Doris Forte v. Wal-Mart Stores, Incorporate ( 2015 )

Case: 12-40854 Document: 00512943087 Page: 1 Date Filed: 02/20/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
February 20, 2015
No. 12-40854 Lyle W. Cayce
Clerk
DORIS FORTE, O.D., on behalf of herself and all other similarly situated
persons; BRIDGET LEESANG, O.D.; DAVID WIGGINS, O.D.; JOHN
BOLDAN, O.D.,
Plaintiffs - Appellees
v.
WAL-MART STORES, INCORPORATED,
Defendant - Appellant
Appeal from the United States District Court
for the Southern District of Texas
Before STEWART, Chief Judge, and JOLLY, and SMITH, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
The original opinion in this case was filed on August 14, 2014. 1 In that
opinion, we affirmed the district court’s judgment of liability under the Texas
Optometry Act (“TOA”), Tex. Occ. Code § 351.408(c). We reversed and vacated
the district court’s monetary award, however. We held that Chapter 41 of the
Texas Civil Practices and Remedies Code (“Chapter 41”) precludes the district
court’s award of the civil penalties in this case. Tex. Civ. Prac. & Rem. Code §
1 Forte v. Wal-Mart Stores, Inc., 763 F.3d 421 (5th Cir. 2014).
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41.004(a). The plaintiffs filed a petition for rehearing en banc, challenging our
decision to reverse and vacate the monetary award. We treat the plaintiff’s
petition as a petition for panel rehearing, which is GRANTED. The original
opinion is VACATED.
We reinstate the holding in Part II of the original opinion, and
accordingly AFFIRM the district court’s judgment as to liability for the reasons
stated in Part II of that opinion. Part II of the original opinion reads as follows:
II.
We begin by addressing whether the district court erred in
denying Wal-Mart’s renewed JMOL motion, which we review de
novo. Vanderbilt Mortg. & Fin., Inc. v. Flores, 692 F.3d 358, 364
(5th Cir. 2012). “When reviewing jury verdicts, the court views all
the evidence and draws all reasonable inferences in the light most
favorable to the verdict.” Black v. Pan Am. Labs., L.L.C., 646 F.3d
254, 258 (5th Cir. 2011). A JMOL motion will be granted “[i]f the
facts and inferences point so strongly in favor of [Wal-Mart] that a
rational jury could not arrive at a contrary verdict.” Id. (internal
quotation marks omitted).
A.
As a threshold matter, we reject the plaintiffs’ argument
that Wal-Mart’s new argument raised on appeal concerning the
proper construction of the TOA was waived by failing to present it
to the district court. In the district court, Wal-Mart contended that
because it did not attempt to influence the plaintiffs’ hours, it was
not liable under the TOA. On appeal, Wal-Mart argues that
although the TOA prohibits influencing office hours, it does so only
when attempting to control an optometrist’s professional
judgment, and that the plaintiffs’ claims are not covered under the
TOA so interpreted.
It is certainly true that we do not generally consider matters
on appeal that were not presented in the lower court. New Orleans
Depot Servs., Inc. v. Dir., Office of Worker’s Comp. Programs, 718
F.3d 384, 387 (5th Cir. 2013) (en banc). The purpose of this rule is
to ensure the appellate court benefits from a full record on the
issue and a lower court determination. Id. at 388. Consequently,
“a well-settled discretionary exception to the waiver rule exists
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where a disputed issue concerns a pure question of law.” Id.
(internal quotation marks omitted). Because Wal-Mart’s
argument on appeal concerns a pure question of law, and all
parties have had an opportunity to fully brief the question, the
waiver rule does not bar our consideration of Wal-Mart’s statutory
argument as now presented to us.
B.
The TOA provision at issue, TEX. OCC. CODE § 351.408(c),
states that
A . . . retailer of ophthalmic goods may not directly or
indirectly:
(1) control or attempt to control the professional
judgment, manner of practice, or practice of an optometrist or
therapeutic optometrist[.]
In turn, TEX. OCC. CODE § 351.408(b) states that
“[C]ontrol or attempt to control the professional judgment,
manner of practice, or practice of an optometrist or therapeutic
optometrist” includes:
(1) setting or attempting to influence the . . . office hours
of an optometrist or therapeutic optometrist[.]
