McPeters v. Lexisnexis

• Decision Date: 31 March 2014
• Docket Number: Civil Action No. 4:11–CV–2056.
• Parties: Karen McPETERS, et al., Plaintiffs, v. LEXISNEXIS, Defendant.
• Court: U.S. District Court — Southern District of Texas

11 F.Supp.3d 789

Karen McPETERS, et al., Plaintiffs

v.LEXISNEXIS, Defendant.

Civil Action No. 4:11–CV–2056.

United States District Court, S.D. Texas, Houston Division.

Signed March 31, 2014.

Austin P. Tighe, Jr., Feazell & Tighe LLP, Austin, TX, Robert L. Mays, Jr., Attorney at Law, San Antonio, TX, for Plaintiffs.

Cynthia Grace Burnside, John M. Hamrick, J. Allen Maines, Holland Knight LLP, John G. Parker, S. Tameka Phillips, William K. Whitner, Paul Hastings et al., Atlanta, GA, Robert T. Mowrey, Locke Lord LLP, Dallas, TX, Amanda Marie Schaeffer, Benjamin David Lee Foster, Locke Lord LLP, Austin, TX, David Alan McNamara, Port of Houston Authority, Houston, TX, for Defendant.

MEMORANDUM AND ORDER

KEITH P. ELLISON, District Judge.

For some four years now, Plaintiffs have sought to challenge the e-filing fees implemented by certain Texas county courts. Plaintiff Karen McPeters originally filed suit against LexisNexis and a series of government employees and entities and, once that action was dismissed, brought this separate proceeding against LexisNexis, the provider of the e-filing services, alone.

The Court turns to several pending issues in this Memorandum and Order. First, there are four motions: Plaintiffs' Motion to Certify a Class (Doc. No. 146), Plaintiffs' Motion for Partial Summary Judgment (Doc. No. 155), Defendant's Motion for Summary Judgment (Doc. No. 156), and, less pressingly, Plaintiffs' Motion for a Protective Order (Doc. No. 157). Second, the Court has independently elected to revisit an earlier order, in which it denied Defendant's Motion to Dismiss certain of Plaintiffs' claims. (See Doc. No. 100 (order denying motion); Doc. No. 158 (order for supplemental briefing).) The Court has reviewed exhaustive briefing on each of these issues and held a lengthy hearing on the motion to certify.

In this Memorandum and Order, the Court endeavors to bring this case to a final resolution (pending appeal, of course). First, it reconsiders its earlier ruling and GRANTS Defendant's Motion to Dismiss Plaintiffs' claims under Section 15.05 of the Texas Free Enterprise and Antitrust Act. Second, it DENIES Plaintiffs' Motion to Certify a Class for the purposes of their unconscionability claim. Finally, it GRANTS Defendant's Motion for Summary Judgment on all remaining claims. Plaintiffs' Motions for Partial Summary Judgment and for a Protective Order will be DENIED AS MOOT. The Court explains its reasoning below.

I. IMMUNITY

LexisNexis contends, albeit only in the short final paragraph of its twenty-five-page brief in support of summary judgment, that it is entitled to immunity “from claims where [it] is performing services related to a judicial function, pursuant to court order.” (Doc. No. 156 at 30.) It is true that, “[w]hen judges delegate their authority or appoint others to perform services for the court, the judge's absolute judicial immunity may extend to his or her delegate or appointee.” Vernon v. Rollins–Threats, No. CIV.A.3:04CV1482BFP, 2005 WL 3742821, at *4 (N.D.Tex. Nov. 2, 2005). However, “[d]erived judicial immunity extends only to those officials whose ‘judgments are functionally comparable to those of judges' and who ‘exercise a discretionary judgment as part of their function.’ ” Id.(quoting Antoine v. Byers & Anderson, Inc., 508 U.S. 429, 432 & n. 3, 113 S.Ct. 2167, 124 L.Ed.2d 391 (1993) ). The Court cannot conceive of how LexisNexis, as facilitator of e-filing and e-serving, fulfilled such a role and thus declines to cloak Defendant in any sort of immunity.

II. SECTION 15.05 CLAIMS

Plaintiffs have alleged violations of the Texas Free Enterprise and Antitrust Act (TFEAA), as codified by Texas Business & Commerce Code § 15.05(a) and (b). Sub-section (a) dictates that “[e]very contract, combination, or conspiracy in restraint of trade or commerce is unlawful,” while section (b) makes its “unlawful for any person to monopolize, attempt to monopolize, or conspire to monopolize any part of trade or commerce.” With respect to the Section 15.05(a) claim, Plaintiffs argue that the Court could find the LexisNexis user fees as illegal per se, or in the alternative, an unreasonable restraint of trade. A brief history of this litigation will help to put these claims in context. The Court then turns to its substantive analysis.

