Farmers Group, Inc. v. Lubin

222 S.W.3d 417, 50 Tex. Sup. Ct. J. 690, 2007 Tex. LEXIS 363, 2007 WL 1225080
CourtTexas Supreme Court
DecidedApril 27, 2007
Docket05-0169
StatusPublished
Cited by32 cases

This text of 222 S.W.3d 417 (Farmers Group, Inc. v. Lubin) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Farmers Group, Inc. v. Lubin, 222 S.W.3d 417, 50 Tex. Sup. Ct. J. 690, 2007 Tex. LEXIS 363, 2007 WL 1225080 (Tex. 2007).

Opinions

Justice BRISTER

delivered the opinion of the Court,

in which Chief Justice JEFFERSON, Justice O’NEILL, Justice WAINWRIGHT, Justice MEDINA, Justice GREEN, and Justice JOHNSON joined.

In 1973, the Legislature amended the Insurance Code to allow an attorney gen[420]*420eral to bring a class action on behalf of insurance buyers. This is the first time an attorney general has tried. The trial court certified a class, but the court of appeals reversed, finding the Attorney General had not strictly complied with two of the certification requirements.

We agree courts must rigorously analyze whether a party has strictly complied with all requirements for class certification.1 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. Accordingly, we hold the standard class action requirements must be applied generally to the claims asserted by the Attorney General, not the Attorney General himself.

I. Background

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.2 The Commissioner of Insurance also 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 attorney’s 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.3 The district court granted certification and preliminarily approved the settlement.

The Intervenors filed an interlocutory appeal,4 and the Third Court of Appeals reversed, holding the Attorney General could not bring a class action under the Insurance Code without naming individual class members as representatives.5 The State and Farmers filed petitions for review.

II. Appellate Jurisdiction of Class Certification

In 2003, the Legislature expanded this Court’s jurisdiction to include interloc[421]*421utory review of class certification orders to the same extent as in the courts of appeals.6 Thus, the Government Code now grants the following jurisdiction to all Texas appellate courts:

A person may appeal from an interlocutory order of a district court, county court at law, or county court that ... certifies or refuses to certify a class in a suit brought under Rule 42 of the Texas Rules of Civil Procedure ... 7

Here, certification was sought and granted under two alternatives: (1) Rule 42 and (2) the separate but virtually identical class-action provisions in the Insurance Code. The Intervenors point out that section 51.014(3) mentions only the former, and argue that we have no jurisdiction because the class can meet the requirements, if at all, of only the latter.

We disagree. Assuming the Legislature intended to allow interlocutory review of Rule 42 classes but not Insurance Code classes (an issue we do not reach), in this case the State and Farmers sought both. “As we have repeatedly recognized, if our jurisdiction is properly invoked on one issue, we acquire jurisdiction of the entire case.”8 As we have jurisdiction to review certification under Rule 42, we may review certification under the Insurance Code as well.

Moreover, the trial judge granted certification under both alternatives here. We have held that an alternative holding may establish jurisdiction if, even though a judgment could have been based on either of two grounds, it was based on both.9 This rule is a practical one, because (1) appellate jurisdiction generally attaches to orders, not reasons, and (2) reviewing one ground for an order would be futile if the order would stand on the unappealed ground regardless. Here, for example, if we have no jurisdiction to review certification based on the Insurance Code, neither did the court of appeals, and thus the class would remain certified under the Insurance Code regardless of either court’s Rule 42 analysis. We cannot construe section 51.014 so strictly as to render it futile.10 As the parties sought and the trial court granted certification under both Rule 42 and the Insurance Code, we have jurisdiction to review both grounds for that order.

III. Class Actions by the Attorney General

We begin by placing Insurance Code class actions in context. The Code prohib[422]*422its a list of unfair insurance practices,11 and delegates enforcement in three ways:

• the Department of Insurance may conduct investigations,12 issue cease-and-desist orders,13 assess monetary penalties,14 and order premium refunds;15

• the Attorney General may file suits seeking injunctions,16 monetary penalties,17 and restitution;18 and

• any person may file suit for damages.19

Due to the wide-spread use of standard provisions in insurance policies, a single insurance practice may often affect many consumers. Thus, the Code provides for three different types of class actions:

• an administrative class action brought by the Department of Insurance for premium refunds;20

• a judicial class action brought by the Attorney General;21 and

• a judicial class action brought by “a member' of the insurance buying public” who has been damaged by an unlawful practice.22

Relief under the first is limited to premium refunds,23 while judicial class actions may recover damages and attorney’s fees.24 But administrative class actions take precedence; no judicial class action can be brought once an administrative class action has started.25

Unlike any other statute, the Insurance Code contains its own set of class action rules. While almost identical to those currently in Rule 42 (both of which track federal Rule 23), the Insurance Code provisions were adopted first.26 Both include the same four prerequisites for all class actions (numerosity, commonality, typicality, and adequacy of representation)27

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Bluebook (online)
222 S.W.3d 417, 50 Tex. Sup. Ct. J. 690, 2007 Tex. LEXIS 363, 2007 WL 1225080, Counsel Stack Legal Research, https://law.counselstack.com/opinion/farmers-group-inc-v-lubin-tex-2007.