Any person injured by a violation of § 351.408 may sue and
recover an appropriate civil penalty. Id. at §§ 351.603(b), 351.605.
Wal-Mart invokes the absurdity canon to argue that we must
deviate from the plain language of the TOA. To Wal-Mart, the
TOA’s prohibition against “control[ing] or attempt[ing] to control
the professional judgment, manner of practice, or practice of an
optometrist” would produce absurd results unless we erect some
limiting principle. Cf. Combs v. Health Care Servs., Corp., 401
S.W.3d 623, 630 (Tex. 2013) (departing from plain language
warranted when plain language produces absurd results).
An example Wal-Mart proffered at oral argument is a
retailer ordering an optometrist to keep his store clean. It would
be absurd for the TOA to outlaw such an order, which could
possibly be construed as an “attempt to control” an optometrist.
Wal-Mart argues that an “attempt to control” must be linked to an
attempt to control the optometrist’s professional (i.e., medical)
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judgment. Wal-Mart argues that if the language of the TOA is
applied literally, the TOA would prevent its ordering an
optometrist to keep his store clean, but because the cleanliness of
the store is unrelated to the optometrist’s professional judgment,
the TOA avoids such absurdities.
By contrast, the plaintiffs argue that there is no getting
away from the TOA’s statement that, “control or attempt to
control” includes “setting or attempting to influence . . . . office
hours.” TEX. OCC. CODE at § 351.408(b). Moreover, the plaintiffs
also argue that the TOA expressly prohibits attempting to control
“the professional judgment, manner of practice, or practice of an
optometrist.” Id. at § 351.408(c) (emphasis added). Tying attempts
to control only to professional judgment would read two of the
three parts out of this provision. Moreover, the plaintiffs note that
the TOA requires that § 351.408 be “liberally construed” to prevent
retailers from imposing on optometrists’ independence. See id. at
§ 351.408(a).
C.
After considering the respective arguments of the parties, we
adopt the plaintiffs’ plain meaning interpretation for three
reasons. First, Texas courts highlight the primacy of a statute’s
plain meaning. “When we interpret a Texas statute, we follow the
same rules of construction that a Texas court would apply—and
under Texas law the starting point of our analysis is the plain
language of the statute.” Wright v. Ford Motor Co., 508 F.3d 263,
269 (5th Cir. 2007). The Texas Supreme Court has stressed that
“stray[ing] from the plain language of a statute . . . risk[s]
encroaching on the Legislature’s function to decide what the law
should be.” Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996
S.W.2d 864, 866 (Tex. 1999).
Second, there is no absurd result in finding Wal-Mart liable
here. The “bar for reworking the words our Legislature passed into
law is high.” Combs, 401 S.W.3d at 630. Consequently, the Texas
Supreme Court views the absurdity canon as a “safety valve” that
is “reserved for truly exceptional cases.” Id. Here, when Wal-Mart
began leasing space to optometrists, it was on notice that the TOA
affected the balance of power between retailers and optometrists.
More to the point, Wal-Mart was on notice that the TOA prohibited
setting or attempting to influence office hours. But Wal-Mart, a
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sophisticated party, contracted with optometrists nonetheless.
Given that it was on notice of the TOA when it began contracting
with optometrists, Wal-Mart’s liability was not “patently
nonsensical.” Id.
Wal-Mart’s question about whether, consistent with the
absurdity canon, a retailer can order an optometrist to keep his
store clean is outside the bounds of what we need to decide to
resolve this case. There is already a clear line between influencing
office hours and influencing office cleanliness. Only influencing
office hours is explicitly listed in the TOA as a method of attempting
to control an optometrist, and so is expressly prohibited. Coming
up with an overarching interpretation of what an “attempt to
control” encompasses is not necessary.
