November 14, 1989

Honorable BobMcFarland Chairman Criminal Justice Committee Texas State Senate P. 0. Box 12068 Austin, Texas 78711 OpinionNo. JM-1116

Re: Validity under article I, section 8, of the Texas Consti**tution** of article 5196,V.T.C.S., which requires a corporation to give a discharged employee a statement of reasons for the termination (RQ-1747)

Dear SenatorMcFarland:

You request an opinion on the constitutionality of section 3 of article 5196,V.T.C.S. This provision reads in part:

Either or any of the followingacts shall

constitute discrimination against persons seeking employment:

. . . . 3. Where any corporation

. . . doing business in this state

. . . shall have discharged an employee and such employee demands a statement in writing of the cause of his discharge, and such corporation

. . . fails to furnish a true statement of the
same to such discharged employee,within ten days after such demand, or

. . . shall fail, within ten days afterwritten demand for the same, to furnish to any employee voluntarily leaving the service of such corporation or receiver, a statement in writing that such employee did leave such servicevoluntarily.

Statutes of this nature are commonly called "service letter statutes." Annot., 24 A.L.R.Qth 1115 (1983). Violators of the Texas service letter statute are subject to forfeiting one thousanddollars to the state. V.T.C.S. art. 5199. It is the duty of the attorney general, or the

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district or county attorney under the direction of the attorney general, to sue to recover the forfeiture. Id. A private cause of action fordamagesmay exist under service letter statutes. &8 -iPrudential Ins. C& , 192 S.W. 387, 393 (MO.1917).

The Texas service letter actwas adopted in 1907 and codified as section 3, article 594 of the 1911 code. See Acts 1907, 30th beg., ch. 67, S 1, at 142. Its title read
as follows: "AnAct to define and prohibit discrimination against persons seeking employment, and to prescribe penalties for the breach of said act." In 1910 the court of civil appeals identified the purpose of this provision as follows:

The statutehere under discussionwas passed to meet and remedy an evil that had grown up in this state among railway and other corporations to control their employees. It seems that a custom had grown up among railway companiesnot to employ an applicant for a positionuntilhe gave the name of his last employer, and thenwrite to such company for the cause of the applicant's discharge, if he was discharged, or his cause for leaving such former employer. If the information was not satisfactory to the proposed employer,he would refuse to employ the applicant. They could thusprevent the applicant,by failing to give a true reason forhis discharge orblacklistinghim, from procuring employment in either instance.

s * nt Louis Southwestern Rv. v. Hix n '0, 126 S.W. 338, (!?:x. Civ. App. 1910),rev'd on other urounds, 341 137 S.W. 343 (Tex.1911).

InRixon, the formeremployee alleged that the corporation's service letterdid not state the true cause of his discharge. The court of appeals affirmed a judgment of $2,500 for the employee against the corporation, rejecting various arguments forholding the statute unconstitutional. The supreme court reversed on the ground that the former employee had failed to establish that statements in the service letterwere untrue. S e alsowon v. P rry 181 P. 504 (Okla. 1919),aff'd,e259 U.S. 548, 550 (1:22); Cheek **V.** Prudential Ins. Co.,m, at 389.

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As you point out Courtheld the inyour letter, the Texas Supreme

inSa'nt service letter provision unconstitutional

Louis (Tex.ll914). InSGriffin

outhwesternRv. v. Grif& 171 S.W.

the court held th;t article 703

section 3, of the 1911 &de interferedwith a 594, corporation8s right to discharge employees at will without cause, and accordinglyviolated the corporation's freedom of contract under the United States Constitution. It found that the statute violated the equal protection clause of the FourteenthAmendment of the Constitution. The Griffin case also held that the service letter requirement violated article I, section 8, of the Texas Constitution, which guarantees the freedom of the people to speak, write or publish their opinions on any subject. The court stated as follows:

The liberty to write or speak includes the

correspondingright to be silent, and also the liberty to decline to write. To say that
one can be compelled at the instance of anotherparty to do what he has the constitutional liberty to do or not is a contradiction that is not susceptibleof reconciliation. (Citationsomitted.)
Griffin, Sunra, at 705. The supreme court concluded that the provision could not be police power, sustainedas an exercise of the

stating as follows:

The subject of legislation in this statute and itsvarious provisions,as stated above,
are purely personal as between the employee and the corporation, and do not directly affect the public, in health, safety, comfort, convenience,or otherwise.

