The Senate has now approved the House’s revisions to the bill that would form the new Fifteenth Court of Appeals for commercial cases. Once the two chambers of the Legislature sign the final version of the bill, the creation of that new court awaits only the governor’s signature.
Before long, that court’s justices will take office and its docket will begin to fill with cases. As a brand new institution, the Fifteenth Court will have no precedent of its own to apply in those cases. With apologies for the pun, that court will face an “unprecedented” situation.
Fortunately, the new court will not lack raw material. Texas has no shortage of precedent from the state’s two high courts and its 14 other courts of appeal. And the federal system provides a helpful framework to at least start the process of creating precedent within the Fifteenth Court.
When jurisdiction arises from the parties’ diversity of citizenship, federal courts must frequently resolve unsettled points of state law. To do so, a court makes an “Erie guess” to determine, as best it can, what the highest court of the state would decide on that issue.
In the Fifth Circuit, to make such a “guess” a federal court works its way downward through a hierarchy of resources: (1) decisions of the state supreme court in analogous cases, (2) the rationales and analyses underlying state supreme court decisions on related issues, (3) dicta by the state supreme court, (4) lower state court decisions, (5) the general rule on the question, (6) the rulings of courts of other states to which the relevant state’s court would likely look, and (7) other available sources, such as treatises and legal commentaries.
That framework is a productive starting point for the Fifteenth Court. After all, it will be engaging in a similar exercise, trying to anticipate how the Texas Supreme Court would resolve a particular issue of law. The resources identified by the Fifth Circuit for making an Erie guess, and the order of importance attached to them, fit well with what Texas’ newest court will need to be doing.
It also fits well with Texas judicial history. After all, this is not the first time that a Texas court has had to start from nothing. The Supreme Court of the Republic of Texas also faced that challenge, and in the 1844 case of Carr v. Wellborn it wrote:
Organized as our system is on the principles of the common law, both reason and prudence should lead us to adopt decisions of courts whose system is the same; especially when supported by the authority of reason and the dignity of names eminent for their proficiency in science and wisdom and their elucidation of the principles of the common law. … [W]e should follow in the beaten track, guided by the lights which they have shed, to conclusions correct in principle, guarded by precedent, and just in their effects.
The principles set out by that statement have a great deal in comment with the modern framework for an Erie guess.
But more complex questions may also arise. What if Texas law is silent on a particular question, other than the Dallas Court of Appeals answering it “yes” while the San Antonio Court of Appeals says “no” — and the parties are from San Antonio?
In a traditional conflict-of-laws analysis, the parties’ location would carry weight, particularly if that location brought with it settled expectations about the controlling law (i.e., the precedent established by the local court).
This situation, however, is not a true conflict. The Fifteenth Court is not deciding whether to enforce a choice-of-law provision that may give another state’s law priority over Texas. The Court is deciding the content of its ownprecedent, applicable throughout its statewide jurisdiction — even though settled expectations varied throughout that jurisdiction at the time the court was created.
Because that kind of question does not create a true conflict-of-laws problem, the new court will have considerable flexibility about answering it and other similar ones. After all, there is no Restatement for New Courts.
But that flexibility brings with it a need for conservatism and reflection. Just because the new court can paint with bright colors when selecting its initial precedents does not mean that it should. At least in the early stages, creation of a meaningful statewide body of commercial law will require a keen sensitivity to practicalities such as the litigants’ location, even if such matters may not otherwise be relevant in a traditional analysis of precedent.
David Coale is an appellate law partner at Lynn Pinker Hurst & Schwegmann.