Third, when a court invokes the absurdity canon, it is
attempting to divine a legislative intent that the plain meaning of
the statute does not reflect. When a legislature uses an
“amorphous term” we may sometimes have “no choice but to
speculate about [legislative] intent.” BedRoc Ltd., LLC v. United
States, 541 U.S. 176, 183 (2004). But such speculation is less
necessary when the legislature “has textually narrowed the scope
of [a] term.” Id. The Texas Legislature has narrowed “control or
attempt to control” to specifically include “setting or attempting to
influence . . . office hours.” “Control or attempt to control” is thus
a narrowly defined rather than amorphous term. Consequently,
we decline to speculate about legislative intent by invoking the
absurdity canon.
Wal-Mart is asking us to winnow from a state statute its
plain meaning. Because of federalism concerns, invoking the
absurdity canon here is especially dangerous because it would
involve a federal court’s “encroaching on the [Texas] Legislature’s
function to decide what the law should be.” Fitzgerald, 996 S.W.2d
at 866.
D.
With that said, we turn to the plain meaning of the TOA.
The TOA expressly prohibits a retailer’s “attempt to control the . .
. manner of practice” of an optometrist. TEX. OCC. CODE §
351.408(c). “Control or attempt to control” is minutely defined in
Section 351.408, and includes “setting or attempting to influence
the . . . office hours of an optometrist.” Id. at § 351.408(b).
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Under the plain language of the TOA, a rational jury could
have found that Wal-Mart’s leases and conduct constituted “an
attempt to control the . . . manner of practice” of an optometrist by
coercing him into working certain hours. Id. at § 351.408(c). The
jury’s verdict was supported by the optometrists’ testimony that
they understood themselves to be obligated to work the hours in
the lease and that Wal-Mart pressured three plaintiffs to increase
their hours when they renewed their leases.
Because the plaintiffs’ monetary award implicates important issues of Texas
law as to which there is no controlling Texas Supreme Court precedent, we
unanimously submit the following certified questions to the Supreme Court of
Texas.
CERTIFICATION FROM THE UNITED STATES COURT OF
APPEALS FOR THE FIFTH CIRCUIT TO THE SUPREME COURT OF
TEXAS, PURSUANT TO THE TEXAS CONSTITUTION ART. 5 § 3-C AND
TEXAS RULE OF APPELLATE PROCEDURE 58.1.
I. Style of the Case: Parties and Counsel
The style of the case is Doris Forte, O.D., on behalf of herself and all
other similarly situated persons; Bridget LeeSang, O.D.; David Wiggins, O.D;
John Boldan, O.D., Plaintiffs–Appellees v. Wal-Mart Stores, Incorporated,
Defendant–Appellant, Case No. 12–40854, in the United States Court of
Appeals for the Fifth Circuit, on appeal from the judgment of the United States
District Court for the Southern District of Texas. Federal jurisdiction is
premised on diversity of citizenship, 28 U.S.C. § 1332.
The names of all the parties to the case, each of whom is represented by
counsel, and the respective names, addresses, and telephone numbers of their
counsel, are as follows:
• Doris Forte, O.D., on behalf of herself and all other similarly situated
persons; Bridget Leesang, O.D.; David Wiggins, O.D.; John Boldan,
O.D., the plaintiffs in the district court and the appellees in this
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Court, are represented by Mark Clyde Burgess of Boyd, Poff &
Burgess, L.L.P., 2301 Moores Lane, Texarkana, TX 75503, Tel. 903-
838-6123; Russell S. Post of Beck Redden, L.L.P., 1221 McKinney
Street, Suite 4500, Houston, TX 77010, Tel. 713-951-3700; Jose
Antonio Canales of Canales & Simonson, P.C., 2601 Morgan Avenue,
Corpus Christi, TX 78405, Tel. 361-883-0601; and William R.
Peterson of Beck Redden, L.L.P., 1221 McKinney Street, Suite 4500,
Houston, TX 77010; and
• Wal-Mart Stores, Incorporated, the defendant in the district court
and the appellant in this Court, is represented by James C. Ho of
Gibson, Dunn & Crutcher L.L.P., 2100 McKinney Avenue, Dallas, TX
75201, Tel. 214-698-3100; Ashley E. Johnson of Gibson, Dunn &
Crutcher, L.L.P., 2100 McKinney Avenue, Suite 1100, Dallas, TX
75201, Tel. 214-698-3111; and Prerak Shah of Gibson, Dunn &
Crutcher, L.L.P., 2100 McKinney Avenue, Suite 1100, Dallas, TX
75201, Tel. 214-698-3193.
