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dibtatt of Pccxas 

February 21,199l 

Honorable John Whitmire 

Chairman 

Opinion No. DM-3 

Intergovernmental Relations Committee Re: Constitutionality of chapter 64 of the 

TexaseState Senate Agriculture Code, which requires arbitration 

P. 0. Box 12068 in vegetable seed performance disputes 

Austin, Texas 78711 (RQ-2130) 

Dear Senator Whitmire: 

Your predecessor asked whether the requirements for arbitration of seed 

performance disputes found in chapter 64 of the Agriculture Code violate the “open courts” 

provision of article I, section 13, of the Texas Constitution. Article I, section 13, provides 

that “ali courts shall be open, and every person for an injury done him, in his lands, goods, 

person or reputation, shall have remedy by due course of law.” 

Chapter 64 was adopted in 1989. Acts 1989. 71st Leg., ch. 604, $ 1. at 1996-98. 

Section 64.002(a) states: 

When a purchaser of vegetable seed designed for planting claims to 

have been damaged by the failure of the vegetable seed’to produce or 

perform as represented by warranty or by the label required to be 

attached to the vegetable seed under this subtitle or as a result’of 

negligence, the purchaser must submit the claim to arbitration as 

provided by this chapter as a prerequisite to the exercise of the 

purchaser’s right to maintain a legal .action’ against the labeler, .as 

defined by Section 19.9, Texas Administrative Code (4 TAC Sec. 19.9). 

or any other seller of the vegetable seed. 

See also Agric. Code $ 64.003 (seed container label to give notice of chapter 64 arbitration 

requirement). 

Chapter 64 arbitration is instituted by filing a complaint and a ten dollar filing fee 

with the commissioner of agriculture, who refers complaints and answers thereto to the 

State Seed and Plant Board, which serves as the “arbitration board” in chapter 64 

arbitrations. u @64.005, 64.006(a)-(c). The arbitration board investigates complaints 

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referred to it and reports findings of fact, conclusions of law, and recommendations as to 

costs to the commissioner within sixty days of the referral or at a later date agreed to by the 

parties. & 0 64.006(d). 

Chapter 64 does not purport to abolish the right of seed performance disputants to 

obtain redress in court. Section 64.002(a) rather establishes arbitration as a “prerequisite 

to the exercise of the purchaser’s right to maintain a legal action.” Applicable limitation 

periods are tolled until 11 days after the arbitration board’s report is filed with the 

commissioner of agriculture. Id. 5 64.002(b), (d). Section 64.004 permits the arbitration 

report to be introduced at subsequent litigation and allows the court to give such weight to 

the matters in the report as it deems advisable. 

The “open courts” provision of article I, section 13, of the state constitutionhas been 

considered by the Texas Supreme Court in numerous recent opinions. See. e.g.. Moreno v. 

&rlina DN~. Inc., 787 S.W.2d 348 (Tex. 1990) two year statute of limitations on wrongful 

death action not in violation of open courts provision); Lucas v. United States, 757 S.W.2d 

687 (Tex. 1988) (statutory cap on medical malpractice damages violated provision)* LeCrov 

v. Hanlorl, 713 S.W.2d 335 (Tex. 1986) (statutory provision for portion of court c&filing 

fee going to state general revenues violated provision); NeaFle v. Nelson, 685 S.W.2d 11 

(Tex. 1985) (application of two-year statute of limitations on health care liability which cut 

off cause of action before injured party had reasonable opportunity to discover injury 

violated provision); Nelson v. Krusen, 678 S.W.2d 918 (Tex. 1984) (application of statute of 

limitations to cut off wrongful birth action before parents could have known son had 

disease violated provision); Sax v. Votteler, 648 S.W.2d 661 (Tex 1983) (statute removing 

tolling of statute of limitations on medical malpractice actions for minors violated 

provision); s Linaer, Why Bother with State Bilk of Rights? 68 TEX. L. REV. 1573, 1592-97 

(1990). The Sax majority set out the test for an open courts violation as follows: 

First, it must be shown that the litigant has a cognizable common law 

cause of action that is being restricted. Second, the litigant must show 

that the restriction is unre’asonable or arbitrary when balanced against 

the purpose and basis of the statute. 

