Friday, January 29, 2016

Top 10 from Texas Bar Today: Arbitration, Competition, and Fashion

Originally published by Joanna Herzik.

To highlight some of the posts that stand out from the crowd, the editors of Texas Bar Today have created a list from the week’s blog posts of the top ten based on subject matter, writing style, headline, and imagery. We hope you enjoy this installment.

10. An Employer Can Violate Its Own RulesThomas J. Crane @tomjcrane of Law Office of Thomas J. Crane of San Antonio

9. 108 Year-Old Lease SurvivesCharles Sartain of Gray Reed & McGraw @GrayReedLaw in Dallas

8. Murder Case Hinges on the Privacy of Cell Tower Records Brandon Barnett of Barnett Howard & Williams PLLC @BHWLAWFIRM in Fort Worth

7. SitzkriegDavid Coale @600camp of Lynn Tillotson Pinker & Cox LLP in Dallas

6. Top 8 Pitfalls of ArbitrationCleve Clinton of Gray Reed & McGraw @GrayReedLaw in Dallas

5. Al FicoMichelle Cheng @foodiethenew40 of Whitehurst Harkness Brees Cheng Alsaffar & Higginbotham PLLC in Austin

4. Fashion Law Series – Part I: These Shoes’ Trademarks are Made for EnforcingTiffany Johnson of Klemchuk LLP @K_LLP in Dallas

3. Fair v. Unfair Competition, or the Real Life Case of Globo Gym v. Average JoesLeiza Dolghih @leizad33 of Godwin Lewis PC in Dallas

2. If a patent plaintiff gets a verdict for no money, is it a win or not?Michael C. Smith of Siebman, Burg, Phillips & Smith, LLP in Marshall

1. The “Anders Brief” — It’s Not Just For Criminal Appeals AnymoreKen Carroll of Carrington Coleman Sloman & Blumenthal LLP in Dallas

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Out-of-state judgments: An overview (from a Texas perspective)

Originally published by Beverly Via.

This article was written by Hance | Wickham associate attorney Beverly Via.   When parents of a child get divorced in Texas and continue to live in Texas, the rules governing parenting time and child support are fairly clear-cut. The divorce decree lays out the parenting schedule, and the Child Support Divisions of the Office […]

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Houston Legal Links

Originally published by Mary Flood.

Top legal news includes: One of Houston’s most notorious killers Henley has Facebook page; Who’s Tracking the BP Oil Spill Money That’s Supposed to Restore Oyster Reefs?; Jared Woodfill Starts Small in Bid to ‘Take Back’ Control of Texas GOP; Analysis: The Death of Taxes on Illegal Drugs; Local Chef Wrongly Held in Immigrant Detention Center for Two Months; Before ‘affluenza’ case, teen’s family tangled with the law; Traffic stop leads to home with $50K in stolen property; Owners of Heights Tortilla Factory Indicted By Feds for illegally hiring workers; Annise Parker Explains Why She Didn’t Go Full-Throttle On Potholes; Dozens of students hospitalized after carbon-monoxide leak at Beaumont middle school; Prairie View police chief suddenly resigns; CSB chief: West explosion shouldn’t have happened; UT creates ‘Rooney Rule’ to boost leadership diversity & Oil industry throws support behind energy reform bill.

For the water cooler: Arizona governor wants the state out of the 9th Circuit; Revised outlook for growth in lawyer jobs is glum; Job-offer rate for summer associates is at a 10-year high; Megyn Kelly of Fox News handled law firm ‘macho culture’ as a former lawyer; This Hitler-loving, gay-hating Oregon judge is so unethical that he might be a criminal, state panel finds; This Law School Will Pay You To Take The GRE To Save Its U.S. News Rank From The Dreaded LSAT; Disbarment recommended for lawyer who called disciplinary counsel a ‘pimp’ and ‘Oreo’; How Prop 8 Lawyer David Boies Saved Natalie Portman’s Troubled ‘Jane Got a Gun’; Poor, Black Lawyers Lack Work Ethic, Says Legal Recruiter; Is Homophobia Going To Cost This Law School Its Accreditation?; Did school’s restroom policy violate Title IX? 4th Circuit considers transgender teen’s case; The First Step To Being A Great Justice Is Being Humble; Judge threatens to jail lawyer who keeps arguing his client is victim of anti-Muslim hysteria; Scammer using attorney’s name is math-impaired; newbie lawyers also targeted; Retired lawyer handled pro bono case, called opposing counsel ‘lawyer babe,’ ethics complaint says & These top-ranked law schools have cut 1L class sizes by more than 25%.

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Blogging and Social Media: Proof it works

Originally published by Cordell Parvin.

I hear it all the time.

No one has ever hired be from reading a blog post.

I wrote a column for Roads and Bridges Magazine for 25 years. I’m not sure anyone ever said:

Read your column on… and I want to hire you.

Yesterday, Shawn Tuma and I gave a presentation on Blogging and Social Media to the Collin County Bar Association.

Screen Shot 2016-01-28 at 2.11.15 PM

I started coaching Shawn over five years ago, after he met me first on Twitter. I invite you to fast forward in Prezi to his part of the presentation.

Why? Because Shawn actually has had new clients find him because of his blogging and social media. Shawn has actually written for some top publications after the editors found his blog through social media.

While, I don’t think blogging is for everyone or every type of law practice, Shawn is living proof that at least for the Computer Fraud Act and Data Privacy, blogging and social media can be amazing tools.

You may know Shawn did a three part series on how to blog and use social media in an hour. Here is the Link to Part 1, Part 2 and Part 3.

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eDiscovery Advice to IT – be on high alert to protect electronic evidence under “Legal Hold”!

Originally published by Peter S. Vogel.

The concept of “Legal Hold” is not new in the least and long before anyone ever thought about electronic evidence (Electronically Stored Information- ESI) once a party became aware of potential litigation it had a duty to protect all relevant evidence, like paper documents.  So it comes as no surprise that an in recent IT white paper that sanctions for destruction of ESI (e.g. spoliation) has increased by “271 percent since 2005!”  Networkworld included Code42’s white paper “Protecting data in the age of employee churn” is on a broader scope for IT professionals because so many IT professionals leave their jobs at a relatively high rate.

Here are the points raised by Code42’s report that technology “that automates and tracks legal holds”:

  • Demonstrates the organization has an established process and enables identification, storage and maintenance of relevant data without increasing IT headcount.
  • Reduces risk and increases defensibility.
  • Guarantees that holds are issued in a timely fashion and contain all necessary information.
  • Enables data set selection.

Whether we like it or not every lawsuit now has ESI and IT is responsible for helping protecting ESI.

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When are shapes sufficiently distinctive to function as trade marks?

Originally published by Clare Jackman (UK).

Two High Court decisions in the UK last week highlight that it is not always easy to register and enforce shape trade marks even when the shapes themselves are iconic and recognisable by the public. The consumer’s perception of the trade marks was pivotal in both cases, with mere association being insufficient and reliance being too high a bar to clear.

London Taxi

The London Taxi Corporation Ltd (t/a The London Taxi Company) v Frazer-Nash Research Ltd and another [2016] EWHC 52 (Ch), 20 January 2016

In the first High Court Decision, Mr. Justice Arnold, concluded that the shape of the traditional London taxi was not sufficiently distinctive, or as iconic as the London Taxi Corporation claimed, to be a trade mark. The judge said that the trade mark would merely be seen as a variation of the typical shape of a taxi and that consumers (in this case, taxi drivers) would not regard the shape as indicating the origin of the taxis. They were far more likely to rely on badges on the front and rear of the vehicles themselves. As a consequence, a UK registration was declared invalid and a corresponding community trade mark was revoked on grounds of non-use. Even if the marks had been valid, the judged found they had not been infringed by the defendants and rejected the passing off claim.

Kit Kat

Nestlé v Cadbury [2016] EWHC 50 (Ch)

Nestlé was unsuccessful in registering the shape of its 4 finger Kit Kat (without Kit Kat embossed on each finger) as a trade mark on the basis that consumers recognise the 4 fingered bar and associate it with Nestlé. Mr. Justice Arnold decided that it was not enough that consumers recognise or make that association. According to the judge, Nestle had not shown that consumers rely on the shape of the four fingered bar, rather than its wrapper or the Kit Kat trade mark, in order to make the connection with Nestlé and so their appeal, against the Intellectual Property Office’s original decision denying registration, was dismissed.

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RG3 and the Employee Departure

Originally published by Rob Radcliff.


A few weeks ago Washington Quarterback Robert Griffin III left the Washington lockeroom for what all believe was the last time.  RG3, a Heisman winner at Baylor, will likely be cut.  It was only a couple of seasons ago that Washington fans believed he was their football saivor as he led them to a division win and playoffs.  Injuries, bad press, and the rise of quarterback Kirk Cousins put an end to that dream.  At the beginning of the season RG3 was benched in favor of Cousins and never set foot on the field this season.

So on his way out in what was obviously an orchestrated move, RG3 left the print out above on his locker for all to see and report on.  He did not talk to the press.

