In recent months we have discussed litigation funding, specifically covering what litigation funding entails, whether such agreements are legal in different jurisdictions and the ethical issues surrounding litigation funding agreements. There’s an opportunity to continue the conversation as we keep a close eye on the Texas Legislative Session, just as we did last month with a recap of bills related to civil litigation. Members of the Texas House and Senate introduced bills relating to the disclosure of litigation funding in state court lawsuits. Continue Reading Could Litigation Funding Disclosure Be Coming to Texas?
The 86th Texas Legislative Session has been in swing for almost two months, so we thought now would be a good time to highlight some proposed legislation relating to civil litigation that may affect your business.
What if my Opponent Files a Claim in Arbitration After the Statute of Limitations Expires? Continue Reading Litigation-Related Legislative Bills that May Affect Your Texas Company
Originally designed to share our practical insights, a little humor and some business common sense, Jamie Ribman and I wrote for our Maverick clients – entrepreneurs who dare big, plan big, think big and often find themselves in big trouble.
When Jamie left to go in-house with a firm client in 2014, Drew York ably stepped in. We re-directed a bit and, of late, have intentionally reacted more to legal issues presented by current events.
As both the world and our lives have changed, so has Tilting… and our clients. Continue Reading Ten Year Anniversary. WOW!
Co-author: Skyler Stuckey
After finishing his weekly rehearsal for an upcoming Robin Hood performance at his local theatre, Wiley Enferee walked into his local Mega-Mart at his wife’s behest to buy a gallon of milk. Not thinking, Wiley walked into the store still carrying his sword on his hip. Wiley quickly found the milk and paid in the self-checkout line, but not before concerned shoppers notified store employees, who quickly called the police. One store employee, Sam Aritan followed Wiley into the parking lot. Wiley left before the police arrived, but Sam jotted down his license plate and told officers which way Wiley went. Officers quickly found Wiley in his car, and noticed he was swerving and looking down. The officers pulled Wiley over and placed him under arrest. Wiley explained that the sword was just a prop and he’d forgotten to take it off. The officers let him go but wrote him a ticket for texting while driving. Wiley is upset that he ended up with a ticket when he was just minding his business. Should Wiley put up a legal fight?
Following his transfer to Houston, Ruel Benda decided to keep his posh gated neighborhood Rodeo Drive house and started advertising it on AirBNB. His profits were so good that he began renting for 7 days or less. Insisting that Benda’s home use was commercial and not residential, a violation of his property owners association’s (POA) recorded Covenants, Conditions and Restrictions, the POA fined him. Benda sued. Did he win? Can Benda continue to rent his house?
It depends. No, if Ruel Benda lived in San Antonio. Under these facts a San Antonio appellate court concluded that the POA deed restrictions prevented such rentals and granted the POA’s injunction denying further rentals.
Yes, if Benda lived in Austin where, under very similar facts, the Austin Court of Appeals found no violation of a restrictive covenant under similar circumstances, determining that the covenant restricting homes to be used “for single family residential purposes” was ambiguous. The Austin court “resolve[d] the ambiguity against the Association and in favor of the [homeowner’s] free and unrestricted use of their property.” The San Antonio Court respectfully disagreed with the Austin Court of Appeals and did not find its reasoning persuasive.
Like Uber, the AirBNB kerfluffle has landed in the news in Chicago, Spokane, (requires a license) and even Arlington County near Washington, D.C. – just in time for Inauguration Day. Even San Antonio is considering municipal regulations that would affect properties not otherwise subject to a property owner’s association.
Tilting the Scales in Your Favor. Avoid being surprised. If you are in a property owner’s association, read your documents. While many POAs have more detailed restrictions against short term rentals (STR) of POA homes, some enforce their rules and others don’t. Likewise, while smaller counties and cities are not actively enforcing requirements to report and pay hotel occupancy taxes upon home rentals, many cities like Austin, San Antonio and Houston are.
