this Chapter must deliver a written request for the hearing to the court before the 14th day after the date the vehicle was removed and placed in the vehicle storage facility or booted, excluding Saturdays, Sundays, and legal holidays.").

161.

Id

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twentieth day fell on a weekend or a holiday to the next day that the courts are open.

The TTBA refers to its deadline as a fourteen-day period, which it clearly is not.' 6 2 This reference does nothing but add to the likelihood of confused consumers and missed deadlines. Imagine for a moment the difficulty a justice of the peace would have keeping a straight face while explaining to a pro se litigant that despite the mention of a fourteen-day period in what is, in essence, a consumer protection statute, there are not really fourteen "counting days" and that the consumer has lost her right to a Tow Hearing. Now imagine the frustration of that pro se applicant with the justice court system.

Ironically, one way to calculate a safe filing date is to ignore the complicated wording of the TTBA and pretend that 452 Hearing requests have a strict filing deadline of ten calendar days. Under this method, an applicant would simply count ten calendar days after the date the car was towed or booted and file the application within that time period (or on the first day following when the courts are open). While this procedure does not follow the letter of the TTBA, it is easy to remember and results in timely filing.

Regardless of how a court interprets section 2308.456(a), Tow Hearing deadlines should be easy to calculate. An unclear filing deadline has no place in a statute designed to help the public in justice court. It has even less place in a statute that is so frequently read and relied on by pro se litigants.

The statute should be clear, concise, and unequivocal. Otherwise, the TTBA may work an injustice on the very people it was designed to protect.

3.

Issues to Adjudicate in Tow Hearings

The issues to be determined at a Tow Hearing are very limited. They include: (1) "whether probable cause existed for the removal and placement of the vehicle"; and (2) "whether a towing charge imposed or collected in connection with removal or placement of the vehicle was greater than the amount authorized" by statute.1 6 3 The latter of these issues is easily determined by reference to state or municipal regulation of the towing industry. The former issue, involving probable cause, is the subject of much debate.

162.

See id. § 2308.456(c-1) (delaying the fourteen-day period's begin date until the towing company provides the owner or operator with the necessary information to complete the hearing request).

163.

Id. § 2308.458(c)(1)-(2); see also Fidelis v. Smith, No. 14-08-00224-CV, 2009 Tex. App. LEXIS 7815, at *2 (Tex. App.-Houston [14th Dist.] Sept. 24, 2009, no pet.) (mem. op.) (per curiam).

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Determining whether probable cause existed for removal and placement of a vehicle is the most commonly disputed issue at a Tow Hearing. 6" Unfortunately, while probable cause is almost always at issue, it lacks a statutory definition. The Regulations also do not attempt to define this phrase either. This issue is complicated further by a dearth of published case law clarifying the issue.

The Fourteenth Court of Appeals in Houston is responsible for the only published analysis of probable cause in Texas. In Fidelis v. Smith, the vehicle owner's car was towed from a parking spot designated as disabled

by Overhaulin' Towing Company because it lacked special plates and a disabled parking placard.' 65 By the time this case had reached the appellate court, Fidelis had argued and lost the case twice (both at the justice court and county court).1 66 The court of appeals affirmed the decision of the county court.' 6 7 In doing so, it addressed the issue of probable cause in the context of "[p]roper [s]ignage."1 68 In reviewing whether probable cause existed for the removal and placement of Fidelis's car, the court of appeals analyzed whether signs prohibiting unauthorized vehicles were in compliance with Subchapter G of the TTBA.1 69 Fidelis argued that the signs prohibiting unauthorized vehicles failed to comply with the TTBA because they were not permanently mounted on a barrier.1 70 The record, however, showed that the signs were, in fact, mounted on iron gates at every entrance to the apartment.171 While it appears that Fidelis was destined to lose this case from the start, it benefits Texas towing law generally by providing insight into how probable case is determined. Fidelis's argument failed because the sign he referenced complied with the TTBA. 17 However, the court's analysis shows that had the signs prohibiting unauthorized vehicles not been in compliance with Subehapter G, the court would have determined a lack of probable cause for the removal of the vehicle. Thus, while not explicitly stating so, the court established the rule that probable cause cannot exist in the removal of a vehicle if the towing signs do not comply with Subchapter G of the TTBA.

164.

165.

166.

167.

168.

169.

170.

171.

172.

See, e.g., Fidelis, 2009 Tex. App. LEXIS 7815, at *2.

Fidelis, 2009 Tex. App. LEXIS 7815, at *1-2.

Id at *2-4.

Id. at *9.

Id. at *5 (emphasis omitted).

Id. at *5-7.

Id at *7.

Id Id. at *7-8.

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Res Judicataand PreclusiveEffects of a Tow Hearing

One common question that arises in the context of a 452 Hearing is what effect it has on the ability of a wrongfully towed individual to bring a later cause of action under section 2308.404 of the Texas Occupations Code. Under the common law, the doctrine of res judicata (or claim preclusion) "prevents the relitigation of a claim or cause of action that has been finally adjudicated, as well as related matters that, with the use of diligence, should have been litigated in the prior suit." 7 3 This doctrine requires that all theories of liability be brought in one suit.1 7 4 At first glance, it would appear that the doctrine of res judicata could apply to prevent a party who recovered at a 452 Hearing from recovering in a subsequent civil action.

The Dallas Court of Appeals recently addressed this issue. In Sisavath v. Oates, the court of appeals stated that the common-law concept of res judicata did not govern 452 Hearings.' 7 5 Rather, the court held that 452 Hearings were governed by section 31.005 of the Texas Civil Practice and Remedies Code, which states: A judgment or a determination of fact or law in a proceeding in small claims court or justice of the peace court is not res judicata and does not constitute a basis for estoppel by judgment in a proceeding in a county court or statutory county court, except that the judgment rendered is binding on the parties thereto as to recovery or denial of recovery.16 The Dallas Court of Appeals held that section 31.005 modified the common law so that res judicata only bars those claims that were actually litigated in the limited-jurisdiction court, effectively applying a form of limited claim preclusion. 77 This is the only opinion to date to examine the preclusive effect of a 452 Hearing on subsequent claims, and perfectly tracks both the letter of the Texas Civil Practice and Remedies Code as well as the intent of the TTBA. As correctly pointed out by Justice Bridges, "The plain purpose of the statute is to narrow the preclusive effect of judgments from courts of limited jurisdiction."'78 Thus, while res judicata would bar the claims that could actually have been litigated in the 452 Hearing, it

173.

Wren v. Gusnowski, 919 S.W.2d 847, 848 (Tex. App.-Austin 1996, no writ) (citing Barr v. Resol. Trust Corp. ex rel. Sunbelt Fed. Say., 837 S.W.2d 627, 628 (Tex. 1992)).

174.

Id. (citing Barr, 837 S.W.2d at 629).

175.

Sisavath v. Oates, No. 05-12-01027-CV, 2014 Tex. App. LEXIS 2908, at *3-5 (Tex. App.-Dallas Mar. 13, 2014, no pet.) (mem. op.).

Id at *34(citing TEX. CIV. PRAC. & REM. CODE ANN. § 31.005 (West 2008)).

176.

177.

Id at *4.

178.

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would not bar a subsequent claim under section 2308.404 because those 17 9 claims were incapable of being brought in a 452 Hearing proceeding.

B.

TTBA Section 2308.404: A Quasi-Qui Tam Cause ofAction

Section 2308.404 of the TTBA also provides for what can be considered a quasi-qui tam action. Qui tam actions are brought under a statute "to sue for a penalty, part of which the government or some specified public institution will receive."' 180 The full Latin phrase describing these actions is "qui tam pro domino rege quam pro se ipso in hac parte sequitur," which translates to "who as well for the king as for himself sues in this matter."'8 ' While a cause of action under section 2308.404 does not necessarily involve a lawsuit on behalf of the "king," there are several similarities between section 2308.404 and traditional qui tam actions.

There can be little doubt that TDLR lacks the capability to review each and every parking facility in Texas for TTBA compliance. Notwithstanding this fact, the TTBA requires a landowner properly to prepare its parking facility for private property tows by a licensee. 82 This specifically includes signage requirements that vary based on the general or individual restriction of spaces. 18 3 If a parking facility is not properly prepared and signed, the tow company's license is ineffective for use on the property, and any 84 nonconsent tow from the parking facility will violate the TTBA.1 A victim of an illegal tow can file a complaint with TDLR that will trigger an investigation. 1 However, section 2308.404 also permits that person to bring a private cause of action against the tow company based on state-granted authority.1 8 6 While the victim of the illegal tow does not technically sue on behalf of the state, there is a substantial amount of coordination between TDLR and a judgment creditor once the judgment is fimal.1 87 First, the TTBA requires that a certified copy of the judgment obtained under Chapter 2308 be submitted to TDLR.188 Second, TDLR is

See TEx. OCC. CODE ANN. § 2308.458(c)(1)-(4) (West 2012) (providing the exclusive 179. issues to be determined at a 452 Hearing).

180.

BLACK'S LAW DICTIONARY, supra note 35, at 1444.

Id. 181.

See Occ. § 2308.301-305.

182.

Id. 183.

See id. §2308.404.

184.

See id. § 2308.460(a).

185.

See id. § 2308.404.

186.

See id. § 2308.460.

187.

Id § 2308.460(c). This section of the Texas Occupations Code is found under 188.

Subchapter J, and refers to both an "award" and a "final judgment," which is somewhat contradictory. See id. § 2308.460. The plain language of the TTBA implies that the enforcement

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required to suspend a licensee's license if the licensee fails to pay the judgment on or before the sixtieth day after the final judgment.' 89 This suspension, however, cannot occur unless TDLR provides thirty-days' notice to the licensee that her license will be suspended.1 90 Third, once the certified judgment is delivered to TDLR, TDLR is required to prohibit a licensee from renewing a license or permit, and taking a licensing examination.'91 Finally, each judgment delivered to TDLR initiates an informal complaint process, which results in an investigation.' 92 The coordination between private litigants and TDLR resulting from a TTBA-based judgment leads this author to refer to section 2308.404 as a quasi-qui tam statute. Section 2308.404 permits a wrongfully towed party to recover against a tow company that violates the TTBA, amplifying the damages in the event of a knowing, intentional, or reckless violation. 193 Thus, the person suing under section 2308.404 is not technically suing on behalf of the state, but using statutory law and regulatory power to recover against a noncompliant company. The state then steps in and begins an investigation using the judgment from the private lawsuit.1 94 VI. FEDERAL PREEMPTION AND STATE TOWING LAWS

A.

The Origin of the Preemption Argument

In 1994, Congress enacted the Federal Aviation Administration Authorization Act (the FAAAA) to eliminate a perceived competitive advantage that arose in favor of certain air carriers over ground carriers. 195 In interpreting this law, the Ninth Circuit held that Federal Express trucks enjoy the same immunity to state and local regulation that its airplanes enjoy because the truck operations were integral to Federal Express's air operations. 96 This decision rendered other ground carriers that were not integral to an air carrier subject to regulations.

provisions apply to both section 2308.404 and an award of damages from a 452 Hearing because it applies to any award under Chapter 2308; however, this should be clarified through amendment.

189.

Id. § 2308.460(b).

190.

Id

191.

192.

Id § 2308.460(d).

See id. § 2308.460(a).

193.

194.

195.

1991).

196.

Id § 2308.404(a), (c).

See id § 2308.460(a).

See Fed. Express Corp. v. Cal. Pub. Utils. Comm'n, 936 F.2d 1075, 1078-79 (9th Cir. See id at 1078.

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State laws or regulations that have a connection or reference to carrier rates, routes, or services will be preempted.' 97 Such preemption may occur even if a state's law has only an indirect effect on the rates, routes, or services.' 98 However, the federal preemption provision might not reach state laws that affect rates, routes, or services if the state law's impact is "too tenuous, remote, or peripheral."' 99 B.

Preemption as an Affirmative Defense

A defendant must assert federal preemption as an affirmative defense. 20 0 As applied to a lawsuit involving towing, the defense of preemption asserts that § 14501(c) of the Interstate Commerce Commission Termination Act of 1995 (ICCTA) preempts the plaintiffs conversion and, potentially, TTBA causes of action.201 However, preemption is a very limited affirmative defense.

Under 49 U.S.C. § 14501(c), a state or local law is preempted only if: "(1) the [state] law is related to a price, route, or service of any motor carrier with respect to the transportation of property, and (2) the [state] law does not fall under one of [the statute's] regulatory exceptions.", 20 2 Accordingly, those asserting this affirmative defense have the burden to 203 prove each element of preemption.

A "motor carrier" is a person that provides transportation in a motor vehicle for compensation.20 4 Tow trucks are "motor carrier[s] of property" under the ICCTA, and thus subject to this regulation. 2 05 The question is, therefore, whether federal law preempts state towing regulations.

As with many questions in law, the answer is, "it depends." Federal law generally preempts the regulation of motor carriers, including tow truck operators, by state and local governments. 2 06 49 U.S.C. § 14501(c) provides

197. Rowe v. N.H. Motor Transp. Ass'n, 552 U.S. 364, 370 (2008) (citing Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 (1992)).

198. Id. (citing Morales, 504 U.S. at 384).

199. Id at 371 (quoting Morales, 504 U.S. at 386).

200. See Harrill v. A.J.'s Wrecker Serv., Inc., 27 S.W.3d 191, 194 (Tex. App.-Dallas 2000, pet. dism'd w.o.j.).

201. See 49 U.S.C. § 14501(c)(1)-(2) (2012).

202. Tillison v. Gregoire, 424 F.3d 1093, 1098 (9th Cir. 2005) (citing 49 U.S.C. § 1 45 01(c)).

203. See, e.g., A.J.'s Wrecker Serv. of Dali., Inc. v. Salazar, 165 S.W.3d 444, 446-47, 44950 (Tex. App.-Dallas 2005, pet. denied) (noting that the defendant wrecker service argued on appeal that the plaintiffs conversion claims were preempted by 49 U.S.C. § 14501(c), and the conversion claim did not fall within the safety exception to preemption).

204. 49 U.S.C. § 13102(14).

205. City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 430 (2002) (alteration in original).

206.

See VRC LLC v. City of Dallas, 460 F.3d 607, 612 (5th Cir. 2006).

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that "a State, political subdivision of a State, or political authority of 2 or more States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier." 207 The state may only regulate the "price of for-hire motor vehicle transportation by a tow truck." 20 8 At least one court of appeals has determined that the ICCTA preempts conversion and tort claims against towing companies. 209 In A.J. 's Wrecker Service ofDallas, Inc. v. Salazar, the court examined whether Salazar could maintain suit against A.J.'s for civil theft, conversion, and trespass to chattels. 2 10 The court found that under preemption analysis, general tort claims such as conversion, theft, and trespass to chattels did not fall under any of the safety exceptions to § 14501.211 Furthermore, the court found that a conversion claim for unauthorized towing of the plaintiffs vehicle is related to the services of the towing company as a carrier, and is therefore preempted by federal law.212 Enforcement of tort law, the Fifth Circuit determined, would undermine the purpose of economic deregulation. 2 13 C.

The Safety Exception

The ICCTA contains several express exceptions to preemption. The primary exception relevant to this Article is the safety regulation exception, which exempts state laws where preemption would "restrict the safety regulatory authority of a State with respect to motor vehicles."2 1 4 The safety exception has been "given [a] broad construction." 2 15 Thus, statutes and regulations that are "reasonably related and genuinely responsive to safety concerns" are not preempted, even if they also work to accomplish economic regulation or consumer protection.216 Under the safety exception, states have the authority to regulate tow safety operations pursuant to their police power.2 17 Furthermore, the safety

207.

49 U.S.C. § 14501(c)(1).

208.

49 U.S.C. § 14501(c)(2)(C); Salazar, 165 S.W.3d at 447.

209.

See Salazar, 165 S.W.3d at 449.

210.

Id. at 446.

211.

Id. at 450.

212.

Id at 449.

213.

Id 214.

49 U.S.C. § 14501(c)(2)(A); see also VRC LLC v. City of Dallas, 460 F.3d 607, 609 (5th Cir. 2006).

215.

Merlin Transp., Inc. v. Denton, No. 3:11-cv-365-M, 2011 U.S. Dist. LEXIS 88832, at *9 (N.D. Tex. Aug. 9, 2011) (quoting VRC, 460 F.3d at 612).

216.

VRC, 460 F.3d at 615.

217.

See City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 434-35 (2002).

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exception is available to local as well as state governments. 2 18 in City of Columbus v. Ours Garage & Wrecker Service, Inc., the United States Supreme Court found that both state and local governments can exercise the "safety regulatory authority" free from federal preemption. 2 19 The Court held that state governments might "delegat[e] to municipalities and other local units the State's authority to establish safety regulations governing motor carriers of property, including tow trucks." 220 However, the Court warned that states and municipalities could not hide economic regulation under the guise of safety regulation. The Court put it clearly: "Local regulation of prices, routes, or services of tow trucks that is not genuinely responsive to safety concerns garners no exemption from § 14501(c)(1)'s preemption rule."22 1 Courts have recognized that "[c]ase law both predating and applying the principles discussed in Ours Garage has on the whole given a broad construction to the safety regulation exception." 2 2 2 The Dallas Court of Appeals is of the opinion that the safety exception applies to specific legislation, as opposed to common-law causes of action directed at motor carriers.223 Additionally, the Fifth Circuit has at least twice applied the safety regulation exception to towing regulations, both times concluding that the regulations fell within the safety exception.22 4 In VRC LLC v. City ofDallas, a towing company challenged a city ordinance that required signs warning of the potential risk of towing to be posted on private property twenty-four hours before a vehicle could be towed without the owner's consent.225 The court reviewed evidence of Dallas's motive and purpose in enacting the ordinance, and concluded that the ordinance was reasonably related and genuinely responsive to its concern about "violent confrontation[s] between unwarned vehicle owners and tow truck drivers" that could occur without clear signage warning of the risk of towing.226 218. Id. at 435.

