*1 BALLY TOTAL FITNESS CORPORA- Corpora- Health & Tennis
TION f/k/a America, by merger
tion of successor Clubs,
to Dallas Health Inc. Bal- d/b/a
ly’s, Petitioner, JACKSON, individually
Keith and on similarly
behalf of all others situat-
ed, Freddy Mack, Respondents.
No. 99-1002.
Supreme Court of Texas.
Argued Sept. 2000. April
Decided 2001.
Rehearing Sept. Overruled Crofts, H. Callaway,
Sharon E. Thomas Jr., Jefferson, Callaway & Ricardo Crofts Mendoza, Cedillo, Davis & Keith G. Cedillo Ferrill, Kaiser, E. A. Michael Cox & Antonio, Tribe, Smith, Laurence H. San MA, Cambridge, petitioner. Snell, Snell, Barry Claybourne David Antonio, Krause, San Bayne Snell & respondent. opinion
Justice O’NEILL delivered the Court, joined by of the Chief Justice PHILLIPS, ENOCH, Justice Justice BAKER, and Justice HANKINSON. an interloc party may A by statute. utory order unless authorized Ross, 698 S.W.2d Co. v. Cherokee Water curiam). (Tex.1985) Section (per 51.014(a)(3) Practice and of the Texas Civil *2 353 Code. See the Texas Consumer Credit appeal an party Remedies Code allows 5069-6.02(9)(a) (re art. or refuses interlocutory order that certifies Tex.Rev.Civ. Stat. (current version at pealed) a class action. Tex. Fin.Code Tex. Prac. & Civ. 51.014(a)(3). 345.055(a)). claimed § Jackson also In De Los San- Rem.Code Deceptive Texas Bally liable under the Corp., 933 was tos v. Occidental Chemical (Tex.1996), Act for unconscionable 493, that Trade Practices 495 we held S.W.2d that an representing conduct and for сhanged order that a cer- an rights and obli conferred mandatory agreement opt-out tified class from & by law. See Bus. prohibited gations the class and its Tex. created conflict between 17.46(b)(12). 17.50(a)(3), §§ the fundamental nature of Comm.Code counsel altered 1995, opt-out trial court certified under the the appealable the class and was 42(b)(4) of the Texas class under statute. Bally appealed Procedure. Rules of Civil trial certified a In this case the court order, court of but the the certification subject not the of but that order is affirmed the trial court. See appeals defendant, Rather, Bally appeal. this Jackson, Am. v. Corp. Health & Tennis of Fitness, appeal Total seeks to three subse- ton (Tex.App.—San 928 S.W.2d An The first or- quent orders. w.o.j.). io writ dism’d summary judgment granted partial der Discovery disputes concerning certain cus- holding Bally charged had membership arose after the certifica- illegal time-price tomers an differential. tion, of notice.1 As delaying delivery Bally’s overruled two The other two orders result, sent when notice had been decertify the must motions to class. We summary judg- partial moved for Jackson effect of decide whether combined The trial court liability ment on the issue. meets the De Los Santos test these orders and ruled that granted Jackson’s motion interlocutory-appeal jurisdiction. for We the Texas Consumer Bally had violated hold that it does not. Whether or not the Bally DTPA. then and the Credit Code issuing trial court abused its discretion class, complaining decertify moved to Bally which we appeal, the orders seeks summary judgment should decide, partial that the do not those orders do not alter the to the class mem- рreceded not have notice nature of the as De Los fundamental two orders bers.2 The trial court issued Accordingly, we affirm requires. Santos denying the motions. appeals’ of for want of the court dismissal jurisdiction. Bally petition filed an and a ap- the court of of mandamus with