II. Statement of the Case
A. Background
Since 1992, Wal-Mart Stores, Inc. (“Wal-Mart”) has leased space in its
Texas stores to optometrists, typically receiving as rent ten percent of the
optometrists’ gross income. Through 1995, the standard lease Wal-Mart used
in Texas required optometrists to remain open for at least forty-five hours a
week. Failure to abide by the terms of the lease put the optometrist in default,
which, at Wal-Mart’s discretion, could trigger a liquidated damages provision
of $200 per day of violation. Although none of the four plaintiffs here leased
space at Wal-Mart when the forty-five hour requirement was in effect, that
requirement set the stage for the events that followed.
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In 1995, the Texas Optometry Board (“the Board”), a state agency
regulating optometry, notified Wal-Mart that setting required hours violated
the TOA, which prohibits “control[ling] . . . the practice of an optometrist” by
“attempting to influence the . . . office hours of an optometrist.” Tex Occ. Code
§ 351.408(b), (c). Wal-Mart then eliminated the forty-five hour requirement
and revised its lease to read “[t]he following is the LICENSEE’S representation
of the weekly hours of coverage to the patients,” which was followed by a table
in which the optometrists could handwrite their hours. The lease further
provided that Wal-Mart “shall retain no control whatsoever over the manner
and means by which the LICENSEE performs his/her work.”
In 1998, after Wal-Mart revised its lease, the Board stated in a
newsletter addressed to the public at large that leases that even referenced
hours violated the TOA. In 2003, the Board wrote Wal-Mart that it had
learned that Wal-Mart had told an optometrist that customers were requesting
longer hours. The Board warned that, although it was aware that Wal-Mart
had also stated “the ultimate decision regarding the hours and fees for eye
examinations are made by the doctors,” even informing optometrists of
customer requests for longer hours violated the TOA. Nonetheless, Wal-Mart
continued requiring that optometrists provide the hours representations in its
leases.
B. Procedural History
In 2007, the dispute culminated in this suit when Doris Forte sued Wal-
Mart in the United States District Court for the Southern District of Texas for
alleged violations of the TOA. Eleven plaintiffs moved to certify a class action
of four hundred optometrists. The district court, however, denied the
certification and instead designated four plaintiffs who would go to trial. These
plaintiffs were Drs. Doris Forte, John Boldan, David Wiggins, and Bridget
LeeSang.
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In 2009, while the suit was pending, Wal-Mart deleted the hours
representation provision from its leases and sent a letter to Texas lessees
stating that it would not enforce this provision.
The four plaintiffs’ claims were tried to a jury in August 2010. The judge
instructed the jury that the plaintiffs “do not claim they have suffered any
physical or economic damages [and] only seek to recover civil penalties.” Wal-
Mart’s primary argument in the district court was that the hours
representation provision was not enforced, and that optometrists could change
their hours if they desired. Wal-Mart also argued that the provision was not a
condition of the lease because it was unenforceable.
The four plaintiff optometrists testified that they believed that the hours
representation provision was binding and enforceable. All four plaintiffs
conceded, however, that the hours were set at an acceptable level. Three of the
plaintiffs renewed their leases, some multiple times, but when renewing all
felt pressured to increase office and work hours.
The jury sided with the plaintiffs, awarding them $3,953,000 in civil
penalties. This award was the maximum possible under the TOA—$1,000 per
day that each plaintiff operated under his or her lease. The plaintiffs were also
awarded $763,854 in attorneys’ fees. As a point of reference, the evidence
showed that the gross annual income of the optometrists was in the
neighborhood of $200,000.
Post-verdict, Wal-Mart renewed its motion for a judgment as a matter of
law (JMOL). The district court denied the motion with respect to liability but
entered a remittitur reducing the civil penalty to $400 a day. Forte v. Wal-
Mart Stores, Inc., No. CC-07-155, 2011 WL 1740182, *17 (S.D. Tex. May 4,
2011). The reduced award totaled $1,396,400, to which the plaintiffs
consented.