Which brings up employee departures, more specifically terminations.  Over the last couple of weeks I’ve assisted a few clients with depatures.  Yes, there is the legality behind the decision to let someone go, but there is also the mechanics behind how to do it.  My thoughts:

  1. Dignity – Employers have to be mindful that this is a traumatic event for someone.  It’s not fun and no one likes the process unless they are a psychopath.  Be mindful of the employees’ feelings.
  2. Timing – There is no one size fits all solution for this but letting folks go later in the day usually works better.  It usually doesn’t make sense to keep them working.
  3. Make sure the employee’s access to email and the office end immediately.  Forward their email to someone in the company if necesssary.  Also, make sure remote access is cut-off.
  4. Conduct an exit interview if that is part of the employer’s process.
  5. Collect all keys, access cards, phones, etc.
  6. Remind the employee of any post-employment covenants or obligations they have.
  7. If the departuer is going to be contentious, have security there.  No joke, this can be an issue.

These are just a few thoughts.  I am sure there are others.

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Thursday, January 28, 2016

‘All About Kids’ Daycare Owner Charged and Arrested after Death of 5-Month-Old Brody Havins

Originally published by Jeff Rasansky.

GEORGETOWN, TX (01/13/2016) — The owner of All About Kids daycare, Holly Harrison, faces two charges after 5-month-old Brody Havins died in her care two weeks prior.

Holly Harrison

Texas Child Care Licensing and the Williamson County Sheriff’s Office are currently investigating the All About Kids home-based day care near Georgetown, Texas after a 5-month-old child died while in their care.

Officials reported that emergency medical services responded to a call at All About Kids daycare at around 10:30 a.m. on January 13 to find that Brody Havins had choked on a mitten while under Holly Harrison’s care.

Harrison has been charged with injury to a child and tampering with physical evidence.

Authorities stated that Harrison was booked into the Williamson County Jail on Tuesday and was released on bond Wednesday.

The post ‘All About Kids’ Daycare Owner Charged and Arrested after Death of 5-Month-Old Brody Havins appeared first on Rasansky Law Firm.

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The “Anders Brief” — It’s Not Just For Criminal Appeals Anymore

Originally published by Carrington Coleman.

Earlier this week the Dallas Court of Appeals followed the procedures established in Anders v. California, 386 U.S. 738 (1967), to affirm an order terminating parental rights in the face of the mother’s baseless appeal. The decision is the latest reminder that Anders is not confined to the criminal context in which it was born.

In Anders, the United States Supreme Court fashioned a protocol to balance the right of a criminal defendant to appeal a conviction against the ethical obligations of appointed counsel and the attendant considerations of judicial economy and efficiency with respect to a frivolous appeal. Pursuant to Anders, if a criminal defendant insists on pursuing an appeal, but appointed counsel believes that appeal to be without merit, counsel must thoroughly review the record and the law, file a brief detailing that review and explaining why an appeal would be frivolous, and move to withdraw as counsel. Counsel must provide a copy of the brief and motion to the client. Faced with an “Anders brief,” the appellate court undertakes its own review of the record and law to determine whether the appeal is wholly frivolous. It must also afford the client the opportunity to respond, pro se or otherwise. If, after all that, the court finds the appeal is not wholly frivolous, the appeal will proceed and the appeals court will deny the motion to withdraw or appoint substitute counsel. But if the court agrees the appeal has no merit, as is usually the case, it will grant counsel’s motion to withdraw and affirm the decision of the court below.

Anders is firmly embedded in Texas criminal jurisprudence.” In re D.A.S., 973 S.W.2d 296 (Tex. 1998). But in D.A.S., the state’s Supreme Court extended Anders to juvenile commitments, which, though “quasi-criminal in nature,” are “classified as civil proceedings.” Id. Courts of appeals across the state have applied Anders to involuntary mental health commitments, e.g., State ex rel. L.E.H., Jr., 228 S.W.3d 219 (Tex. App.—San Antonio 2007, no pet.), and to terminations of parental rights, e.g., In re D.D., 279 S.W.3d 849 (Tex. App.—Dallas 2009, pet. denied). The Dallas Court’s decision this week in In re N.A. reminds us that the Anders procedures will apply to most, if not all, situations in Texas where an appointed counsel’s client insists on pressing what counsel deems to be a meritless appeal.

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A Quantum of Meruit

Originally published by David Coale.

A high-profile fee dispute led to holdings that (1) an attorney can recover in quantum meruit in connection with an oral contingent fee agreement, notwithstanding the other legal problems with such agreements; (2) legally sufficient evidence of the attorney’s “valuable compensable global settlement services” supported the verdict on his quantum meruit theory; (3) claimed error on the narrow scope of a fiduciary duty instruction was not preserved without a specific objection to the scope issue; and (4) the trial court did not abuse its discretion in refusing a spoliation instruction, when evidence showed that the destruction of the relevant emails resulted from a routine upgrade process.  Shamoun & Norman, LLP v. Hill, No. 05-13-01634-CV (Jan. 26, 2016).  The Court rendered judgment on quantum meruit.

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New Trial Set Aside by Mandamus

Originally published by Carrington Coleman.

The Fort Worth Court of Appeals granted mandamus to set aside a new-trial order, applying the new standards laid down by the Texas Supreme Court in Toyota Motor Sales and United Scaffolding. After a fender bender with an underinsured driver, Scott Newell asked his insurer, State Farm, to pay under its underinsured motorist coverage for neck surgery, significant pain, and other injuries he attributed to the accident. State Farm paid part of his claim, and he received some compensation from the other driver’s insurer. Unsatisfied, Newell sued State Farm for additional damages.

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Houston Legal Links 1/28/2016

Originally published by Mary Flood.

Top legal news includes: DA Anderson’s video response to defense lawyers for indicted anti-abortion activists; Legal Experts Weigh in on Planned Parenthood Case; Defense lawyers and DA spar over anti-abortion activist’s prosecution (Chron subsc); Associate Bonus Watch: Above-Market Bonuses For Big Billers In Texas; Top Texas for Lawsuit Reform Lobbyist Hull Switches Sides, Joins Tort Reform Foe (Texas Lawyer); Ex-HISD officer accused of indecency with middle schooler; Wharton County man executed for killing Texas game warden; This is What HPD Doesn’t Want You to Know About Its Use of Force Policy; Teen driver accused of running over 2 students on purpose; First of 4 cars submerged in local bayous pulled; Thousands call on lawmakers to ‘halt’ UT expansion plans; Gardere Wynne Sewell Hires 4 Lawyers, Opens Denver Office (Texas Lawyer); Securities Fraud Convictions Overturned Due to Evidence Errors (Texas Lawyer); Report: Basically Nothing Has Changed Since West Fertilizer Blew Up; Dozens of dangerous Texas plants operate near public centers; Texas driver fatally shot in apparent road rage incident; Texas pumps more oil in November, and the Eagle Ford Shale counties stay at the top of the list & Shell investors OK acquisition of BG Group.

For the water cooler: Maid service owner accused of overcharging customers in retaliation for bad reviews; Psychic who bilked man out of $550K is sentenced to probation; New York Jets will pay cheerleaders $324K to settle wage lawsuit; Outsourcing company will open office in law school library; Jury Laughs at Hot-Yoga Guy; The Best Law Schools Are Attracting Fewer Students; Judge Gets Slap On The Wrist For Disrespecting Women; DC lawyer ethics board investigating Bush-era DOJ lawyer who leaked info about warrantless wiretaps; Law license suspended for former St. Louis prosecutor who covered up assault of handcuffed suspect; Apple vs. Google: Who Comes Out Ahead In Patent Prosecution?; Suit seeks replacement of lead water pipes in Flint; is sovereign immunity a bar?; Prosecutor’s ‘Hannibal Lecter’ comparison was unauthorized and inappropriate, DA says; Obama as a Supreme Court justice? It’s a great idea, Clinton says & Educating jurors on eyewitness reliability may backfire, study suggests.

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Employers Generally Do Not Owe Fiduciary Duties To Employees

Originally published by David Fowler Johnson.

In Espinosa v. Aaron’s Rents, Inc., a former employee sued his former employer for defamation and other torts related to the defendant reporting the plaintiff to the police for alleged theft. No. 01-14-00843-CV, 2016 Tex. App. LEXIS 423 (Tex. App.—Houston [1st Dist.] January 14, 2016, no pet. history). One of the claims that the plaintiff asserted was that the defendant breached a fiduciary duty owed to the plaintiff, who used to be a manager for the defendant. The trial court granted the defendant a summary judgment on all of the plaintiff’s claims. The court of appeals affirmed. Regarding the breach of fiduciary duty claim, the court held that the defendant did not owe the plaintiff a fiduciary duty as a matter of law. The court cited to a prior opinion: Beverick v. Koch Power, Inc., 186 SW.3d 145,153 (Tex. App.—Houston [1st Dist.] 1997, pet. denied). The Beverick court held that “Texas does not recognize a fiduciary duty or a duty of good faith and fair dealing owed by an employer to an employee.” Id. (citing City of Midland v. O’Bryant, 18 S.W.3d 209, 216 (Tex. 2000) (holding that there is no duty of good faith and fair dealing in the employment context)).

