Case: 12-40854 Document: 00512744187 Page: 1 Date Filed: 08/25/2014
REVISED August 25, 2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
August 14, 2014
No. 12-40854
Lyle W. Cayce
Clerk
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
Appeal from the United States District Court
for the Southern District of Texas
Before STEWART, Chief Judge, and JOLLY, and SMITH, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
This case of first impression calls upon us to interpret and apply the
Texas Optometry Act. Wal-Mart rented space to optometrists using a standard
lease agreement requiring optometrists to make representations in their leases
of the projected number of hours their offices would remain open. A jury found
Wal-Mart liable for “setting or attempting to influence . . . office hours of an
optometrist” in violation of the Act. The jury returned a civil penalty award,
which the district judge called “stunning” and “the highest verdict that’s been
reached in this court . . . in a case that is not worthy of the highest verdict.”
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Accordingly, the district judge remitted the award, and the plaintiffs accepted
the remittitur. On Wal-Mart’s appeal, we AFFIRM the judgment of liability.
In doing so, we decline to adopt Wal-Mart’s construction of the Texas
Optometry Act, which runs counter to its plain words giving it its plain
meaning. We further hold, however, that Texas’s rule on exemplary damages
requires us to REVERSE and VACATE the civil penalty awards inasmuch as
the plaintiffs neither suffered nor were awarded any underlying damages. We
REMAND the case to the district court for entry of judgment consistent with
this opinion.
I.
A.
Since 1992, Wal-Mart Stores, Inc. (“Wal-Mart”) has leased space in its
Texas stores to optometrists, typically receiving as rent ten percent of the
optometrists’ gross income. Through 1995, the standard lease Wal-Mart used
in Texas required optometrists to remain open for at least forty-five hours a
week. Failure to abide by the terms of the lease put the optometrist in default,
which, at Wal-Mart’s discretion, could trigger a liquidated damages provision
of $200 per day of violation. Although none of the four plaintiffs here leased
space at Wal-Mart when the forty-five hour requirement was in effect, that
requirement set the stage for the events that followed.
In 1995, the Texas Optometry Board (“the Board”), a state agency
regulating optometry, notified Wal-Mart that setting required hours violated
the Texas Optometry Act (“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
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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.
B.
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 that 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
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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.
The jury sided with the plaintiffs, awarding them $3,953,000 in civil
penalties. This award was the maximum possible under the TOA—$1,000 per
day that each plaintiff operated under his or her lease. The plaintiffs were also
awarded $763,854 in attorneys’ fees. As a point of reference, the evidence
showed that the gross annual income of the optometrists was in the
neighborhood of $200,000.
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.
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II.
We begin by addressing whether the district court erred in denying Wal-
Mart’s renewed JMOL motion, which we review de novo. Vanderbilt Mortg. &
Fin., Inc. v. Flores, 692 F.3d 358, 364 (5th Cir. 2012). “When reviewing jury
verdicts, the court views all the evidence and draws all reasonable inferences
in the light most favorable to the verdict.” Black v. Pan Am. Labs., L.L.C., 646
F.3d 254, 258 (5th Cir. 2011). A JMOL motion will be granted “[i]f the facts
and inferences point so strongly in favor of [Wal-Mart] that a rational jury
could not arrive at a contrary verdict.” Id. (internal quotation marks omitted).
A.
As a threshold matter, we reject the plaintiffs’ argument that Wal-Mart’s
new argument raised on appeal concerning the proper construction of the TOA
was waived by failing to present it to the district court. In the district court,
Wal-Mart contended that because it did not attempt to influence the plaintiffs’
hours, it was not liable under the TOA. On appeal, Wal-Mart argues that
although the TOA prohibits influencing office hours, it does so only when
attempting to control an optometrist’s professional judgment, and that the
plaintiffs’ claims are not covered under the TOA so interpreted.
It is certainly true that we do not generally consider matters on appeal
that were not presented in the lower court. New Orleans Depot Servs., Inc. v.
Dir., Office of Worker’s Comp. Programs, 718 F.3d 384, 387 (5th Cir. 2013) (en
banc). The purpose of this rule is to ensure the appellate court benefits from a
full record on the issue and a lower court determination. Id. at 388.
Consequently, “a well-settled discretionary exception to the waiver rule exists
where a disputed issue concerns a pure question of law.” Id. (internal
quotation marks omitted). Because Wal-Mart’s argument on appeal concerns
a pure question of law, and all parties have had an opportunity to fully brief
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the question, the waiver rule does not bar our consideration of Wal-Mart’s
statutory argument as now presented to us.
B.
