Chapter 4B A Few Cases to Help in Constructing the Defense of an Energy Related Class Action in Texas

• Jurisdiction: United States

Chapter 4B A Few Cases to Help in Constructing the Defense of an Energy Related Class Action in Texas
D. Patrick Long Squire Patton Boggs Dallas, TX

D. PATRICK LONG is a Senior Partner at Squire Patton Boggs in Dallas, TX. Pat is a trial lawyer who is intimately familiar with the energy business. He has tried lawsuits and/or arbitrations involving a wide range of energy related disputes from basic oil and gas lease or title disputes to catastrophic personal injury cases. He is a member of the American College of Trial Lawyers, the International Academy of Trial Lawyers and the American Board of Trial Advocates.

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I. Introduction

This article addresses several key class action cases from the defense perspective, with the goal of assisting practitioners in analyzing or architecting the defense of energy related class actions in Texas.

A. The Threshold Requirements for Class Certification Under Federal and Texas State Law

Rule 42 of the Texas Rules of Civil Procedure governs class certification in state court in Texas. "The rule is patterned after Federal Rule of Civil Procedure 23; consequently, federal decisions and authority interpreting current federal class action requirements are persuasive authority." Southwestern Refining Co., Inc. v. Bernal, 22 S.W.3d 425, 435 (Tex. 2000).

The four threshold requirements for a class action under Rule 23(a) of the Federal Rules of Civil Procedure and Rule 42(a) of the Texas Rules of Civil Procedure are (1) numerosity ("the class is so numerous that joinder of all members is impracticable"); (2) commonality ("there are questions of law or fact common to the class"); (3) typicality ("the claims or defenses of the representative parties are typical of the claims or defenses of the class"); and (4) adequacy of representation ("the representative parties will fairly and adequately protect the interests of the class").

As explained by the Texas Supreme Court, T.R.C.P. Rule 42 "is a procedural device intended to advance judicial economy by trying claims together that lend themselves to collective treatment . . . . Procedural devices may 'not be construed to enlarge or diminish any substantive rights or obligations of any parties to any civil action.'" Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 693 (Tex. 2002). "The procedural device of a class action eliminates the necessity of adducing the same evidence over and over again in a multitude of individual actions; it does not lessen the quality of evidence required in an individual action or relax substantive burdens of proof." Id. at 693-94.

1. Numerosity

The test for numerosity under Texas state law is "whether joinder of all members is practicable in view of the size of the class and includes such factors as judicial economy, the nature of the action, geographical location of class members, and the likelihood that class members would be unable to prosecute individual lawsuits." Rainbow Group, Ltd. v. Johnson, 990 S.W.2d 351, 357 (Tex. App.—Austin 1999, pet. dism'd w.o.j.).

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2. Adequacy

The factors to consider in determining under Texas state law if the adequacy of representation elements is satisfied include "(1) adequacy of counsel; (2) potential for conflicts of interest; (3) personal integrity of the plaintiffs; (4) whether the class is unmanageable because of geographic limitations; (5) whether the representative plaintiffs can afford to finance the class action; and (6) the representative plaintiffs' familiarity with the litigation and his or her belief in the legitimacy of the action." Enron Oil and Gas Co. v. Joffrion, 116 S.W.3d 215, 219 (Tex. App.—Tyler 2003, no pet.).

3. Typicality

A claim is typical under Texas state law "if it arises from the same event or practice or course of conduct that gives rise to the claims of other class members, and if his or her claims are based upon the same legal theory." Sw. Bell Tel. Co. v. Mktg. on Hold Inc., 308 S.W.3d 909, 920 (Tex. 2010).

4. Commonality

The seminal case of Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) is required reading for defense counsel in analyzing a defense based upon the commonality requirement. Dukes is not an energy-related case. It was a class action alleging discrimination on the part of Wal-Mart against female employees. The Dukes opinion explains that the commonality requirement depends upon a common contention that is of "such a nature that it is capable of classwide resolution - which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke. . . . [W]hat matters to class certification . . . is not the raising of common 'questions'—even in droves—but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation." Id. at 350.

5. Predominance

"Predominance" is an additional element in class actions seeking monetary damages as per Rule 23(b)(3) F.R.C.P. and Rule 42(b) T.R.C.P. This element is satisfied only if (1) questions of law or fact common to class members predominate over any question affecting only individual members, and (2) a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.

"The test for predominance is not whether common issues out number uncommon issues but . . . whether common or individual issues will be the object of most of the efforts of the litigants and the court." Stonebridge Life Ins. Co. v. Pitts, 236 S.W.3d 201, 205 (Tex. 2007) citing Bernal, 22 S.W.3d at 434. "The predominance requirement prevents class certification when complex and diverse individual issues would overwhelm or confuse a jury or severely compromise a party's ability to present otherwise viable claims or defenses. . . . Certification is not appropriate unless it is determinable from the outset that the individual issues can be considered in a manageable, time-efficient and fair

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manner." Id. "Ideally, 'a judgment in favor of class members should decisively settle the entire controversy, and all that should remain is for other members of the class to file proof of their claim.'" Bernal, 22 S.W.3d at 434.

6. The Courts Must Perform a Rigorous Analysis

Both the United States Supreme Court and the Texas Supreme Court have held that courts must perform a "rigorous analysis" to determine if all the prerequisites for class certification have been met. See Wal-Mart Stores, Inc., 564 U.S. at 350-51 (". . . certification is proper...