by Paul Alan Levy
The spring, an unusual coalition of forces made a serious run at gutting the Texas Citizens’ Participation Act, the Texas version of state anti-SLAPP suits that protects consumers and citizen activists from baseless lawsuits intended to stop them from voicing criticisms of businesses and powerful political figure in their communities. A significant battle remains – enduring that the law continues to protect the ability of consumer critics of business to obtain afforable legal representation to fight SLAPP suits.
The Need for Anti-SLAPP Laws
Well-written anti-SLAPP laws protect individuals who have been targeted by baseless litigation over things they say to government officials or during government proceedings, or more generally their speech on issues of public interest. Such speakers can get the suit thrown out at an early stage, without having to run up the expense of paying a lawyer to bear the burdens of litigation including discovery, by forcing the plaintiff to show both a factual and a legal basis for believing that the suit has a realistic chance of success on the merits. And, if the suit proves to be baseless in that the plaintiff cannot show that it has a genuine claim, not only is the case dismissed, but thet SLAPP’d defendant gets an award of attorney fees.
Because, in this kind of case, the reason for suing is often to suppress future criticism rather than to win in the case in the conventional manner — that is, by securing a judgment or a monetary settlement — anti-SLAPP laws provide a valuable protection against the chilling effect that can suppress fair criticisms. At the same time, knowing that the tactic of bringing baseless suits over speech won't succeed (and can be costly), the laws discourage the filing of baseless lawsuits against speech. Moreover, the provision for awards of attorney fees means that even ordinary citizens who otherwise couldn’t afford to hire a lawyer to protect her legal rights can often get the case taken by a lawyer on a contingent fee basis, hoping to be paid though an attorney fee award. In states with strong anti-SLAPP laws, lawyers can specialize in anti-SLAPP work just as the provisions for fee awards in discrimination suits, consumer suits, and other kinds of suits fostered the emergence of a specialize bar representing the impecunious in such cases.
California was the first state to pass a strong and successful anti-SLAPP law, but the Texas statute has been very successful as well. In recent years, other states have begun to add this weapon to the arsenal of free speech advocates. A few years ago, free speech forces in Nevada were able to fight off the effort, sponsored by a frequently criticized wealthy businessman, to cripple that state’s law. A retrenchment in Texas could have stopped the momentum of this national trend.
The Progress of the Legislative Fight in Texas
The initial bill would have cut back severely on the range of speech on issues of public interest that would be protected, would have hampered the duty of judges to grant early dismissal when the plaintiff could not show it had genuine claims that might succeed on the merits, and would have allowed plaintiffs to avoid paying attorney fees even after putting speakers to the terror and expense of having been sued. The proponents of taking the law down included the usual suspects for such an effort: representatives of business and political interests that you would ordinarily see opposing a law that aims to protect consumer rights against businesses which hate the idea that the Internet enables regular people to get public attention to their criticisms. But they were joined by two Texas groups that claim to want to reform the justice system to prevent baseless tort litigation – the so-called Texans for Lawsuit Reform and Civil Justice League – groups whose advocacy many of my colleagues identify with the sobriquet “tort deform.” Given that the most common SLAPP litigation takes the form of libel claims, as well as other tort claims that amount to libel claims because they seek to protect plaintiffs against harmful criticism, this lobbying campaign to enable baseless tort litigation when brought by the businesses and moneyed interests that finance such groups may show the true colors of the “tort deform” movement.
Arrayed against the proposed changes has been a Protect Free Speech Coalition that includes an extensive listing of Texas broadcast and print media, environmental groups, online hosts for consumer comment such as Yelp and Trip Advisor, and public interest groups including Public Citizen, the Texas ACLU, and Public Citizen. (The list of members is here). A large number of witnesses, including several Texans as well as citizens of other states who have benefited from the TCPA’s protections for free speech (my clients among them), testified at an April 1 hearing before the House Judiciary Committee. At that hearing, it became apparent that a series of strong editorials run in media across the state, criticizing the apparent attack on free speech in the original bill, got the attention of its House sponsor (the chair of that committee) who was stung by the criticism, and committed publicly to eliminate some of the worst provisions.
The result that has been passed by the Texas House was a considerably toned down bill that generally preserves the TCPA’s protections while carving out a series of exceptions intended to mollify the concerns of particularly influential lobbying interests by exempting their cases from the law’s coverage. These exceptions are regrettable, but it appears that consumer interests may have to live with those.