& at 666. 

The majority opinions in Moreno 1990, m in 1988,. and a in 1986 have 

utilized the & test in determining the validity of statutes under the open courts provision, 

at 355,690, and 341 respectively. But see Lucas at 716-17 (Chief Justice Phillips’ dissenting 

opinion) (a test “has resulted in an almost exclusive focus on ‘the extent to which the 

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litigant’s right to redress is affected,’ with an almost total disregard of ‘the general purpose 

of the statute.‘“); see also Moreno at 357; &f&y at 343 (dissenting opinions). 

We do not believe that the supreme court would find the provisions of chapter 64 on 

their face .violative of the provision. Although the first prong of the ti test for an open 

courts violation - that the challenged statute restricts a well-recognized common law cause 

of action - would appear to be met in the case of the chapter 64 arbitration requirements,’ 

we do not believe that the court would find, under the second prong of the test, that the 

chapter 64 requirements are “unreasonable or arbitrary when balanced against the purpose 

and basis of the statute.” 

It is to be presumed that the legislature has acted with knowledge of the factual 

circumstances relating to an enactment, and has not acted unreasonably or arbitrarily. See 

67 Tex. Jur. 3d Statutes $ 134, 12 Tex. Jur. 3d s 0 40, and authorities 

cited therein The Committee on &riculture and Livestock Bill Analysis to Senate Bill 64, 

the 1989 bill adding the provisions of chapter 64, set out the “background” and “purpose” of 

the bill. Those portions of the bill analysis read: 

BACKGROUND 

In the past, some farmers have experienced dissatisfaction with various 

crop seeds not germinating and emerging at the percentage labeled. 

Usually the complaint is settled between the.seller .of the seed and the 

purchaser, with litigation resulting when the complaints cannot 

otherwise be settled. However, farmers and seedmen agree that 

litigation is not the most desirable way to settle a complaint about seed, 

and the farmers are often reluctant to litigate. 

For many years the state of Florida has used a method of arbitration 

with an unbiased third party investigation and opinion. The American 

Seed Trade Association has recommended to each of its member states 

that they work to pass measures similar to Florida’s[.] 

1. As was noted in Lucas. which invalidated a cap on medical malpractice damages, a statute need 

not totally abolish a cause of action to run afoul of the open courts provision. u at 691,692. Chapter 64, by 

establishing arbitration as a prerequisite to maintaining a legal action in a seed performance dispute, would 

appear, by delaying a disputant’s access to the courts and by requiring a ten dollar tiling fee, to “restrict” such a 

cause of action under the first part of the-test. 

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PURPOSE 

The bill provides for an unbiased third party investigation by the State 

Seed and Plant Board of the Texas Department of Agriculture of 

complaints concerning seed performance. 

Bill Analysis, S.B. 64,71st Leg. (1989). 

As the bill analysis indicates, Florida has had a similar statutory seed dispute 

arbitration requirement in effect for some years. & F.S.A. $9 578.26, 578.27 (provisions 

of which were first adopted by Laws 1951, chapter 26814, section 1). The only Florida case 

we find that has addressed the provisions of the Florida seed dispute Statute is Ferrv-Morse 

Seed Co. v. Hit&cock, 426 So2d 958 (Ha. 1983). The Ferry-Morse opinion responded to 

certified questions from the United States Court of Appeals, Eleventh Circuit. It found 

that a farmer’s failure to first follow the requirements of the Florida seed dispute statute 

barred his cause of action against the seller for seed defects (but did notbar his plea of lack 

of consideration as a defense to the seller’s action). Though it did not specifically address 

the issue of an open courts provision violation, we think the Fens-Morse holding certainly 

suggests that the court did not think the Florida statute violative of that provision of the 

Florida constitution. The Florida constitution’s “open courts” provision is .sirnilar to the 

Texas provision, and Florida courts have adopted a similar test for violations of the 

provision. & Khmer v. White, 281 So2d 1, 4 (Fla. 1973) (statute must provide “a 

reasonable alternative to protect the rights of the people of,the State to redress for injuries, 

unless the Legislature can show an overpowering public necessity for the abolishment of 

such right, and no alternative method of meeting such public necessity can be shown”). 

