Volume 1, Issue 3, November 2013

Litigation news and recent relevant rulings
Volume 1, Issue 3 November 2013  


Board of Certified Safety Professionals

Legal Investigators

Blood/Breath Alcohol Calculator


Amy B. Pollock


Amy Pollock practices general civil litigation and insurance defense for a wide variety of defense cases including premises liability, trucking and automobile accidents, contractors' liability, and liquor liability (dram shop). Amy also represents licensed professionals before the state licensing boards in Texas. Prior to her move to Texas in 2003, Amy was a prosecutor for the Pennsylvania Department of State, Bureau of Professional and Occupational Affairs where she sought disciplinary action against licensees who were in violation of a state statute, or had otherwise engaged in unprofessional conduct that warranted prosecution.

Amy was named a "Texas Rising Star" in 2007 by Thomson Reuters as published in Texas Monthly magazine, an honor reserved for 2.5 percent of lawyers under 40 years old who have been practicing law for less than 10 years.
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In This Issue:

In The News...

Health Care Reform Liability
An On-Going Update

As we approach 2014, concerns about implementing the Affordable Care Act and the possible fines, penalties and lawsuits that employers could face are causing considerable anxiety.

The ACA affects more than just Health Insurance. As an employer, you could be faced with lawsuits from employees and direct actions by the Federal or State government.

Many believe that, as long as the employer has acted in good faith, the only penalties they will suffer will be in the form of the fines and penalties outlined in the Affordable Care Act. That is simply not true.

The Department of Labor - Occupational Safety & Health Administration is charged with protecting employees from retaliation due to an employee reporting violations of ACA to Federal, State or Local regulators.

To quote from the Federal Register, Feb. 27, 2013, " ... the relationship between the employee's receipt of a credit and the potential tax penalty imposed on an employer could create an incentive for an employer to retaliate against an employee. ... An employer may not retaliate against an employee because the employee provided, or is about to provide or cause to be provided to the employer, the Federal Government or the attorney general of a State information relating to any violation of the Affordable Care Act."

So expect the DOL to be very busy filing lawsuits on behalf of employees who believe they have been retaliated against ... and retaliation can take several subtle forms (lower paying position, assignment to different departments, loss of certain privileges, and termination).

One area of concern is the so called "grandfathered plans." It is possible these can be challenged on a class action basis, for example, as to whether those plans must provide preventive care services, such as birth control.  In fact, the Supreme Court's decision in June of 2012 to uphold the core of President Obama's health care law guaranteed that the law and its potential impact on abortions and contraception will remain a powerfully divisive issue for religious groups for the foreseeable future. Two parts of the June ruling are notable:

  • One, from the majority opinion, said: "Even if the taxing power enables Congress to impose a tax on not obtaining health insurance, any tax must still comply with other requirements in the Constitution."

  • The second, from Justice Ruth Ginsburg, said "A mandate to purchase a particular product would be unconstitutional if, for example, the edict impermissibly abridged the freedom of speech, interfered with the free exercise of religion, or infringed on a liberty interest protected by the Due Process Clause."


In general, litigators across the country are expecting a flood of suits against employers not only for violations of the massive and complex law, but also for technical issues, such as documentation of benefits, change notices and the interpretation of arcane provisions; that workers may claim are preventing them from getting the benefits they deserve.

Employers trying to manage the size of their workforce in order to avoid the "play or pay mandate," will likely see class action suits from their employees.

All of the above scenarios will require defense of lawsuits and possible payments depending on the prevailing party. Like all new laws, the ACA will surely be tested by plaintiff lawyers much like wage and hour claims have become the soup of the day.

What type of policy will provide the best coverage given the uncertainty of these claims?

Currently the only policy that offers protection against these types of lawsuits is a properly written Fiduciary Liability policy. This policy has long been ignored by insurance brokers and employers believing you only needed a fiduciary liability policy if you had a pension plan or 401(k) plan. That is completely wrong.

A properly written Fiduciary Liability policy can protect an employer from claims arising out of any ERISA Health & Welfare Plan, whether those claims are from employees or regulators.

Some Fiduciary policies include coverage for what are called Voluntary Settlement Programs. These are compliance resolution programs or similar settlement programs administered by the IRS or DOL. In some cases the Fiduciary Liability program will cover fines that are part of the Settlement Program.

Critical Components Necessary to Obtain Coverage for Claims Arising from the ACA 

You must currently have an ERISA qualified Health & Welfare plan and most Health insurance programs are ERISA qualified plans. Just because you have a Health Insurance program does not mean you will not be sued or challenged. As you struggle to comply with the Affordable Care Act, remember your good intentions will not always protect you from lawsuits or government regulators.

Whenever legislation creates new obligations for employers and rights for employees, inevitably, there are disputes about exactly what the legislation means, how far the rights extend and whether employers' individual decisions fit the expectations of the employees (and the plaintiff lawyers that represent them). While much is uncertain, you can be sure the parameters surrounding the ACA will be tried and tested.