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Wal-Mart now appeals the denial of its JMOL motion, asserting that the
judgment should be reversed or vacated. Alternatively, Wal-Mart seeks
further remittitur, and also urges that the civil penalty award as remitted by
the district court violates both Texas’s cap on exemplary damages and Due
Process.
III. Legal Issues
To decide whether the plaintiffs can recover the award of civil penalties,
the Court must interpret two statutes—the TOA and Chapter 41. Chapter 41,
a tort reform statute, “applies to any action in which a claimant seeks damages
relating to a cause of action.” Tex. Civ. Prac. & Rem. Code § 41.002(a).
Relevant here, Chapter 41 limits the recovery of exemplary damages, defined
as “any damages awarded as a penalty or by way of punishment but not for
compensatory purposes.” Id. § 41.001(5). Exemplary damages are neither
economic nor noneconomic in nature and include “punitive damages.” Id.
Critically, a plaintiff cannot recover exemplary damages unless the plaintiff
also recovers actual damages. Id. § 41.004(a).
Here, the district court instructed the jury that the plaintiffs were not
seeking any actual damages as a result of Wal-Mart’s violations of the TOA.
Instead, the plaintiffs were only seeking a civil penalty award. Thus, Wal-
Mart argues: (a) the plaintiffs’ action for civil penalties under the TOA was a
damages action for purposes of Chapter 41; and (b) the plaintiffs’ recovery is
barred because they received an award of civil penalties, which is a form of
exemplary damages, without recovering actual damages.
Both aspects of Wal-Mart’s argument turn in part on the construction of
the TOA, which authorizes these plaintiffs to seek the civil penalties at issue
here. Under the TOA, “[a] person injured as a result of a violation of Section
351.408, including an optometrist who is a lessee of a manufacturer,
wholesaler, or retailer, is entitled to the remedies in Sections 351.602(c)(2),
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351.603(b), and 351.604(3).” Tex. Occ. Code § 351.605. Section 351.605
authorizes the plaintiffs to seek multiple types of relief. Two types of relief are
relevant here. First, the plaintiffs may seek “injunctive relief or damages plus
court costs and reasonable attorney’s fees . . . .” Id. § 351.602(c)(2). Second, the
plaintiffs may pursue an action for “a civil penalty not to exceed $1,000 for each
day of a violation plus court costs and reasonable attorney’s fees.” Id. §
351.603(b).
A.
The first, and primary, issue is whether the plaintiffs’ action for civil
penalties under the TOA is an action for damages for purposes of § 41.002(a).
Although the plaintiffs concede that some penalties are damages under the
meaning of the TOA, they argue that statutory penalties similar to those in the
TOA are not.
First, the plain language of Chapter 41, read in conjunction with the
TOA, suggests that the plaintiffs’ action is an action seeking damages.
Chapter 41 applies explicitly to any action for damages. Tex. Civ. Prac. & Rem.
Code § 41.002(a). The use of the term “any” coupled with the broad, general
term “damages” suggests that Chapter 41 applies to most civil recoveries.
Indeed, the Texas Supreme Court has defined the term “damages,” standing
alone, to broadly mean “‘compensation in money imposed by law for loss or
injury.’” Geters v. Eagle Ins. Co., 834 S.W.2d 49, 50 (Tex. 1992) (quoting
Webster’s Ninth New Collegiate Dictionary 323 (1989)). Similarly, Black’s
Law Dictionary defines damages as “[m]oney claimed by, or ordered to be paid
to, a person as compensation for loss or injury.” Black’s Law Dictionary 445
(9th ed. 2009). The plaintiffs’ cause of action authorizes a private plaintiff to
seek civil penalties only if he or she is “injured as a result of a violation of
Section 351.408 . . . .” Tex. Occ. Code § 351.605.
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The Texas Supreme Court has not decided whether a statutory penalty
such as the penalty in the TOA falls within the meaning of the clause “any
action in which a claimant seeks damages relating to a cause of action.” Tex.
