by Steve Gardner
Justifiably, Texas is now considered by most class action lawyers (on both sides of the aisle) to be the state most hostile to class actions. One judge commented to the author, “I don’t know why anyone would bring a class action in state court in Texas because as far as I can tell, the Texas Supreme Court has abolished class actions — it just hasn’t said so.”
In Citizens Insurance Company of America v. Daccach, --- S.W.3d ----, 2007 WL 623799 (Tex. Mar. 2, 2007), Texas's High Court tightened the class action noose a bit further. (Citations to the opinion will use Westlaw star system, e.g., “Daccach *8”.)
But, first, some history. Starting at the beginning of this Millennium, the court has repeatedly applied excessively strict criteria to various aspects of class action litigation, running the gamut from making it almost impossible to bring a class action when reliance might be at issue, Schein v. Stromboe, 102 S.W.3d 675, 695 (Tex. 2002), to requiring a detailed trial plan. Southwestern Refining Co., Inc. v. Bernal, 22 S.W.3d 425, 435 (Tex. 2000). The court has faulted trial plans that did not contain a rigorous analysis of (1) all causes of action, (2) how those claims will be tried, (3) every controlling substantive issue, (4) whether or how individual issues related to limitations will be determined, (5) how it would dispose of issues of reliance, (6) how it would try damages, both actual and punitive, (7) why individual issues did not predominate, and (8) why a class action is superior to other methods of resolving the dispute. State Farm Mutual Automobile Ins. Co. v. Lopez, 156 S.W.3d 550, 557 (Tex. 2004) [first three points]; Nat’l Western Life Ins. Co. v. Rowe, 164 S.W.3d 389 (Tex. 2005) [remaining points].
Throughout its holdings, the court insists that when a trial court certifies a class action compliance with class action requirements must be demonstrated rather than presumed.” Compaq Computer Corp. v. Lapray, 135 S.W.3d 657, 672 (Tex. 2004). In practice, this has turned out to be less of a Show Your Work requirement than a game of Guess What Number I’m Thinking Of, as the court adds barrier after barrier to class certification.
In Daccach, the court now holds that any claims not asserted because they can’t be brought in a class action may be subject to res judicata anyway. That is, an issue that involves “too little commonality to allow for a class to survive the predominance requirements may still be precluded for later individual action.” Daccach *16. Here, the court seemingly conflates (a)(1) commonality requirements with (b)(3) predominance requirements.
Finally, the Texas Supreme Court allows defendants in Texas court class actions to have their cake and eat it too — they can defeat certification because a plaintiff cannot survive the procedural maze the court has created but they can also preclude later individual litigation of the very claims that could not be brought as a class.
The court’s pretzel logic is exemplified by two quotes from the opinion. First, when the court wants to find res judicata effect, it says that “Nothing forces plaintiffs seeking damages into a class suit. They may decide to opt out...,” Daccach *18, but when it wants to find that adequacy of the class representation is at issue because he decided to “abandon” non-certifiable claims, the court says that “A class representative’s decision to abandon certain claims may be detrimental to absent class members for whom those claims could be more lucrative or valuable, assuming those class members do not opt out of the class.” Daccach *22. (To give the devils their due, the court permitted a worldwide class certified using Texas Securities Law as the underlying cause of action for all class members. Daccach *8.)
Since the phrase “Judicial Hellholes” has been appropriated by defenders of the defense industry, I nominate Texas for a preeminent position in a new list of Dens of Iniquity.