Texas Class Actions - Who May Sue as a Class? #2

(Texas Court of Appeals Jurisprudence)

© A. Hawkins 2004

YouKnowItAll.com

 

Suitability

This course is suitable for all lawyers, but is most likely to interest lawyers who litigate class actions, or are considering filing a class action.  It also may interest lawyers who represent, or work for, companies that are defendants in class action litigation.

Scope

This course covers Texas court of appeals decisions. Course #1, covering Texas Supreme Court decisions, should be taken first.

 

Table of Contents

Texas Class Actions-Who May Sue as a Class? #1

(Texas Supreme Court Jurisprudence)

 

Bally v. Jackson  53 S.W.3d 352 (Tex. 2001)

 

De Los Santos v. Occidental Chemical  933 S.W.2d 493 (Tex. 1996)

 

Ford Motor Co. v. Sheldon,  22 S.W.3d 444 (Tex. 2000)

 

Intratex Gas v. Beeson,  22 S.W.3d 398 (Tex. 2000)

 

Southwestern Refining Co. v Bernal  22 S.W.3d 425 (Tex. 2000)

 

Wagner & Brown v. Horwood  53 S.W.3d 347 (Tex. 2001) (Justice Hecht, joined by Justices Owen, and Abbott, dissenting from the denial of the motion for rehearing of the petition for review.)

 

Schein v. Stromboe  28 S.W.3d 196  (Tex. 2002)

Dissent by Justice O'Neill, joined by Justices Enoch and Hankinson.

Opinion of the court by Justice Hecht, joined by Chief Justice Phillips and Justices Owen, Jefferson, and Rodriguez joined.

 

Texas Class Actions-Who May Sue as a Class? #2

(Court of Appeals Jurisprudence)

 

Entergy v. Butler  25 S.W.3d 359 (Tex.App.-Texarkana 2000)  [The May 4, 2000 withdrawn opinion is also included.]

 

Graebel/Houston v. Chastain  26 S.W.3d 24 (Tex.App. - Houston [1st Dist.] 2000)

 

Third Coast v. Taylor  44 S.W.3d 684 (Tex.App.-Houston [14th Dist.] 2001)

 

Domizio  v  Progressive County Mutual Insurance Company  54 S.W.3d 867 (Tex.App.-Austin 2001)

 

Wood v. Victoria Bank  69 S.W.3d 235 (Tex.App. - Corpus Christi 2001)

 

Bailey v. Kemper  83 S.W.3d 840 (Tex. App. - Texarkana 2002)

 

National Western Life v. Rowe  86 S.W.3d 285  (Tex. App. Austin 2002)

 

Farmers Insurance v. Leonard  April 10, 2003 (Tex. App. Austin 2003)

 

Citgo v. Garza  94 S.W.3d 322 (Tex. App. - Corpus Christi 2002)

 

Hardy v. Wise   December 19, 2002  Per Curiam (Tex. App. - Beaumont 2002)

 

Tracker Marine v. Ogle  April 10, 2003 (Tex. App. - Houston [14th Dist.] 2003)

 

Capital One Bank v. Rollins  April 30, 2003 (TexApp1 Houston 2003)

 

Ford Motor v. Sheldon  August 14, 2003  (Tex.App.3 Austin 2003)

 

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This course is primarily a case study which relies on the words of the courts which are quoted so that you may read them yourself.  The teacher has selected  quotations, deleted original emphasis, added the authors emphasis, and moved citations to footnotes. Commentary by the teacher is included in the text and in footnotes. Five asterisks ( * * * * * ) identify each new case, If a case doesnÕt interest you, just search for * * * * * to find the next one. This also helps if you wish to go back to reread a case.

There are three kinds of footnotes. 

1. Footnotes by the court retain the courtÕs original number.  Our footnote is a footnote to that number. 

2. Footnotes that move citations to the footnotes are intended to make the material more readable. Our footnote has the courtÕs citations.

3. Footnotes that contain some of the authorÕs commentary.

 

If you read this course online, your browser will probably let you click on a footnote number to go to the footnote and click on the number in the footnote to return to the text.  Some browsers will show the footnote if you hold your curser over the footnote number without clicking  If you print the text, you may wish to staple the footnotes separately so you may easily refer to them. They are at the end because of technicalities of the internet.  This is a Microsoft Word document displayed as a web page. You may copy it into a word processor to print it if you like.  If you have any problems, let us know.

