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January/February 2011

A Preview of the 82nd Texas Legislature

Animal Law
By Robyn Katz
In the upcoming 82nd Session of the Texas Legislature, there will likely be animal-related bills introduced pertaining to commercial breeders, cockfighting, an animal abuser registry, pets in protective orders, and appeals when an animal has been seized.

Commercial breeder bill: Like more than half of the states in the country, this bill would protect animals by requiring the humane treatment of dogs and cats, including proper clean water, sanitary living conditions, shelter, and proper veterinary care.

The principal purpose of the "puppy mill" bill is to ensure the humane care and treatment of dogs and cats in the custody of large-scale commercial breeders. To accomplish this, the bill requires a commercial breeder (defined as a person who has 11 or more breeding females and is in the business of selling their offspring) to obtain a commercial breeder license from the Texas Department of Licensing and Regulation ("TDLR"). This is the same agency that regulates various businesses and professions from manicurists to electricians to guard dog companies to scrap medal dealers to elevator manufacturers, and so on. As of last count, TDLR regulates over 28 businesses and professions. All licensing, regulation and enforcement is done by the TDLR or other government agency they may choose to contract with. It is equally important to note that no non-government entity has any power or regulatory authority under the bill.

The bill requires a commercial breeder to apply for a commercial breeder license and pay a fee set by the TDLR. The fees for the initial license and the renewal licenses cannot exceed the amount necessary to fund the cost of administering and enforcing the regulatory program by the TDLR.

The commercial breeder must allow the TDLR to perform an initial inspection and thereafter an annual inspection of the commercial breeder's facility to ensure that it is in compliance with the standards set by TDLR. These standards will be similar to those currently set forth in the United States Department of Agriculture regulations for dogs and cat breeders under the Federal Animal Welfare Act. They will basically cover things such as the housing, feeding, veterinary care, and sanitation at the commercial breeder's facility.

Currently, there are no laws against puppy mills and no state regulation to require minimum care standards. Opponents of this bill argue that animal cruelty laws are already in place to allow seizure of starving or cruelly treated animals and, therefore, regulations are not needed. However, by the time that animal control officers have the evidence to conduct a seizure, the animals they find are either dead, dying or in need of extensive medical care. In any case, they have suffered needlessly for extended lengths of time.

Cockfighting bill: Cockfighting is prevalent throughout Texas, including East Texas, West Texas, the Valley, and both metropolitan and rural areas. Cockfighting puts the poultry industry in jeopardy, as the interstate and international movement of fighting cocks contributes to poultry diseases, specifically the avian flu. House Bill 1320 would make owning or operating a cockfighting facility, owning cockfighting equipment, training a cock to fight, and attending a cockfight a crime. Unlike most states, Texas makes it very difficult to prosecute cockfighting because the only way to do so is by actually witnessing two people fighting their birds. This bill makes each of the supporting activities an offense, and would classify cockfighting as an organized crime. The bill would effectively assist law enforcement in stopping the cruel and bloody act of cockfighting, and the other illegal and violent activities that accompany it.

This bill is supported by the Texas Municipal League, the Texas Sheriffs Association, the Texas Animal Control Association, the Texas Veterinary Medical Association, county and district attorneys throughout the state, and the Texas Poultry Federation.

Animal abuse registry bill: Many states now have registries where those people convicted of acts of cruelty to animals must register in a database. The Texas bill creates a database and would require the registration of any person who was convicted of cruelty to animals or received a deferred adjudication for offenses involving cruelty to animals. Suffolk County, New York recently created such a database, and it was largely supported by domestic violence advocates, child welfare advocates, and others interested in the protection of their loved ones and pets. There is well-documented research showing the strong relationship between animal abuse and cruelty to other interpersonal crimes, and those who commit the crime of cruelty to animals are often repeat offenders. Other states are currently considering such registries, as well.

Pets in protective orders: House Bill 323 was filed on November 19, 2010 by State Representative Jodie Laubenberg (R-Wylie). If the bill passes, it will allow for the inclusion of service and companion animals within protective orders.

Appeal of animal seizures: Last session, the Texas Legislature passed a bill that enables appeals in cases involving the seizure of cruelly treated animals. This bill would streamline the appellate process in cases that involve the seizure of cruelty treated animals. Under the new law, an owner who was divested of ownership of his animals due to the cruel mistreatment of them would have a one-time appeal from either the Justice of Municipal Court or the County Court. Additionally, the law would expedite the appellate process so the animals are not held in limbo for an extended period of time. The law also provides adequate security for the cost of the government or non-profit agency which has custody of the animals during the process of litigation.

