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Texas Supreme Court Upholds Texas Highway Beautification Act:
Texas Department of Transportation v. Barber

By Alexis Brown Stokes

In Texas Department of Transportation v. Barber, 2002 WL 32126134, 46 Tex. Sup. Ct. J. 916, Tex., July 3, 2003, the Texas Supreme Court upheld the constitutionality of the Texas Highway Beautification Act (“the Act”). Plaintiff Pat Barber brought this action against TxDOT, challenging the constitutionality of the Act, and seeking to block enforcement actions which prohibited him from displaying a billboard containing a non-commercial message on his nonresidential property. On appeal, the Texas Supreme Court rejected Barber’s free speech argument and held that the Act is content neutral and narrowly tailored to serve substantial state interests.
The Texas Legislature passed the Texas Highway Beautification Act, Tex. Transp. Code Ann. § 391, to comply with the Federal Highway Beautification Act, 23 U.S.C. § 131, which requires states to control signs within 660 feet of interstate and primary highways, and beyond 660 feet in non-urban areas if the signs are designed to be and are visible from such highways. The Federal Act provides that if states fail to control such signs effectively, they risk losing ten percent of their federal highway funds. Consequently, the Texas Act prohibits outdoor advertising in limited areas, but exempts from regulation several types of signage, including advertising for a “natural wonder or a scenic or historic attraction,” advertising solely for activities conducted on the property on which the sign is located, election signs on private property, directional signs, and advertising located on industrial or commercial land.
Barber installed a billboard on his own, nonresidential property adjacent to Interstate 20. The billboard stated, “Just say NO to Searches,” and displayed a telephone number. Callers to that number reached a recorded message about citizens’ rights to refuse to have their vehicles searched by police. Barber’s billboard received some local publicity, and shortly thereafter, TxDOT sent Barber a letter stating that the billboard violated the Texas Highway Beautification Act and must be removed. Barber then filed suit seeking injunctive relief and a declaratory judgment that the Act is unconstitutional. The trial court granted TxDOT summary judgment, concluding that the Act is constitutional under the Texas and United States constitutions, both on its face and as applied to Barber. Barber removed his billboard, but appealed. The Third Court of Appeals reversed, holding that the Act violated Barber’s first amendment right to express noncommercial, ideological speech, and TxDOT appealed to the Texas Supreme Court.
The court began its analysis by considering whether the Act’s regulations are content neutral or content based. The court explained that a content-neutral regulation must be both viewpoint neutral — not based on the message’s ideology — and subject-matter neutral — not based on the message’s topic. The court also noted that the United States Supreme Court has indicated a willingness to treat some content-based regulations as content-neutral if the regulations are motivated by a permissible content-neutral purpose. See, e.g., City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 48 (1986). In this case, the parties and the court agreed that the Act does not endorse any particular viewpoint, but it does make certain distinctions based on subject matter. However, the Act was intended to control the secondary effects of billboards and signs — i.e., visual clutter and travel safety issues — along the interstate and highway system. Thus, the Act is content neutral because it is justified without reference to the content of the regulated speech.
The court next considered whether the Act is narrowly tailored to serve a substantial state interest. The court first noted that aesthetics and public safety on the highway are recognized as substantial state goals. Further, the Act leaves Barber with adequate alternative venues for communication, and thus constitutes a valid time, place, and manner restriction. Accordingly, the Act does not violate Barber’s First Amendment rights under the United States Constitution. In addition, because the Texas Constitution offers no broader protection of noncommercial speech than does the United States Constitution, the Act also does not violate Barber’s Texas Constitutional rights.

Alexis Brown Stokes practices at Andrews Kurth LLP and is a member of The Houston Lawyer Editorial Board.



Who Can Change an Incompetent Person’s Domicile?

By Don D. Ford, III

In 1996, Mary Acridge placed her husband, Louis, in a New Mexico retirement center as a result of his rapid mental deterioration due to Alzheimer’s dementia. When she became dissatisfied with his treatment in 1997, she moved Louis to a Texas facility that she believed would provide a higher level of care for her husband. After living in the Texas facility for over a year, Louis Acridge was attacked and killed by another patient in the facility who had a history of violent behavior toward other patients.
As a result of her husband’s death, Mary Acridge filed suit in federal court in Texas claiming diversity jurisdiction alleging that all of the plaintiffs, including the estate of her deceased husband, were residents of states other than Texas, where all of the defendants resided. The defendants filed a motion for summary judgment claiming that diversity jurisdiction did not exist because Louis Acridge’s residency for purposes of diversity changed when he was moved from New Mexico to Texas.
In Acridge v. The Evangelical Lutheran Good Samaritan Society, et al, 334 F.3d 444, 5th Cir.(Tex.), June 16, 2003, the Fifth Circuit Court of Appeals considered the defendants’ interlocutory appeal on the question of diversity jurisdiction and acknowledged that each party’s claims hinged on the question, “Did he [Louis Acridge] become a Texas domiciliary?”
Acknowledging that federal common law presumes that a person’s domicile continues in one state absent sufficient evidence of change, the court recited firm precedent that the presumption may be overcome to establish a new domicile if both 1) he resides in a new state, and 2) he has an intention to remain in that state indefinitely.
In the case of an incompetent person, the law presumes that the incompetent lacks the mental capacity to change his own domicile. Nonetheless, this presumption will be overcome and his domicile will be changed as long as “he understands the nature and effect of his act.”
Prior to this case, no Fifth Circuit precedent existed to answer the question whether someone acting on behalf of an incompetent person can change the incompetent’s state of domicile. However, the other circuits across the country are split on this issue.
In this case, the court held that Mary Acridge had the authority to change the domicile of her husband so long as she was acting in his best interests. The court’s holding agreed with other circuits in that denying the person charged with making decisions for an incompetent the authority to change his domicile leaves the incompetent person “in a never-ending limbo where the presumption against changing domicile becomes more important than the interests of the person the presumption was designed to protect.”
As a result of its ruling, the court denied that diversity jurisdiction existed between the parties and dismissed the plaintiffs’ case for lack of jurisdiction.
An important aspect of this case should be noted here as the court noted in footnote 3 of its opinion. Mary Acridge never applied for or was appointed as the legal guardian of her husband. Rather, her actions were undertaken solely in her capacity as a spouse caring for her husband. Had she established a legal guardianship over her husband, the outcome of this case could have been quite different because the court would have had to consider which state’s court had jurisdiction over the incompetent person, and that issue alone could have changed the court’s analysis.

Don D. Ford III is a partner in the firm of Ford & Mathiason LLP, practicing probate and guardianship. He is a member of The Houston Lawyer Editorial Board.



Divorce Allocation of Retirement Benefits Shanks v. Treadway and Reiss v. Reiss

By Fred A. Simpson

The question of how to properly divide retirement benefits between divorcing parties was the subject of two recent decisions.
In Shanks v. Treadway, 46 Tex. Sup. Ct. J 840 (June 26, 2003), a 1981 divorce decree unambiguously stated that the wife was awarded a pro-rata interest in the husband’s retirement benefits equal to 25 percent of the total sums to be paid to the husband, as and when those retirement benefits were in fact paid to him. Upon his retirement in 1998, the husband requested the trial court to calculate the values his ex-wife was entitled to as of the date of the 1981 divorce, which the trial court did, ostensibly under Family Code Section 9.102. The ex-wife appealed, seeking her 25 percent share of the impending payments to her former husband. The Dallas Court of Appeals reversed and the case was reviewed by the supreme court. The ex-husband argued that if his former wife was allowed retirement benefits accruing to him after the 1981 divorce, the courts wrongfully divested him of his separate property. The supreme court would not allow the ex-husband to make such a collateral attack on the judgment embodied in the divorce decree, noting that if the ex-husband had any complaints, he should have filed an appeal in 1981, not 20 years later.
The supreme court construed the 1981 divorce decree as a whole, harmonizing and giving effect to the entire decree. Because of the unambiguous nature of the decree, the court found the ex-wife was actually awarded more benefits than were accrued at the 1981 divorce date. She was nevertheless entitled to all sums her ex-husband received under the entire retirement plan, whenever those benefits accrued, before or after the divorce. The court also reflected on the common law formula used to measure retirement benefits to be allocated in a property division at the trial court level. The formula uses, if necessary, a fraction with a numerator equal to the number of months of the marriage duration, with the denominator equal to the greater number of months the employee-spouse worked for the employer paying the retirement benefits. This fraction, if applicable, is then applied to the value of the community’s interest in the retirement plan at the time of the divorce. This is as close as the courts can get to perfection in the matter of avoiding the invasion of separate property.
A similar situation emerged in Reiss v. Reiss, 46 Tex. Sup. Ct. J. 844 (June 26, 2003), coming from the First Court of Appeals. A 1980 divorce decree granted the wife 50 percent of future retirement benefits payable to the husband, even though such future benefits were his separate property. (As in Shanks v. Treadway, payment of those benefits began in 1998.) The supreme court again found the divorce decree unambiguous and harmonized it in favor of the former wife, explaining why the court’s dissenting justices viewed the issues differently than in Shanks. Although the 1980 decree contained reversible error, it was too late for the trial court or the appellate courts to correct the erroneous division of property effectuated in the 1980 decree.
The ex-husband argued in Reiss that his present appeal was not a collateral attack on the 1980 decree because that decree was void for the lack of trial court jurisdiction to divest him of his separate property. The supreme court then explained the important difference between “void” and “voidable” judgments, finding that when a court has jurisdiction over the parties and the subject matter and does not act outside the court’s capacity as a court, the judgment is not void, even if a trial court acts contrary to a statute or a statutory intent. Nevertheless, the 1980 decree was a voidable judgment, had it been timely appealed.