219. Id at 439-40.

220. Id at 428.

221. Id. at 442.

222. E.g., VRC, 460 F.3d at 612.

223. A.J.'s Wrecker Serv. of Dall., Inc. v. Salazar, 165 S.W.3d 444, 450 (Tex. App.-Dallas 2005, pet. denied); see also Galactic Towing, Inc. v. City of Miami Beach, 341 F.3d 1249, 1251 (11th Cir. 2003) (per curiam) (involving a city's nonconsensual towing ordinance requiring a permit, written authorization for tow, and storage within city limits within safety exception); Cole v. City of Dallas, 314 F.3d 730, 735 (5th Cir. 2002) (per curiam) (involving a municipal regulation prohibiting a person with a criminal conviction from obtaining a permit to operate a tow truck); Ace Auto Body & Towing, Ltd. v. City of New York, 171 F.3d 765, 774 (2d Cir. 1999) (involving an ordinance requiring licensing and disclosure of criminal history within safety exception).

224.

VRC, 460 F.3d at 615; Cole, 314 F.3d at 735.

225.

VRC, 460 F.3d at 608-09.

226. Id. at 615.

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Similarly, in Cole v. City of Dallas, a city ordinance in Dallas was challenged after the plaintiff was denied a wrecker driver's permit due to a prior criminal conviction.22 7 The Dallas ordinance prohibited a person from receiving a wrecker driver's permit if she had been convicted of certain crimes. 2 28 After reviewing the ordinance and its express concern for safety, the court held that the ordinance was clearly exempt from preemption under the safety regulation exception.229 Persuasive authority analyzing preemption and the safety exception is also readily available. In one opinion, a California court of appeals upheld laws establishing licensing, reporting, record keeping, and other requirements. 2 30 The Servantes court cited several previous cases in declaring that the unexpected loss of a vehicle's use directly affected the safety of its operators. 23 1 The court reasoned that the operator of a towed vehicle could be left stranded, and that legislation that assists members of the public in avoiding the loss of their vehicles-and also helps in reclaiming such vehicles once towed-"fairly and clearly promotes the safety and welfare of the public." 2 32 The State Office of Administrative Hearings (SOAH) recently addressed the issue of preemption of state towing regulation. In Texas Department of Licensing and Regulation v. Merlin Transport, Inc., Excalibur Towing Company filed a plea to the jurisdiction based upon federal preemption by relying on A.J. 's Wrecker Service.2 33 In denying the plea to the jurisdiction, Administrative Law Judge Berger cited to the safety language contained in the Texas Administrative Code,234 and concluded that "the violations alleged . .. fall under the . .. safety exemption and are not preempted by [fjederal law." 235 Thus, as far as SOAH is concerned, the TTBA is not preempted by the ICCTA.

227.

Cole, 314 F.3d at 732.

228.

Id 229.

Id. at 735 ("That the criminal history regulation has, at its core, concern for safety is manifest. It is difficult to imagine a regulation with a more direct protective nexus or peripheral economic burden.").

230.

See People ex rel. Renne v. Servantes, 103 Cal. Rptr. 2d 870, 880 (Ct. App. 2001).

231.

Id at 878 (citing Berry v. Hannigan, 9 Cal. Rptr. 2d 213, 215 (Ct. App. 1992); Crane Towing, Inc. v. Gorton, 570 P.2d 428, 434 (Wash. 1977) (en banc)).

232.

Servantes, 103 Cal. Rptr. 2d at 878.

233.

Order No. 3 Denial of Respondent's Plea to the Jurisdiction and Grant of Respondent's Motion to Change Venue at 1-2, Tex. Dep't of Licensing & Reg. v. Merlin Transp., Inc., (July 14, 2014) (SOAH No. 452-14-3330.TOW).

234.

16 TEX. ADMIN. CODE § 86.1 (2014) (Tex. Dep't of Licensing & Reg., Authority and Purpose).

235.

Order No. 3, supra note 168, at 3.

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Preemption and Causes ofAction Related to Towing

Federal preemption affects both state and consumer actions in the same way. As one court stated: It is irrelevant that it is an individual . . . rather than the state which seeks to enforce state policy. . . . The State may not escape the preemptive effect of federal statutes by using private litigation as a means of enforcement rather than its own police power....

[T]he United States Supreme Court ... squarely reject[ed] the idea that a suit brought by private parties is not enforcement of state law.236 Therefore, regardless of whether a state or individual asserts a cause of action, federal preemption will apply if it does not fall within an exception to preemption.

Just as with a state's enforcement action, an individual's cause of action in tort or under the TTBA will need to be analyzed for an exception to the ICCTA. The critical question when analyzing the safety exception is whether the statute being enforced relates to safety, even if it also incorporates consumer protection remedies. As stated above, the two are not mutually exclusive.2 37 Retreat from preemption is readily evident in both Texas and California. It is highly unlikely that a court would strike down a cause of action asserted under the TTBA given the clear ties each jurisdiction has made to the safety of both the vehicle owner and the tow truck driver. The safety exception, however, is not the only means of avoiding preemption of towing regulations.

E.

The United States Supreme Court's Take on Preemption:Dan's City Used Cars, Inc. v. Pelkey

One of the most interesting cases concerning federal preemption's relationship with the towing and vehicle storage industry is Dan's City Used Cars, Inc. v. Pelkey.238 In Dan 's City, the United States Supreme Court resolved the question of "whether 49 U.S.C. § 14501(c)(1) preempts a vehicle owner's state-law claims against a towing company regarding the company's post-towing disposal of [a] vehicle." 2 39 In analyzing federal preemption under the FAAAA, the Court concluded that Pelkey's state-law claims against Dan's City Used Cars, Inc.

236.

Whitten v. Vehicle Removal Corp., 56 S.W.3d 293, 310 (Tex. App.-Dallas 2001, pet. denied) (sixth alteration in original) (internal quotation marks omitted).

237.

See discussion supra note 216.

238.

Dan's City Used Cars, Inc. v. Pelkey, 133 S. Ct. 1769 (2013).

239.

Id. at 1777.

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were not preempted because they were not sufficiently "related to . . the transportation of property." 240 These quoted words, the Court held, "massively limit[ed] the scope of preemption" under the FAAAA. 241 The Court stated that for purposes of preemption, "it is not sufficient that a state law relates to the price, route, or service of a motor carrier in any capacity; the law must also concern a motor carrier's transportation of property." 242 The New Hampshire regulation in question did "not limit when, where, or how tow trucks may be operated."24 3 Instead, it regulated the disposal of vehicles once the transportation of the vehicle had ended.2 44 Dan 's City is fascinating because the Supreme Court did not entirely slam the door on the preemption of state-law claims. Instead, it provided guidance for future preemption analysis under the FAAAA. Dan's City stated that where "Congress has superseded state legislation by statute, [a court's] task is to identify the domain expressly pre-empted."245 It also stated that the phrase "related to," when considering a state law's relation to the "rates, routes, or services" of a motor carrier, "should [not] be read with an 'uncritical literalism.' 24 6 In other words, the FAAAA did "not preempt state laws affecting carrier prices, routes, and services in only a tenuous, remote, or peripheral ... manner." 24 7 Pelkey's claims in Dan 's City survived preemption because they did not relate to: (1) the transportation of property, or (2) the service provided by a motor carrier.248 The Court determined this based on the addition of the phrase "with respect to the transportation of property" to the FAAAA. 24 9 This phrase "massively limit[ed]" the FAAAA's preemptive scope by requiring that the state regulation of motor carriers relate to the service of motor carriers and that such relation be tied to the actual transportation of property. 250 Thus, to prove the affirmative defense of preemption under the FAAAA, the defendant must demonstrate that the state regulation both: (1) relates to the service of a motor carrier, (2) with respect to the transportation of property.

240.

Id. at 1778 (quoting 49 U.S.C. § 14501(c)(1) (2012)) (internal quotation marks omitted).

241.

Id. 242.

Id. at 1778-79 (internal quotations marks omitted).

243.

Id at 1779.

244.

Id 245. Id at 1778 (quoting Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 541 (2001)) (internal quotation marks omitted).

246.

Id. 247.

Id (alteration in original) (internal quotation marks omitted).

248.

Id. 249.

Id. 250.

Id at 1778-79.

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Without demonstrating both, the FAAAA will not preempt regulations affecting the "price, route, or service" of a motor carrier.25 49 U.S.C. § 13102(23)(B) defines "transportation" as "services related to th[e] movement [of property], including arranging for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, packing, unpacking, and interchange of passengers and property." 252 The Court held that Pelkey's consumer-protection and negligence claims were not "related to th[e] movement" of his car. 253 Pelkey instead sued Dan's City for failure to comply with the statutory consumer protection provisions related to the disposal of his vehicle and "commonlaw duties of care as a bailee of his stored vehicle."254 Because the New Hampshire statute in question did not regulate "when, where, or how tow trucks may be operated," and Pelkey sought redress only for Dan's City's conduct subsequent to the transportation, the transportation element failed and Pelkey's claims were not preempted.255 In analyzing the second requirement for FAAAA preemption, the Court stated that Pelkey's claims survived because his claims were ,,256 64 unrelated to a 'service' a motor carrier renders its customers."6 The service Dan's City provided Pelkey "was the removal of Pelkey's car from his landlord's parking lot," and the Court held this service did involve the movement of property.25 7 However, the service Dan's City provided had ended several months prior to the conduct on which the New Hampshire statutory and common-law claims were based.258 While the New Hampshire statute addressed storage companies and garage owners or keepers, it did not address transportation. 25 9 Thus, because the Court determined that the New Hampshire regulations at issue "ha[d] neither a direct nor an indirect connection to any transportation services a motor carrier offers its customers," such regulations fell outside of the preemptive compass of §

14501.260 The Supreme Court continued its analysis by reviewing two other arguments advanced by Dan's City: (1) the "exception" argument, and (2) the "related to" argument. 2 61 Dan's City's "exception" argument contended

251.

252.

253.

254.

255.

256.

257.

258.

259.

260.

261.

Id. 49 U.S.C. § 13102(23)(B) (2012).

Dan's City, 133 S. Ct. at 1779 (alteration in original).

Id. Id. Id. Id. Id Id. Id. Id. at 1780.

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that a state may only regulate motor carriers when the state's law comes within an exception found in 49 U.S.C. § 14501(c)(2), (3), and (5).262 Dan's City argued that because Pelkey's claims did not fall within any exception to preemption, those claims were preempted.263 The Court quickly shot this argument down, stating that it "exceed[ed] sensible bounds." 264 Exceptions, the Court held, may sometimes be a "helpful interpretive guide," but "do not in themselves delineate the scope of the rule." 2 65 The exceptions to the general rule of preemption set out in § 14501(c)(1) involve situations where a state may regulate "when it would otherwise be precluded from doing so," but provides no more control than that.266 As an example of how Dan's City's exceptions argument failed, the Court analyzed zoning regulations. The Court held that these state laws were "peculiarly within the province of state and local legislative authorities."267 While a state's zoning regulations might govern the physical location of motor carrier operations, they fell outside of the preemptive sweep of § 14501(c)(1) because such ordinances are "not related to a price, route, or service of any motor carrier . .. with respect to the transportation of property." 2 68 The same was found true for New Hampshire's regulation of the disposal of stored vehicles.269 The Supreme Court also rejected Dan's City's second "related to" argument. Dan's City argued that Pelkey's claims were related to its towing service because the payment for the tow was only obtained through the sale of Pelkey's car.270 In analyzing this argument, the Court stated that without such state-law claims there would be no governing law for "resolution of a non-contract-based dispute" such as the one at issue. 2 7 1 No applicable 272 federal law spoke to the dispute at issue.22 Carried to its logical conclusion, this related to argument would not only eliminate any potential recourse for vehicle owners but also would eliminate the authority of a towing company to dispose of unclaimed vehicles.273 In the words of the Supreme Court, "No such design can be attributed to a rational Congress." 274 262.

Id. 263.

Id 264.

Id 265.

Id. 266.

Id 267.

Id. (quoting Warth v. Seldin, 422 U.S. 490, 508 n.18 (1975)).

268.

Id. (alteration in original) (quoting 49 U.S.C. § 14501(c)(1) (2012)) (internal quotation marks omitted).

269.

See id. at 1779.

270.

Id. at 1780.

271.

Id 272.

Id at 1780-81.

273.

Id at 1781.

274.

Id

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Dan's City provides unprecedented guidance in analyzing TTBA statelaw claims in the context of federal preemption. This analysis can be broken down exactly as in Dan's City, and the result is remarkably similar. First, in analyzing whether the FAAAA preempts state-law claims under the TTBA, the statutory provisions granting such claims must be examined to determine whether they relate to: (1) the transportation of property, and (2) the service provided by a motor carrier. 275 If either of these is absent, then preemption will fail under the analysis in Dan's City.27 6 As discussed above, the TTBA grants vehicle owners or operators relief under two different provisions: (1) section 2308.404 (providing for a civil lawsuit against a tow company or parking facility owner), and (2) section 2308.452 (providing for a 452 Hearing).2 77 Section 2308.404 provides that a tow company or parking facility owner who violates the TTBA shall be liable for damages arising from removal and costs of storage, and may be liable for exemplary damages under certain circumstances. 278 Section 2308.452 provides for a Tow Hearing to determine probable cause at which costs of the tow and attorney's fees may be awarded.279 Most commonly, claims under sections 2308.404 and .452 focus on the required signage located at the parking facility, and whether the signage was TTBA-compliant. 28 0 The signage requirement, therefore, will be the focus of this analysis.

The TTBA's signage requirements are unlikely to be preempted under Dan's City for several reasons. First, proper TTBA-compliant signage at a parking facility must be installed not less than twenty-four hours before the towing activity occurs.281 Thus, the signage must be in place well before any transportation by a motor carrier can occur. Second, the TTBA's signage requirements govern activity that must occur while an unauthorized vehicle is parked at the parking facility. 2 82 Therefore, just as Pelkey's claims survived preemption because the transportation by a motor carrier had ceased, the TTBA's requirements would likely survive because they regulate activity that must occur before transportation has begun.

Another important aspect of section 2308.252 is that it governs the right of a parkingfacility owner, not a towing company, to cause the vehicle

275.

Id. at 1778-79.

276.

See id.

277.

TEX. OCC. CODE ANN. §§ 2308.404, .452 (West 2012).

278.

Id. § 2308.404(a)(1)-(2), (c).

279.

Id. §§ 2308.451-.452.

280.

See, e.g., Fidelis v. Smith, No. 14-08-00224-CV, 2009 Tex. App. LEXIS 7815, at *2 (Tex. App.-Houston [14th Dist.] Sept. 24, 2009, no pet.) (mem. op.) (per curiam).

281.

TEX. OCC. CODE ANN. § 2308.252(a)(1) (Supp. 2014).

282.

Id.

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to be removed and stored at a vehicle storage facility. 28 3 Thus, section 2308.252 does not regulate the service of a motor carrier; it regulates the owner or operator of the real property where the unauthorized vehicle is located. While a towing company might argue that the activity of the parking facility owner is related to the service it provides as a motor carrier, this would likely fall victim to the same analysis in Dan's City regarding obtaining payment.

Unlike Pelkey's claims in Dan 's City, TTBA claims for signage violations would face a greater challenge in being unrelated to a motor carrier's service to its customers. The Court in Dan 's City stated that Pelkey's claims endured because his claims were unrelated to motor carrier services rendered to customers with respect to the transportation of property.284 The service rendered was "the removal of Pelkey's car from his landlord's parking lot." 2 85 Under the TTBA, the service provided by a Texas towing company is the removal of vehicles from a parking facility.

Therefore, the service does involve the movement of property. The TTBA signage requirements could be construed to have a direct or indirect connection to transportation services provided by a motor carrier. Also, such regulations could be construed to "freez[e] into place services that carriers" may otherwise choose to discontinue, and open the way for "a patchwork of state service-determining laws, rules, and regulations."286 Indeed, the case law on the subject of towing, whether analyzed in state or federal courts, discusses state or local regulation of towing companies to some extent, and all state and local law is to some degree unique.

However, it is not sufficient under Dan 's City that the regulations only be "related to" the service of a motor carrier; they must also concern the "transportation of property." 287 The Supreme Court explained that unlike the Americans with Disabilities Act's air carrier preemption language, the FAAAA's language "with respect to the transportation of property.... massively limits" its preemptive scope. 288 Thus, without the TTBA's signage requirements being both related to the transportation of property and the service provided by a motor carrier, the TTBA's signage requirements would survive a preemption attack. Simply stated, one out of

283.

Id § 2308.252(a).

284.

Dan's City, 133 S. Ct. at 1779.

285.

Id 286.

Id at 1780 (alteration in original) (quoting Rowe v. N.H. Motor Transp. Ass'n, 552 U.S. 364, 372, 373 (2008)).

287.

Id at 1778 (quoting 49 U.S.C. § 14501(c)(1) (2012)).

288.

Id (quoting City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 449 (2002)).

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two Dan's City factors is not enough to preempt the TTBA under the FAAAA. The TTBA's signage requirements would also survive Dan's City's second "related to" argument in favor of preemption. Conceivably, a parking facility owner or towing company might argue that the signage requirements are related to the activity of the towing company because the signage was one of the requirements under Texas law allowing the vehicle to be towed. Under Dan's City, this argument fails because the logical result of this preemption cannot be attributed to the intent of a rational Congress. If a court found that section 2308.252 of the TTBA was preempted, then neither a parking facility owner nor a towing company would have the legal authority to remove an unauthorized vehicle. Their authority to do so is derived from the very same statutory provision.

Additionally, without the protections afforded by sections 2308.404 and .452, which rely specifically on the notice provisions of section 2308.252, there would be no remedy available to a consumer. No federal law speaks to this issue. Thus, a related to argument would not only effectively preempt the vehicle owner's state-law claims under sections 2308.404 and .452 but also effectively eliminate the right of the parking facility owner to authorize the vehicle's removal in the first place.

Finally, the TTBA would likely survive a Dan's City "exceptions" argument under the FAAAA. Under the TTBA, Texas regulates the physical location of motor carrier operations through signage requirements.289 In essence, the TTBA says that without TTBA-compliant signage, the physical location of motor carrier operations-in this case towing operations-cannot occur. 2 90 As Dan's City stated, the physical location of motor carrier operations "are peculiarly within the province of state and local legislative authorities." 2 9 1 When combined with the fact that TTBA signage requirements regulate the right of a parking facility owner rather than a motor carrier,292 this strongly indicates that the TTBA's signage requirements would survive an exceptions preemption argument.

Dan's City's conclusion draws all of the above into sharp focus.

