McAllen Medical Center, Inc. v. Cortez

• Decision Date: 30 August 2001
• Docket Number: No. 00-0710.,00-0710.
• Citation: 66 S.W.3d 227
• Parties: McALLEN MEDICAL CENTER, INC., Petitioner, v. Ramiro CORTEZ, Jr., et al., Respondents.
• Court: Texas Supreme Court

66 S.W.3d 227

McALLEN MEDICAL CENTER, INC., Petitioner, v. Ramiro CORTEZ, Jr., et al., Respondents.

No. 00-0710.

Supreme Court of Texas.

Argued March 21, 2001.

Decided August 30, 2001.

Patricia Kelly, Roger W. Hughes, Adams & Graham, Harlingen, for petitioner.

George G. Brin, Brin & Brin, Celeste P. Lira, San Antonio, for respondents.

Michael A. Caddell, Joe Phillips, Cynthia Bodendiec Chapman, Caddell & Chapman, Donald Lee Harvey, Houston, for respondents.

Ezequiel Reyna, Jr., Law Offices of Ezequiel Reyna, Jr., Weslaco, Mark A. Cantu, Law Offices of Mark A. Cantu, McAllen, for respondents.

Justice O'NEILL delivered the opinion of the Court.

Plaintiff brought this putative class action against a doctor and the hospital where he practiced, claiming that they had misrepresented the hospital's cardiac surgeons' qualifications. When the plaintiff settled with the doctor, the trial court certified a "settlement-only" plaintiff class, preliminarily approved the settlement, and scheduled a fairness hearing at which it would review and finalize both the certification and the settlement. See Tex.R. Civ. P. 42. The hospital attempted to appeal the trial court's order, but the court of appeals dismissed the appeal. 17 S.W.3d 305. It held that the hospital lacked standing to challenge the order and that the challenge to both certification and settlement was premature pending the fairness hearing's disposition. Id. at 309-10. We hold that the hospital's certification challenge is ripe and that it has standing to appeal the trial court's order. Accordingly, we reverse the court of appeals' judgment dismissing the hospital's appeal and remand the case to that court for further proceedings.

I. Background

Ramiro Cortez, Jr., filed this putative class action against McAllen Medical Center (MMC) and Dr. Francisco Bracamontes, a cardiac surgeon at MMC. Cortez alleges that Bracamontes and MMC misrepresented to cardiac-surgery patients that all MMC cardiac surgeons were board certified. He seeks economic damages from both MMC and Bracamontes, and damages for mental anguish and intentional infliction of emotional distress from Bracamontes. Two-and-one-half weeks after filing suit, Cortez reached a tentative settlement with Bracamontes, and they jointly moved for the trial court to certify a class for purposes of approving the settlement. The proposed class consisted of everyone who had cardiac surgery at MMC from December 1, 1993, to May 21, 1999.

MMC received less than one day's notice of the certification hearing. MMC appeared at the hearing and asked the trial court to delay ruling on the motion until MMC could evaluate it. The trial court questioned MMC's standing to contest either the certification or the settlement, but gave MMC three days to file objections. MMC's objections contended that it had inadequate time to prepare for the hearing and that the proposed class met none of the criteria for class certification under Texas Rule of Civil Procedure 42. The trial court implicitly overruled MMC's objections when it entered an order that (1) certified a class action "for purposes of settlement with Defendant Bracamontes only," (2) preliminarily approved the settlement, (3) scheduled a fairness hearing on the settlement, and (4) provided for class notice of the class action and the proposed settlement.

The class notice is directed not just to Bracamontes's patients, but to all patients who had cardiac surgery at MMC. The notice also describes class claims against both Bracamontes and MMC. The order recites that it will not prejudice any other defendant's right to contest class certification with respect to claims against it, and provides that the court will rescind the certification if it does not approve the settlement after the fairness hearing. MMC filed an interlocutory appeal, and the parties agreed to postpone the fairness hearing pending the court of appeals' decision. The fairness hearing has not yet occurred.

MMC claims that it is directly affected by, and therefore has standing to contest, the Bracamontes class certification, class notice, and settlement. But the court of appeals dismissed MMC's appeal, holding that it did not have jurisdiction because MMC had shown no injury that would give it standing to appeal. 17 S.W.3d at 305. The court did not consider the class notice improper or harmful to MMC, and it did not believe that MMC's potential complaints about the settlement gave MMC standing to appeal the certification. Id. at 309-10. The court of appeals further held that the appeal was premature pending the trial court's disposition at the fairness hearing. Id. We granted review to consider whether the court of appeals correctly decided that it lacked jurisdiction. See Qwest Communications Corp. v. AT & T, 24 S.W.3d 334, 335-36 (Tex.2000).

II. The Court of Appeals' Jurisdiction

A court of appeals' judgment in an appeal from an interlocutory class-certification order is generally conclusive on the law and facts and may not be appealed to this Court. See Tex. Gov't Code § 22.225(b)(3). Here, however, the court of appeals did not consider the merits of MMC's challenge, but instead dismissed the appeal on jurisdictional grounds. 17 S.W.3d at 310. When a court of appeals determines that it lacks jurisdiction over an interlocutory appeal, this Court has jurisdiction to review that decision. Qwest, 24 S.W.3d at 335-36. The parties do not dispute that the trial court's order certifies a class action and is thus subject to interlocutory appeal. See Tex. Civ. Prac. & Rem.Code § 51.014(a)(3) (allowing appeal from an interlocutory order that certifies or refuses to certify a class action). But the interlocutory appeal statute does not supplant the constitutional requirement that the court of appeals have subject-matter jurisdiction, and both ripeness and standing are necessary components of that jurisdiction. Patterson v. Planned Parenthood of Houston & