The following are summaries of selected opinions issued by the Texas Supreme Court in June 2024. These summaries are prepared by court staff as a courtesy and are not a substitute for the actual opinions. The summaries are overviews of the opinions; please review the entire opinions.
ADMINISTRATIVE LAW: Commission’s order approving electricity scarcity-pricing was not subject to judicial review.
Pub. Util. Comm’n of Tex. v. RWE Renewables Ams., LLC, No. 23-0555, ___ S.W.3d ___ (Tex. June 14, 2024).
The central issues in this case are: (1) whether the Public Utility Commission’s order approving a protocol adopted by the Electric Reliability Council of Texas regarding electricity scarcity-pricing constitutes a “competition rule[] adopted by the commission” under Section 39.001(e) of the Public Utility Regulatory Act (PURA), which may be directly reviewed by the court of appeals; and (2) if so, whether the Commission exceeded its authority under PURA or violated the Administrative Procedure Act (APA)’s mandatory rulemaking procedures in issuing the approval order.
In 2021, Winter Storm Uri strained Texas’s electrical power grid to an unprecedented degree. Electricity suppliers were unable to produce enough electricity to meet market-wide demand during the storm. Consequently, regulators struggled to maintain critical grid conditions and ultimately resorted to mandating lengthy and widespread blackouts to prevent catastrophic damage to the state’s power grid. Simultaneously, the Commission issued emergency orders administratively setting the wholesale price of electricity to the regulatory maximum in an effort to incentivize generators to rapidly resume production.
In the storm’s aftermath, ERCOT adopted, and the Commission approved, a formal protocol setting electricity prices at the regulatory ceiling under certain extreme emergency conditions.
RWE, a market participant, appealed the Commission’s approval order directly to the Third Court of Appeals.
The Court held the order was invalid, determining that (1) the order constituted a competition rule under PURA and a rule under the APA; (2) by setting prices, the rule was anti-competitive and so exceeded the Commission’s statutory authority under PURA; and (3) the Commission implemented the rule without complying with the APA’s rulemaking procedures.
The Supreme Court reversed, holding that the Commission’s approval order is not a “competition rule[] adopted by the commission” subject to the judicial-review process for such rules. The Court reasoned that PURA envisions a separate path for ERCOT-adopted protocols, which are subject to a lengthy and detailed process before being implemented. The statutory requirement that the Commission approve those adopted protocols before they may take effect does not transform Commission approval orders into Commission rules eligible for direct review by a court of appeals. Hence, the court of appeals lacked jurisdiction over the proceeding.
Accordingly, the Supreme Court vacated the court of appeals’ judgment and dismissed the case for lack of jurisdiction.
ADMINISTRATIVE LAW: Statutory timeframe for annual HHSC external Medicaid contractor audits is mandatory.
Image API, LLC v. Young, No. 22-0308, ___ S.W.3d ___ (Tex. June 21, 2024).
At issue is the interpretation of a statute requiring the Health and Human Services Commission (HHSC) to conduct annual external audits of its Medicaid contractors and providing that an audit “must be completed” by the end of the next fiscal year.
HHSC hired Image API to manage a processing center for incoming mail related to Medicaid and other benefits programs. In 2016, HHSC notified Image that an independent firm would audit Image’s performance and billing for years 2010 and 2011. Image cooperated fully. The audit, completed in 2017, found that HHSC had overpaid Image approximately $440,000.
Image sued HHSC’s executive commissioner for ultra vires conduct, alleging that she has no legal authority to audit Medicaid contractors outside the statutory timeframe. Image sought a declaration that the 2016 audit for years 2010 and 2011 violated Section 32.0705(d) of the Human Resources Code and an injunction preventing HHSC from conducting or relying on any noncompliant audit. The parties filed cross-motions for summary judgment, and HHSC also filed a plea to the jurisdiction.
The lower courts ruled for HHSC. Despite the statutory directive that an audit “must be completed” by a certain time, the court of appeals characterized the deadline as “mere[ly] a suggestion.” The court reasoned that the lack of any textual penalty for noncompliance, coupled with HHSC’s heavy workload, supported “forgo[ing] the common man’s interpretation of ‘must’” and construing the deadline as directory rather than mandatory.
