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analyzing whether existence of duty "remained an open question" before applying Phillips factors
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No. 21-0496
06-23-2023
HOUSTON AREA SAFETY COUNCIL, INC. and Psychemedics Corporation, Petitioners, v. Guillermo M. MENDEZ, Respondent
John S. Serpe, Michael Lewis, Christopher D. Knudsen, for Petitioner Houston Area Safety Council, Inc. Robert E. Goodman Jr., Dallas, for Respondent. Charles Hollis, D. Faye Caldwell, Houston, for Petitioner Psychemedics Corporation.
John S. Serpe, Michael Lewis, Christopher D. Knudsen, for Petitioner Houston Area Safety Council, Inc.
Robert E. Goodman Jr., Dallas, for Respondent.
Charles Hollis, D. Faye Caldwell, Houston, for Petitioner Psychemedics Corporation.
Chief Justice Hecht delivered the opinion of the Court, in which Justice Blacklock, Justice Busby, Justice Bland, Justice Huddle, and Justice Young joined.
We are asked as a matter of first impression whether a third-party entity hired by an employer to collect and test an employee's biological samples for drugs owes the employee a common-law duty to perform its services with reasonable care. Applying established principles, we conclude that the common law does not recognize such a duty. Accordingly, we reverse the court of appeals’ judgment and render judgment for Petitioners. I
634 S.W.3d 154, 163 (Tex. App.—Houston [1st Dist.] 2021).
Guillermo Mendez, a pipefitter employed by Turnaround Welding Services, was assigned to work the Valero Ardmore Refinery. Following Valero policy for all on-site workers, Turnaround directed Mendez to report to the Houston Area Safety Council to provide hair and urine samples for drug and alcohol screenings. The Safety Council collected the samples from Mendez and delivered them to Psychemedics for laboratory testing. Psychemedics reported that Mendez's hair sample tested positive for cocaine and a cocaine metabolite. Mendez had taken numerous drug tests over the more than 25 years he worked as a pipefitter and had never had a positive result. Mendez denies that he has ever used cocaine.
Metabolites are substances produced by the body when it breaks down a drug. See Mission Petroleum Carriers, Inc. v. Solomon , 106 S.W.3d 705, 707 (Tex. 2003).
Valero required Mendez to provide a second sample to a different collection entity, DISA Global Solutions, which also sent the sample to Psychemedics for testing. The second sample tested negative for cocaine, as did a third that Mendez had tested by a different laboratory at his own expense. Mendez was required to complete a substance-abuse course, and when he did, DISA approved him to return to work. Nevertheless, Turnaround refused to reassign him to the Valero facility or to any other jobsite. After collecting unemployment benefits for a time, he found work with a different employer.
Mendez sued Turnaround in federal court and settled those claims. He then filed this suit against the Safety Council and Psychemedics, alleging that they negligently collected, transported, tested, and reported the results of his first hair sample, causing him to lose his job with Turnaround. The Safety Council and Psychemedics filed traditional and no-evidence summary-judgment motions, asserting that they did not owe Mendez a legal duty of care and that there is no evidence of breach, causation, or damages. The trial court granted the traditional summary-judgment motions, agreeing with the Safety Council and Psychemedics that they did not owe Mendez a legal duty.
The court of appeals reversed, holding that "when an individual is required, as a condition of employment, to submit to drug testing, the law recognizes a duty to use reasonable care in collecting and processing biological samples between third-party collection and testing agencies and the employees they test." We granted the Safety Council's and Psychemedics’ petitions for review.
II
The existence of a legal duty, which is "a prerequisite to all tort liability", is the "threshold inquiry in a negligence case". Whether a legal duty exists under particular facts, and if so, the scope and elements of that duty, present questions of law that courts must decide. To determine whether a particular defendant owes a negligence duty to a particular claimant, courts look first to whether we have previously held that a duty does or does not exist under the same or similar circumstances. If, for example, a "special relationship" exists between the parties that we have previously held gives rise to a legal duty, that duty exists in the case presented as a matter of law, and "the duty analysis ends there." But "[w]hen a duty has not been recognized in particular circumstances, the question is whether one should be."
Graff v. Beard , 858 S.W.2d 918, 919 (Tex. 1993).
Elephant Ins. Co. v. Kenyon , 644 S.W.3d 137, 144 (Tex. 2022) (quoting Greater Hous. Transp. Co. v. Phillips , 801 S.W.2d 523, 525 (Tex. 1990) ); see also Pagayon v. Exxon Mobil Corp. , 536 S.W.3d 499, 503 (Tex. 2017) ; El Chico Corp. v. Poole , 732 S.W.2d 306, 311 (Tex. 1987) ; Otis Eng'g Corp. v. Clark , 668 S.W.2d 307, 309 (Tex. 1983).
Kenyon , 644 S.W.3d at 145 ; see also Pagayon , 536 S.W.3d at 503 ; Nabors Drilling, U.S.A., Inc. v. Escoto , 288 S.W.3d 401, 404 (Tex. 2009) ; New Tex. Auto Auction Servs., L.P. v. Gomez De Hernandez , 249 S.W.3d 400, 406 (Tex. 2008) ; Humble Sand & Gravel, Inc. v. Gomez , 146 S.W.3d 170, 181 (Tex. 2004) ; Golden Spread Council, Inc. No. 562 of Boy Scouts of Am. v. Akins , 926 S.W.2d 287, 289 (Tex. 1996) ; Phillips , 801 S.W.2d at 525.
See Kenyon , 644 S.W.3d at 145 (explaining that the duty inquiry involves evaluating the factual situation presented "in the broader context of similarly situated actors" (quoting Pagayon , 536 S.W.3d at 504 )).
Golden Spread Council , 926 S.W.2d at 292.
Pagayon , 536 S.W.3d at 503.
To determine whether a duty exists, we consider several interrelated factors we set out more than 30 years ago in Greater Houston Transportation Co. v. Phillips , often referred to as the Phillips factors. In undertaking this analysis, we weigh "the risk, foreseeability, and likelihood of injury ... against the social utility of the actor's conduct, the magnitude of the burden of guarding against the injury, and the consequences of placing the burden on the defendant." We also consider "whether one party would generally have superior knowledge of the risk or a right to control the actor who caused the harm." We have said that some of these factors, like risk and foreseeability, "may turn on facts that cannot be determined as a matter of law and must instead be resolved by the factfinder", but these cases are unusual. More often, "the material facts are either undisputed or can be viewed in the light required by the procedural posture of the case." This is because "the factual situation presented must be evaluated in the broader context of similarly situated actors." Thus, "[t]he question is whether a duty should be imposed in a defined class of cases, not whether the facts of the case at hand show a breach."
See 801 S.W.2d at 525.
Kenyon , 644 S.W.3d at 145 (quoting Humble Sand & Gravel , 146 S.W.3d at 182 ); Phillips , 801 S.W.2d at 525.
Kenyon , 644 S.W.3d at 145 (quoting Humble Sand & Gravel , 146 S.W.3d at 182 ); see also Pagayon , 536 S.W.3d at 504 ; Nabors Drilling , 288 S.W.3d at 410 ; New Tex. Auto Auction , 249 S.W.3d at 406 ; Golden Spread Council , 926 S.W.2d at 290 ; Graff , 858 S.W.2d at 920 ; Phillips , 801 S.W.2d at 525.
Pagayon , 536 S.W.3d at 504 (quoting Humble Sand & Gravel , 146 S.W.3d at 182 ).
Id.
Id.
Id. The concurrence argues that the Phillips factors facilitated judicial restraint when they were adopted. Post at 594 (Young, J., concurring). "The irony is," the concurrence explains, "that the dissent would harness the Phillips factors in service of the repudiated vision of an invasive judiciary, when the point of Phillips was to do the opposite." Id. at 595. We agree. But no party here has asked us to revisit the Phillips factors, and we apply them in accordance with our precedent.
III
A
The Safety Council and Psychemedics argue that we need not consider the Phillips factors to determine whether they owed Mendez a legal duty because we have already twice refused to recognize such a duty in the drug-testing context in Mission Petroleum Carriers, Inc. v. Solomon and SmithKline Beecham Corp. v. Doe. We disagree. Although those cases involved negligence claims arising from circumstances involving drug-testing activities—and although we held in both cases that no duty existed—we have not addressed in any case the specific duty Mendez argues exists here.
903 S.W.2d 347 (Tex. 1995).
In SmithKline , we considered whether an independent drug-testing laboratory similar to Psychemedics, which was hired by an employer to test prospective employees’ biological samples, "owe[d] a person tested a duty to tell that person or the employer that ingestion of certain substances will cause a positive test result." The claimant, who lost her job after testing positive for opiates, did not complain that the laboratory improperly performed the test or reported an incorrect result but instead complained that it "should have informed her and her prospective employer that eating poppy seeds could cause a positive test result."
Id. at 348.
Id.
