E. GRADY JOLLY, Circuit Judge:
The original opinion in this case was filed on August 14, 2014.
We reinstate the holding in Part II of the original opinion, and accordingly AFFIRM the district court's judgment as to liability for the reasons stated in Part II of that opinion. Part II of the original opinion reads as follows:
Because the plaintiffs' monetary award implicates important issues of Texas law as to which there is no controlling Texas Supreme Court precedent, we unanimously submit the following certified questions to the Supreme Court of Texas.
CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT TO THE SUPREME COURT OF TEXAS, PURSUANT TO THE TEXAS CONSTITUTION ART. 5 § 3-C AND TEXAS RULE OF APPELLATE PROCEDURE 58.1.
The style of the case is Doris Forte, O.D., on behalf of herself and all other similarly situated persons; Bridget LeeSang, O.D.; David Wiggins, O.D.; John Boldan, O.D., Plaintiffs-Appellees v. Wal-Mart Stores, Incorporated, Defendant-Appellant, Case No. 12-40854, in the United States Court of Appeals for the Fifth Circuit, on appeal from the judgment of the United States District Court for the Southern District of Texas. Federal jurisdiction is premised on diversity of citizenship, 28 U.S.C. § 1332.
The names of all the parties to the case, each of whom is represented by counsel, and the respective names, addresses, and telephone numbers of their counsel, are as follows:
Since 1992, Wal-Mart Stores, Inc. ("Wal-Mart") has leased space in its Texas stores to optometrists, typically receiving
In 1995, the Texas Optometry Board ("the Board"), a state agency regulating optometry, notified Wal-Mart that setting required hours violated the TOA, which prohibits "control[ling] ... the practice of an optometrist" by "attempting to influence the ... office hours of an optometrist." Tex. Occ.Code § 351.408(b), (c). Wal-Mart then eliminated the forty-five hour requirement and revised its lease to read "[t]he following is the LICENSEE'S representation of the weekly hours of coverage to the patients," which was followed by a table in which the optometrists could handwrite their hours. The lease further provided that Wal-Mart "shall retain no control whatsoever over the manner and means by which the LICENSEE performs his/her work."
In 1998, after Wal-Mart revised its lease, the Board stated in a newsletter addressed to the public at large that leases that even referenced hours violated the TOA. In 2003, the Board wrote Wal-Mart that it had learned that Wal-Mart had told an optometrist that customers were requesting longer hours. The Board warned that, although it was aware that Wal-Mart had also stated "the ultimate decision regarding the hours and fees for eye examinations are made by the doctors," even informing optometrists of customer requests for longer hours violated the TOA. Nonetheless, Wal-Mart continued requiring that optometrists provide the hours representations in its leases.
In 2007, the dispute culminated in this suit when Doris Forte sued Wal-Mart in the United States District Court for the Southern District of Texas for alleged violations of the TOA. Eleven plaintiffs moved to certify a class action of four hundred optometrists. The district court, however, denied the certification and instead designated four plaintiffs who would go to trial. These plaintiffs were Drs. Doris Forte, John Boldan, David Wiggins, and Bridget LeeSang.
In 2009, while the suit was pending, Wal-Mart deleted the hours representation provision from its leases and sent a letter to Texas lessees stating that it would not enforce this provision.
The four plaintiffs' claims were tried to a jury in August 2010. The judge instructed the jury that the plaintiffs "do not claim they have suffered any physical or economic damages [and] only seek to recover civil penalties." Wal-Mart's primary argument in the district court was that the hours representation provision was not enforced, and that optometrists could change their hours if they desired. Wal-Mart also argued that the provision was not a condition of the lease because it was unenforceable.
The four plaintiff optometrists testified that they believed that the hours representation provision was binding and enforceable. All four plaintiffs conceded, however, that the hours were set at an acceptable level. Three of the plaintiffs renewed their leases, some multiple times, but when renewing all felt pressured to increase office and work hours.
Post-verdict, Wal-Mart renewed its motion for a judgment as a matter of law (JMOL). The district court denied the motion with respect to liability but entered a remittitur reducing the civil penalty to $400 a day. Forte v. Wal-Mart Stores, Inc., No. CC-07-155, 2011 WL 1740182, *17 (S.D.Tex. May 4, 2011). The reduced award totaled $1,396,400, to which the plaintiffs consented.
Wal-Mart now appeals the denial of its JMOL motion, asserting that the judgment should be reversed or vacated. Alternatively, Wal-Mart seeks further remittitur, and also urges that the civil penalty award as remitted by the district court violates both Texas's cap on exemplary damages and Due Process.
