Law360 (August 7, 2020, 3:00 PM EDT) -- In the Texas Supreme Court's upcoming term, the court has the chance to clarify what evidence is required for injured employees or relatives of dead employees to hold their employers liable in intentional tort suits and establish how trade secrets are treated during court proceedings.


The high court is also set to hear disputes over whether government entities that conduct business by contracts are immune from suits in court. The justices will also have a chance to weigh in at the beginning of a national conversation about how claims related to government decisions during natural disasters will be litigated, if at all.

Here, Law360 takes a look at four cases attorneys are watching.

Berkel & Co. Contractors Inc. v. Tyler Lee

In this case involving a former construction superintendent whose leg had to be amputated after it was crushed by a crane on a job site, the Supreme Court will be tasked with establishing what level of evidence is required for employees to prove their employer had “substantial certainty” of injuring them.

Texas workers injured or killed on the job are typically limited to recovering workers’ compensation, but the state’s Workers’ Compensation Act contains an intentional-tort exception that allows employees, or certain surviving loved ones, to pursue tort claims against the employer if there is evidence the employer intended to cause injury.

A Brazoria County jury awarded the injured superintendent, Tyler Lee, $44 million after a trial in May 2015, but that verdict was wiped out in July 2017 by a split Fourteenth Court of Appeals panel in Houston that said Lee was limited to recovering workers’ compensation.

In January 2018, the court of appeals withdrew its previous opinion and remanded the case to district court “in the interest of justice.” The panel said the case needed to be further developed on the issue of whether Berkel & Co. Contractors Inc. was “substantially certain” its conduct would cause Lee’s injuries.

The high court’s decision in this case — no matter what side it ultimately agrees with — will be one for the textbooks, said Alex Hilliard of Hilliard Martinez Gonzales LLP.

If the Supreme Court sides with Berkel & Co., which argues employees should be required to prove their employer intended to hurt them personally, the decision will effectively create an “employer liability shield,” which would erase incentives for employers to create safe workplaces and enforce safety practices and policies, Hilliard said.

“If the Supreme Court sides with Berkel, it could effectively extinguish an employees’ ability to ever sue their employer,” he said.

The court’s decision in this case will build on a recent one that narrowed the “substantial certainty” evidence window.

In June, the Supreme Court found that testimony in Mo-Vac Service Co. Inc. v. Primitivo Escobedo et al. that trucking company Mo-Vac pushed its drivers to work long hours to maximize profit wasn’t specific enough to prove the company intended for Escobedo to die when his truck veered off the road and rolled in 2012.

If the Supreme Court sides with Lee in this case, employees could see large damages awards in the future doled out by Lone Star State juries, who tend to favor employees, Hilliard and his colleague John Duff said.

The case is Berkel & Co. Contractors Inc. v. Tyler Lee, case number 18-0309, in the Supreme Court of Texas. Oral argument is set for Sept. 15.

HouseCanary Inc. v. Title Source Inc. et al. 

Real estate analytics company HouseCanary Inc. has asked the Supreme Court to weigh in on whether it is allowed to keep the seal on trade secrets records that had been admitted as trial exhibits in its now-tossed $706 million jury verdict win against Quicken Loans affiliate Title Source Inc.

HouseCanary argues that the 2013 Texas Uniform Trade Secrets Act, which allows courts to seal “alleged trade secrets by reasonable means,” holds in this case. But Title Source, now known as Amrock, and two media entities say Texas Rule of Civil Procedure 76a, which includes a higher standard for sealing documents, should hold.

Monica Latin of Carrington Coleman Sloman & Blumenthal LLP said this case could act as a good beginning to the discussion of which standard should apply.

“It’s beginning an important conversation in the modern era of who should have the right to what information under what circumstances,” she said.

A Bexar County jury in March 2018 awarded HouseCanary $706.2 million against Amrock, who the jury found stole proprietary data recipes for home appraisals and comparisons in order to build a competing software suite. That verdict was tossed in June by the Fourth Court of Appeals in San Antonio for flawed jury instructions. HouseCanary is appealing that ruling in a separate pending case.

The Bexar County District Court sealed 14 trial exhibits six weeks after trial. The Fourth Court of Appeals overturned that decision as well, holding that Rule 76a applies.

