AUSTIN – The Texas Supreme Court recently ruled that a group of optometrists suing Wal-Mart over workday requirements were not entitled to civil penalties.
The optometrists’ original $1.4 million judgment, awarded by a lower-court jury and reduced from an initial $4 million payout, was rescinded.
At the center of the case was the issue of whether individuals in Texas are allowed to sue a company and collect civil penalties if the company breaches or ignores state regulations.
The suit contended that Wal-Mart pressured optometrists working out of rented spaces in their stores to keep specific hours, an action that is against the Texas Optometry Act. The act is meant to keep companies from affecting the practice of optometry and can carry fines of up to $1,000 per day, which are handed out by the optometry board.
“(A) manufacturer, wholesaler, or retailer of ophthalmic goods may not directly or indirectly . . . control or attempt to control the professional judgment, manner of practice, or practice of an optometrist,” the act reads.
The initial award was granted based on the $1,000-per-day civil fine.
The state called on Wal-Mart to change its practices in 1995 to allow optometrists to set their own standard hours, which the retail chain agreed to.
“In 2003, the Board notified Wal-Mart that it was violating the Act simply by informing optometrists that customers were requesting longer business hours,” court documents state.
The optometrists, all with post-1995 leases, sued Wal-Mart in 2007, and won in federal district court – a decision that Wal-Mart quickly appealed.
But the lower court had an important question it had not fully resolved: whether the plaintiffs actually were entitled to the civil penalty-based judgment for “exemplary” damages.
Citing Chapter 41 of the Texas Civil Practice and Remedies Code, the supreme court decided last week that they were not.
The state’s definition of “Exemplary damages” was used in the court’s opinion.
The definition: “Any damages awarded as a penalty or by way of punishment but not for compensatory purposes. Exemplary damages are neither economic nor noneconomic damages. Exemplary damages include punitive damages.”
Several state government entities joined the state in arguing against the decision to award the optometrists the civil penalties, saying the decision could affect their agencies’ regulatory powers and ability to enforce civil fines.
“Applying Chapter 41 to governmental penalty actions would contravene legislative intent and nullify a wide range of statutes—some enacted at the same time or after Chapter 41—that allow governmental actors to seek civil penalties,” an amicus brief filed on behalf of the state said.
An amicus filed by Texas Local Government, Texas Local Government Organizations and Texas Local Government officials made a similar argument.
“(The officials) are concerned that this Court’s opinion…could have the unintended consequence of limiting the government’s ability to recover civil penalties,” the brief states. “They have already seen litigants attempting to use the Fifth Circuit panel’s now-withdrawn opinion to support that argument.”