Interesting Note: Even though courts have held that employers do not owe fiduciary duties to employees, courts have also held that employees may owe limited fiduciary duties to employers. The term “fiduciary” generally applies “to any person who occupies a position of peculiar confidence towards another,” refers to “integrity and fidelity,” and contemplates “fair dealing and good faith.” Kinzbach Tool Co. v. Corbett-Wallace Corp., 138 Tex. 565, 571, 160 S.W.2d 509, 512 (1942). In addressing the scope of a fiduciary duty in the context of an agency relationship, the Texas Supreme Court has observed:

The agreement to act on behalf of the principal causes the agent to be a fiduciary, that is, a person having a duty, created by his undertaking, to act primarily for the benefit of another in matters connected with his undertaking. Among the agent’s fiduciary duties to the principal is the duty to account for profits arising out of the employment, the duty not to act as, or on account of, an adverse party without the principal’s consent, the duty not to compete with the principal on his own account or for another in matters relating to the subject matter of the agency, and the duty to deal fairly with the principal in all transactions between them.

Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 200 (Tex. 2002) (quoting Restatement (Second) Of Agency § 13, cmt. a (1958)). “[W]hen a fiduciary relationship of agency exists between employee and employer, the employee has a duty to act primarily for the benefit of the employer in matters connected with his agency.” Abetter Trucking Co. v. Arizpe, 113 S.W.3d 503, 510 (Tex. App.—Houston [1st Dist.] 2003, no pet.). The Texas Supreme Court has recognized that fiduciary employees owe duties of loyalty to their employers and, if a fiduciary employee “takes any gift, gratuity, or benefit in violation of his duty, or acquires any interest adverse to his principal without a full disclosure, it is a betrayal of his trust and a breach of confidence, and he must account to his principal for all he has received.” Kinzbach Tool Co., 138 Tex. 565, 160 S.W.2d at 514. But an employer’s right to demand and receive loyalty from a fiduciary employee must be tempered by society’s interest in encouraging competition. See Johnson, 73 S.W.3d at 201. Thus, in general, an at-will employee may plan to compete with his employer and take certain steps toward that goal without disclosing his plans to the employer, but he may not “appropriate his employer’s trade secrets,” “solicit his employer’s customers while still working for his employer,” “carry away certain information, such as lists of customers,” or “act for his future interests at the expense of his employer by using the employer’s funds or employees for personal gain or by a course of conduct designed to hurt the employer.” Id. at 202; see also Abetter, 113 S.W.3d at 510.

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Fashion Law Series – Part I: These Shoes’ Trademarks are Made for Enforcing

Originally published by Tiffany Johnson.

Christian Louboutin. Charles Philip Pozzi. Chanel. Each of these fashion retail powerhouses has taken advantage of intellectual property law, particularly trademarks, in an attempt to […]

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If a patent plaintiff gets a verdict for no money, is it a win or not?

Originally published by Michael C. Smith.

031911-ignore-unemployment-trends-during-a-job-search-300x2281As readers know, I have been keeping a close watch on local trends in patent cases since the patent docket emerged in the early 1990’s, from the plaintiffs’ anni horribili of 2007 and 2013 – to which we can now add the long stretch from last fall, to the well-documented defendants’ losing streak that ended in the fall of 2006, and all the dull intervening years where the verdicts just seesaw back and forth.

Week before last was easy – we won a noninfringement verdict for defendant Steelseries in Judge Payne’s court (have I mentioned that before? – can’t remember if I have, but yes, we did), and plaintiff Genband won the next day in Judge Gilstrap’s court. But this week is a little harder to classify.

In Nichia Corporation v. Everlight Electronics Co., Ltd. et al, 2:13cv0702 (1/25/16) Judge Gilstrap conducted a bench trial on the plaintiff’s claims of infringement.  He found the claims infringed and not invalid, but the plaintiff had withdrawn its claim for money damages based on a reasonable royalty or other theory, and was only seeking injunctive relief.  In a 134 page set of findings of fact (picture a JMOL ruling after years of performance-enhancing drugs and you’ll get the idea of what FF look like) Judge Gilstrap denied the injunctive relief, finding that there was no showing of irreparable harm.

In the end, I think I’ll just use the case’s status as a bench trial instead of a jury verdict to ignore it, rather than try to figure out whether to classify it as a plaintiff or defense win.

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The Dark Side Lives: Darth Vader Infant Bodysuits Recalled Over Choking Hazard

Originally published by Nick Farr.


The dark side of the Force did not die along with Darth Vader at the hands of Emperor Palpatine in Return of the Jedi. Before you start accusing us of giving away The Force Awakens spoilers (as if there is anyone who hasn’t already seen the film), hear us out. We here at Abnormal Use have substantial proof that the dark side is alive and well and not tucked away in a galaxy far, far away. Last week, the Consumer Product Safety Commission (“CPSC”) announced that Walt Disney Parks and Resorts has recalled Darth Vader infant bodysuits because they are harmful to innocent children in the most predictable, dark side fashion. The bodysuits, which contain the slogan, “If you only knew the power of THE DARK SIDE” pose a choking hazard to children. And, the Force choke lives on.

Darth Vader Infant Bodysuit

In an attempt to hide the presence of the dark side, the CPSC claims that the hazard posed by the Vader bodysuit is not the Force choke but detaching snaps which somehow find their way into infants’ mouths.  But who does the CPSC and Walt Disney Parks think they are fooling? We recognize the power of a Sith Lord when we see it.

The recall apparently also includes Disneyland 60th Anniversary infant bodysuits but clearly those suits were also touched by Vader’s power in the factory. For those that actually believe it is possible to rid the world of the dark side, the bodysuits can be returned for a full refund. Nonetheless, the CPSC will continue to monitor any disturbances in the Force.

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Wednesday, January 27, 2016

Houston Legal

Originally published by Mary Flood.

Top legal news includes: Indictment Sheds Light on Planned Parenthood Sting; After Indictments, Texas Still Wants to De-Fund Planned Parenthood; DA denies politics played role in Planned Parenthood case (Chron subsc); Falkenberg: Amazing what can happen when a grand jury works as it should (Chron subsc); Open Carry Confusing for Police, Businesses and Public, Senators Hear; V&E adds partner from another firm; Rick Burleson Joins Paul Hastings in Houston (Texas Lawyer); Man accused of setting attorney, son on fire speaks in jailhouse interview; Boutique movie theater scores first win in Houston lawsui; Texas sex offender gets 15 years for child pornography; Nobel Laureate Becomes Reluctant Texas Anti-Gun Leader; Law Targeting Landlords Prompts Shelter Provider to Sue State Officials (Texas Lawyer); Officer shoots man four times after domestic dispute; Pilot project to remove some submerged vehicles from local bayous; Texas Again Seeks to Bar Syrian Refugees; The State Bar of Texas Board Opposes American Bar Association Guidelines Regulating Nonlawyer Lega; Assistance (Texas Lawyer); Paul Bettencourt Named Texas Senate GOP Caucus Chairman; Drop In Oil Tax Revenue ‘Not Going To Be Pretty’ For Texas; 2 Texas men caught on video fighting with weapons during violent road rage incident; Officials: SCOTUS ruling has no effect in Texas; Police Group Upset After DPS Director Says Cops Should “Just Take” Being Spit At; 40 arrested in Texas cockfighting ring linked to alleged cocaine distributor; AP News Guide: A look at the ‘affluenza’ teen case; Distress in the oil patch is spurring a new type of joint venture; Hess cuts 2016 budget by 40 percent; Economist says Texas oil drillers may have unlocked crude supply lasting “decades into the future” & Canada’s pipeline regulators can’t keep up with companies, audit finds.

For the water cooler: Latham associates refinance $13M in student debt, thanks to firm’s efforts; Woman sues Associated Press for selling her photo in a hijab as a stock photo; President Trump’s Supreme Court Shortlist: 5 Possible Nominees; Can Going To A Crappy Law School Really Change Your Life… For The Better?; Beyond Biglaw: Mistake Tolerance; Judge’s coffee request, inappropriately aimed paper bring admonishment; Judge fines prominent lawyer $133,000 for alleged push poll before trial; How “The People v. O.J. Simpson” movie explores sexism, feminism and race through wardrobe; Judge who refused to perform gay marriages has boundaries problem, should be ousted, commission says; Journalism production company wins grant to expand police misconduct database; Second trial starts for New Mexico lawyer accused of shooting homeless man who entered his office & King & Wood Mallesons in Talks to Raise Capital in Europe, Review Finances.

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Law Firm Professional Development: This one is for you

Originally published by Cordell Parvin.

Is training your lawyers thought of as an expense or a revenue enhancer? I believe most firms view it as an expense and that is why they do so little of it.

I know, because law firms routinely spend less money and time on developing their lawyers than their clients spend on developing their skilled workers and professionals.

Many years ago I read In Search of Excellence by Tom Peters.