To decide whether the plaintiffs can recover the award of civil penalties, the Court must interpret two statutes — the TOA and Chapter 41. Chapter 41, a tort reform statute, "applies to any action in which a claimant seeks damages relating to a cause of action." Tex. Civ. Prac. & Rem.Code § 41.002(a). Relevant here, Chapter 41 limits the recovery of exemplary damages, defined as "any damages awarded as a penalty or by way of punishment but not for compensatory purposes." Id. § 41.001(5). Exemplary damages are neither economic nor noneconomic in nature and include "punitive damages." Id. Critically, a plaintiff cannot recover exemplary damages unless the plaintiff also recovers actual damages. Id. § 41.004(a).
Here, the district court instructed the jury that the plaintiffs were not seeking any actual damages as a result of Wal-Mart's violations of the TOA. Instead, the plaintiffs were only seeking a civil penalty award. Thus, Wal-Mart argues: (a) the plaintiffs' action for civil penalties under the TOA was a damages action for purposes of Chapter 41; and (b) the plaintiffs' recovery is barred because they received an award of civil penalties, which is a form of exemplary damages, without recovering actual damages.
Both aspects of Wal-Mart's argument turn in part on the construction of the TOA, which authorizes these plaintiffs to seek the civil penalties at issue here. Under the TOA, "[a] person injured as a result of a violation of Section 351.408, including an optometrist who is a lessee of a manufacturer, wholesaler, or retailer, is entitled to the remedies in Sections 351.602(c)(2), 351.603(b), and 351.604(3)." Tex. Occ.Code § 351.605. Section 351.605 authorizes the plaintiffs to seek multiple types of relief. Two types of relief are relevant here. First, the plaintiffs may seek "injunctive relief or damages plus court costs and reasonable attorney's fees...." Id. § 351.602(c)(2). Second, the plaintiffs may pursue an action for "a civil penalty not to exceed $1,000 for each day of a violation plus court costs and reasonable attorney's fees." Id. § 351.603(b).
The first, and primary, issue is whether the plaintiffs' action for civil penalties under the TOA is an action for damages for purposes of § 41.002(a). Although the plaintiffs concede that some penalties are damages under the meaning of the TOA, they argue that statutory penalties similar to those in the TOA are not.
The Texas Supreme Court has not decided whether a statutory penalty such as the penalty in the TOA falls within the meaning of the clause "any action in which a claimant seeks damages relating to a cause of action." Tex. Civ. Prac. & Rem. Code § 41.002(a). If damages is given a broad meaning, however, the plain language of Chapter 41 suggests that the civil penalties be treated as damages. Thus, Wal-Mart advances a credible interpretation of Chapter 41 based on the plain language of both statutes, which controls if it is unambiguous. Tex. Dep't of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 177 (Tex.2004) ("If the statutory text is unambiguous, a court must adopt the interpretation supported by the statute's plain language unless that interpretation would lead to absurd results.").
Nonetheless, the plaintiffs point to several deficiencies with this interpretation. First, the structure of the TOA suggests that civil penalties are not a form of damages. One TOA provision authorizes recovery of damages and injunctive relief, whereas a separate provision allows for recovery of statutory penalties. Tex. Occ. Code §§ 351.602(c)(2), 351.603(b). Because the TOA addresses damages and civil penalties in separate statutory provisions, the TOA arguably recognizes that civil penalties form a category of monetary relief that is distinct from damages. Additionally, the TOA's definition of damages may trump even an unambiguous definition of damages in Chapter 41 because the TOA is a specific statute that addresses the issue in this appeal, whereas Chapter 41 is a more general statute. See Tex. Appleseed v. Spring Branch Indep. Sch. Dist., 388 S.W.3d 775, 779 (Tex.App.-Houston 2012) ("It is a common statutory interpretation rule that specific provisions control over general provisions.") (citing Tex. Gov't Code Ann. § 311.026 (Vernon 2005)).