 

Optional Telephone Conference

The teacher is available for an optional personal telephone conference on the substance of this course.  If you have a question about the application of the material in this course to a particular case, or would just like to visit about this topic, you may do so.  A brief basic phone conference is $20 per course.  If you would like to schedule a phone conference, email or call YouKnowItAll.com.

 

The Course Text

Texas Class Actions-Who May Sue as a Class? The Court of Appeals Decisions

 

Who May Constitute a ÒClassÓ for a Texas Class Action?

 

In 2000, the Texas Supreme Court clarified the unwritten requirement that class actions require a ÒproperÓ class.  This course examines this unwritten requirement for a class in Texas courts. 

A ÒproperÓ class does not guarantee a class action. Without a ÒproperÓ class there can be no class action. 

If you are seeking a class action, start by deciding who will be in the class. This is called ÒdefiningÓ the Òclass.Ó

If you are opposing certification of a class action, start by examining the proposed definition of the class.  If the definition is not of a ÒproperÓ class, the class action must not be approved.

This course covers this unwritten essential requirement for a class action.  If the class is properly defined, there are other written requirements specified in the rules for a class action.  Although these written rules are mentioned in this course, this course is not about those written rules.

This topic has been resulted in numerous opinions since 2000. Because of the quantity, this topic has been divided into two courses.  This course examines the Texas Supreme Court opinions.  Another course examines the court of appeals decisions that follow first Supreme Court decisions.  An exception to that division is that court of appeals decisions in cases that are later decided by the Supreme Court are included in the Supreme Court course. 

 

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Lights Out

The Texarkana Court of Appeals published three opinions on this case.  The first one was withdrawn and is not included in this text.  The second one affirmed the class action, but was withdrawn and replaced by an opinion reversing the class certification after the Texarkana court read the Texas Supreme Court opinions. We include the third and final opinion along with the interesting, but withdrawn, second opinion.  The contrast shows the effect of the Supreme CourtÕs action on this case.

 

Entergy v. Butler  (this is the final opinion issued August 1, 2000) 25 S.W.3d 359 (Tex.App.-Texarkana 2000)

 

This is an accelerated appeal in which Entergy . . . appeals an order granting class certification. . . . Entergy contends that class certification is improper because individual issues will predominate over common issues, certification of the class is not the superior method for resolving this controversy, the named plaintiffs' claims are not typical, and the named plaintiffs are not adequate representatives of the class. Additionally, in its first motion for rehearing, Entergy also claimed that the class is improper as certified because the trial court had created a fail-safe class.

 

Due to two recent Texas Supreme Court opinions addressing class certification, both of which were released after our substituted opinion in this case, we are required to withdraw our previous opinion.1[1] [2]  In light of Bernal and Sheldon, we must sustain Entergy's contention that individual issues will predominate over common issues, and we must reverse the trial court's order granting class certification.

 

In January 1997, many customers of Entergy in the Southeast Texas region suffered substantial power outages. These outages were triggered by the occurrence of a major ice storm moving through the area. The class proponents claim, however, that due to Entergy's failure to properly maintain the system before the storm, the power outages lasted an unreasonably lengthy period of time and this interruption caused them to sustain various damages. These utility customers, who were without power for varying periods of time, sought class certification. After hearing the certification evidence, the trial court signed an order granting class certification to "all Texas customers of Defendant Entergy whose electrical service was interrupted between January 11, 1997 through January 22, 1997, and who have sustained damages as a result of said disruption of service." . . .

