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Appellate Decisions of Note:

Ellis v. USA, No. 10-50845, (5th Cir., March 2, 2012). Texas Noneconomic Damages Cap Does Not Apply to Loss of Household Services In a case of first impression, the Fifth Circuit made an “Erie guess” and decided that under Texas law, damages for loss of household services are not subject to the $250,000 cap on noneconomic damages under the Texas Medical Liability Act. This decision has the likelihood of altering the current Texas landscape of healthcare liability.

Big Bird Tree Service v. Gallegos, No. 05-10-00923-CV, (Tex. Civ. App.—Dallas, March 22, 2012). The Dallas Court of Appeals addressed the interaction between the CPRC 41.0105 (“paid or incurred”) limitation of [actually] incurred medical expenses and health care provider write downs. While the case involved medical services provided by a charity hospital, the opinion is not limited to that context. The Court held that a healthcare provider’s write downs can be recovered as an actually incurred expense if they were not made pursuant to a statutory or contractual requirement . That is, unless the medical expense write down is required by law or contract, it remains a sum which can be recovered.

Carey v. 24 Hour Fitness, USA, Inc., No. 10-20845, (5th Cir., January 25, 2012). Arbitration agreements, which allowed unilateral change by employer, were illusory and unenforceable. An employee brought a class action in federal court, alleging violations of the Fair Labor Standards Act. The employer moved to compel arbitration, based on its employee handbook that provided for mandatory arbitration and provided that the employer “has the right to revise, delete, and add to the employee handbook.” On appeal, the Fifth Circuit affirmed the district court and found that the arbitration agreement was illusory under Texas law. The fundamental concern for employers is a challenge to an arbitration agreement where it ostensibly binds them both, but where the employer can escape its obligations under the agreement by modifying it. Of course this could apply to similar circumstances outside the employment context.

Edwards Aquifer Authority v. Day, No. 08-0964 (Tex. 2012). Property owners have a right to be compensated for the value of water located under their property, which is taken by a governmental entity. The Texas Supreme Court held that land ownership includes an interest in “groundwater in place” that cannot be taken for public use without adequate compensation under the Texas Constitution. In examining the validity of the takings claim, the court found that there was not enough evidence in the record to rule on the issue. However, the court’s language shows some support for a finding that the regulation amounts to a taking. The court then remanded the case to the district court for a trial on the takings claim. This case has the potential to be extremely important for those involved in water resources. The case joins several other state supreme courts that have recently found that groundwater rights are legally recognized rights subject to constitutional protection. In addition, the finding that landowners have a property right to groundwater “in place” is powerful. This means that the landowner’s right is not merely a right to use, as has been found in other states, but the right to the groundwater beneath their property before it is withdrawn.

In Texas Rice Land Partners, Ltd. v. Denbury Green Pipeline-Texas, LLC, No. 09-0901, Texas Supreme Court, March 2, 2012, the Texas Supreme Court unanimously held that in order for a pipeline company to acquire property through eminent domain, it would have to establish that the proposed pipeline was a “common carrier” for which such authority is granted.  While the industry’s complaint that this ruling will delay such projects, the Court’s ruling appears sound as it does nothing more than require what is required in any other context, that the entity or person seeking relief has the authority (or standing) to do so.  The opinion is limited to pipelines carrying CO2 or hydrogen (as that was the issue before the Court), however, there is no apparent reason why a different result would be reached in a case involving any other pipeline.