The Supreme Court affirmed the part of the court of appeals’ judgment dismissing Image’s claims arising from the 2016 audit, while clarifying the mandatory/directory distinction in Supreme Court caselaw. After agreeing with the court of appeals that Image is a Medicaid contractor, the Court emphasized that a statute requiring an act be performed within a certain time, using words like “shall” or “must,” is mandatory. Section 32.0705(d) is therefore mandatory because it states that a statutorily required audit “must be completed” within the time prescribed. What consequences follow a failure to comply is a separate question, which turns on whether a particular consequence is explicit in the text or logically necessary to give effect to the statute. Because there is no textual clue that the relief Image seeks is what the Legislature intended, the Court held that an injunction prohibiting HHSC from collecting overpayments found by the 2016 audit would be error.
The Court remanded the case to the trial court for further proceedings on remaining claims.
TAX PROTESTS: Tax Code limitations on appeal are procedural, not jurisdictional.
Tex. Disposal Sys. Landfill, Inc. v. Travis Cent. Appraisal Dist., No. 22-0620, ___ S.W.3d ___ (Tex. June 21, 2024).
The issue in this case is whether statutory limits on an appraisal district’s ability to challenge an appraisal review board’s decision confine the trial court’s
subject-matter jurisdiction.
Texas Disposal Systems Landfill operates a landfill in Travis County. In 2019, Travis County Central Appraisal District appraised the market value of the Landfill, and the Landfill protested the amount under a Tax Code provision requiring equal and uniform taxation. The Landfill won its challenge, and the appraisal review board significantly reduced the appraised value of the landfill.
The Appraisal District appealed to the trial court and claimed that the appraisal review board’s appraised value was unequal and below market value. The Landfill filed a plea to the jurisdiction, arguing that it raised only an equal-and-uniform challenge—not one based on market value. The trial court granted the Landfill’s plea.
The court of appeals reversed, holding that review of an appraisal review board’s decision is not confined to the grounds the taxpayer asserted before the board.
In an opinion by Justice Bland, the Supreme Court affirmed. The Tax Code limits the trial court’s review to the challenge the appraisal review board heard. That limitation, however, is procedural, not jurisdictional. The Court observed that the Tax Code allows parties to agree to proceed before the trial court despite a failure to exhaust administrative remedies, signaling that the parameters of an appeal are not jurisdictional because parties cannot confer jurisdiction by agreement. Additionally, the Tax Code employs limits like those in other statutes the Court has held to be procedural, not jurisdictional. The Court also noted that the fair market value of the property is relevant to an equal and uniform challenge, but if the fair market value deviates from the equal and uniform appraised value, a taxpayer is entitled to the lower of the two amounts.
Justice Boyd filed a dissenting opinion. He would have held that any limitation the Tax Code imposes on the scope of the Appraisal District’s appeal is jurisdictional, and the statute does not limit the trial court’s jurisdiction to the specific protest grounds relied on by the taxpayer.
TEXAS MEDICAID FRAUD PREVENTION ACT: No civil penalty when provider indicates license type but omits identification number on claim form.
Malouf v. State, No. 22-1046, ___ S.W.3d ___ (Tex. June 21, 2024).
The issue in this case is whether Section 36.002(8) of the Texas Medicaid Fraud Prevention Act (TMFPA) imposes civil penalties when a provider indicates their license type but fails to indicate their identification number on a claim form.
Malouf owned All Smiles Dental Center. Two of Malouf’s former employees filed qui tam actions against him, alleging that he and All Smiles committed violations of the TMFPA. The State intervened in both actions, consolidating them and asserting a claim under Section 36.002(8) of the Human Resources Code.
The State filed a motion for partial summary judgment, alleging that All Smiles submitted 1,842 claims under Malouf’s identification number even though a different dentist actually provided the billed-for services. Malouf filed a no-evidence summary judgment motion, arguing that a provider violates Section 36.002(8) only when he fails to indicate both the license type and the identification number of the provider who provided the service. Because the forms all correctly indicated the correct license type, Malouf argued he did not violate the TMFPA.
The trial court denied Malouf’s motion and granted the State’s, entering a final judgment that fined Malouf over $16,500,000 in civil penalties.
The court of appeals affirmed the trial court’s judgment apart from the amount awarded in attorney fees.
