KEITH P. ELLISON, District Judge.
Having invited and reviewed supplemental briefing from the parties, as well as the authorities which those briefs recommend, the Court finds itself with scant guidance from Texas courts regarding the proper disposition of the breach of contract claim asserted by Plaintiff Jay Martin Barrash, M.D. against Defendant American Association of Neurological Surgeons, Inc. ("AANS").
Despite the lack of clear guidance from Texas case law, the Court concludes that the Texas Supreme Court would not entertain a breach of contract claim under the allegations pled by Dr. Barrash. As a result, the Court
The Court begins its analysis with a brief survey of relevant Texas law. Under Texas law, a private, voluntary membership organization is empowered to "make," "adopt," and "interpet its own organic agreements, [] laws and regulations." Brotherhood of R.R. Trainmen v. Price, 108 S.W.2d 239, 241 (Tex. Civ. App.-Galveston 1937, writ dism'd). "[A] member, by becoming such, subjects himself, within legal limits, to his organization's power to administer, as well as its power to make, its rules." Id. Consequently, courts play an extremely limited role in policing the activities of private organizations, and will not review the substance of a private organization's adjudication of a dispute involving one of its members. See Dallas Cnty. Med. Soc'y v. Ubinas Brache, 68 S.W.3d 31, 41 (Tex. App.-Dallas 2001, pet. denied). This is known as the doctrine of judicial non-intervention.
Despite the doctrine of judicial non-intervention, Texas law authorizes judicial review of whether a private organization acting in an adjudicative capacity has afforded due process to the affected member.
This raises the question of what judicial review, if any, is available when a private organization imposes procedural safeguards beyond minimal due process, but fails to adhere to them in the context of a specific dispute. At least two Texas appellate courts have held that the organization cannot be made to account by way of a breach of contract claim or a due process claim. See Ubinas Brache, 68 S.W.3d at 42; Whitmire v. Nat'l Cutting Horse Ass'n, No. 2-08-176-CV, 2009 WL 2196126, at *5 (Tex. App.-Fort Worth July 23, 2009, pet. denied). These decisions are somewhat inconsistent with older cases which state that "courts will interfere [in the decision of a private organization] to ascertain whether or not the proceedings within the [private organization] were pursuant to the rules and laws of the [private organization]." Lundine v. McKinney, 183 S.W.2d 265, 273 (Tex. Civ. App.-Eastland 1944, no writ); see also Brown v. Harris Cnty. Med. Soc'y, 194 S.W. 1179, 1180-81 (Tex. Civ. App.-Galveston 1917, no writ) (similar); cf Adams, 583 S.W.2d at 834 (analyzing plaintiffs' claim that they were denied due process by analogy to judicial proceedings "because the by-laws of [the organization] do not cover this subject"). The Court feels compelled to conclude that Lundine and Brown no longer represent good law in Texas and that-pursuant to Whitmire, Ubinas—Brache, and Hatley— contractual "due process" is at most a one-way valve. In other words, a private organization may be able to avoid judicial oversight by contractually eliminating default procedural protections, as Hatley suggests, but it does not appear to invite more judicial scrutiny by expanding them.
The Court must reconcile these rules with the oft-quoted "exception" to the doctrine of judicial non-intervention. As commonly phrased, the exception permits judicial intervention when the organization has "substitute[d] legislation for interpretation;" "transgress[ed] the bounds of reason, common sense, fairness;" or "contravene[d] public policy, or the laws of the land." Price, 108 S.W.2d at 241; see also Ubinas Brache, 68 S.W.3d at 41. Because no court has ever found the exception to be met, it is unclear what type or types of claims it authorizes. However, one Texas appellate court has intimated that the exception permits a due-process-type review only. See Burge v. Am. Quarter Horse Ass'n, 782 S.W.2d 353, 355-56 (Tex. App.-Amarillo 990, no writ) (acknowledging the exception to the judicial non-intervention doctrine and later concluding that "we believe the process of registration and cancellation of registration [of a quarter horse] to be an integral part of the [organization's] internal management with which the courts will not interfere in the absence of deprivation of due process.").
The authorities cited above provide some oblique support for the AANS's position that Dr. Barrash has not stated a claim for breach of contract, but they are by no means definitive. Therefore, pursuant to Erie R.R. v. Tompkins, 304 U.S. 64 (1938), the Court must make its own best guess as to how the Texas Supreme Court would rule on AANS's motion to dismiss Dr. Barrash's breach of contract claim for failure to state a claim. See Am. Int'l Speciality Lines Ins. Co. v. Rentech Steel LLC, 620 F.3d 558, 564 (5th Cir. 2010).
As the Court explained in its January 31, 2014 order, Dr. Barrash has adequately alleged in the Amended Complaint that the AANS "substituted legislation for interpretation"—i.e., that it used the disciplinary proceeding against Dr. Barrash to create a rule, rather than to interpret and enforce a pre-existing one. Although no Texas case explicitly addresses how this "exception" to the judicial non-interference doctrine maps onto a cause of action, the Court concludes that the Texas Supreme Court would view Dr. Barrash's allegations as supporting a due process claim only. The Court reaches this conclusion because breach of contract seems a poor fit for the exception identified.
Dr. Barrash seeks permission to amend Count II in the event that the Court grants the AANS's motion to dismiss. (Doc. No. 48, at 14-15.) He believes that he has uncovered evidence through discovery which will show that the AANS inconsistently adjudicated one of the Rules for Expert Opinion Services. He argues that this evidence will support another prong of the exception to judicial non-intervention—that the AANS's decision to censure him was "arbitrary and capricious." (Id.)
The Court cannot permit amendment based on the bare notion that the AANS may have inconsistently applied its rules once or twice in the past. As the survey of law in Section I shows, Texas courts display extreme deference to the right of a private organization to interpret and administer its own rules. Moreover, the Court is in no position to determine if the factual circumstances of one case are sufficiently similar or dissimilar to another to justify a deviation in result. Because amendment would be futile, on the information provided by Dr. Barrash, leave to amend is not extended.
For the reasons stated above, Dr. Barrash has failed to state a claim for breach of contract under Texas law. Defendant's Supplemental Motion to Dismiss Count II of Plaintiff's Amended Complaint (Doc. No. 47) is therefore
Dr. Barrash's Motion to Compel Answers to Requests for Admission (Doc. No. 30) remains pending. The Court believes it prudent to convene another hearing, at which the relevance of the requested admissions in the context of Dr. Barrash's due process claim may be addressed. Parties will receive a notice of setting and are free to attend telephonically.