Under Texas law, an STR is rental of a property for less than 30 days and the guest is charged $15 or more per day. Texas hotel occupancy tax due to the Texas Comptroller is six percent of the room cost. Counties are authorized to impose a hotel occupancy tax also.
And, by the way, your income from the STR may well be taxable. As my colleague Drew York wrote a couple of months ago, whether the income is taxable depends upon a “Master Exception” to the Internal Revenue Code. Check out our September article Do I Owe Income Taxes When I Rent Out My Home?
Unless you’ve been living under a rock for the past three weeks, you know Donald Trump was elected the next President of the United States. You also probably know that some of Mr. Trump’s companies are defendants in various lawsuits. Individuals have also threatened to file individual lawsuits against Mr. Trump. Can Mr. Trump be forced to sit for a deposition while he’s in office? Can plaintiffs take his cases to trial during his presidency? Or does Mr. Trump enjoy a “Presidential Privilege” during his term that bars litigation against him that is unrelated to his office?
Presidents Are Not Immune From Lawsuits for Acts Outside of Office
Generally, Mr. Trump is not immune from lawsuits that do not relate to his activities in office. The United States Supreme Court ruled in Clinton v. Jones that a sitting president is not immune from litigation for acts that occurred before he became president. This means presidents may be forced to go to trial and engage in discovery, such as a deposition, during the presidency. However, the Supreme Court noted that in “cases of extraordinary public moment,” such as times of war, a plaintiff may be required to delay prosecuting his or her case against the president to allow the president to perform his duties to promote “public welfare or convenience.” So, for example, a plaintiff may be required to delay trial while the president deals with a natural disaster or a terrorist attack.
Will Presidents Always Be Required to Appear for a Deposition?
It’s important to remember that Mr. Clinton was being sued by a woman who claimed he sexually harassed her. Mr. Trump faces similar allegations. But some of his companies also face claims (Mr. Trump settled the Trump University lawsuits shortly after his election). So can Trump be forced to sit for a deposition relating to the claims against those companies while he’s in office? In addition to the Supreme Court’s concerns about the burdens on the office of the presidency, Mr. Trump might not have to appear for a deposition unless his personal involvement is significant to the case. Some courts have adopted an “apex deposition” doctrine that protects high level corporate executives from deposition where the executives do not have personal knowledge of facts or issues that are relevant to the lawsuit. Thus, Mr. Trump may not be subject to deposition if he lacks that knowledge.
Tilting the Scales in Your Favor
Just because the president does not enjoy immunity probably does not mean there will be a rush of lawsuits against him. As the Supreme Court notes in Clinton v. Jones, frivolous and vexatious lawsuits are usually terminated at the pleading stage and require little personal involvement from the president. There have also been a small number of lawsuits filed against sitting presidents for acts that occurred before they took office. It’s thus unlikely that the American public will be subjected to a “trial of the century” involving a sitting president.
Police Chief Steroid McMuscles reported that Colt Glockenhand who entered Wally-Mart with a shotgun was not charged with “engaging in the lawful open carry of a pump-action shotgun” – a violation of the Cut and Shoot town ordinance. However, when Colt entered Kreamy Kreme, loaded his shotgun and pumped it in front of witnesses, Chief McMuscles arrested him for breach of the peace. Wally-Mart did not have a posted sign prohibiting the open carry of guns; Kreamy Kreme did. Was Chief McMuscles on target?
Texas state law now pre-empts existing city ordinances in Dallas, Houston, San Antonio and Austin, despite a last minute effort by larger cities to opt-out of the “open carry” law. And, Yes, Chief McMuscles is right for two reasons: (1) ignoring a properly posted prohibition of either “open carry” or “concealed carry” is a Class A misdemeanor, (2) displaying a firearm or other deadly weapon in a public place in a manner calculated to alarm is a breach of the peace and a Class B misdemeanor.
Introducing the “open carry” bill, Wichita Falls Senator Craig Estes noted that Texas was one of only six states that did not permit its citizens to openly carry handguns under any circumstances. The other states are California, Florida, Illinois, New York, and South Carolina. To ban the open carrying of firearms, business must post a specifically worded sign at its entrance(s).