After concluding that no court had previously recognized such a duty, we considered the Phillips factors and concluded they did not support recognizing the duty the claimant proposed. Although we acknowledged that the claimant's job loss was, at least to some degree, a likely and foreseeable result of the laboratory's failure to warn her not to ingest poppy seeds before taking the test, we found that other considerations outweighed those concerns. Specifically, we concluded that the proposed duty could not be "readily defined" and was "unworkable"; that it would require the laboratory to fulfill responsibilities that, under its contractual agreement, belonged to the claimant's employer; and that it would "impinge[ ] on the liability of other professionals for services rendered." Importantly, we concluded our duty analysis in SmithKline by "emphasiz[ing] that we have not considered whether a drug testing laboratory ... has a duty to use reasonable care in performing tests and reporting the results."
Id. at 351.
Id. at 353-354 ; see also id. at 353 (declining to find a duty among the "very general principles" in Buchanan v. Rose , 138 Tex. 390, 159 S.W.2d 109, 110 (1942), regarding a duty to prevent injury in a negligently created dangerous situation).
Id. at 353-354.
Id. at 355.
Several years after our decision in SmithKline , we came closer to addressing today's issue in Mission Petroleum. But Mission Petroleum did not involve an independent laboratory that tested employees’ samples for an employer (like Psychemedics or SmithKline) or an independent entity that collected and transported employees’ samples for an employer (like the Safety Council). Instead, the claimant in Mission Petroleum asserted a negligence claim against the employer—which itself collected the employee's urine sample—alleging that it failed to use reasonable care in doing so, resulting in a false-positive test result. The issue we addressed in Mission Petroleum was "whether an employer owes a duty to an at-will employee to use reasonable care when collecting an employee's urine sample for drug testing pursuant to [Department of Transportation (DOT)] regulations." We began our analysis in Mission Petroleum by noting that we had declined in SmithKline "to address any duty the employer may owe to an employee and expressly reserved the question whether a laboratory may be liable for performing drug tests negligently." And we emphasized that the question of whether a third-party entity that collects employees’ samples owes a duty of care to the employees was "not before [the] Court." Instead, Mission Petroleum required us to decide "whether an employer owes a duty of care when the employer itself collects the employees’ urine samples."
Id. (emphasis added).
Id.
Id. at 711.
Id. (emphasis added).
In holding that the employer did not owe such a duty, we acknowledged that an employer's negligence in such circumstances creates a risk of harm and a likelihood of injury, but we concluded that the DOT regulations substantially reduced the risk and likelihood of harm to tested employees by "impos[ing] stringent rules" for the process, "levy[ing] civil penalties for violation[s]", and providing "a safe harbor for employees whose test results are tainted by unacceptable breaches of collection procedures." We also considered how creating such a common-law duty on the part of an employer could undermine Texas’ fundamental employment-at-will doctrine, since the employee's claim "concern[ed] the process by which [his employer] chose to terminate him".
Id. at 713-715.
Id. at 715.
Balancing the risk and likelihood of harm against the social value of employee drug testing and the employment-at-will doctrine, we "decline[d] to impose a common-law duty on employers who conduct in-house urine specimen collection under the DOT regulations." But we expressly did not address whether third-party companies like the Safety Council and Psychemedics owe a common-law negligence duty to the employees of their clients. Until today, that has remained an open question in this Court.
Id.
See id. at 711.
B
When deciding whether to recognize a common-law duty, we consider "not only the law and policies of this State, but the law of other states and the United States, and the views of respected and authoritative restatements and commentators." Lower courts around the country have split over the issue of whether third-party companies owe a common-law duty to their clients’ employees to use reasonable care in collecting and testing their drug-testing samples. Only five state high courts over 20 years have recognized such a duty. Although no state high court has yet rejected such a duty, unlike the dissent, we do not regard the cases in a handful of states as approaching a consensus.
SmithKline , 903 S.W.2d at 351.
See Cooper v. Lab'y Corp. of Am. Holdings , 150 F.3d 376, 379-380 (4th Cir. 1998) (collecting cases).
See Shaw v. Psychemedics Corp. , 426 S.C. 194, 826 S.E.2d 281, 282 (2019) ; Landon v. Kroll Lab'y Specialists, Inc. , 22 N.Y.3d 1, 977 N.Y.S.2d 676, 999 N.E.2d 1121, 1122 (2013) ; Berry v. Nat'l Med. Servs., Inc. , 292 Kan. 917, 257 P.3d 287, 291 (2011) ; Sharpe v. St. Luke's Hosp. , 573 Pa. 90, 821 A.2d 1215, 1221 (2003) ; Duncan v. Afton, Inc. , 991 P.2d 739, 740 (Wyo. 1999).
Moreover, as explained in Part V, infra , we find our own well-established tort jurisprudence persuasive and conclude that declining to recognize this duty is more consistent with the common law's treatment of analogous conduct.
After we decided SmithKline , the Fifth Circuit made an Erie guess in Willis v. Roche Biomedical Laboratories, Inc. that, under Texas law, an independent laboratory does not owe a legal duty "to persons tested to perform its services with reasonable care." The court acknowledged that we noted in SmithKline that "some jurisdictions had held that a laboratory owes a duty to persons tested to perform its services with reasonable care" and that we "distinguish[ed] those decisions from the failure to warn claims" at issue in SmithKline. Nevertheless, the court concluded that our opinion in SmithKline "seemed to question the soundness of the decisions finding such a duty", particularly by making "unfavorable references" to the original panel opinion, which was withdrawn and replaced with a substituted opinion. The court concluded that under Texas law, the laboratory owed the employee "no duty of reasonable care in testing his urine for drugs." As a result, the Fifth Circuit and its district courts have followed Willis ’ holding that under Texas law, an independent laboratory does not have a legal duty to a person whose specimens are tested to exercise reasonable care when conducting those tests.
61 F.3d 313, 316 (5th Cir. 1995).
Id.
Id. at 316 & n.2 ; Willis v. Roche Biomed. Lab'ys , 21 F.3d 1368 (5th Cir. 1994).
Willis , 61 F.3d at 316.
See, e.g., Calbillo v. Cavender Oldsmobile, Inc. , 288 F.3d 721, 730 (5th Cir. 2002) ; Brownlow v. Lab'y Corp. of Am. , 254 F.3d 1081, 2001 WL 563785, at *1 (5th Cir. May 14, 2001) ; Martinez v. DISA, Inc. , 435 F. Supp. 3d 747, 753 (W.D. Tex. 2020) ; Hinds v. Baker Hughes, Inc. , MO-06-CV-134, 2007 WL 9710941, at *3 (W.D. Tex. Sept. 28, 2007) ; Frank v. Delta Airlines, Inc. , No. 3:00-CV-2772, 2001 WL 910386, at *2 (N.D. Tex. Aug. 3, 2001).
Until today, however, this Court has not addressed the issue presented in this case.
IV
With these principles and precedents in mind, we turn to the question whether to recognize the legal duty Mendez proposes under the Phillips factors.
We first consider the risk, foreseeability, and likelihood of injury that Mendez would suffer as a result of the negligent collection and testing of his samples. We have noted before the "serious risk that an employee can be harmed by a false positive drug test." In this case, for example, Mendez testified that not only was he not allowed to return to the jobsite where he was working at the time of his positive drug test but that a second positive test would bar him from all future job prospects in his profession.
See Phillips , 801 S.W.2d at 525.
Mission Petroleum , 106 S.W.3d at 714-715.
In Mission Petroleum , we noted that the DOT's "comprehensive statutory and regulatory scheme" afforded employees "significant protection" from that risk. We concluded that the DOT regulations struck the appropriate balance between the need for efficient drug testing and protections for employees to insist on the integrity of the process. The DOT regulations do not apply in this case, but test subjects have similar protections. As in Mission Petroleum , Psychemedics reviews the chain of custody before testing the sample, and an independent medical review officer verifies the test results. In the event of a positive test result, the medical review officer contacts the test subject to give the subject an opportunity to explain the test result. Additionally, DISA provides procedural protections such as retesting and a substance abuse program. Finally, Psychemedics notes that its conduct is in fact highly regulated: it is licensed, certified, and regulated by numerous federal and state governmental agencies, some of which have evaluated and approved its testing procedures.
Id. at 715.
Id.
In light of these protections, Petitioners argue that the nature and likelihood of risk arising from supposed contamination are minimal. According to them, Psychemedics’ washing and testing procedure eliminates contaminants, making the risk "essentially non-existent." And in light of the contaminant-eliminating procedures and the additional procedural protections, Petitioners argue that they could not have reasonably anticipated a false positive or that Turnaround would have fired Mendez. However, as in SmithKline , we assume that there is a significant likelihood that Petitioners could and did foresee the injury—Psychemedics’ specimen custody and control form, completed by a Safety Council employee, has a box for "Pre-Employment" testing purposes, which was checked. And the test results delivered to Mendez's employer also noted that the "Test Use" was for "Pre-Employment" purposes. But this does not end the inquiry.
See SmithKline , 903 S.W.2d at 353. The dissent faults us for "assum[ing]" that there is a significant likelihood of foreseeable injury. Post at 593-94 (Boyd, J., dissenting). Rather than accept Psychemedics’ contention that it has "never had a false positive" in over nine million tests, we assume without deciding that a false-positive result is possible and is a foreseeable harm. We have no occasion in this case to opine on the truth of Psychemedics’ infallibility claim, although we note that the summary-judgment evidence suggests a high degree of accuracy in its testing methods.
See SmithKline , 903 S.W.2d at 353 ("Foreseeability alone, however, is not sufficient to create a new duty.").
