Court Opinion

ID: 5128548
Source: CourtListenerOpinion
Date Created: 2021-11-23 01:00:34.674299+00
Date Added: 2024-06-11T08:23:07.452826
License: Public Domain

Case: 21-20145     Document: 00516104201       Page: 1    Date Filed: 11/22/2021

           United States Court of Appeals
                for the Fifth Circuit                            United States Court of Appeals
                                                                          Fifth Circuit
                                 ___________                            FILED
                                                                 November 22, 2021
                                  No. 21-20145
                                 ___________                       Lyle W. Cayce
                                                                        Clerk
   Fire Protection Service, Incorporated,

                                                         Plaintiff—Appellant,

                                      versus

   Survitec Survival Products, Incorporated,

                                            Defendant—Appellee.
                  ______________________________

                  Appeal from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:19-CV-2162
                  ______________________________

   Before Elrod, Oldham, and Wilson, Circuit Judges.
   Jennifer Walker Elrod, Circuit Judge:
         Fire Protection Service, Inc. filed an unopposed motion to certify a
   state-law question to the Supreme Court of Texas. Because this case
   presents a determinative and novel question of Texas law, we GRANT the
   motion and certify the question.
                                        I.
         The facts of this case are fairly straightforward. Survitec Survival
   Products, Inc. makes life rafts. Survitec had an open-ended oral agreement
   with Fire Protection to sell Survitec’s life rafts. After they made that
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                                    No. 21-20145

   agreement, the Texas Legislature passed the Fair Practices of Equipment
   Manufacturers, Distributors, Wholesalers, and Dealers Act (“the Texas
   Dealers Act” or “the Act”). Act of May 27, 2011, 82d Leg., R.S., ch. 1039,
   §§ 1–5, 2011 Tex. Gen. Laws 2646–59. The Act (among other things)
   prohibits equipment suppliers like Survitec from ending dealer agreements
   without good cause and notice, and it requires those suppliers to buy back
   unsold inventory from dealers like Fire Protection when they do so. See Tex.
   Bus. & Com. Code §§ 57.202, 57.204, 57.355(a). Survitec later ended its
   relationship with Fire Protection without notice and without explaining why.
          Fire Protection sued Survitec, alleging it violated these provisions of
   the Act. Survitec removed the case to federal court, then responded that the
   Act violates the Texas Constitution’s prohibition on “retroactive law[s].”
   See Tex. Const. art. I, § 16 (“No bill of attainder, ex post facto law,
   retroactive law, or any law impairing the obligation of contracts, shall be
   made.”). The district court agreed with Survitec and held that the Act was
   unconstitutional to the extent it retroactively amended the oral agreement
   between the two parties. Fire Protection appealed.
                                         II.
          When a case presents a question of Texas law, we look to the decisions
   of the Supreme Court of Texas for the answer. When no decision gives
   enough guidance, rather than make an Erie guess at the answer, we
   sometimes ask the Supreme Court of Texas to answer the question for us.
   Austin v. Kroger Tex. L.P., 746 F.3d 191, 196 (5th Cir. 2014). The Texas
   Constitution gives that court the power to do so, Tex. Const. art. V, § 3-c(a),
   so long as the case presents “determinative questions of Texas law” not
   already answered by the Court’s precedent, Tex. R. App. P. 58.1. On our
   end, we consider three factors before certifying a question:

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                 (1) the closeness of the question and the
                 existence of sufficient sources of state law;
                 (2) the degree to which considerations of comity
                 are relevant in light of the particular issue and
                 case to be decided; and
                 (3) practical limitations of the certification
                 process: significant delay and possible inability to
                 frame the issue so as to produce a helpful
                 response on the part of the state court.

   Silguero v. CSL Plasma, Inc., 907 F.3d 323, 332 (5th Cir. 2018). Each favors
   certification here.
          Whether the Act (as applied to the preexisting oral agreement)
   violates the Texas Constitution’s retroactivity clause is a close call. The
   retroactivity clause has been part of the state’s constitution for “as long as
   the State of Texas has been the State of Texas.” City of Fort Worth v. Rylie,
   602 S.W.3d 459, 460 (Tex. 2020). It has its roots in the Declaration of Rights
   in the Constitution of the Republic of Texas: “No retrospective or ex post
   facto law, or laws impairing the obligations of contracts shall be made.”
   Repub. Tex. Const. of 1836, Dec. of Rights § 16. And it has been featured in
   the Bill of Rights in each of the state’s constitutions since. See Robinson v.
   Crown Cork & Seal Co., Inc., 335 S.W.3d 126, 138 & n.63 (Tex. 2010).
          Despite this long history, the clause is not so easy to apply. By its
   terms, the clause is seemingly absolute: No “retroactive law” “shall be
   made.” Tex. Const. art. I, § 16. Most laws have some retroactive effect,
   though, because they often “operate to change existing conditions.” Tex.
   Water Rights Comm’n v. Wright, 464 S.W.2d 642, 648 (Tex. 1971). The
   Supreme Court of Texas has thus acknowledged that “not all statutes that
   apply retroactively are constitutionally prohibited.” Subaru of Am., Inc. v.
   David McDavid Nissan, Inc., 84 S.W.3d 212, 219 (Tex. 2002); Robinson, 335