Robyn Katz is an Assistant District Attorney at the Bexar County District Attorney's Office and a graduate of Texas Tech School of Law. She has authored articles related to animal law.

Business Organizations
By Julie Barry
With the filing of HB 521 for the 82nd Legislature, Representative Gary Elkins has once again attempted to introduce legislation that would clarify the standard of liability protection that should be afforded to members of limited liability companies ("LLC") for the obligations of the LLCs. HB 521 would align the standards for piercing the liability shield of LLCs with the standards used to pierce the liability shield of corporations by amending Business Organizations Code, chapter 101, subchapter A, to include a new section 101.002 which would provide that section 21.223 (limitation on liability for obligations of corporations, officers, and shareholders), section 21.224 (preemption of liability), section 21.225 (exceptions to limitations on liability), and section 21.226 (liability of pledgees and trust administrators) would apply to an LLC and its members, owners, assignees, and subscribers.

Current law is silent as to what standards a court should use to determine whether an LLC's limited-liability protections should be pierced to provide for personal liability on the part of the LLC's members for the obligations of the LLC. Consequently, there is a difference of opinion as to what standard should apply to LLCs.

Some legal experts argue that since LLCs are inherently less formal than corporations they should not enjoy all the same liability protections that corporations have. It should be easier to pierce an LLC's limited-liability protections than it is to pierce those of a corporation. Other experts argue that Texas created LLCs to allow groups that could not incorporate to enjoy some of the same desirable legal protections afforded a corporation.

HB 521 would provide clarification to the law by making clear that standards for piercing the corporate veil that currently apply to corporations would also apply to LLCs. HB 521 would provide no more or less protection to LLCs than current law grants to corporations.
Representative Elkins filed similar legislation under HB 3624 on behalf of the Business Law Foundation during the last session, as a companion to SB 1773. However, SB 1773 died on the House Calendar.

Julie Barry is an attorney with Theodore J. Lee, focusing on U.S. and international commercial transactional law. She is a member of The Houston Lawyer editorial board.

Collaborative Law
By Harry Tindall
The Uniform Collaborative Law Act ("UCLA"), jointly sponsored by the State Bar of Texas Alternative Dispute Section and the State Bar of Texas Collaborative Law Section, is expected to be introduced in the 2011 Texas Legislature.

For those not familiar with collaborative law, following is a brief explanation: Parties and lawyers commit to trying to settle a dispute out of court and if not successful, the parties must retain new lawyers. Meetings are scheduled and agendas are prepared. The parties and lawyers meet face to face. Discovery is informal, but any requested information must be produced. Experts are usually jointly retained. Parties can opt out of the process at any time.

The UCLA was unanimously approved by the Uniform Law Commission at its Annual Meeting in July 2009. It has been endorsed by the Collaborative Law Institute of Texas, as well as by the Family Law Section of the American Bar Association.

Texas was the first state to ever pass collaborative law legislation in 2001. Several other states have passed collaborative law legislation or enacted court rules. Utah became the first state to adopt the UCLA in 2010. About 15 states are expected to have introductions in 2011.

As currently drafted, the UCLA will appear as a new Chapter 161 in the Civil Practice and Remedies Code. Collaborative law is entirely voluntary. The UCLA makes clear that no party shall be required to participate in this form of dispute resolution. This is designed to preclude local rules that are now commonly imposed to require mediation.

The Act will cover all forms of civil disputes, not just family law matters. This was the subject of considerable discussion by the Uniform Law Commission, but ultimately it was decided that there was no sound policy reason not to extend collaborative law to all areas of civil practice. Current Texas law only applies to family law cases.

The UCLA provides that parties can agree to keep the discussions confidential. The Act also provides privilege to the communications made in the joint meetings, subject to certain limitations such as fraud and misrepresentation.

Settlement agreements are binding as in mediation. In this regard, the draft adopts the exact language of the current Texas Alternative Dispute Resolution statute.

Finally, the draft preserves the current Texas Family Code provisions for collaborative law. The provisions have proven to be popular with the collaborative family practitioners and there was no desire to change those sections.

For more information about the UCLA, visit www.collaborativepractice.com or www.nccusl.org.

Harry Tindall is a Texas Commissioner for the Uniform Law Commission.

Employment Law
By Samantha Martinez
With our state's usual flair for the dramatic, the Texas Legislature is taking on a number of "hot button" workplace issues, including guns, drugs, criminal history, and immigration.

