549 S.W.3d 768
Tex. App.2018Background
- In 2014 the Texas Lottery Commission (TLC) sold a $5 instant ticket called “Fun 5’s” whose Game 5 awarded prizes for tic‑tac‑toe matches and included a “moneybag” 5x multiplier; TLC required the moneybag symbol to appear on ~25% of nonwinning tickets as an anti‑micro‑scratching measure.
- Purchasers who uncovered moneybags on nonwinning tickets claimed the printed instructions were misleading, asserting the moneybag alone awarded five times the PRIZE box amount; many suits followed alleging fraud and related torts against GTECH, the vendor that developed, printed, distributed, and programmed ticket validation systems under contract with TLC.
- GTECH filed a plea to the jurisdiction arguing it is entitled to derivative sovereign immunity from suit because the claims attack TLC’s decisions or were actions GTECH took under TLC directives; the trial court denied the plea for some claims and granted it for others; this appeal addresses only immunity/jurisdiction.
- The Instant‑Ticket Contract gave GTECH broad role in proposing game designs and drafting working papers (artwork, instructions, prize structures), but reserved final approval and ultimate control over game specifications to TLC; it also required GTECH to conform tickets to TLC‑approved specifications.
- Fact evidence showed (1) GTECH originated the ticket design and instructions, (2) TLC directed the parameter change requiring moneybags on nonwinning tickets, and (3) after that directive GTECH reviewed but declined to recommend a change to the ticket instructions—facts the court treated as true for the jurisdictional inquiry.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GTECH is entitled to derivative sovereign immunity for all claims | Steele: GTECH’s fraud claims rely on GTECH’s independent wording of instructions; GTECH exercised discretion and so is not immune | GTECH: Most claims merely implement TLC directives; when contractor acts as government and follows directives, immunity derivatively applies | Court: Mixed — immunity applies to claims that substantively attack TLC’s decisions (aiding/abetting, conspiracy, tortious interference), but not to fraud claims based on GTECH’s independent choice not to alert TLC after the parameter change |
| Standard for contractor derivative immunity under Brown & Gay | Steele: Brown & Gay requires two elements—(1) contractor exercised no independent discretion; and (2) extending immunity must serve sovereign fiscal/policy rationales | GTECH: Contractor need only show its conduct was government action (no independent discretion); no separate fiscal‑rationale showing required | Court: Adopts GTECH’s framing—showing the contractor was acting for/at direction of the government (no substantive independent discretion) suffices; separate fiscal justification need not be proven when the suit attacks government action |
| Whether GTECH’s pre‑approval origination of instructions defeats immunity | Steele: GTECH originated the instructions and thus exercised independent discretion | GTECH: TLC later changed parameters (moneybags on nonwinning tickets), so the operative conduct was implementing TLC’s directive | Held: Origination alone is immaterial; focus is whether GTECH had discretion after TLC’s parameter change to raise or alter the instructions—evidence showed GTECH had such discretion and chose not to act, so immunity does not bar fraud claims tied to that decision |
| Whether Brown & Gay’s “rationale and purpose” analysis independently supports extending immunity | GTECH: Even if discretionary conduct existed, public‑finance and policy concerns favor immunity here | Steele: Brown & Gay’s rationale section does not independently justify immunity where contractor acted with independent discretion | Held: Court declines to expand immunity on policy grounds beyond Brown & Gay; fiscal arguments do not justify immunity where contractor had and exercised discretion relevant to the alleged wrong |
Key Cases Cited
- Brown & Gay Eng'g, Inc. v. Olivares, 461 S.W.3d 117 (Tex. 2015) (establishes limits on extending sovereign immunity to private government contractors and emphasizes whether contractor exercised independent discretion)
- Yearsley v. W.A. Ross Constr. Co., 309 U.S. 18 (U.S. 1940) (federal precedent allowing immunity where contractor merely implements valid governmental authority and specifications)
- Glade v. Dietert, 295 S.W.2d 642 (Tex. 1956) (contractor held not liable when performing public‑works contract in strict compliance with government plans)
- Strakos v. Gehring, 360 S.W.2d 787 (Tex. 1962) (rejects ‘‘accepted‑work’’ doctrine and distinguishes contracts that leave contractor discretion from those that do not)
- K.D.F. v. Rex, 878 S.W.2d 589 (Tex. 1994) (contractor entitled to immunity only where it performs ministerial tasks under government control and exercises no discretion)
- Campbell‑Ewald Co. v. Gomez, 136 S. Ct. 663 (U.S. 2016) (discusses contractor immunity/defenses and distinguishes Yearsley‑type principles)