In the first case we know of in which a licensed professional has sought a judicial order commanding a state regulatory agency to exercise its enforcement power against a competitor that utilizes artificial intelligence, the Austin Court of Appeals has, at least for now, foiled the Judicial Branch Certification Commission’s effort to avoid the lawsuit.
Judicial Branch Certification Commission, et al. v. Jo Ann Holmgren and Preferred Legal Services, Inc. (No. 03-23-00245-CV; April 30, 2024) arose from a certified court reporting firm’s complaint against a “digital court reporting firm” called StoryCloud. This firm, according to the court, “employed notary publics who were not licensed court reporters to digitally record wht were alleged to be depositions. The notaries also administered oaths, handle[d] exhibits, and provide[d] contemporaenous playback for proceedings on request. The recordings were then transcribed by artificial intelligence.” StoryCloud registered with the Commission but “surrendered its license” after the filing of this suit and has vanished from the Texas scene.
The Commission administratively dismissed Plaintiffs’ complaint in December 2020. Plaintiffs, who contend that StoryCloud practiced court reporting without a license, subsequently filed a petition for judicial review or, alternatively, for a writ of mandamus ordering the Commission to investigate and consider the complaint. The Commission filed a plea to the jurisdiction, asserting sovereign immunity, lack of standing, and that Plaintiffs “sought to control state policy by requiring the Commission to take a specific enforcement action against StoryCloud.” The trial court denied the Commission’s plea. The Commission sought interlocutory review.
In an opinion by Chief Justice Byrne, the court of appeals affirmed in part and reversed in part. The court reversed the trial court’s denial of the Commission’s plea because judicial review is available “only to a person aggrieved by a final decision in a contested case,” whereas here the Commission administratively dismissed Plaintiffs’ complaint without hearing (as permitted by statute for complaints not within the Commission’s jurisdiction). Additionally, the Commission has, by statute, exclusive jurisdiction to make initial determinations regarding complaints, as it did here, and nothing in its enabling statute either authorizes judicial review either way.
Regarding the other two issues, however, the court affirmed the trial court’s denial of the Commission’s plea to the jurisdiction. First, the court held that the trial court had subject matter jurisdiction to determine Plaintiffs’ request for a writ of mandamus order the agency to consider its complaint. Observing that “[d]istrict courts have jurisdiction to issue writs of mandamus to compel a public official to perform a ministerial act or to correct a clear buse of discretion, though not to compel a particular result from an exercise of discretion,” the court determined that whether the Commission’s actions in this case were “ministerial” or “discretionary” went to the merits of the mandamus petition and could not be considered as an interlocutory matter. The court thus remanded that issue to the trial court for a determination of “whether the Commission properly dismissed the complaint for lack of jurisdiction without further action by the Commission.” The standard for that determination is a “clear abuse of discretion by a public official.” Additionally, the court, at least at this stage of the game, rejected the Commission’s contention that Plaintiffs’ seek to control state action because the “trial court could decide the merits of the mandamus petition in ways that do not attempt improperly to control state action.”
The court likewise rejected the Commission’s standing argument. Likening this case to Touchy v. Houston Legal Fund, 432 S.W.2d 690 (Tex. 1968), in which SCOTX allowed lawyers to file suit “to enjoin a nonprofit corporation from the unauthorized practice of law and legal ethical violations,” the court found that Plaintiffs had standing to “seek enforcement of rules intended to safeguard the quality of depositions, a fundamental means of gathering and offering evidence in legal proceedings.” Moreover, Plaintiffs and all licensed court reporters have a financial stake than the general public “in protecting the exclusivity and standards of their profession.” This fact makes the case comparable to Texas Bd. of Chiropractic Exam’rs v. Texas Med. Ass’n, 616 S.W.3d 558 (Tex. 2021), which held that physicians had standing to challenge a board rule “that would have allowed chiropractors to provide a service the physicians believed was reserved by law for physicians.” Relying on these cases, the court concluded that Plaintiffs “sufficiently demonstrated that they have a particularized interest in the enforcement of rules restricting their profession that would be affected differently from the interests of the general public to support standing in this matter.”
Is this case the leading edge of campaigns by other licensed or certified professionals—physicians, attorneys, CPAs, engineers, architects, surveyors, land-men, and so forth—to establish a boundary beyond which the use of AI by non-licensees cannot go? It looks as though the Austin Court of Appeals is keeping an open mind. Do not be surprised if we see legislation on this issue next spring.