Civ. Prac. & Rem. Code § 41.002(a). If damages is given a broad meaning,
however, the plain language of Chapter 41 suggests that the civil penalties be
treated as damages. Thus, Wal-Mart advances a credible interpretation of
Chapter 41 based on the plain language of both statutes, which controls if it is
unambiguous. Tex. Dep’t of Protective & Regulatory Servs. v. Mega Child Care,
Inc., 145 S.W.3d 170, 177 (Tex. 2004) (“If the statutory text is unambiguous, a
court must adopt the interpretation supported by the statute’s plain language
unless that interpretation would lead to absurd results.”).
Nonetheless, the plaintiffs point to several deficiencies with this
interpretation. First, the structure of the TOA suggests that civil penalties are
not a form of damages. One TOA provision authorizes recovery of damages
and injunctive relief, whereas a separate provision allows for recovery of
statutory penalties. Tex. Occ. Code §§ 351.602(c)(2), 351.603(b). Because the
TOA addresses damages and civil penalties in separate statutory provisions,
the TOA arguably recognizes that civil penalties form a category of monetary
relief that is distinct from damages. Additionally, the TOA’s definition of
damages may trump even an unambiguous definition of damages in Chapter
41 because the TOA is a specific statute that addresses the issue in this appeal,
whereas Chapter 41 is a more general statute. See Tex. Appleseed v. Spring
Branch Indep. Sch. Dist., 388 S.W.3d 775, 779 (Tex. App.–Houston 2012) (“It
is a common statutory interpretation rule that specific provisions control over
general provisions.” (citing Tex. Gov’t Code Ann. § 311.026 (Vernon 2005)).
Relatedly, the Texas Supreme Court has recognized that not all
recoveries of monetary sums are damages under Texas law. In the context of
analyzing whether attorney’s fees were compensatory damages under a Texas
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tort reform statute, the Texas Supreme Court observed that “[n]ot every
amount, even if compensatory, can be considered damages.” In re Nalle
Plastics Family Ltd. P’ship, 406 S.W.3d 168, 173 (Tex. 2013). Although the
court in that case did not address civil penalties, its assessment of attorney’s
fees suggests that the Texas Supreme Court could conclude that such penalties
are not damages. Indeed, the Texas Supreme Court has previously
distinguished statutory penalties from damages, observing that a plaintiff “did
not sue for damages under [a statute], but undertook to maintain this suit on
his own behalf and on behalf of the State of Texas, although the Attorney
General had refused to join him in the suit.” Agey v. Am. Liberty Pipe Line Co.,
172 S.W.2d 972, 974 (Tex. 1943). Of course, the Supreme Court’s decision in
Agey predated the passage of Chapter 41.
In a similar vein, the plaintiffs point out that civil penalties differ from
a typical damage award in several respects. Private litigants may pursue
statutory penalties only in limited circumstances, as “[g]enerally, a statutory
penalty or fine is not payable to a private litigant.” Brown v. De La Cruz, 156
S.W.3d 560, 564 (Tex. 2004). Additionally, penalty statutes are strictly
construed, and a person seeking such penalties must fall clearly within the
ambit of the statute. Id. The limited nature of these remedies and their strict
construction suggests that statutory civil penalties are a unique breed of
remedies that are not damages as the term is commonly understood. Because
the Texas Legislature has explicitly authorized private litigants to assist the
State with its law enforcement obligations in these limited circumstances, the
Texas Supreme Court reasonably could conclude that a civil penalty award
falls outside the tort reform context to which Chapter 41 applies.
In sum, we conclude that this issue is amenable to certification to the
Texas Supreme Court. We recognize the practical concern that both private
plaintiffs and state and local governments may be hindered in seeking civil
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penalties if those penalty awards are subject to the limitations in Chapter 41.
Similarly, we recognize that the Texas Legislature has enacted such penalty
regimes to allow public and, in some cases, private litigants to enforce Texas
law. Conversely, we acknowledge that Chapter 41 by its terms applies broadly
to most civil actions, and we are reluctant to read an exception into that statute
that does not flow unambiguously from its text. Thus, we certify the issue so
that the Texas Supreme Court may decide the appropriate meaning of Tex.
Civ. Prac. & Rem. Code § 41.002(a).
B.