The TOA provision at issue, TEX. OCC. CODE § 351.408(c), states that
A . . . retailer of ophthalmic goods may not directly or indirectly:
(1) control or attempt to control the professional judgment,
manner of practice, or practice of an optometrist or therapeutic
optometrist[.]
In turn, TEX. OCC. CODE § 351.408(b) states that
“[C]ontrol or attempt to control the professional judgment, manner
of practice, or practice of an optometrist or therapeutic
optometrist” includes:
(1) setting or attempting to influence the . . . office hours of an
optometrist or therapeutic optometrist[.]
Any person injured by a violation of § 351.408 may sue and recover an
appropriate civil penalty. Id. at §§ 351.603(b), 351.605.
Wal-Mart invokes the absurdity canon to argue that we must deviate
from the plain language of the TOA. To Wal-Mart, the TOA’s prohibition
against “control[ing] or attempt[ing] to control the professional judgment,
manner of practice, or practice of an optometrist” would produce absurd results
unless we erect some limiting principle. Cf. Combs v. Health Care Servs.,
Corp., 401 S.W.3d 623, 630 (Tex. 2013) (departing from plain language
warranted when plain language produces absurd results).
An example Wal-Mart proffered at oral argument is a retailer ordering
an optometrist to keep his store clean. It would be absurd for the TOA to
outlaw such an order, which could possibly be construed as an “attempt to
control” an optometrist. Wal-Mart argues that an “attempt to control” must be
linked to an attempt to control the optometrist’s professional (i.e., medical)
judgment. Wal-Mart argues that if the language of the TOA is applied literally,
the TOA would prevent its ordering an optometrist to keep his store clean, but
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because the cleanliness of the store is unrelated to the optometrist’s
professional judgment, the TOA avoids such absurdities.
By contrast, the plaintiffs argue that there is no getting away from the
TOA’s statement that, “control or attempt to control” includes “setting or
attempting to influence . . . . office hours.” TEX. OCC. CODE at § 351.408(b).
Moreover, the plaintiffs also argue that the TOA expressly prohibits
attempting to control “the professional judgment, manner of practice, or
practice of an optometrist.” Id. at § 351.408(c) (emphasis added). Tying
attempts to control only to professional judgment would read two of the three
parts out of this provision. Moreover, the plaintiffs note that the TOA requires
that § 351.408 be “liberally construed” to prevent retailers from imposing on
optometrists’ independence. See id. at § 351.408(a).
C.
After considering the respective arguments of the parties, we adopt the
plaintiffs’ plain meaning interpretation for three reasons. First, Texas courts
highlight the primacy of a statute’s plain meaning. “When we interpret a
Texas statute, we follow the same rules of construction that a Texas court
would apply—and under Texas law the starting point of our analysis is the
plain language of the statute.” Wright v. Ford Motor Co., 508 F.3d 263, 269
(5th Cir. 2007). The Texas Supreme Court has stressed that “stray[ing] from
the plain language of a statute . . . risk[s] encroaching on the Legislature’s
function to decide what the law should be.” Fitzgerald v. Advanced Spine
Fixation Sys., Inc., 996 S.W.2d 864, 866 (Tex. 1999).
Second, there is no absurd result in finding Wal-Mart liable here. The
“bar for reworking the words our Legislature passed into law is high.” Combs,
401 S.W.3d at 630. Consequently, the Texas Supreme Court views the
absurdity canon as a “safety valve” that is “reserved for truly exceptional
cases.” Id. Here, when Wal-Mart began leasing space to optometrists, it was
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on notice that the TOA affected the balance of power between retailers and
optometrists. More to the point, Wal-Mart was on notice that the TOA
prohibited setting or attempting to influence office hours. But Wal-Mart, a
sophisticated party, contracted with optometrists nonetheless. Given that it
was on notice of the TOA when it began contracting with optometrists, Wal-
Mart’s liability was not “patently nonsensical.” Id.
Wal-Mart’s question about whether, consistent with the absurdity
canon, a retailer can order an optometrist to keep his store clean is outside the
bounds of what we need to decide to resolve this case. There is already a clear
line between influencing office hours and influencing office cleanliness. Only
influencing office hours is explicitly listed in the TOA as a method of attempting
to control an optometrist, and so is expressly prohibited. Coming up with an
overarching interpretation of what an “attempt to control” encompasses is not
necessary.
Third, when a court invokes the absurdity canon, it is attempting to
divine a legislative intent that the plain meaning of the statute does not reflect.
When a legislature uses an “amorphous term” we may sometimes have “no
choice but to speculate about [legislative] intent.” BedRoc Ltd., LLC v. United
States, 541 U.S. 176, 183 (2004). But such speculation is less necessary when
the legislature “has textually narrowed the scope of [a] term.” Id. The Texas
Legislature has narrowed “control or attempt to control” to specifically include
“setting or attempting to influence . . . office hours.” “Control or attempt to
control” is thus a narrowly defined rather than amorphous term.