The Supreme Court reversed and rendered judgment in Malouf’s favor. In an opinion by Justice Boyd, the Court held that based on the statute’s grammatical structure, context, and purpose, Section 36.002(8) only makes unlawful the failure to indicate both the license type and the identification number of the provider who provided the service. The Court concluded that the State failed to demonstrate that Malouf committed unlawful acts under Section 36.002(8).
Justice Young filed a dissenting opinion. He would have held that Section 36.002(8) makes unlawful the failure to indicate either the type of license or the identification number.
TAX PROTESTS: Limits on scope of appellate review posed by Tax Code Section 1.111(e) agreements are nonjurisdictional.
Oncor Elec. Delivery Co. NTU, LLC v. Wilbarger Cnty. Appraisal Dist., No. 23-0138, and Mills Cent. Appraisal Dist. v. Oncor Elec. Delivery Co., No. 23-0145,___ S.W.3d ___ (Tex. June 21, 2024).
The issue in these consolidated cases is whether questions regarding the validity and scope of a statutory agreement under Section 1.111(e) of the Tax Code implicate the trial court’s subject-matter jurisdiction over a suit for judicial review under Section 42.01 of the Code.
In 2019, Oncor’s predecessor-in-interest, Sharyland, protested the value of its transmission lines in various appraisal districts, including in Wilbarger and Mills counties. Sharyland ultimately settled its protests by executing agreements with the chief appraiser of each district. The agreements with the appraisal districts for Wilbarger and Mills counties each stated a total value for Sharyland’s transmission lines within that district.
After acquiring the transmission lines, Oncor sought to correct the two districts’ appraisal rolls, filing motions to correct under Section 25.25 of the Tax Code with the appraisal review board for each district. Oncor’s motions asserted that the valuations listed on each district’s appraisal rolls were based on a “clerical error” that occurred when Sharyland’s agent sent incorrect mileage data to the districts’ agent.
The Wilbarger appraisal review board denied Oncor’s motions and the Mills appraisal review board dismissed the motions for lack of jurisdiction.
Oncor sought review of those decisions in district court in each county, suing both of the relevant appraisal districts and review boards, asserting the same claims, and seeking substantially identical relief in both cases. The relevant taxing authorities filed pleas to the jurisdiction, which were granted in the Mills case and denied in the Wilbarger case. The Wilbarger appraisal district and Oncor each filed an interlocutory appeal of the decision against them.
The courts of appeals reached conflicting decisions. In the Mills case, the court of appeals reversed in part and remanded for further proceedings, holding that the doctrine of mutual mistake, if applicable, would prevent the settlement agreement from becoming final. In the Wilbarger case, the court of appeals reversed the trial court’s order and rendered judgment granting the Wilbarger taxing authorities’ plea.
Oncor and the Mills taxing authorities petitioned the Supreme Court for review. The Supreme Court granted both petitions and consolidated the cases for oral argument.
The Supreme Court held that a Section 1.111(e) agreement poses nonjurisdictional limits on the scope of appellate review under Chapter 42 of the Tax Code.
Accordingly, the Court affirmed the court of appeals’ judgment in the Mills case, reversed the court of appeals’ judgment in the Wilbarger case, and remanded both causes to their respective trial courts for further proceedings.
APPELLATE PROCEDURE—VEXATIOUS LITIGANTS: Appeals and petitions for review from judgment or order in civil action are part of the same “litigation” under TCPRC Section 11.054(1)(A).
Serafine v. Crump, No. 23-0272, ___ S.W.3d ___ (Tex. June 21, 2024) (per curiam).
Pro se petitioner Serafine challenged the determination that she is a vexatious litigant.
The court of appeals affirmed the trial court’s order deeming Serafine a vexatious litigant by counting each of the following as separate “litigations”: (1) Serafine’s partially unsuccessful appeal to a Texas court of appeals of a final trial court judgment in a civil action; (2) her unsuccessful petition for review of that court of appeals judgment and motion for rehearing in the Texas Supreme Court; (3) her unsuccessful petition for writ of mandamus in the court of appeals; (4) a civil action she filed in federal district court that was dismissed for lack of jurisdiction; (5) her unsuccessful appeal of that dismissal to the Fifth Circuit; and (6) her unsuccessful petition for writ of mandamus in the Fifth Circuit.
