IN THE UNITED STATES COURT OF APPEALS 

FOR THE FIFTH CIRCUIT

______________________

No. 05-50711

______________________

SOILA CAMACHO, SONIA DENISE GROVER, 

TEXAS WELFARE REFORM ORGANIZATION, 

EL PASO COUNTY HOSPITAL 

d/b/a R.E. THOMASON GENERAL HOSPITAL, 

Plaintiffs - Appellants,

v.

TEXAS WORKFORCE COMMISSION, 

TEXAS HEALTH AND HUMAN SERVICES COMMISSION, 

and TEXAS DEPARTMENT OF HUMAN SERVICES, 

Defendants - Appellees. 

______________________

Appeal from the United States District Court

for the Western District of Texas

_____________________

Before: KING, SMITH, and BENAVIDES, Circuit Judges.

BENAVIDES, Circuit Judge:

After successfully challenging rules adopted by the Texas

Workforce Commission and successfully defending that judgment

before this Court, Appellants sought attorney’s fees. The

district court denied their application. The parties are now

before us again, but this time the sole issue on appeal is

whether the district court erred under Erie R.R. Co. v. Tompkins,

304 U.S. 64 (1938), by refusing to apply the fee-award provision

of the Texas Declaratory Judgment Act. We affirm, finding

United States Court of Appeals

Fifth Circuit

F I L E D

March 30, 2006

Charles R. Fulbruge III

Clerk
2

Appellants’ claim foreclosed by precedent directly on point:

Utica Lloyd’s of Texas v. Mitchell, 138 F.3d 208 (5th Cir. 1998).

I. BACKGROUND

The Appellants, Soila Camacho, Sonia Denise Grover, Texas

Welfare Reform Organization, and El Paso County Hospital District

sued the Appellees, Texas Workforce Commission, Texas Health and

Human Services Commission, and Texas Department of Human Services

in state court. Appellants challenged rules adopted in 2003 by

the Texas Workforce Commission which limited eligibility for

Medicaid health coverage. They sought relief under the Texas

Declaratory Judgment Act (“DJA”). Appellees removed to federal

court, asserting federal question jurisdiction. The district

court invalidated the rules at issue, holding that they were

contrary to the plain meaning of the Medicaid statute. We

affirmed. See Comacho v. Texas Workforce Comm’n, 408 F.3d 229

(5th Cir. 2005).

Appellants then filed an application for attorney’s fees in

the district court. They specified the fee award provision of

the DJA as the statute entitling them to the award. See TEX. CIV.

PRAC. & REM. CODE § 37.009 (Vernon 1997). Section 37.009 provides,

“In any proceeding under this chapter, the court may award costs

and reasonable and necessary attorney’s fees as are equitable and

just.” The district court denied the application, citing Fifth
1 Utica is not distinguishable on the ground that this case 

arrived in federal court via federal question, rather than diversity,

jurisdiction. The statement in Utica that the DJA does not apply in “a

diversity case” likely reflects the frequently assumed, but erroneous,

proposition that Erie applies only in diversity cases. “The Erie case and the

Supreme Court decisions following it apply in federal question cases as well.” 

WRIGHT, MILLER & COOPER, supra, page 3, § 4520.

3

Circuit precedent holding that the DJA is a procedural statute

that does not apply in federal court. This appeal followed.

II. STANDARD OF REVIEW

We review a denial of attorney’s fees for abuse of

discretion. Adams v. Unione Mediterranea Di Sicurta, 364 F.3d

646, 656 (5th Cir. 2004). Underlying questions of law, like the

Erie question presented here, are reviewed de novo. Id.

III. DISCUSSION

A. Utica Lloyd’s of Texas v. Mitchell

Under Erie, federal courts apply state substantive law “to

any issue or claim which has its source in state law.” C. WRIGHT,

A. MILLER, & E. COOPER, 19 FEDERAL PRACTICE AND PROCEDURE (2d ed.

2002) § 4520. Yet, federal law, rather than state law,

invariably governs procedural matters in federal courts. E.g.,

Motorola Communic’s & Elec., Inc. v. Dale, 665 F.2d 771, 774 (5th

Cir. 1982). In Utica, this Court squarely held that the DJA is

procedural for Erie purposes: “a party may not rely on the Texas

DJA to authorize attorney’s fees in a diversity case because the

statute is not substantive law.” 138 F.3d at 210.1
4

Two panels of this Court subsequent to Utica reached the

opposite result and applied the DJA in federal court. Kona Tech.