Id. at 707.

Within a fewyears of theGriffi.R decision, the United States Supreme Court ruled that the Missouri service letter statute was constitutional, finding that it did not interfere with the corporation's freedom to contract, deprive it of any property or libertywithout due process, or deny it the privileges and immunitiesof citizens or the equalprotection of the laws. mential Ins. Co. v. Cheek, 259U.S. 530 119221. "The state with aood reason regulate the terms and conditions of employment, miaht including the methods of accepting and dismissing employees, so as to

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prevent the corporations from producingundue detriment to the individualsconcerned

. . . .n L at 545.

InAttorney General OpinionJR-623 (1987),this office concluded that section 3 of article 5196,V.T.C.S., did not violate the due process clause or the equal,protection clause of the Fourteenth Amendment to the United States Constitution. Thus, developments in federal constitutional law sinceGriffinhave shown its reasoningand conclusion on the federal issues to be incorrect.

The Griffin court?8holding that the service letter statute violated article I, section 8, of the Texas Constitutionhas neverbeen challenged in our court system. Attorney General OpinionJM-623 (1987),at 5. In addressing this aspect of Griffin,Attorney General Opinion 313-623 stated as follows:

Even though we may disagree with this interpretation,we are not at liberty to modify or overrule the Texas Supreme Court's holding inGriffb. This is especially true since our legislature and courts have not done so.

**Id. at**  **6.1**

1. In 1929, the legislature reenacted article 594 as article 5196,V.T.C.S. **Acts** 1929, 41st beg., ch. 245, at 509. The emergency clause stated that "the codifiers

### ofthe Revised Civil Statutes of Texas of 1925, omitted from the definition of discriminationmany of the material provisions of the former law on that subjectas set out inArticle 594 of the Revised Civil Statutes of 1911

. . . .M A prior opinion of this office stated, without mentioning any federal cases, that the codifiers of the 1925 statutes had obviously omitted article 594 because ithad been declared unconstitutional in Griffin. Attorney General Opinion O-3562 (1941) (overruledby Attorney General Opinion JM-623 (1987)). However, the legislature's reenactment of the provision omitted from the 1925 code could alsomean that the legislaturewas aware of the Prudential case and thought that ithad overruled the reasoning of Griffin.

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It iswell established that opinions of the attorney general do not have the force of law. See. e.czL Travis fountv v. Matthews 235 S.W.2d 691 (Tex.Civ.App.

ref'dA.r.e.); Austin 1951,writ Gavnor mst

. 0.v. oard of 

### Truste

.E r Countv Indev. School Dist, (Tex.Esv. zii. - El Paso 1950,writ ref'di. 233 S.W.Zd 472 As stated in Attorney General Opinion JM-623, we cannot overrule a judicialdecision. We can,however, reviewdevelopments in the law since Griffinwas decided, and attempt to predict whether the Texas courts, if facedwith this issue in the future,would find that the service letter requirement violated a corporation#s free speech rightsunder article I, section 8, of the Texas Constitution.

In 1914,when the Texas Supreme Court ruled inGriffin, the FirstAmendmenthad not yet beenheld to be applicable to the states through the FourteenthAmendment. &8 Gitlow N Yr 268 U.S. x&,at 652 (1925);Prudenti al Ins. Co. v. 542-43. Thus, the court could not have based its decision about corporate speech rights on the FirstAmendment of the United States Constitution. Instead, it followed two state cases that found service letter statutesunconstitutional provisions of their under the freedomof expression respectiveconstitutions. See Wallace

v. Georaia. C. 8N. Rv., 22 S.E. 579 (Ga.1894); Atchison.