Screen Shot 2015-12-24 at 7.16.08 AM


I still enjoy reading what he has to say. I recently read: Excellence, No Excuses, Now. I found many nuggets there in his 34 BFO’s (Blind Flashes of Obvious).

Here is Number 1 BFO.

BFO #1: If you (RELIGIOUSLY) help

people—EVERY SINGLE PERSON, JUNIOR OR SENIOR, LIFER OR TEMP—grow and reach/exceed their perceived potential, then they in turn will bust their individual and collective butts to create great experiences for Clients—and the “bottom line” will get fatter and fatter

and fatter. (ANYBODY LISTENING?)


PROFITABILITY. PERIOD.) (ANYBODY LISTENING?) (FYI: “People FIRST” message is 10X more urgent than ever in the high-engagement “AGE OF SOCIAL BUSINESS.”)

Here is Number 3 BFO.

BFO 3: The “CTO”/Chief Training Officer should (MUST!) be on a par with the CFO/CMO.

Training = Investment #1.

(8 of 10 CEOs see training as an “expense,” not an investment/prime asset booster.) (“Our training courses are so good they make me want to giggle.” “Our trainers are on the same pay scale as our

engineers.”) (In a 45-minute “tour d’horizon” of the enterprise: GUARANTEE 9 of 10 CEOs* [*10 of 10?] wouldn’t once mention training.

I imagine that 8 of 10 law firm leaders see training as an expense. Training in those firms amounts to lawyers getting their required CLE hours. It is focused on substantive law.

Practicing law in a firm requires much more. Lawyers must learn people skills. That is becoming an increasingly challenging task as young lawyers come to firms having spent the last several years communicating by text.

I have worked with the Professional Development Professionals in several firms. They love their work, they love the lawyers in the firm. They hate when firms cut their budgets to the degree that they cannot help the junior lawyers develop skills to become successful partners?

It all reminds me of the well known imagined conversation between a CFO and CEO.

CFO: What happens if we train them and they leave?

CEO: What happens if we don’t and they stay?

What is your firm’s plan for professional development in 2016?

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Large Numbers of Texas Inmates Suffer From Mental Health Problems

Originally published by Sarah Klein.

It’s not a shock to find out that our prison population is made up of a large number of people with mental illnesses. What surprises many people is the sheer weight of the numbers involved. A recent article in The Atlantic pointed out more than half of the population of state prisons and local prisons has a mental disorder. The …

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State Bar, Metroplex Veterans Legal Services to hold first Veterans Bankruptcy Legal Clinic

Originally published by Amy Starnes.

Low-income, disabled, unemployed, or homeless veterans needing assistance with bankruptcy or debt issues can receive free legal services at a first-of-its-kind Veterans Bankruptcy Clinic in the Dallas area on February 3.

The single-issue clinic focused on bankruptcy and debt problems is a partnership between the State Bar of Texas, the Bankruptcy Law Section of the State Bar, and Metroplex Veterans Legal Services. It is being held as part of the State Bar’s three-day annual continuing legal education opportunity for bankruptcy attorneys across the state.

The clinic will take place at 5:30 p.m. February 3 at Cityplace Events, 2711 N. Haskell Ave., Dallas. It is open to low-income, disabled, unemployed, or homeless veterans in Texas with either an honorable, general, or general under honorable conditions discharge from the military. Veterans must register online in advance of the clinic. Walk-ins will not be allowed. To register, go to

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Fair v. Unfair Competition, or the Real Life Case of Globo Gym v. Average Joes

Originally published by Leiza Dolghih.

DodgeballWhile we patiently wait for a sequel to Dodgeball: A True Underdog Story to come out, a similar saga involving competing gym/spa establishments has been unfolding in Houston, Texas (minus the dodge ball tournament and shiny singlets) recently culminating in a lawsuit in the federal district court for the Southern District of Texas. 

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An Employer Can Violate Its Own Rules

Originally published by Thomas J. Crane.

Sometime back, I met with a young man about his work situation. He was told by his boss to do some things that the worker believed would violate internal policies. Every work place has rules unique to that work place. We describe those rules as internal rules or policies. The worker was essentially telling me he was enforcing the rules, even if his boss was not.

Well, I had to tell him that those rules are not binding on the employer. The employer can change them. Even in a large national corporation, the boss is basically the “employer.” The boss can ignore those rules. What if violating those rules places a worker at risk of physical harm? For example, if you work in a warehouse and the rule is never climb a ladder without a co-worker holding the bottom of the ladder. What if the supervisor one day says get a box down from the top shelf now, quickly, a customer is waiting? In effect, the boss is saying do not stop to find a co-worker to hold the ladder. Do you do what the boss tells you?

If the safety of a worker is involved, then that violation might involve OSHA (Occupational Safety & Health Administration) rules. But, otherwise, in an at-will state like Texas, the worker cannot say no. The only time a worker can say no in Texas is if s/he is asked to break a criminal law.

Even if violating the company’s internal rules also involves a possible OSHA violation, the worker still must respect his employer. If a worker refuses to follow an order from her/his boss, the worker will be accused of insubordination. So, in the same example, if the order from the boss did violate an OSHA rule, the worker cannot then refuse to climb the ladder without a co-worker holding the ladder. Since, if the worker refuses to climb the ladder, then he has been insubordinate. An employer can fire a worker for insubordination.

It may not be fair that the worker has so little control over acts that be unsafe. But, as I tell many folks, if you want fairness, if you want some control over your work, then form a labor union. Otherwise, in an at-will state, you have to do what the boss says.

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Houston Bar interview workshop prepares law students for success

Originally published by Guest Blogger.

By Rehan Alimohammad, Guest Blogger

interview workshop with panelistsThe Houston Bar Association’s Minority Opportunities in the Legal Profession (MOILP) Committee held its annual interview workshop January 20 to prepare applicants for upcoming interviews with potential employers through the MOILP 1L Summer Clerkship and Mentoring Program.

Over 75 students from Texas Southern University Thurgood Marshall School of Law, South Texas College of Law, and the University of Houston Law Center attended the workshop.

I had the pleasure of moderating the workshop, which covered important topics such as preparation, dress, types of questions to expect, questions to ask, tips on closing the interview, and common mistakes. The panelists included Travis Torrence, vice president at Jiffy Lube International; L. Renee Lowe, Harris County assistant county attorney; Chevazz Brown, partner at Jackson Walker LLP; and Tiffiny Fayle, director of firm marketing and recruiting at Chamberlain Hrdlicka.

The 1L Summer Clerkship Program is an important part of the Houston Bar Association’s mission to serve the needs of the legal community through a vibrant and inclusive local bar.

For more information about the MOILP Committee or to participate in the upcoming MOILP Summer Luncheon, contact Co-Chairs Chevazz Brown ( or Farrah Martinez (

Rehan Alimohammad is a minority director for the State Bar of Texas and partner at Alimohammad & Zafar, PLLC.

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Fiduciaries And Beneficiaries Should Be Aware Of Criminal Statutes

Originally published by David Fowler Johnson.

There are several criminal statutes that implicate fiduciary activities in Texas that are not well-known: misappropriation of fiduciary property and financial exploitation of the elderly. Though these may be similar in some ways to a theft charge, they are different criminal charges. Rhinehardt v. State, No. 08-01-00335-CR, 2003 Tex. App. LEXIS 6223 (Tex. App.—El Paso July 17, 2003, no pet.).

Misapplication Of Fiduciary Property

Misapplication of fiduciary property or property of a financial institution is a charge that has been in existence in Texas for over forty years. Tex. Penal Code Ann. § 32.45. A person commits the offense of misapplication of fiduciary property by intentionally, knowingly, or recklessly misapplying property he holds as a fiduciary in a manner that involves substantial risk of loss to the owner of the property. Id. at § 32.45(b). “Substantial risk of loss” means a real possibility of loss; the possibility need not rise to the level of a substantial certainty, but the risk of loss does have to be at least more likely than not. Coleman v. State, 131 S.W.3d 303 (Tex. App.—Corpus Christi 2004, pet. ref’d).

The statute defines “Fiduciary” to include: “(A) a trustee, guardian, administrator, executor, conservator, and receiver; (B) an attorney in fact or agent appointed under a durable power of attorney as provided by Chapter XII, Texas Probate Code; (C) any other person acting in a fiduciary capacity, but not a commercial bailee unless the commercial bailee is a party in a motor fuel sales agreement with a distributor or supplier, as those terms are defined by Section 162.001, Tax Code; and (D) an officer, manager, employee, or agent carrying on fiduciary functions on behalf of a fiduciary.” Id. at § 32.45(a)(1).