Corp. v. S. Pac. Transp. Co., 225 F.3d 595, 604 (5th Cir. 2000);

In re Garza, 2004 WL 249596, *4 (5th Cir. Feb. 10, 2004)

(unpublished). Neither of these decisions affects the

precedential value of Utica because the earliest of conflicting

panel decisions controls. See Southard v. Texas Bd. of Criminal

Justice, 114 F.3d 539, 549 (5th Cir. 1997). Two other post-Utica

panels have reaffirmed the viability of Utica and held that this

Court’s precedent forecloses the use of the DJA in federal court.

See Olander v. Compass Bank, 363 F.3d 560, 567–68 (5th Cir.

2004); Van v. Anderson, 66 Fed. Appx. 524 (5th Cir. Apr. 14,

2003) (unpublished). 

B. UTICA AND OLANDER ARE NOT DISTINGUISHABLE

Appellants maintain that Utica and Olander can be

distinguished. They point out that the instant case involves a

challenge brought against state agencies, whereas Utica and

Olander were disputes between private parties. They contend that

this distinction is important because Texas has decided to waive

its sovereign immunity to allow private parties to recover

attorney’s fees against the state in declaratory judgment

actions. See Texas Educ. Agency v. Leeper, 893 S.W.2d 432, 446

(Tex. 1994). Because a state’s waiver of sovereign immunity is a
5

fundamental policy decision, they argue, state agencies should be

susceptible to awards of attorney’s fees under the DJA in federal

court.

Appellants’ effort to distinguish Utica and Olander is not

persuasive. The intention of a state in waiving sovereign

immunity is that the state “be treated in the same manner as any

private litigant.” Driskill v. State, 787 S.W.2d 369, 370–71

(Tex. 1990); see also United States v. Orleans, 425 U.S. 807, 814

(1976) (“The Federal Tort Claims Act is a limited waiver of

sovereign immunity, making the Federal Government liable to the

same extent as a private party for certain torts.”) (emphasis

added). A government that has waived sovereign immunity is

entitled to “assert the same defenses available to private

citizens.” Starnes v. United States, 139 F.3d 540, 542 (5th Cir.

1995). Refusing to extend Utica and Olander to Texas agencies

would treat the state differently than private litigants, who,

under those precedents, are not subject to attorney’s fees

awards. Accordingly, applying Utica and Olander to cases

involving the state is perfectly consistent with Texas’s waiver

of sovereign immunity. 

Appellants argue that the Supreme Court’s recent decision in

Lapides v. Board of Regents requires us to carve out an exception

to Utica. 535 U.S. 613 (2002). We disagree. Lapides held that
6

a state waives its sovereign immunity when it removes a case from

state court to federal court. The Supreme Court noted that it

would “seem anomalous or inconsistent for a State both (1) to

invoke federal jurisdiction, thereby contending that the

‘Judicial power of the United States’ extends to the case at

hand, and (2) to claim Eleventh Amendment immunity, thereby

denying that the ‘Judicial power of the United States’ extends to

the case at hand.” Id. at 619. There is no comparable anomaly

in the instant case. Appellees did invoke federal jurisdiction

by removing the case to federal court, but they did not

simultaneously deny the same. Indeed, Appellees do not argue any

form of sovereign immunity defense. Furthermore, contrary to

Appellants’ claim, Appellees have not effectively “regained”

their sovereign immunity by removing to federal court. Appellees

were treated exactly like private parties in federal court. In

short, this case falls squarely within the holdings of Utica and

Olander, and the Supreme Court’s Lapides decision is inapposite.

C. UTICA DOES NOT CONFLICT WITH PRIOR PRECEDENT

Appellants also argue that Utica is not binding because it

conflicts with prior precedent. Appellants contend that Utica

failed to conduct a proper Erie analysis, as required by this

Court’s prior opinions. “Whether a particular provision is

substantive or procedural for Erie purposes is determined by
7

looking to the ‘twin aims’ of the Erie doctrine: the

discouragement of forum shopping and the avoidance of inequitable

administration of the laws.” Herbert v. Wal-Mart Stores, 911

F.2d 1044, 1047 (5th Cir. 1990). Because Utica made no such

analysis, Appellants argue, “it is of no effect.” 

