How many times have you heard it during this election cycle? We are constantly told that we need conservative judges that "enforce the law, not make the law" or judges that " strictly interpret the law." Two recent Texas Supreme Court cases demonstrate the fallacy in these statements.

On October 20, 2006 (almost two years after the case was argued before the Court), the Texas Supreme Court handed down an opinion in Alex Sheshunoff Management Services, Inc. v. Johnson. The issue in this case was whether a covenant not to compete signed five years after the employee started working for the company was enforceable. In holding for the employer, the Court had to ignore a prior Supreme Court opinion and the plain language of the statute. Instead of being conservative, the Court was overtly activist in its decision.

Texas has a covenant not to compete statute adopted by the legislature that provides:

A covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made....

The difficulty in interpreting the statute is that Texas is an at-will state. An employer can make a promise that appears to be enforceable but which the employer can avoid fulfilling by firing the employee. For example, an ancillary agreement could be made where the employee agrees not to disclose information in exchange for a promise that the employer will give the employee a raise after two years of work. Because Texas is an at-will state, the employer could avoid its obligations to give the raise by firing the employee before two years of work. Common wisdom was that these obligations that can be avoided by terminating an employee, termed "illusory promises," will not satisfy the statutory requirements because they are not enforceable "at the time the agreement is made" as required by the statute.

Johnson, the employee, began working for the company in 1993, and received a promotion in 1997. Five months after the promotion, Sheshunoff, the employer, asked the employee to sign a covenant not to compete. The agreement provided that Sheshunoff would provide Johnson with confidential information and special training. In exchange, Johnson agreed not to compete with Sheshunoff for a year after Johnson’s employment with Sheshunoff was terminated.

In the case, Johnson argued that the promise to provide the training and confidential information was illusory because Sheshunoff could have fired him before it ever had to provide the training or confidential information. Johnson continued that, while the agreement may become enforceable later when Sheshunoff actually provided the information, it was not enforceable "at the time the contract was made" as required by the statute and thus could not support the covenant not to compete.

The Republican dominated court searched long and hard to find a way to help the employer win, and eventually turned to the alleged legislative history of the statute. Ignoring the plain language of the statute, the court noted that the statute was amended several times in response to Supreme Court opinions to ensure that it could be enforceable in an at-will agreement. This argument, of course, still begs the question of why should the "at the time the agreement is made" language should be ignored.

In fact, the only place in the majority opinion that the Court really addressed the "at the time the agreement was made" language is an argument that enforcing that language as written would mean that most covenants executed in at-will relationships would be unenforceable.  But so what?  It is the legislature's, and not the court's, role to write the statute. Instead of "strictly interpreting" the statute and enforcing the language that the legislature chose to put in the statute, the supposedly "conservative court" is arguing policy and making law.

In addition to ignoring the statute, the Court ignored prior Supreme Court predent that dictated how the case should have been decided. The exact fact pattern in the current case was addressed in a 1994 Supreme Court opinion. In that opinion, the Court stated, "But such unilateral contract, since it could be accepted only by future performance, could not support a covenant not to compete inasmuch as it was not an "otherwise enforceable agreement at the time the agreement is made" as required by" the statute." The current Court merely dismisses this well-established law because it did not agree with the result it would require.

In addition, the Court ignored the 1994 case when looking at the "legislative history" of the act. As the Court noted, in the 1980s and 1990s, the legislature frequently amended the act in response to various Supreme Court opinions. However, in the 12 years since the previous decision was handed down, the legislature has never gone back to amend the act to say that the Supreme Court got it wrong in 1994. Under rules of statutory construction, this argument supports the claim that the 1994 interpretation was right. It was, of course, ignored.

In an equally egregious opinion, the Court issued FFP Operating Partners, LP v. Duenez on November 3, 2006, a mere three and one-half years after the original oral argument. Duenez involves application of Texas’s comparative responsibility statute to dram shop causes of action.