Justice Ginsberg wrote the following: "In sum, Dan's City cannot have it both ways. It cannot rely on New Hampshire's regulatory framework as authorization for the sale of Pelkey's car, yet argue that Pelkey's claims, invoking the same state-law regime, are preempted." 29 3 Just as in Dan's City, towing companies and parking facility owners cannot rely on the 289.

290.

291.

292.

293.

See TEX. OCC. CODE ANN. § 2 308.252(a)(1) (Supp. 2014).

See id.

Dan's City, 133 S. Ct. at 1780.

Occ. § 2308.252(a) Id. at 1781.

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TTBA as authorization to remove a vehicle without the owner's consent and then argue that the owner's claims, invoking rights under the same state-law regime, are preempted. The TTBA gives rise to a parking facility owner's authority to remove a vehicle. It also creates the licenses and permits that allow towing companies to remove and store vehicles. Vehicle owners' claims under the TTBA rest on the same provisions. As Justice Ginsberg simply put it, you "cannot have it both ways."2 94 VII. CONCLUSION An ordinary licensed activity can involve an extraordinary amount of interplay between different areas of the law. In towing, the interaction between business, property, administrative, and federal law balances the competing interests of vehicle owners with property owners. While this Article has examined a great deal of the issues related to Texas towing laws, it is far from exhaustive. Without additional case law, many issues will remain unresolved. Thanks to the Supreme Court's guidance in Dan's City, however, at least one part of this area of law is clear: If a towing company wants to play the game, it cannot hide behind preemption to avoid playing by the rules.

294.

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APPENDIX A: CASE LAW SUMMARY

1.

Tex. Att'y Gen. Op. No. GA-0316 (2005).

This opinion is one of the most in-depth discussions of a 452 Hearing.

In Tex. Att'y Gen. Opinion No. GA-0316, the Texas Attorney General's Office explained the nature of nonconsent Tow Hearings and how courts should deal with them. 29 5 The Attorney General issued this opinion in response to questions by two state representatives on how appeals from Tow Hearings were to be handled by a magistrate court.296 In response, the Attorney General stated that appeals were only authorized if contained in the statute.297 This opinion analyzed the applicable statute while it was still located in the Texas Transportation Code. However, the analysis is likewise applicable to the TTBA. 2. Dan's City Used Cars, Inc. v. Pelkey, 133 S. Ct. 1769 (2013).

Once towing has concluded, state-law claims flowing from the storage and disposal of a vehicle are not appropriately joined "to a motor carrier's service with respect to the transportation of property" to permit preemption pursuant to 49 U.S.C. § 14501(c)(1).298 For purposes of preemption under the FAAAA, it is not sufficient that a state law relates to the "price, route, or service of a motor carrier in any capacity"; in addition, the law must relate to a motor carrier's "transportation of property."299 Title 49 of the United States Code defines "transportation," in part, as "services related to the movement [of property], including arranging for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, packing, unpacking, and interchange of passengers and property."o 3.

City of Columbus v. Ours Garage& Wrecker Serv., Inc., 536 U.S. 424

(2002).

Federal legislation preempts provisions by "a State [or] political subdivision of a State ... related to a price, route, or service of any motor

295.

See Tex. Att'y Gen. Op. No. GA-0316 (2005).

296.

Id. 297.

Id. 298.

Dan's City Used Cars, Inc. v. Pelkey, 133 S. Ct. 1769, 1775 (2013) (emphasis omitted); 49 U.S.C. § 14501(c)(1) (2012).

299.

Dan's City, 133 S. Ct. at 1778-79 (internal quotation marks omitted); 49 U.S.C. § 14501(c)(1).

300.

49 U.S.C. § 13102(23)(B).

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carrier ... with respect to the transportation of property." 301 Congress specified that the preemption order shall not constrain state safety regulations related to motor vehicles-an exception to the general rule.302 49 U.S.C. § 14501(c)(1) unequivocally incorporates "'State[s]' and their 'political subdivision[s]"' into the statement of the general rule.303 However, political subdivisions are not specified in the exception for safety regulation, only states. 304 Section 14501(c) allows a state to delegate the promulgation of safety regulations directing motor carriers of property, as well as tow trucks, to municipalities and other local units. 305 A locality, as § 14501(c) identifies, is a "political subdivision" of the state.3 06 Typically, pursuant to its own constitution and laws, a political subdivision may exercise any amount of state power that the state decides to assign to the subdivision.307 Unless expressly contradicted, "Congress'[s] reference to the 'regulatory authority of a State' should be read to preserve, not preempt, the traditional prerogative of the States" to parse out power to their political subdivisions.3 08 Tow trucks are "motor carrier[s] of property" within the scope of § 14501(c).'09 This interpretation is supported by § 14501(c)(2)(C), which relates to nonconsensual tows (e.g., tows of illegally parked or abandoned vehicles). 3 '0 This provision plainly designates tow trucks as "motor carrier[s] of property," and exempts from federal preemption state and local regulation of "the price of for-hire motor vehicle transportation by a tow truck," if such transportation is performed without the prior consent or authorization of the owner or operator of the motor vehicle. 3 11 Congress's intent in enacting § 14501(c)(2)(A) is to ensure that its preemption of states' economic authority over motor carriers of property under § 14501(c)(1) does not restrict "the preexisting and traditional state police power over safety." 3 12 This preexisting state power usually includes

301.

City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 428 (2002) (alterations in original) (quoting 49 U.S.C. § 14501(c)(1)).

302.

Id.; 49 U.S.C. § 14501(c)(2)(A).

303.

Id. (alterations in original) 304.

Ours Garage, 536 U.S. at 428; 49 U.S.C. § 14501(c)(2)(A).

305.

Ours Garage, 536 U.S. at 428.

306.

Id. (emphasis added).

307.

Id. at 428-29.

308.

Id at 429.

309.

Id at 430 (alteration in original).

310.

Id.; 49 U.S.C. § 14501(c)(2)(C).

311.

Ours Garage, 536 U.S. at 430 (quoting 49 U.S.C. § 14501(c)(2)(C)) (alteration in original).

312.

Id. at 439.

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the choice to delegate the state's safety regulatory authority to smaller localities. 313 The Supreme Court has indicated that "§ 14501(c)(2)(A) shields from preemption only safety regulatory authority (and authority of a State to regulate . . with regard to minimum amounts of financial responsibility relating to insurance requirements)."3 14 However, "[1]ocal regulation of prices, routes, or services of tow trucks that is not genuinely responsive to safety concerns" is not exempted under § 14501(c)(1).3 15 4. Cal. Tow Truck Ass'n v. City & Cnty. of S.F., 693 F.3d 847 (9th Cir. 2012).

With regard to the safety exception provided in 49 U.S.C. § 14501(c)(2)(A), courts have applied various formulations of how to determine if a law is genuinely responsive to safety concerns.3 16 However, the circuits agree that "the focus begins with intent, i.e., whether the purpose and intent of the body passing the law at issue, whether state or a municipality, was truly safety." 317 In assessing safety concerns, courts must consider "specific expressions of legislative intent in the statute itself as well as the legislative history, and [the court] must assess any purported safety justifications asserted by the state or municipality in light of the existing record evidence."3 18 In other words, the court "must ask if the regulator was acting out of safety concerns." 3 19 The court must determine "whether the purpose and intent was truly safety." 320 This does not mean that the court should take the regulator's word at face value; the court must go further with its analysis. 3 2 1 The court must ultimately make the decision

as to whether the regulation is genuinely responsive to safety concerns.32 2 The safety exception should not be construed narrowly. 32 3 Even the presence of mixed legislative motives "does not preclude the application of the safety exception, provided that the State's safety motives are not pre-

313.

Id

Id. at 442 (alteration in original).

314.

315.

Id. 316.

Cal. Tow Truck Ass'n v. City & Cnty. of S.F., 693 F.3d 847, 859 (9th Cir. 2012).

317.

Id (quoting Tillison v. City of San Diego, 406 F.3d 1126, 1129 (9th Cir. 2005)) (internal quotation marks omitted) (emphasis omitted).

Id (quoting Loyal Tire & Auto Ctr., Inc. v. Town of Woodbury, 445 F.3d 136, 145 (2d 318.

Cir. 2006)) (internal quotation marks omitted).

Id (internal quotation marks omitted).

319.

Id (internal quotation marks omitted).

320.

Id. 321.

Id. 322.

Id. at n.12 (citing City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 323.

424, 440 (2002)).

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textual."3 24 After all, "asking whether a proffered safety motive is 'not pretextual' is equivalent to asking whether a law is 'genuinely responsive' to safety concerns."3 25 In analyzing the applicability of the safety exception, courts apply a two-prong test to determine whether a law is genuinely responsive to safety concerns. 326 "First, courts consider available legislative or regulatory intent-ask whether safety relating to motor vehicles was truly a concern.

Second, courts assess the nexus between the provision at issue and the safety concern-ask whether the regulation sufficiently 'responds to' the concern." 327 The first step involves the examination of "expressions of legislative intent, including (1) the particular language of the statute or regulation being challenged, and any explicit statutory or regulatory findings in the provision; and (2) available legislative or regulatory history (e.g., committee reports, or statements of lawmakers)." 32 8 The second step, after identifying a safety concern, is to examine the record evidence to ascertain whether a logical or genuine connection exists between the regulation and the safety justification, and to ensure that the stated safety justification is not merely a pretext for what is actually economic regulation. 3 29 As the connection becomes more attenuated or speculative, it is less likely that the safety justification will withstand scrutiny since the purported safety motives were found to be merely illusory or pretextual.3 30 In the context of the safety exception in § 14501(c)(2)(A), the proper analysis for a court to conduct when facing a challenge to a comprehensive law is on a provision-by-provision basis. 3 31 Therefore, if a multifaceted law or regulation is being challenged as a whole, each of the essential components must be analyzed. 3 32 "Upholding a multi-part regulatory scheme necessarily upholds its components, and 'the mere fact that one part of a regulation or group of regulations might come within an exception to preemption does not mean that all other parts of that regulation or group are also excepted."' 333 Any other way would permit many nonexcepted

324.

Id. at 859-60 (quoting Am. Trucking Ass'ns, Inc. v. City of Los Angeles, 660 F.3d 384, 405 (9th Cir. 2011), rev'd in part, 133 S. Ct. 2096 (2013)).

325.

Id at 860.

326.

Id 327.

Id 328.

Id (internal quotation marks omitted) (emphasis omitted).

329.

Id. 330.

Id. 331.

Id. 332.

Id 333.

Id. (quoting Am. Trucking Ass'ns, Inc. v. City of Los Angeles, 559 F.3d 1046, 1055 (9th Cir. 2009)).

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provisions to stand based on a single valid excepted provision.33 4 Similarly, just because one part of a regulatory scheme is preempted does not mean the entire scheme is preempted.335 5.

VRC LLC v. City ofDallas, 460 F.3d 607 (5th Cir. 2006).

VRC LLC challenged a Dallas ordinance that required the posting and maintaining of towing warning signs on private property at the time of, and for at least twenty-four hours prior to, a vehicle being towed without consent of the vehicle owner.336 Under the ordinance, the warning signs were subject to specific requirements regarding their "placement, size, color, language, and lettering."3 3 7 A violation of the ordinance is punishable by a fine of $200 to $500, and subsequent offenses can lead up to double or treble the fine.338 "Congress'[s] clear purpose in § 14501(c)(2)(A) is to ensure ...

its

preemption of States' economic authority over motor carriers of property . . not restrict the preexisting and traditional state police power over safety."3 3 9 Further, local political subdivisions cannot use safety regulations as a fagade covering what are really economic regulations.34 0 Local regulations of tow truck prices, routes, or services "'not genuinely responsive to safety concerns"' are not exempt from preemption under

§ 14501(c)(1). 34 1 The court recognized the possibility that municipalities may be accomplishing consumer protection through economic regulation by citing safety findings in their ordinances' introductions. 342 However, there is nothing to suggest that safety and consumer protection are mutually exclusive categories.34 3 Despite such a possibility, the court reiterated that the safety concerns underlying Dallas's ordinance were legitimate enough to convince the court that the ordinance is both reasonably related and genuinely responsive to safety concerns.344

334.

Id (citing Am. Trucking, 559 F.3d at 1055).

335.

Id 336.

VRC LLC v. City of Dallas, 460 F.3d 607, 608-09 (5th Cir. 2006).

337.

Id. at 609 & n.2.

338.

Id. at 609.

339.

Id at 612 (quoting City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 439 (2002)) (internal quotation marks omitted).

Id. 340.

341.

Id. (quoting Ours Garage, 536 U.S. at 442).

342.

Id at 61S. 343.

Id. 344.

Id

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Cole v. City ofDall., 314 F.3d 730 (5th Cir. 2002) (per curiam).

A Dallas ordinance prohibited wrecker driver applicants from receiving a permit to tow motor vehicles if their criminal history contained certain criminal convictions, documented mental illnesses, or a record of unsafe driving. 34 5 The applicant challenged the denial of his license based upon his prior criminal history, asserting that Dallas's ordinance was preempted by 49 U.S.C. § 14501(c). 34 6 The district court had found that the city ordinance was a motor vehicle safety regulation under § 14501(c)(2)(A) and was thus not preempted.347 Affirming, the Fifth Circuit held that the exception applied to provisions in the ordinance that were reasonably related to a safety concern because the ordinance was "designed to curtail confrontation between truck operators and nonconsenting vehicle owners." 34 8 Additionally, there was no showing of any pretextual economic goals underlying the provision. 34 9 Therefore, because the court held that the regulation requiring criminal history was included within the safety exception, it was not preempted.35 o 7.

CardinalTowing & Auto Repair, Inc., v. City ofBedford, 180 F.3d 686

(5th Cir. 1999).

In Cardinal Towing, the Fifth Circuit analyzed a municipal towing ordinance in the context of preemption. 5 ' In this case, the court was presented with a City of Bedford ordinance that required Bedford to contract with only one towing company to meet its police-initiated towing needs.3 52 The court observed that because of the unique structure of the industry, nonconsent tows do not provide an opportunity for the vehicle's owner to participate in negotiating the towing contract.

Rather, the party who orders the tow chooses both to remove the vehicle and the party to carry out the service.354 Accordingly, the court found that Bedford's ordinance was not a towing regulation because Bedford was merely creating efficiencies for itself by way of an ordinance that controlled the small arena of police-initiated nonconsent tows."5 A state or municipality acting as a market participant "in a narrow and focused manner consistent with the

345.

Cole v. City of Dallas, 314 F.3d 730, 732 (5th Cir. 2002) (per curiam).

346.

Id at 732-33.

347.

Id. at 732.

348.

Id at 734-35.

349.

Id at 735.

350.

Id. 351.

Cardinal Towing & Auto Repair, Inc. v. City of Bedford, Tex., 180 F.3d 686, 688 (5th Cir. 1999).

352.

Id at 689.

353.

Id. at 696.

Id. 354.

355.

Id at 696-97.

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behavior of other market participants" is not regulating the towing market.3 56 8.

Stucky v. City of San Antonio, 260 F.3d 424 (5th Cir. 2001), vacated,

536 U.S. 936 (2002).

In Stucky, the Fifth Circuit concluded that San Antonio's towing ordinances, which prohibited all towing companies from performing any tow unless under contract with the city, too were regulations. 3" The court reasoned that San Antonio's ordinances controlled the towing market so broadly that they had the direct effect of reducing the market's size.358 This reduction in market size impacted the public regulatory plan, rather than a private proprietary plan.359 The diminished market size, coupled with the court's finding that San Antonio expressly considered its ordinances to be regulations, was sufficient proof for the court to conclude that San Antonio's interaction with the market was not so narrowly focused to rule out San Antonio's regulatory impulse. 36 0 9. Fort Bend Cnty. Wrecker Ass'n v. Wright, 39 S.W.3d 421 (Tex. App.-Houston [1st Dist.] 2001, no pet.).

Appellee sheriffs department maintained a list of wrecker and towing companies.361 Appellee used this list to determine which towing company would be assigned to tow cars when appellee requested a nonconsent tow. 3 62 Appellee enacted numerous rules and regulations specifying the requirements that wrecker truck companies had to meet to remain on appellee's list.363 Among those rules was a price cap of $75.364 The legitimacy of the rules was the subject of the appeal.365 The First Court of Appeals in Houston did not find the appellee's wrecker policy to be an ordinance violating the separation-of-powers doctrine. 366 A departmental policy that refers business to a particular set of tow companies does not have the force and effect of law. 36 7 Appellee was allowed to create a 3 68 wrecker rotation list and maintain policies in accordance with that list.

356.

Id. at 691.

357.

See Stucky v. City of San Antonio, 260 F.3d 424, 427-28, 438 (5th Cir. 2001), vacated, 536 U.S. 936 (2002).

358.

See id at 436.

359.

Id 360.

Id at 438.

361.

Fort Bend Cnty. Wrecker Ass'n v. Wright, 39 S.W.3d 421, 424 (Tex. App.-Houston [1st Dist.] 2001, no pet.).

362.

Id 363.

See id 364.

Id. 365.

Id. 366.

Id. at 426.

367.

Id. 368.

Id at 427.

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The trial court permanently enjoined appellee's price caps out of concern that appellee was not in compliance with a Texas Attorney General Opinion. 36 9 The appellate court disagreed and concluded that the Texas Attorney General Opinion was inapplicable to the case. 3 70 The court stated, "The Fifth Circuit has also held that non-consensual towing policies are not regulations or law."3 7 ' In support of this assertion, the court analyzed a Fifth Circuit case with similar circumstances, Cardinal Towing & Auto Repair, Inc. v. City of Bedford, Texas. In that case, the City of Bedford decided to stop using a rotation system for nonconsensual tows; instead, it contracted with one company by ordinance. 37 2 This ordinance was "limited to nonconsensual tow situations in which the police requested a tow."37 3 The Fifth Circuit held that Bedford's actions were not regulations or law.374 Thus, like the Fifth Circuit in CardinalTowing, the appellate court in Wright held that the appellee's wrecker policy did not rise to the level of a regulation or law; consequently, the policy was permissible.3 75 Accordingly, the court found that the appellee was permitted to create a wrecker rotation list and maintain policies under such list. 37 6 10. Whitten v. Vehicle Removal Corp., 56 S.W.3d 293 (Tex. App.-Dallas 2001, pet. denied).

