CLASS ACTION UPDATE

By Dean Foster

Line Ltd., No. 01-02-00017-CV, 2004 WL 637894, (Tex. App. – Houston [1st Dist.] Mar. 30, 2004, no pet.).

A group of mobility impaired individuals filed a class action suit against the cruise line for breach of contract, fraud, negligent misrepresentation, violation of the DTPA, and violation of Texas Human Resources Code §121.003. Section 121.003 provides that persons with disabilities shall have the same right as the able-bodied to the use and enjoyment of any public facility. The proposed class of plaintiffs included mobility impaired passengers and their companions who "lived in, or sailed from, Texas and who sailed on NCL cruises from August 1, 1996 to present." The court determined that the proposed class certification encompassed a significant number of plaintiffs that had only sailed on cruise line vessels that never entered Texas waters.

Plaintiffs had not asserted claims under the federal Americans with Disabilities Act and failed to address whether the anti-discrimination laws of other states where similar to Texas law. State and federal courts have consistently rejected a class certification when the laws of multiple states must be applied, because similar issues would no longer predominate. The court therefore held that the trial court did not abuse its discretion in refusing to certify the case. Plaintiffs had failed to show that the laws of multiple states would not apply, or that those laws were sufficiently similar so that legal issues would predominate.

General Motors Corp. v. Garza, No. 04-03-00702-CV, 2005 WL 154198, (Tex. App. – San Antonio, Jan. 26, 2005, no pet.).

Based on allegations of defective brake systems, the trial court certified a class defined as "persons who are residents of the State of Texas who purchased or leased in Texas, new at retail, a 1997, 1998, 1999, 2000, or 2001 model year Chevrolet Malibu sedan." In addition to other allegations, plaintiffs alleged GM had breached an express warranty to repair. To establish a breach of the express warranty to repair, a plaintiff must show that the product was presented to the defendant for repair and that the defendant either failed or refused to repair the defect. In addition, the plaintiff’s reliance is an element of a claim for breach of express warranty. Because reliance requires an individual finding as to each class member, class certification is generally improper where reliance is an element of the cause of action.

GM further argued that the trial plan unfairly prevented it from asserting a defense based upon the contractual limitation of damages for breach of warranty to "performance of repairs and needed adjustments." The court of appeals noted that the trial court’s ruling that the limitation was too inconspicuous to be valid ignores whether or not individual class members may have had actual knowledge of the limitation. The effect was that the trial court’s plan permitted the plaintiffs to establish a uniform class-wide measure of damages while denying GM the opportunity to point out the differences among class members. The court stated that a class action cannot be used to circumvent an element of damages or prevent a defendant from presenting viable defenses. Accordingly, the court held that the trial court had abused its discretion in certifying the class.

Lubin v. Farmers Group, Inc., No. 03-03-00374-CV, 2004 WL 3119023, (Tex. App. – Austin, Jan. 21, 2005, no pet.).

Insureds intervened and objected to a class action settlement agreement between the Texas Attorney General and Farmers Group relating to alleged violations of the Texas Deceptive Trade Practices Act with regard to the renewal of homeowners’ insurance policies. The issue of this appeal was whether the Attorney General could maintain a class action lawsuit against Farmers without satisfying the prerequisites for a class action set forth in Tex. Ins. Code Ann. art. 21.21, section 18. The trial court held that the Attorney General could maintain the suit without complying with section 18 because the Attorney General was qualified by his capacity as parens patriae (parent of the country) to represent the interests of class members without the appointment of a class representative.

The court of appeals, however, disagreed. The court held that without specific statutory grant of authority, the Attorney General may not rely on a general invocation parens patriae to bring suit on behalf of individually injured persons. The Attorney General can only act within the limits of the Texas Constitution and statutes. Therefore, absent specific authority, the Attorney General must comply with the same rules of procedure as any other party. The court of appeals therefore reversed the order certifying the class.

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