Offer of Settlement--Texas Rule

In 2003, the Texas legislature enacted an "Offer of Settlement" rule to encourage litigants to accept reasonable settlement offers by invoking a form of "fee shifting" or "loser pay" system. The rule is not used very often but could be a good strategy to employ in certain circumstances.  

The Offer of Settlement rule is codified in Rule 167 of the Texas Rules of Civil Procedure. The Texas rule is modeled after the offer of judgment rule in the Federal Rules of Civil Procedure. Both rules were designed to discourage frivolous and unnecessarily prolonged litigation. However, there are material and substantial differences between the two rules, and the Texas rule is rarely used as a result.

The Texas offer of settlement rule is a compromise that, in theory, incentivizes parties to make and accept reasonable offers early in the case. In doing so, it provides for cost shifting in the event a party has made a reasonable settlement offer that is not accepted. The costs are shifted pursuant to the amount of the offer(s) made and not based upon the prevailing party. 

The key components of the Rule 167 offer of settlement procedure in Texas are as follows:


  • A defendant must file a declaration to invoke the rule no later than 45 days before the trial setting. Only a defendant can invoke the offer of judgment procedure. The defendant cannot invoke the procedure until at least 60 days after both the plaintiff and defendant have appeared in the case; 

  • Once the defendant has invoked Rule 167 by filing a declaration, either party may make a settlement offer under the offer of settlement procedure;

  • The terms of the offer must be in writing and served on all parties to whom it is made.

  • The offer must not attempt to settle less than all monetary claims and may not include non-monetary claims. Class actions, shareholder derivative actions, family code suits and equitable claims are not subject to this rule;

  • The offer must not include "unreasonable conditions," but may contain conditions to acceptance;

  • The offer may not be made at mediation or arbitration; 

  • The offer must state an acceptance deadline, which must be at least 14 days after the offer is made. Before the offer is accepted, it may be withdrawn; and 

  • After a defendant invokes the process, the plaintiff can then invoke the procedure as well.


Thus, a defendant may end up paying the plaintiff's litigation costs under this procedure.

Under the Texas rule, the offering party is entitled to recover litigation costs if the judgment is "significantly less favorable than the rejected offer." A judgment is considered significantly less favorable if:

(a) the amount of the judgment is less than 80% of the offer rejected by the plaintiff; or

(b) more than 120% of the offer rejected by the defendant.

For example, if a plaintiff rejected an offer of settlement of $100,000, litigation costs will be assessed if the amount of the judgment (considering proportionate responsibility, settlement credits, and prejudgment interest) is less than $80,000. Similarly, for a defendant who rejected a plaintiff's offer of settlement of $80,000, litigation costs will be assessed if the amount of the judgment is more than $96,000. It is important to note that the litigation costs only include those costs incurred between the date the offer was rejected and the time of judgment.

Litigation costs are defined as the money spent and obligations incurred that directly relate to the claims in the settlement offer. They include (1) court costs; (2) reasonable fees for no more than two testifying experts; and (3) reasonable attorneys' fees. Litigation costs cannot exceed the total of 50% of the plaintiff's economic damages, plus 100% of the plaintiff's non-economic, exemplary and additional damages.

Lastly, if the defendant recovers litigation costs, those costs are awarded as an offset against any judgment obtained by the adverse party. The litigations costs are incorporated into the final judgment.

Dram Shop: Texas Ranked No. 1 in the U.S. for Alcohol-Impaired Driving Fatalities

Dram Shop Liability refers to causes of action brought against sellers and other providers of alcohol beverages resulting from injuries to consumers of alcohol beverages and third parties harmed by such persons. Dram shop liability is the most common type of liability that licensees of alcohol beverages are exposed to, and any party holding a liquor license may be subject to this kind of liability.

Courts analyzing these cases decide how to apportion responsibility for the injury between the server and the drinker. The traditional common law rule in most United States jurisdictions was that the consumption of alcohol, rather than the furnishing of it, was the proximate cause of alcohol-related accidents. Today, all fifty states have a statutory scheme to address these issues. Courts must balance the common law and these liquor liability statutes in order to assess liability. Two of the most significant decisions in Texas include the Supreme Court rulings in Duenez and Parker

In May 2007, the Texas Supreme Court issued an opinion in F.F.P. Operating Partners v. Duenez, which drastically changed the way responsibility is apportioned in third-party dram shop cases. In that case, the Duenez family was injured by a drunk driver who, after drinking all day, purchased a 12-pack of beer from a convenience store and then drove across the centerline and hit the Duenez's car head on. The family sued the drunk driver, the store and the store's clerk.