In Whitten, signs were posted on Whitten's apartment complex asserting that vehicles with invalid registration or inspection stickers would be towed at their owner's expense. 377 While Whitten was on a trip to California, the towing company Vehicle Removal Corp. (VRC) towed Whitten's vehicle.378 Whitten sued for compensation, charges, punitive damages, and attorney's fees. 379 The appellate court held that Whitten failed to establish that VRC violated sections 684.014 or .084 of the Texas Transportation Code which would not have been preempted by 49 U.S.C. § 14501(c)(1), nor excepted from preemption by the safety regulation exception found in § 14501(c)(2)(C). 380 Further, the court held that the signage and notice requirements under section 684.014 of the Texas 369.

Id 370.

Id 371.

Id. at 426.

372.

Id. (citing Cardinal Towing & Auto Repair, Inc. v. City of Bedford, Tex., 180 F.3d 686, 688-89 (5th Cir. 1999)).

373.

Id. (citing CardinalTowing, 180 F.3d at 689).

374.

Id (citing Cardinal Towing, 180 F.3d at 697).

375.

Id 376.

Id. 377.

Whitten v. Vehicle Removal Corp., 56 S.W.3d 293, 297 (Tex. App.-Dallas 2001, pet. denied).

378.

Id. 379.

Id 380.

Id at 310-ll.

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Transportation Code were preempted because their dominant purpose was merely consumer protection. 38 1 The court observed that it was irrelevant that an individual rather than the state was seeking to enforce state policy. 38 2 Accordingly, the court found that mere testimony by a company employee that signs about towing were placed for the benefit of the apartments and its residents, without other evidence, failed to show that the resident was a Thus, no breach by VRC was third-party beneficiary of any contract.

384 shown.

11. A.J. 's Wrecker Serv. of Dall., Inc. v. Salazar, 165 S.W.3d 444 (Tex. App.-Dallas 2005, pet. denied).

A.J.'s Wrecker Service, a towing company, argued that the owner's claims were preempted by 49 U.S.C. § 14501.8 The court of appeals agreed and set aside the trial court's judgment, reasoning that the trial court lacked jurisdiction over the owner's claims because federal law preempted them. 8 The court held that the owner's claims, based on the car being wrongfully towed, were undeniably related to the services provided.387 The court held that conversion, trespass to chattel, and civil theft had elements closely related to A.J.'s nonconsensual towing service.38 8 Towing cars without their owners' consent was a service that A.J.'s provided. 3 89 As part of its rationale, the court stated that if the claims were allowed to proceed, the towing company conceivably could be hauled into court to defend its actions every time it towed a car without an owner's consent. 3 90 That would constitute regulation of motor carriers through the enforcement of state laws. 39 1 The safety exception in § 14501(c)(2)(A) did not apply to the owner's causes of action because it applied only to "specific legislation directed at motor carriers."392 In this case, the owner attempted to apply the safety exception to general causes of action rather than legislation affecting the towing industry.393

381.

382.

383.

384.

Id. at 310.

Id. Id. at 312.

Id.

385. A.J.'s Wrecker Serv. of Dall., Inc. v. Salazar, 165 S.W.3d 444, 446 (Tex. App.-Dallas 2005, pet. denied).

386. Id. at 450.

387. Id. at 448-49.

388. Id. at 449.

389. Id.

390.

Id.

391.

392.

393.

Id. Id. at 450.

Id.

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12.

Wehbe v. State, No. 02-07-00407-CR, 2011 Tex. App. LEXIS 3419 (Tex. App.-Fort Worth May 5, 2011, pet. ref'd) (mem. op., not designated for publication).

In Wehbe, the court of appeals held that the trial court had jurisdiction, rejecting the defendant's argument that the towing law and theft statutes were "in pari materia."394 The court also held that the evidence was sufficient to support the conviction, even though no one testified to seeing the defendant personally tow any of the vehicles in question. 395 There was evidence that the defendant acted on behalf of the towing company when the company obtained the appropriate certificates and inspections after charges were filed, and dealt with the police while the alleged thefts were being investigated.3 96 These facts supported a finding that the defendant was aware of the paperwork provided to the police as well as the company's recognition of at least one improper pull. 3 97 The company's knowledge that it towed a vehicle from the owner's property at no one's request, coupled with the defendant's refusal to return the vehicle without payment, was evidence that the defendant was guilty of theft. 398 Although another car was probably appropriated solely with the intent to keep it until the owner paid to have it released, an intent to permanently deprive the owner of his car was shown because the car had not yet been returned at the time of trial.

13. Amaro v. Wilson Cnty., 398 S.W.3d 780 (Tex. App.-San Antonio 2011, no pet.).

In Amaro, Wilson County's decision to award a two-year contract to one particular towing company to perform incident management tows was proper because Wilson County's proprietary interest in creating efficiencies and its duty to control the county roads allowed it to make such a contract. 4 00 The court found that Wilson County had an interest in efficiently procuring its own services and in maintaining the flow of traffic after an accident. 40 1 By contracting with one tow service provider, Wilson County avoided having to make multiple calls to locate an available tow truck when one was needed.40 2 This efficiency meant that disabled vehicles could be removed quickly whenever Wilson County requested a tow 394.

Wehbe v. State, No. 02-07-00407-CR, 2011 Tex. App. LEXIS 3419, at *16-17 (Tex. App.-Fort Worth May 5, 2011, pet. ref d) (mem. op., not designated for publication).

395.

Id. at *23-24.

396.

Id. at *19-20.

397.

Id. at *20.

398.

Id. at *21.

399.

Id. at *22.

400.

Amaro v. Wilson Cnty., 398 S.W.3d 780, 783, 786 (Tex. App.-San Antonio 2011, no pet.).

401.

Id. at 786.

402.

Id.

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4 04 This truck.403 The contract at issue was not impermissibly monopolistic. was because the contract did not prohibit a motorist or a police officer from requesting a different towing company to tow the vehicle.405 Furthermore, the contract also provided for a "limited designated service area," and gave the appellee towing company "no right to perform certain categories of nonconsent tows." 4 06 Because the contract at issue did not regulate towing fees, the court could not conclude that Wilson County failed to comply with Texas Occupations Code section 2308.202.407 Additionally, the appeals court held that on these facts, the trial court did not abuse its discretion by awarding attorney's fees to the appellee towing company.408 14. Burrows v. Daring, No. 14-06-00473-CV, 2008 Tex. App. LEXIS 5883 (Tex. App.-Houston [14th Dist.] Aug. 5, 2008, no pet.) (mem.

op.).

In Burrows, the manager of an apartment complex approved the towing of a vehicle that had an expired state inspection sticker and was not in working order. 4 09 The owner refused to pay the storage facility. 41 0 The vehicle was not released, and an action was instituted alleging a violation of Texas Transportation Code section 684.084, conversion, and breach of a vehicle rental contract. 4 1 1 A motion for summary judgment was granted against the owner, and the owner appealed. 12 Because the owner failed to challenge all of the issues raised in the motion for summary judgment, he waived the ability to challenge further the remaining issues. 4 13 The affirmative defense of preemption failed because the appellee did not prove that section 14501(c)(2)(A)'s safety exception to preemption did not apply.4 14 The rest of the issues on appeal were not addressed because of this ruling. 415 The claims for breach of contract and violation of section 684.084 against the storage facility operator were affirmed.4 16 But the causes of action for conversion against the storage facility operator, the towing company, and its owner, and the additional violations of section 684.084 403. Id. 404. Id. at 787.

405. Id. 406. Id at 787-88.

407. Id at 788.

408. Id at 789.

Burrows v. Daring, No. 14-06-00473-CV, 2008 Tex. App. LEXIS 5883, at *1 (Tex. 409.

App.-Houston [14th Dist.] Aug. 5, 2008, no pet.) (mem. op.).

410.

Id. 411.

Id. 412.

Id at *3-4.

413.

Id. at *5.

414.

Id.at*11.

Id. at *11-12.

415.

416.

Id at *12.

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against the towing company and its owner were reversed.4 17 The case was remanded.4 18

15. Fidelis v. Smith, No. 14-08-00224-CV, 2009 Tex. App. LEXIS 7815 (Tex. App.-Houston [14th Dist.] Sept. 24, 2009, no pet.) (mem. op.) (per curiam).

In Fidelis, the owner's vehicle was towed from his apartment complex's parking lot because his vehicle, which did not display the appropriate placards, was parked in a space designated as a disabled parking space. 4 19 The owner "testified that there was no sign warning that unauthorized vehicles would be towed, nor was there a sign permanently mounted on a pole, post, permanent wall, or permanent barrier as mandated by the [Texas] Occupations Code."42 0 The appellate court ruled that the owner failed to meet his burden of proof because he failed to show the tow of his vehicle was without probable cause due to improper signage. 421 The owner failed to cite any authority "requiring a sign designating a parking space for disabled persons to be permanently mounted."4 22 As demonstrated by photographs admitted at trial, the parking space was clearly marked with a permanent sign painted on the pavement designating the space as reserved for vehicles transporting disabled persons.4 23 Also, the photograph reflected that the tow warning sign was posted on iron gates at the entrance to the parking lot. 424

417.

Id. 418.

Id. 419.

Fidelis v. Smith, No. 14-08-00224-CV, 2009 Tex. App. LEXIS 7815, at *1-2 (Tex. App.-Houston [14th Dist.] Sept. 24, 2009, no pet.) (mem. op.) (per curiam).

420.

Id. at *3.

421.

Id. at *8.

422.

Id at *7.

423.

Id at *7-8.

424.

Id at *7.

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APPENDIX B: GLOSSARY OF DEFINED TERMS Each of the following defined terms is found in either Texas Occupations Code section 2308.002 or Texas Administrative Code section

86.10: "Advisory Board' means the Towing, Storage, and Booting Advisory Board.

"Applicant" means the person or entity submitting an application for a permit or license issued by the department.

"Boot" means a lockable road wheel clamp or similar vehicle immobilization device that is designed to immobilize a parked vehicle and prevent its movement until the device is unlocked or removed.

"Booting Company" means a person that controls, installs, or directs the installation and removal of one or more boots.

"Boot Operator" means an individual who installs or removes a boot on or from a vehicle.

"Certificate of Insurance" means a certificate prescribed by and filed with the department in which an insurance carrier or surety company, approved in this state, warrants that a towing company for whom the certificate is filed has the minimum coverage as required by 16 Texas Administrative Code § 86.400.

"Commission" means the Texas Commission of Licensing and Regulation.

"Consent Tow" means any tow of a motor vehicle in which the tow truck is summoned by the owner or operator of the vehicle or by a person who has possession, custody, or control of the vehicle. The term does not include an incident management tow or a private property tow.

"Conspicuous" means written in a size, color, and contrast so as to be readily noticed and understood.

"Contested Case" means a proceeding, including a licensing proceeding, in which the legal rights, duties, or privileges of a party are to be determined by a state agency after an opportunity for adjudicative hearing.

"Department" means the Texas Department of Licensing and Regulation.

"Driver's License" has the meaning assigned by Section 521.001, Transportation Code.

"Incident" means an unplanned randomly occurring traffic event that adversely affects normal traffic operations.

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"Incident Management Tow" means any tow of a vehicle in which the tow truck is summoned to the scene of a traffic accident or to an incident, including the removal of a vehicle, commercial cargo, and commercial debris from an accident or incident scene.

"License Holder" or "Licensee" means the person to which the department issued a license.

"Nonconsent Tow" means any tow of a motor vehicle that is not a consent tow, including: (A) an incident management tow; and (B) a private property tow.

"Parking Facility" means public or private property used, wholly or partly, for restricted or paid vehicle parking. The term includes: (A) a restricted space on a portion of an otherwise unrestricted parking facility; and (B) a commercial parking lot, a parking garage, and a parking area serving or adjacent to a business, church, school, home that charges a fee for parking, apartment complex, property governed by a property owners' association, or government-owned property leased to a private person, including: (i) a portion of the right-of-way of a public roadway that is leased by a governmental entity to the parking facility owner; and (ii) the area between the facility's property line abutting a county or municipal public roadway and the center line of the roadway's drainage way or the curb of the roadway, whichever is farther from the facility's property line.

"ParkingFacilityAuthorized Agent" means an employee or agent of a parking facility owner with the authority to: (A) authorize the removal of a vehicle from the parking facility on behalf of the parking facility owner; and (B) accept service on behalf of the parking facility owner of a notice of hearing requested under this Chapter.

"ParkingFacility Owner" means: (A) an individual, corporation, partnership, limited partnership, limited liability company, association, trust, or other legal entity owning or operating a parking facility; (B) a property owners' association having control under a dedicatory instrument, as that term is defined in Section 202.001, Property Code, over assigned or unassigned parking areas; or (C) a property owner having an exclusive right under a dedicatory instrument, as that term is defined in Section 202.001, Property Code, to use a parking space.

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"Private Property Tow" means any tow of a vehicle authorized by a parking facility owner without the consent of the owner or operator of the vehicle.

"Property Owners' Association" has the meaning assigned by Section 202.001, Property Code.

"Public Roadway" means a public street, alley, road, right-of-way, or other public way, including paved and unpaved portions of the right-ofway.

"Tow Truck" means a motor vehicle, including a wrecker, equipped with a mechanical device used to tow, winch, or otherwise move another motor vehicle. The term does not include: (A) a motor vehicle owned and operated by a governmental entity, including a public school district; (B) a motor vehicle towing: (i) a race car; (ii) a motor vehicle for exhibition; or (iii) an antique motor vehicle; (C) a recreational vehicle towing another vehicle; (D) a motor vehicle used in combination with a tow bar, tow dolly, or other mechanical device if the vehicle is not operated in the furtherance of a commercial enterprise; (E) a motor vehicle that is controlled or operated by a farmer or rancher and used for towing a farm vehicle; or (F) a motor vehicle that: (i) is owned or operated by an entity the primary business of which is the rental of motor vehicles; and (ii) only tows vehicles rented by the entity.

"Towing Company" means an individual, association, corporation, or other legal entity that controls, operates, or directs the operation of one or more tow trucks over a public roadway in this state but does not include a political subdivision of the state.

"Unauthorized Vehicle" means a vehicle parked, stored, or located on a parking facility without the consent of the parking facility owner.

"Vehicle" means a device in, on, or by which a person or property may be transported on a public roadway. The term includes an operable or inoperable automobile, truck, motorcycle, recreational vehicle, or trailer but does not include a device moved by human power or used exclusively on a stationary rail or track.

"Vehicle Owner" means a person: (A) named as the purchaser or transferee in the certificate of title issued for the vehicle under Chapter 501, Transportation Code;

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(B) in whose name the vehicle is registered under Chapter 502, Transportation Code, or a member of the person's immediate family; (C) who holds the vehicle through a lease agreement; (D) who is an unrecorded lienholder entitled to possess the vehicle under the terms of a chattel mortgage; or (E) who is a lienholder holding an affidavit of repossession and entitled to repossess the vehicle.

"Vehicle Storage Facility" means a vehicle storage facility, as defined

by Section 2303.002, that is operated by a person who holds a license issued under Chapter 2303 to operate the facility.

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APPENDIX C: STATUTORY CAUSE OF ACTION COMPARISON

COURT OF TYPE

OF

ACTION

DAMAGES

EXCLUSIVE

STATUTORY

DETERMINATION

JURISDICTI

AUTHORITY

TO BE MADE

TACPGAN REMEDIES

ON

If no probable TEX. OCC. CODE ANN.

Was there "probable cause"

Tow

Justice

§ 2308.452

for the removal

HEARING

Court

(West 2012

and placement or

& Supp.

2014).

booting of the vehicle?

TTBA CIVIL

Not Applicable

LAWSUIT

TEX. PROP. CODE

abl

ANN.

§ 92.0131 (West

2014)

-

Applic

cause: Cost of

not necessrl ail applicable

removal and placement;

cent and Attorney's fees (permissive) Damages to vehicle; Cost of

Was removal of

removal and

TEx. OCC. CODE ANN. § 2308.404

the vehicle in compliance with the TTBA provisions

placement of vehicle; $1,000 plus 3x cost of

(West

regarding

removal and

2012).

licensing, permitting, signage, etc.?

placement of vehicle if knowing, intentional, or reckless violation Cost of removal and

Applicable

TEX. PROP.

Compliance with notice and

CODE ANN.

update

§ 92.0131 (West

requirements

2014).

multiunit

aone

complexes?

fe

applicable to

pemen Da'meto vehice

Applicable

$100;'

Rean fees

(mandatory)

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APPENDIX D: MODEL FINDINGS OF FACT AND CONCLUSIONS OF LAW WITH COMMENTARY

CAUSE NO. IN RE: NONCONSENT REMOVAL AND STORAGE OF A VEHICLE

§

IN THE JUSTICE COURT

§

PRECINCT

[INSERT APPLICANT NAME] Applicant.

§ §

[NAME] COUNTY, TEXAS

, PLACE

FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER[S] OF THE JUSTICE COURT [INTRODUCTORY COMMENTS: The following model findings of fact and conclusions of law and orders have been drafted pursuant to the requirements of Texas Occupations Code Chapter 2308. The format of the orders of the court are so structured because of the unique nature of a 452 Hearing, which is neither civil nor criminal in nature and does not result in a traditional "judgment," but rather an order from the court as to who will pay certain costs. These model findings of fact and conclusions of law and orders are intended as a guide for practitioners and justices of the peace seeking clarification on the proper issues to be argued and determined as well as the permissive and mandatory orders to be issued by a justice court in a hearing conducted pursuant to a request under Texas Occupations Code section 2308.452. They do not constitute legal advice and are not intended for use by any person not licensed to practice law in the State of Texas.]

ON [INSERT DATE], the Court called the above-numbered hearing, conducted pursuant to TEX. OCC. CODE ANN. § 2308.452 and timely requested.

The applicant, [INSERT

NAME],

a[n] [individual/limited

liability company/for-profit corporation/limited partnership/limited liability partnership/other entity] [appeared and announced ready/failed to appear].

[INSERT NAME], a[n] [individual/Texas limited liability company/Texas for-profit corporation/limited partnership/limited liability partnership/other

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entity], the towing company that removed the vehicle from the parking facility, [appeared and announced ready/failed to appear]. The parking facility

owner

a[n]

[individual/limited

liability

company/for-profit

corporation/limited partnership/limited liability partnership/other entity] [appeared and announced ready/failed to appear].