In order to obtain certification, a party must satisfy the four requirements of Rule 42(a), as well as one of the requirements of Rule 42(b).[3]  In this case, the trial court found that all requirements for class certification had been met under Rule 42(a) and Rule 42(b)(4). Rule 42(a) requires class proponents to prove that (1) the class is so numerous that joinder is impracticable, (2) the class has common questions of law or fact, (3) the representatives' claims are typical of the class claims, and (4) the representatives will fairly and adequately protect the interests of the class.[4]  In other words, class proponents must prove numerosity, commonality, typicality, and adequate representation.[5]  Rule 42(b)(4) further requires that "the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy."[6]  Since the predominance requirement under Rule 42(b)(4) is one of the most stringent prerequisites to class certification, we will consider it at the outset.[7]

 

The test for evaluating predominance is "not whether the common issues outnumber the individual issues, but instead whether common or individual issues will be the object of most of the efforts of the litigants and the court."2[8][9]  Moreover, "[i]f, after common issues are resolved, presenting and resolving individual issues is likely to be an overwhelming or unmanageable task for a single jury, then common issues do not predominate."[10]  The Texas Supreme Court has made it very clear that the trial court must conduct this rigorous predominance analysis at the time class certification is sought. It emphasized that "[a]lthough it may not be an abuse of discretion to certify a class that could later fail . . . a cautious approach to class certification is essential."[11]

 

In the case at hand, Entergy contends that the predominance requirement is not met because the common issues do not predominate over the individual issues.3[12]   It claims that even if the class could prove that Entergy failed to properly maintain the system, every individual would still have to separately prove both causation and damages, which will assuredly predominate over any issues that are common to the class. It also claims that its defenses vary from one individual to the next depending on the individual facts of each claim. Entergy argues that "[t]he predominance requirement is intended to prevent class action litigation when the sheer complexity and diversity of the individual issues would overwhelm or confuse a jury or severely compromise a party's ability to present viable claims or defenses."[13] 

 

As a result of the individual issues involved in this type of suit, Entergy contends that the case will result in a series of mini-trials, rather than one collective trial, and as a result is not suitable for class certification.[14]  In light of the recent holdings in Texas regarding class certifications, we find these class action cases dealing with claims against utility companies persuasive, and we agree that the certification in this case was inappropriate.

 

Additionally, the Bernal case made clear that when there are claims for personal injuries made, this also weighs against class certification. While we do not read the Bernal case to hold that all claims involving personal injury are unsuitable for class certification, it is obviously a factor to consider. In this case, the plaintiffs included claims for personal injuries in their pleadings. When the Bernal court considered the predominance requirement in light of the specific facts before it, it determined that the individual issues would predominate over the common ones. It reasoned that:

 

The common-issues phase will establish whether Southwest [sic] is legally responsible for the explosion and whether the released materials were capable of causing the harm some members of the class allege. The answers to these questions are necessary in considering Southwest's [sic] liability, but they will not establish whether and to what extent each class member was exposed, whether that exposure was the proximate cause of harm to each class member, whether and to what extent other factors contributed to the alleged harm, and the damage amount that should compensate each class member's harm.[15]

 

This reasoning is instructive to the case at hand. These same types of considerations and individual determinations would have to be made in order to show that Entergy was the cause of each individual's harm, and precisely what damages each individual plaintiff suffered.

 

Moreover, the trial court failed to explain its plan for trying these individual issues, and "it is improper to certify a class without knowing how the claims can and will likely be tried."[16]  The trial court did acknowledge the potential need to divide the class into subclasses. However, the Texas Supreme Court has made it clear that it is no longer acceptable for a trial court to "certify now and worry later."[17]  "If it is not determinable from the outset that the individual issues can be considered in a manageable, time-efficient, yet fair manner, then certification is not appropriate."[18]  In this case, the predominance requirement is not satisfied.

 

The order certifying the class is reversed.

Because of its length, the courtÕs footnote 3 printed here.

The trial court, in its order granting class certification with findings of fact and conclusions of law, found the common issues to include, but not be limited to, the following:

(i) whether Entergy and the remaining Defendants were negligent in failing to properly maintain the distribution system to ensure continued receipt of electrical services;

(ii) whether Entergy and the remaining Defendants misrepresented their ability and intentions to maintain service-related manpower, materials and equipment at levels necessary to ensure continuation of electrical service and/or in order to limit interruption of service to a reasonable basis;

(iii) whether Entergy and the remaining Defendants acted willfully, recklessly or with conscious indifference to the rights of the customers of Entergy in misrepresenting material facts regarding their intention and/or ability to maintain the service-related manpower, equipment and materials as detailed hereinabove, and/or their ability to timely reinstate electrical power in the event of a weather-related power outage;

