The United States Court of Appeals for the Fifth Circuit, in a per curium decision issued October 27, 2016 in Forte v. Wal-Mart Stores, Inc., vacated approximately $1.4 million in statutory civil penalties awarded by the district court to a group of optometrists who leased retail office space from Wal-Mart Stores, Inc.
The optometrists sued Wal-Mart for violations of the Texas Optometry Act (the Act), which prohibits non-licensed parties from exercising control over licensees, in an attempt to limit the so-called “corporate practice of medicine.” The optometrists alleged that Wal-Mart, in violation of the Act, attempted to control their practice of optometry by exercising influence over their hours. The optometrists sought civil penalties under the Act but conceded that they did not suffer actual damages. After trial, a jury returned a verdict in the optometrists’ favor, and the district court entered judgment in the amount of almost $1.4 million, consisting entirely of statutory civil penalties. Wal-Mart appealed.
The Fifth Circuit held in a 2015 decision that Wal-Mart could be held liable under the Act for exercising influence over the optometrists’ hours, causing other retailers that offer health care services to take note of the decision. However, the 2015 decision was vacated. In this most recent decision, the Fifth Circuit concluded that although Wal-Mart was liable under the Act, the district court erred in entering the almost $1.4 million judgment against Wal-Mart because under Texas law, civil penalties under the Act were not available to private plaintiffs who had not sustained any actual damages. The District Court reached this conclusion after the Texas Supreme Court resolved through certified questions that civil penalties under the Act are exemplary damages and may not, per Chapter 41 of the Texas Civil Practice and Remedies Code, be awarded to private plaintiffs who had not sustained actual damages.
The full text of Forte is available here.