A. Litigation History

In 2010, Plaintiff McPeters brought a putative class action against Judge Frederick E. Edwards, who originally authorized e-filing in Montgomery County, the county clerk, the county as an entity, and LexisNexis. See McPeters v. Edwards (McPeters I), 806 F.Supp.2d 978, 981 (S.D.Tex.2011) (Ellison, J.), aff'd, 464 Fed.Appx. 351 (5th Cir.2012). Plaintiff alleged that the e-filing system at issue “violate[d] the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961 –68 ; the due process and equal protection provisions of the U.S. Constitution, pursuant to 42 U.S.C. § 1983 ; the separation of powers, equal protection, open courts, and due course of law provisions of the Texas Constitution; the Texas Theft Liability Act, Tex. Civ. Prac. & Rem.Code § 134.001 et seq. (Vernon's 2005); and [amounted to] common-law fraud, conspiracy, and violation of statutory duties.” Id. at 982.

The Court dismissed the federal claims on a Rule 12(b)(6) motion. In considering whether to exercise supplemental jurisdiction, the Court noted that it was “troubled by certain aspects of the e-filing system at issue.” Id. at 991. More specifically, the Court explained that:

It is not clear that the e-filing system, and the accompanying fees, were properly adopted within the bounds of applicable Texas law. The Texas Government Code provides that rules and procedures regulating the use of electronic filing systems, including local rules, must be approved by the Texas Supreme Court. Tex. Govt.Code §§ 51.803, 51.807 (Vernon's 2005). Although the Montgomery County Local Rules were approved in 1997, the fees charged by LexisNexis were not specifically approved. (Ex. 2 to Judge Edwards's Mot. to Dismiss 2d. Am. Compl., Doc. No. 56–2.) In addition, the Texas Government Code sets forth filing fees and other fees to be charged by district clerks. Tex. Govt.Code §§ 51.317 –19, 101.061 –101.0617, 103.021 –103.033 (Vernon's 2005). The statute provides that “for performing any other service prescribed or authorized by law for which no fee is set by law” the district clerk shall collect “a reasonable fee.” Id. at § 51.319....

It is not clear that under [certain other] statutes the district clerk may delegate fee-setting authority to a private company. It is also not clear that there is any limit to the rates LexisNexis could charge, subject only to Montgomery County ceasing to use LexisNexis's services.

Id.¹ But, because “no federal remedy [wa]s available under the facts presented,” the Court declined to exercise supplemental jurisdiction. Id. at 992.

Three days before the Court granted Defendant's Motion to Dismiss in McPeters I, McPeters filed this suit in state court, naming LexisNexis as the sole defendant and alleging violations of the Texas Deceptive Trade Practices–Consumer Protect Act, Procedural and Substantive Due Process rights under the state constitution, the Texas Theft Liability Act, Texas Business & Commerce Code Section 15.05(a), as well as common law fraud. (See Doc. No. 1.) Defendant removed to the Western District of Texas and then successfully moved to have the case transferred to this Court. (Doc. Nos. 13, 21.) After some motions practice, Plaintiff filed a First Amended Complaint. (Doc. No. 54–2.) That Complaint set forth most of the same basic claims, but its TFEAA claims went from being one of Plaintiff's final allegations to her very first, and the Complaint largely tracked the language of the McPeters I Memorandum & Order, quoted above, in which the Court explained why it was “troubled” by the e-filing system at issue. (See id. at 7–10.) McPeters alleged violations of Section 15.05(a) and (b), and this time included her allegation that the filing system was illegal per se. (Id. at 4.)

Defendant's Motion to Dismiss the First Amended Complaint was granted in part and denied in part. See McPeters v. LexisNexis (McPeters II), 910 F.Supp.2d 981 (S.D.Tex.2012) (Doc. No. 100). The TFEAA claims survived. With respect to per se illegality, the Court held:

For the reasons previously noted by this Court in McPeters v. Edwards, there are a number of reasons why Defendant's e-filing fees may be illegal per se. McPeters v. Edwards, 806 F.Supp.2d at 991. First, the fees charged by Defendant were not specifically approved. (Ex. 2 to Judge Edwards's Mot. to Dismiss 2d. Am. Compl., Doc. No. 56–2.) The Texas Government Code provides that rules and procedures regulating the use of electronic filing systems, including local rules, must be approved by the Texas Supreme Court. Tex. Govt.Code §§ 51.803, 51.807 (Vernon's 2005). While the e-filing system was approved by the Texas Supreme Court, the specific amounts charged by Defendant have not been approved. Second, it is not clear whether the district court clerk may delegate fee-setting authority to a private company. Thus, there is a plausible claim that Defendant's practices are illegal per se.

Id. at 994. And, further, with respect to the other TFEAA claims, the Court explained:

Plaintiff argues that Defendant's practices are an unreasonable restraint, § 15.05(a), or a monopoly, § 15.05(b). Plaintiff has alleged that Defendant's contract was approved in circumvention of the competitive bidding requirements imposed under the Texas Local Government Code, § 262.021. Defendant states in its Motion that Plaintiff has not shown that the alleged contract has an adverse effect on competition in the relevant market. If competitive bidding requirements were circumvented, that would be an adverse effect on competition. Thus, Defendant's Motion with respect to § 15.05(a) and § 15.05(b) is denied.

Id. Plaintiff filed a Second Amended Complaint in January...