Firearms: Re-introduced after failing in 2009, Senate Bill 321 (Hegar, Birdwell) proposes to amend the Texas Labor Code to allow employees to transport or store guns or ammunition in their private vehicles in employer parking areas. Employers can still prohibit firearms in their buildings and in any vehicle which the employer owns or leases. Employers would not be civilly liable for any injury or death resulting from compliance with this law, except (in an exception that may swallow the rule) in cases of gross negligence. Schools are exempt from this law.

Verification of lawful status to work: Some Texas legislators are looking to pass Arizona-style rules for employers. House Bills 178 and 601 (Jackson) require employers to use the federal "E-verify" program to electronically confirm employment eligibility to work and subject employees to immediate termination if they are responsible for and fail to use the "E-verify" program. House Bill 296 (Berman) goes one step further, where in addition to requiring employers to use the federal "E-verify" program, the bill would prohibit contracts or subcontracts with independent contractors who are unauthorized to work in the United States. Violations of this proposed legislation would include criminal and civil penalties, as well as revocation of occupational licenses and return of any government grant or subsidy. House Bill 296 also proposes to criminalize the act of impeding traffic to hire day laborers. House Bills 177 (Jackson) and 623 (Bonnen) require individuals who seek to obtain or renew occupational licenses, certificates, registrations, or permits to first prove employment eligibility using the federal I-9 standard.

Unemployment benefits: House Bill 126 (Legler) would require individuals seeking unemployment benefits to submit to and pass a drug test. Moreover, an individual receiving unemployment benefits who fails a pre-hire drug test is disqualified from benefits and must notify the Texas Workforce Commission of the failure or repay benefits. House Bills 223 (Strama) and 314 (Zaffirini) amend the definition of base period and broaden the involuntary separation definitions and chargeback exclusions relating to disability and illness, sexual assault, family violence, and relocation.

Criminal history: House Bill 68 (Martinez) requires employers who turn away an applicant based on criminal history to notify the applicant of the specific arrest or disposition that precluded employment and how they learned of the arrest or disposition. House Bill 542 (Dutton) prohibits employers from denying employment on the basis of dismissal, deferred adjudication, or discharge of a crime.

Pay discrimination: Senate Bill 280 (Davis) mirrors Congress' Lilly Ledbetter Act and would amend the Texas Labor Code so that a pay discrimination claim accrues each time an individual is subject to the allegedly discriminatory act, i.e., with each paycheck.

Leave for court hearings: Senate Bill 64 (Zaffirini) would grant paid leave to attend court proceedings for employees who are crime victims or parents or guardians of crime victims, and the bill also seeks to protect them from retaliation for taking such leave.

Samantha Barlow Martinez is a partner at Muskat, Martinez & Mahony, LLP. She is Board-certified in Labor and Employment Law, and represents employers in litigation and management of workplace issues.

Environmental Law
By John S. Gray
Even with every other hot-button issue in this legislative session, environmental concerns will still be front and center. Both the Texas Railroad Commission ("TRC") and the Texas Commission on Environmental Quality ("TCEQ") are scheduled for sunset review in which all aspects of their operations are subject to evaluation and public comment.

Among the top issues being highlighted by TCEQ's sunset process are (1) public assistance and participation, (2) using compliance history as a regulatory tool, (3) enforcement efforts, (4) drought issues, and (5) funding programs. The sunset process, however, is off to a slow start and given all that is on the plate this year, there is some talk that the Legislature may avoid this messy sunset debate by simply moving the process to the next legislative session in 2013.

The TRC sunset process involves sweeping structural changes. For example, during the process it is suggested to replace the three elected commissioners with five part-time appointees while other proposals are to elect a commissioner and supplement him or her with two part-time appointees.

These sunset processes are not the only environmental issues being considered this session. Bills have already been filed that address:

  • overall support and state use of renewable energy and conservation technology – HB51, HB128, HB211, HB450, HB453, SB238;

  • recovery and recycling of electronic equipment – HB88

  • expanding the use of cost-benefit analyses in proposed rules – HB125;

  • changing the name of the TRC to the Texas Oil and Gas Commission – HB173;

  • industrial and municipal waste disposal wells – HB444;

  • dumping and industrial operation that adversely affects surface waters – HB451, SB160;

  • oil and gas produced water pipelines – SB103, SB106, SB107;

  • oil and gas waste injection wells – SB104, SB105; and

  • water conservation – SB181, SB274, SB292.

Additionally, do not be surprised if the Legislature considers bills that address concerns being raised by citizens living in and around Fort Worth who are concerned by pollution from natural gas wells in the Barnett Shale. Two other areas that many believe the Legislature may weigh in on are climate change regulations being promulgated by the Environmental Protection Agency ("EPA") and the air-permitting dispute between TCEQ and the EPA.