We next balance the risk, foreseeability, and likelihood of injury against the social utility of the Petitioners’ services and the magnitude and consequences of the burden the legal duty would impose on them. We conclude that the balance of these countervailing factors does not counsel recognition of a new common-law duty.
There is great social utility in drug testing employees, particularly those engaged in occupations that present substantial dangers to themselves, other employees, property, and the public. Petitioners contend that the importance of drug testing and the burden to be imposed on them far outweigh the risk of harm to individual employees. For one, they argue that imposing the duty will produce a flood of frivolous and burdensome claims against them for every employee who receives a positive test result. According to them, employees will be able to sue the collection facility or laboratory claiming that they do not do drugs, so the test result must be a false positive.
The court of appeals concluded that the Safety Council and Psychemedics are in the best position to guard against the injury to employees because they are solely responsible for collecting, testing, and the quality control process, and they are "better able to bear the burden financially than an individual employee harmed by a false positive report." Further, the court reasoned that "[a]ccuracy of collection and testing ... is of paramount importance to the business success of both [the Safety Council] and Psychemedics" and that "[c]ontrolling their processes to ensure accurate results is a good business practice as employers have an interest in receiving accurate testing results."
Id. at 162.
But the Petitioners counter that Mendez's proposed duty is inappropriate because the Safety Council has no control over an employer's response to an employee's drug-test results. Any harm an employee sustains as the result of a false-positive drug test necessarily depends not on an independent entity that collects or tests the sample but on whether and how the employer chooses to terminate or discipline the employee in response to the test result. Neither the Safety Council nor Psychemedics provides any recommendation to employers about what to do with the test results. Nor do Petitioners have any direct relationship with an employee whose samples they collect or test. And when a case involves an at-will employee like Mendez, the employer can terminate the employee for almost any reason, and a third-party entity has no control over that decision.
See Mission Petroleum , 106 S.W.3d at 710-711 (noting that Texas courts have rejected a laboratory's duty of care because "drug-testing companies have a direct relationship only with the employer and not the employee"); see also infra Part V.
Further, if faced with this burden, Petitioners contend that third-party facilities may instead "seek to transfer responsibility to employers through indemnity agreements, drastically increase the price, or choose not to collect samples for use in the employment context." This could lead to a decline in employment drug screens, or employers may be charged more for drug-screening tests, which could lead to employers assuming control over the drug-testing program themselves. Petitioners note that should employers assume control over testing programs, may erode the employment-at-will doctrine. If third-party entities can be liable for negligently collecting and testing employee drug samples, then employers who themselves collect or test such samples may ultimately face the same liabilities. As we recognized in Mission Petroleum , "[w]e must also balance any risk to employees against the burden it could place on our employment-at-will doctrine." Although not directly implicated here, "we must consider [Mendez's] claim in its overall context."
As the dissent notes, we already decided in Mission Petroleum that employers owe no duty to employees when they perform drug testing themselves, at least in part because the employer is regulated. But it would make little sense that an employer—who has a direct relationship with the employee—has no duty to its employee, but a third-party entity—which has no relationship with the employee—does.
See id. ("We agree that the employment-at-will doctrine is not directly implicated here because Solomon has not sued for wrongful discharge.").
Id.
V
Declining to recognize the proposed duty is consistent with our existing tort law. Take defamation and the economic-loss rule, for example. In the defamation context, Texas law recognizes a "qualified privilege" that "protects a former employer's statements about a former employee to a prospective employer." The privilege extends to a former employer's "communications made in good faith on subject matter in which the author has a common interest with the other person, or with reference to which he has a duty to communicate to the other person." It is widely recognized that "common interest" includes a prospective employer's inquiry to a prospective employee's former employer about that individual as an employee. An employee can defeat the privilege by proving actual malice.
Smith v. Holley , 827 S.W.2d 433, 436 (Tex. App.—San Antonio 1992, writ denied). Our Court has not addressed the validity of the qualified privilege in this precise context, but it has recognized the qualified privilege in a similar employment context. See Randall's Food Mkts., Inc. v. Johnson , 891 S.W.2d 640, 646-647 (Tex. 1995) (applying the qualified privilege to employer investigations of employee wrongdoing). And the specific former-to-prospective-employer privilege has been recognized by Texas courts of appeals and the Fifth Circuit since 1969 and 1997, respectively. See Duncantell v. Universal Life Ins. Co. , 446 S.W.2d 934, 937 (Tex. App.—Houston [14th Dist.] 1969, writ ref'd n.r.e.) ; Burch v. Coca–Cola Co. , 119 F.3d 305, 323-326 (5th Cir. 1997). The Texas Labor Code also supports recognizing a qualified privilege for former or current employers. See Tex. Lab. Code §§ 103.001 -103.005 ; see also id. § 103.001 ("The legislature finds that the disclosure by an employer of truthful information regarding a current or former employee protects employment relationships and benefits the public welfare. It is the intent of the legislature that an employer who makes a disclosure based on information obtained by the employer that any employer would reasonably believe to be true should be immune from civil liability for that disclosure."); id. § 103.003 (authorizing employers to "disclose information about a current or former employee's job performance"); id. § 103.004 (granting immunity to employers that disclose information about an employee under Section 103.003 unless "the information disclosed was known by that employer to be false at the time the disclosure was made or that the disclosure was made with malice or in reckless disregard for the truth or falsity of the information disclosed").
Smith , 827 S.W.2d at 436 ; Patrick v. McGowan , 104 S.W.3d 219, 223 (Tex. App.—Texarkana 2003, no pet.) ; see also Wheeler v. Miller , 168 F.3d 241, 252 (5th Cir. 1999) (explaining that the qualified privilege is recognized for "statements that occur under circumstances wherein any one of several persons having a common interest in a particular subject matter may reasonably believe that facts exist that another, sharing that common interest, is entitled to know" (quoting Hanssen v. Our Redeemer Lutheran Church , 938 S.W.2d 85, 92 (Tex. App.—Dallas 1996, writ denied) )).
Pioneer Concrete of Tex., Inc. v. Allen , 858 S.W.2d 47, 49 (Tex. App.—Houston [14th Dist.] 1993, writ denied) ; Smith , 827 S.W.2d at 436.
Pioneer Concrete of Tex. , 858 S.W.2d at 49.
The reason for this privilege is clear. If an employer can be sued for speaking in good faith about its former employee to a prospective employer, the former employer might be hesitant to disclose important information about the employee's fitness, including information about past drug use. The third-party drug-testing companies at issue here are in a position similar to that held by former employers protected by the qualified privilege—assuming they are acting without malice, of which there is no allegation. The drug-testing companies are in possession of information that is damaging to the prospective employee's reputation but pertinent to the employee's fitness for the job. The common law already recognizes a qualified privilege shielding from liability the disclosure of similar information in other contexts. Declining to impose the requested duty on drug-testing companies thus conforms with the common law's treatment of analogous conduct and avoids imposing greater potential liability on drug-testing companies than on others who communicate with employers about prospective employees.
Similarly, although it is well recognized that one who undertakes services necessary for the protection of a third person and performs them negligently is subject to liability for that person's physical harm or property damage, "[t]he law has long limited the recovery of purely economic damages in an action for negligence." "[T]he extent to which Texas precludes recovery of economic damages in a negligence suit between contractual strangers" is not entirely clear, but our courts of appeals "have uniformly ... den[ied] recovery of purely economic losses in actions for negligent performance of services" absent "[p]rofessional malpractice", which is not at issue here. The Restatement (Third) of Torts: Liability for Economic Harm , which we discussed extensively in LAN/STV v. Martin K. Eby Construction Co. , also limits liability for negligently performed services to "loss suffered (a) by the person or ... group of persons for whose benefit the actor performs the service; and (b) through reliance upon [the service] in a transaction that the actor intends to influence." In this case, the Safety Council and Psychemedics performed their collection and testing services for the benefit of Turnaround, not Mendez.
See Fort Bend Cnty. Drainage Dist. v. Sbrusch , 818 S.W.2d 392, 396 (Tex. 1991) (citing Restatement (Second) of Torts § 324A ( Am. L. Inst. 1965) ).
LAN/STV v. Martin K. Eby Constr. Co. , 435 S.W.3d 234, 238 (Tex. 2014).
Id. at 243.
Id. at 243-244. We explained in LAN/STV that the analysis is somewhat different for claims of negligent misrepresentation. Id. at 244-249. But Mendez has not alleged such a claim.
Restatement (Third) of Torts: Liab. for Econ. Harm § 6(2) ( Am. L. Inst. 2020).
Considering the competing factors above—the risk to employees, public safety, existing protections and regulations, the possible burdens on third-party testing administrators, the employment-at-will doctrine—as well as our well-established tort principles, we hold that the third-party testing entities hired by an employer do not owe a common-law negligence duty to their clients’ employees. Whether such a duty is desirable is a separate policy question for the Legislature, which can balance competing factors apart from the common law.
* * * * *
Accordingly, we reverse the court of appeals’ judgment and render judgment for petitioners Safety Council and Psychemedics.
Justice Young filed a concurring opinion, in which Justice Blacklock joined.
Justice Boyd filed a dissenting opinion, in which Justice Lehrmann and Justice Devine joined.
Justice Young, joined by Justice Blacklock, concurring.
