Chief Justice John Marshall (1755-1835).
Would he take a Texas class action?
As Blawgletter surveyed the Texas Supreme Court’s "weekly orders" from last Friday, the words of Chief Justice John Marshall came to mind. He wrote: "That the power to tax involves the power to destroy [and] that the power to destroy may defeat and render useless the power to create . . . are propositions not to be denied." McCulloch v. Maryland, 17 U.S. 316, 431 (1819) (holding taxation of Bank of the United States by State of Maryland unconstitutional).
The case that summoned the memory concerned whether a state trial court erred in certifying a worldwide class to pursue a state securities law claim against Texas defendants. The plaintiffs filed the action in 1999. After hearing four days of testimony and argument, the trial court issued a 20-page order certifying the worldwide class and including a 10-page "trial plan". The court of appeals affirmed the certification order in 2003. Citizens Ins. Co. of Am. v. Daccach, 105 S.W.3d 712 (Tex. App. — Austin 2003).
The Supreme Court heard oral argument in 2004 and rendered its decision two years and four months later. Citizens Ins. Co. of Am. v. Daccach, No. 03-0505 (Tex. Mar. 2, 2007). The Court decertified the class, holding that "the trial court did not consider the effect of res judicata on the adequacy of the class representative, the superiority of litigating this case as a class action, the typicality of claims within the class, and the predominance of common issues over individual issues".
Sounds pretty dull, eh? Blawgletter agrees. But you’ll notice the emphasis that we’ve put on how long the court system has taken — nearly eight years — to put the class plaintiffs back to square one. Now the lawsuit will return to the trial court, and any certification it orders will again start the ponderous climb through the wonderland of another interlocutory appeal.
And yet one may descry in Daccach a glimmer of hope for Texas class actions. Since Sw. Ref. Co. v. Bernal, 22 S.W.3d 425 (Tex. 2000), Blawgletter cannot recall a single instance in which the Court upheld — much less required — class certification. The Court on the contrary has seemed almost monomaniacal in creating ever more stringent requirements for class treatment. But, despite its decertification in Daccach, the Court essentially held that the trial court can fix the res judicata problem by notifying class members that they’ll probably lose the right to pursue individual claims if the class loses on the merits. That sounds pretty easy.
Blawgletter doesn’t see a new day dawning for class actions in the Lone Star State. So long as the Supreme Court continues to tax class cases with the delays and uncertainties of interlocutory review, Rule 42 will lay in the ruins it has become. The power to tax involves the power to destroy. Indeed.
Barry Barnett