Consequently, we decline to speculate about legislative intent by invoking the
absurdity canon.
Wal-Mart is asking us to winnow from a state statute its plain meaning.
Because of federalism concerns, invoking the absurdity canon here is especially
dangerous because it would involve a federal court’s “encroaching on the
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[Texas] Legislature’s function to decide what the law should be.” Fitzgerald,
996 S.W.2d at 866.
D.
With that said, we turn to the plain meaning of the TOA. The TOA
expressly prohibits a retailer’s “attempt to control the . . . manner of practice”
of an optometrist. TEX. OCC. CODE § 351.408(c). “Control or attempt to control”
is minutely defined in Section 351.408, and includes “setting or attempting to
influence the . . . office hours of an optometrist.” Id. at § 351.408(b).
Under the plain language of the TOA, a rational jury could have found
that Wal-Mart’s leases and conduct constituted “an attempt to control the . . .
manner of practice” of an optometrist by coercing him into working certain
hours. Id. at § 351.408(c). The jury’s verdict was supported by the
optometrists’ testimony that they understood themselves to be obligated to
work the hours in the lease and that Wal-Mart pressured three plaintiffs to
increase their hours when they renewed their leases.
III.
We now move on to the district court’s ruling that Chapter 41 of the
Texas Civil Practices and Remedies Code (“TCPR”) did not apply to reduce any
of the plaintiffs’ civil penalty awards. We review the district court’s ruling de
novo, as it is a question of law. Williams v. Liberty Mut. Ins. Co., 741 F.3d 617,
620 (5th Cir. 2014). We hold that Chapter 41 eliminates the civil penalties in
this case.
Under Chapter 41, “exemplary damages may be awarded only if
damages other than nominal damages are awarded.” TEX. CIV. PRAC. & REM.
CODE § 41.004(a) (emphasis added). “Exemplary damages” are defined as “any
damages awarded as a penalty or by way of punishment but not for
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compensatory purposes.” Id. at § 41.001(5) (emphasis added). 1 The TOA’s civil
penalties fall within Chapter 41’s definition of “exemplary damages.” First,
the TOA expressly labels civil penalties as a type of penalty. TEX. OCC. CODE
§ 351.603(b). Second, the TOA’s civil penalties as awarded here are not
compensatory in nature. For example, the plaintiffs expressly disclaimed that
they had suffered any actual damages.
The plaintiffs argue that Vanderbilt Mortg. & Fin., Inc. v. Flores, 692
F.3d 358 (5th Cir. 2012), shows that Chapter 41’s “exemplary damages” does
not extend to the TOA’s civil penalties. Vanderbilt held that “statutory
damages” under TCPR Chapter 12, which prevents filing false liens, were not
“exemplary damages” under Chapter 41 of the TCPR. 692 F.3d at 372. This
was so despite statutory damages’ not being designed to compensate for “any
particular, actual harm.” Id. The TOA’s civil penalties, the plaintiffs argue, is
similar to Vanderbilt’s “statutory damages” in that neither are intended to
compensate for “actual harm.” Id.
But Vanderbilt is distinguishable here for two reasons. First, in TCPR
Chapter 12, “statutory damages” were listed separately from “exemplary
damages.” Vanderbilt stated that this indicated a legislative intent to treat
statutory damages and exemplary damages as mutually exclusive. Id. As
statutory damages were not exemplary damages under TCPR Chapter 12,
neither were statutory damages exemplary damages under TCPR Chapter 41.
1 Penalties and damages are not mutually exclusive under Chapter 41. “Exemplary
damages” by definition includes “any damages awarded as a penalty.” TEX. CIV. PRAC. &
REM. CODE § 41.001(5) (emphasis added).
“Exemplary damages” are further defined to include punitive damages. Id.
“Exemplary damages” are not, however, intended to compensate for: actual economic or
pecuniary loss, physical pain and suffering, mental or emotional pain or anguish, loss of
consortium, disfigurement, physical impairment, loss of companionship and society,
inconvenience, loss of enjoyment of life or injury to reputation. Id. at § 41.001(4), (5), (12).
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But unlike TCPR Chapter 12, the TOA contains no indication that civil
penalties and exemplary damages are mutually exclusive.
Second, the statutory damages in Vanderbilt were not characterized by
the statute at issue as a “penalty,” which constitutes a central element of the
definition for exemplary damages under Chapter 41. TEX. CIV. PRAC. & REM.
