Tesco American, Inc. v. Strong Industries
| Decision Date | 17 March 2006 |
| Docket Number | No. 04-0269.,04-0269. |
| Citation | 221 S.W.3d 550 |
| Parties | TESCO AMERICAN, INC. d/b/a Tesco/Williamsen, Petitioner, v. STRONG INDUSTRIES, INC. and Brooks Strong, Respondents. |
| Court | Texas Supreme Court |
Thomas C. Wright, Chad Michael Forbes, Wright Brown & Close, LLP, Houston, William V. Dorsaneo III, SMU School of Law, Dallas, Thomas G. Gruenert, Gibson-Gruenert, LLP, Houston, George Fred Rhodes, Port Lavaca, for petitioner.
Robert B. Dubose, Sean Reed Cox, Robert M. Roach Jr., Cook & Roach, L.L.P., Houston, S. Scott West, A. Reagan Clark, The West Law Firm, Sugar Land, Stephen G. Tipps, Baker & Botts, L.L.P., Houston, for respondents.
Carlton D. Wilde Jr., Jeffrey Donald Meyer and Sheila Murphy Wollam, Franklin Cardwell & Jones, P.C., Houston, for F.S. New Products, Inc.
Luther H. Soules, III, Langley & Banack, Inc., San Antonio, for amicus curiae.
Since Texas became a state in 1845, judicial disqualification has always been a matter of constitutional dimension. Every Texas Constitution has provided that
No judge shall sit in any case wherein the judge may be interested, or where either of the parties may be connected with the judge, either by affinity or consanguinity, within such a degree as may be prescribed by law, or when the judge shall have been counsel in the case.1
The question presented here is whether an appellate judge is disqualified because, unbeknownst to her, before she took the bench another attorney at her very large firm played a very small role in the early stages of this appeal. For the reasons discussed below, we hold that she is, and thus reverse and remand for further proceedings.
Strong Industries, Inc. manufactures dump-truck trailing axles2 designed by its founder, Brooks Strong. In 1992, Tesco American, Inc. signed a dealer agreement with the company that contained covenants not to compete or disclose confidential information. Five years later, Tesco and F.S. New Products, Inc. ("FSNP") began marketing a competing trailing axle.
Both Strongs sued Tesco and FSNP, alleging fraud, breach of contract, and misappropriation of trade secrets. Based on favorable jury findings, the trial court entered judgment against Tesco for over $2 million (for fraud and exemplary damages) and against FSNP for over $100,000 (for breach of contract).
Both appealed. A panel of the First Court of Appeals, in a lengthy and unanimous opinion authored by Justice Laura C. Higley, affirmed as to Tesco, but reversed and rendered a take-nothing judgment as to FSNP.
Shortly thereafter, Tesco filed a motion for rehearing that included a motion to disqualify Justice Higley and reassign the case to a different panel. In the motion, Tesco asserted that Justice Higley was an attorney at Baker Botts L.L.P. in 2001, during which time another attorney at the firm briefly appeared as lead counsel for the Strongs in this appeal (filing a cross-notice of appeal, participating in a status conference, and agreeing to extend deadlines), before moving to withdraw in October 2001. None of the appellate briefs mentioned Baker Botts's limited involvement,3 and Tesco concedes there is no evidence Justice Higley knew of any connection between her former firm and this case.
Nevertheless, Tesco asserted Justice Higley was constitutionally disqualified, and that the appeal should be assigned to a new panel "to avoid any appearance of impropriety." The panel members disagreed, but referred both motions to the other members of the First Court. Sitting en banc, a majority of that court denied both motions,4 after which the original panel reissued substantially the same opinion, again authored by Justice Higley.5 Tesco appeals the denial of its motions, as well as the panel's judgment on the underlying merits.