. & S. F. Rv. v. Brow& 102 P. 459 (Kan. 1909). In Prudential Ins. Co. v. Cheek, the United States Supreme Court commented as followson this aspect of Griffin and the Kansas and Georgia cases it relied on:

The cases cited fromGeorgia, fromKansas, and fromTexasplace material dependenceupon provisions of the several state Constitutions guaranteeing freedom of speech, fromwhich is deduced as by contrast a right of privacy called the 'libertyof silence';and it seems to be thought that the relationsbetween a corporation and its employees and former employees are a matter of wholly private
concern. But, as we have stated,neither the FourteenthAmendment nor any other provision of the Constitution of the United States imposes upon the states any restrictions about 'freedomof speech' or the 'liberty of silence'

. . . .

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prudentia, w, at 542-43.2

In a 1983 decision, the Supreme Court of Missouri concluded that the state service letter statute did not violate corporate rights of free speechunder the First Amendment. ,

Ha ch v. K. **F.** C. Nat 1 Man S.W.Zd 28 (Mo.n1981) (enbane). aaement Corn.
, 615 The court stated:

The statute's mandate affects corporate rights of free speech no more than the plethora **of** state and federal statutes and regulations that require corporations to keep the governments to which they owe their existence appraised [sic] of their activities. Few are the cases raising first amendment challenges to tax, corporate or securities laws requiring corporations to speak truthfully. The compulsion to speak truthfully to a former employeewould appear to be a smallprice to pay for the benefits gained by corporations,and their owners, for the enjoyment of their statutory franchises.

Id. at 36.

The Eighth Circuit of the United States Court of Appeals also found the Missouri statute constitutional, reversing a federaldistrict court decision that found it to violate the free speechprovision of the First Amendment. Rimmer v. Colt Indus. Overatina Core,, 656 F.2d 323 (8th

In Chicaao.R. I. 8 P. Rv. v. Perry, 259U.S. 555 &22), 548,

the United States Supreme Court stated that Prud ntial had overruled the contentionthat the service let& statute denied the right **of** free speech "upon the ground that the right did not existunder th; state Constitution in the absolute form inwhich itwas asserted." It also stated that the l'decisions by the Supreme Courts of Georgia, Kansas, and Texas

. . .were disapproved." & This commentary on state court interpretations of state constitutionalprovisions is dicta, since the United States Supreme Court looks to the decisions of a state's courts to determine the meaning of its laws. &S Clav v. Sun Ins. Office, 363U.S. 207 (1960). This dicta isnonetheless of interestbecause it shows how theUnited States Supreme Court thought about the issuebefore us.

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**Cir.** 1981), **yev ’** **q, 495**  F. **SUPP.** 1217 (W.D.MO. 1980). The court of appeals-noted that in-FirstNat 1 Bank -', v. Bellotti, **435 U.S.**  **765** (1978). the Suvreme Courtheld that sveech otherwiseprotected-.by the FirstAmendment does not -lose that protection simplybecause its source is a corporation. The eighth circuit concluded,however, that the First Nat'1 && decision did not shield corporations from state statutes that require them tomake truthful statements or take actions that effectuate legitimate legislative ,goals. Rimmer, suvrg, at 328. "Thereare numerous statutes that similarly,and nevertheless constitutionally,restrict the 'free speech' rights of corporateemployers." & (citing National Labor RelationsAct, 29U.S.C. **5 158(c)**  (1976); EmployeeRetirement Income Security,Act, 29 U.S.C. 8 1132(c) (1976);Missouri Workers' Compensation Act, Mo.Ann.Stat. § 287.380 (VernonSupp. 1981)). The statutewas adopted to protect certain economic and social interests and was properly characterized as economic or social legislation enacted for the generalpublicwelfare. L at 328-29. It did not affect any "fundamentaltl **First** Amendment rights. Id. at 329 (analyzingservice letter statute in terms of equal protection clause and FirstAmendment of the United States Constitution),

Texas cases decidedmore recently than Griffin rely on a broader conception of the policepower than did that case. The Supreme Court of Texas has stated that "the very foundation of the police power is the control of private interests for the publicwelfare

. . . .I1T wn of A cam
v. Villalobof, 223 S.W.2d 945, 950 (Tex.19z9) (guotsng 16 C.J.S. Constitutional L&f 5 199, at 581). The court has recognized the validity of legislation that protects employee rights in disputes with the employer. mnstructi n & Gen. LaborUnion v. LTcee

