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Several plaintiffs lawyers fear the future of class-action litigation in this state could hinge on what the Texas Supreme Court decides in Compaq Computer Corp. v. LaPray, et al., a case argued before the court on Oct. 15. At issue is whether approximately 1.8 million computer purchasers nationwide, who allege that Compaq sold them computers with a defective part covered by an express limited warranty, can be certified as a class. The plaintiffs seek a declaratory judgment that says Compaq built a computer with a defective floppy disk controller (FDC), shipped computers to them with the defective part and, under the warranty, has an obligation to replace it. Compaq contended in the argument before the state Supreme Court that there is no proof of a defect in the FDC. David Beck, Compaq’s attorney, told the court that the defect alleged by the plaintiffs is unmanifested. Compaq filed an interlocutory appeal challenging certification of the class in LaPray. Frank Newton, who serves as counsel to the plaintiffs, says in an interview that LaPray is a “negative-value case” — one in which each plaintiff’s claim against Compaq is so small that it would not be feasible to be brought as individual suits. The Texas Supreme Court’s ruling in LaPray could determine whether class actions can be brought in Texas, he says. Newton describes LaPray as a simple case in which the class members are missing the same computer part, are covered by the same warranty and aren’t suing for damages. So, he says, “If this case is one that cannot be certified as a class, it is unlikely there will ever be any cases certified as class actions in Texas.” Newton is a former dean of the Texas Tech University School of Law and the current president of the Beaumont Foundation of America, which was formed to distribute computers to schools. In January 2000, the plaintiffs filed suit in the 60th District Court in Beaumont, Texas, seeking class certification. The 60th District Court certified the class as a mandatory declaratory-judgment class under Texas Rule of Civil Procedure 42(b)(2) and, alternatively, as a Rule 42(b)(4) opt-out class for breach-of-warranty damages. Compaq appealed the class certification, arguing, among other things, that the 60th District Court ignored established Texas law in certifying a mandatory class for declaratory relief. Beaumont’s 9th Court of Appeals affirmed the trial court’s certification order. Justice Don Burgess wrote the 9th Court’s opinion in which he was joined by former Chief Justice Ronald Walker and Senior Judge John Hill of Fort Worth, who sat by assignment. Class counsel Gary Reger, a partner in Beaumont’s Orgain, Bell & Tucker, says in an interview that the two sides disagree on exactly what the court of appeals did. Compaq argues in its brief to the state Supreme Court that the 9th Court affirmed the trial court’s certification under both rules — 42(b)(2) and 42 (b)(4) — but the plaintiffs contend in their response to the Texas Supreme Court that the 9th Court affirmed certification under only Rule 42(b)(2). Reger told the state Supreme Court that the LaPray plaintiffs asked for certification under Rule 42(b)(4) and the 60th District Court granted it. The 9th Court didn’t grant certification under Rule 42(b)(4), he argued. The reason the plaintiffs think the 9th Court didn’t affirm certification under Rule 42(b)(4) is because the 9th Court had affirmed the certification under Rule 42(b)(2) and didn’t think it had to certify the class under both rules, Reger told the Texas Supreme Court. In its brief to the Texas Supreme Court, Compaq argues that the reason the plaintiffs have taken the position that the 9th Court affirmed the trial court’s certification only under Rule 42(b)(2) is to avoid conflict with the high court’s 2000 decision in Southwestern Refining Co. v. Bernal, which is based on (b)(4). The principal issue on the merits in LaPray is whether filing under Rule 42(b)(2) for declaratory relief is an end run around the predominance and superiority requirements under Rule 42(b)(4), Newton says. Beck, a partner in Houston’s Beck, Redden & Secrest, urged the Texas Supreme Court to prevent the plaintiffs from circumventing what Compaq believes are the court’s “teachings” in Bernal and Henry Schein Inc. v. Stromboe, decided last year. The Texas Supreme Court held in Bernal that a trial court’s certification of a class in a personal-injury action stemming from a refinery explosion was improper because common issues of the class do not predominate over individual issues. In Schein, the court held that the trial court erred in certifying a class of dental management software buyers in a consumer fraud case against the software seller because there was no showing that a class action was superior to some other action. JURISDICTION ISSUE Before the Texas Supreme Court can address the issue on the merits in LaPray, however, it must determine whether it has jurisdiction to decide the case. To have jurisdiction in an interlocutory appeal under the law in effect when LaPray was filed, the justices must find that the 9th Court’s decision in LaPray conflicts with decisions of other mid-level appellate courts or with the state Supreme Court’s decision in Bernal. Justice Harriet O’Neill, who dominated the questioning during the Oct. 15 hearing in LaPray, focused on the jurisdictional issue in a series of questions addressed to Beck. O’Neill first asked whether the Texas Supreme Court ever has ruled on whether predominance and superiority are required by Rule 42(b)(2). “You have not,” Beck said. “So, this would be a matter of first impression?” O’Neill asked. “Yes, that is correct,” Beck said. “Then how can we have a conflict for justiciable purposes?” she asked. Beck said that Bernal requires a trial court to perform a “rigorous analysis” of all elements in a suit before certifying it as a class action. He said Compaq doesn’t think that requirement is limited to Rule 42(b)(4) — and if the two rules are to be treated the same that would mean there is no issue of first impression. Undeterred, O’Neill then asked, “If we were to find that the certification was solely under (b)(2) and whether predominance and superiority are required is a matter of first impression, how could we get conflicts jurisdiction?” Beck said the state Supreme Court talked about choice of law in Schein and how important that is to a Rule 42(b)(4) analysis. He argued that the same analysis is applicable to Rule 42(b)(2). O’Neill also quizzed Beck about what kind of case he believes can be certified as a class action. She described a scenario in which a company shipped computers nationwide but left out the FDC — although the computer was warranted for that part. “Would that be a class action?” she asked. Beck said O’Neill’s scenario would not be appropriate for certification under Rule 42(b)(2). O’Neill asked if Beck would consider the case appropriate for certification if the plaintiffs weren’t seeking damages and wanted only to have the company ship them the FDC. “It’s still not enough to justify a (b)(2) class because it doesn’t end the dispute between the parties,” Beck said. If a court granted a declaratory judgment, there still would be an issue of what the remedy should be, he added. Reger argued that Compaq’s warranty bars the plaintiffs from seeking anything but declaratory relief. In its pleadings to the trial court, he said, Compaq argued that the plaintiffs’ breach-of-warranty claims are barred. “The only thing we have left, due to the skillful Compaq lawyers who drew this warranty many years ago, is this declaratory judgment,” Reger contended. Eight justices sat for the arguments in LaPray. Chief Justice Tom Phillips recused himself from the case without explanation. The court gave no indication when it might rule in the case.

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