Rulings Limit Class Actions
by Cris FeldmanIn April, Texas Supreme Court Justice Alberto Gonzales stated, "The court has said relatively little about class-action cases. We currently have an opportunity to present a much fuller picture in class action in Texas."
Staying true to its pro-corporate activism and fundamental distrust of juries, the Texas Supreme Court did just that in the form of a trilogy — Intratex Gas Co. v. Beeson, Ford Motor Co. v. Sheldon and Southwestern Refining Co. v. Bernal. The end result is a hazardous landscape for consumers illuminating the need for an independent judiciary insulated from high-dollar campaign contributors.
Class actions involve litigation on behalf of a group suffering similar injury arising from the same set of facts. Acting as a class, plaintiffs seek redress for a wrong when their claims would be economically infeasible to pursue individually. Class litigation reduces repetitive litigation and helps courts avoid inconsistent results. Undoubtedly, class action suits provide a powerful tool for litigants of average means, especially when confronted with a defendant of unlimited resources.
Track Record
Therefore, it should come as little surprise that the high court moved to limit class actions as a viable vehicle for plaintiffs. The court’s track record on limiting access to the justice system and of being hostile to jury verdicts is well known. For example, the court declared its fear of juries in the insurance arena with the 1994 opinion National Union Fire Insurance v. Dominguez, allowing for increased appellate review of fact in bad-faith claims against insurers. Borders v. Heise, a 1996 decision, articulated a deep distrust of jurors evaluating medical testimony, establishing high standards for medical experts. In 1997, Clayton Williams v. Olivo exhibited the court’s suspicion of the reasonable-care standard, reversing a trial court’s decision to use a "simple negligence" jury charge in a premises defect suit. In the context of class actions, the litany of pro-corporate, anti-jury opinions now reaches into the new millennium with Intratex, Ford Motor and Southwestern Refining.
Intratex came down in March of this year and methodically established the foundation for subsequently striking down the class in Ford Motor. The trial court in Intratex certified a class of plaintiffs consisting of producers of natural gas under Rule 42 of the Texas Rules of Civil Procedure. The plaintiffs alleged that Intratex had taken their gas over a 10-year period at less than ratable proportions. The court of appeals upheld certification of the class. However, the Texas Supreme Court decertified the class and remanded the case to the trial court. Carefully cherry picking from over 10 opinions outside of Texas to support its reasoning, the court held that a class may not be defined by the ultimate issue of liability. According to the court, only then would the plaintiffs be "clearly ascertainable."
As stated, the purpose of class litigation is to allow plaintiffs the opportunity to litigate claims that would be too costly to pursue individually. Intratex may now be used to force individuals to establish liability before acting as a class, turning the objective of class litigation on its head. The end result is that consumers harmed by a defective product may now find it difficult to proceed as a class. This is how the court employed Intratex in Ford Motor.
The Texas Supreme Court delivered Ford Motor in May, two months after its holding in Intratex. The opinion provides a striking example of pro-corporate activism. Ford Motor involved a class of consumers who had bought certain models of Fords from 1984 to 1993. Eighteen to 36 months after the purchase, paint on the vehicles would begin to peel, costing consumers $2,000 a piece to fix. The class alleged that Ford continued to use the same defective paint process even after Ford became aware of the problem.
Leaning heavily on Intratex, the Texas Supreme Court threw out the trial court and court of appeals decisions in Ford Motor, decertifying the class, further delaying the purchasers’ day in court. According to the opinion, basing a class on an alleged defect would violate Intratex’s "clearly ascertainable" requirement. This supports the argument that via Intratex, the court may require consumers to first establish liability individually.
Ford Motor could prove to be a seminal case illustrating how the Texas Supreme Court will thwart the objective of class actions in the consumer protection arena.
Ford Motor, applying Intratex, may be a nail in the coffin for consumer class actions against defective products. However, it could be the beacon of things to come in regard to special laws passed for narrow private interests. The Texas Supreme Court claimed jurisdiction over the interlocutory appeal by Ford Motor via Texas Motor Vehicle Commission Code §6.06(g). Normally, the Texas Supreme Court does not possess jurisdiction over interlocutory appeals challenging class certification. However, §6.06(g) was passed specifically for car dealers and manufacturers allowing for their own special interlocutory appeals to the high court. Justice James A. Baker, in his dissent, stated that the majority opinion "mocks the Constitutional prohibition of special laws and undermines our special law jurisprudence." In this one opinion, the Texas Supreme Court increased its jurisdiction and emboldened wealthy private interests to seek their own special laws in the Texas Legislature.
No PI Class
The Texas Supreme Court delivered Southwestern Refining Co. v. Bernal on the same day as Ford Motor. Southwestern Refining concerned a group of citizens who were injured allegedly by the explosion of a slop tank in Corpus Christi. As alleged, a toxic plume descended upon residents causing respiratory difficulties, nausea, eye irritation, headaches and the death of pets. A class of 904 plaintiffs sought relief. As the court itself noted, their individual claims were significant, but not necessarily economically feasible on a case-by-case basis.
However, throwing out the trial court and appellate court decisions, the Texas Supreme Court held class actions are not appropriate for personal-injury claims and decertified the class. Moving from products liability to personal injury, Southwestern Refining picked up where Intratex and Ford Motor left off. Individuals who suffer damage from a chemical spill, explosion or other mass tort will now find it difficult to band together and seek redress for their grievances in state court.
Perhaps just as revealing as the decision to carve personal-injury claims out of class actions was the reasoning used to maintain jurisdiction in Southwestern Refining. As with Ford Motor, the court went out of its way to establish jurisdiction over the interlocutory appeal. However, in this case the court employed conflicts jurisdiction. Under §§22.225(c) and 22.001(a)(2) of the Texas Government Code, the Texas Supreme Court may review an interlocutory appeal concerning class certification if a decision by one appellate court would operate to overrule the decision of another. In its effort to justify jurisdiction, Southwestern Refining provides six pages of tortured prolixity on how lower court certification of the class conflicted with precedent.
Special Interests
Texas needs an independent judiciary precisely because its Legislature seems to be awash in special-interest money. Under the current system, special interests involved in the three discussed cases bombarded not only the Legislature, but also the court with more than $200,000 in campaign contributions.
Powerful, well-financed special interest groups concerned with limiting liability appear to influence our high court, just as they appear to do so with legislators. The subsequent casualty is our system of checks and balances.
Hence, the court’s pro-corporate stance comes as no surprise. This recent trio of consumer-hostile class action opinions sends a distinct message — as long as damages are too low to litigate individually, this court is unlikely to allow plaintiffs the opportunity to hold corporations responsible for mass torts, defective products and consumer fraud, even where physical injuries are involved.
These three decisions also send a broader message: The Texas civil justice system is in crisis. In his vigorous Ford Motor dissent Justice Baker said it best: "In any event, we all know what is going on here!"
Cris Feldman is a National Association for Public Interest Law fellow and tracks campaign contributions in the Texas judicial system. Feldman is the staff attorney for Texans for Public Justice, a nonprofit, nonpartisan advocacy and research organization. His e-mail address is cfeldman@tpj.org.