writ I denied, The writ of mandamus peals. ar- After oral appeal proceeded. action and the Keith Jackson filed this class appeals dismissed gument, cer- the court Bally claiming charged that it jurisdic- for want of interlocutory appeal amounts that exceeded tain customers 327. filed both tion. time-price permitted differential maximum Bally petitioned both the court of disputes while 2. were resolved and 1. After these Court, pending this the case was Court for a writ of mandamus and this delayed approved trial court a form notice but prevent the rendition granted delivery until June 2000. We its potential class mem- before notice was sent to pend- Bally’s stay delivery notice motion to bers, was unsuccessful. but Sup.Ct. J. ing in this Court. 43 Tex. resolution 329 n. 24, 2000). (May peti- and a ferred to another court. The new court petition writ of mandamus granted plaintiffs’ tion denied motion to reconsid- for review this Court. We mandamus, Sup.Ct. opt-oiit the writ of 43 Tex. J. er and certified the class as an 13, 2000), (April granted peti- but class. The Gonzalez and others out, opted plaintiffs pro- tion whether the and the Grant for review consider *3 juris- appeals correctly court of decided its ceeded to trial. Long diction. v. Humble Oil & See Refin- jury negli- found defendants to be (Tex.1964) Co., ing 380 S.W.2d negligent, and awarded gent grossly jurisdiction to (holding this Court has damages. proceeding actual Before to the appeals review whether the court of had trial, of the punitive damages phase
jurisdiction). $65,700,000 defendants offered to settle for
provided mandatory that a class was certi- II by the trial court. The approved fied statute, By party may appeal counsel, a previously had opposed who order that certifies or refuses mandatory accepted joined a certify a class action. Tex. Civ. PRAC. & convincing defendants in the court to mod- 51.014(a)(3). The three inter by changing it from an ify opt-out the class Rem.Code locutory orders at issue here do not ex mandatory class to a settlement class. pressly certify certify objection or refuse to a class. was done over the of those This Rather, grants partial summary a rejected one had class counsel’s plaintiffs who judgment and the other two refuse to de- representation by opting par- out and not the class. concedes this certify Bally ticipating the trial. De point, argues but Los Santos appeals The court of dismissed the ob that an
broadened the statute’s reach so juris jecting plaintiffs’ appeal for want of changes appeal any lies from diction, upon Mortuary Pierce relying the fundamental nature of the class. changing that an order proposition why reasons the trial court’s offers several merely size of a class modifies a certifica na orders altered the class’s fundamental qualify tion order and does not as an “or argu addressing Bally’s ture. Before certifying refusing certify a der ments, presented examine the facts we Mortuary Colleges,Inc. class.” See Pierce De Los Santos. (Tex. 878, 880-81 Bjerke, denied). Santos, But we App. In filed writ De Los Grant — Dallas interlocutory order at issue OxyChem inju- and others for held that the suit simply did more than plant’s a acci- De Los Santos by ries caused butadiene “[cjhanging of the class: a plaintiffs change release. Other the size dental chemical defendants, not opt-out mandatory class from does facing and the intervened suits, membership; it alters injury simply enlarge success- its personal hundreds of class.” 933 manda- the fundamental nature of the fully moved the court to reaching our decision vigorous ob- at 495. tory plaintiffs’ class over the S.W.2d concern about conflicts jections. appealed and others the we voiced Grant counsel, certification, the class and its group of over 500 arise between but settlement. regard with represented by attorney particularly Gonza- interlocutory ap though deny noted that join “[t]o in the even We lez did not situation, class counsel in this when initially oppоsed peal the certifica- they had restructuring agrees fundamental tion. While they opposed, to which were once the case was trans- the class pending, order were favor, although they would Id.; in their see also merits those concerns.” aggravates