958 ITex.y950) Stevhen **soi, 225**  S.W.Zd (vicketina)

. The volice vower authorizes the adoption of iegislationdesigned to pkevent deceitful communications in a commercial setting. "A state statute designed to prevent the deception

### ofconsumers ofparticular goods is recognized as avalid exercise of police power." Malestic Indu

.v. Saint Clair **537** S.W.2d 297, 302 (Tex. Civ.App. -AEstin 1976,writ r;f#d n.r.e.); see also w y. State, 665 S.W.2d 476 (Tex. **Grim.** App. 1984) (the **First** Amendment does not protect intentionally false ormisleading statementsmade in a commercial context).

Exercises of the police power that involve restraints
on freedom of speech are not for that reason necessarily invalid. S.!?S2Allenv. **604** S.W.2d 191 (Tex. Grim. App. 1980) (discussing FirstAmendment of United States

p. 5867Honorable BobMcFarland - Page 8 (JM-1116)

Constitution). In upholding a provision of the Alcoholic Beverage Code that prohibited solicitationof drinks by a beer retailer's employee, the court of criminal appeals quoted the United States Supreme Court as follows:

Ithas neverbeen deemed an abridgement of freedom of speech or press tomake a course of conduct illegalmerely because the conduct
was in part initiated,evidenced, or carried out by means of language, either spoken, written, or printed.

. . . Numerous examples couldbe cited of communications that are regulatedwithout offending the First Amendment, such as the exchange of information about securities,

. . . corporate proxy statements,

. . .the exchange 

### ofprice and production information about competitors,

. . .and employers' threats of retaliation for the labor activitiesof employees.

&& at 192 (citingOhralikv. Ohio State Bar Ass'n, 436 U.S. 447, 456 (1978)).

The court of criminal appeals quoted the United States Supreme Court in answering an argument based on the First Amendment of the United StatesConstitution,not article I, section 8, of the Texas Constitution. However, decisions of Texas courts that deal with the Texas constitutional provision also recognize thatpermissible regulations of conductmay sometimes include regulation of speech. Our courts have upheld statutes that require persons to communicate information or that limit some kinds of communications, finding them consistent with article I, section 8, of the Texas Constitution.

In finding that an injunction to prevent untrained layman from advertisingand sellingblank will formsdid not violate article I, section 8, of the Texas Constitution, the court pointed out that constitutionalrights of speech and publication are not absolute. palmer v. Unauthorized practice Comm. of St t Bar, 438 S.W.2d 374 (Tex.Civ.

- Houston [14thHis:.; APP. 1969,no writ). In a given case where the public interest is involved,courtsmay strike a balance between fundamentalconstitutional freedomsand the state's interest in thewelfare of its citizens. &

The court of criminal appeals has held that a statute proscribingharassing and threatening telephone calls did not violate article I, section 8, of the Texas Constitution

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or the First Amendment of the United States Constitution. Schusterv. State 450 S.W.Zd 616 (Tex. (applyingPenal &de article 476 (1925)). Crim.App. 1970)

In another case, an injunctionprohibiting a 40 percent shareholder of a corporation from writing letters to corporate clients asking **for** assistance in a liquidation suitwas upheld as not violative of article I, section 8, of the Texas Constitution. C &I&, 678 S.W.2d 580 (Tex.App. writ dism'd). - Houst& [14thDist;] 1984

The injunctionwas granted to prevent inter: ference to the contractualrelationshipsof the corporation and interference fromprivate communication. L
Finally, a recent decision of the court of criminal appeals indicates that the **free** speech clause of the Texas Constitutiondoes not create an absolute silent. privilege to be

y-F---' 687 S.W.Zd 736 (Tex.Grim. APP. 1984), cer

.denied, 474U.S. 944 (1985). In a prosecution for obstructing a public passagewaywhere the key issue was whether the defendant had chainedhimself to a doorway during the protest, the defendant sought to subpoena a newspaperphotographer who had photographedthe incident. The photographer refused to make his photographs available andwas held in contempt. The courtheld that neither the First Amendment of ~the United States Constitution nor article I, section 8, of the Texas Constitution created a privilege thatwould excuse the photographer from testifying and producing photographs. Id. at 737.