(iv) whether Entergy and the remaining Defendants acted willfully, recklessly or with conscious indifference by failing to take appropriate preventive maintenance actions to prevent and/or limit weather-related power outages including, but not limited to, whether Energy [sic] completed appropriate vegetation-related preventive maintenance to its distribution and/or transmission system;

(v) whether Entergy and/or the remaining Defendants violated the Deceptive Trade Practices Act;

(vi) whether Entergy and/or the remaining Defendants violated certain express and implied warranties made either directly to the Representative Plaintiffs and Class members or for the benefit of the Representative Plaintiffs and Class members to third parties, including the PUC and certain governmental entities;

(vii) whether Entergy and/or the remaining Defendants breached certain contractual obligations related to continuation and/or reinstatement of electrical service, which contractual obligations were owed by Entergy either directly to the Representative Plaintiffs and the Class members or by Entergy to certain third-party entities, including the PUC and various governmental entities for the benefit of the Representative Plaintiffs and Class members.

(viii) whether wrongful acts and/or omissions on the part of Entergy and/or the remaining Defendants constitute fraud, constructive fraud, negligent misrepresentation, breach of contract, negligence, gross negligence, conspiracy and/or other violations of Texas common law;

(ix) whether the Defendants violated their service obligations related to PURA, including their obligations to provide "continuous and adequate" electrical service, whether the Class members were damaged as a result of said violations and whether the Class members may pursue a claim for recovery of said damages.

(x) whether the Representative Plaintiffs and Class members are entitled to prejudgment interest on their damages, including contract claimed damages under Texas law;

(xi) whether the Representative Plaintiffs and Class members are entitled to punitive damages under Texas law;

(xii) whether the Representative Plaintiffs and Class members are entitled to recover their reasonable and necessary attorney's fees, litigation expenses and court costs in prosecuting this action under Texas law;

(xiii) the determination of the measure and/or methodology for quantifying the damages resulting from the wrongful acts and omissions on the part of Entergy and the remaining Defendants;

(xiv) whether the duty of Entergy and the remaining Defendants to provide electrical energy to the customers of Entergy, including the Representative Plaintiffs and Class, is governed by tariffs approved by regulatory agencies, whether said tariffs set standards for "quality of service", and whether said tariffs preclude all or a portion of the claims of the Representatives [sic] Plaintiffs and the Class; and

(xv) Other additional common issues of law and fact.

 

_____________

Entergy v. Butler  May 4, 2000  This opinion was withdrawn and has no effect. It is included for educational purposes only. It was replaced by the August 1, 2000 opinion (Tex.App. - Texarkana 2000)

 

This is an accelerated appeal in which Entergy Gulf States, Inc., et al. ("Entergy") appeals an order granting class certification to Billy Joe Butler, et al. ("Butler"). Entergy contends that class certification is improper because individual issues will predominate over common issues, certification of the class is not the superior method for resolving this controversy, the named plaintiffs' claims are not typical, and the named plaintiffs are not adequate representatives of the class. Additionally, in its motion for rehearing, Entergy also claims that the class is improper as certified because the trial court has created a fail-safe class. We overrule these contentions and affirm the trial court's order granting class certification.

 

ÒIn order to obtain certification, a party must satisfy the four requirements of Rule 42(a), as well as one of the requirements of Rule 42(b). . . . However, before we review whether the trial court abused its discretion by making this determination, we will first consider the appropriateness of the certified class definition. Entergy claims that when the trial court defined this class, it abused its discretion by creating a fail-safe class. See Intratex Gas Co. v. Beeson.[19] This contention, though, is made for the first time in Entergy's motion for rehearing, and a complaint which is initially brought to the court's attention in such a motion is untimely. . . . Therefore, we are not required to address this claim. However, since the Texas Supreme Court has recently spoken on this specific issue, we will nonetheless address Entergy's additional complaint.