Over the years, the Texas legislature has enacted and made numerous amendments to the Dram Shop Act. The Act allows persons injured by intoxicated individuals to sue entities that provide alcoholic beverages to obviously intoxicated persons. To recover for a claim under the Act, a plaintiff must prove that, when the alcohol was provided, the recipient was "obviously intoxicated to the extent that he presented a clear danger to himself and others," and that the recipient’s intoxication was a cause of damages to the injured person. If a plaintiff meets this burden, the Act provides a safe-harbor provision that shields the provider from liability for its employees’ actions if the provider required the employee to attend a training course approved by the Texas Alcoholic Beverage Commission, the employee actually attended the class, and the provider did not encourage the employee to violate the Alcoholic Beverage Code. If the plaintiff meets its burden, and the provider is unable to establish the defense, then the provider is liable "for the actions of its customers."

Texas also has a general comparative responsibility statute that governs most cases. Under the statute, a jury is asked to assign a percentage of fault to all parties. The award of damages is then based on the percentage of fault. The total damages are reduced by any percentage responsibility assigned to the plaintiff. For example, if the plaintiff is 30% responsible, then the plaintiff is only awarded 70% of the damages found by the jury. And, generally, when there are multiple defendants, defendants are only responsible for their percentage of the damages they cause. If two defendants are each found 50% responsible then they are each only responsible for 50% of the plaintiff’s damages. The question in Duenez was whether this general statute applied to Dram Shop Act claims, and if so, how.

Complicating the case was a 1994 Supreme Court decision involving a Dram Shop claim against a bar by the intoxicated person. In that case, the Court held that the general statute applied and that the intoxicated person’s damages were reduced by any negligence assigned to them by the jury. In Duenez, it was not the intoxicated person making the claim, but an innocent third party hit by the intoxicated person.

The Duenez family argued that the general statute should not apply because the Dram Shop statute specifically provides that the provider is liable for the actions of its customer. Under widely accepted rules of statutory construction, if two statutes conflict, then the specific statute (here, the Dram Shop Act) governs over a general statute.

The family further argued that the provider's causation of the wreck was irrelevant.  Under the comparative responsibility act, the jury is asked to decide the perecentages of causation that each party contributed to the act.  But the Dram Shop Act isn't written in terms of causation.  The Act only requires that a plaintiff prove that the provider gave alcohol to someone obviously intoxicated and that the person's intoxication was a cause of damage to the injured person.  The statute does not require the next leap --- that the providing of alcohol was the cause of the injury.  In fact, the family argues, such language was included in drafts of the act but specifically removed by the legislature.  Because it is irrelevant whether providing alcohol caused the injury, then the jury should not be asked to apportion responsibility based on causation. 

Finally, the family argued that the primary purpose of the act is to deter providers of alcoholic beverages from giving alcohol to obviously intoxicated individuals and applying the general statute to Dram Shop claims runs counter to that goal. Reducing the award by the percent of negligence of the intoxicated person would effectively gut the statute — juries are likely to assign most, if not all, of the responsibility for third parties’ injuries to the intoxicated patron. In fact, applying the statute to reduce the award against the provider, the bar may avoid liability precisely because its patron was so drunk and such a clear danger that the sale could not have caused the accident on a Texas road. The family further argued that the 1994 case did not apply here because it was a first party case, where it made little sense to reward the drunk plaintiff for their own intoxication.

The bar argued that (1) the general statute listed exceptions to which it did not apply, but Dram Shop cases were not included in those exceptions, thus the general statute must apply; and (2) under the 1994 case, they were obligated to apply the general statute to the claim.

Not surprisingly, the Supreme Court majority opinion reversed the plaintiff's judgment against the defendant. While the reasoning was wrong, even more offensive was the process used to get there. The case was originally argued before the Supreme Court on March 5, 2003. After argument, the Supreme Court delivered an opinion in favor of the plaintiff on September 3, 2004.

After the opinion favoring the plaintiff was issued, three members of the Court stepped down. The dissenters, armed with new allies in the replacement justices, opted to revisit the decision by granting a motion for rehearing. In the words of one of the dissenting justices:

Between the time the Court issued its original decision in this case and the date the rehearing was granted, more than seven months passed and three members of the former majority left the Court.

The motion for rehearing raises no new issues; every point was thoroughly considered by the Court in its prior decision. While the motion for rehearing was pending, the Legislature convened without taking any action to alter this Court’s original interpretation. Nevertheless, the Court today withdraws the prior opinion, reaches the opposite result, and accomplishes judicially what the Legislature itself declined to do.

Sadly, these cases are not the exception, but the rule with the Texas Supreme Court, where it appears that most decisions are not based on the statute or law before the court, but on making sure that the outcome is the one the court desires.