The phrase “acting in a fiduciary capacity” is not defined in the code, but the Texas Court of Criminal Appeals has construed the undefined phrase according to its plain meaning and normal usage to apply to anyone acting in a fiduciary capacity of trust. Coplin v. State, 585 S.W.2d 734, 735 (Tex. Crim. App. 1979). Based on the plain and ordinary meaning of the word “fiduciary” as “holding, held, or founded in trust or confidence,” one court has held that a person acts in a fiduciary capacity within the context of section 32.45 “when the business which he transacts, or the money or property which he handles, is not his or for his own benefit, but for the benefit of another person as to whom he stands in a relation implying and necessitating great confidence and trust on the one part and a high degree of good faith on the other part.” Gonzalez v. State, 954 S.W.2d 98, 103 (Tex. App.—San Antonio 1997, no pet.); see also Konkel v. Otwell, 65 S.W.3d 183 (Tex. App.—Eastland 2001, no pet.). Moreover, evidence that a defendant aided another person in misapplying trust property sufficed, under the law of parties as set forth in Texas Penal Code sections 7.01(a), 7.02(a)(2), to convict a defendant of misapplication of fiduciary property although the defendant did not personally handle the misapplied funds. Head v. State, 299 S.W.3d 414 (Tex. App.—Houston [14th Dist.] 2009, pet. ref’d).

An offense under this statute ranges from a Class C misdemeanor if the property is less than $100 to a first degree felony if the property misapplied is over $300,000. Tex. Penal Code Ann. § 32.45(c). Moreover, the punishment is increased to the next higher category if it is shown that the offense was committed against an elderly individual. Id. at § 32.45(d). For example, a court affirmed a sentence of 23 years for a conviction of this crime, and held that such was no cruel and unusual punishment. See Holt v. State, NO. 12-12-00337-CR, 2013 Tex. App. LEXIS 8393 (Tex. App.—Tyler July 10 2013, no pet.).

This criminal charge arises in the context of trustees misapplying trust property. Bowen v. State, 374 S.W.3d 427 (Tex. Crim. App. 2012); Kaufman v. State, No. 13-06-00653-CR, 2008 Tex. App. LEXIS 3880 (Tex. App.—Corpus Christi May 29, 2008, pet. dism.).   It also arises in joint bank accounts situations and the use of funds therein. Bailey v. State, No. 03-02-00622-CR, 2003 Tex. App. LEXIS 10140 (Tex. App.—Austin Dec. 4, 2003, pet. ref’d). It also arises when a power of attorney holder makes gifts to himself or herself. Natho v. State, No. 03-11-00498-CR, 2014 Tex. App. LEXIS 1427 (Tex. App.—Austin Feb. 6 2014, pet. ref’d); Tyler v. State, 137 S.W.3d 261, 2004 Tex. App. LEXIS 3446 (Tex. App.—Houston [1st Dist.] 2004, no pet.). This can also apply in business contexts, where a business partner improperly diverts funds for personal use. Bender v. State, No. 03-09-00652-CR, 2011 Tex. App. LEXIS 3096 (Tex. App.—Austin Apr. 19 2011, no pet.); Martinez v. State, No. 05-02-01839-CR, 2003 Tex. App. LEXIS 9963 (Tex. App.—Dallas Nov. 21, 2003, pet. ref’d). Attorneys can be charged for misapplying clients’ funds. Sabel v. State, No. 04-00-00469-CR, 2001 Tex. App. LEXIS 6493 (Tex. App.—San Antonio Sept. 26, 2001, no pet.). It also arises where a defendant misapplies royalty owners’ money contrary to a gas lease agreement. Coleman v. State, 131 S.W.3d 303, 2004 Tex. App. LEXIS 2093 (Tex. App.—Corpus Christi 2004, pet. ref’d). It also arises in the abuse of guardianship relationships. Latham v. State, No. 14-04-00248-CR, No. 14-04-00249-CR, No. 14-04-00250-CR, 2005 Tex. App. LEXIS 6560 (Tex. App.—Houston [14th Dist.] Aug. 18, 2005, no pet.). Of course, the charge can apply in many other instances as well.

Financial Exploitation Of The Elderly

Financial exploitation of the elderly is a criminal offense in Texas that has been in the statutes since 2011. Tex. Penal Code Ann. § 32.53. “A person commits an offense if the person intentionally, knowingly, or recklessly causes the exploitation of a child, elderly individual, or disabled individual.” Id. at § 32.53(b).  “Exploitation” means the illegal or improper use of a child, elderly individual, or disabled individual or of the resources of a child, elderly individual, or disabled individual for monetary or personal benefit, profit, or gain. Id. at § 32.53(a)(2). A “child” means a person 14 years of age or younger, and an “elderly individual” means a person 65 years of age or older. Id. at § 22.04(c). A “disabled individual” means a person: (A) with one or more of the following: (i) autism spectrum disorder, as defined by Section 1355.001, Insurance Code; (ii) developmental disability, as defined by Section 112.042, Human Resources Code; (iii) intellectual disability, as defined by Section 591.003, Health and Safety Code; (iv) severe emotional disturbance, as defined by Section 261.001, Family Code; or (v) traumatic brain injury, as defined by Section 92.001, Health and Safety Code; or (B) who otherwise by reason of age or physical or mental disease, defect, or injury is substantially unable to protect the person’s self from harm or to provide food, shelter, or medical care for the person’s self. Id. This offense is a felony of the third degree. Id. at § 32.53(c).

Criminal Statutes Do Not Create Civil Liability

Even though plaintiffs may desire to cite these criminal statutes in civil cases, they do not create civil causes of action. “The Texas Penal Code does not create private causes of action,” and as a result, criminal code “allegations fail to state a viable claim for relief.” Spurlock v. Johnson, 94 S.W.3d 655, 658 (Tex. App.—San Antonio 2002, no pet.); see also Macias v. Tex. Dep’t of Crim. Justice Parole Div., No. 03-07-00033-CV, 2007 Tex. App. LEXIS 6798 (Tex. App.—Austin August 21, 2007, no pet.). Other states have adopted express civil causes of action for the exploitation of the elderly or other vulnerable persons. See, e.g., Ariz. Rev. Stat. § 46-456, et. seq.; CA Welf. & Inst. Code § 15610-1561-.65; Fla. Ann. Stat. § 415.102(8)(a)(1) and (2); (8)(b). In Texas, there are no such statutory or common law claims for exploitation of vulnerable persons. However, there is a common law claim for breach of fiduciary duty, and the same conduct that may justify a criminal charge may also support a valid breach of fiduciary duty claim. Compare Natho v. State, No. 03-11-00498-CR, 2014 Tex. App. LEXIS 1427 (Tex. App.—Austin Feb. 6 2014, pet. ref’d) (criminal charge affirmed) with Natho v. Shelton, No. 03-11-00661-CV, 2014 Tex. App. LEXIS 5842 (Tex. App.—Austin May 30, 2014, no pet.) (affirming civil judgment in part based on same acts of fiduciary breach). Moreover, there are civil claims for conversion, tortious interference with inheritance, fraud, breach of contract, money had and received, undue influence, mental incompetence, etc. that may provide the appropriate relief.

Criminal Statutes May Impact Exemplary Damages Awards

Plaintiffs in civil litigation often seek punitive or exemplary damages. “Exemplary damages” means any damages awarded as a penalty or by way of punishment but not for compensatory purposes. Exemplary damages are neither economic nor noneconomic damages. “Exemplary damages” includes punitive damages. Tex. Civ. Prac. & Rem. Code Ann. § 41.001(5). A jury may only award exemplary damages if the claimant proves, by clear and convincing evidence, that the harm resulted from: (1) fraud; (2) malice; or (3) gross negligence. Id. at § 41.003(a).

Under Texas case law, exemplary damages may be proper in breach of fiduciary duty cases where the plaintiff can prove by clear and convincing evidence that the action arose by actual fraud, malice, or gross negligence. Murphy v. Canion, 797 S.W.2d 944, 949 (Tex. App.—Houston [14th Dist.] 1990, no pet.); see also Lesikar v. Rappeport, 33 S.W.3d 282, 311 (Tex. App.—Texarkana 2000, pet. denied); Natho v. Shelton, No. 03-11-00661-CV, 2014 Tex. App. LEXIS 5842, 2014 WL 2522051, at *2 (Tex. App.—Austin May 30, 2014, no. pet.).

One important protection for defendants is the statutory cap on the amount of exemplary damages. The Texas Civil Practice and Remedies Code permits exemplary damages of up to the greater of: (1) (a) two times the amount of economic damages; plus (b) an amount equal to any noneconomic damages found by the jury, not to exceed $750,000; or (2) $200,000. Tex. Civ. Prac. & Rem. Code Ann. § 41.008(b). This cap need not be affirmatively pleaded as it applies automatically and does not require proof of additional facts. Zorrilla v. Aypco Constr., II, LLC, 469 S.W.3d 143 (Tex. 2015).

These limits do not apply to claims supporting misapplication of fiduciary property or theft of a third degree felony level. Tex. Civ. Prac. & Rem. Code Ann. § 41.008(c)(10). Natho v. Shelton, 2014 Tex. App. LEXIS 5842 at n. 4. The statute states that the caps “do not apply to a cause of action against a defendant from whom a plaintiff seeks recovery of exemplary damages based on conduct described as a felony in the following sections of the Penal Code if … the conduct was committed knowingly or intentionally….” Id. Accordingly, if a defendant is found liable for one of these crimes with the required knowledge or intent, it cannot take advantage of the statutory exemplary damages caps.