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   S.W.3d at 160 (Willett, J., concurring) (“Retroactivity in and of itself is not
   fatal.”). When the Court first interpreted the clause, Chief Justice Hemphill
   wrote that “[l]aws are deemed retrospective and within the constitutional
   prohibition which by retrospective operation destroy or impair vested
   rights.” DeCordova v. City of Galveston, 4 Tex. 470, 479 (1849). But the
   “impairs vested rights” framework proved circular. As then-Justice Hecht
   put it: “What constitutes an impairment of vested rights is too much in the
   eye of the beholder,” as it ultimately boils down to a law’s being
   unconstitutionally retroactive “if it takes away what should not be taken
   away.” Robinson, 335 S.W.3d at 143. That test being unworkable, the Court
   in Robinson concluded that “[n]o bright-line test for unconstitutional
   retroactivity is possible,” and it changed course. Id. at 145.
          In light of the clause’s dual objectives—“protecting settled
   expectations and preventing abuse of legislative power,” id. at 139—Robinson
   instructed courts to consider three factors to decide whether a retroactive law
   is constitutionally prohibited: (1) “the nature of the prior right impaired by
   the statute”; (2) “the extent of the impairment”; and (3) “the nature and
   strength of the public interest served by the statute as evidenced by the
   Legislature’s factual findings.” Id. at 145. The Court cautioned courts not
   to weigh the general “public advantage” of a retroactive law against the
   “relatively small impact on private interests,” else the clause “would be
   deprived of most of its force.” Id. at 146. Rather, “[t]here must be a
   compelling public interest to overcome the heavy presumption against
   retroactive laws.” Id. That being said, the Court also acknowledged that it
   has invalidated laws as unconstitutionally retroactive only a few times, so it
   told courts to “be careful to enforce the constitutional prohibition to
   safeguard its objectives.” Id.
          Fire Protection had an agreement to sell Survitec’s life rafts, but the
   Texas Dealers Act added obligations the parties did not originally agree to in

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   their contract. Since Robinson, the Supreme Court of Texas has not come
   across a case like this one. That is precisely why we certified a remarkably
   similar question a few years ago, which the Court graciously accepted, but
   the parties settled before the Court could answer it. See Associated Mach. Tool
   Techs. v. Doosan Infracore Am., Inc., 745 F. App’x 535, 539 (5th Cir. 2018).
   Were we to say that application of the Texas Dealers Act to the contract
   between Fire Protection and Survitec violates the Texas Constitution’s
   retroactivity clause, we would be Erie-guessing our way into uncharted
   waters. See Frank Chang, You Have Not Because You Ask Not: Why Federal
   Courts Do Not Certify Questions of State Law to State Courts, 85 Geo. Wash.
   L. Rev. 251, 265–68, 276–77 (2017) (discussing the advantages of certification
   and disadvantages of Erie-guessing under such circumstances).
          Beyond the closeness of the question and the dearth of on-point
   precedent, considerations of comity counsel in favor of certification. As the
   Court was keen to emphasize in Robinson, “courts must be mindful that
   statutes are not to be set aside lightly.” 335 S.W.3d at 146. That is even truer
   for us, as we are being asked to apply a state constitutional provision to
   prevent the application of state law to a contract which is itself a creature of
   state law. In the spirit of “cooperative judicial federalism,” we think it better
   to let Texas’s high court say what Texas law is, rather than us saying what
   we think they would say. See McMillan v. Amazon.com, Inc., 983 F.3d 194,
   202 (5th Cir. 2020). The justices of the Supreme Court of Texas are far
   better-suited than we are to make such a determination, and we are better off
   riding their robe-tails to the right result here.
          The last thing we consider is the practical limitations of certification.
   None are in play here. Fire Protection’s motion for certification was
   unopposed, and certifying this question early on avoids the hassle of having
   to argue this case twice. Nor is there any concern of delay. The Supreme
   Court of Texas has graciously accepted and promptly answered our questions

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   time and again. McMillan, 983 F.3d at 203. We have every confidence that
   it will do so here too.
                                        III.
          IT IS ORDERED that Appellant’s unopposed motion to certify a
   state-law question to the Supreme Court of Texas is GRANTED. We
   certify the following question of state law to the Supreme Court of Texas:
                  Does the application of the Texas Dealers Act to
                  the parties’ agreement violate the retroactivity
                  clause in article I, section 16 of the Texas
                  Constitution?

   We disclaim any intention or desire that the Court confine its reply to the
   precise form or scope of the question certified.
                                                   QUESTION CERTIFIED.

                                               A True Copy
                                               Certified Nov 22, 2021

                                               Clerk, U.S. Court of Appeals, Fifth Circuit

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