The Importance of the Attorney Fees Provision
There is, however, one significant change in the law that threatens grave harm to the interests of consumers generally, as well as other regular Texans whose protection is imperiled – a danger posed by the movement of a comma within the attorney fees provision: it will make it much harder for consumers to get the legal representation that they need to ward off SLAPP suits ion Texas.
Over the past several years, Texas appellate courts have disagreed about whether, under the current statute, attorney fees were to be awarded to successful TCPA movants whose attorneys were appearing pro bono or working under retainers that provided that they would look solely to a judicial fee award for their representation. That difference matters because, in most circumstances, the only way for consumers to afford legal representation in TCPA cases is to find lawyers who won’t charge them up front for representation. Without that possibility, the TCPA’s protections will remain out of financial reach for many consumers.
Consider, for example, members of the public who commented in a Facebook group about how a so-called “fascia blaster” had hurt them, who created a Facebook group about a "country rap" artist who viciously mistreated workers selling his CD’s, or who posted reviews on Yelp about how the supposed cheap coupon deals of a carpet cleaning company were really just a bait-and-switch. These speakers got no financial benefit from posting, and they stood to gain nothing material from leaving their posts up after being challenged. They were only giving their own expeirences and performing the public service of letting other customers know. When such speaker are sued for their speech, they have already lost if they have to lay out tens of thousands of dollars to defend their right to speak. And if the law is structured so that such speakers know they they will have to pay lawyers up front to defend their speech, the easiest course of action is to take the speech down and issue a groveling apology (the standard demand of the libel plaintiff). Other potential critics will quickly get the message. So the planned change in the TCPA will have serious consequences for free speech in Texas, and indeed anywhere else if the speakers must anticipate being sued in Texas.
The Nitty Gritty Details of Statutory Language, and How the Proposed Bill Makes Which Makes the Law Worse
Here is how the problem presents itself in technical terms. Under Section 29.009 of the TCPA as currently written,
(a) If the court orders dismissal of a legal action under this chapter, the court shall award to the moving party:
(1) court costs, reasonable attorney’s fees, and other expenses incurred in defending against the legal action as justice and equity may require . . ..
The Texas Supreme Court addressed the statutory language in Sullivan v. Abraham, 488 S.W.3d 294, 299 (Tex. 2016), where the key issue was whether the phrase “as justice and equity may require” modifies “attorney fees” or only “other expenses.” The Court decided, in large part because of the Oxford comma after the phrase “attorney fees,” that the clause containing “as justice and equity may require” modified only “other expenses.” Linguistically, that should mean that the entire clause, including the word “incurred,” would modify only other expenses.
However, in Cruz v. Van Sickle, 452 S.W.3d 503 (Tex. App.–Dallas 2014), a case decided two years before Sullivan, the Dallas Court of Appeals had squarely addressed the issue whether fees of attorneys appearing pro bono, with payment contingent on a TCPA award, could be awarded under the statute. The Cruz Court rejected the construction of the statute based on the Oxford comma, ruling that the “incurred” clause modified the entire series (court costs, reasonable attorney fees, and other expenses”), not just “other expenses.” And because the Texas Supreme Court had said, in a different context, that attorney fees are “incurred” only when they are actually paid because the party hiring the lawyer is obligated to pay them, citing Garcia v. Gomez, 319 S.W.3d 638, 642 (Tex. 2010), hat meant that no fees could be awarded for the services of pro bono / contingent lawyers.
The Dallas and Ft. Worth Courts of Appeal then disagreed over whether the Sullivan v. Abraham’s construction of the statute based on its structure and the Oxford comma required acceptance or rejection of the Cruz v. Van Sickle holding. Compare MacFarland v. Le-Vel Brands, 2018 WL 2213913, at *7 (Tex. App.–Dallas May 15, 2018), with McGibney v. Rauhauser, 549 S.W.3d 816, 821 (Tex. App.–Fort Worth 2018). When we litigated the Prestigious Pets case on behalf of Robert and Michelle Duchouquette, a trial judge on the Texas District Court decided that Cruz v. Van Sickle had the better argument, but a trial judge on the County Court at Law decided (implicitly, by awarding fee to lawyers appearing pro bono) that McGibney took the right approach.