For trial judges, Rule 18b(1)(a) of the Texas Rules of Civil Procedure requires disqualification if "a lawyer with whom they previously practiced law served during such association as a lawyer concerning the matter."6 Three years ago, we held in In re O'Connor that this rule requires "vicarious disqualification" for trial judges:
Rule 18b(1)(a) accordingly recognizes that a judge is vicariously disqualified under the Constitution as having "been counsel in the case" if a lawyer with whom the judge previously practiced law served as counsel to a party concerning the matter during their association. This conclusion is consistent with our holding in National Medical Enterprises, Inc. v. Godbey, that "[an] attorney's knowledge is imputed by law to every other attorney in the firm."7
For appellate judges, by contrast, Rule 16.1 of the Texas Rules of Appellate Procedure simply states that disqualification is "determined by the Constitution and laws of Texas."8 The only ground for disqualification asserted here is that Justice Higley was "counsel in the case." The Texas Constitution does not indicate whether that phrase includes the members of a judge's former firm; thus, we must decide whether the Constitution, or just Rule 18b(1)(a), requires vicarious disqualification.
For several reasons, we hold that both do.
First, Rule 18b(1)(a) was not intended to expand disqualification further than constitutionally required. As long ago as 1893, this Court noted there was a "grave question" whether the grounds of disqualification could be extended beyond those listed in the Texas Constitution.9 Both the rule and the Constitution specify the same three grounds for disqualification (interest, connection, and counsel), and no others. "Texas courts have consistently held these three grounds to be the mandatory, inclusive, and exclusive bases for disqualification."10 Accordingly, our statement in O'Connor that Rule 18b(1)(a) "recognizes that a judge is vicariously disqualified under the Constitution" reflected our understanding that the rule was intended to expound rather than expand the Constitution.11
Second, as O'Connor also noted, Texas law imputes one attorney's knowledge to all attorneys in a firm.12 We adopted this irrebuttable presumption for attorney disqualification in National Medical Enterprises, Inc. v. Godbey, noting the damage to attorney-client relations and the legal profession generally if the rule were otherwise.13 The same considerations apply here — proving misuse would be just as difficult, and damage to the profession just as extensive, if lawyers who become appellate judges might take confidential information with them for future use.14
Finally, we must construe any ambiguity in the constitutional provision here to effectuate its purpose.15 Repeatedly, the people of Texas have insisted on constitutional protection against "counsel in the case" becoming a judge in the case, a guarantee that makes no distinction between trial and appellate judges. When we adopted Rule 18b(1)(a) and applied it in O'Connor, we construed "counsel" to include the former firms of trial judges; we think construing the Constitution otherwise for appellate judges would be construing it too narrowly.
We recognize the risk cited by the First Court that vicarious disqualification may allow litigants to "lie behind the log" and move to disqualify only if an appeal is unsuccessful.16 But no supine surprise was sprung on the Strongs here — none knew better than they of Baker Botts's early involvement in their appeal.
As it is undisputed Justice Higley was an attorney at Baker Botts at the same time another attorney with the firm served as counsel in this appeal, we hold she was disqualified under the Texas Constitution.
We have never before addressed what happens when an appellate opinion and judgment issue before it is discovered that one of the justices is disqualified. "There is considerable diversity of opinion as to the effect on a decision of the fact that one or more of the judges participating therein is disqualified."17
To some degree, the different results reached in other jurisdictions can be explained by the extent of the disqualified jurist's involvement. At one extreme, a disqualified appellate judge cannot cast the deciding vote. In Aetna Life Insurance Co. v. Lavoie, the United States Supreme Court found a violation of Due Process when a justice of the Alabama Supreme Court authored a 5-4 opinion that allowed him to recover a "tidy sum" in his own very similar lawsuit.18 Notably, the Court vacated the judgment but did not disqualify the remaining judges from further proceedings on remand.19
At the other extreme, appellate courts universally proceed to dispose of an appeal when one or more members disqualify themselves at the outset.20 It is true that when an attorney moves between private firms, an irrebuttable presumption of shared confidences attaches to both the sending and receiving firms.21 But attorneys who take a seat at opposing-counsel table are not like those who take the bench — the former become advocates for an adversary, while judges are advocates only for the law.22 The Rules of Professional Conduct make no allowance for judges to share the confidences of former clients with their new colleagues; presuming they do so would be presuming a serious ethical breach.
In between these extremes, there is little consensus. Several courts have concluded that a decision need not be vacated if a disqualified judge's vote was "mere surplusage."23 At least one would appear to apply this rule even if a disqualified judge authored the opinion,24 but others hold that a disqualified author requires that the judgment be vacated,25 and perhaps requires recusal of the entire court.26
It has always been the rule in Texas that any orders or judgments rendered by a trial judge who is constitutionally disqualified are void and without effect.27 But in the appellate...
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