Tilting the Scales in Your Favor
Gray Reed attorney and Texas State Representative Jeff Leach tells us: “The ‘open carry’ bill was signed in to law by Governor Greg Abbott on June 13, 2015, and becomes effective (with a few minor exceptions) on January 1, 2016, making Texas the 45th state to allow some form of ‘open carry’ of handguns. Business and property owners who wish to prohibit open and concealed carry must closely observe the signage requirements.” Special thanks for his assistance in helping preparing this article, based on this legal update he recently drafted.
- To prohibit the “concealed” carry of handguns by licensed CHL (LTC) holders, the sign should include the following language (pursuant to Texas Penal Code Section 30.06):
- “Pursuant to Section 30.06, Penal Code (trespass by license holder with a concealed handgun), a person licensed under Subchapter H, Chapter 411, Government Code (handgun licensing la), may not enter this property with a concealed handgun.”
- To prohibit the “open” carry of handguns by LTC holders, the sign should include the following language (pursuant to Texas Penal Code Section 30.07):
- “Pursuant to Section 30.07, Penal Code (Trespass by license holder with an openly carried handgun), a person licensed under Subchapter H, Chapter 411, Government Code (handgun licensing law), may not enter this property with a handgun that is carried openly.”
- To prohibit BOTH concealed and open carry of handguns, both signs should be posted.
- HB 910 authorizes individuals (with some exceptions) to obtain a license to openly carry a handgun where licensed carrying of a concealed handgun is permitted.
- Openly carried handgun must be in a shoulder or belt holster, whether loaded or not.
- Licensing of both concealed (CHL) or openly carrying a handgun (LTC) will not change. Both will be called LTC.
- CHL holders may continue to carry handguns both concealed and open carry at no additional fee, nor will they be required to attend additional training.
- New LTC applicants will be required to complete training updated to reflect new requirements addressing restraint holders for secure carry of handguns.
Even with a CHL (LTC), these weapons may not be carried concealed or “open carry” regardless of whether the handgun is holstered pursuant to Texas Penal Code §46.03 & §46.035:
A concealed handgun cannot be carried while the person is intoxicated.
- In the premises of an establishment licensed to dispense alcoholic beverages for consumption on the premises, which derives 51% or more of its income from the sale of alcoholic beverages and has a conspicuous warning prohibiting firearms, if posted.
- On the premises of a public higher education institution or private or independent institution of higher education, including any public or private driveway, street, sidewalk or walkway, parking lot, parking garage or other parking area
- Inside the secured area of any airport, however a person may carry any legal firearm into the terminal that is encased for shipment purposes and checked as baggage to be lawfully transported on an aircraft pursuant to airline and TSA regulations.
- In a place of religious worship if a proper TPC §30.06 warning is given.
- In a hospital or nursing home if a proper TPC §30.06 warning is given.
- In any court or offices used by a court unless pursuant to written regulations or written authorization from the court.
- At any polling place on Election Day.
- At any meeting of any governmental body if proper notice is posted pursuant to Texas Penal Code §30.06.
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Yearning to leave the frozen wasteland of Dallas, Texas behind her if just for a moment, Penny McCrathy, an outspoken anti-vaccination advocate, took her unvaccinated children to Disneyland in Anaheim, California. Not knowing that her children had been exposed to measles by a foreign tourist, Penny brought them back to Texas and sent them back to public school, which they attended under a vaccination exemption based on their “personal beliefs”. One week later, her children came down with measles as well. Most of the children in their school were immunized, but unfortunately one young lady, Ima Munenot, had a severe immunodeficiency disorder and could never receive vaccinations. One week after the McCrathy kids came down with measles, so did Ima – but while the McCrathy children got over the disease, Ima was hospitalized with meningitis and nearly died. In addition to their emotional trauma, Ima’s family incurred tens of thousands of dollars in medical expenses. Might Ima’s family have a legal case against Penny for refusing to vaccinate her children and exposing Ima to a deadly disease?