After considering the contents of the Request for Tow Hearing submitted by applicant, the evidence presented at the Hearing, and arguments, and based upon the requirements of TEX. OCC. CODE ANN. § 2308.458(d),

the Court issues these written Findings of Fact and

Conclusions of Law and orders (collectively, the Orders): I.

FINDINGS OF FACT

[COMMENT: Written findings of fact are required by Texas Occupations Code section 2308.458(d). Listed below are the most common findings of fact determining the exact parties present at a 452 Hearing. They also include other findings of fact useful for the preservation of the record both for the benefit of each person present at the 452 Hearing as well as the county court in the event of an appeal. It is imperative that the license number and legal name of both the towing company and the vehicle storage facility are correctly entered at the 452 Hearing as a determination therein may result in administrative action by the Texas Department of Licensing and Regulation (TDLR) against a licensee.]

The Court makes the following findings of fact: 1.

The [owner/operator] of the vehicle at the time it was removed

and stored is [INSERT NAME].

2.

The vehicle is a [INSERT VEHICLE DESCRIPTION].

3.

The person who authorized the removal and storage of the

vehicle is: [INSERT LEGAL

NAME OF INDIVIDUAL OR BUSINESS ENTITY THAT AUTHORIZED REMOVAL OF VEHICLE].

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[COMMENT: The court should exercise care in listing the legal name of a business entity. The proper legal name should be requested from the representative or attorney of the business entity and verified using the Texas Secretary of State's online database "SOS Direct." If the business entity that authorized the removal is a towing company or vehicle storage facility, these results should be cross-checked with the licensing records available at TDLR's website. Many times, an assumed name filing, assumed name certificate, or "DBA" on file with a county will not accurately reflect the name of a business entity registered to do business in the State of Texas and licensed with TDLR.] 4.

The parking facility is located at [INSERT ADDRESS].

5.

The parking facility owner is [INSERT NAME].

[COMMENT: "Parking facility owner" is a specifically defined term and includes not only the owner but also the operator of the parking facility, as well as a property owners' association under Texas Occupations Code section 2308.002(8). The person listed here should be the person notified of the 452 Hearing by the court.]

6.

The towing company that removed the vehicle from the parking facility is [INSERT NAME]. The license number of the towing company at the Texas Department of Licensing and Regulation is [INSERT LICENSE NUMBER].

7.

The vehicle was stored at [INSERT VEHICLE STORAGE FACILITY NAME]

at [INSERT ADDRESS].

The license

number of the vehicle storage facility issued by the Texas Department

of

Licensing

and

Regulation

is

[INSERT

LICENSE NUMBER].

8.

The reason for the vehicle's removal and storage is as follows: [INSERT REASON FOR REMOVAL].

9.

Court costs are [INSERT AMOUNT].

10.

Applicant

submitted

that

his/her/its

photography were [INSERT AMOUNT].

reasonable

costs

of

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SOUTH TEXAS LAWREVIEW

572

11.

The [owner/operator] paid [INSERT AMOUNT] in removal and storage fees before the 452 Hearing.

12.

The

vehicle

was

removed

[with/without]

the

[were/were

not]

[owner's/operator's] consent.

13.

Signs

prohibiting

unauthorized

vehicles

present on the parking facility.

II. CONCLUSIONS OF LAW. [COMMENT: Written conclusions of law are required by Texas Occupations Code section 2308.458(d). As section 2308.458(c) dictates the only four issues that may be determined at a 452 Hearing, each of those issues is listed below in item 1. In order to move a 452 Hearing along in a timely manner, the court should further limit the issues discussed at the 452 Hearing by selecting the issues in dispute and restricting testimony and evidence presented accordingly.]

1.

The issues to be decided in this Hearing are the following

(check all that apply): Whether probable cause existed for the removal and placement of the vehicle.

Whether a towing charge imposed or collected in connection with the removal or placement of the vehicle was greater than the amount authorized by the political subdivision under TEX. OCC. CODE ANN. §§ 2308.201 or

.202.

Whether a towing charge imposed or collected in connection with the removal or placement of the vehicle was greater than the amount authorized under TEX. OCC. CODE ANN. §

2308.203.

Whether a towing charge imposed or collected in connection with the removal or placement of the vehicle was greater than the amount authorized under TEX. OCC. CODE ANN.

§ 2308.0575.

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Based on the foregoing, the court concludes as follows (complete as applicable, strike through all that do not apply): 2.

Probable cause [did/did not] exist for the removal and

placement of the vehicle for the following reasons (check all that apply and complete as necessary): Signs prohibiting unauthorized vehicles on the parking facility failed to comply with the requirements of Subchapter G, Chapter 2308, TEX. OCC. CODE ANN.; [and/or]

[COMMENT: While Texas Occupations Code Chapter 2308 requires a determination of presence of absence probable cause at a 452 Hearing, neither the Texas Occupations Code nor the rules promulgated thereunder define that term. Thus, these model findings of fact and conclusions of law, and orders follow current precedent holding that improper signage likely prevents probable cause. See Fidelis v. Smith, No. 14-08-00224-CV, 2009 Tex. App. LEXIS 7815, at *6-8 (Tex. App.-Houston [14th Dist.] Sept. 24, 2009, no pet.) (mem. op.) (per curiam). They also leave a space for a description of why probable cause did not exist in the event that proper parking facility signage did exist at the time of the removal and storage of the vehicle.]

3.

The charges imposed or collected in connection with the

removal or placement of the vehicle were greater than the amount authorized by the political subdivision under TEX. OCC. CODE ANN. §§ 2308.201 or .202. The charges imposed or collected, the required amount to be imposed or collected, and the difference may be found below:

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4.

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The charges imposed or collected in connection with the

removal or placement of the vehicle were greater than the amount authorized by TEX. OCC. CODE ANN. § 2308.203. The charges imposed or collected, the required amount to be imposed or collected, and the difference may be found below:

5.

The charges imposed or collected in connection with the

removal or placement of the vehicle were greater than the amount authorized by TEX. OCC. CODE ANN. § 2308.0575. The charges imposed or collected, the required amount to be imposed or collected, and the difference may be found below:

III.

ORDERS OF THE COURT.

[COMMENT: The following orders are either required under Texas Occupations Code section 2308.451 or are permissive in nature under section 2308.458(e). Some of the orders fall under both categories and are discussed further below. This section is structured as "Orders of the Court" rather than "Judgment" because a judgment is not appropriate at a 452 Hearing. The court is not to determine fault, but rather to find presence or absence of probable cause for the removal and storage of the vehicle or overcharging in violation of state and local regulation.]

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PART I - REQUIRED ORDERS: Based on the foregoing findings of fact and conclusions of law, the Court orders as follows (complete as necessary, strike through all that do not apply): [COMMENT: If probable cause did exist for the removal and storage of the vehicle, the court should insert this provision.]

ORDERED, that because [person/law enforcement agency] authorized, with probable cause, the removal and storage of the vehicle in a vehicle storage facility, the applicant shall pay the costs of removal and storage of the vehicle in the amount of:

[COMMENT: If probable cause did not exist for the removal and storage of the vehicle, the court should insert this provision and exclude the provision immediately above.]

ORDERED, that because [person/law enforcement agency] authorized, without probable cause, the removal and storage of the vehicle in a vehicle storage facility, the [towing company/vehicle storage facility/parking facility owner] [or, if applicable, law enforcement agency that authorized the removal of the vehicle] shall (select only one): pay the costs of the removal and storage in the amount of reimburse the owner or operator for the cost of the removal and placement of the vehicle in the amount of

ORDERED, that because [towing company/vehicle storage facility] charged a towing fee that exceeded the fees regulated by a political subdivision or authorized by TEX. OCC. CODE ANN. §§ 2308 or 2303, the towing company shall reimburse the owner or operator the amount of $_.

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SOUTH TExASLAW REVIEW

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[COMMENT: The justice court shall award the owner or operator the amount of the overcharge pursuant to Texas Occupations Code section 2308.451(d). This provision may be included regardless of whether probable cause existed for the removal and storage of the vehicle.]

PART II - DISCRETIONARY ORDERS: [COMMENT: The following orders are permissive in nature and awarded in the discretion of the court under Texas Occupations Code section 2308.458(e). Note that these awards may be ordered all, in part, or not at all, under section 2308.458.]

ORDERED, that [towing company/parking facility owner/vehicle storage facility/person requesting hearing] shall pay applicant all costs of court in the amount of $_.

[COMMENT: Order to pay court costs to prevailing party is a permissive award pursuant to section 2308.458(e)(1).]

ORDERED, that [towing company/parking facility owner/vehicle storage facility/person requesting hearing] shall pay applicant reasonable and necessary attorney's fees in the amount of $_.

[COMMENT: Order to pay attorney's fees to prevailing party is a permissive award pursuant to section 2308.458(e)(1).]

ORDERED, that [towing company/parking facility owner/vehicle storage facility] shall pay the vehicle owner or operator the reasonable cost of photographs submitted pursuant to TEX. OCC. CODE ANN. § 2308.456(b)(8) in the amount of $_.

[COMMENT: Order to pay cost of photographs is a permissive award pursuant to section 2308.458(e)(2).]

ORDERED, that [towing company/parking facility owner/vehicle storage facility]

shall pay the vehicle owner or operator the amount of

2015]

$

LICENSED TO STEAL

577

, which is the amount by which the towing charge and

associated parking fees exceeded fees regulated by a political subdivision or authorized by TEX. OCC. CODE ANN §§ 2308 or 2303.

[COMMENT: Order to pay excess of fees charged is both a mandatory award and a permissive award pursuant to section 2308.451(d) and 2308.458(e)(3). While the TTBA provides no explanation for the duplication of this provision, it is presumed that the discretionary award is a means of imposing additional liability on a party that may not be liable for these fees under the Mandatory Award - Part I.] ORDERED, that [towing company/parking facility owner/vehicle storage facility] shall pay the vehicle owner or operator reimbursement of the fees paid for vehicle towing and storage in the amount of $_.

[COMMENT: Order to pay reimbursement of fees is both a mandatory award and a permissive award pursuant to sections 2308.451(b)(2) and 2308.458(e)(3). While the TTBA provides no explanation for the duplication of this provision, it is presumed that the discretionary award is a means of imposing additional liability on a party that may not be liable for these fees under the Mandatory Award - Part I.] [FINAL COMMENT: No determination of statutory violations, adjudication of civil causes of action, or criminal violations is appropriate at a 452 Hearing. Pursuant to section 2308.458(c), the only issues to be decided are very well enumerated, defined, and limited.]

[Remainder of page intentionally left blank. Signature page follows.]

EXECUTED this

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SOUTH TEXAS LA wREVIEW

day of

,20_

.

578

JUDGE PRESIDING:

EVERYTHING IS PRESUMED IN TEXAS: ANALYZING THE APPLICATION OF THE PRESUMPTION AGAINST PREEMPTION BENJAMIN WALTHER* I. II.

INTRODUCTION .....................................

INVOKING THE PRESUMPTION AGAINST PREEMPTION ......

A. B. III. IV.

...... 579 ..... 582

Matters of TraditionalState Concern ....... .......... 583 Analyzing the State Regulation'sPurposeand Effect............. 587

EFFECT OF THE PRESUMPTION ........................

APPLICATION OF THE PRESUMPTION ....................

......

590 ..... 591

A.

V.

Express Preemption: Texas Courts Apply the Presumption

by Requiring a Narrow Construction of a Preemption Clause ......................................

591 B. Implied Preemption: Texas CourtsEmploy the Presumption to Require a HigherBurden in Orderfor Regulatory Silence to be Given PreemptiveEffect......... ............... 597 CONCLUSION ...................................... ....... 602 I.

INTRODUCTION

The presumption against preemption is a well-known canon of statutory interpretation. The canon arises from the structure of federalisma judicial warning sign that cautions against crossing the inherently blurry line separating federal and state sovereignty.' Although the courts have recognized the canon for several decades, the U.S. Supreme Court's irregular application of the presumption precludes any reliable means to predict how the courts will treat the presumption in the future. 2 Wyeth v. Levine suggested a new resolve to apply a more straightforward presumption-against-preemption analysis, 3 but the Court's * Associate, Shook, Hardy & Bacon L.L.P. I would like to thank my wife, Catherine Walther, for the love and support she gave during the process of writing this article. I would also like to thank Prof. Aaron Bruhl for all of his helpful thoughts, comments, and criticisms.

1. Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996).

2.

See Robert N. Weiner, The Height of Presumption:Preemption and the Role of Courts, 32 HAMLINE L. REV. 727, 727 (2009) ("Few aspects of Supreme Court jurisprudence are as

contradictory and convoluted as the so-called 'presumption against preemption."').

3. See Wyeth v. Levine, 555 U.S. 555, 576-77 (2009).

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SOUTH TEXAS LA wREVIEW

[Vol. 56:579

preemption cases since then have muddied the presumption's application.

Several cases make no mention of the presumption;4 others only acknowledge its restraints. Further complicating matters, the PLIVA, Inc. v.

Mensing majority similarly omitted any reference to the doctrine, instead premising part of its holding on a novel construction of the Supremacy Clause-the same clause that the Court has traditionally cited to justify the presumption. 6 The PLIVA dissenters, perplexed by this omission, ridiculed the majority's failure to invoke the standard preemption doctrine. Although PLIVA arguably rejected the presumption, the courts that have since been confronted with a preemption issue have appeared to ignore the Court's opinion.8 Despite the Court's recent failures to apply the presumption, it seems safe to say that the presumption persists in preemption jurisprudence. 9 When the presumption is properly applied, a court requires a party urging preemption to show that Congress expressed a "clear and manifest" intent to preempt state law.10 Absent such a showing, state law will control."

4.

See, e.g., Mut. Pharm. Co. v. Bartlett, 133 S. Ct. 2466, 2483 & n.1 (2013) (Sotomayor, J., dissenting) (noting that the presumption against preemption was "conspicuously absent" from the majority's opinion); Williamson v. Mazda Motor of Am., Inc., 131 S. Ct. 1131 (2011). In Arizona v. United States, the Court noted that "the historic police powers of the States" are "assumed" to be valid, but it did not appear to apply this assumption to any of the provisions that were challenged in the case. See Arizona v. United States, 132 S. Ct. 2492, 2501 (2012).

5.

See, e.g., Tarrant Reg'l Water Dist. v. Herrmann, 133 S. Ct. 2120, 2132 n.10 (2013) (refusing to invoke the presumption when Congress merely approves a compact that was drafted and approved by the states); Hillman v. Maretta, 133 S. Ct. 1943, 1950 (2013) (recognizing the limits of the presumption within the family law context).

6.

Pliva, Inc. v. Mensing, 131 S. Ct. 2567, 2579-80 (2011).

7.

Id. at 2586-89 (Sotomayor, J., dissenting).

8.

See, e.g., Suarez v. Castrillo, Civil Action No. I 1-CV-01762-MSK, 2011 WL 2729074, at *1 (D. Colo. July 13, 2011) (applying the normal presumption-against-preemption analysis but citing to PLIVA as support for the assertion that state laws that conflict with federal laws are preempted); Tohono O'odham Nation v. City of Glendale, No. CV-l 1-279-PHX-DGC, 2011 WL 2650205, at *4 (D. Ariz. June 30, 2011) (applying the normal presumption-against-preemption analysis, but citing to PLIVA for the proposition that federal law is the supreme law of the land).

But see Lofton v. McNeil Consumer & Specialty Pharm., 672 F. 372, 378 (5th Cir. 2012) (concluding that the continued validity of the presumption is "uncertain").

Since PLIVA, the Court has appeared to reinstate the presumption. In Inter Tribal, for example, the Court acknowledged that the presumption still applies to situations where Congress is intruding on an area of traditional state concern. See Arizona v. Inter Tribal Council of Ariz., Inc., 133 S. Ct. 2247, 2256-57 (2013). But see id. at 2260-61 (Kennedy, J., concurring) (suggesting that the Court should either apply the presumption "across the board," or not apply it

all).

9.

See supra note 8 (citing post-PLIVA decisions that have continued to apply the presumption when presented with a preemption issue).

10.

Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947).

I1. See id.

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EVER YTHING IS PRESUMED IN TEXAS

58 5 1

Federal laws can preempt state laws' 2 in several different fashions, although they are generally divided into two categories: (1) express preemption, and (2) implied preemption. 3 Implied-preemption cases, in turn, are divided into two categories: (1) field preemption, and (2) conflict preemption.14 Finally, courts have found conflict preemption either when it is impossible for a party to comply with both federal and state law or when the state law stands as an obstacle to achieving the federal goal.' 5 Express preemption arises when Congress includes a preemption clause within a piece of legislation.' 6 That provision establishes Congress's intent to preempt state laws that are in variance with a federal law or regulation.' 7 Express preemption analysis, therefore, involves determining the scope of Congress's intended preemption.' 8 Unlike express preemption, which contains Congress's preemptive command within the text of the statute, implied preemption requires courts to look to the statute's "structure and purpose." 9 Determining if a state law is impliedly preempted thus requires a court to assess both what the federal and state laws prescribe, as well as the goals that Congress intended to achieve in creating the federal law.20 As this Article will reveal, the United States Court of Appeals for the Fifth Circuit has traditionally been loath to apply the presumption against preemption in most cases. Texas courts, on the other hand, have consistently employed a particularly strong application of the presumption to all types of preemption cases. This inconsistency between these two jurisdictions creates an incentive for forum shopping.2 ' Generally, courts rely on a defendant's ability to remove a case to federal court to counteract

12.

Both federal statutes and federal regulations can preempt state law. See, e.g., Fid. Fed. Say. & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 153-54 (1982); Hines v. Davidowitz, 312 U.S. 52, 66 (1941). Unless otherwise indicated, this Article will use the term "laws" to refer to both statutes and regulations. Similarly, federal law can preempt both state law and state tort suits. See Geier v. Am. Honda Motor Co., 529 U.S. 861, 886 (2000); de la Cuesta, 458 U.S. at 153. Again, unless otherwise indicated, this Article will use the term "laws" to refer to both categories.

13.

MCI Sales & Serv., Inc. v. Hinton, 329 S.W.3d 475, 482 (Tex. 2010). Federal law displaces conflicting state laws as a result of the Supremacy Clause. Id. at 481 (citing U.S. CONST. art. VI, cl. 2).

14.

Id. at 482.

15.

Id. 16.

