Antitrust Law Daily Wrap Up, ANTITRUST—S.D. Tex.: LexisNexis could not be held liable for code violations by Texas courts, (Apr 1, 2014)

By Jody Coultas, J.D.

LexisNexis could not be held liable under the Texas Free Enterprise and Antitrust Act (TFEAA) for violations of Texas laws and regulations by Texas judges, county clerks, and counties, the federal district court in Houston has held (McPeters v. LexisNexis, March 31, 2014, Ellison, K.). The company also could not be held liable under the Texas Deceptive Trade Practices Act, according to the court.

A class representative challenged the e-filing fees implemented by certain Texas county courts. Specifically, the representative alleged that LexisNexis’ user fees were illegal per se, and an unreasonable restraint of trade because LexisNexis’ contract was approved in order to circumvent the competitive bidding requirements of the Texas Local Government Code. The court dismissed similar claims brought by the representative against Judge Frederick E. Edwards, who originally authorized e-filing in Montgomery County, the county clerk, and the county as an entity since there was no federal remedy available to the representative.

First amended complaint. The court held that the representative’s TFEAA claims survived. While the e-filing system was approved by the Texas Supreme Court, as required, the specific amounts charged were not approved. It also was not clear whether the district court clerk may delegate fee-setting authority to a private company. The court also found that if The Texas Code competitive bidding requirements were circumvented as alleged, it would be an adverse effect on competition in violation of the TFEAA.

Standing. A plaintiff must allege an antitrust injury to have standing to assert TEFAA claims, according to the court. LexisNexis argued that, because the TFEAA was modeled after the Sherman Act, courts should require a plaintiff to demonstrate antitrust standing. The legislature mandated that Texas antitrust law be harmonized with federal antitrust law. If plaintiffs were allowed to state TFEAA claims without having antitrust standing, the two laws would not be “in harmony.” An antitrust injury is one that the antitrust laws were designed to prevent and that flows from the defendants’ unlawful acts. Courts also look at (1) whether the plaintiff’s injuries or their causal link to the defendant are speculative, (2) whether other parties have been more directly harmed, and (3) whether allowing the plaintiff to sue would risk multiple lawsuits, duplicative recoveries, or complex damage apportionment.

The class representative lacked standing in this case because the alleged TFEAA violations were not undertaken by LexisNexis, according to the court. The claims involving violations of the Texas Code did not apply to LexisNexis as the Texas Code governed the actions of the courts and clerks. Any injuries suffered from the Texas Code violations were caused by the counties’ and courts’ failure to comply with the law, not the actions of LexisNexis. Therefore, the representative could not show an injury caused by LexisNexis. Where a private right of action does not exist for the violation of a particular statute, a plaintiff cannot “create” one by alleging that the violation of that statute nevertheless satisfies an element of another claim. Also, statutes that apply to certain entities do not confer a correlative right upon another.

Unconscionable claims. The representative’s Texas Deceptive Trade Practices Act (DTPA) claim could not be certified based on the predominance of individual issues, according to the court. The claim would require each class member to testify regarding what class members knew about the e-filing system, the relative sophistication of the individual class members, and whether they would have chosen to file and serve in the same manner regardless of LexisNexis’ actions.

A reasonable consumer could not find that LexisNexis’ actions amounted to an unconscionable act, according to the court. To state a DTPA claim, the representative was required to show that LexisNexis took advantage of the lack of knowledge, ability, experience, or capacity of the class members to a grossly unfair degree. LexisNexis was the sole provider of e-filing services, which, for certain cases, was mandatory. The fees charged were almost double what one a competitor charged for e-filing and service, but were comparable to other competitors’ fees. Although lawyers filing claims in Texas courts lacked an alternative to LexisNexis’ e-filing services, there was no evidence the fees were unfair and/or excessive prices or that lawyers would have chosen another e-filing provider given the choice.

The case is No. 4:11-CV-2056.

Attorneys: Austin P. Tighe, Jr. (Feazell & Tighe LLP) for Karen McPeters. Cynthia Grace Burnside (Holland Knight LLP) for LexisNexis.

Companies: LexisNexis

Cases: Antitrust StateUnfairTradePractices TexasNews