We note too that constitutional attacks on statutory arbitration requirements have 

generally been upheld by courts only where such statutes close the courts to litigants and 

make the decisions of arbitrators the final determinant of the rights of the parties. See 

Annotation, 55 kLR.2d 432,441; New England Merchants Nat’1 Bank v. Hughes, 556 F. 

Supp. 712,714 (E.D. Penn. 1983); Attorney General of Marvland v. Johnson, 385 k2d 57, 

65 (Ct. App. Md. 1978); Collier & Wallis v. Astor, 70 P.2d 171, 173 (Cal. 1937). 

Among Texas authorities, we find no cases which invalidate under the open courts 

provision requirements comparable to the non-binding arbitration requirements in chapter 

64. See. e.g, Middleton v. Texas Power & Light Co,, 185 S.W. 556 (Tex. 1916) (workers 

compensation law, in providing for determination of disputed claims by Industrial Accident 

Board, with right of appeal to the courts, does not violate article I, section 13, or other 

constitutional provisions). 

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It has been suggested that the non-refundable ten dollar filing fee is impermissible 

under &Qoy. In I.&&y the statute required a portion of the filing fee filed with the 

district clerk when instituting a court action to go to the state comptroller for deposit in the 

general revenue fund. The a majority opined that “the major defect with the filing 

fee is that it is a general revenue tax on the right to litigate: the money goes to other 

statewide programs besides the judiciary.” I.&&y at 341. “[Llitigants must pay a tax for 

general welfare programs as a condition to being allowed their right of access to the courts. 

This the open courts provision prohibits.” !& at 342. 

Texas courts have uniformly followed the rule that if, from a consideration of the 

statute as a whole, the primary purpose of a charge is the raising of revenue, then the 

charge is to be considered a tax. If, on the other hand, the primary.purpose is that of 

regulation, then the charge is to be considered a fee rather than a tax. & Hurt v. Coooer, 

110 S.W.2d 896 (Tex. 1937) (and other authorities cited in Attorney General Opinion 

JM-963 (1988)); see also City of Fort Worth v. Gulf Refining Co., 83 S.W.Zd 610,619 (Tex. 

1935) (because a charge goes into general revenue funds does not in itself resolve whether 

the charge is a tax or a fee). 

Nothing has been brought to our attention that would suggest the ten dollar filing 

fee was not intended to offset the Agriculture Department’s administrative c0sts.z Thus, 

we do not believe the fee is in the nature of a “tax on the right to litigate,” such as the 

portion of the filing fee the I=&&y court found ran afoul of article I, section 13. 

Irrlight of the foregoing, it is our opinion that the arbitration requirements of 

chapter 64 do not on their face violate the open courts provision of the Texas Constitution. 

We caution, finally, that application of the chapter 64 requirements in particular 

cases might raise questions under the open courts provision. For example, application of 

the requirement of section 64.006(a), that the arbitration complaint must be filed in time to 

permit inspection of plants under field conditions, might in particular cases be limited by 

the open courts provision. See. e.g.. Neazle at 12 (“the open courts provision. . . protects a 

citizen . . . from legislative acts that abridge his right to sue before he has a reasonable 

opportunity to discover the wrong and bring suit”). 

2. See the Legislative Budget Board’s May 16, 1989, Fiscal Note to S.B. 64 (the bill adding the 

provision of chapter 64) anticipating revenues from the tiling fee as $500 for each of the tint five years after the 

bill’s passage, but costs of the program as $6665,165 in the first year and $55,165 in each of the succeeding years. 

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SUMMARY 

The requirements of chapter 64 of the Agriculture Code for 

non-binding arbitration of seed performance disputes do not on their 

face violate the open courts provision of article I, section 13, of the 

Texas Constitution. 

DAN MORALES 

Attorney General of Texas 

WILL PRYOR 

First Assistant Attorney General 

MARY KELLER 

Executive Assistant Attorney General 

JUDGE ZOLLIE STEAKLEY (Ret) 

Special Assistant Attorney General 

RENEA HICKS 

Special Assistant Attorney General 

SUSAN GARRISON 

Acting Chairman, Opinion Committee 

Prepared by William Walker 

Assistant Attorney General 

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