See de la Cuesta, 458 U.S. at 152-53.

17.

See id 18.

See id. at 152-54.

19.

Id. at 152-53.

20.

See id at 153.

21.

See Ferens v. John Deere Co., 494 U.S. 516, 527 (1990) ("An opportunity for forum shopping exists whenever a party has a choice of forums that will apply different laws.").

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SOUTH TEXAS LAW REVIEW

[Vol. 56:579

the plaintiffs exclusive power to decide the forum.22 This ability, however, is not available to a defendant within the context of preemption cases.23 As such, there is a heightened need for the two jurisdictions to maintain similar jurisprudence regarding this issue.

This Article will discuss the ways in which Texas courts apply a stronger version of the presumption against preemption than does the Fifth Circuit. Part II will analyze the various situations in which the competing jurisdictions invoke the presumption. Part III will briefly discuss the manner in which each jurisdiction uses the presumption to tilt the inquiry toward a finding of preemption. Part III will also analyze the presumption's effect when the two jurisdictions are asked to determine whether federal regulatory inaction can impliedly preempt conflicting state laws. Finally, Part IV will discuss how the courts have applied the presumption in both express- and implied-presumption cases.

II.

INVOKING THE PRESUMPTION AGAINST PREEMPTION

Both the Fifth Circuit and the State of Texas treat the presumption differently from the very beginning. Texas courts invoke the presumption reflexively, applying it anytime a party asserts preemption.24 The doctrine, in this context, acts as a baseline check against federal overreach-a wall protecting the state's concurrent sovereignty. If the state constitutionally exercised its police powers, Texas courts will presume that federal objectives do not encroach on the state's autonomy.25 But the state also employs a heightened standard when the challenged law falls within the state's traditional regulatory role. When premised on this power, Texas

22.

See JACK H. FRIEDENTHAL ET AL., CIVIL PROCEDURE: CASES AND MATERIALS 350-51

&

(10th ed. 2009) (discussing different theories supporting removal jurisdiction).

23.

Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 14 (1983) ("[S]ince 1887 it has been settled law that a case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption, even if the defense is anticipated in the plaintiff's complaint, and even if both parties admit that the defense is the only question truly at issue in the case."). Although a defendant asserting a preemption defense can remove a case on the basis of diversity, rather than federal-question jurisdiction, many plaintiffs join nondiverse parties to their suits to avoid this result. See id at 7-9 (basing its holding on 28 U.S.C. § 133 1's federal-question jurisdiction, rather than 28 U.S.C. § 1332's diversity-jurisdiction provision).

24.

See, e.g., MCI Sales & Serv., Inc. v. Hinton, 329 S.W.3d 475, 487 (Tex. 2010) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)); Graber v. Fuqua, 279 S.W.3d 608, 611-12 (Tex. 2009) (quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996)); Great Dane Trailers, Inc. v. Estate of Wells, 52 S.W.3d 737, 743 (Tex. 2001); Moore v. Brunswick Bowling Billiards Corp., 889 S.W.2d 246, 249 (Tex. 1994) (quoting Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 516 (1992)); Grocers Supply, Inc. v. Cabello, 390 S.W.3d 707, 713, 716 (Tex. App.Dallas 2012, no pet.) (quoting Lohr, 518 U.S. at 485); Comcast Cable of Piano, Inc. v. City of Plano, 315 S.W.3d 673, 677-78 (Tex. App.-Dallas 2010, no pet.).

25.

See cases cited supra note 24.

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EVERYTHING IS PRESUMED IN TEXAS

583

courts seem to interpret the federal law warily, restricting the federal authority to only those matters that the federal law expressly brings within its control.26 The Fifth Circuit, on the other hand, has a more measured approach. It only applies the constitutional assumption when the "purpose and effect" of the state statute implicates a matter traditionally regulated by the states. 2 7 This process involves a two-step inquiry. First, the circuit determines whether the regulation falls within the state's historic police powers. 28 But the circuit does not stop at the regulation's subject matter alone. Instead, it takes a second step, looking to both the state's regulatory intent and effect to determine if the statute implicates a matter of federal concern.2 9 A.

Matters of TraditionalState Concern

The Fifth Circuit only invokes the presumption when the case involves a matter of traditional state concern. 30 In Lady v. Neal Glaser Marine Inc.,

26.

See infra note 58 and accompanying text.

27.

See cases cited infra note 30.

28.

See, e.g., Villas at Parkside Partners v. City of Farmers Branch, 675 F.3d 802, 808 (5th Cir. 2012), aff'd en banc, 726 F.3d 524 (5th Cir. 2013); Lofton v. McNeil Consumer & Specialty Pharm., 672 F.3d 372, 378 (5th Cir. 2012); MacDonald v. Monsanto Co., 27 F.3d 1021, 1023 (5th Cir. 1994); Moore v. Kimberly-Clark Corp., 867 F.2d 243, 244 (5th Cir. 1989).

See, e.g., Villas, 675 F.3d at 808-09; Lofton, 672 F.3d at 378-79; MacDonald, 27 F.3d 29. at 1023-24; Kimberly-Clark Corp., 867 F.2d at 244.

30.

See Lady v. Neal Glaser Marine, Inc., 228 F.3d 598, 606-08 (5th Cir. 2000) (limiting the presumption's application to areas traditionally controlled by the states), overruled in part by Sprietsma v. Mercury Marine, 537 U.S. 51 (2002); see also Franks Inv. Co. v. Union Pac. R.R., 593 F.3d 404, 407 (5th Cir. 2010) (en banc) (limiting the presumption's application to areas of traditional state concern); O'Hara v. Gen. Motors Corp., 508 F.3d 753, 759 n.4 (5th Cir. 2007) ("The O'Haras argue that Bates v. Dow Agrosciences L.L.C. requires this Court to impose a presumption against preemption here. Because we hold that [Federal Motor Vehicle Safety Standard] 205 is a minimum safety standard which does not preempt the O'Hara's suit regardless of any presumption against preemption, we do not reach this issue." (citation omitted)); Davis v.

Davis (In re Davis), 170 F.3d 475, 481-82 (5th Cir. 1999) (en banc) ("Deference to our federalism counsels a presumption that areas of law traditionally reserved to the states, like police powers or property law, are not to be disturbed absent the 'clear and manifest purpose of Congress."'). Until recently, the Fifth Circuit has refused to apply the presumption against preemption to expresspreemption cases. Compare Perry v. Mercedes Benz of N. Am., Inc., 957 F.2d 1257, 1261 (5th Cir. 1992) ("We do not hesitate to find preemption when Congress has expressly stated its intent."), with Franks Inv. Co., 593 F.3d at 407 ("The presumption is relevant even when there is an express pre-emption clause."). A few Fifth Circuit panels continued to apply the presumption during this period, or at least state that the presumption existed. See, e.g., Stamps v. Collagen Corp., 984 F.2d 1416, 1419-20 (5th Cir. 1993) (applying the presumption to an expresspreemption case involving the preemptive scope of the Medical Device Amendments (MDA) of 1976, 21 U.S.C. § 360k(a)), abrogatedin part by Martin v. Medtronic, Inc., 254 F.3d 573 (5th Cir. 2001). Although technically invoking the presumption in these cases, the courts generally did not employ it in a manner that prevented a finding of preemption. See Stamps, 984 F.2d at 1421-22 (holding that the express-preemption clause prohibiting state "requirements" prevented a plaintiff

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for example, the plaintiff asserted a state-law tort claim against a recreational boat manufacturer.3 1 He had been riding a jet ski alongside his friend's boat when he accidentally swerved into the side of the boat. 32 He was thrown off the jet ski and tossed underneath the boat's hull. As he was trying to surface, the boat's moving propeller hit him. 3 4 In his lawsuit against the defendant manufacturer, he claimed that he would not have been injured had the boat been equipped with a propeller guard.

When the defendant asserted that the Federal Boat Safety Act preempted the plaintiffs suit, the plaintiff argued that his claims were presumed valid.36 The court nonetheless disagreed.37 It premised its holding on the Supreme Court's United States v. Locke decision, which addressed the presumption's application to a law involving international maritime commerce.38 Locke revolved around a series of regulations that the State of Washington had imposed in response to the Valdez oil spill.3 9 The Court acknowledged that the regulations were intended to protect the safety of the state's citizens, but ultimately concluded that international maritime commerce is "an area where there has been a history of significant federal presence."40 As such, the presumption's underlying purpose in recognizing the boundaries of a federalist system did not apply. 4 1 Unlike Locke, the Fifth Circuit's decision in Lady did not involve international maritime trade.4 2 In fact, the court recognized that "[the plaintiffs] tort action touch[ed] on safety and health 'matters that historically have been areas of state jurisdiction."-4 3 But the tort case did not exist in a vacuum; its context mattered. Lady also involved "maritime

from asserting a state-law tort claim despite the fact that the savings clause provided that compliance with an order issued under the MDA did not relieve any person from liability under state law); see also Blanchard v. Collagen Corp., 909 F. Supp. 427, 432, 434 & n.9 (E.D. La. 1995) (noting the incongruity between the Fifth Circuit's analysis in the Stamps opinion and the language of the preemption and savings clauses (citing 21 U.S.C. §§ 360k(a), 360h(d)) (1992))).

31.

Lady, 228 F.3d at 600.

32.

Id. 33.

Id 34.

Id 35.

Id. 36.

Id. at 601, 606.

37.

Id at 607-08.

38.

Id. (citing United States v. Locke, 529 U.S. 89 (2000)).

39.

Id. at 607; see also Locke, 529 U.S. at 89.

40.

Locke, 529 U.S. at 108.

41.

Id. at 108-09.

42.

43.

Lady, 228 F.3d at 607.

Id (quoting MacDonald v. Monsanto Co., 27 F.3d 1021, 1023 (5th Cir. 1994)).

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activity-an area traditionally within the purview of federal regulation."44 It did not matter that Locke's regulations applied to international commercial tankers engaged in commerce, whereas Lady's tort claims only applied to a small motorboat that was being used in a local bayou.45 Both cases revolved around maritime activity, and the presumption therefore was inapplicable because the case involved a matter of primarily federal concern.46 In the Fifth Circuit, the rule is clear: The presumption only applies to cases that involve traditional state regulation, and only when those state regulations do not touch the fringes of larger federal concerns.47 But the circuit is not deaf to the fact that other jurisdictions apply a more far-reaching standard. The Lady court, for example, noted that the Texas Supreme Court had reached the opposite conclusion on the exact same preemption issue Lady was asked to address-a decision that was based entirely on the fact that the presumption against preemption applied. 4 8 Like Lady, the plaintiff in Moore v. Brunswick Bowling & Billiards Corp. was injured when a propeller from a recreational motorboat struck her. 4 9 And like Lady, she claimed that she would not have been injured had the boat been properly equipped with a propeller guard.5 0 But unlike Lady, the Moore court began its analysis with the presumption against preemption.5 1 Rather than compare the different spheres of federal and state concern, the court applied the presumption in an almost knee-jerk fashion, never questioning whether it was properly invoked. In fact, the court went 44.

Id Although Wyeth v. Levine later addressed this issue, the Fifth Circuit has not been presented with an opportunity since that opinion to apply Wyeth to this particular situation. See Wyeth v. Levine, 555 U.S. 555, 565 n.3 (2009) ("[The presumption's application] does not rely on the absence of federal regulation.").

45.

See Lady, 228 F.3d at 600, 607-08 ("[A]ny distinction between recreational vehicles and tankers is of little significance, as the national interest in vessels operating on navigable waters of the United States encompasses both."). Interestingly, in Ray v. Atlantic Richfield Co., the Supreme Court was asked to address whether the predecessor statutes to the ones at issue in Locke were preempted. Ray v. Atl. Richfield Co., 435 U.S. 151, 154-55 (1978). Although ultimately deciding that the statutes were impliedly preempted, the Court began its analysis with the presumption against preemption. Id. at 157. In Lady, the Fifth Circuit discussed the Ray opinion at length; it never mentioned that the Ray Court applied the presumption against preemption. See Lady, 228 F.3d at 613-14.

46.

Lady, 228 F.3d at 608.

47.

See supra note 30 and accompanying text; see also Diamond Offshore Co. v. Survival Sys. Int'l, Inc., 902 F. Supp. 2d 912, 940 (S.D. Tex. 2012) ("First, the court notes that the design and construction of lifesaving equipment aboard these vessels is not an area of law states have traditionally occupied, so there is no presumption against preemption." (citing United States v.

Locke, 529 U.S. 89, 108 (2000))).

48.

Lady, 228 F.3d at 602 (citing Moore v. Brunswick Bowling & Billiards Corp., 889 S.W.2d 246 (Tex. 1994)).

49.

Moore, 889 S.W.2d at 247.

50.

Id 51.

Id at 249.

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even further by concluding that the presumption-though always applicable-should be given even more weight than usual because this case involved "state regulation of health and safety matters," 52 and because the federal legislation did not provide a means for Texas citizens to recover These heightened state interests required a compensatory damages. particularly strict construction of the preemption clause.

The Texas Supreme Court had issued the Moore decision before the U.S. Supreme Court decided Locke. Moore's analysis, however, indicates that the Locke holding would probably not have prevented it from applying the presumption. The Fifth Circuit premised Locke's application on the conclusion that the federal maritime interest outweighed the state's interest in regulating the health and safety of its citizens.5 4 Moore, on the other hand, did not even acknowledge a level of federal concern.5 1 In fact, the Moore court determined that the state's interest was even higher than normal because the federal legislation precluded recovery of compensatory damages. 56 Moore's ambivalence to federal concerns is a preview of its presumed ambivalence to Locke. What matters, in the Texas courts' view, is that the presumption protects against perceived federal intrusion.

Moore illustrates the Texas courts' more expansive view of the presumption's application. The Texas Supreme Court has consistently maintained that the presumption applies to all preemption cases, rather than

52.

Id The Texas Supreme Court has consistently applied this more burdensome presumption to preemption matters involving the health and safety of Texas's citizens. See, e.g., MCI Sales & Serv., Inc. v. Hinton, 329 S.W.3d 475, 487 (Tex. 2010) ("The presumption is particularly strong when Congress legislates 'in [a] field which the States have traditionally occupied."' (alteration in original) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947))); Great Dane Trailers, Inc. v. Estate of Wells, 52 S.W.3d 737, 743 (Tex. 2001) (same).

Moore, 889 S.W.2d at 251. Only recently has the Fifth Circuit begun to recognize a 53. heightened concern for the presumption against preemption in cases in which the plaintiff would be deprived of a remedy if federal preemption were found to negate a state-law claim. Compare Demahy v. Actavis, 593 F.3d 428, 435 (5th Cir. 2010) ("In this case, the bar to a finding of preemption is set even higher because federal law provides no remedy for an injured consumer."), rev'd sub nom. PLIVA, Inc. v. Mensing, 131 S. Ct. 2567 (2011), with Stamps v. Collagen Corp., 984 F.2d 1416, 1425 (5th Cir. 1993) (holding that a more burdensome presumption against preemption is only employed in implied-preemption cases where federal law precludes recovery of compensatory damages but is not applicable to express-preemption cases even if it would leave the plaintiff remediless), abrogatedin part by Martin v. Medtronic, Inc., 254 F.3d 573 (5th Cir. 2001).

Lady, 228 F.3d at 608 ("Because a state common-law rule requiring OMC to equip its 54. boats with propeller guards implicates federal concerns at least as much state concerns, we cannot say that the state's interests predominate."); see also id. at 611, 615 (finding implied preemption based on the strong federal interest in a "uniform system of requirements for recreational vessels" in an area of significant federal involvement).

See Moore, 889 S.W.2d at 251.

55.

56.

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being limited to areas in which the states have traditionally occupied.57 A stronger presumption is employed when the preemption analysis addresses an area that traditionally belongs to the states, such as citizens' health or safety. Finally, unlike the Fifth Circuit, Texas courts apply a heightened presumption in instances where the federal legislation would preclude a plaintiffs recovery of compensatory damages.s9 B.

Analyzing the State Regulation'sPurpose and Effect

The Fifth Circuit does not accept a state's reflexive invocation of its police powers at face value. Instead, the circuit tends to look past the law, considering both the statute's purpose and effect.60 If the legislative insight reveals that the state is shrouding its federal ambitions in traditional state laws, the circuit refuses to afford the state the presumption against '

preemption.6

In Farmers Branch, the circuit was asked to review whether the City of Farmers Branch's housing ordinance unlawfully interfered with federal immigration objectives.62 The ordinance at issue required noncitizen applicants to submit proof of their lawful immigration status before the City's building inspector was allowed to grant a residential occupancy license. 63 The plaintiffs challenging the ordinance argued that the law amounted to an immigration regulation in both purpose and effect.6 The City asserted that the ordinance was entitled to the presumption against preemption because it was a housing regulation-a matter typically within the state's sovereign control-and thus the ordinance was

57.

See, e.g., Graber v. Fuqua, 279 S.W.3d 608, 611 (Tex. 2009); see supra note 30 (citing cases in which the Fifth Circuit stated that the presumption only applies to areas of traditional state concern).

58.

See Great Dane Trailers, Inc. v. Estate of Wells, 52 S.W.3d 737, 743 (Tex. 2001) ("Historically, states have exercised authority in matters involving their citizens' public health and safety. Thus, this presumption is nowhere stronger than under circumstances in which the states are exercising that authority.").

59.

See supra note 53 (discussing Texas's and the Fifth Circuit's presumption jurisprudence in relation to federal laws that if given preemptive effect, would preclude a plaintiff from recovering damages for her injury).

60.

E.g., Villas at Parkside Partners v. City of Farmers Branch, Tex., 675 F.3d 802, 809 (5th Cir. 2012), aff'den banc, 726 F.3d 524 (5th Cir. 2013).

61.

See id. at 809-11.

62.

Id. at 804. The Fifth Circuit's en banc opinion affirmed the panel's decision, but it did not discuss the presumption's applicability. See Villas at Parkside Partners, 726 F.3d at 566 (Jones, J., dissenting) ("Unfortunately, none of the three opposing opinions accords the [o]rdinance this strong presumption [of constitutionality] ....

63.

FarmersBranch, 675 F.3d at 804.

64.

Id. at 809.