ÒFor a class to be sufficiently defined, it must be precise; the class members must be presently ascertainable by reference to objective criteria."[20]  In Beeson, the Texas Supreme Court held that a class definition which rests on the resolution of the ultimate liability question fails to meet this criteria because it is not objective or precise and the members cannot be ascertained until after the liability issue has been determined.[21]  They determined that such a class, appropriately named a fail-safe class, is unacceptable because it inevitably creates one-sided results.[22]

ÒIf the defendant is found liable, class membership is then ascertainable and the litigation comes to an end. A determination that the defendant is not liable, however, obviates the class, thereby precluding the proposed class members from being bound by the judgment.[23]

ÒIn the case at hand, however, this is not the situation presented by the certified class definition. The trial court defined the class as "all Texas customers of Defendant Entergy whose electrical service was interrupted between January 11, 1997 through January 22, 1997, and who have sustained damages as a result of said disruption of service." This class is precise and ascertainable by reference to objective criteria. It can easily be determined who had their service interrupted in this time period and who claims to have suffered damages as a result of this interruption. In fact, every plaintiff who asserts any type of civil claim must be able to assert in their original pleadings the relief they are seeking as a result of the defendant's alleged wrongdoing.[24]

ÒWhile we can see how a fail-safe class, as defined in Beeson, could potentially disallow class definitions that rest on the determination of legal conclusions besides liability, we believe that the class definition in this case is clearly not such a class. There is no ultimate legal conclusion which must be made in order to ascertain the class, and a finding of liability or nonliability on the part of Entergy for the said interruption will bind all class members and prevent them from bringing another suit. Fail-safe classes are not allowed because they present a means of risk-free litigation for the potential members of the class.[25]  The present certified class definition, however, does not present such a situation.Ó

 

There is also a notable statement in a footnote in the withdrawn Entergy opinion stating that the court of appeals lacks the authority to change the trial courtÕs class definition.

 

ÒIn its motion for rehearing, Entergy also claims that the members of the certified class have altered the trial court's certified class definition through their argument to this Court, and that this Court has approved this altered definition. Neither this Court nor the members of the class altered the trial court's given definition; nor does either have the power or authority to do so.[26]  We approve the certified class definition that was stated by the trial court.Ó[27]  . . .

 

The concurring opinion of Justice Donald R. Ross in the withdrawn Entergy opinion is interesting because of what he decided to do.  Does he believe that the class certification is improper, but approve it with the hope that it will be fixed later by the trial judge?  Is that a correct approach?

 

It is with reluctance and reservations that I concur in this opinion. My reluctance and reservations in certifying this large number of consumers as a class in this cause of action is because these specific damages for those within this class certification may not have issues of common questions of law and fact on the matter of causation. I do not believe that a fair trial can result if the general causation of not being prepared for the ice storm is treated as the specific causation of all damages incurred by all of the class even though no connection is shown between the specific cause and the damages to some of the litigants. For example, if it is shown that a fallen limb was the cause of the outage by consumers in one geographical location, any negligence contributed to that fallen limb should not be considered a causation of other geographical areas that were totally unaffected by the damage to the power lines by that fallen limb. For example, a misrepresentation as to when the power would be restored that was relied on by one customer to his detriment should not have any bearing on the causation of damages to customers to whom this representation was not made.

 

If the facts in this case dealt with one common source as the causation of damages, class certification would be in order, but in viewing the entire distribution system of the utility company, different factors are alleged to have caused the power outages, and some of these factors may be determined to be related to fault by the defendant and some may not; some of these outages may have been the causation of some damages to some of the litigants and to others it may be totally unrelated.

 

I concur in this opinion only because the trial judge at any time may make a determination to decertify the class or may find some way to group members of the class so that the proper issues relating to the parties can be severed out and tried separately.

 

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A Car Classic

 

On April 19, 2001, the same day that the Texas Supreme Court had its Bally gym class food fight, the Fourteenth Court of Appeals decided Third Coast, a classic case of alleged chicanery which asks the age old question, Òare the amounts $20 and $778.75 identical?Ó

 

 

Third Coast v. Taylor  44 S.W.3d 684 (Tex.App.-Houston [14th Dist.] 2001)

 

ÒThis is an interlocutory appeal(1)[28]  from an order certifying a class action under Texas Rule of Civil Procedure 42. Because we find that the trial court's order does not meet the Texas Supreme Court's recently articulated interpretation of the requirements for class certification orders, we remand this cause back to the trial court.[29]  

I. Factual and Procedural Background

ÒThis is a case brought by the plaintiffs/appellees, Malinda Mouton Taylor and Patrick Hodgins, against defendants/appellants, Charlie Thomas Courtesy Leasing, Inc. d/b/a Third Coast Rent-A-Car ("Third Coast"), Kenneth Watson, Charlie Thomas, Republic Industries, Port City Imports, Inc. ("Port City"), Robert Westrup, and Jack Sulephen.(2)[30]  Appellees brought a cause of action in district court for alleged violations of the Texas Debt Collection Act,(3)[31]  malicious prosecution, and abuse of process. They sought statutory and common law remedies, as well as attorneys' fees and exemplary damages.