This case turns on the threshold inquiry for any common-law negligence claim: whether a duty exists. To make that determination, the Court today adheres to our precedents by applying the Phillips factors. But at least for a case like this, we should not need those factors. Drug testing is a familiar area of life and law that, in many respects, is already highly regulated. Judicial meddling with the careful balances that the other branches can strike and have struck is unnecessary and improper.
I nonetheless join the Court's thorough, well-reasoned, and well-written opinion that declines to recognize a duty in this context. No party has asked us to revisit those precedents. I address this case in a separate writing, however, for three reasons. First, I explain why we can reach today's result wholly aside from the Phillips factors. Second, I want to clarify that while the Phillips factors were a salutary and important improvement in the law when they were adopted, they do not have the ability to predictably constrain judicial adventurism. A judge who wants to impose a duty or create a new cause of action can readily do so and claim fidelity to Phillips —and, because the factors are amorphous, that claim cannot readily be rebutted. And third, I emphasize that I am not at all antagonistic to the common law. To the contrary, my approach would ensure that the common law plays its important but properly limited role in our large legal superstructure. In other words, we honor the common law by applying it where it exists, reading other laws (including the Constitution) in light of established common-law principles, and—importantly—declining to expand it where there is no vacuum for it to fill.
In short, I again suggest that our jurisprudence may benefit from a different approach when we respond to requests to enlarge the common law of torts.
See also, e.g., Elephant Ins. Co. v. Kenyon , 644 S.W.3d 137, 155–60 (Tex. 2022) (Young, J., concurring); Am. Nat'l Ins. Co. v. Arce , ––– S.W.3d ––––, 2023 WL 3134718, at *17 (Tex. Apr. 28, 2023) (Young, J., concurring). I expand upon those observations here because this case provides a prime example of when the Phillips factors can be less than helpful and may in fact cause more harm than good.
I
One feature of today's case is, in my view, dispositive: that the alleged duty would arise in a highly familiar and significantly regulated context. Testing for drugs—within the broader context of drug abuse and detection more generally—is not some remote area of life that federal and state law have never contemplated. Over fifty years ago, the President declared that drug abuse was "public enemy number one." It is no secret that the improper use of drugs remains a widespread danger that has generated a host of public-policy responses. Nor is it a secret that drug use in some contexts—especially by those in positions capable of affecting public safety—is an even higher priority. Quite relevant here, both Congress and this State's legislature have passed laws that encourage drug-free workplaces. See Drug-Free Workplace Act of 1988, Pub. L. No. 100-690, 102 Stat. 4304 (codified as amended at 41 U.S.C. §§ 8101 – 8106 ) (instituting requirements for federal contractors and grant recipients); Tex. Lab. Code § 21.120 (stating that declining to employ individuals who illegally use or possess controlled substances does not constitute unlawful employment discrimination).
Richard Nixon, President of the U.S., Remarks About an Intensified Program for Drug Abuse Prevention and Control (June 17, 1971), https://www.presidency.ucsb.edu/documents/remarks-about-intensified-program-for-drug-abuse-prevention-and-control.
One specific response to drug use has been an emphasis on workplace drug testing, especially in fields with heightened safety concerns. To address drug testing in such employment contexts, a broad range of laws and regulations have been enacted by both the federal and state governments. These enactments usually provide protection for employees, whether through an appeal process, by establishing required testing procedures, or both. See, e.g., Mission Petroleum Carriers, Inc. v. Solomon , 106 S.W.3d 705, 713–15 (Tex. 2003) (discussing protections for transportation workers under specified federal drug-testing regulations); Tex. Lab. Code § 207.026(d) (requiring appeal process in unemployment-benefits context); Tex. Health & Safety Code § 555.022(b) (requiring appeal process for employees of state-supported living centers). In this case, Psychemedics points to regulatory requirements for laboratories addressing licensing, safety, and testing quality. The record indicates that Psychemedics is licensed or certified both by Texas (as well as other states) and the U.S. Department of Health and Human Services. The degree to which policymaking efforts have already been directed toward workplace drug testing is unsurprising. The briefing and the Court's opinion, see ante at 586-87, merely confirm what is widely known.
See, e.g. , 49 U.S.C. § 5331 (public transportation); id. § 20140 (railroads); id. § 31306 (commercial motor vehicles); id. § 45102 (aviation); 51 U.S.C. § 31102 (NASA employees and contractors); 14 C.F.R. pt. 120 (aviation); 49 C.F.R. pt. 40 (DOT drug-testing procedures); id. pt. 199 (pipeline facilities); id. pt. 219 (railroads); id. pt. 382 (commercial motor vehicles).
See, e.g. , Tex. Health & Safety Code § 242.052 (convalescent and nursing facilities); id. § 555.022 (state-supported living centers for those with intellectual disabilities); Tex. Occ. Code § 2303.161 (vehicle-storage facilities); id. § 2308.158 (towing operators); Tex. Hum. Res. Code § 42.057 (DFPS-licensed or certified residential childcare facilities); Tex. Lab. Code § 207.026 (unemployment benefits for certain categories of workers); 26 Tex. Admin. Code § 554.423 (providing model drug-testing policy, including appeal process, for nursing facilities that choose to drug-test employees); id. § 745.4151 (providing model drug-testing policy for residential childcare facilities, including an appeal process and minimum standards for testing methods); 16 Tex. Admin. Code § 85.725 (establishing minimum standards for drug testing for employees of vehicle-storage facilities and detailing reporting and reviewing procedures); id. § 86.710 (same for towing operators).
Nothing suggests that legislation cannot add (or subtract) more or different requirements as needed, including private causes of action against drug-testing laboratories. Likewise, as noted above, the reason that drug testing is so prevalent and pervasively regulated in some contexts is because public safety requires it. Consider, for example, an airline pilot who should have been flagged as under the influence, but who instead received a false-negative result. This one mistake could prove fatal to dozens or hundreds of lives.
Importantly, we do not live in an era in which courts alone are attuned to and responsible for such risks. Identifying and weighing them implicates the institutional competence and authority of the political branches of government. Those branches can consider the full landscape of costs and benefits, both to the public and to individuals; conduct detailed studies; gather and assess comprehensive technical data; account for the input of all affected groups; prioritize competing goals; and determine the proper extent of regulation. Unlike judges, they are not confined to the single record of a case and the parties before them. As one prominent scholar said plainly more than a century ago, "[i]t is a sound instinct in the community that objects to the settlement of questions of the highest social import in private litigations between John Doe and Richard Roe." Roscoe Pound, Common Law and Legislation , 21 Harv. L. Rev. 383, 404 (1908). In short, judges should not be lawmakers when actual lawmakers are on the job.
Historically, of course, "judges were lawmakers by necessity as the common law took form." Elephant Ins. , 644 S.W.3d at 155 (Young, J., concurring). For so many centuries of the common law's development, the rest of the government made no effort to prescribe essential rules of conduct; the common law properly occupied the vacuum. The circumstances before us today provide no such vacuum. Insisting on judicially regulating in this context would amount instead to elbowing aside the institutions that exist for the purpose of, and have already undertaken the duty of, legislating and regulating. When the executive and legislative branches step up to the plate, the judicial creation of new common-law duties or actions is akin to treating a regulatory scheme like a Google Doc where we judges are invited to add a paragraph here or there.
"Unlike the judges who developed the law of negligence, today's judges routinely see comprehensive statutory and regulatory schemes," and "it is increasingly less likely than ever before that there are gaps that judges alone can (much less should) fill." Elephant Ins. , 644 S.W.3d at 157 (Young, J., concurring).
Such judicial tinkering is hardly costless. It instead poses serious risks of destabilizing difficult balances that the other branches have struck—including when a deliberative scheme of regulation does not provide for liability in a given context. We cannot disregard "the presumption that the Legislature acts with full knowledge of ... extant law." Am. Nat'l Ins. Co. v. Arce , ––– S.W.3d ––––, 2023 WL 3134718, at *4 n.14 (Tex. Apr. 28, 2023). Particularly when the legislature has focused deeply on an area of highly regulated law, it knows if the common law does not already impose a duty. When the legislature regulates many aspects of such a legal terrain (especially one as prominent as drugs in the workplace) but refuses to impose new legally enforceable obligations (such as a laboratory's duty as requested in this case), we should assume this result to be purposeful. We should credit the legislature with having considered taking such a step and, for any number of reasons, declining to do so. Maybe it prefers to await further data and experience. Maybe it has concluded that overregulation carries more risks than benefits. But the one thing that is improper to assume, at least in the context of detailed regulation or a highly familiar public-policy problem, is that the legislature just wants to see what this Court will do. Regardless, the presence of one or both indicates that perceived gaps or shortfalls should be remedied legislatively, not by the courts.
By proposing a bright-line rule of restraint when the area of law at issue is highly regulated, I do not suggest that a lack of regulation indicates that courts should feel liberated or obligated to recognize new tort duties or actions. While legislative exertion more obviously demonstrates an attempt to finely tune a policy balance, inaction can also signal a policy choice, particularly in contexts like this one that are not "genuinely new. " Id. at 159 n.7. My point is that even if we keep the Phillips factors generally, we at least need not use them in contexts like this one.