Published panel opinions are ordinarily binding on

subsequent panels. Completely disregarding decisions under the

“conflict exception” is a disfavored practice that is to be

avoided if possible. See United States v. Alvarado-Santilano,

434 F.3d 794, 798 (5th Cir. 2005). If Appellants’ argument were

to succeed, it would represent a serious erosion of the principle

of precedent and a dramatic expansion of the conflict exception.

Appellants argue that Utica is inconsistent with general Erie

principles and that Utica’s “analysis” was wrong. They do not,

however, point to any case that contradicts Utica’s specific

holding that the DJA is procedural. Disregarding precedent where

it arguably conflicted with general principles or employed flawed

analysis would invite parties to re-argue the merits of every

prior panel decision. This is because to ask whether a prior

decision’s analysis was correct is essentially to ask whether it

was rightly decided. Thus, we reject Appellants’ effort to

undermine the precedential effect of Utica by referencing broad

principles of Erie analysis.
8

Appellants also argue that Utica conflicts more specifically

with this Court’s earlier decision in Ashland Chemical Inc. v.

Barco Inc., 123 F.3d 261 (1997). Appellants contend that Ashland

held that refusing to apply fee-shifting statutes in federal

court would result in forum shopping and that such statutes are

substantive for Erie purposes. Appellants misread Ashland.

First, Ashland recognized, as has the Supreme Court, that not all

state attorney’s fees laws are applicable in federal court under

Erie. Id. at 265. Second, Ashland did not state, much less

hold, that all fee-shifting rules implicate the problem of forum

shopping. Rather, it expressed this concern only about the

specific attorney’s fees law at issue in that case. Id. at 265

n.3 (“The Local Rule . . . implicates the Erie problem of forum

shopping.”). The Supreme Court has taken a nuanced approach in

determining whether particular attorney’s fees laws are

procedural or substantive under Erie. See Chambers v. NASCO,

Inc., 501 U.S. 32 (1991). Accordingly, the statement in Ashland,

regarding a law not at issue here, does not undermine Utica. In

sum, Utica is binding because Appellants have not identified a

prior decision that conflicts with its specific holding that the

DJA is procedural for Erie purposes.
2

We agree with Appellants that, when courts divide substance from procedure

under Erie, they should not ordinarily rest on state court opinions

characterizing statutes as “procedural” or “substantive” in cases unrelated to

the Erie doctrine. See Guaranty Trust Co. v. York, 326 U.S. 99, 108–09

(1945).

9

D. UTICA’S HOLDING FOLLOWS FROM GENERAL ERIE PRINCIPLES

We need not go further to affirm the judgment of the

district court. Utica is good law and is not distinguishable

from the case at bar. Nevertheless, since Appellants mount such

a vigorous attack on the reasoning of Utica, we find it prudent

to explain why we believe Utica’s holding comports with general

Erie principles.

Appellants argue that a correct Erie analysis2 compels the

conclusion that the DJA applies in federal court. They contend

that (1) no federal statute, rule, or policy conflicts with the

DJA and (2) failing to apply the DJA in federal court would

promote forum shopping and cause the inequitable administration

of the laws. See Hanna v. Plummer, 380 U.S. 460, 465–68 (1965).

These arguments fail.

The DJA does conflict with a federal policy: the “American

Rule” that “parties are ordinarily required to bear their own

attorney’s fees.” Buckhannon Bd. & Care Home, Inc. v. W. Va.

Dep’t Health & Human Res., 532 U.S. 598, 602 (2001). In light of

the American Rule, generally applied in federal court, we have

been instructed that state law does not always control the issue
10

of attorney’s fees. See Chambers, 501 U.S. at 51–52. Rather, we

are to apply state attorney’s fee law only when it “embod[ies] a

substantive policy.” Id. at 52.