A plaintiff must prove its entitlement to an exception to the exemplary damages cap. The Texas Pattern Jury Charge has the following as a proposed jury question that a plaintiff can seek to submit to the jury:


Did Don Davis intentionally misapply [identify property defendant held as a fiduciary, e.g., 300 shares of ABC Corporation common stock] in a manner that involved substantial risk of loss to Paul Payne [and was the value of the property $1,500 or greater]?

“Misapply” means a person deals with property [or money] contrary to an agreement under which the person holds the property [or money].

“Substantial risk of loss” means it is more likely than not that loss will occur. A person acts with intent with respect to the nature of his conduct or to a result of his conduct when it is the conscious objective or desire to engage in the conduct or cause the result.

Answer “Yes” or “No.”

Answer: _______________

This question presumes that a fiduciary relationship exists. If the existence of such a fiduciary relationship is disputed, the court should submit a preliminary question, and the question set out above should be made conditional on a “Yes” answer to the preliminary question. Further, the statute authorizes elimination of the limitation on exemplary damages awards if the conduct described in the applicable Texas Penal Code section was committed either knowingly or intentionally. If knowing instead of intentional conduct is alleged, the Texas Pattern Jury Charge suggests the following definition: “A person acts knowingly with respect to the nature of his conduct or to circumstances surrounding his conduct when he is aware of the nature of his conduct or that the circumstances exist. A person acts knowingly with respect to a result of his conduct when he is aware that his conduct is reasonably certain to cause the result.”

“A plaintiff can avoid the cap by pleading and proving the defendant intentionally or knowingly engaged in felonious conduct under criminal statutes expressly excluded from the cap under section 41.008(c).” Zorrilla, 469 S.W.3d at 157. In a civil case, a plaintiff must prove by clear and convincing evidence the elements of exemplary damages. Tex. Civ. Prac. & Rem. Code Ann. § 41.003(b). “‘Clear and convincing’ means the measure or degree of proof that will produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established.” Id. § 41.001(2).

However, the state has to prove the elements of a crime by the beyond-a-reasonable-doubt standard. See Jackson v. Virginia, 443 U.S. 307, 319, 99 S. Ct. 2781, 2789, 61 L. Ed. 2d 560 (1979); In re Winship, 397 U.S. 358, 361, 90 S. Ct. 1068, 1071, 25 L. Ed. 2d 368 (1970); Laster v. State, 275 S.W.3d 512, 517 (Tex. Crim. App. 2009); Marin v. IESI TX Corp., 317 S.W.3d 314, 330 (Tex. App.—Houston [1st Dist.] 2010, pet. denied) (holding evidence legally sufficient to support finding beyond reasonable doubt that defendant misapplied fiduciary property by depositing funds tendered for payment to one company’s account into another company’s account that she also controlled). A finding of liability in a civil case should not have any collateral estoppel or res judicata effect in a subsequent criminal trial as the burdens of proof are different. Osborne v. Coldwell Banker United Realtors, No. 01-01-00463-CV, 2002 Tex. App. LEXIS 4930 (Tex. App.—Houston [1st Dist.] July 11, 2002, no pet.) (citing State v. Benavidez, 365 S.W.2d 638, 640 (Tex. 1963)). If the criminal trial is first, and the jury does not find the defendant guilty, that also does not have collateral estoppel effect in a subsequent civil proceeding as the burden of proof is lighter in the civil case. See Ex Parte Watkins, 73 S.W.3d 24, n. 16 (Tex. Crim. App. 2002) (citing One Lot Emerald Cut Stones v. United States, 409 U.S. 232, 235, 34 L. Ed. 2d 438, 93 S. Ct. 489 (1972) (noting that the difference between the burden of proof in criminal and civil trials prevents application of collateral estoppel in subsequent civil trial after acquittal on specific fact in criminal case with “beyond a reasonable doubt” standard)).

Interestingly, the crime of financial exploitation of the elderly is not an exception to the exemplary damages cap. Perhaps this is due to the fact that the Texas Legislature created the criminal charge in 2011 and it was not on the books at the time that the Legislature created the exemplary damages statute. In any event, at least one court has considered this criminal charge in determining whether exemplary damages awarded was reasonably proportioned to the actual damages. Natho v. Shelton, 2014 Tex. App. LEXIS 5842 at *8. The court held:

We conclude that the trial court’s award of $20,000 in punitive damages is reasonably proportioned to actual damages in the amount of $33,096.11, considering the following applicable factors: (1) the nature of the defendant’s wrongdoing (the unauthorized appropriation for Natho’s personal benefit of appellee’s personal and real property, including family heirlooms); (2) the character of the defendant’s conduct (effectuated under the apparent authority of a power of attorney with respect to an elderly and infirm woman); (3) the degree of the defendant’s culpability (despite his testimony at an earlier temporary-injunction hearing that he relied on the advice of financial advisers in spending appellee’s money to qualify her for Medicaid, Natho refused to answer questions at trial on the ground of protecting himself against self-incrimination with respect to concurrent criminal proceedings against him for the same conduct); (4) the situation and sensibilities of the parties concerned (Natho was the ex-grandson-in-law of appellee, who was elderly, infirm, and living in a nursing home); and (5) the extent to which such conduct offends a public sense of justice and propriety (the legislature has deemed the “improper use” of the resources of an elderly individual especially reprehensible, making it a third-degree felony, see Tex. Penal Code § 32.53).

Id. Accordingly, even though the crime of financial exploitation of the elderly is not an exception to the exemplary damages cap, it may still be relevant in a civil proceeding.

Courts Can Award Restitution In A Criminal Case

Even if a party cannot assert a civil claim under a criminal statute, a criminal court has discretion to award a victim restitution as against the criminal defendant. Jones v. State, 2012 Tex. App. LEXIS 10549 (Tex. App.—Corpus Christi Dec. 20 2012, pet. ref’d). “Restitution was intended to ‘adequately compensate the victim of the offense’ in the course of punishing the criminal offender.” Cabla v. State, 6 S.W.3d 543, 545 (Tex. Crim. App. 1999) (quoting Tex. Code Crim. Proc. Ann. art. 42.12 § 9(a)). A sentencing court may order a defendant to make restitution to any victim of the offense. Tex. Code Crim. Proc. Ann. art. 42.037(a). “[T]he amount of a restitution order is limited to only the losses or expenses that the victim or victims proved they suffered as a result of the offense for which the defendant was convicted.” Cabla, 6 S.W.3d at 546. “An abuse of discretion by the trial court in setting the amount of restitution will implicate due-process considerations.” Campbell v. State, 5 S.W.3d 693, 696 (Tex. Crim. App. 1999). Due process places four limitations on the restitution a trial court may order. First, “[t]he amount of restitution must be just, and it must have a factual basis within the loss of the victim.” Id. Second, “[a] trial court may not order restitution for an offense for which the defendant is not criminally responsible.” Id. at 697. Third, “a trial court may not order restitution to any but the victim or victims of the offense with which the offender is charged.” Id. Fourth, a trial court may not, “without the agreement of the defendant, order restitution to other victims unless their losses have been adjudicated.” Id. The standard of proof for determining restitution is a preponderance of evidence. Tex. Code Crim. Proc. Ann. art. 42.037(k). The burden of proving the amount of loss sustained by the victim is on the prosecution. Id. The restitution ordered must be “just” and must be supported by sufficient factual evidence in the record.

Because the request for restitution creates more work for prosecutors and is often seen as civil in nature, prosecutors are reluctant to request this form of relief. A victim should do everything that he or she can do to encourage the prosecutor to seek this permissible form of relief.

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More on the U.S. as the World’s Tax Haven

Originally published by Jack Townsend.

On the theme of U.S. laws offering tax haven opportunities for foreign persons, Jesse Drucker reports on one instance of a Swiss category 2 bank, Rothschild & Co., setting up shop in the U.S. to promote the business.  Jesse Drucker, The World’s Favorite New Tax Haven Is the United States (BloombergBusiness 1/17/16), here.

Excerpts from the opening:

Last September, at a law firm overlooking San Francisco Bay, Andrew Penney, a managing director at Rothschild & Co., gave a talk on how the world’s wealthy elite can avoid paying taxes.

His message was clear: You can help your clients move their fortunes to the United States, free of taxes and hidden from their governments.

Some are calling it the new Switzerland.

After years of lambasting other countries for helping rich Americans hide their money offshore, the U.S. is emerging as a leading tax and secrecy haven for rich foreigners. By resisting new global disclosure standards, the U.S. is creating a hot new market, becoming the go-to place to stash foreign wealth. Everyone from London lawyers to Swiss trust companies is getting in on the act, helping the world’s rich move accounts from places like the Bahamas and the British Virgin Islands to Nevada, Wyoming, and South Dakota.