Avoiding overregulation in this context, for example, would be consistent with our State's approach to private-employer drug testing more generally. See Aaron S. Demerson, Tex. Workforce Sols. & Tex. Workforce Comm'n, Texas Guidebook for Employers 216 (2022), https://efte.twc.texas.gov/texas-guidebook-for-employers-2022.pdf (noting that, "[u]nder Texas and federal laws, there is almost no limitation at all on the right of private employers to adopt drug and alcohol testing policies for their workers").
This case again provides a ready illustration. As the Court observes, "the Fifth Circuit made an Erie guess ... that, under Texas law, an independent laboratory does not owe a legal duty ‘to persons tested to perform its services with reasonable care.’ " Ante at 586 (quoting Willis v. Roche Biomed. Lab'ys, Inc. , 61 F.3d 313, 316 (5th Cir. 1995) ). Until the judgment below, we are aware of no Texas courts that deviated from that understanding. For decades , therefore, the legislature has known that such claims would not be heard in any forum. It is implausible that the legislature, aware of this legal regime and fully attuned to the complex issues surrounding drug testing, would not have stepped in if it believed that the absence of new tort liability was undermining its regulatory program or if such new liability would be advantageous to it.
The courts obviously retain important roles in highly regulated legal areas. For one thing, courts remain the chief fora in which those laws and regulations may be interpreted and enforced. And not just enforced, but also tested—in proper adversary contexts, it remains a core judicial function to determine whether the legislature (and, by extension, agencies) have complied with all relevant principles of constitutional (and administrative) law.
My point, therefore, is not that courts must supinely yield to anything an agency (whether expert or otherwise) might say. Quite to the contrary, courts should and must ensure that the political branches and the agencies they empower do not overstep. But when it comes to the lawmaking function, the very fact that the legislature has focused on a problem (including when it delegates to agencies, whether properly or not) may mean that we have much less need to act as common-law judges in that area, and perhaps no need at all.
* * *
In short, the existence of a regulatory scheme governing the type of conduct alleged to constitute negligence—at least when there is no impediment to the political branches’ continued regulation—generally should foreclose the imposition of a common law negligence duty. Thus, even if the Phillips factors remain intact for other situations, we should take the opportunity—at least in a future case in which the parties so urge—to carve out circumstances like the one before us now and hold that such factors will play no further analytical role.
II
My desire to move away from the Phillips factors—at least in contexts like today's case, and perhaps more generally—does not connote disrespect for them. When they were announced in Greater Houston Transportation Co. v. Phillips , 801 S.W.2d 523 (Tex. 1990), the enumerated factors facilitated judicial restraint. It was a necessary and welcome speedbump following an extravagant era of largely uninhibited judicial creativity. Given Phillips ’s important place in our legal history, it is impossible to regard its now-eponymous factors without a healthy measure of gratitude. They made it easier for courts to pause and reflect on whether another branch of government would be better equipped to determine how best to order societal responsibilities and resources.
My dissenting friends and colleagues, however, invoke the very principles that led Phillips to attempt a recalibration of judicial excess. The common law, they say, "is not frozen or stagnant, but evolv[es]" when "the need [arises] in a changing society." Post at 598, 604-05 (Boyd, J., dissenting) (quoting El Chico Corp. v. Poole , 732 S.W.2d 306, 310, 311 (Tex. 1987) ). As those societal changes occur, the dissent adds, "it is the duty of this court," id. at 2 (quoting Poole , 732 S.W.2d at 310 ), to evaluate whether the "changing social standards and increasing complexities of human relationships in today's society" "justify imposing a duty" we have not previously recognized, id. at 1–2 (quoting Otis Eng'g Corp. v. Clark , 668 S.W.2d 307, 310 (Tex. 1983) ).
These statements were anachronistic when they were made in 1983 and 1987. Those cases’ conception of the judicial role betrays an undue confidence in the judiciary's ability, much less authority, to oversee society. Judges are not at all equipped to measure the "complexities of human relationships in today's society," and we lack the resources to survey (much less understand) our "changing society[’s]" various "need[s]." Judges are elected for legal analysis, such as interpreting the meaning of documents and clearly articulating the meaning of existing law. These are very important and powerful roles that have little, if anything, to do with telling a society how to run its affairs. Fortunately, other branches of government do have that authority: those who are elected to devise and implement policy choices.
Notably, in one of the areas of common law left to the U.S. Supreme Court—implying causes of action—that Court went through a similar process of exuberance and retrenchment, including with respect to the indisputably important goal of protecting constitutional rights.
In his concurring opinion in Bivens , for example, Justice Harlan forthrightly put it this way: "[T]he range of policy considerations we may take into account is at least as broad as the range ... a legislature would consider with respect to an express statutory authorization of a traditional remedy." Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics , 403 U.S. 388, 407, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971) (Harlan, J., concurring in judgment) (emphasis added).
Things quickly changed. The U.S. Supreme Court stopped implying other Bivens actions around the time that this Court made the statements about the evolution of the common law in the two cases cited above. And fast-forward to last year, in which the U.S. Supreme Court put it this way: "A court faces only one question: whether there is any rational reason (even one) to think that Congress is better suited to weigh the costs and benefits of allowing a damages action to proceed." Egbert v. Boule , ––– U.S. ––––, 142 S. Ct. 1793, 1805, 213 L.Ed.2d 54 (2022) (internal quotations omitted). "[E]ven a single sound reason to defer to Congress is enough to require a court to refrain from creating such a remedy." Id. at 1803 (emphasis added) (internal quotations omitted).
We need not go so far with respect to all common law; after all, state courts do possess a broader repository of common-law authority than federal courts. But I do not see why it should be terribly controversial, at least with respect to highly regulated areas of the law, to agree with Egbert ’s logic. For those areas, unless there is no good reason to think that the legislature "is better suited to weigh" all the various factors involved in creating a new duty to govern civil and commercial relationships (and that would be, to put it mildly, rare), we should stay our hand.
The irony is that the dissent would harness the Phillips factors in service of the repudiated vision of an invasive judiciary, when the point of Phillips was to do the opposite. But I cannot fault the dissent for this approach— Phillips itself makes it possible because its factors remain inherently malleable. Social questions, political questions, economic questions, social utility, burdens and benefits, and all the rest—who can say how such a "balance" turns out, or that it is balanced wrongly?
The Phillips factors, in other words, provided (and perhaps still provide) a useful yield sign. But after that pause, they do not in and of themselves prevent the determined judicial driver from zooming forth again. Fortunately, our Court has rarely put the foot back on the gas. The Phillips factors, however, are not themselves why we have discontinued broadly recognizing a host of new duties or causes of action. We do not need any factors to know that it is "highly unlikely that we could properly ‘discover’ a new duty lurking in the shadows after all these generations." Elephant Ins. , 644 S.W.3d at 159 (Young, J., concurring).
One unfortunate aspect of the concept of "balancing" tests—where facts and factors are weighed—is that it plays on the common judicial imagery of "the scales of justice." As attractive as such an image is for some purposes, it is inapposite here. Balancing implies some calculable and reliable result. But the Phillips factors cannot provide for any such thing. The weighing of these factors manufactures an ability for judges to place a thumb on the scale—consciously or not—and then depict, to ourselves and others, the result as following from a neutral weighing. The idea is that the judge is no more responsible for the outcome of that weighing than the doctor is when we step onto his scales.
That is not usually how "balancing" tests actually work in the law. As one of my colleagues has previously noted, "[a] judge applying such a [balancing] test can become indistinguishable from a policymaker, for nothing in the test ‘stop[s] [him] from arriving at any conclusion he sets out to reach.’ " Abbott v. Anti-Defamation League Austin, Sw., & Texoma Regions , 610 S.W.3d 911, 928 (Tex. 2020) (Blacklock, J., concurring) (quoting McDonald v. City of Chicago , 561 U.S. 742, 799, 130 S.Ct. 3020, 177 L.Ed.2d 894 (2010) (Scalia, J., concurring)). And as another eminent jurist has commented in a different context, "what happens when the factors point in different directions[?] ... No one knows. You get to guess. " Axon Enter., Inc. v. FTC , 598 U.S. 175, 207, 143 S.Ct. 890, 215 L.Ed.2d 151 (2023) (Gorsuch, J., concurring in judgment) (preliminary print). I must agree with all of this. A test that can be reverse-engineered seems less like an exercise of judicial discretion than a disguised exercise of the legislative function.
The problem is not that the tests do not generate unanimity—the justices of this Court routinely disagree about all sorts of questions. But they are usually legal questions. Multifactor balancing tests based on considerations more conducive to legislative than judicial determinations—like the balancing of values and risks at the forefront of the drug-testing context—are especially prone to unpredictable answers. Predictability, like objectivity, is essential to the rule of law. But both suffer because "[s]uch ‘balancing tests’ often invite courts to engage in open-ended cost-benefit analysis with no objective guideposts"—"a quintessentially legislative way of making decisions." Abbott , 610 S.W.3d at 928 (Blacklock, J., concurring).
This all sounds very critical, but I am not critical of the judges who use the Phillips factors. For one thing, our current precedents require that effort; the Court today, and all its members (including me), are right to adhere to them. And in addition to my recognition that the Phillips factors have a positive origin, I also am certain that no justice of this Court uses them cynically to simply reach a desired result. Rather, I only note that such an especially indeterminate and subjective test has the potential to be used in a less than unbiased manner, even if done so unwittingly.