Perhaps. Texas law recognizes a cause of action for the negligent transmission of infection diseases – for instance, plaintiffs have litigated and won cases involving the negligent transmission of genital herpes. Although there are no cases to date involving the negligent transmission of measles where the negligent act is a failure to vaccinate a child, it is certainly possible that a plaintiff might prevail on such a case if they can prove the essential elements of a negligence cause of action: (1) the existence of a duty from the defendant to the plaintiff, (2) breach of that duty, (3) harm to the plaintiff, and (4) that the breach of the duty caused the harm. The two greatest hurdles to a successful lawsuit in this case are duty and causation.
Is there Causation? Ima’s parents must prove both that Penny’s actions in failing to vaccinate her children was both the cause-in-fact of Ima’s disease and that the injury was foreseeable. According to a recent article in the Journal of Law, Medicine and Ethics, medical science can trace the spread of measles from person to person with a high degree of probability both through laboratory and epidemiological studies. It is thus very likely that Ima’s parents can prove that Penny’s children were the source of Ima’s measles. A jury could certainly find that Penny should have foreseen that Penny’s failure to vaccinate her children might spread the disease to others.
Is There a Duty? The larger hurdle for Ima is proving the existence of a duty. Courts, in determining whether a duty exists, traditionally apply a “risk-utility” test comparing the risk of harm by the actor against the social utility of the actor’s conduct. In this case, Penny’s conduct in not vaccinating her children has zero social utility and the risk is high: measles is one of the leading causes of death among young children and the measles vaccine is safe, readily available and inexpensive. Additionally, Texas statutes require that all children be vaccinated. However, those same statutes also state that a failure to comply with the statute requiring vaccination does not create a cause of action, and further that there is a statutory exemption for persons who sign an affidavit stating that they do not wish to vaccinate their children for “reasons of conscience”. In addition, persons who refuse to vaccinate their children for religious reasons may be protected by the Texas and United States Constitutions. Thus, Penny likely has a strong legal argument that she is not liable for Ima’s illness.
Tilting the Scales in Your Favor. The best protection against measles is vaccination, not litigation. However, infants and persons with suppressed immune systems cannot get vaccinated. Parents of children who cannot be vaccinated should demand that schools protect vulnerable students by banning unvaccinated children from attending school during outbreaks of measles and other diseases. In the worst case scenario, however, the threat of litigation may convince parents who are on the fence to have their children vaccinated.
Halftime was just the Beginning: A backup dancer in Katy Perry’s Super Bowl halftime show goes viral upstaging the singer, Tom Brady and Russell Wilson for MVP. Thanks to social media, “Left Shark” became a “thing” overnight and an enterprising entrepreneur (Frederick Sosa) sells internet 3D printed figurines to cash in on the immediate success of the carefree creature.
The Real Shark? Katy Perry’s lawyers issued a cease and desist letter claiming copyright violations and threatening a lawsuit. No surprise there.
The Victim? Protecting some 10 sales of a $24.99 “Left Shark Desk Figurine” versus litigation threatened by a 1,000+ attorney law firm? No contest – Frederick Sosa of Orlando. Even assuming he did have the resources to fight, it’s not worth the time or the argument. At $24.99 a pop, the economics are obvious. The good news is that Sosa got a lot of airtime for his 3-D online printing business. In the social media world he and Left Shark upstaged everyone on the big stage.
Legal Issues? Plenty to go around on Copyright Law and 3D Printing.
Copyright. Generally speaking: Can a non-generic animal costume be copyrighted? Probably. But, who owns the right to the copyright? If used before, it may be in the public domain. If not, it depends. Who designed the shark costume? What do the contracts say among any number of possible claimants – a third party designer, Perry’s team, the NFL, NBC or someone else? Finally, if it is protectable, was it properly perfected? For the real answer to any specific copyright questions, our very own Gray Reed copyright, trademark and patent experts David Lisch and David Henry can provide the right answers to the hard questions.
