SCoTX punts on ERCOT lawsuit question


The Texas Supreme Court punted Friday on a question dogging millions of Texans affected by last month’s catastrophic power failure: Can ERCOT, the state’s grid manager, be sued?

The state’s highest court ruled 5-4 that it won’t decide — at least not now — on closely-watched case between Dallas electricity generator Panda Power and the Electric Reliability Council of Texas. The $2.2 billion case filed by Panda Power in 2016 raised the question whether ERCOT is a governmental agency that has sovereign immunity protecting them from lawsuits. ERCOT, a private, nonprofit corporation overseen by the Texas Legislature and the Public Utility Commission, is the only grid manager in the country that has received such protection.

Five justices led by Justice Jeff Boyd said the Texas Constitution prohibits them from ruling on the case after the trial court issued a final judgment dismissing the case. Based on a finding of sovereign immunity by an appeals court, the Supreme Court narrowly ruled that the dismissal by the lower court made the case moot and that it no longer had the authority to rule in the case.

“Because the trial court’s interlocutory order merged into the final judgment and no longer exists, we cannot grant the relief the parties seek,” the majority opinion written by Boyd stated. “As a result, any decision we might render would constitute an impermissible advisory opinion, and these consolidated causes are moot.”

Four dissenting justices led by Chief Justice Nathan Hecht, argued they should rule on the case because the public has an interest whether ERCOT can be sued in the aftermath of last month’s storm. Several lawsuits have been filed against the state grid manager, including over the deaths of an 11-year-old boy and a 95-year-old man, who were both found dead in their freezing Houston-area homes.

“The answer to the immunity issue in this case has become perhaps more important to the public than even to the parties,” the minority opinion, written by Hecht stated. “The parties want to know. The public wants to know. The court refuses to answer.”

The ruling by the high court has widespread implications in the wake of last month’s deadly and devastating blackouts, which contributed to more than 50 deaths and billions of dollars of property damage.

David Coale, an appellate partner with Dallas-based law firm Lynn Pinker Hurst & Schwegmann, said the Supreme Court could still decide on ERCOT’s immunity as appeals from the Panda Power case come up through the legal system. In the meantime, ERCOT’s immunity — upheld by a Texas appeals court in 2018 — remains intact, but the state grid manage faces an onslaught of legal cases without any guidance from the Supreme Court.

“The court may have punted, but it didn’t walk away,” Coale said. “It acknowledged that another appeal involving the same parties is on its way up to them, and it can revisit these issues then.”

See here and here for some background. I guess I can understand the “let’s do this all in the correct order” idea, but as the story notes the question about whether ERCOT has sovereign immunity or not is very pertinent right now. Maybe if the ultimate decision is that ERCOT cannot be sued it would be nice to let all those folks who are now suing them know, so they won’t waste a bunch of time and money pursuing their cases. I’m not a lawyer, what do I know? You can find all the relevant opinions and concurrences and dissents here if you need a little light reading for the weekend.

UPDATE: Forgot to mention that Harris, Fort Bend, and Travis Counties submitted amicus briefs urging SCOTUS to find in favor of ERCOT not having sovereign immunity. This Bloomberg article, which is behind their paywall but which you might be able to see if you haven’t exceeded your monthly allowance, details those filings.

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2 Responses to SCoTX punts on ERCOT lawsuit question

  1. Bill Daniels says:

    Suing ERCOT for money is useless, because guess who will pay any judgements rendered against ERCOT? Ultimately, the taxpayers of Texas will pay, which are conveniently the same folks who got screwed BY ERCOT. Suing for performance, i.e. to retroactively change the pricing structure that they apparently screwed the pooch on seems more reasonable. Of course, if you can sue for performance, you can also sue for damages, it’s like being pregnant. Either you can sue for anything, or you can’t sue at all.

  2. Lobo says:

    Kudos to Kuff: 1-word caption is right on-point & accompanying comment well taken …

    … not to mention that the answer to the question presented would also be important to the Legislature, and what might be done by them. If Dan Patrick is serious about providing real relief – and those who accuse him of showboating question it – he could put the wheels in motion to pass a bill clarifying that the Lege didn’t intend to imbue a certified independent system operator (i.e., ERCOT) with governmental status and sovereign immunity, whether derivative of PUC’s or otherwise (such as based on ERCOT’s role in running the grid and/or the wholesale markets). As far as the legal arguments pro-and-con in the SCOTX go, it really seems a gray area in light of prior decisions not involving ERCOT. It could go either way. But the Lege can countermand the SCOTX, and has done so before.