* * *
Instead of the current factor-ridden balancing test on which we must rely, I await a day in which the Court is presented with a new exercise—one that does not depend on subjective interpretations of policy considerations flexibly wielded to reach a particular result. In the meantime, while I acknowledge our broad authority to recognize new duties or causes of action, I am grateful that the Court continues to exercise extreme caution when asked to do so—especially in a highly regulated context like this.
III
Finally, and most briefly, I believe that the principles that I have articulated are among the best ways for us to honor the common law and our role as its custodians.
Adopting clear rules about when we will not accept invitations to expand the common law is a way to preserve the common law's integrity. Jurisdictional rigor involves an analogous point. "[J]udicial duty is not less fitly performed by declining ungranted jurisdiction than in exercising firmly that which the Constitution and the laws confer." Ex parte McCardle , 74 U.S. (7 Wall.) 506, 515, 19 L.Ed. 264 (1869). Our job is to decide cases—when we have jurisdiction. And our job is to expand and contract common-law duties and actions—when the conditions for doing so exist.
Many citations of McCardle use 1868 for its year of decision. But while it was heard in December Term 1868, the Court decided it in 1869. See William H. Rehnquist, Judicial Independence , 38 U. Rich. L. Rev. 579, 590 n.41 (2004) (explaining both the confusion regarding McCardle ’s citation and the correct date to use). Since Chief Justice Rehnquist's article, the U.S. Supreme Court has not used the erroneous 1868 date.
Recognizing the proper boundaries of the common law, therefore, would not, as our dissenting colleagues contend, forfeit our "role as guardian of the common law." Post at 598. Recognizing these limits instead ensures that, like all judicial decisionmaking, common-law emanations arise by necessity and not through will or mere preference. There is no necessity to regulate an area that the other branches are already regulating.
Importantly, I do not contend that the Court lacks the power to take the steps that the dissent would take. In this sense the analogy to subject-matter jurisdiction is imperfect. The question instead is one of sound judicial administration, respect for the separation of powers, and a desire to ensure that the common law is playing only roles of undoubted propriety.
Many such roles remain, of course. The common law is not going anywhere and I am not advocating otherwise. Indeed, the common law has a privileged jurisprudential position. One of the "[s]tabilizing [c]anons" of construction is that "statutes will not be interpreted as changing the common law unless they effect the change with clarity." Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 318 (2012). This Court accordingly "follow[s] an ‘opt-out’ approach that incorporates common-law principles absent the Legislature's clear repudiation." Taylor v. Tolbert , 644 S.W.3d 637, 650 (Tex. 2022). Unsurprisingly, this Court still routinely decides a host of common-law cases in many legal areas—including torts. Of course, "as other sources of law proliferate, our common-law garden will require more pruning than fertilizing." Elephant Ins. , 644 S.W.3d at 158 (Young, J., concurring). But any pruning must satisfy the requirements of stare decisis. Until this Court says otherwise, or the legislature clearly supersedes it by statute, the rather substantial body of common law remains wholly in effect.
The common law, moreover, plays another vital role in the life of the law: informing and infusing our understandings of myriad legal texts, both old and new. To determine what later-enacted laws mean, as I recently discussed in a concurring opinion, "the common law is especially valuable. ‘[W]e construe statutory language against the backdrop of common law, assuming the Legislature is familiar with common-law traditions and principles.’ " Arce , ––– S.W.3d at ––––, 2023 WL 3134718, at *15 (Young, J., concurring) (quoting Marino v. Lenoir , 526 S.W.3d 403, 409 (Tex. 2017) ).
These important roles make it all the more important that we exercise caution in changing —and especially in expanding —the common law's reach. Because the Court exercised such caution in this case, I am pleased to concur.
Justice Boyd, joined by Justice Lehrmann and Justice Devine, dissenting.
To its credit, this Court does not take lightly a request to recognize a common-law duty. For the most part, at least in recent years, we have viewed the common law as sufficiently developed to address those circumstances in which parties owe legal duties to each other and those in which they don't. See, e.g., Elephant Ins. Co. v. Kenyon , 644 S.W.3d 137, 150–51 (Tex. 2022) ; Pagayon v. Exxon Mobil Corp. , 536 S.W.3d 499, 507–08 (Tex. 2017). Yet we have not rejected our longstanding recognition that "changing social standards and increasing complexities of human relationships in today's society" may "justify imposing a duty" the common law has not previously imposed. Otis Eng'g Corp. v. Clark , 668 S.W.2d 307, 310 (Tex. 1983). It remains true today that, because our society and its standards are constantly changing, "the common law is not frozen or stagnant, but evolving, and it is the duty of this court to recognize the evolution." El Chico Corp. v. Poole , 732 S.W.2d 306, 310 (Tex. 1987) (citing Otis Eng'g , 668 S.W.2d at 310 ); see also Tex. Mut. Ins. Co. v. Ruttiger , 381 S.W.3d 430, 457 (Tex. 2012) (Willett, J., concurring) ("[W]e are called upon to reevaluate common-law rules, giving deference to stare decisis when warranted, but departing when the prior rule no longer furthers the interests of efficiency, fairness, and legitimacy.").
We are asked in this case whether entities an employer hires to collect and test an employee's biological samples for drug-testing purposes owe a legal duty to the employee to act reasonably in the performance of those limited services. As the Court explains, we have not previously addressed this question. To ensure consistency, predictability, and public confidence in the law and in this Court's role in its development, we cannot address the issue by relying on our own personal, subjective views of whether a particular party should face the possibility of liability in particular circumstances, or even of what the law "should" be. Instead, our analysis must adhere to well-established considerations that have long guided and constrained this Court's role as guardian of the common law.
Ante at ––––. We held in SmithKline Beecham Corp. v. Doe , 903 S.W.2d 347 (Tex. 1995), that an independent drug-testing laboratory did not owe "a person tested a duty to tell that person or the employer that ingestion of certain substances will cause a positive test result," id. at 348, but we expressly "emphasiz[ed]" in that case that we were not considering "whether a drug testing laboratory ... has a duty to use reasonable care in performing tests and reporting the results," id. at 355. And we held in Mission Petroleum Carriers, Inc. v. Solomon , 106 S.W.3d 705 (Tex. 2003), that an employer did not owe a "duty to an at-will employee to use reasonable care when collecting an employee's urine sample for drug testing pursuant to DOT regulations," id. at 710, but we again emphasized that the question of whether a third-party entity that collects employees’ samples owes a duty of care to the employees was "not before [the] Court," id. at 711.
The parties here agree we should focus on such well-established considerations in this case, specifically—as explained below—on (1) the social, economic, and political questions the proposed duty presents, and (2) the laws and policies not only of this State, but of other states and of the United States. Guillermo Mendez, who urges us to recognize the proposed duty, does not argue that we have previously recognized the duty or that the duty falls within some general negligence duty owed by all. The Houston Area Safety Council and Psychemedics, who oppose the proposed duty, do not argue that we should abandon or revisit those well-established considerations. The Court thus properly limits its analysis to the arguments the parties have presented. But because I conclude the analysis necessarily leads directly to a recognition of the common-law duty proposed in this case, I must respectfully dissent.
In the trial court, the Safety Council and Psychemedics argued that Mendez could not establish any of the elements of a negligence claim: duty, breach, causation, or damages. The trial court granted summary judgment only on the ground that Petitioners did not owe Mendez a legal duty. The court of appeals held that Petitioners did owe Mendez a duty, and it remanded the case to the trial court without addressing breach, causation, or damages. See 634 S.W.3d 154, 163 (Tex. App.—Houston [1st Dist.] 2021). I too would address only the duty question and leave it to the trial court to consider the other elements in the first instance on remand.
A. Social, economic, and political concerns
Our precedent first requires us to "weigh the ‘social, economic, and political questions and their application to the facts at hand’ to determine whether a duty exists and what it is." Elephant Ins. , 644 S.W.3d at 145 (quoting Humble Sand & Gravel v. Gomez , 146 S.W.3d 170, 182 (Tex. 2004) ). We do this by considering several factors—commonly referred to as the Phillips factors —balancing "the risk, foreseeability, and likelihood of injury" against the "social utility of the actor's conduct, the magnitude of the burden of guarding against the injury, the consequences of placing the burden on the defendant," and considering "whether one party would generally have superior knowledge of the risk or a right to control the actor who caused the harm." Id. (quoting Humble Sand & Gravel , 146 S.W.3d at 182 ). In this case, these factors weigh heavily in favor of recognizing the duty Mendez proposes.
See Greater Hous. Transp. Co. v. Phillips , 801 S.W.2d 523, 525 (Tex. 1990).
See also Pagayon , 536 S.W.3d at 504 ; Nabors Drilling, U.S.A., Inc. v. Escoto , 288 S.W.3d 401, 410 (Tex. 2009) ; New Tex. Auto Auction Servs., L.P. v. Gomez De Hernandez , 249 S.W.3d 400, 406 (Tex. 2008) ; Golden Spread Council, Inc. No. 562 of Boy Scouts of Am. v. Akins , 926 S.W.2d 287, 289–90 (Tex. 1996) ; Graff v. Beard , 858 S.W.2d 918, 920 (Tex. 1993) ; Phillips , 801 S.W.2d at 525.