Fred A. Simpson practices with the law firm of Jackson Walker L.L.P. He is a member of The Houston Lawyer Editorial Board.




‘Direct Evidence’ Not Required For Title VII Discrimination Mixed-Motive Jury Instruction

By Trang Q. Tran

In a 9-0 decision, the U.S. Supreme Court discards the direct evidence standard that has been followed by many courts for over 10 years in employment discrimination suits. Desert Palace, Inc. d/b/a Caesar’s Palace Hotel and Casino v. Costa, 123 S.Ct. 2148, 156 L.Ed.2d 84 (June 9, 2003).
Based upon the statutory language contained in the Civil Rights Act of 1991, the Supreme Court held that a plaintiff does not have to present direct evidence of discrimination in order to be entitled to a mixed-motive jury instruction. To obtain a mixed-motive jury instruction, a plaintiff need only present sufficient evidence for a reasonable jury to conclude, by a preponderance of the evidence, that race, color, religion, sex, or national origin was a motivating factor for any employment practice.
Costa was the only woman employed by Desert Palace as a warehouse worker and heavy equipment operator. Costa experienced a number of problems with management and her co-workers that led to an escalating series of disciplinary sanctions, and she was eventually terminated. Costa filed a lawsuit against Desert Palace asserting sex discrimination under Title VII of the Civil Rights Act of 1991. At trial, Costa presented evidence that (1) she received harsher discipline than men for the same conduct, (2) her male co-workers “frequently used or tolerated” sex-based slurs against her and other disparate treatments.
Based on the evidence presented, the district court gave the jury a mixed-motive instruction that allowed a plaintiff’s verdict even if the jury found that the defendant’s conduct was motivated by both discriminatory and non-discriminatory reasons. If the jury found that the defendant’s treatment of the plaintiff was motivated by both discriminatory and lawful reasons, the district court’s jury instruction permitted the jury to award damages to the plaintiff “unless the defendant proves by a preponderance of the evidence that the defendant would have treated plaintiff similarly even if the plaintiff’s gender had played no role in the employment decision.”123 S.Ct. 2148 at 2152.
The jury rendered a verdict for Costa and awarded her back pay, compensatory damages, and punitive damages. Desert Palace appealed based on the argument that a mixed-motive jury instruction was improper because Costa had failed to produce direct evidence that sex was a motivating factor in her dismissal or in any of the other adverse employment actions taken against her. An en banc panel of the Court of Appeals for the Ninth Circuit held upheld the verdict.
The Supreme Court agreed with the Court of Appeals and affirmed the judgment. In doing so, the Supreme Court considered the effects of the 1991 Act on jury instructions in mixed-motive cases and rejected the requirement that a plaintiff must present direct evidence of discrimination in order to obtain a mixed-motive instruction under 42 U.S.C. §2000e-2(m). The Desert Palace decision is significant because defendants will have a much more difficult time obtaining summary judgment in mixed motive cases now that the standard for showing an impermissible motivating factor has been lightened and the burden of proof of a legitimate, non-discriminatory reason has been shifted to the defendant, and they would have to establish it as a matter of law.

Trang Q. Tran practices with the Tran Law Firm L.L.P. and concentrates in employment law and civil trials. He is a member of The Houston Lawyer Editorial Board.



Victoria’s Secret Undressed?