deci- bound an adverse not have been Corp. Bloyed, Motors Gen. (1988). (Tex.1996) app. (noting “special sion. See 28 U.S.C. 953-54 classes). Advisory Bally, Commit- According concerns” raised settlement 23(c)(3) drafters intended tee ruling in De Los Santos Our narrow to elimi- Procedure Federal Rules of Civil intent that Legislature’s with the comports “ by allowing judgment practice nate this ‘a strictly 51.014 be construed section have re- members who only to bind to the rule that exception general narrow opted out: “Under ceived notice and judgments ap- final and orders are ” (c)(3), one-way inter- propоsed subdivision County v. Fu pealable.’ Montgomery excluded; the action will vention is (Tex.App qua, 22 S.W.3d . —Beau *4 be a class or early determined to been denied) 2000, Dep’t Tex. pet. (quoting mont action, former case the nonclass City Valley, 8 Transp. v. Sunset favorable, or not will judgment, whether 1999, 727, (Tex.App. S.W.3d — Austin correspond- Id. The include the class....” Online, America Inc. v. pet.)); no rule, 42(c)(3), Rule ing Texas class-action Williams, 268, (Tex.App.— S.W.2d Rule language of Federal tracks pet.). no [14th Dist.] Houston 23(c)(3). P. From 42(c)(3). Tex.R. Civ. DeBord, rejected Stary example, for we 42(c)(3) this, also Bally infers that Rule argument corporate-shareholder that a one-way Bally intervention. con- prohibits claim, closely though derivative even re pre-notice par- that trial court’s tends action, a class fit within the stat sembling summary judgment effectively permits tial utory language. 967 353-54 one-way intervеntion and violates (Tex.1998) curiam). (per Similarly, 42(c)(3). allowing one- Bally claims that statute does not authorize an of an the Texas way intervention also violates class, merely enlarging order the size of a and the open courts clause Constitution’s 880-81, Mortuary, Pierce 841 S.W.2d at process due federal and state constitutions’ definition, modifying an order class’s Bally clauses. con- equal protection Harms, Gathering Systems, Koch Inc. v. impli- violations alleged cludes that these (Tex.App. Corpus 455-56 — underlay our De the concerns that cate denied). Christi writ Los Santos decision. Nevertheless, Bally argues that we is that De Bally’s arguments an The crux of should extend De Los Santos to cover whenever that it less like Los Santos authorizes makes create incentives opt will out. Ac orders ly that class members stay opt-out in an class. Bally, sum class mеmbers cording partial because outset, underly- question Bally’s we liability in the At the mary judgment resolved favor, partial the trial court’s potential ing premise class mem plaintiffs’ one-way in- summary implicates judgment have been virtu opt bers’ incentives to out class, eliminated; because it will cause thus the while nomi tervention ally class, in the class. members to remain nally opt-out actually a de facto that “absent Bally acknowledges itself mandatory argues class. also opt out could recover judgment class members who pre-notice partial summary than damages more one-way interven seventeen times impermissible invites due to the in the class.” This is staying to the “One-way tion. intervention” refers $100,000 to class cap applies penalties permitting class members practice Compare Tex. Fin.Code litigation. actiоn after the court has decided intervene § (allowing plaintiff change 349.001 an indi- ders do not the nature of the vidual action to recover twice the total nor affect they do class members’ relation- time-price differential contracted for as a ships with each other or with class counsel. regard penalty, without to the size of his conclude that De Los cannot be We Santos actual damages) with Tex. case, Fin.Code present extended to the which does ’ (limiting 349.403 members of a implicate any of De Los Santos con- damages plus propor- class to actual their cerns.