CODE § 41.001(5). By contrast, the TOA characterizes the award the plaintiffs
seek here as a “civil penalty.” TEX. OCC. CODE § 351.603(b). The argument
that the TOA’s civil penalties are “exemplary damages” is therefore
significantly more compelling than the statutory damages that Vanderbilt
considered.
We now circle back to Chapter 41’s command that “exemplary damages
may be awarded only if damages other than nominal damages are awarded.”
TEX. CIV. PRAC. & REM. CODE at § 41.004(a). Because civil penalties under the
TOA constitute “exemplary damages” under Chapter 41, and because the
plaintiffs have acknowledged that non-nominal damages were not awarded,
Chapter 41 eliminates the award of civil penalties unless some exception to
Chapter 41 applies.
The district court held that Chapter 41’s lower damage cap exception
applied. Forte, 2010 WL 519042 at *2. This exception renders Chapter 41
inapplicable “to the extent another law establishes a lower maximum amount
of damages for a particular claim.” TEX. CIV. PRAC. & REM. CODE at § 41.002(b).
Restated, Chapter 41 “applies to any action involving exemplary or punitive
damages unless another law establishes a lower cap.” Arismendez v.
Nightingale Home Health Care, Inc., 493 F.3d 602, 611 (5th Cir. 2007). The
“maximum exemplary award cannot be determined until the jury has awarded
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economic damages.” Id. at 612. 2 “Once the statutory cap of Chapter 41 has
been determined, a district court can then determine if another . . . statutory
cap is lower and therefore controlling.” Id. (emphasis added).
We hold that the district court erred in applying Chapter 41’s lower
damage cap exception. Chapter 41’s section 41.004 caps damages for each
plaintiff’s claim at zero, because no plaintiff received non-nominal damages
that would have in turn permitted any award of exemplary damages. TEX. CIV.
PRAC. & REM. CODE § 41.004(a). By contrast, the TOA caps civil penalties at
“$1,000 for each day of a violation.” TEX. OCC. CODE § 351.603(b). Because the
TOA does not establish a lower damage cap than Chapter 41, Chapter 41’s
lower damage cap exception does not apply.
The district court mistakenly determined that § 41.008(b) established
the maximum amount of damages under Chapter 41. Forte, 2010 WL
519042 at *2. Section 41.008(b) caps exemplary damages at the greater of
(a) “two times the amount of economic damages [plus] noneconomic
damages . . . not to exceed $750,000” or (b) $200,000. TEX. CIV. PRAC. & REM.
CODE at § 41.008(b). Since the plaintiffs asserted no economic or
noneconomic damages within the meaning of Chapter 41, § 41.008(b) would
cap the exemplary damages each plaintiff could have received at $200,000.
But here, § 41.004(a) establishes the maximum amount of damages under
Chapter 41 because it establishes a cap lower than § 41.008(b). Because the
plaintiffs had no non-nominal damages, the maximum amount of exemplary
damages under Chapter 41 for each plaintiff’s particular claim was not
$200,000 under § 41.008(b), but $0 under § 41.002(b). 3
2Chapter 41 defines economic damages as “compensatory damages intended to
compensate a claimant for actual economic or pecuniary loss.” Id. at § 41.001(4).
3 The district court also held that Chapter 41 did not apply because, in its reading of
the TOA, the TOA does not require compensatory damages to be a prerequisite to civil
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Because Chapter 41 eliminates the plaintiffs’ civil penalty awards, we do
not consider Wal-Mart’s remittitur and Due Process arguments.
IV.
For the reasons above, we AFFIRM the district court’s judgment
regarding Wal-Mart’s liability and REVERSE and VACATE the district court’s
judgment regarding damages. The case is REMANDED to the district court
for entry of judgment consistent with this opinion. 4
penalties. Forte v. Wal-Mart Stores, Inc., No. CC-07-155, 2010 WL 519042, *2 (S.D. Tex.,
Feb. 2, 2010). The district court held that the TOA prevailed over Chapter 41 because the
TOA was the more specific statute. Id. The district court erred, however, and the plaintiffs
do not even cite this holding of the district court’s in their brief, much less make such an
argument.
Chapter 41 prevails over the TOA because Chapter 41 expressly states that it
“prevail[s] over all other laws to the extent of any conflict.” TEX. CIV. PRAC. & REM. CODE
§ 41.002(c). Moreover, the TOA is silent on what damage cap to apply when there are no
compensatory damages. Consequently, on this specific issue there is no conflict between the
TOA and Chapter 41. Invoking the specific versus the general canon is therefore not
appropriate here.
4 We do not address attorneys’ fees in this opinion. We remand to the district court to
consider attorneys’ fees in the light of this opinion.
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