Relatedly, the Texas Supreme Court has recognized that not all recoveries of monetary sums are damages under Texas law. In the context of analyzing whether attorney's fees were compensatory damages under a Texas tort reform statute, the Texas Supreme Court observed that "[n]ot every amount, even if compensatory, can be considered damages." In re Nalle Plastics Family Ltd. P'ship, 406 S.W.3d 168, 173 (Tex.2013). Although the court in that case did not address civil penalties, its assessment of attorney's fees suggests that the Texas Supreme Court could conclude that such penalties are not damages. Indeed, the Texas Supreme Court has previously distinguished statutory penalties from damages, observing that a plaintiff "did not sue for damages under [a statute], but undertook to maintain this suit on his own behalf and on behalf of the State of
In a similar vein, the plaintiffs point out that civil penalties differ from a typical damage award in several respects. Private litigants may pursue statutory penalties only in limited circumstances, as "[g]enerally, a statutory penalty or fine is not payable to a private litigant." Brown v. De La Cruz, 156 S.W.3d 560, 564 (Tex. 2004). Additionally, penalty statutes are strictly construed, and a person seeking such penalties must fall clearly within the ambit of the statute. Id. The limited nature of these remedies and their strict construction suggests that statutory civil penalties are a unique breed of remedies that are not damages as the term is commonly understood. Because the Texas Legislature has explicitly authorized private litigants to assist the State with its law enforcement obligations in these limited circumstances, the Texas Supreme Court reasonably could conclude that a civil penalty award falls outside the tort reform context to which Chapter 41 applies.
In sum, we conclude that this issue is amenable to certification to the Texas Supreme Court. We recognize the practical concern that both private plaintiffs and state and local governments may be hindered in seeking civil penalties if those penalty awards are subject to the limitations in Chapter 41. Similarly, we recognize that the Texas Legislature has enacted such penalty regimes to allow public and, in some cases, private litigants to enforce Texas law. Conversely, we acknowledge that Chapter 41 by its terms applies broadly to most civil actions, and we are reluctant to read an exception into that statute that does not flow unambiguously from its text. Thus, we certify the issue so that the Texas Supreme Court may decide the appropriate meaning of Tex. Civ. Prac. & Rem.Code § 41.002(a).
Although the plaintiffs will prevail if the monetary award they seek is not damages within the meaning of § 41.002(a), they may also prevail if the award of civil penalties in this case falls outside the definition of exemplary damages in § 41.001(5). Chapter 41 only prohibits a recovery of exemplary damages if actual damages are not awarded. Id. § 41.004(a). The Texas Supreme Court has not decided whether a statutory civil penalty award under the TOA falls within the meaning of exemplary damages.
The Texas Supreme Court may find several ambiguities in Chapter 41's definition of exemplary damages. First, exemplary damages only encompass damages that are awarded as a penalty. Id. § 41.001(5). As the Court has already explained in Part III.A., supra, the Texas Supreme Court has not decided whether statutory civil penalties under the TOA are damages, the answer to which will affect the determination of whether the plaintiffs' monetary award is a form of exemplary damages. Second, even if the TOA's statutory penalties are damages, it is not entirely clear that they are "awarded as a penalty or by way of punishment but not for compensatory purposes." Id. Wal-Mart points out that the TOA refers to the award in such a case as a "civil penalty." Tex. Occ.Code § 351.603(b). The plaintiffs observe, however, that the definition of exemplary damages explicitly "includes punitive damages." Tex. Civ. Prac. & Rem.Code § 41.001(5). Thus, the Texas Supreme Court could read the inclusion of punitive damages as illustrative of the types of
Indeed, the Texas Supreme Court could distinguish statutory civil penalties from exemplary damages on the basis that statutory civil penalties are tailored to aid the State in its law enforcement role. On one hand, statutory civil penalties are similar to punitive damages because, like punitive damages, statutory penalties "deter and punish culpable conduct." See Serv. Corp. Int'l v. Guerra, 348 S.W.3d 221, 238 (Tex. 2011) (addressing the purpose of punitive damages). Nonetheless, statutory penalties also differ from punitive damages because statutory penalties have been authorized by the Texas Legislature to aid in law enforcement. See State v. Harrington, 407 S.W.2d 467, 474 (Tex.1966) (observing that a statutory penalty regarding violations of various rules "is a civil penalty statute enacted for the primary purpose of promoting and encouraging law enforcement and deterring violations of the rules"). Thus, the Texas Supreme Court could conclude that statutory penalties are a form of damages, but they cannot be considered exemplary damages.
As with the first issue, the Texas Supreme Court has not addressed whether statutory civil penalties, such as the penalties under the TOA, are a form of exemplary damages. Additionally, the Court has not addressed the interplay between § 41.002, which applies the limits of Chapter 41 to any action seeking damages, and § 41.004, which limits the award of exemplary damages. Because it is possible that the plaintiffs here could be seeking damages under § 41.002 but not exemplary damages under § 41.004, we certify a related question on this issue to the Texas Supreme Court.
For the reasons discussed above, we hereby certify the following determinative questions of Texas law to the Supreme Court of Texas:
We disclaim any intention or desire that the Supreme Court of Texas confine its reply to the precise form or scope of the questions certified.