The problem with the Committee’s substitute bill is that it eviscerates the basis for the McGibney analysis, in that it leaves the word “incurred” in the subsection but removes the Oxford comma and places it adjacent to the phrase “reasonable attorney fees”:
(a). . . . the court
(1) shall award to the moving party court costs and reasonable attorney's fees incurred in defending against the legal action . . .
Under this language, “incurred” plainly modifies “reasonable attorney fees,” and hence limits the award of fees to those TCPA defendants who can afford to pay their attorneys up front.
In sum, although the original bill has been significantly improved, it is disappointing that the attorney fee provision has been made worse than in the original bill, ensuring that the only TCPA defendants who can get attorney fee awards are the ones who pay their attorneys as the services are provided. This simple change in the language would fix the problem:
(a). . . . the court
(1) shall award to the moving party court costs and reasonable attorney’s fees for defending against the legal action . . .
We can hope that the bill will be fixed in the state senate.
There is another pertinent development on the judicial policy side of the fee shifting issue:
About 2 weeks ago, the Texas Supreme Court addressed the significance of the word “incurred” in statutes that authorize award of attorney’s fees in Rohrmoos Venture v. UTSW DVA Healthcare, LLP, No. 16-0006 (Tex. Apr. 26, 2019).
Rohrmoos is going to be the leading case on the matter of how reasonable and necessary fees are to be proven in the fee-shifting context in Texas state courts. It basically adopts the federal Lodestar approach for use in state courts beyond cases involving statutes that are analogues of federal ones, such as the TCHRA that was at issue in El Apple I, Ltd. v. Olivas, 370 S.W.3d 757 (Tex. 2012).
But the Rohrmoos opinion also parses the distinction between enabling statutes that require attorney’s fees to be “incurred” to be recoverable and those that do not. See the excerpt pasted below.
The key implication here is that the TCPA should not include the “incurred” qualification as to attorney’s fees. Barring success in re-locating the Oxford comma in the legislative process, however, perhaps defendants eligible to use the TCPA and attorneys interested in working such cases can contract around the pro-bono/no-fee problem. By way of Plan B.
Since the attorney who normally does contingency-fee work would not take the case except on the reasonable expectation of success and payment by the opposing side, the attorney could agree to start work under a normal hourly-fee agreement without requiring immediate payment (in the case of a cash starved defendant) and send the client regular billing statements (to help support the fee claim later), and could also agree not to sue the client to collect those fees if the client can’t cover them from fees ordered paid by the opponent under the fee-shifting provision of the TCPA.
The client would be, and would remain, liable to the attorney for the fees incurred by the client at all times, but would avoid facing a lawsuit by her/his own attorney over those fees, should the case not end favorably for the client, or the fee award be insufficient to cover all fees. See See Sullivan v. Abraham, 488 S.W.3d 294, 299 (Tex. 2016) (noting that “reasonable” attorney’s fee is one that is fair and moderate rather than excessive or extreme and that determination thereof rests within trial court’s discretion); Kurtz v. Kurtz, No. 14-08-00351-CV, 2010 WL 1293769, at * 2-3 (Tex. App.-Houston [14th Dist.] Apr. 6, 2010, no pet.) (mem. op.) (noting that limited remand for determination of reasonable attorney’s fees recoverable for specified portion of case is appropriate). As for sanctions, see Tex. Civ. Prac. & Rem. Code § 27.009(a)(2); Kinney v. BCG Att’y Search, Inc., No. 03-12-00579-CV, 2014 WL 1432012, at *11 (Tex. App.-Austin Apr. 11, 2014, pet. denied) (mem. op.) (noting that TCPA “gives the trial court broad discretion to determine what amount is sufficient to deter the party from bringing similar actions in the future”).
The attorney could manage the risk of working (or credit, as it were) without ultimately getting paid by carefully evaluating the case upon intake, as would be done contingent fee cases.
Eventually the client’s obligation to the attorney would become time-barred if not satisfied from an award in the client’s favor, or not completely satisfied, if the award is less than the amount of the billed fees. But if the TCPA motion fails, and the case continues, the client will also need legal help defending the lawsuit on the merits. At that point, an attorney will want to get off the case if he or she is not getting paid by the client, and non-payment of fee bills is generally considered a valid ground for attorney withdrawal under TRCP 10. If the case is a pro bono case to begin with, however, it may be more difficult for an attorney to jump ship midstream based on lack of success in getting the case dismissed under the TCPA.