If the Supreme Court sides with HouseCanary’s TUTSA preemption argument, Latin said this case could pave the way for more lenient sealing rules and problems for defendants. Under TUTSA, a party could simply allege something is a trade secret to push for its sealing, preventing the other side from seeing the evidence that will be used against them.

On the other hand, Latin said, protecting trade secrets is important.

While she hopes to see some discussion in the Supreme Court’s opinion in this case of how TUTSA and Rule 76a interact, Latin said she doesn’t expect the court to discuss what standard should apply generally.

The case is HouseCanary Inc. v. Title Source Inc. et al., case number 19-0673, in the Supreme Court of Texas. Oral argument is set for Oct. 27.

Electric Reliability Council of Texas Inc. v. Panda Power Generation Infrastructure Fund LLC

This consolidated case involving the Electric Reliability Council of Texas Inc., which manages the power grid that covers most of Texas, pits freedom of contract against governmental immunity and saddles the Supreme Court with a decision that could potentially change how government entities do business.

Panda Power Generation Infrastructure Fund LLC argues that ERCOT, as a private corporation, does not benefit from governmental immunity and should have to face the energy company’s claims of fraud and negligent misrepresentation. Panda seeks to hold ERCOT responsible for allegedly misleading reports about the scarcity of power in Texas that prompted it to invest $2.2 billion in new power plants in the state, only to face difficulty recouping its expenses as power prices remained low.

ERCOT, and the Fifth Court of Appeals in Dallas, disagree. In an April 2018 decision, the appellate court found that ERCOT has governmental immunity because it exercises power delegated to it by the Public Utility Commission of Texas at the direction of the state Legislature and has rulemaking authority that’s binding on market participants.

The Supreme Court’s decision in this case could drastically change how Texas’ energy system operates, said David Coale of Lynn Pinker Hurst & Schwegmann LLP.

“A relatively small tweak in the law of immunity can affect a lot of contractual enterprises,” he said. “How they frame it is about as important as what they rule.”

Panda has argued that the Supreme Court holding that ERCOT has governmental immunity would “destabilize” the state’s competitive energy market.

But ERCOT argues that ruling would just allow business as usual to continue, Coale said.

ERCOT has told the state’s high court that nothing it does is free from the state’s direct oversight and that Panda’s claims arise from its regulatory authority delegated to it by the state and utility commission.

The cases are Electric Reliability Council of Texas Inc. v. Panda Power Generation Infrastructure Fund LLC, case number 18-0781, and In re: Panda Power Infrastructure Fund LLC et al., case number 18-0782, in the Supreme Court of Texas. Oral argument is set for Sept. 15.

San Jacinto River Authority v. Michael A. Burney et al.

In this case stemming from the San Jacinto River Authority’s actions to control flooding during Hurricane Harvey in 2017, the Supreme Court must decide whether the authority’s decision to release water from the Lake Conroe dam, causing flooding on some Houston-area homeowners’ properties, constitutes takings.

SJRA has turned to the high court in an effort to escape takings claims filed by dozens of homeowners, arguing the claims fail because Texas Government Code Chapter 2007 only requires compensation for “regulatory takings” and not “physical takings” of private property. And, the authority said, its actions during the natural disaster do not qualify as “regulatory takings.”

The homeowners have argued that SJRA can’t make its Chapter 2007 argument on appeal because it didn’t raise it in the courts below. They added that if the argument isn’t waived, lawmakers never limited Chapter 2007 to regulatory takings.

Mary Hazelwood Barkley of Cantey Hanger LLP said this case is interesting for two reasons. First, it is important on a national scale as to how courts will deal with claims associated with natural disaster responses. Second, it will affect how future defendants use the 2011 Texas Rule of Civil Procedure 91a, which allows for quick dismissal of cases that have no basis in fact.

“It’s very interesting to the whole jurisprudence of the state,” she said.

On appeal to the First Court of Appeals in Houston, SJRA argued it had governmental immunity from the claims, an argument the appellate court rejected in its December 2018 opinion. While the opinion dismissed inverse-condemnation claims filed by the homeowners, the court allowed their takings claims to proceed.

The case is San Jacinto River Authority v. Michael A. Burney et al., case number 19-0400, in the Supreme Court of Texas. Oral argument is set for Oct. 6.

–Editing by Rebecca Flanagan and Orlando Lorenzo.

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