The DJA does not represent “substantive policy” under

Chambers. The Supreme Court explained in Chambers that

substantive fee-shifting statutes include those “which permit[] a

prevailing party in certain classes of litigation to recover

fees.” Id. Thus, laws requiring fee awards for prevailing

parties in actions to enforce an insurance policy are substantive

for Erie purposes. Id. By contrast, laws providing for fees due

to an opponent’s bad-faith litigation tactics are procedural.

Id. at 53. In reaching this conclusion, the Supreme Court

emphasized that bad-faith fee awards were “not tied to the

outcome of litigation.” Id.

Fifth Circuit decisions following Chambers recognize that

only fee-shifting statutes limiting fee awards to prevailing

parties are substantive for Erie purposes. In Ashland, this

Court held that the fee-shifting rule at issue there was

substantive because “unlike the imposition of bad-faith sanctions

in Chambers, [the award was] tied to the outcome of the case.”

123 F.3d at 265. Similarly, in Exxon Corp. v. Burglin, we

distinguished fee-shifting statutes “that hinge an award on

success in the underlying lawsuit” from those that do not. 42
11

F.3d 948, 951 (5th Cir. 1995). “This difference tracks the

blurry line between substance and procedure in Erie and the Rules

Enabling Act.” Id. at 952. 

The “tied to the outcome” test suggested by the Supreme

Court in Chambers reflects the more general policy concerns

expressed in Hanna. Where an award of attorney’s fees is

discretionary and does not depend on the outcome of the case, it

is difficult for a party to predict whether the law will result

in an additional benefit or an additional liability. We do not

believe that parties would select their forum based upon the

availability of such a law. Nor does refusing to enforce such a

law in federal court result in the inequitable administration of

the laws. See Chambers, 501 U.S. at 53.

Turning back to the statute at issue here, the DJA does not

tie fee awards to the outcome of litigation. The Texas Supreme

Court has held that fee awards under the DJA do not depend upon a

finding that a party “substantially prevailed.” Barsho v. Medina

County Underground Water Conserv. Dist., 925 S.W.2d 618, 637

(Tex. 1996). Rather, the DJA provides the trial court “a measure

of discretion” to decide when awarding fees is “equitable and

just.” Bocquet v. Herring, 972 S.W.2d 19, 20–21 (1998). In its

discretion, a trial court may “grant attorney’s fees to the

nonprevailing party.” Cartwright v. Cologne Production, __ S.W.
3

Appellants cite a single case from an intermediate Texas court of appeals

which suggests that only “the prevailing party” may be “entitled” to

attorney’s fees under the DJA. Anderson Mill Util. Dist. v. Robbins, __

S.W.3d __, 2005 WL 2170355, *6 (Tex. App.—Austin, Sep. 8, 2005, no pet.). As

shown above, this is contrary to the weight of Texas authority and, more

importantly, to rulings of the Texas Supreme Court. 

12

3d __, 2006 WL 22681, *6 (Tex. App.—Corpus Christi Jan. 5, 2006,

no pet.); see generally 16 TEX. JUR. § 66 (2006) (collecting cases

holding that “attorney fees [under the DJA] are discretionary and

can be awarded to either party, even a non-prevailing party”). 

At oral argument, Appellants contended that no Texas court

has ever affirmed fees awarded to a nonprevailing party. Given

the clear language in the cases cited above, we doubt the

relevancy of this contention. In any event, it is incorrect.

See Maris v. McCraw, 902 S.W.2d 191 (Tex. App.—Eastland, 1995,

writ denied); McLendon v. McLendon, 862 S.W.2d 662 (Tex.

App.—Dallas, 1993, writ denied) (affirming an award of more than

$1 million in attorney’s fees to the plaintiffs even though

“[t]he trial court denied the declaratory relief sought”); Blue

Cross Blue Shield of Texas v. Duenez, 2005 WL 1244609 (Tex.

App.—Corpus Christi, May 26, 2005, pet. filed) (mem. op.).3

Based on the foregoing reasons, we conclude that the DJA is

procedural for Erie purposes under Chambers and its Fifth Circuit

progeny.
13

IV. CONCLUSION

We have considered Appellants’ efforts to escape the rule of

Utica Lloyd’s of Texas v. Mitchell and found them inadequate.

Accordingly, the district court’s judgment denying attorney’s

fees is AFFIRMED.