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'

presumptively valid.6 ' But the Fifth Circuit was not persuaded. The mere fact that the regulation was passed as a housing ordinance did not mean that it was a housing ordinance.66 The court noted that the ordinance did not have any of the "indicia one would expect of a housing regulation."6 7 It established an application process, but the only criterion was immigration status.68 It did not require any information about the applicant's credit history, employment history, criminal background, or leasing history. 6 9 in fact, the application, once granted, could only be revoked on a singular 70 ground: change in immigration status.

And the ordinance's invocation of the City's power to regulate public health and safety was similarly unpersuasive. The evidence, the court noted, did not support the City's supposed attempt to protect the public welfare. 7 The City had never conducted any studies about undocumented aliens' impact on the community, and testimony even suggested that the sole purpose of the ordinance was to "remov[e] illegal immigrants" from the City's borders.7 2 Given this legislative backdrop, the court concluded that the purported housing regulation was not a housing regulation at all; it was "an impermissible regulation of immigration" and therefore prohibited by the Supremacy Clause.

Farmers Branch marks a shift in the Fifth Circuit's preemption jurisprudence. State regulations were previously categorized by the subject matter that the regulation addressed.7 4 But Farmers Branch created a more searching inquiry. The analysis hinges not on what the regulation says it will do, but on what the legislation actually does.75 Motives rise to the forefront, and the statute's self-defined subject matter recedes into the background.

Texas courts turn this analysis on its head. While the Fifth Circuit looks at whether the purpose of the state regulation conflicts with federal

65.

Id 66.

See id 67.

Id. 68.

Id. at 809-10.

69.

Id 70.

Id. 71.

Id. at 810.

72.

Id. 73.

Id. at 811. It is important to note that the Fifth Circuit did not base its decision on field preemption. Had it done so, it would have concluded that the regulation was improper because Congress completely controls the field of immigration. Instead, it based its decision on the fact that the ordinance "pos[ed] an obstacle to federal control of immigration policy." Id (emphasis added).

74.

See, e.g., Lady v. Neal Glaser Marine, Inc., 228 F.3d 598, 608 (5th Cir. 2000), overruled in part by Sprietsma v. Mercury Marine, 537 U.S. 51 (2002).

See FarmersBranch, 675 F.3d at 810.

75.

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authority, Texas courts look at whether the state law conflicts with the specific purpose of the federal law.76 The Grocers Supply v. Cabello case offers an interesting example. In that case, the defendant argued that an undocumented alien plaintiff should not be allowed to recover lost wages in his personal-injury action because federal immigration law prohibited the company from hiring undocumented workers in the first place. Awarding lost wages, the argument goes, would directly contravene Congress's decision to discourage illegal immigration by eliminating illegal 78 immigrants' employment opportunities.

As in Moore, the Texas court in Grocers Supply began by invoking the presumption.79 It then looked to the subject matter of the suit to determine whether the law fell within a field traditionally controlled by the state.80 The court noted that two fields were in play. On one hand, "the power to regulate immigration is unquestionably a federal power," but, on the other hand, the state traditionally controls the type of tort remedies implicated by the case. Unlike the Fifth Circuit, however, the court did not consider these two fields to overlap: "[I]mmigration is a distinct and separate field from state tort law." 82 As a result, the court applied a heightened presumption.83 After invoking the presumption, the court then turned to its more "cautious" preemption analysis: whether the state law conflicted with Congress's limited purpose. Rather than looking at the purpose of the state law in the context of federal authority, the court looked to the purpose of the federal law in the context of state authority.85 Congress, the court noted, was not trying to prevent undocumented workers from receiving money in

76.

See Grocers Supply, Inc. v. Cabello, 390 S.W.3d 707, 716 (Tex. App.-Dallas 2012, no pet.) ("A preemption analysis is an inquiry into congressional intent." (quoting Comcast Cable of Piano, Inc. v. City of Plano, 315 S.W.3d 673, 677 (Tex. App.-Dallas 2010, no pet.))); id. at 718 ("Courts therefore must approach this interpretive task cautiously, applying a high threshold for concluding a state law is to be preempted for conflicting with the purposes of a federal statute.").

77.

Id at 711.

78.

Id at 712, 714.

79.

Id. at 713.

80.

See id. at 716-17.

81.

Id at 717.

82.

Id. 83.

See id at 713-14, 717 ("Based on a state's sovereignty and its power to regulate public health and safety, the presumption against preemption can be no stronger than where a state exercised its authority in those matters").

84.

Id at 716 ("In [the presumption] context-and because the purpose of Congress is the ultimate touchstone in every preemption case-we must examine Congress's purpose in enacting [the Immigration Reform Control Act].").

85.

Id at 719 ("We have found no evidence Congress intended [the Immigration Reform Control Act] to combat illegal immigration by encroaching into the States' authority to regulate health and safety matters . . . .").

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the United States. Instead, it was trying to discourage aliens from illegally entering the country in the first place by removing one of the primary incentives for immigration. Allowing a tort victim to recover damages for lost wages simply could "not implicate the number of job opportunities available to undocumented aliens."88 Farmers Branch and Grocers Supply both reached relatively uncontroversial conclusions, but it is the way that they reached them that was interesting. FarmersBranch refused to apply the presumption when the state law's motive indicated that its goal was to usurp federal powers. But Grocers Supply invoked the presumption to limit the federal law's objectives in light of the state's traditional authority.

III. EFFECT OF THE PRESUMPTION

One of the most striking distinctions between the two jurisdictions is the different effect that the presumption's application has on a court's decision. Both jurisdictions apply the "clear and manifest intent" standard after the presumption has been invoked, but the manner in which they do so results in noticeably different conclusions.89 Texas courts use the presumption as a barrier to finding preemption-a wall that can only be overcome by a clear statement of congressional intent.90 Absent Congress's definite indication that it intended to supersede state law, Texas courts will allow state law to control. 9' The way in which Texas courts initiate the preemption analysis depicts the pivotal role that the presumption plays: the courts always begin by invoking the presumption. 92 The Fifth Circuit, on the other hand, uses the presumption merely as an interpretive tool, settling equal arguments in favor of the state.9 3 Unlike the Texas courts' practice of automatically invoking the presumption prior to starting their preemption analysis, 94 the Fifth Circuit generally avoids

86.

See id at 716.

87.

Id at 718.

88.

Id. 89.

See, e.g., Franks Inv. Co. v. Union Pac. R.R., 593 F.3d 404, 407 (5th Cir. 2010) (en banc); Graber v. Fuqua, 279 S.W.3d 608, 612 (Tex. 2009).

90.

See Graber, 279 S.W.3d at 611-12; Moore v. Brunswick Bowling & Billiards Corp., 889 S.W.2d 246, 249 (Tex. 1994).

91.

See cases cited supra note 90.

92.

See, e.g., MCI Sales & Serv., Inc. v. Hinton, 329 S.W.3d 475, 487-89 (Tex. 2010) (reconfirming the presumption's application to all preemption cases "[b]efore discussing whether preemption applie[d]" to the matter before the court); Graber, 279 S.W.3d at 611 (beginning with the presumption before analyzing the preemption issue); Moore, 889 S.W.2d at 249 (same).

93.

See White Buffalo Ventures, LLC v. Univ. of Tex. at Austin, 420 F.3d 366, 370 (5th Cir. 2005) (describing the presumption as "classic 'tie goes to the state' jurisprudence").

94.

See supra note 92 and accompanying text.

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invoking the presumption, first attempting to resolve the preemption issue prior to determining whether the presumption is applicable to the present case. 9 5 Similarly, when the court is required to apply the presumption, it uses the canon as a tiebreaker. 96 In express-preemption cases, for example, the circuit employs the presumption to resolve equally logical constructions of the same provision in favor of the state.97 Absent an ambiguity in the preemption clause's meaning, however, the presumption does not come into play.98 IV. APPLICATION OF THE PRESUMPTION

A.

Express Preemption: Texas CourtsApply the Presumptionby Requiringa Narrow Construction of a Preemption Clause

The Texas Supreme Court has held that the presumption against preemption works in another way not recognized by the Fifth Circuit. In Texas, the presumption is employed to narrowly construe a preempting statute, thus limiting the scope and effect that the preempting statute has over state law. 99 The presumption works two ways: (1) to act as a barrier to a statute being originally found as preemptive,100 and (2) to narrowly construe that statute once it has been determined to preempt state law.'o' The Fifth Circuit, on the other hand, does not employ the presumption in either of these ways. Rather than requiring a strict construction of a preemption clause, the circuit uses the presumption as a tiebreaker: if the statute has two equally plausible meanings, then the presumption functions to settle the issue in the state's favor.1 02 This contrast between the two jurisdictions is perhaps best seen in their conflicting interpretations of the Medical Device Amendments of 1976 (MDA). Like the Deregulation Act, the MDA resulted in a "legion of cases

95.

See Franks Inv. Co. v. Union Pac. R.R., 593 F.3d 404, 408 (5th Cir. 2010) (en banc) (discussing the role that the presumption plays, but then deciding that "the presumption need not be invoked in this case" because the court held that preemption did not apply); White Buffalo, 420 F.3d at 372 (stating that the presumption's application is "trigger[ed]" upon a finding of textual ambiguity in the express-preemption clause).

96.

See White Buffalo, 420 F.3d at 370.

97.

See id at 370-72.

98.

Id. at 72.

99.

Graber v. Fuqua, 279 S.W.3d 608, 611 (Tex. 2009).

100.

See supra Part Ill (discussing the way in which Texas courts perceive the presumption as a significant obstacle to finding that state law has been preempted by federal action).

101.

Graber, 279 S.W.3d at 611 ("The presumption applies not only to whether Congress preempted state law at all, but also to the scope of preemption.").

102.

See supra Part III (discussing the Fifth Circuit's tiebreaker mentality toward the presumption).

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attempting to determine [the MDA's] preemptive scope."l 0 3 In general, the MDA grants the Food and Drug Administration (FDA) the authority to regulate various classifications of medical devices.1 0 4 Congress expressed its intent to preclude state interference with the FDA's decision-making by enacting an express-preemption clause: [N]o State . . may establish or continue in effect with respect to a device intended for human use any requirement(1) which is different from, or in addition to, any requirement applicable under [the MDA] to the device, and (2) which relates to the safety or effectiveness of the device or to any other matter included in a requirement applicable to the device under [the MDA]. 10

The FDA, pursuant to its authority granted by the MDA, interpreted the preemptive scope of 21 U.S.C. § 360k(a) as follows: State or local requirements are preempted only when the [FDA] has established specific counterpart regulations or there are other specific requirements applicable to a particular device under the [MDA], thereby making any existing divergent State or local requirements applicable to the device different from, or in addition to, the specific [FDA] requirements.' 0 6 The Fifth Circuit's Stamps v. Collagen Corp. opinion was one of the first opinions to rule on the clause's construction in the context of Class III regulations.1 0 7 The court's cursory analysis addressed several issues. First, it determined that the term "requirement" includes state-law tort liability in addition to positive enactments by a state legislative or regulatory body. 08 Steele v. Depuy Orthopaedics, Inc., 295 F. Supp. 2d 439, 447-48 (D.N.J. 2003).

103.

104.

See Stamps v. Collagen Corp., 984 F.2d 1416, 1418-19 (5th Cir. 1993) (describing the FDA's role in ensuring that medical devices are safe for market use prior to being marketed), abrogated in part by Martin v. Medtronic, Inc., 254 F.3d 573 (5th Cir. 2001). The MDA gave the FDA authority to divide all medical devices into three categories (Class 1, II, and IlI) based on the amount of harm that they can inflict. Medtronic, Inc. v. Lohr, 518 U.S. 470, 476-77 (1996). Each category is subject to varying levels of regulation. Id. at 477. Class III devices are the most stringently regulated. See id To meet FDA approval necessary to be publically marketed, the device must go through the premarket approval (PMA) process. Id. This process requires submitting an enormous amount of laboratory data, which the FDA reviews. Id On average, it results in approximately 1,200 hours of labor. Id. Most devices, however, have never undergone the PMA process. Id. These devices were either grandfathered in by the MDA, or had undergone a comparatively minor approval process whereby the manufacturer of the device demonstrated that the device is substantially equivalent to a previously approved device. Id. at 477-78.

105.

21 U.S.C. § 360k(a) (2012).

106.

21 C.F.R. § 808.1(d) (2014).

107.

See Stamps, 984 F.2d at 1423 n.7.

Id. at 1421. The court largely premised this decision on one of its earlier decisions 108. made in the context of Class 11 regulations, Moore v. Kimberly-Clark Corp., 867 F.2d 243 (5th Cir. 1989), and a Supreme Court decision addressing the preemptive scope of the Federal

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Second, and most importantly, the court held that the premarket approval (PMA) process is a requirement, in and of itself, that is imposed by the MDA.1 09 As such, the court reasoned, any state requirement (such as tort liability) necessarily was "different from, or in addition to" the federal PMA requirement." 0 Third, the Stamps panel applied Morales v. Trans World Airlines, Inc.'s"' broad interpretation of a statute's "relates to" language to the MDA's preemption clause.l12 As such, the panel concluded that "Stamps's state law claims undoubtedly 'relate to' either the safety or effectiveness" of the medical device in question, and were therefore preempted by the MDA." 3 Interestingly, the Stamps court mentioned the presumption's application prior to beginning its analysis, although the opinion reveals that the court did not apply it to the case.114 The court never mentioned the presumption's standard after stating its black-letter law, nor does it appear that the court considered it either an obstacle to overcome or a doctrine requiring a narrow construction of the preemption provision. The court's refusal to apply the presumption reveals the circuit's hesitancy toward the doctrine. Because the court employs the presumption as a tiebreaker whenever the court is confronted with an ambiguous preemption clause,' 15 the court's determination that the statute's language was clear necessarily precluded the presumption's application." 6 The U.S. Supreme Court ruled on the MDA's preemptive scope before the Fifth Circuit was asked to reconsider the statute." 7 The Medtronic, Inc. v. Lohr decision, however, shed little light on the issue. Although subsequent courts have since limited the Lohr decision to precluding preemption only in the context of premarket notifications under § 510(k), these later courts have been relatively unable to agree on any other

Cigarette Labeling and Advertising Act of 1965, Cipollone v. Liggett Grp., Inc., 505 U.S. 504 (1992). See Stamps, 984 F.2d at 1421. Shortly before the Stamps decision, the Supreme Court had held that the phrase "requirement or prohibition" included common-law claims. Cipollone, 505 U.S. at 520. The Fifth Circuit noted that it would be "anomalous" to find the MDA's failure to similarly include the term "prohibition" in the preemption clause manifested Congress's intent to allow state-law tort liability. Stamps, 984 F.2d at 1421.

109.

Id. at 1421-22.

110.

Id. at 1421.

111.

Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 (1992) (defining "relate to" as having "a connection with or reference to" a given term).

112.

Stamps, 984 F.2d at 1421-22.

113.

Id. at 1422.

114.

See id. at 1419.

115.

See supra Part Ill. 116. See Stamps, 984 F.2d at 1421-22.

117.

Medtronic, Inc. v. Lohr, 518 U.S. 470, 471 (1996).

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consistent construction of the case." 8 The courts' inability to reach a consensus is primarily the result of the inconsistencies between their splintered decisions.1 9 Fortunately, an independent analysis of the Lohr opinion is not necessary for present purposes. Instead, it is the Fifth Circuit's and the Texas Supreme Court's analysis of Lohr that is illuminating.

In Martin v. Medtronic, Inc., the Fifth Circuit was asked to determine whether Stamps had survived Lohr.1 20 The court reduced the fractured Lohr decision into three basic principles.12' First, it determined that a majority of the U.S. Supreme Court in Lohr had found that common-law tort suits could constitute state requirements within the purview of the preemption statute.122 Second, it found that Stamps's original determination that all state-law tort suits that are remotely related to a patient's health, or a medical device's safety or effectiveness, was overbroad.1 2 3 Instead, a common-law tort claim could enforce a general duty of care, but it would be preempted if it threatened to impose specific requirements that conflicted with a specific federal requirement like those imposed by the PMA process.1 2 4 Third, it noted that Lohr addressed preemption in the context of the § 510(k) notification provision, rather than the PMA process.1 25 This distinction, the Fifth Circuit decided, prevented Lohr from disturbing Stamps's essential holding that common-law tort claims are requirements "different from, or in addition to the PMA process." 2 6 Nonetheless, the court noted that Lohr's language necessarily restricted the part of the Stamps decision that had held that any state requirement was preempted by

118.

See, e.g., Martin v. Medtronic, Inc., 254 F.3d 573, 583 (5th Cir. 2001).

119.

Justice Stevens wrote the plurality opinion in which three other Justices joined entirely.

See Worthy v. Collagen Corp., 967 S.W.2d 360, 367-68 (Tex. 1998) (discussing the "complicated" task of discerning the controlling rule from the Lohr decision). Justice O'Conner wrote the dissenting opinion in which three other Justices joined entirely. Id. Justice Breyer joined part of Justice Steven's opinion, thus creating a majority for part of the decision. Lohr, 518 U.S. at 473. Justice Breyer, however, filed a separate concurrence. Worthy, 967 S.W.2d at 367-68. Much of the confusion regarding § 360k(a)'s preemptive scope stems from the seemingly conflicting statements between that portion of Justice Stevens' decision in which Justice Breyer joined and Justice Breyer's separate concurrence. See, e.g., Martin, 254 F.3d at 581-82 (discussing the apparent conflict between the two opinions).

120. Martin, 254 F.3d at 577.

121.

The court also asserted a fourth finding, although it is really only a restatement of its third finding that limits the Lohr decision to the § 5 10(k) notification process. See id. at 583.

122.

Id at 580 (citing Lohr, 518 U.S. at 509 (O'Connor, J., dissenting); Lohr, 518 U.S. at 503 (Breyer, J., concurring)).

123.

Id. at 581-83.

124.

Id. at 582-83.

125.

Id at 583.

126.

Id. (internal quotation marks omitted).

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the PMA process.127 nstead, Lohr held that state common-law claims that parallel the PMA requirements are not preempted.1 2 8 The Fifth Circuit, therefore, concluded that Stamps was only overruled in part.129 As such, the court reaffirmed "that a medical device manufacturer's compliance with the FDA's PMA process will preempt state tort law claims brought with respect to that approved device and relating to safety, effectiveness or other MDA requirements when the substantive requirements imposed by those claims potentially conflict with PMA approval."o The Fifth Circuit did not invoke the presumption against preemption in the Martin decision, presumably for the same reason that the Stamps panel did not apply it.' 3 ' Without the presumption standing in its way, the court reaffirmed its earlier broad interpretation of the statute.' 32 Subsequent Texas courts, addressing the same statute, have applied the presumption to reach narrower conclusions.

