One of the Insurance Journal’s roles is to keep insurance professionals updated on key legal issues affecting the insurance industry. Indeed, the Legal Beat Column often focuses on court cases and trends in the law that are interesting or may have a direct impact on insurance professionals. So when managing editor Stephanie Jones forwarded an e-mail that purportedly described a potential landmark decision from an East Texas court, we decided to take a look at it.
The case was not exactly what we expected, however. First, it was not a “decision” per se, but was rather an interlocutory read “non-final” ruling from a state trial court. The e-mail discussing the case even proposed a headline that turned out to be longer than the trial court’s one-sentence ruling. It suggested that the trial court’s ruling in East Texas was a major shift in Texas law and a “key round” in a nationwide battle between policyholders and carriers over a substantial insurance coverage issue. But is it, at this stage of litigation, a matter of wide-ranging importance?
Perhaps. Trial court rulings on legal issues do matter, but for good or ill, they matter primarily to the parties involved, not to the industry as a whole. Why? Simply because legal rulings by trial courts in Texas (and most everywhere else) are reviewed by appellate courts on a “de neuvo” standard; that is, the appellate courts decide the issue themselves without being bound at all by the trial court ruling on the law.
Trial court fact-findings are reviewed with a higher standard and trial courts are given great deference as finders of fact, but appellate courts craft the outlines of the law and are jealous of this prerogative. So while a trial court’s interlocutory legal ruling may shape the actual trial of the suit, it does not change the law of the state one single bit. This raises an interesting question for insurance professionals—how much weight do you give rulings by a trial court in evaluating how they effect your coverage decisions? Also, at what point do court rulings become “precedent”—that is, the decision is authority, and in some circumstances must be followed by other courts? Let’s consider these questions.
State trial court rulings, even if in the form of written opinions by a court, do not bind other courts. Legal rulings by a state trial court may influence an appellate court, but they are not binding. Both intermediate and supreme courts issue rulings that can be “published” and become part of the body of common law. The publication of a case simply means that that case has been published with the decisions of that state and can be cited as “authority” or as a legal basis for future legal decisions. Trial court decisions from Texas state courts are not published, and are never authority (except in that particular case). This does not mean that they are not “illustrative” of how court’s address issues and may influence other courts. Technically, such unpublished rulings are not authority and are not properly cited in briefs. Nevertheless, they are still often attached to briefs or discussed with courts as acts of advocacy.
The federal system is very different. Certain federal district court or bankruptcy court decisions are published in the Federal Supplement or the Bankruptcy Reporters. These decisions do have the weight of law and are authority for the decisions of other courts. However, while the higher appellate courts, such as the Fifth Circuit, are not bound by the lower courts’ legal findings, the published opinions in a federal court are given considerable weight, especially when there are no higher court decisions.
So rule number one is that “non-published rulings are of immediate value to the parties, but of minimal impact on the law.” Consequently, it is often wise to follow and understand trial court legal rulings in major cases, but primarily to learn about the case—for example, the leanings of that particular judge, the impact on the parties, and how the case shapes up for any appeal. Seldom is it a good guide to trends in the law, however.
Rule number two is that “published opinions are not all equal.” The level of the importance of a decision, with some exceptions, depends on the relative level of the court. For instance, any decision from the United States Supreme Court is not reviewable by any other court. It is the ultimate court of last resort. Even so, Congress can effectively overrule any Supreme Court ruling by passing legislation or, in extreme cases, amending the United States Constitution. In contrast, federal circuit decisions are given less weight, but more so than federal district courts. And while circuit courts are binding on the district courts of their circuit, other circuits may afford them less weight, and may even conflict on the law.
State Supreme Courts are the usual last word on issues of state law. Except for challenges of the state laws’ constitutionality under the United States Constitution, state Supreme Courts are the courts of last resort for substantive issues of state law such that their decisions on issues of state law are final—again barring legislative actions.
State intermediate courts are more problematic. In Texas, for instance, appellate courts are divided into appellate districts and have published decisions that are binding only on the trial courts in their own district, similar to the federal system. But outside their appellate district their decisions are authority, but are not binding. In other words, they give guidance, but other courts of equal dignity are not bound to follow them. For instance, the East Texas trial court ruling mentioned above is contrary to all of the published authority in the State of Texas, including two published Texas Appellate Court decisions. Even so, while those decisions are binding in their own appellate districts, the East Texas trial court decided to ignore the legal rulings of those courts, albeit without noting why.
Insurance attorneys often believe that where the Supreme Court of a jurisdiction has not acted, any actual published intermediate court decision, from any appellate district in the state, should be heeded as “the law.” That is prudent in most cases, though it is not technically correct in most jurisdictions. The key distinction is that while such decisions have the weight of authority and precedent, they are not the final word as they are not “binding” on all of the courts of the state.
The point underlying this column is that each decision you read must not only be weighed based upon what it says, but on who says it and how. Do not rejoice or despair too quickly if you agree or disagree with the case. Is this the final word, or the beginning of the tale? Hold your horses until you know the full story!
Topics USA Texas Legislation
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