By Al Harrison

The United States Supreme Court, in Moseley v. V Secret Catalogue, Inc., 123 S. Ct. 1115 (2003), agreed to resolve the anomalous situation among the circuits wherein different standards of proof are invoked to ascertain whether trademark dilution has occurred under the Federal Trademark Dilution Act (“FTDA”). 15 U.S.C. § 1125 (c). By establishing the FTDA, Congress amended § 43 of the Trademark Act of 1946 (“Lanham Act”), 15 U.S.C. § 1125, to afford trademark owners a remedy for the dilution of their famous marks inasmuch as subsequent unauthorized uses thereof tend to blur a mark’s distinctiveness and to tarnish such mark — even absent a likelihood of confusion will result due to this blurring and tarnishment.
It is no surprise that Victoria’s Secret constitutes a chain of retail stores that market and sell women’s intimate lingerie via the well-established “Victoria’s Secret” trademark. The owner of the Victoria’s Secret trademark sued a Kentucky retail shop for selling adult videotapes, gifts, and novelties under the names “Victor’s Secret” and “Victor’s Little Secret.” (The name “Victor’s Secret” was changed to “Victor’s Little Secret” in response to a cease-and-desist letter; but this modest name change was insufficient to avoid litigation.) The basis for this suit was that the novelty shop’s actions were likely to cause blurring and erosion of the established mark’s distinctiveness and likely to cause tarnishing of the mark’s reputation, thereby resulting in its being diluted as contemplated under the FTDA. The trial court granted Victoria’s Secret’s summary judgment on the FTDA claim and the Sixth Circuit affirmed. 259 F.3d 464 (6th Cir. 2001) (finding that the Victoria’s Secret mark was distinctive and that evidence had established dilution in spite of no actual harm having been proven).
The Supreme Court reversed and remanded finding that the FTDA’s crucial language is that “ ‘the owner of a famous mark’ is entitled to injunctive relief against another person’s commercial use of a mark or trade name if that use ‘causes dilution of the distinctive quality’ of the famous mark.” 123 S. Ct. at 1124, citing, 15 U.S.C. 1125(c)(1) (emphasis original). Justice Stevens, writing for a unanimous Court, held that the anti-dilution statute unambiguously requires a showing of actual dilution rather than the likelihood of dilution. He notes that , “at least where the marks at issue are not identical, the mere fact that consumers mentally associate the junior user’s mark with a famous mark is not sufficient to establish actionable dilution. Such mental association will not necessarily reduce the capacity of the famous mark to identify the goods of its owner, the statutory requirement of dilution under the FTDA.” 123 S. Ct. at 1124.
Unfortunately, in spite of the efforts of Congress to safeguard the rights of famous trademarks, this statutory language clearly produces a contrary effect. In order for a junior, conflicting mark to engender actual harm to a famous mark, the conflicting mark must already have become established on the commercial scene. Stated alternately, once the junior mark has become established commercially, dilution of the famous mark has already commenced. It should be evident that, in this type of situation, dilution of a famous mark (or any established trademark) will occur unless a conflicting mark is enjoined at its incipiency stage. It is anticipated that, in view of the Victoria’s Secret decision, Congress will clean up its unambiguous, but nonetheless off-target language. This should enable Victoria’s Secret to restore her full commercial dress.

Al Harrison is an intellectual property lawyer and patent attorney, and he is a member of The Houston Lawyer Editorial Board.



Win For Texas Wine Lovers

By Ann D. Zeigler

In Dickerson v Bailey, ___ F.3d ___, 2003 WL 21469120, 5th Cir.(Tex.), Jun 26, 2003, the United States Fifth Circuit Court of Appeals determined that the Texas Alcoholic Beverage Commission regulations forbidding direct wine importation by private citizens violate the Commerce Clause of the United States Constitution. The Court affirmed the judgment of the Southern District Court in Houston, including its analysis of the offending provisions and its remedy of enjoining enforcement of the offending regulations.
The regulations forced out-of-state wineries to sell and ship to Texas residents only through the three-tiered permit system required for sales of alcohol. A Texas resident could not purchase wine personally at a winery in California and ship the wine back to himself. A Texan could not order on the Internet or by mail from a small winery in New York to be delivered to her home in Houston. The regulations state plainly that their purpose is not to protect Texans from alcohol abuse, nor to maintain a consistent tax regime. Their only purpose is to protect the Texas wine industry from out-of-state competition. The Fifth Circuit zeroed in on the regulatory language, cutting through various arguments by the Commission which the court pointed out were unfounded by both the facts and the law. The upshot—the Commission failed completely to show that it had permissibly burdened the Commerce Clause for a protected purpose. Preventing economic protectionism by the states is one of the fundamental reasons for the existence of the Commerce Clause, the court said. And the Texas regulations whose sole purpose was protectionism cannot stand.
The court then examined the Commission’s position on the remedy. The district court issued a permanent injunction against enforcement of the wine-importation regulations. The Commission proposed that the appropriate remedy is to extend the regulations to include in-state wineries in the same regulatory scheme as out-of-state wineries, forcing all wine sales into the multi-tiered distribution system. The Fifth Circuit declined to embark on legislation, pointing out that the district court properly focused on the offending regulations, and did not stray into other portions of the alcohol marketing regulations. Since the remedy already in place was narrowly tailored to eliminate the violation of the Commerce Clause, it should not be disturbed.

Ann D. Zeigler is a bankruptcy lawyer at Hughes, Watters & Askanase, L.L.P., and is the “Keeping Up With” Associate Editor of The Houston Lawyer.

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