ÒAccording to appellees, certain individuals leased cars from Third Coast while their vehicles were being repaired by the dealership. After disputes arose over (a) whether the customer or the warrantor was obligated for the amount due for the rental car and/or (b) how much was owed, Watson filed criminal complaints in the justice courts of Harris County on behalf of Third Coast. The criminal complaints alleged that the amounts owed were less than $20.00, thereby invoking the justice court's jurisdiction,(4)[32]  even though the invoices attached to the complaints showed a larger sum was actually due--and in some cases, a much larger sum. For instance, although the affidavits filed in connection with the class representatives alleged Taylor and Hodgins owed only $20.00 apiece, the attached documentation alleged the debts owed were for $778.75 and $84.07, respectively. Appellees allege the reason for claiming an amount under $20.00 was because appellants knew that the Harris County District Attorney's office did not screen criminal complaints involving $20.00 or less.

ÒAfter filing a criminal complaint but prior to trial, Watson used the threat of execution on the arrest warrants as leverage for negotiating a settlement of the amount of the actual debt, i.e., the amount shown on the attachments to the complaint. Appellees further allege that the officers and directors were aware of, participated in, and even authorized these debt collection efforts.

ÒIn their second amended petition, appellees sought to certify their cause of action as a class action under Rule 42 of the Texas Rules of Civil Procedure. They allege there are 250 to 300 potential class members. After a hearing, the trial court signed an order granting appellees' motion for class certification.

II. Standard of Review

ÒA trial court has broad discretion in determining whether to grant or deny class certification.[33]  An appellate court may not substitute its judgment for that of the trial court even if it would determine the issues differently than did the trial court.[34]   Therefore, an appellate court may reverse a trial court's judgment only if the record shows an abuse of discretion.[35]  An abuse of discretion occurs where (1) the trial court misapplied the law to undisputed facts, (2) the record does not reasonably support its findings, or (3) the trial court acted arbitrarily or unreasonably.[36]

ÒWe view the evidence in the light most favorable to, and indulge every presumption in favor of, the trial court's action.[37]  "In applying this standard, we defer to the trial court's factual determinations so long as they are properly supported by the record[,] while reviewing its legal determinations de novo."[38]

III. Class Certification

ÒIn two points of error, appellants argue that the trial court's order certifying a class action must be reversed because it does not comply with two recently announced interpretations of Rule 42 by the Texas Supreme Court. First, they argue that the trial court's order does not comply with Southwestern Refining Co. v. Bernal[39]  because it does not indicate how the elements of Rule 42 were satisfied. Second, they argue that it does not comply with Intratex Gas Co. v. Beeson[40]  because it creates a failsafe class. However, because it is impossible to evaluate whether the putative class representatives satisfy Rule 42's requirements absent a cognizable class, we address appellants' arguments in reverse order.[41]

A. The Class Definition

ÒThe supreme court has held that, as a threshold matter, "Rule 42 implicitly requires the representative plaintiffs to demonstrate . . . that [the proposed class] is susceptible to precise definition." Beeson[42]  This, in turn, means "class members must be presently ascertainable by reference to objective criteria."[43]  Stated differently, the class definition "should not be defined by criteria that are subjective or that require an analysis of the merits of the case."[44]  "Deciding the merits of the suit in order to determine the scope of the class or its maintainability as a class is not appropriate."[45]  "A proposed class definition that rests on the paramount liability question cannot be objective, nor can the class members be presently ascertained; when the class definition is framed as a legal conclusion, the trial court has no way of ascertaining whether a given person is a member of the class until a determination of ultimate liability as to that person is made." Beeson[46]  Such a definition creates a failsafe class because the class would be bound only by a judgment favorable to the plaintiffs.(5)[47]