Other key tidbits:

Rokahr and other advisers said there is a legitimate need for secrecy. Confidential accounts that hide wealth, whether in the U.S., Switzerland, or elsewhere, protect against kidnappings or extortion in their owners’ home countries. The rich also often feel safer parking their money in the U.S. rather than some other location perceived as less-sure.
“I do not hear anybody saying, ‘I want to avoid taxes,’ ” Rokahr said. “These are people who are legitimately concerned with their own health and welfare.”

No one expects offshore havens to disappear anytime soon. Swiss banks still hold about $1.9 trillion in assets not reported by account holders in their home countries, according to Gabriel Zucman, an economics professor at the University of California at Berkeley. Nor is it clear how many of the almost 100 countries and other jurisdictions that have signed on will actually enforce the new disclosure standards, issued by the Organisation for Economic Co-operation and Development, a government-funded international policy group.

There’s nothing illegal about banks luring foreigners to put money in the U.S. with promises of confidentiality as long as they are not intentionally helping to evade taxes abroad. Still, the U.S. is one of the few places left where advisers are actively promoting accounts that will remain secret from overseas authorities. 

* * * *

Firms aren’t wasting time to make the most of the current environment. Bolton Global Capital, a Boston-area financial advisory firm, recently circulated this hypothetical example in an e-mail: A wealthy Mexican opens a U.S. bank account using a company in the British Virgin Islands. As a result, only the company’s name would be sent to the BVI government, while the identity of the person owning the account would not be shared with Mexican authorities.

The U.S. failure to sign onto the OECD information-sharing standard is “proving to be a strong driver of growth for our business,” wrote Bolton’s chief executive officer, Ray Grenier, in a marketing e-mail to bankers. His firm is seeing a spike in accounts moved out of European banks—“Switzerland in particular”—and into the U.S. The new OECD standard “was the beginning of the exodus,” he said in an interview.

The U.S. Treasury is proposing standards similar to the OECD’s for foreign-held accounts in the U.S. But similar proposals in the past have stalled in the face of opposition from the Republican-controlled Congress and the banking industry.

At issue is not just non-U.S. citizens skirting their home countries’ taxes. Treasury also is concerned that massive inflows of capital into secret accounts could become a new channel for criminal money laundering. At least $1.6 trillion in illicit funds are laundered through the global financial system each year, according to a United Nations estimate.
Offering secrecy to clients is not against the law, but U.S. firms are not permitted to knowingly help overseas customers evade foreign taxes, said Scott Michel, a criminal tax defense attorney at Washington, D.C.-based Caplin & Drysdale who has represented Swiss banks and foreign account holders.

“To the extent non-U.S. persons are encouraged to come to the U.S. for what may be our own ‘tax haven’ characteristics, the U.S. government would likely take a dim view of any marketing suggesting that evading home country tax is a legal objective,” he said.

There are other tidbits in the article as well.  A strongly recommended read for persons interested in federal tax crimes.  Consider this from Saltzman & Book, IRS Practice and Procedure (Thomson Reuters/Tax & Accounting, Rev. 2nd ed. 2002 & Supp. 2015-3).

¶ 12.03[3][c][vi] Other countries’ taxes; revenue rule.

As noted, some component of many crimes will use mail, wire, or commercial delivery services. This is true of cross-border crimes intended to include conduct in the United States that violates laws of other countries. Those laws of other countries may include tax laws. Can the mail and wire fraud statutes be deployed if the object of the crime was the violation of foreign tax law? Under the common-law revenue rule, one country will generally decline to enforce another country’s tax law. The notion is that taxes are so intertwined with the sovereignty of the country that another country should not be involved in the enforcement of the other country’s tax laws. In Pasquantino v. United States, n349 the Court held in a rather summary majority opinion (J. Thomas) that use of U.S. mail or wire communications to evade Canada’s taxes was within the literal terms of the wire fraud statute. For present purposes, Justice Thomas’s summary application of the wire fraud statute in Pasquantino should illustrate how pervasive the statute can be in its potential application. As the world increasingly becomes a global village in which nations cooperate regarding tax matters, one can expect such cases to continue.
n 349 Pasquantino v. United States, 544 US 349 (2004), reh’g denied, 544 US 1012 (2005) [Casetext version here].

For those wanting a bit more detail on the holding in Saltzman, the link is provided in the footnote.  But, here is the Supreme Court’s syllabus of its opnion (from Casetext):

Petitioners carried out a scheme to smuggle large quantities of liquor into Canada from the United States to evade Canada’s heavy alcohol import taxes. They were convicted of violating the federal wire fraud statute, 18 U. S. C. § 1343, for doing so. That statute prohibits the use of inter-state wires to effect “any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses.” The Fourth Circuit affirmed their convictions, rejecting petitioners’ argument that their prosecution contravened the common-law revenue rule, which bars courts from enforcing foreign sovereigns’ tax laws. The Fourth Circuit also held that Canada’s right to receive tax revenue was “money or property” within § 1343’s meaning.

Held: A plot to defraud a foreign government of tax revenue violates the federal wire fraud statute. Pp. 355-372.

(a) Section 1343’s plain terms criminalize a scheme such as petitioners’. Their smuggling operation satisfies both of the § 1343 elements that are in dispute here. First, Canada’s right to uncollected excise taxes on the liquor petitioners imported into Canada is “property” within the statute’s meaning. That right is an entitlement to collect money from petitioners, the possession of which is “something of value” to the Canadian Government. McNally v. United States, 483 U. S. 350, 358. Such valuable entitlements are “property” as that term ordinarily is employed. Second, petitioners’ plot was a “scheme or artifice to defraud” Canada of its valuable entitlement to tax revenue, because petitioners routinely concealed imported liquor from Canadian officials and failed to declare those goods on customs forms. See Durland v. United States, 161 U. S. 306, 313. Pp. 355-359.

(b) The foregoing construction of § 1343 does not derogate from the common-law revenue rule. Pp. 359-372.

(1) Relying on the canon of construction that “`[s]tatutes which invade the common law . . . are to be read with a presumption favoring the retention of long-established and familiar principles, except when a statutory purpose to the contrary is evident,'” United States v. Texas, 507 U. S. 529, 534, petitioners argue that, to avoid reading § 1343 to derogate from the revenue rule, the Court should construe the otherwise-applicable statutory language to except frauds directed at *350 evading foreign taxes. Whether § 1343 derogates from the revenue rule depends on whether reading the statute to reach this prosecution conflicts with a well-established revenue rule principle. See United States v. Craft, 535 U. S. 274, 276. Thus, before concluding that Congress intended to exempt the present prosecution from § 1343’s broad reach, the Court must find that the revenue rule clearly barred such a prosecution as of 1952, the year Congress enacted the wire fraud statute. See Neder v. United States, 527 U. S. 1, 22-23. Pp. 359-360.

(2) No common-law case decided as of 1952 clearly established that the revenue rule barred the United States from prosecuting a fraudulent scheme to evade foreign taxes. Pp. 360-368.

(i) The revenue rule has long been treated as a corollary of the rule that “[t]he Courts of no country execute the penal laws of another.” The Antelope, 10 Wheat. 66, 123. It was first treated as such in cases prohibiting the enforcement of tax liabilities of one sovereign in the courts of another sovereign, such as suits to enforce tax judgments. The revenue rule’s grounding in these cases shows that, at its core, it prohibited the collection of tax obligations of foreign nations. The present prosecution is unlike these classic examples of actions traditionally barred by the revenue rule. It is not a suit that recovers a foreign tax liability, but is a criminal prosecution brought by the United States to punish domestic criminal conduct. Pp. 360-362.

(ii) Cases applying the revenue rule to bar indirect enforcement of foreign revenue laws, in contrast to the direct collection of a tax obligation, cannot bear the weight petitioners place on them. Many of them were decided after Congress passed the wire fraud statute. Others come from foreign courts. And, significantly, none involved a domestic sovereign acting pursuant to authority conferred by a criminal statute to enforce the sovereign’s own penal law. Moreover, none of petitioners’ cases barred an action that had as its primary object the deterrence and punishment of fraudulent conduct — a substantial domestic regulatory interest entirely independent of foreign tax enforcement. The main object of the action in each of them was the collection of money that would pay foreign tax claims. The absence of such an object here means that the link between this prosecution and foreign tax collection is incidental and attenuated at best. Thus, it cannot be said whether Congress in 1952 would have considered this prosecution within the revenue rule. Petitioners answer unpersuasively that the recovery of taxes is indeed the object of this suit because restitution of Canada’s lost tax revenue is required under the federal Mandatory Victims Restitution Act of 1996. Whether restitution is mandatory is irrelevant here because § 1343 advances the Government’s independent interest in punishing fraudulent domestic criminal conduct. In any *351 event, if awarding restitution to foreign sovereigns were contrary to the revenue rule, the proper resolution would be to construe the later enacted restitution statute not to allow such awards, rather than to assume that it impliedly repealed § 1343 as applied to this prosecution. Pp. 362-365.

