The recent highly-publicized push in Texas for tort-reform legislation that would have included far-reaching “loser-pays” fee-shifting, has ended with virtually all of the loser-pays proposals failing, but with something potentially more significant taking its place. The tort-reform bill, passed with Texas House approval on May 25, 2011, and heading to Governor Perry for signature, sets Texas state courts on the path to a “federalized” motion-to-dismiss practice. The result is likely to require major changes in the way Texas lawyers frame and defend claims.

Current Texas Practice
For 70 years, plaintiff lawyers practicing in state courts in Texas have been permitted to file lawsuits containing little, if any, detail as to the precise allegations or causes of actions involved. A leading procedural treatise affirmatively recommends that plaintiff lawyers in Texas embrace generality in their pleadings and avoid any specific allegations that might tie them down later. O’Connor’s 2011 Texas Rules, p. 92. Under the state rules of civil procedure, defense lawyers have had little ability to challenge the inadequacy of state court lawsuits until after significant discovery, meaning virtually any state-court lawsuit has some not-insignificant nuisance value.

These plaintiff-oriented rules are in sharp contrast to those followed by federal courts, in which plaintiffs must provide many details about their claims and in which defendants have many opportunities, beginning with their first appearance in a case, to convince the court the claims against them are so lacking in merit they should be dismissed.

Tort Reform Pushes Texas Toward Federal Procedure
Recent tort-reform legislation passed in Texas is likely to change significantly Texas pleading practice, pushing Texas procedures much closer to the federal standards. In particular, HB 274 provides that the Texas Supreme Court “shall adopt rules to provide for the dismissal of causes of action that have no basis in law or fact on motion and without evidence.” The drafters of this language certainly expect that the Texas Supreme Court will enact something like the federal rules.

Additionally, once these new rules are adopted and effective (there is no deadline for their adoption in the bill), Texas courts will be required to award attorney fees and costs to any party (the plaintiff or defendant) who prevails on a motion to dismiss made pursuant to these new motions. 

As part of the same tort reform legislation, parties may seek permission to appeal adverse trial court rulings on questions of law, including rulings on these newly established motions to appeal.

Likely Effects of the New Procedures
Because the new rules should subject plaintiff claims to scrutiny by trial courts and appellate panels at the outset of litigation, plaintiff lawyers will likely have to put much more effort and thought into crafting lawsuits that can survive such scrutiny. No longer will a plaintiff be able to file a lawsuit and then pursue discovery in the hopes of finding a claim. Similarly, defense lawyers should be expected to exercise thorough analytical and persuasive skills at the commencement of litigation. The days in which lawyers could generate lawsuit petitions and answers simply by printing forms out of their word processor appear to be numbered.

In addition, because attorney fees are available only on these new motions to dismiss and not (unless otherwise provided by law) on victories after trial or summary judgment, defense lawyers will be even more encouraged to file high-quality motions to dismiss. The risk that unsuccessful motions may result in fee awards against defendants should deter motions that are unlikely to succeed.

Ultimately, the hope of the new legislation is that plaintiff lawyers will be discouraged from bringing lawsuits that have no more than a nuisance value or that are based on nothing more than a hope that evidence can be found after-the-fact.

Remaining Questions
The language in the legislation leaves some open questions, including:

1. There is no deadline for the Supreme Court to act. Language requiring the new rules to be adopted by the end of 2011 was stripped from the bill.
2. The language leaves ambiguous exactly what rules the Supreme Court should adopt. The bill as originally introduced would have required the rules to be modeled after Federal Rules 9 and 12. That language is not in the final bill, which confers a high degree of discretion on the Supreme Court with respect to how to implement its mandate. An exception to that discretion is the legislature’s requirement that state courts rule on motions to dismiss within 45 days of their filing.
3. There is no express requirement that the “motion to dismiss” procedures be available at the commencement of litigation, or before discovery, other than a reference in the title of the Article to “Early Dismissal of Actions.” The Supreme Court could fulfill its mandate and the legislative intent by requiring motions to dismiss to be filed with or before answers, as they are in federal court, or by staying discovery while they are pending. If the Supreme Court is silent about such matters, defendants can be expected to appropriately seek such stays of discovery. 
4. The new rule provides for the dismissal of causes of action that have no factual basis, while prohibiting the use of evidence in their consideration. Lawyers who have argued motions to dismiss are very familiar with the practice of referring to at least some “evidence” in connection with those motions, including the use of documents mentioned in the pleadings and documents that can be judicially noticed.

It will be up to the Texas Supreme Court to resolve such issues.

Conclusion
While it is always important to remember the distance between a cup and a lip, the adoption of HB 274 seems to put Texas on a clear path to the adoption of meaningful pleading standards and early dismissal procedures. Such changes are likely to have a major impact on the prosecution and defense of lawsuits in state courts in Texas.

For more information, please contact Vinson & Elkins lawyers John Wander or Stuart Tonkinson. Visit our website to learn more about V&E's Commercial and Business Litigation practice or e-mail one of the practice contacts.