Texas Supreme Court Holds Courts Cannot Certify Issue Classes Unless Underlying Claim Is Certifiable

May 24, 2024

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Frisco Medical Center, L.L.P. v. Chestnut, No. 23-0039 – Decided May 17, 2024

The Texas Supreme Court held that courts cannot sever discrete issues for class treatment if the underlying claim doesn’t meet Rule 42’s class certification requirements.

“Severing an issue ‘does not save the class action’ because courts ‘cannot manufacture predominance through the nimble use’ of Rule 42(d)(1)[ ] . . . .”

Per curiam

Background:

Plaintiffs Paula Chestnut and Wendy Bolen sued Frisco Medical Center, L.L.P. and Texas Regional Medical Center, L.L.C. for allegedly charging emergency room patients special fees without prior notification. Plaintiffs sought class certification on behalf of a group of allegedly overcharged emergency room patients. The district court certified a class of patients who received emergency treatment, were assessed a fee, and paid that fee, finding that the prerequisites of Texas Rule of Civil Procedure 42(a) were met and that plaintiffs’ claims satisfied all three parts of Rule 42(b). The district court also determined that four discrete issues should be severed for issue class treatment under Rule 42(d)(1), which provides that “[w]hen appropriate . . . an action may be brought or maintained as a class action with respect to particular issues.”

On interlocutory appeal, the Fifth Court of Appeals held that plaintiffs’ claims as a whole failed to satisfy any of the parts of Rule 42(b). Nevertheless, the court held that three of the four discrete issues the trial court identified satisfied Rule 42(b)(2). The court affirmed the certification of these three as “issue classes” under Rule 42(d)(1).

Issue:

Can a court certify an “issue class” when the underlying claim doesn’t meet the class certification requirements?

Court’s Holdings:

No. A court cannot certify an issue class unless the underlying claim meets Rule 42’s other class certification requirements.

What It Means:

• In a per curiam opinion handed down without argument, the Court reaffirmed its holding in Citizens Insurance Co. of America v. Daccach, 217 S.W.3d 430 (Tex. 2007), that issue-class certification “cannot be used to manufacture compliance with the certification prerequisites” of Rule 42(a) and (b). Op. 4.
• The Court explained that Rule 42(d)(1) is merely “a case-management tool” allowing trial courts to subdivide “class actions that already meet the requirements of Rule 42(a) and (b) into discrete ‘issue classes’ for ease of litigation”—not a means “to certify an otherwise uncertifiable class.” Op. 4–5.
• This conclusion tracks the Fifth Circuit’s reasoning in Castano v. American Tobacco Co., 84 F.3d 734 (5th Cir. 1996), regarding Rule 42’s federal counterpart—confirming that interpretations of the federal class action rules will continue to influence Texas’s analogous requirements.
• By foreclosing the use of issue classes when the underlying claim is otherwise uncertifiable under Rule 42, the Court eased the pressure on class-action defendants to choose between risking crushing liability at trial or capitulating to what many judges have called “blackmail settlements.”

The Court’s opinion is available here.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Texas Supreme Court. Please feel free to contact the following practice group leaders:

Appellate and Constitutional Law Practice

Related Practice: Texas General Litigation

This alert was prepared by Texas associates Elizabeth Kiernan, Stephen Hammer, Jessica Lee, and Zachary Carstens.

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