ÒThe trial court in Beeson defined the class as gas producers "whose natural gas was taken by the defendant in quantities less than their ratable proportions."[48]  The supreme court found that this was an abuse of discretion because the certified issue was whether Intratex had taken nonratably from the producers.[49]  Similarly, in Sheldon, the supreme court found the trial court's definition impermissible. There, the class was defined as those "who suffered past and/or future damage as a result of peeling or flaking paint on these vehicles caused by a defective paint process" or "who paid Ford or a Ford dealership for a paint repair to their vehicle to repair peeling or flaking paint caused by a defective paint process . . . ." Sheldon[50] (6)[51]  The trial court's definition was impermissible under Beeson because if the paint process was not defective, then no class would exist.[52]  In other words, including the defective paint process theory as an element of the class definition impermissibly required a determination of the merits before the court could ensure the existence of a class.

ÒHere, the trial court's certification order defined the class as "[a]ll persons who were Defendants in a Justice Court criminal theft of Service Complaint filed by [Third Coast] after September 1, 1994 where the affidavit swears the amount of the debt is equal to or less than $20.00 and the attached documents reveal that the amount of the claimed debt is greater than $20.00." This is not a prohibited definition because the class members are "presently ascertainable by reference to objective criteria." Beeson[53]  No resolution of the merits is required before class membership can be determined.[54]  Nor does the definition rest upon the paramount liability question.[55]  All that is required to determine who is a member of this class is to determine which individuals had a theft of services complaint filed by Third Coast in a justice court, where the complaint affirms that the debt is $20.00 or less, but the accompanying paperwork shows the debt actually exceeds this jurisdictional limit.

ÒAppellants argue that the class definition is improper because "[t]he assumption is that it is wrong (and thus actionable) for Third Coast to file a theft of service complaint for one day of a car rental if they are prepared to accept less than $20.00 for that one day of rental." We disagree for two reasons. First, appellees' allegation is that the Debt Collection Act was violated because appellants used improper means in attempting to extract a settlement of a debt with individual members of the class. Tex. Fin. Code  ¤ 392.301(a)  (prohibiting, inter alia, a debt collector from falsely accusing the debtor of fraud or other crime or threatening the debtor with arrest for nonpayment of a debt without proper court proceedings). Second, whether appellants would have accepted less than $20.00 is in the nature of a defense to the class members' claims. Because class certification is not the appropriate stage of litigation for evaluating the substantive merits of each class member's claim,(7)[56] it would be improper at this stage to decide whether appellants, in fact, were prepared to accept $20.00 or less in settlement of the claims. In short, if it is improper to evaluate the merits of the class members' claims at the certification stage, it is equally improper to evaluate the merits of any defense that may defeat liability. Accordingly, because the class definition does not create a failsafe class, we overrule appellants' first point of error.

B. The Trial Court's Compliance With Bernal

ÒIn their remaining point of error, appellants complain that the trial court's order must be reversed because it fails to demonstrate that the trial court rigorously analyzed whether all the prerequisites to Rule 42 were satisfied. Bernal[57]  Appellees maintain that appellants have waived this point of error by not raising it in the court below. This issue was rendered moot, however, because class counsel conceded during oral arguments that the failure of the trial court's order to specify a trial plan under Bernal requires that we reverse.(8)[58]

IV. Conclusion

ÒBecause the trial court's definition of the class is susceptible to precise definition presently ascertainable by reference to objective criteria, it complies with the supreme court's decision in Beeson.[59]  However, as both parties now agree, the failure of the certification order to include a trial plan requires that we reverse and remand this cause back to the trial court for further proceedings in light of the supreme court's opinion in Bernal.[60] Ó

 

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Insurance Class

 

Issues:  Definitions may be dull.  The details may be trivial, even if it is important trivia.  Disputes over class definitions can be disputes over trivia.

 

Graebel/Houston v. Chastain  26 S.W.3d 24 (Tex.App. - Houston [1st Dist.] 2000)

 

ÒThis is an interlocutory appeal1[61]  from an order certifying a class action pursuant to Tex. R. Civ. P. 42. We affirm.