A hotly divided Texas Supreme Court decided Friday that it will not decide – at least not at this time – whether the Electric Reliability Council of Texas – aka ERCOT – is a governmental body that has sovereign immunity and thus protected from lawsuits.
But the same case with the same issues will almost certainly be back before the state justices in the next year or two.
Four justices including Chief Justice Nathan Hecht dissented, saying the state’s highest court might as well decide the issue now, especially because the public has a great interest in whether ERCOT can be sued as a result of the power outages from last month’s winter storm.
The case, ERCOT v. Panda Power, is a five-year-old dispute in which Panda sued ERCOT for a billion-dollars for fraud and breach of fiduciary duty.
“The immunity issue has been important to them since the case was first filed in the trial court more than five years ago,” Hecht wrote in his dissent, which was joined by justices Eva Guzman, Deborah Lehrmann and John Devine. “Now it happens that the public stakes are high too. After Winter Storm Uri last month, the public also wants to know whether ERCOT can be sued.
“Will ERCOT be immune to claims against it for failing to prevent the power outages across Texas that not only crippled millions of users but resulted in water outages that were at least as bad, if not worse?” Hecht wrote. “The answer to the immunity issue in this case has become perhaps more important to the public than even to the parties. The parties want to know. The public wants to know. The court refuses to answer.”
The reasoning behind the majority’s opinion rests in the case’s procedural history.
The trial judge in Sherman ruled in 2018, that ERCOT is not immune from lawsuits. ERCOT filed an interlocutory appeal. A writ of mandamus was also filed. The Dallas Court of Appeals consolidated the two appeals, reversed the trial court and ordered that the case be dismissed, which the judge did a few days later.
Panda then asked the court of appeals to set aside its order and allow it to appeal directly to the Texas Supreme Court. The appellate court said no. Panda then filed a mandamus with the high court.
The justices agreed to tackle the case and heard oral arguments from the two sides’ lawyers last September.
Public interest in the case grew exponentially when millions of Texas lost power in February from the winter storm. Texans that did have power were charged exorbitant prices.
Several lawsuits against ERCOT were filed. Lawyers in the case said that the Texas Supreme Court’s decision in the Panda case would provide the litigation guidance they needed on whether to proceed.
But Friday, five justices said not so fast. They said that the Texas Constitution requires that they not decide the question of ERCOT’s sovereign immunity at this point.
“However much we may desire to provide answers in these now moot interlocutory proceedings, the constitution prohibits us from doing so, and we must respect that prohibition,” Justice Jeffrey Boyd wrote in a 19 -page opinion. “We must therefore dismiss both the petition for writ of mandamus and the petition for review for want of jurisdiction.”
The problem, according to Justice Boyd, is that the trial court entered a final judgment against Panda. Because the court of appeals had consolidated the mandamus petition with the interlocutory appeal, which was dismissed by the trial court, the mandamus was also rendered moot.
Boyd agreed that the cases “present a medley of jurisdictional issues.”
“Because the trial court’s interlocutory order merged into the final judgment and no longer exists, we cannot grant the relief the parties seek,” Boyd said. “As a result, any decision we might render would constitute an impermissible advisory opinion, and these consolidated causes are moot.”
David Coale, an appellate law expert at Lynn Pinker, said the “court may have punted, but it didn’t walk away. It acknowledged that another appeal involving the same parties is on its way up to them, and it can revisit these issues then.”
“Five justices said ‘we have rules, and this case has become moot, even though it’s important.’ Four Justices said ‘nothing will change in a year – same arguments, same parties – and everyone wants to know what we think about this issue.’
“The majority didn’t say this, but they may well have been thinking that the storm-related issues will be more apparent in a year,” Coale said. “That litigation has just started and they could have been worried about a statement in this case really affecting those cases before the issues in them are fully developed.”
“The good news for ERCOT is it didn’t have to deal with an opinion that might have limited its immunity. The bad news is it now faces a lot of litigation with no guidance from the supreme court.”
The lawyers representing ERCOT in this case are former Texas Supreme Court Chief Justice Wallace Jefferson, who is a partner at Alexander Dubose & Jefferson; Nick Bacarisse, also a partner at ADJ; ERCOT General Counsel Chad Seely; and Skelton & Woody partner J. Hampton Skelton.