tionate share of the maximum class action that a emphatically The dissent states $100,000). penalty of The class notice that class can never be certified or maintained the trial approved court has notifies the any after favoring plain- merits decision accordingly: class members “Because Tex- resulting potential tiff because of the penalty as law limits the amount of which Yet it one-way intervention. fails to ex- action, you may in a be awarded plain how the trial court’s orders here greater recovery you be able to if receive alter the class’s fundamental nature as re- Thus, yourself exclude from the class.” That quired by De Los Santos. the order contrary Bally’s argument, it does not (which decide) might wrong do not we appear absent class members’ incen- *5 appealable, does not make it else all al- opt tive to out has been eliminated leged in class-action irregularities a suit pre-notice partial summary judgment. subject to immediately would be review. so, any But even if that were incentive analysis, any Under the dissent’s stay might to in the class that result from a motion for reconsideration of a denying affect only the trial court’s order would alleging class certification the class the size of the not its fundamental requirements did not meet the of Rule nature. And in De we Los Santos said subject would be to review. simply enlarging the class’s member- might or not orders that create Whether ship enough. is not at 495. potential one-way intervention are Importantly, De Los Santos was not about claims, Bally prohibited, question in, strategic opting which is what presented any prohibition is whether such complains forcing of here. It was about may remedied be already plaintiffs opted who had out into a jurisdictional under limited our statute’s mandatory settlement class. The does law grant. And whether or not the trial mandatory in a permit plaintiffs class created impermissibly court’s оrder here out, if they every even have incen- opt potential an incentive for class members Thus, tive lost plaintiffs to do so. in, clear, it opt changed which is far from ability opt their out and were forced nothing about the class itself. into a class and a settlement their will. Moreover, question the dissent’s we sweeping any pre-notice assertion that contrast,
By
class members
the Jackson
favoring
merits determination
out as a result
legal
opting
face no
bar
None of the
requires decertification.
summary judg-
pre-notice partial
of the
upon establishes
cases the dissent relies
they
are
forced into a class
ment. Nor
contrary,
rule. To the
those
per
such a
se
against their will. And unlike the De Los
that the federal courts have
cases reveal
members,
class
the class members
Santos
bright-line
rule out-
proclaim
declined to
here have not been forced into
conflict
background
the context of the case’s
counsel. The trial court’s or-
side
with class
Newberg
(D.C.Cir.1980). There, the court ob
procedural posture.3 See
on
ed.)
(3d
of the law
state
present
7-54
“[T]he
7.15 at
served:
Actions
Class
necessarily preclude
(“Whether
does not
on the
summary dispositions
certifi
merits
on the
merits,
judgment
cation
ruling, may
prop
be
after
23(b)(3)
in
class action is unset
reasons for allow
may
equitable
er
a Rule
there
tled.”). These decisions are consistent
in some
ing post-judgment
added).
The Pos
discretion afforded district
cases.” Id.
(emphasis
with the broad
managing class
certifying
courts in
did
tow court concluded
that the trial court
Corp.
In re Nissan Motor
actions. See
in
de-
refusing to
not abuse its discretion
(5th
Litig., 552 F.2d
Antitrust
rendering summary
certify a class after
Cir.1977).
favor,
plаintiffs’
taking
judgment
procedural
complicated
into account
Tse,
In Schwarzschild v.
example,
Id. history of the case.
1383-84.
rejected
the Ninth
the defendant’s
Circuit
following “equitable rea
court cited the
to order notice sent to class mem-
request
allowing post-judgment certifica
sons” for
bers almost six months after the defen-
in that
tion
case:
summary
motion was
judgment
dant’s
originally
The class was
certified before
(9th Cir.1995).
293, 297
granted.
69 F.3d
granted
to the
summary judgment
specifically
open
ques-
The court
left
(though
II
the mem-
Postows on Count
tion whether certification and notice
correctly
were not
bers of the class
proceed
cases
which the
then);
identified and notified until after
Id.
summary
prevailed
judgment.
moved for
at n. 4. In
Oriental
reserving
question,
Federal
agreed
stay
had
Postow OBA
court
after
the Postows
referred
Ass’n,
Savings & Loan
discovery
identity
of the
*6
System,
jury
Library
plaintiffs
the
had obtained a favorable
In Smith v. Shawnee
liability
finding
whether class
central
issue before
Seventh Circuit considered
on the
yet
seeking
members who had not
received class no
at 354-55.
In
even
certification.
Id.
contrast,
by summary judgment fa
plaintiffs
present
tice were bound
a
case
in the
(7th
voring
relatively
the defendant.
Bally says,
I agree,
that there is no
in
developments
some situations await
principled
for drawing
basis
a distinction
judgment
the trial or even final
on the
between the facts of this case and the facts
merits in
whether
determine
in De Los Santos v. Occidental Chemical
would
to their
participation
be favorable
(Tex.1996).