1. Risk of injury
As the Court concedes, we have previously recognized the "serious risk that an employee can be harmed by a false positive drug test." Ante at 586 (quoting Mission Petroleum , 106 S.W.3d at 714–15 ). Other state supreme courts around the country have recognized it as well. See, e.g., Shaw v. Psychemedics Corp. , 426 S.C. 194, 826 S.E.2d 281, 284 (S.C. 2019) (noting that the "risk is especially great in at-will [employment] states"); Landon v. Kroll Lab'y Specialists, Inc. , 22 N.Y.3d 1, 977 N.Y.S.2d 676, 999 N.E.2d 1121, 1122 (N.Y. 2013) (noting the "profound, potentially life-altering, consequences" of the drug-testing company's actions); Berry v. Nat'l Med. Servs., Inc. , 292 Kan. 917, 257 P.3d 287, 291 (Kan. 2011) (observing that "inaccurately reported test results can have dire consequences on the livelihood of individuals"); Duncan v. Afton, Inc. , 991 P.2d 739, 745 (Wyo. 1999) (noting the testing company "is aware that the likely effect of a false positive result is significant and devastating"). Indeed, as the Court explains, Mendez testified that he was barred from the jobsite after his positive test results, and a second positive result would prevent him from working in his profession at all. Ante at ––––. The Court concludes, however, that—similar to the U.S. Department of Transportation regulations that applied to the trucking-company employer in Mission Petroleum —Petitioners’ internal procedures and licensing and certification requirements substantially mitigate the risks, and even make them "essentially non-existent." Ante at 587 (describing Psychemedics’ chain-of-custody reviews, verification reviews, opportunities to explain positive results and take a second test, and washing and testing procedures, which governmental agencies "have evaluated and approved").
The Safety Council and Psychemedics contend that the positive result of Mendez's first test could not have caused Mendez to lose his job at Turnaround Welding Services because he quickly retested negative and completed other requirements, and Turnaround's decision not to reassign Mendez to Valero or another job site cannot be attributed to the initial positive test result. This argument, however, addresses the issue of whether Petitioners’ conduct proximately caused Mendez's alleged damages, not whether they owed Mendez a legal duty.
In the most important respects, however, Petitioners have not shown that their procedures provide the kinds of protections we considered important in Mission Petroleum. There we noted not only that federal DOT regulations (as opposed to the entities’ own internal procedures) required the types of protections the Court recites, but also that they grant employees the right to complain and initiate administrative proceedings to challenge those procedures. Mission Petroleum , 106 S.W.3d at 714–15. Importantly, we noted that the DOT regulations grant the Federal Highway Administration authority to investigate alleged violations, "compel compliance, assess civil penalties, or both," and "fashion relief to the complainant and ‘assure that the complainant is not subject to harassment, intimidation, disciplinary action, discrimination, or financial loss’ for having filed the complaint." Id. at 714 (quoting 49 C.F.R. § 386.12 ). These remedies, we concluded, sufficiently enable employees to "protect themselves from harm," without merely relying on the employer to comply with its internal procedures. Id.
Unlike the employer in Mission Petroleum , the Safety Council and Psychemedics have not pointed us to any governmental or external regulatory scheme that provides meaningful remedies on which employees may rely to prevent and mitigate the harm that foreseeably occurs when a drug-collection or drug-testing company negligently fails to comply with its internal procedures or regulatory mandates. And as we noted in Mission Petroleum , "[w]ithout these protections, the risk of harm resulting from a negligently conducted urinalysis test would be great." Id. at 715. Because those protections do not exist for those whose samples are collected and tested by third parties, rather than a DOT-regulated employer, this factor weighs heavily in favor of recognizing the proposed duty.
2. Foreseeability and likelihood of injury
The Court merely "assume[s] that there is a significant likelihood that Petitioners could and did foresee the injury" Mendez suffered as a result of his positive drug test. Ante at 587. As its subsequent discussion reveals, however, we need not rely on an assumption to reach that conclusion. The specimen-custody-and-control form and the test-results report confirm that the Safety Council and Psychemedics knew that Mendez was being tested for employment purposes, so they cannot dispute that they could foresee that a positive test would cause Mendez economic harm. Like the risk factor, the foreseeability factor, which we have described as the "foremost and dominant consideration," Phillips , 801 S.W.2d at 525 (quoting Poole , 732 S.W.2d at 311 ), weighs heavily in favor of recognizing the proposed duty.
3. Social utility of drug testing
We must next balance the substantial risk, foreseeability, and likelihood of injury against the social utility of the Petitioners’ services. See Elephant Ins. , 644 S.W.3d at 145. I agree with the Court that "[t]here is great social utility in drug testing employees, particularly those engaged in occupations that present substantial dangers to themselves, other employees, property, and the public." Ante at 587. But the value of drug testing is only as great as the accuracy and reliability of the tests’ results. As the South Carolina Supreme Court has observed, the "significant public interest" is "in ensuring accurate drug tests because countless employees are required to undergo drug testing as a condition of their employment." Shaw , 826 S.E.2d at 283 (emphases added). Because the social utility of employee drug testing is only as significant as the accuracy of that testing, this factor bears little weight against the recognition of a duty to act reasonably to ensure such accuracy.
4. Burden and consequences
In addition to the social utility, we must also consider the burden Petitioners would bear to guard against the foreseeable injury and the consequences of placing that burden on them. See Elephant Ins. , 644 S.W.3d at 145. The Court concludes that the burden and consequences would be great because Petitioners "contend" that recognition of the duty "will produce a flood of frivolous and burdensome claims against [third-party facilities] for every employee who receives a positive test result," leading them to insist on indemnity agreements with their customers, increase their prices, or cease drug testing altogether. Ante at ––––.
I agree we must carefully consider such consequences and give them great weight when they in fact exist. But Petitioners have failed to provide any evidence to support these contentions. As discussed below, several other states have recognized the proposed duty for twenty-odd years, and Petitioners have not suggested that any significant burden or parade of horribles has in fact occurred in those jurisdictions. Absent such evidence, we can only assume that Petitioners and others like them have been able to comply with the duty of "ordinary care" in these other states, and they have offered no argument that they have faced a barrage of frivolous claims in those states.
Psychemedics, in fact, vigorously contends that Mendez's proposed duty is completely unnecessary because its testing procedures are essentially infallible, "there are no false positives with hair testing," it has "never had a false positive," and in over nine million tests, an error has "never happened." But accepting the truth of these contentions, our recognition of the proposed duty will impose no more than a minimal burden because Psychemedics will never breach the duty. Psychemedics expresses fear that the duty's mere existence will produce a wave of frivolous and burdensome claims, but our laws provide substantial protections, disincentives, and remedies against such claims.
The Court also accepts Petitioners’ suggestion that recognizing the proposed duty would "erode the at-will employment doctrine" because, "[i]f third-party entities can be liable for negligently collecting and testing employee drug samples, then employers who themselves collect or test such samples will ultimately face the same liabilities." Ante at 588. But we already addressed that issue in Mission Petroleum , refusing to recognize the duty as to employers who collect or test their own employees’ drug samples, in part because the duty could undermine Texas's fundamental at-will-employment doctrine because the employee's claim concerned "the process by which [his employer] chose to terminate him." 106 S.W.3d at 715. Even if we were to someday reconsider that reasoning (which no one here argues we should), our decision would (or, at least, should) be the result of our careful consideration of the well-established fundamental principles that govern our analysis, not a "consequence" of our decision in this distinguishable case.
Relatedly, the Court also contends that recognizing a duty in this case would be inconsistent with Texas law because, in the context of defamation claims, "Texas law recognizes a ‘qualified privilege’ that ‘protects a former employer's statements about a former employee to a prospective employer.’ " Ante at 588-89 (quoting Smith v. Holley , 827 S.W.2d 433, 436 (Tex. App.—San Antonio 1992, writ denied) ). Setting aside the Court's conflation of legal duties and privileges, the privilege on which the Court relies exists to protect the free-speech rights of those who may be responsible for the "honest communication of misinformation," not the freeconduct rights of those whose affirmative actions cause the information to be incorrect. Pioneer Concrete of Tex., Inc. v. Allen , 858 S.W.2d 47, 50 (Tex. App.—Houston [14th Dist.] 1993, writ denied) (quoting Kaplan v. Goodfried , 497 S.W.2d 101, 105 (Tex. App.—Dallas 1973, no writ) ). The privilege might provide a proper analogy if Mendez were suing the Safety Council and Psychemedics for falsely communicating that Mendez had tested positive for drugs, but that of course is not Mendez's claim. According to Psychemedics, Mendez in fact did test positive for drugs, but according to Mendez, he did so only because the Safety Council negligently collected his sample or Psychemedics negligently performed the test. Texas law has never recognized a qualified privilege to protect against negligent conduct in any similar circumstances. Nor does the Court's reliance on the economic-loss rule justify its reasoning in this case. See ante at –––– (citing LAN/STV v. Martin K. Eby Constr. Co. , 435 S.W.3d 234 (Tex. 2014) ). The lost wages Mendez seeks to recover constitute losses directly resulting from injury to him personally, not a "standalone economic loss" that resulted from "bodily harm to another or from physical damage to property in which he has no proprietary interest." LAN/STV , 435 S.W.3d at 238–39.