    Additionally, had the SCOTX signaled how it would likely rule on ERCOT immunity when the case returns in the proper procedural posture (it’s currently pending in an appeal from the final judgment of dismissal in the Dallas COA), the Lege would have more options and the affected parties and their advocates could adjust their political and legal strategies accordingly. — So, thumbs down to the Supremes. All of them, even the dissenters. (More on that below).

    Even if the SCOTX rules that ERCOT has immunity, the Lege could presumably overrule them and declare otherwise. Although the doctrine itself is judge-made, it is the Lege’s prerogative to expressly *waive* sovereign immunity. So the Supremes told us on many occasions.

    As a further alternatives, the Lege could perhaps grant the right to sue by joint resolution for the specific occasion, as they did in the aftermath of the Texas A&M bonfire-pile-collapse tragedy, if I recall that correctly.

    I wasn’t sure this story was going to make it onto OTK. Here is my instanter-pundit reaction that started to pen yesterday:


    As per today’s issuances, a five-member majority of the SCOTX decided not to decide the eminently pressing question of whether ERCOT should be accorded sovereign immunity.

    Dissenters took umbrage at their colleagues’ noncommittal disposition – dismissal for want of jurisdiction – but elected not to reveal how they themselves feel about the merits of the matter, carefully couching the would-be substance of a merits decision and its consequences in subjunctive formulations instead. The quadruplet of dissenters may not even be in agreement. What do we know? How are we to read the tea leaves?

    So much for High Court guidance on a recognized issue of importance to the jurisprudence of the State. And not just the State, mind you: the people. First and foremost that plebs. The folks off-lined and relegated to chill during the winter storm for the greater good of the grid. The frost-spooked if not -bitten folks who now come to court with tort claims and burst-pipes property damages.

    But when was the last time that people’s interests mattered in the High Court? Even in the case at hand — Panda Power v. ERCOT in the trial court, with the reverse case style on appeal — the dispute was between entities with deep pockets, rather than individuals, with both sides lawyered up to the teeth.


    It’s a great way for the Supremes to have it both ways. To boil it down to the gist, it goes something like this:

    We acknowledge the public’s keen interest in knowing whether they can sue ERCOT for winter-storm blackout damages, but – unfortunately – we find our hands to be tied in the current procedural posture, and we can’t tell you what you all want to know because that would be an impermissible advisory opinion.

    – Blah!

    And one of them felt compelled to assert the Supremes’ collective immunity to public clamor, writing separately to chill the popular passions. As if more chilling we needed under the circumstances.

    The bottom line here it this: Not a single one of the nine Judicial Republicans – whether in the majority or otherwise – was prepared to take a stance on ERCOT immunity/impunity at this juncture. Collectively, they thus avoided aggrieving either Panda Power or ERCOT in the process. And left us in limbo.

    — Let the lower courts and the Lege take the heat over the freeze.

    At least for now.

    The legal rationales belabored to produce this highly unsatisfactory outcome – after years of litigation — involve arcane procedural technicalities that only appellate lawyers can get excited about. – Why: Because it’s complicated and therefore commands top dollar; and it’s time consuming, so that’s great for Big- Law firms billing corporate clients by the billable hour.

    The more briefing at all levels of the judicial hierarchy, the merrier. Simultaneous appeals and mandamus proceedings. Great! Ditto for iterative interlocutory appeals, original mandamus proceedings, and appeals from a final judgment that is not necessarily final, depending on the outcome of a prior appellate or mandamus proceeding still pending.

    Fittingly, Chief Hecht shed crocodile tears about “resources” being expended, not to mention evoking the specter of a forthcoming avalanche of “duplicate” litigation.


    Electric Reliability Council of Texas, Inc, (ERCOT) v. Panda Power Generation Infrastructure Fund, LLC, d/b/a Panda Power Funds, et al., No. 18-0781 (Tex. Mar. 19, 2021)(Maj. op. by Boyd, J) (interlocutory appeal d.w.o.j).

    In re Panda Power Infrastructure Fund, LLC d/b/a Panda Power Funds, et al, No. 18-0792 (Tex. Mar. 19, 2021)(orig. proc., dismissed).

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