Reed Smith Client Alerts

Companies at risk of personal injury or wrongful death litigation in Texas should take note of two bills recently passed by the 84th Texas Legislature, HB 1692 and SB 735.

HB 1692 HB 1692 is intended to curb the practice of foreign plaintiffs filing claims in Texas courts involving incidents that happened outside state borders. The bill would change Texas forum non conveniens law, currently found in section 71.051 of the Texas Civil Practice and Remedies Code, to remove a provision prohibiting dismissal of personal injury or wrongful death claims filed by nonresident plaintiffs on grounds of forum non conveniens, as long as one plaintiff in the action is a legal resident of Texas. TCPRC § 71.051(e).

This statutory forum non conveniens exception was the focus in In re Ford Motor Company, 442 S.W.3d 265 (Tex. 2014), the Texas Supreme Court’s July 2014 decision requiring Ford Motor Company to defend Texas wrongful death claims involving two Mexican residents and a car accident that took place in Mexico. In that case, the survivor of the crash, a Mexican citizen, sued the estate of a Mexican decedent in Texas state court. HB 1692 would amend section 71.051(e) to clarify that the legal residency exception to forum non conveniens applies only to plaintiffs who are legal residents of Texas or derivative claimants of legal residents of Texas, and to provide that the forum non conveniens analysis shall be made individually with respect to each plaintiff. The bill also redefines “plaintiff” to exclude representatives, administrators, guardians and next friends—unless they are a derivative claimant of a Texas resident.

The bill was submitted to the governor May 26, 2015; will take effect immediately upon the governor’s signature; and will only apply to new actions commenced on or after the effective date of the Act.

SB 735 SB 735 is intended to limit the circumstances in which net worth evidence is discoverable in personal injury and wrongful death cases. In Lunsford v. Morris, 746 S.W.2d 471 (Tex. 1988), the Texas Supreme Court permitted the discovery and use of net worth evidence to support a claim for punitive damages. Currently, section 41.011(a) of the Texas Civil Practice and Remedies Code codifies the ruling in Lunsford, providing that the trier of fact shall consider evidence relating to the defendant’s net worth in determining the amount of punitive damages. Texas has no statutory guidance, however, on how net worth is defined or what net worth materials are discoverable. This has resulted in inconsistent application of law across the district courts.

SB 735 would amend section 41.001 to add a statutory definition of “net worth” (“the total assets of a person minus the total liabilities of the person on a date determined appropriate by the trial court”). The bill would also add a new section 41.0115, providing that a court may authorize discovery of evidence relating to a defendant’s net worth if the court finds that the plaintiff “has demonstrated a substantial likelihood of success on the merits of a claim for exemplary damages.” The bill would further limit the trial court to authorizing only the least burdensome method available to obtain the net worth evidence. On appeal, a reviewing court may consider only the evidence submitted by the parties to the trial court in support of or in opposition to the motion seeking the discovery.

SB 735 would also facilitate defendants’ motions for summary judgment on punitive damages claims, providing that the trial court “shall presume that the requesting party has had adequate time for the discovery of facts relating to exemplary damages for purposes of allowing the party from whom net worth discovery is sought to move for summary judgment on the requesting party’s claim for exemplary damages.”

The bill was submitted to the governor May 30, 2015, and, if signed, will take effect September 1, 2015. The Act will apply only to new actions commenced on or after that date.


Client Alert 2015-159