As of January 2, 2011, EPA rules require TCEQ to begin considering greenhouse gas emissions in air quality permitting. TCEQ Chairman Bryan Shaw and Texas Attorney General Greg Abbott responded to the EPA's request to know whether Texas will administer the permitting of greenhouse gases by stating that: "Texas has neither the authority nor the intention of interpreting, ignoring or amending its laws in order to compel the permitting of greenhouse gas emissions." Unsurprisingly, the EPA announced just before Christmas that it will seize authority from Texas to regulate major emitters of greenhouse gases. This decision will affect 167 facilities in Texas—many of them power plants and oil refineries. The EPA claims that its actions will actually help Texas businesses by avoiding permitting uncertainty. Governor Perry responded by stating that: "The federal Environmental Protection Agency on Thursday effectively declared Texas unfit to regulate its own greenhouse gas emissions" and promised to fight the EPA's actions in court.

Some fear that the Texas Legislature may seek to directly influence the dispute between Texas and the EPA. If that occurs, life in this Texas legislative session could get very interesting.

John S. Gray is a partner in the environmental section at Gardere. He is the editor in chief of The Houston Lawyer.

Family Law
By William W. Morris
The 82nd Legislature has only recently convened and already more than 40 bills directly affecting family law have been filed. And this does not include the Family Law Section's bills. If the Legislature focuses on anything other than the budget or redistricting there is a good chance some significant legislation affecting family law may pass.

Paternity Mistakes – There are several bills which, in light of available scientific evidence, attempt to correct mistakes made in the past as to paternity. These bills would allow a finding of non-paternity if genetic testing showed the person designated in the order as the father was excluded by the test and there was a showing of a mistake or fraud. Any current obligation to pay child support would cease but any support paid in the past would not be subject to repayment.
Possession of and Access to Children Under 3 – The Family Code would provide a list of factors (as opposed to actual guidelines) for the court to consider in making an order for possession of and access to children under 3.

Protective Orders – When there was a third protective order granted based on a finding of family violence the court would have discretion in the duration of the order. The proposed legislation would also allow persons under the age of 18 to sign an affidavit in support of a petition for a protective order.

Spousal Maintenance – Revisions to Chapter 8 of the Family Code would include increasing the amount of the monthly payment from a maximum of $2,500 to $5,000. The potential duration of the order could increase depending on the length of the marriage.

Legal Separation – Texas currently does not have legal separations. A proposed constitutional amendment and proposed amendment to the Family Code would create legal separation and allow the court to partition the community estate into separate property, make the income from the separate property separate property, and make the parties earnings the separate property of the spouse who earns the income. This would all remain separate property even if the parties petition to vacate the legal separation order. In some cases a suit for dissolution of marriage would be abated.

The Family Law Section of the State Bar of Texas has a package which includes some of the matters above as well as the hearsay testimony of young children, gestational agreements, military deployment, fraud on the community, and appointed counsel on appeal.

William W. Morris is a partner at Looper Reed & McGraw, where he practices family law, arbitration and ADR. He served as an associate judge for the 247th District Court from 1982-1993. A member of the legislative committee of the Family Section of the State Bar, Morris has chaired the HBA Family Law Section, the HBA Collaborative Law Section and the Gulf Coast Family Law Specialists.

Gaming Law
By Jill Elsey
HB 4062 has been proposed to the Texas Legislature in one way or another multiple times. The Texas racing industry has angled for video lottery terminal ("VLT") legislation for the past decade. In the last legislative session, the bill died in committee.

HB 4062 would authorize video lottery terminals at licensed horse and greyhound racetracks and would provide a defense for video lottery operations by federally recognized Indian tribes. The bill would create the State Video Lottery Account as a special account in the General Revenue Fund, and this account would receive 35 percent of total net terminal income from video lottery operations at racetracks each year. The remainder of the net terminal income would be retained by the racetracks, with a provision that the pari-mutuel license holder at each racetrack enter into a written agreement to allocate a percentage of the racetrack's net terminal income to race purses.

Texas horse racing needs video lottery terminals in order to compete with racetracks in other states. The VLTs would help to generate enough revenue to allow racetracks in Texas to offer larger purses. According to Shawn Hurwitz, Chief Executive Officer of Sam Houston Race Park, "Over the past decade, the ability of Texas racing to remain competitive has been severely impacted as horse owners and horsemen have left to race in neighboring states where slot machines at pari-mutuel facilities have generated larger purses." The Texas Racing Commission indicates that the provisions requiring racetrack video lottery establishments to apply a percentage of their net VLT income to be used for purses would attract additional race animals, owners, trainers, and animal care providers to the state. The legislation dedicates enough revenue to purses such that Texas racing would become regionally competitive in 3 years and nationally competitive in 6 years.