As for the time-keeping burden, under Rohrmoos, Texas attorneys now have to create timekeeper records (if they want to recover fees from the other side when contract or statute authorizes them), whether the case involves a contingent fee contract or not, and that record-keeping requirement also facilitiates segregation of hours incurred on the TCPA motion vs. other legal work on the same client matter.
Excerpt from Rohrmoos:
Furthermore, some enabling statutes have an explicit reference to attorney’s fees that are “incurred.” See, e.g., TEX. CIV. PRAC. & REM. CODE § 74.351(b)(1) (allowing the recovery of “reasonable attorney’s fees and costs of court incurred by the physician or health care provider” for certain situations under the Texas Medical Liability Act); id. § 27.009(a)(1) (providing for recovery of “court costs, reasonable attorney’s fees, and other expenses incurred in defending against the legal action as justice and equity may require” under the Texas Citizens Participation Act). In those instances, we have held that the word “incurred,” just as the word “reasonable,” acts to limit the amount of fees the court may award, and “[a] fee is incurred when one becomes liable for it.” Garcia v. Gomez, 319 S.W.3d 638, 642 (Tex. 2010) (holding that “[b]oth the adjective `reasonable’ and the verb `incurred’ [in section 74.351(b)(1)] act to limit the amount of attorney’s fees the trial court may award”); see also Jackson, 351 S.W.3d at 299-300 (denying a pro se attorney fees under the Texas Public Information Act, which has an “incurred” requirement, because he “did not incur attorney’s fees as that term is used in its ordinary meaning because he did not at any time become liable for attorney’s fees”).
As we have explained, attorney’s fee awards are compensatory in nature, intended generally to make the prevailing party whole as to reasonable and necessary fees for successfully prosecuting or defending against a claim. See Nalle Plastics, 406 S.W.3d at 173. But when statutes do not contain an explicit requirement that fees be “incurred,” e.g., TEX. CIV. PRAC. & REM. CODE § 38.001, we do not imply such a term; rather, we evaluate whether legally sufficient evidence supports that the amount of attorney’s fees awarded is reasonable and necessary for the legal representation, so that an award of such fees will compensate the prevailing party generally for its losses resulting from the litigation process.[9] See, e.g., Long v. Griffin, 442 S.W.3d 253, 255 (Tex. 2014) (per curiam). And when contracts provide for recovery of attorney’s fees, we similarly do not imply terms but adhere to the parties’ intent as expressed in the language of the contract. See URI, Inc. v. Kleberg Cty., 543 S.W.3d 755, 763 (Tex. 2018) (noting that “our primary objective is to ascertain and give effect to the parties’ intent as expressed in the instrument”). Here, because there is no “incurred” requirement on the face of the contract, we evaluate whether legally sufficient evidence supports that the amount of attorney’s fees awarded is reasonable and necessary for the legal representation, so that a fee-shifting award will compensate the prevailing party generally for its losses resulting from the litigation process.
Historically, claimants have proven reasonableness and necessity of attorney’s fees through an expert’s testimony—often the very attorney seeking the award—who provided a basic opinion as to the requested attorney’s fees. See generally Penn Mut. Life Ins. v. Maner, 109 S.W. 1084, 1084 (Tex. 1908). In recent years, Texas law has developed with references to the Arthur Andersen method (sometimes referred to as the “traditional” method) and the lodestar method for proving the reasonableness and necessity of attorney’s fees. See, e.g., Metroplex Mailing Servs., 410 S.W.3d at 900 (suggesting that “[u]nder the traditional method of awarding fees, [as opposed to the lodestar method,] documentary evidence is not a prerequisite”). The court of appeals in this case referenced both methods, distinguishing them and concluding that “Rohrmoos does not assert, and the record does not show, that the lodestar method was statutorily required or that [UTSW] `chose to prove up attorney’s fees using this method.'” 559 S.W.3d at 167 (citations omitted). The court of appeals then affirmed the attorney’s fee award, holding that “Howard’s testimony concerning his experience, the total amount of fees, and the reasonableness of the fees charged was sufficient to support the award” under Arthur Andersen. Id. at 168.
Wolfgang P. Hirczy de Mino Ph.D.(Pol. Science)(Univ. of Houston, 1992)
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