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JCB, Inc v. Horsburgh & Scott Co.

United States Court of Appeals, Fifth Circuit

October 17, 2019

JCB, INCORPORATED, doing business as Conveying & Power Transmission Solutions, Plaintiff - Appellant
v.
THE HORSBURGH & SCOTT COMPANY, Defendant-Appellee

          Appeal from the United States District Court for the Western District of Texas

          Before HAYNES, HO, and DUNCAN, Circuit Judges.

          JAMES C. HO, CIRCUIT JUDGE:

         This case is a perfect example of when we should certify cases, and why certification is valuable. We are presented with a question of pure statutory interpretation on a recurring issue of interest to citizens and businesses across Texas. What's more, it is a question that divided judges on this court. As reflected in our competing concurring opinions, different judges on this court have disagreed about whether the district court correctly interpreted the Texas Sales Representative Act ("TSRA"). See JCB, Inc. v. Horsburgh & Scott Co., 912 F.3d 238, 241-46 (5th Cir. 2018) (Ho & Duncan, JJ., individually concurring) ("Horsburgh I"). But we all agreed that reasonable minds could differ. So rather than provide a partial answer-binding only litigants who file in federal court, not those in state court- we instead certified the question to the Supreme Court of Texas, which can speak with authority for all litigants, in state and federal court alike. See, e.g., id. at 243 (Ho, J., concurring).

         We now have that answer, and accordingly affirm in part and reverse and remand in part.

         Conveying & Power Transmission Solutions ("CPTS") was an independent sales representative for the Horsburgh & Scott Company, earning a commission on every sale. After the parties terminated their agreement, Horsburgh owed CPTS approximately $280, 000 in commissions. Over the next year and a half, Horsburgh made consistent but untimely payments. Eventually, CPTS sued Horsburgh in Texas state court under, inter alia, the TSRA. Horsburgh removed to federal court. While the lawsuit was pending, Horsburgh paid off the rest of its outstanding commissions.

         The district court granted summary judgment to Horsburgh. In relevant part, it determined that the TSRA only allows for treble damages for "unpaid commissions due." According to the court, Horsburgh had paid all of its past-due commissions, so there was no longer anything "unpaid" or "due." CPTS appealed solely with respect to its TSRA claim.

         The TSRA provides:

A principal who fails to comply with a provision of a contract under Section 54.002 relating to payment of a commission . . . is liable to the sales representative in a civil action for: (1) three times the unpaid commission due the sales representative; and (2) reasonable attorney's fees and costs.

         Tex. Bus. & Com. Code § 54.004. The only questions in dispute are (1) whether there are any "unpaid commissions due" to treble, and (2) whether, in the absence of a treble damages award, CPTS is nevertheless entitled to attorney's fees.

         We concluded that § 54.004(1) is ambiguous because it is unclear "[a]t what moment in time" courts must "determine the amount of any 'unpaid commission due'" subject to trebling. See Horsburgh I, 912 F.3d at 239. Further, we determined it was "not clear" whether the TSRA provides for attorney's fees when the plaintiff is not entitled to treble damages. See id. at 241.

         So we certified two questions to the Supreme Court of Texas:

(1) What timing standard should courts use to determine the existence and amount of any "unpaid commissions due" under the treble damages provision of Tex. Bus. & Com. Code § 54.004(1)?
(2) May a plaintiff recover reasonable attorney's fees and costs under Tex. Bus. & Com. Code ยง 54.004(2), if the plaintiff does not receive a treble damages award under Tex. Bus. & Com. Code ...

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