Serafine challenged the court of appeals’ method of counting “litigations” under Section 11.054(1)(A) of the Texas Civil Practice and Remedies Code, which requires a showing that the plaintiff has in the past seven years “maintained at least five litigations as a pro se litigant other than in a small claims court that have been … finally determined adversely to the plaintiff.”
The Supreme Court reversed and remanded the case to the trial court for further proceedings. It held that Serafine is not a vexatious litigant because an appeal and a petition for review from a judgment or order in a civil action are part of the same civil action and therefore count as a single “litigation.” Accordingly, Serafine maintained, at most, only four litigations as a pro se litigant that were determined adversely to her.
CONSTITUTIONAL LAW: Constitutional challenge to statute prohibiting certain medical treatments for children with gender dysphoria unsuccessful.
State v. Loe, No. 23-0697, ___ S.W.3d ___ (Tex. June 28, 2024).
The issue in this direct appeal is whether a law prohibiting certain medical treatments for children with gender dysphoria likely violates the Texas Constitution.
Parents of children who have been diagnosed with gender dysphoria, along with doctors who treat such children, sought to enjoin enforcement of a Texas statute that prohibits physicians from providing certain treatments for the purpose of transitioning a child’s biological sex or affirming a perception of the child’s sex that is inconsistent with their biological sex.
The trial court entered a temporary injunction enjoining enforcement of the law, concluding that it likely violates the Texas Constitution in three ways: (1) It infringes on the parents’ right to make medical decisions for their children; (2) it infringes on the physicians’ right of occupational freedom; and (3) it discriminates against transgender children.
The Supreme Court reversed and vacated the injunction. In an opinion by Justice Huddle, the Court concluded that the plaintiffs failed to establish a probable right to relief on their claims that the law violates the Constitution.
The Court first concluded that, although fit parents have a fundamental interest in making decisions regarding the care, custody, and control of their children, that interest is not absolute and it does not include a right to demand medical treatments that are not legally available. The Court observed that the Texas Legislature has express constitutional authority to regulate the practice of medicine, and the novel treatments at issue in this case are not deeply rooted in the state’s history or traditions such that parents have a constitutionally protected right to obtain those treatments for their children. The Court therefore concluded that the law is constitutional if it is rationally related to a legitimate state purpose, and the plaintiffs failed to establish that it is not.
The Court next concluded that physicians do not have a constitutionally protected interest to perform medical procedures that the Legislature has rationally determined to be illegal, and the law does not impose an unreasonable burden on their ability to practice medicine. Finally, the Court held that the statute does not deny or abridge equality under the law because of plaintiffs’ membership in any protected class, so the plaintiffs failed to establish that the law unconstitutionally discriminates against them.
Justices Blacklock, Busby, and Young filed concurring opinions, although they also joined the Court’s opinion. Justice Blacklock observed that the issues in this case are primarily moral and political, not scientific, and he would conclude that the Legislature has authority to prohibit the treatments in this case as outside the realm of what is traditionally considered to be
medical care. Justice Busby wrote to clarify that the scope of traditional parental rights remains broad and is limited only by the nation’s history and tradition, not by the nature of the state power being exercised. Justice Young noted that there is a considerable zone of parental authority or autonomy that is inviolate, but the parents’ claim in this case falls outside it.
Justice Lehrmann filed a dissenting opinion. She would have held that parents have a fundamental right to make medical decisions for their children by seeking and following medical advice, so a law preventing parents from obtaining potentially life-saving treatments for their children should be subjected to strict scrutiny, which this law does not survive.
TEXAS CITIZENS PARTICIPATION ACT: Court reverses TCPA sanctions against taxpayers in case alleging violations of Texas Constitution’s Gift Clauses.
Borgelt v. Austin Firefighters Ass’n, No. 22-1149, ___ S.W.3d ___ (Tex. June 28, 2024).
The issues in this case are:
(1) whether a collective-bargaining agreement between the City of Austin and the Austin Firefighters Association violates the Texas Constitution’s Gift Clauses; and (2) whether the trial court erred by imposing Texas Citizens Participation Act (TCPA) sanctions and attorney fees on the plaintiffs.
In 2017, the City and the Association entered into a collective-bargaining agreement. Article 10 of the agreement, titled “Association Business Leave” (ABL), authorizes 5,600 hours of paid time off for firefighters to engage in “Association business activities,” which was defined to include activities like addressing cadet classes and adjusting grievances. Article 10 permits the Association’s president to use 2,080 of those hours, which is enough for him to work full-time while on ABL.