(iii) Also unavailing is petitioners’ argument that early English common-law cases holding unenforceable contracts executed to evade other nations’ revenue laws demonstrate that “indirect” enforcement of such laws is at the very core of the revenue rule, rather than at its margins. Those early cases were driven by an interest in lessening the commercial disruption caused by high tariffs. By the mid-20th century, however, that rationale was supplanted, and courts began to apply the revenue rule to tax obligations on the strength of the analogy between a country’s revenue laws and its penal ones. Because the early English cases rested on a far different foundation from that on which the revenue rule came to rest, they say little about whether the wire fraud statute derogated from the revenue rule in its mid-20th-century form. Pp. 365-366.

(iv) Petitioners’ criminal prosecution “enforces” Canadian revenue law in an attenuated sense, but not in a sense that clearly would contravene the revenue rule. That rule never proscribed all enforcement of foreign revenue law. For example, at the same time they were enforcing domestic contracts that had the purpose of violating foreign revenue law, English courts also considered void foreign contracts that lacked tax stamps required under foreign revenue law. The line the revenue rule draws between impermissible and permissible “enforcement” of foreign revenue law has therefore always been unclear. The uncertainty persisted in American cases, which demonstrate that the extent to which the revenue rule barred indirect recognition of foreign revenue laws was unsettled as of 1952. Pp. 366-368.

(3) The traditional rationales for the revenue rule do not plainly suggest that it barred this prosecution. First, this prosecution poses little risk of causing the principal evil against which the revenue rule was traditionally thought to guard: judicial evaluation of the revenue policies of foreign sovereigns. This action was brought by the Executive, “the sole organ of the federal government in the field of international relations,” United States v. Curtiss-Wright Export Corp., 299 U. S. 304, 320. Although a prosecution like this one requires a court to recognize foreign law to determine whether the defendant violated U. S. law, it may be assumed that by electing to prosecute, the Executive has assessed this prosecution’s impact on this Nation’s relationship with Canada, and concluded that it poses little danger of causing international friction. Petitioners’ broader argument that the revenue rule avoids *352 giving domestic effect to politically sensitive and controversial policy decisions embodied in foreign revenue laws worries the Court little. The present prosecution, if authorized by the wire fraud statute, embodies the policy choice of the two political branches of Government — Congress and the Executive — to free the interstate wires from fraudulent use, irrespective of the object of the fraud. Such a reading of § 1343 gives effect to that considered policy choice and therefore poses no risk of advancing Canadian policies illegitimately. Finally, petitioners’ assertion that courts lack the competence to examine the validity of unfamiliar foreign tax schemes is not persuasive here. Foreign law posed no unmanageable complexity in this case, and Federal Rule of Criminal Procedure 26.1 gives federal courts sufficient means to resolve any incidental foreign law issues that may arise in wire fraud prosecutions. Pp. 368-370.

(4) The Court’s interpretation does not give § 1343 extraterritorial effect. Petitioners’ offense was complete the moment they executed their scheme intending to defraud Canada of tax revenue inside the United States. See Durland, 161 U. S., at 313. Therefore, only domestic conduct is at issue here. In any event, because § 1343 punishes frauds executed “in interstate or foreign commerce,” it is not a statute that involves only domestic concerns. Pp. 371-372.

336 F. 3d 321, affirmed.

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Originally published by David Coale.

waving german flagThe forum selection clause in Weber v. Pact XPP Technologies AG, written in German, referred to the “Sitz” of defendant Pact AG, which could be translated as “residence” or “corporate seat.”  After determining that a mixed de novo / abuse of discretion standard of review was appropriate after Atlantic Marine, the Fifth Circuit affirmed dismissal of a Texas case in favor of Germany.  The Court found that the defendant’s broader reading of the clause was better-reasoned, that German law applied to its review (“A contract between a German corporation and a member of its board seems strongly to implicate German policy”), and that the plaintiff did not have a legally cognizable policy argument against enforcing the clause.  No. 15-40432 (Jan. 26, 2016).

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The State Bar of Texas Board Opposes American Bar Association Guidelines Regulating Nonlawyer Legal Assistance

Originally published by Texas Lawyer.

The State Bar of Texas board of directors has reservations about an effort by the American Bar Association to create guidelines to regulate nonlawyers who provide legal assistance.


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Some Tips for Reviewing Exams from the Fall Semester

Originally published by lawschool academicsupport.

Now is a good time to contact your professors to review any fall semester exams about which you had concerns. If you received a C+ grade or below in a course, you should definitely consider reviewing the exam. Many of…

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New Appraisal Clauses Change Appraisal

Originally published by Chip Merlin.

State Farm and Farmers have created new property insurance policy forms which significantly change the rules of appraisal. One of the trends of insurance coverage is that new policies are not being written with standard language, where years of case law have interpreted meanings of phrases used by all insurers. These two forms are perfect examples of this trend.
As noted in Insurance Appraisal Called “Almost Perfect Method” of Alternative Dispute Resolution, here is language which many policies have used as a standard appraisal clause:


If we and you disagree on the value of the property or the amount of the “loss,” either may make written demand for an appraisal of the “loss.” In this event, each party will select a competent and impartial appraiser. You and we must notify the other of the appraiser selected within twenty days of the written demand for appraisal. The two appraisers will select an umpire.

If the appraisers do not agree on the…


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Originally published by The Movie Court.

A new review from the desk of The Movie Snob.

Anomalisa  (B).  This is a strange movie—but it was written by Charlie Kaufman (Being John Malkovich, Eternal Sunshine of the Spotless Mind), so it could hardly be otherwise.  It’s a stop-motion animated movie made with felt puppets, rather like Rudolph the Red-Nosed Reindeer.  But it’s justifiably rated R for “strong sexual content, graphic nudity, and language,” so on the other hand it’s really not like Rudolph at all.  The main character is Michael Stone (voice of David Thewlis, Harry Potter and the Deathly Hallows: Part I), a middle-aged guy who is deep in the grip of the existential blues as he lands in a rainy Cincinnati on a quick, banal business trip.  But Lisa (voice of Jennifer Jason Leigh, The Spectacular Now), a nice young woman with self-esteem problems, rather steals the show.  Anyway, the movie is a pretty effective portrayal of the loneliness, angst, and boredom of life.  Is it more than that?  Hard to say.  But it kept my interest, and that counts for something.

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Tuesday, January 26, 2016

Texas Supreme Court Will Not Review Case Where Post-Arbitration …

Originally published by Beth Graham.


The Supreme Court of Texas has denied a party’s request to review the Dallas Appeals Court’s decision allowing post-arbitration discovery in a case that was filed by an injured worker. In Rodas v. La Madeleine of Texas, No. 15-0340, a woman sought damages from her employer for the purported injuries she sustained in an accident at work. At the time, the woman’s employer was not a Texas workers’ compensation insurance coverage subscriber. The dispute was later sent to arbitration and an award was issued in favor of the employer.

A few months later, the injured worker sought to vacate the arbitral award. According to the woman, the arbitrator demonstrated evident partiality when he did not disclose that he served as the sole arbitrator for another dispute involving her employer’s counsel while her own case was pending. As a result, the worker sought to conduct discovery regarding the arbitrator’s alleged partiality. The trial court refused the woman’s request, but Texas’ Fifth District appellate court reversed.

A previous Disputing blog post on the case stated:

The appeals court said evident partiality occurs when a neutral arbitrator fails to disclose information that would reasonably give an objective observer the impression that he or she exhibited partiality. The court continued by stating, “an arbitrator’s failure to disclose that a party’s representative has previously appeared before him as a party representative in a different arbitration may also be sufficient evidence of evident partiality. See Alim v. KBR (Kellogg, Brown & Root)— Halliburton, 331 S.W.3d 178, 182 (Tex. App.-Dallas 2011, no pet.).”

Ultimately, Texas’ Fifth District Court of Appeals ruled that the lower court abused its discretion when it denied the hurt worker’s post-arbitration discovery request and reversed the trial court’s order confirming the arbitral award. After that, the woman’s employer filed a petition for review with the Texas Supreme Court.

According to the employer, the issues presented in the case were:

Issue No. 1: Does the Federal Arbitration Act (FAA) preempt state law thereby disallowing a disgruntled litigant from pursing discovery from the arbitrator and Petitioners’ Counsel in order to prove evident partiality?

Issue No. 2: Pursuant to 9 U.S.C. § 10(a)(2), are disgruntled litigants allowed to depose the arbitrator and Petitioners’ Counsel when the statute does not authorize it?

Issue No. 3: Under TEX. CIV. PRAC. & REM. CODE § 154.073(b), did the court of appeals reversibly err when it allowed discovery to proceed against the arbitrator and Petitioners’ Counsel when the Texas ADR Act prohibits such discovery?

Issue No. 4: Under the FAA, is a personal injury plaintiff who loses a binding arbitration entitled to pursue carte blanche discovery from the arbitrator and Petitioners’ Counsel simply because the plaintiff alleges the arbitrator is evidently partial?

Issue No. 5: If the court of appeals’ opinion is allowed to stand, will it have a chilling effect on a person’s willingness to serve as a neutral arbitrator?

On Friday, the Texas high court denied the employer’s petition following a full briefing.

Photo credit: Stéfan via / CC BY-SA

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