The Texds legislature has enacted numerous statutes that require corporationsand others to disclose information to governmental agencies, to employees,or to shareholders. See. e.a.,V.T.C.S. arts. 5221b-14(b) (employers prohibited frommaking false statementsor failing to disclosematerial fact to prevent payment of unemployme,nt benefits), 5221k, 5 8.01(a) (record-keepingand reportingrequirement applicable to persons under investigationby Texas Human Rights Commission):Tex. Bus. Corp. Act arts. shareholders to examine corporate 2.44 (right of books and records), 9.01 (corporation,officers, and director shall answer interrogatoriespropounded by secretary of state to enablehim to determinewhether corporation is in compliancewith Business CorporationAct): Agric. Code ch. 125 (duty of certain employers of agricultural laborers tomake informationabout their use of toxic chemicals available to employees and others);Health & Safety Code ch. 502 (employersmust make available to employees informationabout certain hazardous chemicals stored or used in theworkplace). Thus, a statute

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requiring a corporationto disclose information is no longer the novelty it appeared to be in 1914, when Griffin was decided.

Based on our review of decisions of the Texas courts subsequent to Griffin and the cases on service letters from other states,we believe that the Supreme Court of Texas, if itwere to reconsider section 3 of article 5196, V.T.C.S., would find that itdid notviolate article I, section 8, of the Texas Constitution. Until the supreme court overturns its decision inGriffin however, section 3 of article 5196, V.T.C.S.,will be unco&itutional. Followinga judicial decision that a statute isunconstitutional, the statute remains on the books unless expressly repealed by the legislature. 39 Op. [U.S.]Att'y Gen., 22 (1937). When a court overrules a prior judicial decision that held a statuteunconstitutional, the statute will be held valid from its effective date. Storriev. Cortes, 38 S.W. 154, 158 (Tex.1896); see also State ex rel. Badcettv. Lee, 22 So.Zd 804 (Fla. 1945); Christovher v. Munaen (Fla.1911). Rut see Chaversv. Harrell 166 i0.~:6!?"*(Fzz? 1935) (statemay not prosecute for cond;ct inviolation of statuteduring time itwas held unconstitutional). As we have already stated, an opinion of the attorney general cannot overrule a judicialdecision, and therefore cannot validate the service letter statute.

A statuteheld unconstitutionalby the courts does not
cease to exist for the purpose of amendmentby the legislature. Ex varte Hen 1v 285 S.W.2d 720 (Tex.Crim. App. 1956). The Griffin ie%on does not prevent the legislature from amending article 5196,V.T.C.S. The legislature may update this statute ormake the changes, if any, it deems necessarydue to the passage of time since its reenactment in 1929. Attorney General Opinion JM-623 is modifiedwith respect to its discussion of article I, section 8, of the Texas Constitution.

SUMMARY

. . In Saint Louis SouthwesternRv. v. Griffu 171 S.W. 703 (Tex.1914), the Texas Suprem Court held that section 3 of article 5196, V.T.C.S.,was invalidbecause itwas inconsistent with article I, section 8, of the Texas Constitution. On the basis of judicial decisions of Texas courts and the courts of other jurisdictions,we predict that the Texas

p. 5870Honorable Bob McFarland - Page 11 (JM-1116)

Supreme Court, if it again considered this question,would find section 3 of article 5196,V.T.C.S., consistent with section 8, article I,

of the constitution. Until the Texas Supreme Court overrules its decision in El hoy;I;r, section 3 of article 5196,

. . . ., be unconstitutional. The decision in Griffin does not prevent the legislature from amending section 3 of article 5196, V.T.C.S. Attorney General Opinion JM-623 (1987)ismodifiedwith respect to its discussion of article I, section 8, of the Texas Constitution.

- ~ JIM MATTOX Attorney General of Texas

MARYKELLER FirstAssistant Attorney General

LOU MCCREARY ExecutiveAssistantAttorney General

JUDGE ZOLLIE STEAKLEY SpecialAssistant Attorney General

RICK GILPIN Chairman, Opinion Committee
Preparedby Susan L. Garrison Assistant Attorney General

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