Acting to protect the public from unscrupulous lawyers, the legislature in 2011 made Texas the only state with a civil barratry cause of action. A person who was solicited by activity violating criminal barratry laws or professional conduct rules may obtain a $10,000 penalty, actual damages and attorney’s fees.
The legislation was supported by major business groups and employers such as Dow Chemical and Shell Oil.
Now, the Texas Supreme Court must decide how the law applies when much of the alleged activity occurred out of state. The court heard arguments Wednesday in Pohl v. Cheatham, which focuses on alleged improper solicitation of families in Louisiana and Arkansas whose loved ones were killed in auto accidents.
After Ladonna Cheatham and two of her children died in a crash in February 2014, her son Mark Cheatham Jr., his father Mark Cheatham Sr. and her mother Luella Miller entered into a representation agreement with Texas attorneys Michael Pohl and Robert Ammons. The family later sued the attorneys in Harris County in June 2017, alleging the attorneys paid a financing company run by Pohl’s wife, Donalda Pohl, to offer $18,000 in a “settlement advance” for funeral expenses and as an incentive to hire Pohl and Ammons.
Similar allegations were made by an Arkansas woman whose husband died in a July 2014 accident outside of Anson, Texas. Lacy Reese is an intervenor in the case.
Both the Cheatham and Reese wrongful death lawsuits were settled in their respective states.
The trial court granted summary judgment in the barratry case for the Texas lawyers on the basis that the civil barratry law does not apply to solicitations that occur outside of Texas. The court denied a summary judgment motion based on a two-year statute of limitations.
Upon rehearing, the First Court of Appeals reversed and remanded, holding that a four-year statute of limitations applies. The court concluded that sufficient conduct occurred in Texas to allow jurisdiction over plaintiffs’ claims but declined to decide whether the law applies to conduct that occurred outside of Texas.
Thomas R. Phillips of Baker Botts gave arguments for The Ammons Law Firm, stressing that the plaintiffs cannot overcome the presumption against extraterritoriality.
“By the very terms of the statute, its focus is on solicitation and not what an attorney in another state may or may not have done to encourage it,” said Phillips, a Baker Botts partner.
Justice Rebeca Aizpuru Huddle asked what the court should do about the part of the conduct that occurred in Texas.
Phillips, a former chief justice of the Supreme Court, said justices should focus on the statute and where the conduct occurred.
“If you look at the statute and you take the legislature at its word, it’s solicitation. And then you look at where that conduct occurred, and it happened in Louisiana and Arkansas and did not happen in Texas,” he said.
David Eric Kassab of The Kassab Law Firm, argued for the Cheatham plaintiffs.
“[Government Code] 82.0651 was enacted as a mechanism of civil enforcement to deter barratry and hold those who commit it accountable civilly,” he said. “Petitioners do not want this court to hold them accountable. They want to avoid civil responsibility based upon an unreasonable construction of this statute.”
Kassab said it is undisputed that the financing and directing of the unlawful solicitation occurred in Texas.
Justice Evan A. Young appeared skeptical. “Those are not strong arguments where we have a presumption against extraterritoriality,” he said, adding that he would expect the legislature “to be a heck of a lot clearer” if it intended the law to apply to conduct outside of Texas.
Kassab pointed to language calling for the barratry statute to “be liberally construed and applied to promote its underlying purposes, which are to protect those in need of legal services against unethical, unlawful solicitation and to provide efficient and economical procedures to secure that protection.”
Two days before the arguments, Kassab filed a letter of supplemental authorities to advise the court of a recently issued opinion from a federal judge in the Northern District of Texas, in A.S. v. Salesforce, Inc. That case involves a state law imposing liability for trafficking of persons.
“Salesforce recognized that ‘the absence of express language permitting a statute’s extraterritorial application is not determinative if there is other evidence that the legislature intended to give a statute extraterritorial reach.’ Salesforce found that the history and purpose of the statute in question, Chapter 98 of the Civil Practice & Remedies Code, ‘clearly demonstrate the legislature’s intent’ that the statute ‘extend to at least some out-of-state activities,’” the letter states.
Asked by Justice Huddle about the Salesforce decision, Phillips said the case is distinguishable because taking minors and trafficking them across state lines is a “civil crime” in most states and in federal law compared to the unique Texas civil barratry law.
Parth S. Gejji of Beck Redden represents Pohl and shared argument time with Phillips. He said a two-year statute of limitations should apply because the plaintiffs’ claims are more aligned with tort claims than contract claims.
The case is No. 23-0045.