The Gift Clauses in the Texas Constitution prohibit “gifts” of public resources to private parties.
Taxpayers and the State sued the City, alleging that article 10 violates the Gift Clauses and seeking declaratory and injunctive relief. Specifically, the plaintiffs alleged that ABL time has been used for improper private purposes and that the City does not exercise meaningful control over the ABL scheme, but instead approves nearly all ABL requests without maintaining adequate records of how ABL time is used.
The trial court ruled on summary judgment that the text of Article 10 is not unconstitutional and awarded the Association attorney fees and sanctions under the TCPA.
The case proceeded to a bench trial on the issue of whether Article 10 is being implemented in an unconstitutional manner. The trial court concluded it is not and rendered judgment for the City.
The court of appeals affirmed.
In an opinion by Justice Young, the Supreme Court affirmed in part and reversed in part. The Court affirmed the court of appeals’ holding that Article 10 as written does not constitute an unlawful “gift” of funds. The agreement’s text and context impose limits on the use of ABL time, including that all such uses must support the fire department. Allegations of misuse of ABL would constitute violations of the agreement rather than showing that the agreement itself is unconstitutional. The Court reversed the TCPA award of sanctions and attorney fees, holding that the taxpayers’ contentions were sufficiently weighty and supported by the evidence to avoid dismissal under the TCPA.
Justice Busby filed an opinion dissenting in part and concurring in the judgment in part. He would have held that Article 10 violates the Gift Clauses because the City does not exercise control over the Association to ensure that firefighters used ABL time only for public purposes. For that reason, he agreed that the TCPA awards must be reversed.
CIVIL PROCEDURE: Court reverses dismissal of Texas Religious Freedom Restoration Act claims.
Hensley v. State Comm’n on Jud. Conduct, No. 22-1145,___ S.W.3d ___ (June 28, 2024).
This case raises jurisdictional issues arising from a suit under the Texas Religious Freedom Restoration Act (TRFRA).
Justice of the Peace Dianne Hensley declined to officiate marriages for same-sex couples due to her religious beliefs but referred those couples to another officiant. Although no one complained, the Commission found out and issued a public warning against Hensley for violating the Judicial Canon’s proscription on extra-judicial conduct that casts doubt on a judge’s capacity to act impartially as a judge.
Rather than appeal the warning to a Special Court of Review, Hensley sued the Commission and its members under the TRFRA, alleging that the warning substantially burdens her free exercise of religion.
The trial court granted the defendants’ plea to the jurisdiction, which was based on exhaustion of remedies and sovereign immunity.
The court of appeals affirmed.
In an opinion by Chief Justice Hecht, the Supreme Court reversed most of the court of appeals’ judgment.
The Court first held that Hensley was not required to appeal the warning before bringing her TRFRA claim. Even if the Special Court were to reverse the warning, that disposition would not moot Hensley’s claims because it would not extinguish the burden on her rights while the warning was in effect. Hensley also seeks injunctive relief against future sanctions, and the Special Court is not authorized to grant that relief.
The Court turned to sovereign immunity and concluded that most of Hensley’s suit survives the defendants’ challenges. The TRFRA waives immunity from suit and liability. The defendants argued that the waiver does not apply because Hensley failed to meet a statutory presuit notice requirement. But the Court held that the written notice letter Hensley’s attorney sent the Commission is sufficient under the TRFRA. The Court clarified that the immunity from liability accorded the defendants under Government Code Chapter 33 does not affect a court’s jurisdiction, and it held that Hensley’s allegations are sufficient to state an ultra vires claim against the commissioners.
The Court affirmed the court of appeals’ judgment dismissing one request for a declaratory judgment against the Commission, reversed the remainder of the judgment, and remanded to the court of appeals.
Justices Blacklock and Young filed concurrences. Justice Blacklock opined that the Court should reach the merits of Hensley’s TRFRA claim and rule in her favor. Justice Young expressed his view that the Court should only address legal questions in the first instance when doing so is truly urgent, and that test is not met here.
Justice Lehrmann dissented. She would have held that Hensley’s suit is barred by her failure to appeal the public warning to the Special Court of Review.