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Click here for the full text of this decision FACTS:As a result of an investigation by the Texas Department of Insurance, the Texas attorney general sued various Farmers entities alleging inadequate disclosure and discrimination in its homeowners rating practices. The insurance commissioner issued a cease-and-desist order against Farmers and initiated proceedings to collect administrative penalties. Farmers responded by announcing its withdrawal from the Texas homeowners insurance market. In these dire straits, the parties turned from litigation to negotiation. Within a few weeks, they reached a global agreement in which Farmers signed a class action settlement requiring it to reduce its base premiums, adopt uniform discounts, offer refunds to nonrenewing policyholders, discontinue certain tying practices and pay the state $2 million in attorneys’ fees and costs. The agreement was terminable by either party if more than 2 percent of the class members opted out. The settlement was valued at $117 million, the largest property and casualty insurance settlement in the state’s history. The parties applied to the district court for class certification and settlement approval. Five policyholders intervened objecting to both. The district court granted certification and preliminarily approved the settlement. The intervenors filed an interlocutory appeal. The 3rd Court of Appeals reversed, holding that the attorney general could not bring a class action under the Insurance Code without naming individual class members as representatives. The state and Farmers filed petitions for review. HOLDING:Reversed and remanded. The court agreed with the 3rd Court that courts must rigorously analyze whether a party has strictly complied with all requirements for class certification. But those requirements cannot be applied in a way that renders attorney general class actions impossible, a result that would frustrate the Legislature’s intent. Texas Insurance Code ��541.003 and 541.051-.061, the court stated, unquestionably authorizes an attorney general to file a class action. But the state asserted an attorney general may file a class action as parens patriae without meeting the normal certification requirements, while the intervenors asserted that an attorney general must meet them all, even though this will require recruiting policyholders as class representatives. Finding that the doctrine of parens patriae, meaning “parent of the country,” was vague and typically invoked on behalf of children or the mentally ill, the court found it did not apply to class actions. Nonetheless, the court found that the attorney general did not need to recruit class representatives to bring suit under the Texas Insurance Code. Class actions, the court stated, ensure law enforcement by private attorneys general; thus, the court stated, it would be absurd to construe them to prevent the same kind of suit by a real attorney general. The Legislature has provided that the class action provisions under the code be liberally construed. Requiring an attorney general to act solely as class counsel would not be a liberal construction. OPINION:Brister, J., delivered the opinion of the court, in which Jefferson, C.J., and O’Neill, Wainwright, Medina, Green and Johnson, J.J. Willett, J., did not participate in the decision. CONCURRENCE AND DISSENT:Hecht, J. “I would hold that the four prerequisites [of Texas insurance Code �541.256, which are numerosity, typicality, commonality and adequate representation] . . . do not apply, by the plain text of [�541.251], to a class action brought by the Attorney General. That is not to say that such a class action is also excused from the other requirements of the statute, or that judicial supervision of the class vehicle, including the settlement reached in this case, should in any way be relaxed. I agree that the case should be returned to the court of appeals for consideration of the numerous other issues respondents have raised.”

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