Key Legal Developments in Texas Business Cases

Texas continues to favor contracts over equity, with key legal developments covering issues such as limitation-of-liability clauses, anti-SLAPP statute, attorney fees calculation, and fraudulent inducement claims. Recent cases emphasize the enforceability of contractual clauses, particularly in cases involving fraud and sophisticated parties. Interpretation of contracts and resolving disputes under the Texas Citizens Participation Act are also highlighted.

• Legal developments
• Texas business cases
• Fraudulent inducement
• Contract law
• Limitation of liability

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1. Top Business Cases of the Last 18 Months Beau Cox, Partner Sarah Cornelia, Associate Jackie Baker, Associate Dallas, Texas August 20, 2020

2. Key Legal Developments 1. Texas Continues to Favor Contracts Over Equity 2. Texas Anti-SLAAP Statute Issues Resolved 3. Courts Retain Some Control in Class Arbitration 4. Texas Clarifies Attorney s Fees Calculation Method 2

3. MOOT COURT EXERCISE 1 ISSUE 1: DOLIMITATION-OF-LIABILITYCLAUSESREMAINENFORCEABLEWHERE FRAUDISPRESENT? Bombardier Aerospace Corp. v. SPEP Aircraft Holdings, LLC, 572 S.W.3d 213 (Tex. 2019) ISSUE 2: DOCONTRACTUALDISCLAIMERSOFRELIANCEONPRIOR REPRESENTATIONSBARFRAUDULENTINDUCEMENTCLAIMS? Int l Bus. Mach. Corp. v. Lufkin Indus., 573 S.W.3d 224 (Tex. 2019)

4. Holding: Limitation-of-Liability Clauses Remain In Full Effect Where Fraud Is Present Limitation-of-liability clauses remain in full effect, even where fraud is present: [F]raud vitiates whatever it touches. But, We have never held, however, that fraud vitiates a limitation-of-liability clause. Bombardier Aerospace Corp. v. SPEP Aircraft Holdings, LLC, 572 S.W.3d 213 (Tex. 2019) 4

5. Holding: Sophisticated Parties Can Disclaim Reliance On Prior Representations To Bar Fraudulent Inducement Claim Sophisticated parties can disclaim reliance on prior representations, barring a fraudulent inducement action: A merger clause on its own does not prevent a fraudulent inducement action. But, a provision that clearly and unequivocally expresses the party s intent to disclaim reliance on the specific misrepresentations at issue can preclude a fraudulent inducement claim. Int l Bus. Mach. Corp. v. Lufkin Indus., 573 S.W.3d 224 (Tex. 2019) 5

6. Another Case Worth Mentioning Interpret a contract by looking at the contract itself Undefined words are generally given their common, ordinary meaning, BUT The usage of the term in one part of the contract generally applies to all instances of that term in the contract Anadarko Petroleum Corp. v. Hous. Cas. Co., 573 S.W.3d 187 (Tex. 2019) 6

7. TEXAS CITIZENS PARTICIPATION ACT ISSUES RESOLVED

8. MOOT COURT EXERCISE 2 ISSUE 1: DOESTHE TCPA APPLYIN FEDERAL COURT? Klocke v. Watson, 936 F.3d 240 (5th Cir. 2019) ISSUE 2: DOESTHE TCPA PROTECT BUSINESS-RELATED COMMUNICATIONS? Palladium Metal Recycling, LLC v. 5G Metals, Inc., No. 05-19-00482-CV, 2020 WL 4333538 (Tex. App. Dallas July 28, 2020)

9. Holding: The TCPA Does Not Apply in Diversity Cases in Federal Court The TCPA is procedural, not substantive, in nature and therefore does not apply in diversity cases in federal court It imposes additional procedural requirements not found in the Federal Rules It requires courts to weigh evidence in a way inconsistent with the Federal Rules Klocke v. Watson, 936 F.3d 240 (5th Cir. 2019) 9

10. Holding: The TCPA Does Not Protect Purely Business-Related Communications The TCPA does not protect communications related to business transactions The right of association does not include communications when the common interest is a private business transaction The right of free speech does not include communications about private, pecuniary interests Palladium Metal Recycling, LLC v. 5G Metals, Inc., No. 05-19-00482-CV, 2020 WL 4333538 (Tex. App. Dallas July 28, 2020) 10

11. COURTSVS. ARBITRATORS: WHO CONTROLSIN CLASS ARBITRATIONS?

12. MOOT COURT EXERCISE 3 ISSUE: DOESTHE COURTOR ARBITRATOR DECIDE WHETHERTHE PARTIES AGREEDTO CLASS ARBITRATION? 20/20 Commc ns, Inc. v. Crawford, 930 F.3d 715 (5th Cir. 2019) Robinson v. Home Owners Mgmt. Enters., Inc., 590 S.W.3d 518 (Tex. 2019) Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019)

13. Holding: Courts (for the most part) Decide Whether Parties Agreed to Class Arbitration Courts, not arbitrators, must determine whether parties agreed to arbitration in class actions Class arbitration is a gateway issue to be decided by courts 20/20 Commc ns, Inc. v. Crawford, 930 F.3d 715 (5th Cir. 2019) Robinson v. Home Owners Mgmt. Enters., Inc., 590 S.W.3d 518 (Tex. 2019) Except when a contract expressly delegates specific questions of arbitrability to the arbitrator Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) Robinson v. Home Owners Mgmt. Enters., Inc., 590 S.W.3d 518 (Tex. 2019) 13

14. TEXAS CLARIFIES ATTORNEYS FEES CALCULATION METHOD

15. MOOT COURT EXERCISE 4 ISSUE: WHATMETHODSHOULDBEUSEDTO CALCULATEREASONABLEATTORNEY SFEES? Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469 (Tex. 2019)

16. Holding: Lodestar Method Applies When Calculating Attorney s Fees in Texas The Lodestar Method should be the fact finder s starting point for calculating an attorney s fee award Reasonable hours worked x reasonable rate = presumptively reasonable award Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469 (Tex. 2019) 16

17. Questions? Beau Cox beau.cox@nortonrosefulbright.com (214) 855-7494 Sarah Cornelia sarah.cornelia@nortonrosefulbright.com (214) 855-7462 Jackie Baker jackie.baker@nortonrosefulbright.com (214) 855-8048 17

19. Disclaimer Norton Rose Fulbright US LLP, Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP and Norton Rose Fulbright South Africa Inc are separate legal entities and all of them are members of Norton Rose Fulbright Verein, a Swiss verein. Norton Rose Fulbright Verein helps coordinate the activities of the members but does not itself provide legal services to clients. References to Norton Rose Fulbright , the law firm and legal practice are to one or more of the Norton Rose Fulbright members or to one of their respective affiliates (together Norton Rose Fulbright entity/entities ). No individual who is a member, partner, shareholder, director, employee or consultant of, in or to any Norton Rose Fulbright entity (whether or not such individual is described as a partner ) accepts or assumes responsibility, or has any liability, to any person in respect of this communication. Any reference to a partner or director is to a member, employee or consultant with equivalent standing and qualifications of the relevant Norton Rose Fulbright entity. The purpose of this communication is to provide general information of a legal nature. It does not contain a full analysis of the law nor does it constitute an opinion of any Norton Rose Fulbright entity on the points of law discussed. You must take specific legal advice on any particular matter which concerns you. If you require any advice or further information, please speak to your usual contact at Norton Rose Fulbright. 19