The F.F.P. Operating Partners decision made it more difficult to hold bars, restaurants or other providers of alcohol responsible for injuries caused by a drunk driver. The case held that the dram shop's liability is determined by looking at the percentage of responsibility for the accident that the jury assigns to the dram shop. The dram shop is not automatically responsible for all of the injured party's damages. Only if the jury finds that the dram shop is more than 51% at fault will it also be responsible for the drunk driver's share of liability.

In March of 2008, the Texas Supreme Court issued its opinion in 20801, Inc. v. Parker for the first time interpreting the Tex. Alco. Bev. Code § 106.14(a), more commonly referred to as "the safe harbor provision."  In November 1999, Parker attended the grand opening of a Slick Willie's Family Pool Hall, operated by 20801, Inc. Parker contended that, over the course of the evening, the bar's employees served him between 10-15 free alcoholic beverages, including two given to him by the manager, Craig Watson. Parker became involved in an argument with another patron, Anthony Griffin, at which point Watson asked Parker to leave. Outside, in the parking lot, Griffin punched Parker, causing him to fall and strike his head on the pavement.

Parker sued Slick Willie's under both a premises liability theory and the Texas Dram Shop Act, alleging under the latter that Slick Willie's and its "agents, servants and/or employees were negligent in that they provided . . . intoxicating alcoholic beverages and liquor to [Parker] and Griffin when [Slick Willie's] knew or should have known that [they] had become obviously intoxicated to such a degree as to present a clear and present danger to themselves and others . . . [and that] such intoxication was a proximate cause of the damages suffered by [Parker]."

Slick Willie's moved for summary judgment on the grounds that Parker's premises liability claim was precluded by section 2.03 and that Slick Willie's had satisfied section 106.14's safe harbor provision. Under the "safe harbor" provision, the actions of an employee in over-serving a patron "shall not be attributable to the employer if: (1) the employer requires its employees to attend a commission-approved seller training program; (2) the employee has actually attended such a training program; and (3) the employer has not directly or indirectly encouraged the employee to violate such law."

The provision intends to provide a broad shelter from liability for a provider who has complied with the first two elements while also ensuring that this shelter not be abused.  As such, Section 106.14(a) has been interpreted to include both an affirmative defense, contained in the first two elements, as well as a potential rebuttal to that defense if the claimant can demonstrate that the employer directly or indirectly encouraged the server to continue to serve an intoxicated patron. The court of appeals held that a provider must prove enforcement of its alcohol policy on a particular occasion to satisfy the third element of the Safe Harbor Defense. It held that Slick Willie's did not conclusively prove that it did not directly or indirectly encourage its employees to serve alcohol to an intoxicated customer.

The Texas Supreme Court held that a plaintiff has the burden of proof to establish "direct or indirect encouragement" and that the plaintiff's burden in that respect may be satisfied, at the minimum, by evidence of negligence on the part of the provider. Prior to the March 28, 2008 opinion in 20801, Inc. v. Parker, the lower courts had often required the provider to establish all three elements, including "proving a negative" for the third element. The Texas Supreme Court held that the provider has the burden of proof on the first two elements but the plaintiff has the burden to prove the provider did in fact directly or indirectly encourage a violation of the Act.

Another important holding in this opinion was that a manager can be a "vice-principal" of his employer and therefore the conduct of the manager is the conduct of the employer. This means that any encouragement by a vice-principal manager is encouragement by the employer provider. It also means that if a vice-principal manager served the alcohol, the "safe harbor" provision would not apply because the manager would not be an employee within the terms of the provision.

Providers of alcohol in Texas should endeavor to be within the "safe harbor" by following these guidelines:

  • Require employee training;
  • Confirm that employees have attended training;
  • Maintain documentation of that training;
  • Review any existing written policies and ensure they do not in any way encourage the over serving of alcohol; and
  • Be vigilant in supervising their servers.

The proper perspective should be that any loss of revenue from the drinks not served will be more than offset by the savings on legal fees and damage awards and by the prevention of injuries that might result from serving an obviously intoxicated person.

Decision Alert


Texas Engineering Professionals


One important change is the requirement that all engineers who renew an active license for the coming year and all new applicants for licensure in Texas complete a one-time Criminal History Record Check.  Each engineer will be responsible for complying with the law prior to renewing his/her license in 2014. Changes made by the legislature to the Texas Engineering Practice Act went into effect September 1, and staff is working to implement these changes ahead of mandated timelines. 

See a Summary of these Legislative Changes.

See a Revised Version of the Law and Rules Document.

Effective Litigation Is Not 'Boilerplate' -
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The Willis Law Group knows each case and client is unique and we proceed accordingly by building individualized solutions, communicating regularly, being responsive and reaching efficient resolutions. We are based in Dallas, Texas and have offices in Houston, New Orleans, Oklahoma City and San Antonio. Our boutique legal defense firm has 27 attorneys practicing a wide variety of insurance defense and commercial litigation work, including construction, employment & labor, environmental, healthcare, rig/oil well disasters, insurance coverage and professional services.
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