Corp.,
363
(W.D.Pa.1974),
summary judgment
request
on other
did not
rev’d
801
Cir.1975).
(3d
underlying
class’s
claims.
merits of the
grounds,
its whether to a class: (Tex.2000). 404 attempts The Court refute the rule nothing find in either lan-
We
that a merits determination should not oc-
guage
history
gives
or
of Rule
that
cur before
class certification
notice
any authority
prelimi-
court
to conduct a
noting
in
some of the cases cited
nary inquiry into
in
the merits
a suit
above,
proceeded
the trial court
with certi-
may
order to determine whether it
fication and notification after the
Indeed,
maintained as a class action.
defen-
granted summary judg-
dant had been
procedure
such a
contravenes the Rule
therefore,
argues,
ment. The Court
by allowing representative plaintiff to
those cases are
in
inapposite
deciding
of a
secure
benefits
class action
proceed
whether certification can
after a
requirements
without first
satisfying
grants summary judgment
trial court
in
it. He is thereby
allowed to obtain a
plaintiff.
agree
favor of the
I
that cases
determination on the merits of the
granted summary
which a defendant is
claims advanced on behalf of the class
judgment before certification
dif-
present
any
without
that a
assurance
class action
ferent concerns than when a
has
may
procedure
be maintained. This
granted summary judgment.
been
For ex-
directly contrary to the command of
a trial
ample,
court must consider the due
(c)(1)
subdivision
the court deter-
process rights
class members
mine whether a suit denominated a class
in deciding
proceed
whether to
with class
may
action
be maintained as such “as
certification and notification after a defen-
practicable
soon as
after the commence-
”
dant
summary judg-
receives a favorable
[the]
ment of
action....
Gert,
ruling.
ment
law permits give refuses to effect Because the Court the trial depends in turn whether intent and to adhere to our legislative changed the ruling fundamentally court’s I dissent. precedent, own The trial court in this nature of the class. of the class when changed case the nature viability ruling on the merits ended the
its of section purpose
of the class.
51.014(a)(3) Practice and of Texas Civil Code, interlocutory
Remedies which allows of certain class-certification rul
appeals
ings, costly process is to ensure that the of action, its attendant potential with LIBANO, COMPANIA FINANCIARA defendant, harm a does
for irremediable Fong Najarro, Armando and S.A. proceed when there is no basis for Petitioners, 51.014(a)(3) certifying a class. Section provides person may appeal “[a] Mary that: ... certi H. William SIMMONS Hensley, individually
fies or refuses to a class in a suit Simmons trustee, brought Respondents. under Rule 42 of the Texas Rules and as Procedure.” Civil & Tex. Civ. Prac. No. 00-0465. 51.014(a)(3). Legislature § Rem.Code construing provi has directed that in this of Texas. Supreme Court sion, may object sought consider the it we 21, 2001. June consequences partic to attain and the of a ular construction. Tex. Gov’t Code 20, 2001. Rehearing Sept. Overruled 311.023; Corp. see also Ken Petroleum Questor Drilling Corp., (Tex.2000). The Court has refused to acknowledge give object to the effect attain, Legislature sought
which is to allow In
rulings on whether class is certified. case,
this the trial court’s refusal to decer-
tify longer after the certification could no equivalent
be sustained is the functional indistinguishable from а decision
granting certification. closing, it should be noted that says Bally appealing
Court the order summary judgment. granted partial at 359. That is not the case. trial court’s appealing decertify
refusal to the class after it had Bally’s briefing and
ruled on the merits. Notes lem, Advisory Committee as request who does not that a member point out. appearance enter an exclusion Peritz, 354. Decertification F.2d at the case. required: (footnotes 547-48, omit- Id. at 94 S.Ct. here did Inasmuch ted). certification, in fact affir- not seek adhered to the courts have federal the merits resolution on sought matively the merits that a decision on requirement objec- face of in the prior or else to the class occur after notice must defendants, them- they by the tions or maintained. class cannot be certified any class effectively precluded selves 23(c)(2) to ensure purpose “The