Last Bite? After removing the figurine for sale from Shapeways.com, Sosa put his Left Shark figurine design on MakerBot’s Thingiverse site as a free download for anyone with a 3D printer. A modified version is still available as “Blue Drunk Shark.”
3D Printing. The more novel question? Can a 3-D printing-on-demand company be liable for the infringements of its users? The 3D printing industry blog notes that federal law provides a safe harbor for websites and services that provide a platform for users to publish their own works. Manufacturing-on-demand services could be considered analogous to sites such as YouTube and Tumblr; the only real difference is that their products are physical, not virtual. Yet a federal judge ruled last year that CafePress, which makes T-shirts and coffee mugs on demand, didn’t qualify for that safe harbor, allowing a photographer’s infringement claims against the company to proceed. A year ago, Tilting wrote about 3D printing of guns, the fact that the innovative emerging ideas of 3D printing is a disruptive technology and its likely impact on copyright issues. No doubt, more to come.
Tilting the Scales in Your Favor. Evaluate the risk. Be realistic. Identify the opportunity and the near term goal. In this case, better to use sound judgment at the beginning and maximize the social media limelight, then be prepared graciously bow out.
Previous Tilting Articles: There’s a Printer for That!
Lisa Frick, our fictional Denton resident, who collected anti-fracing ordinance signatures to put on the Denton City Ballot now complains that fracing near old Texas Stadium caused earthquakes that harmed her twin sister Linda. Linda wants to sue our November fictional friend Frac Petroleum Company, contending that her Irving home was damaged by the January series of earthquakes caused by Frac’s hydraulic fracing that “felt like a semi hit the side of our house,” causing it to shake so badly it left structure cracks at least a half-inch wide. Can Lisa Frick’s sister Linda sue Frac Petroleum Company?
As the saying goes, anybody can file a lawsuit, but given the current status of Texas case law Linda probably won’t win. Scientific testimony relating earthquakes to hydraulic fracing is not widely accepted. Expert trial testimony requires reasoning or methodology that is scientifically valid and can properly be applied to the facts at issue – it must have attracted widespread acceptance within a relevant scientific community, the Daubert standard.
It’s not the fracing, but rather the disposal of the leftover briny water known as “flowback” that is at the center of the hubbub. Typically, millions of gallons of wastewater are trucked from the fracing site to a second well site and injected thousands of feet underground into porous rock layers. Some seismologists say the flowback injection can cause tiny “micro earthquakes” rarely felt on the surface. While recognizing that the disposal process can trigger slightly larger quakes when water is pumped near an already stressed fault, the U.S. Geological Survey reports that only a handful of the 30,000 injection wells across the country have been suspected of causing earthquakes. While research doesn’t prove all fracing causes earthquakes, it does suggest that fracing occurring near fault lines has the potential to cause them.
Possible Lawsuit Claims
Even assuming unlikely supporting scientific Daubert evidence, a party claiming property damages in Texas could not prove that it was damaged under its most probable claim – trespass. The Texas Supreme Court held that damages for drainage by hydraulic fracturing are precluded by the rule of capture – a rule that gives a mineral rights owner title to the oil and gas produced from a lawful well bottomed on the property, even if the oil and gas flowed to the well from beneath another owner’s tract. No earthquake lawsuits have been successful in Texas, only lawsuits claiming damages from exposure to the compounds in the “flowback” – benzene, toluene, ethylbenzene, xylene, and other compounds – that allegedly contaminated adjacent property.
What’s Going On in Denton, Texas?
Truth and Illusion in the Fracking Debate
Frac(k)ing, Parr v. Aruba, and Minority Oppression
In Wyoming, a Higher Burden for Chemical Disclosure Exemption?
Barnett Shale Drilling Increased North Texas Ozone – Fact or Fiction?
Hydrocarbon Exposure Reconsidered
Previous Tilting Articles: No Fracing Way!- Differences Between Surface & Mineral Estate Ownership and Come and Take It! – Denton Ordinance Prohibits Fracing