Although the plaintiffs will prevail if the monetary award they seek is
not damages within the meaning of § 41.002(a), they may also prevail if the
award of civil penalties in this case falls outside the definition of exemplary
damages in § 41.001(5). Chapter 41 only prohibits a recovery of exemplary
damages if actual damages are not awarded. Id. § 41.004(a). The Texas
Supreme Court has not decided whether a statutory civil penalty award under
the TOA falls within the meaning of exemplary damages.
The Texas Supreme Court may find several ambiguities in Chapter 41’s
definition of exemplary damages. First, exemplary damages only encompass
damages that are awarded as a penalty. Id. § 41.001(5). As the Court has
already explained in Part III.A., supra, the Texas Supreme Court has not
decided whether statutory civil penalties under the TOA are damages, the
answer to which will affect the determination of whether the plaintiffs’
monetary award is a form of exemplary damages. Second, even if the TOA’s
statutory penalties are damages, it is not entirely clear that they are “awarded
as a penalty or by way of punishment but not for compensatory purposes.” Id.
Wal-Mart points out that the TOA refers to the award in such a case as a “civil
penalty.” Tex. Occ. Code § 351.603(b). The plaintiffs observe, however, that
the definition of exemplary damages explicitly “includes punitive damages.”
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Tex. Civ. Prac. & Rem. Code § 41.001(5). Thus, the Texas Supreme Court could
read the inclusion of punitive damages as illustrative of the types of typical
tort awards that § 41.004(a) covers. A statutory civil penalty in the TOA,
although called a penalty for purposes of the TOA, may not be awarded as a
penalty within the meaning of Chapter 41.
Indeed, the Texas Supreme Court could distinguish statutory civil
penalties from exemplary damages on the basis that statutory civil penalties
are tailored to aid the State in its law enforcement role. On one hand, statutory
civil penalties are similar to punitive damages because, like punitive damages,
statutory penalties “deter and punish culpable conduct.” See Serv. Corp. Int’l
v. Guerra, 348 S.W.3d 221, 238 (Tex. 2011) (addressing the purpose of punitive
damages). Nonetheless, statutory penalties also differ from punitive damages
because statutory penalties have been authorized by the Texas Legislature to
aid in law enforcement. See State v. Harrington, 407 S.W.2d 467, 474 (Tex.
1966) (observing that a statutory penalty regarding violations of various rules
“is a civil penalty statute enacted for the primary purpose of promoting and
encouraging law enforcement and deterring violations of the rules”). Thus, the
Texas Supreme Court could conclude that statutory penalties are a form of
damages, but they cannot be considered exemplary damages.
As with the first issue, the Texas Supreme Court has not addressed
whether statutory civil penalties, such as the penalties under the TOA, are a
form of exemplary damages. Additionally, the Court has not addressed the
interplay between § 41.002, which applies the limits of Chapter 41 to any
action seeking damages, and § 41.004, which limits the award of exemplary
damages. Because it is possible that the plaintiffs here could be seeking
damages under § 41.002 but not exemplary damages under § 41.004, we certify
a related question on this issue to the Texas Supreme Court.
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Case: 12-40854 Document: 00512943087 Page: 16 Date Filed: 02/20/2015
No. 12-40854
IV. Questions Certified
For the reasons discussed above, we hereby certify the following
determinative questions of Texas law to the Supreme Court of Texas:
1. Whether an action for a “civil penalty” under the Texas Optometry
Act is an “action in which a claimant seeks damages relating to a
cause of action” within the meaning of Chapter 41 of the Texas
Civil Practice and Remedies Code. In other words, are civil
penalties awarded under Tex. Occ. Code § 351.605 “damages” as
that term is used in Tex. Civ. Prac. & Rem. Code § 41.002(a).
2. If civil penalties awarded under the Texas Optometry Act are
“damages” as that term is used in Tex. Civ. Prac. & Rem. Code §
41.002(a), whether they are “exemplary damages” such that Tex.
Civ. Prac. & Rem. Code § 41.004(a) precludes their recovery in any
case where a plaintiff does not receive damages other than nominal
damages.
We disclaim any intention or desire that the Supreme Court of Texas confine
its reply to the precise form or scope of the questions certified.
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