For the first time, and due to a provision benefiting all performance sport horses in the bill, Texas HORSE (which is a group consisting of united organizations around the state including national organizations located in Texas such as American Quarter Horse Association, National Cutting Horse Association, and American Paint Association) has backed this legislation in a united effort. Previously, the majority of the support and lobbying power for this bill came from the Texas Thoroughbred Association and the Texas Greyhound Association.

In September 2010, Penn National Gaming announced its involvement in a joint venture to purchase 50 percent of Sam Houston Race Park. The deal also included Valley Race Park and an option to build a new track in Laredo, Texas. With this new support from an established gaming corporation and organizations outside the racing industry, this bill looks to be well on its way. Although State Representative Yvonne Gonzalez Toureilles, who sponsored the bill last year, has not been re-elected, the bill will be picked up by another representative in the 2011 session.

This 2011 legislative session seems to be the perfect environment for this bill to get passed. It seems as though the state budget woes will be the main topic of the 2011 legislative session. Thus, legislators will be looking for new budget cuts and new forms of revenue.

Jill Elsey is a solo practioner who focuses exclusively on equine legal matters and assists clients in all aspects of the horse industry.

By John S. Gray
While few bills have yet to be filed directly affecting litigation issues, keep an eye out for the following proposed bills in the upcoming 2011 legislative session that would impact litigation:

  1. Reducing the evidentiary standards in asbestos litigation by overturning the Texas Supreme Court's 2007 decision in Borg-Warner Corp. v. Flores. The Flores court held that its decade-old decision in Merrell Dow Pharmaceuticals Inc. v. Havner was applicable to asbestos-related litigation. Thus, to establish legal liability, asbestos plaintiffs must establish a scientific connection between each defendant-specific exposure and his injury. A strong effort was made to legislatively overrule Flores during the 2009 legislative session. While that effort failed, many expect another attempt to be made in this legislative session.

  2. Dismissing "inactive" asbestos and silica cases thereby allowing plaintiff attorneys to end the attorney-client relationship with these clients. In 2005, the Texas Legislature passed a landmark bill setting forth medical criteria to be used in asbestos-related and silica-related litigation. At the time, thousands of silica cases and tens of thousands of asbestos cases had already been filed in Texas courts. The 2005 legislation provides that these cases could not proceed to trial until the individual plaintiff furnishes medically valid evidence of an actual impairment caused by exposure to asbestos or silica. Five years later, only a tiny fraction of plaintiffs have made the requisite showing leaving thousands of inactive cases on file that the courts and the attorneys must follow because of their fiduciary duties. While there is an effort to dismiss these "inactive" cases ending the attorney/client relationships, there are also discussions to change the law to provide that if a plaintiff re-files his case at a later date (as the law currently allows), the plaintiff gets the benefit of the law existing at the time the plaintiff originally filed suit.

  3. In 2007 in Entergy Gulf States Inc. v. Summers, the Texas Supreme Court held that when acting as its own general contractor, a property owner can also be the "statutory employer" of a subcontractor's employees entitling it the protections provided by the Workers' Compensation Act. A number of Bills were introduced in the 2009 session to overrule Summers. While those efforts were unsuccessful, additional efforts to legislatively overturn Summers are expected this session.

  4. In the 2003 tort reform bill, the Texas Legislature passed a law that allowed a plaintiff claiming payment of medical bills as damages to only recover the amount he actually paid, but not any amount written-off by the medical-services provider. In the 2007 and 2009 sessions, bills were introduced to repeal this provision so that plaintiffs can return to the pre-2003 law, which allowed recovery of amounts billed by the medical-services provider, but not paid or owed by anyone. While those efforts were unsuccessful, persons interested in changing this aspect of the law are expected to try again.

  5. The same 2003 tort reform bill provided that in a healthcare liability case, non-economic damages are limited to $250,000 against all physicians and healthcare providers and $500,000 against healthcare institutions (totaling $750,000 that might be recovered in a healthcare case). The law also provides that a person who in good faith administers emergency care is not liable in civil damages for an act performed during the emergency unless the act is "willfully or wantonly negligent." Bills were introduced in the last two legislative sessions proposing to index the "caps" to adjust for inflation, and to change or lower the standard applicable to emergency care and are expected again this session.

John S. Gray is a partner in the environmental section at Gardere. He is the editor in chief of The Houston Lawyer.