5. Superior knowledge of risk and right to control
Our analysis of the social, economic, and political questions also requires us to consider which of the parties has superior knowledge of the risks and a superior ability to control those whose conduct may create those risks. See Elephant Ins. , 644 S.W.3d at 145. Undoubtedly, Petitioners have far more knowledge of the specimen-collection and -testing processes than the employees whose specimens are collected and tested, and they are in a far better position to ensure that they act reasonably and use ordinary care when they engage in such activities. See Landon , 977 N.Y.S.2d 676, 999 N.E.2d at 1124 ("The laboratory is ... in the best position to prevent false positive results.").
The Court finds it relevant, however, that Petitioners have no control over how an employer responds to a positive drug test and thus have no control over the harm the employee suffers as a result of that test. See ante at ––––. But this concern relates to the question of whether a third-party company's negligent handling of an employee's sample proximately caused the employee's harm—an issue we do not address in this case. Of course, there "may be more than one proximate cause of an injury," and "a defendant's act or omission need not be the sole cause of an injury, as long as it is a substantial factor in bringing about the injury." Bustamante v. Ponte , 529 S.W.3d 447, 457 (Tex. 2017). Even if an employer's reaction to a false-positive drug test is a proximate cause of the employee's injury, any negligent conduct by an outside entity that produced the false positive also proximately caused the injury. The fact that the outside entity's negligence may not be the sole proximate cause does not weigh against recognition of a duty to protect against such negligence.
The Court also suggests that entities like Petitioners lack knowledge or control because they have no "direct relationship with an employee whose samples they collect and test." Ante at 588; see Mission Petroleum , 106 S.W.3d at 710–11 (noting that Texas courts had rejected a laboratory's duty of care because "drug-testing companies have a direct relationship only with the employer and not the employee"). But we have never required any contractual or other privity as a prerequisite to a negligence duty, and we may recognize such a duty under the Phillips factors even in the absence of a previously recognized "special relationship." See Golden Spread Council , 926 S.W.2d at 292. An entity that collects or tests a client's employees’ drug-test samples undeniably has a direct relationship with the samples themselves, and the duty Mendez proposes derives only from that relationship. Mendez does not propose a duty to the employee beyond the duty to act reasonably with regard to the entity's relationship with the employee's drug-testing sample.
In sum, I conclude that entities like Petitioners have superior knowledge of the risks and control over those whose conduct may create such risks. This factor, along with the significant risk, foreseeability, and likelihood of injury, substantially outweighs the impact that recognition of the proposed duty would have on the social utility of drug testing and the burdens and consequences the duty would place on such entities.
B. Decisions of other jurisdictions
When deciding whether to recognize a common-law duty we also "take into account not only the law and policies of this State, but the law of other states and the United States, and the views of respected and authoritative restatements and commentators." SmithKline , 903 S.W.2d at 351. The Court correctly observes that some "[l]ower courts around the country have split over the issue of whether third-party companies owe a common-law duty to their clients’ employees to use reasonable care in collecting and testing their drug-testing samples." Ante at 585. But it ignores the fact that the "overwhelming majority" of courts that have addressed the issue have recognized such a duty, reflecting an "overall trend" throughout our nation's courts. See Quisenberry v. Compass Vision, Inc. , 618 F. Supp. 2d 1223, 1228 (S.D. Cal. 2007) (collecting cases); see also Cooper v. Lab'y Corp. of Am. Holdings, Inc. , 150 F.3d 376, 379–80 (4th Cir. 1998) (same).
This is particularly true when we consider decisions of the state courts of last resort. Only five of the highest state courts have addressed the issue—South Carolina, New York, Kansas, Pennsylvania, and Wyoming—but all of them have recognized the proposed duty's existence under common-law negligence principles. See Shaw , 826 S.E.2d at 282 (holding that under South Carolina law "a drug testing laboratory that has a contract with an employer to conduct and evaluate drug tests owe[s] a duty of care to the employees who are subject to the testing so as to give rise to a cause of action for negligence for failure to properly and accurately perform the test and report the results"); Landon , 977 N.Y.S.2d 676, 999 N.E.2d at 1124 (holding that under New York law a testing laboratory owed a negligence duty to a probationer who was required to participate in drug testing as a condition of probation); Berry , 257 P.3d at 291 (holding that under Kansas law companies that collected and tested urine samples owed a negligence duty to an employee who provided sample); Sharpe v. St. Luke's Hosp. , 573 Pa. 90, 821 A.2d 1215, 1221 (2003) (holding under Pennsylvania law that a hospital that collected drug-testing samples under contract with an employer owed a negligence duty to an employee who submitted samples); Duncan , 991 P.2d at 740 (holding that a Wyoming company hired by the employer to collect urine samples from employees owed a negligence duty to employees "when collecting, handling, and processing urine specimens for the purpose of performing substance abuse testing").
As the Court notes, shortly before we issued our decision in SmithKline , the United States Court of Appeals for the Fifth Circuit held that, under Texas law, an independent laboratory did owe a "duty to testees to use reasonable care in conducting its tests." Willis v. Roche Biomed. Lab'ys, Inc. , 21 F.3d 1368, 1372 (5th Cir. 1994), opinion withdrawn and superseded , 61 F.3d 313 (5th Cir. 1995). In making that "Erie guess," the court relied primarily on the Texas court of appeals’ decision in SmithKline , despite the fact that SmithKline involved a proposed duty to warn against ingesting poppy seeds and not a proposed duty to use reasonable care in conducting the tests, and (as we noted in our decision in SmithKline ) despite the fact that we had already granted review of the Texas court of appeals’ decision in that case. See id. at 1372–73.
After we decided SmithKline , however, the Fifth Circuit panel withdrew its opinion and changed its holding. See Willis v. Roche Biomed. Lab'ys, Inc. , 61 F.3d 313, 313 (5th Cir. 1995). In its new opinion, the panel made an Erie guess that, under Texas law, a laboratory does not owe a legal duty "to persons tested to perform its services with reasonable care." Id. at 316. The court acknowledged our recognition in SmithKline that "some jurisdictions had held that a laboratory owes a duty to persons tested to perform its services with reasonable care," and that we distinguished those decisions "from the failure to warn claims" at issue in SmithKline. Id. Nevertheless, the panel concluded that our opinion in SmithKline "seemed to question the soundness of the decisions finding such a duty," particularly by making "unfavorable references" to the panel's original decision. Id. at 316 & n.2 (emphasis added). Although we had emphasized in SmithKline that we were not addressing "whether a drug testing laboratory ... has a duty to use reasonable care in performing tests and reporting the results," 903 S.W.2d at 355, the Fifth Circuit panel nevertheless relied on our opinion to conclude that, under Texas law, the laboratory owed the employee "no duty of reasonable care in testing his urine for drugs," Willis , 61 F.3d at 316.
As a result, the Fifth Circuit and its district courts have followed Willis ’s holding, repeating that, under Texas law, an independent laboratory does not have a legal duty to a person whose specimens are tested to exercise reasonable care when conducting those tests. See, e.g., Calbillo v. Cavender Oldsmobile, Inc. , 288 F.3d 721, 730 (5th Cir. 2002) ; Brownlow v. Lab'y Corp. of Am. , 254 F.3d 1081, 1081 (5th Cir. 2001) ; Martinez v. DISA, Inc. , 435 F. Supp. 3d 747, 753 (W.D. Tex. 2020) ; Hinds v. Baker Hughes, Inc. , No. MO-06-CV-134, 2007 WL 9710941, at *3 (W.D. Tex. Sept. 28, 2007) ; Frank v. Delta Airlines, Inc. , No. CIV.A. 3:00-CV-2772, 2001 WL 910386, at *2 (N.D. Tex. Aug. 3, 2001). All of these courts, however, simply followed Willis , which in turn relied solely on SmithKline , which did not address the issue; and none of them considered the Phillips factors or conducted any other analysis of the policy issues underlying their holdings.
Although the Court does not perceive a national "consensus" on the issue, ante at ––––, the decisions of our sister states’ highest courts reflect the "changing social standards and increasing complexities of human relationships in today's society" that "justify imposing" the duty Mendez proposes. Otis Eng'g , 668 S.W.2d at 310. And, I must respectfully (yet regretfully) add, they reflect a far deeper analysis of the issue than the cursory review this Court applies today. Conclusion
This Court has "consistently made changes in the common law of torts as the need arose in a changing society." Poole , 732 S.W.2d at 311. When prevailing norms favor a change in the law, it is this Court's duty to recognize the tidal shift. See Sanchez v. Schindler , 651 S.W.2d 249, 251–52 (Tex. 1983) (stating that the Court should, "in light of present social realities," reconsider policy and "act in response to the needs of a modern society"). In the absence of protections of substantial statutory or regulatory schemes, employees subject to employment-related drug testing have no protection against negligently produced false positives. Applying our well-established guiding principles, I would hold that third-party entities that collect and test samples submitted by those employees owe the employees a common-law duty to act reasonably with regard to their handling of the samples. Because I would affirm the court of appeals’ judgment and remand the case to the trial court for further proceedings, I respectfully dissent.