In Worthy v. Collagen Corp., the Texas Supreme Court was asked to decide the same issue that Martin and Stamps had addressed: whether statelaw tort claims were preempted by the federal PMA requirements.13 Ultimately, although the court held that the plaintiffs claims were preempted, its analysis demonstrates that it construed the statute more narrowly than did the Fifth Circuit.134 Like Martin, the Worthy court attempted to glean whatever rules it could from the fractured Lohr opinions to help guide its analysis.1 35 First, it concluded that the federal requirements imposed by the § 510(k) notification process were too general to carry preemptive weight.1 36 Second, the court noted that some, but not all, federal requirements imposed by the PMA process were sufficiently specific to preempt state law.1 3 7

127.

Id 128.

Id 129.

See id at 584 ("In sum, we simply cannot read Lohr as establishing a new rule of law that contradicts our preexisting case law as it applies in this appeal.").

130.

Id. at 585.

131.

See supra notes 95-97 and accompanying text.

132.

Martin, 254 F.3d at 585; see also Blanchard v. Collagen Corp., 909 F. Supp. 427, 432 n.4 (E.D. La. 1995) (expressing misgivings about the Fifth Circuit's treatment of the MDA's preemption clause).

133.

Worthy v. Collagen Corp., 967 S.W.2d 360, 362 (Tex. 1998).

134.

Id at 376.

135.

Id. at 368-72.

136.

Id. at 369-70.

137.

Id at 371 ("[W]e take it to be the view of a majority of the Supreme Court that a federal requirement concerning a device can preempt a suit in which the claim is that the device should have been made or marketed differently provided, as we have already observed, the federal requirement is sufficiently specific.").

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Applying Lohr's invocation of the presumption against preemption, the Worthy court construed the language of the statute strictly, ultimately concluding that the PMA process, standing alone, was insufficient to create specific federal requirements that could preempt state law. 138 The court claimed that this interpretation was compatible with Congress's intent in passing the MDA: [T]he mere fact that a product has received a PMA, a procedure that was instituted with the purpose of benefiting and protecting consumers, is not a reason to forever shield its distributors from State tort actions based on harm caused by the product. Indeed, it is inconceivable that Congress would have provided for such a draconian result without making itself more explicit.' 39 Nonetheless, the court held that the plaintiffs claims were preempted because "the details of the FDA's premarketing approval of [the medical device at issue]-as opposed to the PMA process in general-[were] sufficiently specific to have preemptive effect."1 40 The court's reasoning demonstrates how Texas courts apply a stronger presumption that strictly construes preemption clauses, thereby limiting the scope of a statute's preemptive effect. Stamps and Martin established a per se rule: if the product has been approved through the PMA process, any state-law tort claim that is not identical to the federal regulation is necessarily preempted.141 Worthy declined to impose such a formulaic result; instead, it held that only specific federal requirements imposed during the PMA process could preempt a state-law tort claim if the tort claim depended upon a finding that was specifically rejected by a particular federal requirement. 142 The disparity between the Worthy rule and the Martin analysis is perhaps best demonstrated by the Herring v. Telectronics Pacing Systems,

Id. at 366-67, 376 (citing Medtronic, Inc. v. Lohr, 518 U.S. 470, 485-86 (1996) 138. (employing the presumption against preemption to require "a narrow interpretation of . . . an express" preemption clause)).

Id at 374 (alteration in original) (quoting Sowell v. Bausch & Lomb, Inc., 656 139.

N.Y.S.2d 16, 21 (N.Y. App. Div. 1997)).

140.

Id at 376.

See id at 375 ("[T]he act provides for preemption of a State common law duty only if it 141. imposes a requirement that is different from, or in addition to, a specific substantive requirement pertaining to the particular device that has been imposed by or under the act.").

For example, the court noted that the plaintiff was asserting a deceptive-trade-practices 142. claim for misrepresenting the safety of the product. Id. at 376-77. The plaintiff, however, was not alleging that the defendant failed to manufacture and advertise the product "in compliance with FDA requirements." Id Because the plaintiffs claims necessarily required a finding that the product was not safe-a finding that would have specifically contradicted the FDA's determination that the product was safe if manufactured according to the submitted specifications-the plaintiffs claim was preempted. Id.

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Inc. decision, filed only a few days after the Texas Supreme Court issued its Worthy opinion. 4 3 The Herring plaintiff asserted numerous state-law theories of recovery for injuries sustained by a PMA-approved Class III pacemaker.'" After invoking the presumption against preemption, the court concluded that the plaintiffs claims were not preempted.1 45 The court grounded its holding on the fact that Telectronic "based its motion entirely on the premise that, as a matter of law, no person injured by a pacemaker can ever sue the manufacturer."l 4 6 The court rejected this per se rule-the same rule that the Fifth Circuit upheld in Martin.14 7 Instead, the court required the party asserting preemption to show the plaintiffs statelaw tort claims were not general requirements, but rather particular substantive requirements that conflicted with a specific federal obligation imposed by the PMA process.1 48 The presumption's application is apparent in this holding. Instead of imbuing § 360k(a) with a categorical preemptive scope, the Herring court employed the presumption to limit § 360k(a)'s preemptive effect to only include specific claims that created conflicting requirements imposed by the PMA process. 149 B.

Implied Preemption: Texas Courts Employ the Presumptionto Require a Higher Burden in Orderfor Regulatory Silence to be Given PreemptiveEffect

Actual conflict preemption is generally divided into two subcategories: (1) impossibility, and (2) obstacle. 50 These categories, though academically placed into separate spheres, are practically just gradations of the same concept: A state law cannot prevent federal legislation or regulations from accomplishing its desired goal, whether that prevention takes the form of undermining the legislation by setting up an opposing law or regulation or

143.

Herring v. Telectronics Pacing Sys., Inc., 964 S.W.2d 753, 755 n.2 (Tex. App.Beaumont 1998, pet. denied).

144.

The Herring opinion does not actually specify whether the pacemaker was PMAapproved, but subsequent commentary on the case has determined that the product had been subjected to the rigorous PMA process. W. Kennedy Simpson et al., Recent Developments in Products, General Liability, and Consumer Law, 35 TORT & INS. L.J. 553, 566 (2000). This determination is not surprising considering that Lohr clearly precludes any preemption arguments relating to the § 510(k) notification process. Medtronic, Inc. v. Lohr, 518 U.S. 470,494 (1996).

145.

Herring, 964 S.W.2d at 755, 757-58.

146.

Id. at 757-58.

147.

Id; see also Martin v. Medtronic, Inc., 254 F.3d 573, 585 (5th Cir. 2001); supra notes 129-132 and accompanying text (discussing the Martin rule espoused by the Fifth Circuit).

148.

Herring, 964 S.W.2d at 757-58.

149.

Id. 150.

MCI Sales & Serv., Inc. v. Hinton, 329 S.W.3d 475, 482 (Tex. 2010).

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by standing as an obstacle to the achievement of a federal goal or initiative. "'

While conflict preemption is generally achieved by positive legislative or regulatory enactments, federal regulatory silence has also been interpreted to express a federal policy to not regulate in a particular area.' 5 2 Both the Texas Supreme Court and the Fifth Circuit have been confronted with the preemptive effect of regulatory silence.' 53 Prior to reaching the preemption issue, both courts addressed the applicability of the presumption against preemption: the Texas court invoked the presumption, whereas the Fifth Circuit declined to apply it.1 5 4 The effect of these courts' application or rejection of the presumption is best seen in their analysis of identical controlling authorities.

The Fifth Circuit read the controlling case law narrowly, ultimately concluding that the U.S. Supreme Court's previous decisions encouraged finding a regulatory agency's decision not to regulate as a positive mandate to prohibit state-law jury awards.'1 5 In reaching the conclusion that the Coast Guard impliedly stated its intent to prohibit any regulation of propeller guards, the Fifth Circuit panel analyzed two notable Supreme Court cases.

First, the Fifth Circuit confronted Freightliner Corp. v. Myrick.15 7 Freightlinerinvolved a regulation that had been suspended after the Ninth Circuit determined that it was "neither reasonable nor practicable at the time it was put into effect."' 5 8 The National Highway Traffic Safety Administration (NHTSA), however, left the regulation in the Federal Register "so that manufacturers would know 'what the agency still considers to be reasonable standards for minimum acceptable 151.

Id. 152.

Id. at 489.

153.

E.g., id.; Lady v. Neal Glaser Marine, Inc., 228 F.3d 598, 602 (5th Cir. 2000), overruled in part by Sprietsma v. Mercury Marine, 537 U.S. 51 (2002).

Lady, 228 F.3d at 606-08; MCI, 329 S.W.3d at 487-89.

154.

155.

In dicta, the Fifth Circuit has since backed away from its earlier recognition of the preemptive effect of regulatory silence. See, e.g., Carden v. General Motors Corp., 509 F.3d 227, 232 (5th Cir. 2007) (noting that complete regulatory silence is insufficient to result in preemption, but holding that a positive policy statement by a regulatory agency is sufficient to establish preemption), overruled in part by Williamson v. Mazda Motor of Am., Inc., 131 S. Ct. 1131 (2011); Frank v. Delta Airlines, Inc., 314 F.3d 195, 199 n.6 (5th Cir. 2002) (same). Although the Fifth Circuit has not been presented with a situation involving regulatory silence since expressing its new resolve to require a higher showing prior to giving regulatory silence preemptive effect, the court's comments suggest that it may be moving closer to Texas's jurisprudence on this issue.

Carden, 509 F.3d at 232; Frank, 314 F.3d at 199 n.6.

156.

Lady, 228 F.3d at 611-15.

157.

See Freightliner Corp. v. Myrick, 514 U.S. 280 (1995).

158.

Id. at 285; see also Paccar v. Nat'l Highway Traffic Safety Admin., 573 F.2d 632, 640 (9th Cir. 1978).

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performance."'" 59 While the defendant argued that the suspended regulation should be interpreted as the NHTSA's determination that state regulation was prohibited, the Supreme Court disagreed.16 0 In holding that the plaintiff's claims were not preempted, the Court acknowledged that the defendant was unable to point to any statement where the NHTSA indicated an unwillingness for states to regulate the subject matter of the suspended regulation.161 In Lady, the Fifth Circuit distinguished Freightlineron the grounds that Freightlinerinvolved a situation where the agency had failed to say something, as opposed to deciding to say nothing.' 62 Because the Coast Guard had affirmatively considered regulating propeller guards but decided not to do so, the court in Lady held that the Coast Guard had effectively decided that propeller guards were best left unregulated.1 63 Thus, a statecourt jury award would essentially conflict with the Coast Guard's determination to allow manufacturers to set their own standard.16 4 The Fifth Circuit also looked to the Supreme Court's Ray v. Atlantic Richfield Co. opinion.' 6 5 In Ray, the Court was asked to determine whether the federal Ports and Waterways Safety Act preempted a Washington state law prohibiting tanker vessels that were larger than 125,000 tons from entering a waterway.' 6 6 The Court relied on the language of the statute itself, as well as the Coast Guard's "unwritten 'local navigation rule"' that prohibited more than one tanker that was larger than 70,000 tons from entering the waterway at any given time. 67 Because the Coast Guard had addressed size, but not mentioned a maximum, the Coast Guard's silence functioned as an affirmative prohibition on state regulation.168 Interpreting Ray, the court in Lady argued that the Washington regulations were

159.

Freightliner,514 U.S. at 285 (citing 44 Fed. Reg. 46849 (1979)).

160.

Id at 286.

161.

Id at 287-89.

162.

Lady v. Neal Glaser Marine, Inc., 228 F.3d 598, 612 (5th Cir. 2000) ("In contrast to Freightliner where 'the lack of federal regulation did not result from an affirmative decision by agency officials to refrain from regulating,' the lack of a regulation mandating propeller guards on recreational boats came after the Coast Guard studied the matter and affirmatively determined that requiring propeller guards was substantively inappropriate." (citation omitted) (quoting Freightliner,514 U.S. at 286)), overruled in part by Sprietsma v. Mercury Marine, 537 U.S. 51 (2002).

163.

Id. at 614-15.

Id. 164.

165.

Id at 613.

166.

Ray v. Atl. Richfield Co., 435 U.S. 151, 154-55 (1978).

167.

Id. at 160, 183.

168.

Id at 174-75, 177.

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impliedly preempted because they conflicted with the agency's decision not to regulate larger vessels.169 Ray thus supported the Fifth Circuit's holding in Lady that the statelaw tort claim was impliedly preempted because it conflicted with the Coast 70 Guard's implied determination that regulation was improper.o The court acknowledged that the "issue is an extremely close one," but ultimately determined that the Coast Guard's silence preempted the state-law claim.171 The court, however, hedged its opinion: We do not hold that simply because the Coast Guard has not acted on a safety matter that state action is precluded. Rather, where the Coast Guard has been presented with an issue, studied it, and affirmatively decided as a substantive matter that it was not appropriate to impose a requirement, that decision takes on the character of a regulation and the [Federal Boat Safety Act's] objective of national uniformity mandates that state law not provide a result different than the Coast Guard's. For example, if [the plaintiffs] state common-law tort action against [the defendant] concerned a manufacturing or design issue never presented to or considered by the Coast Guard, implied preemption would not apply, because there would be no federal action to be contravened by a successful tort claim.1 72 The court's willingness to find preemption based on regulatory silence reveals the court's rejection of the presumption against preemption.

Ordinarily, the presumption can only be overcome by a "clear and manifest" intent that the federal law should reign supreme.' 73 But the Fifth Circuit never cited any decision where the Coast Guard determined that state law was inadequate or inappropriate.' 74 Instead, it only cited to various references in which the Coast Guard decided that federal regulatory power was unlikely to be effective.' 7 1 Such ambiguous indications would be insufficient to overcome the presumption-if the presumption applied.1 76 169.

Lady, 228 F.3d at 614-15.

170.

Id. at 615.

171.

Id at 614.

172.

Id. at 615. The Fifth Circuit's conclusion is similar to the way in which the Supreme Court's Williamson decision distinguished its well-known decision in Geier v. American Honda Motor Co.. Williamson v. Mazda Motor of Am., Inc., 131 S. Ct. 1131, 1136-37, 1139-40 (2011).

Because neither Geier nor Williamson involved the presumption against preemption, these important preemption cases fall outside of the scope of this Article.

173.

Bates v. Dow Agrosciences L.L.C., 544 U.S. 431, 449 (2005) (quoting Rice v. Santa Fe

Elevator Corp., 331 U.S. 218, 230 (1947)).

174.

Lady, 228 F.3d at 615.

175.

Id 176.

See MCI Sales & Serv., Inc. v. Hinton, 329 S.W.3d 475, 491 (Tex. 2010) (holding that only positive regulatory statements expressing a concrete intent to prohibit all regulation are sufficient to preempt state law).

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The Texas Supreme Court's opinion in MCI Sales & Services, Inc. v.

Hinton represents the diametric opposite of the Lady decision. Unlike Lady, MCI began its analysis with the presumption against preemption, the effect of which is best seen by its opposing interpretations of the Freightlinerand Ray opinions. 77

Freightliner,the MCI court noted, did not present a situation where the NHTSA affirmatively decided that the minimum safety standard was the absence of all regulation.' 78 Instead, the MCI court viewed Freightlineras holding that an agency's failure to affirmatively state that regulation was prohibited necessarily meant that there was "no preemptive federal law absent a clear and manifest indication of the agency's intent to forbid all regulation."' 79 The court similarly viewed Ray's holding in a stricter light.

Unlike Lady, which viewed Ray as allowing implied conflict preemption based on regulatory silence, the MCI court interpreted the decision as one enforcing implied field preemption.' 80 The MCI holding reflects the broad application of the presumption against preemption as well as its narrow reading of the Freightlinerand Ray decisions: From these cases, it follows that an agency's mere decision to leave an area unregulated is not enough to preempt state law.

Instead, the agency must, consistent with the authority delegated to it by Congress, affirmatively indicate that no regulation is appropriate. That is, the agency must state that not only will it leave the area unregulated, it will not allow any regulation in that area as a matter of policy. Unless the agency takes this "further step" to disallow state regulation, its decision not to regulate has no preemptive force.'

MCI's application of the presumption requires a positive "further step" that the Fifth Circuit did not require.1 82 For Texas jurisprudence, it is insufficient for an agency to merely consider regulation but then decide that it is inappropriate. 83 Instead, the agency must positively express an intention to prohibit all regulation.' 84 The Fifth Circuit, on the other hand, was persuaded of the agency's preemption decision merely by the fact that

177.

Id. at 487-91.

178.

Id. at 490-91.

179.

Id. at 494.

180.

Id. at 490-91 ("In Ray, Congress had intended to consolidate all regulatory power in the federal government .....

181.

Id at 491.

182.

Id. 183.

Id. 184.

Id.

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the agency had considered regulating propeller guards and ultimately decided not to do so.'8 Texas courts require more.1 8 6 V.

CONCLUSION

The purpose of the presumption against preemption is to ensure that Congress, rather than the courts, makes the decision to preempt state law.

Thus, in recognition of this country's unique system of federalism, the courts hesitate to find that federal law displaces state authority. But courts should be wary to diverge so drastically from each other. If they are not, they could inject unnecessary unfairness into the judicial system by creating incentives to shop for a forum that has more favorable laws.

The Supreme Court has demonstrated a recent skepticism toward the presumption, and scholars fear that the presumption is too often used as a means to justify a predetermined result. Regardless of the presumption's future, one thing is clear: If courts continue to apply it, they should at least keep an eye on applying it more uniformly. The Fifth Circuit has followed the Supreme Court's increasing skepticism toward this post hoc reasoning, and Texas courts should do the same. Any reflexive invocation of a resultsdriven presumption could create a situation where a claim is valid in the state courthouse, but not in the federal courthouse across the street.

185.

Lady v. Neal Glaser Marine, Inc., 228 F.3d 598, 611-15 (5th Cir. 2000), overruled in part by Sprietsma v. Mercury Marine, 537 U.S. 51 (2002).

186.

MCI, 329 S.W.3d at 491.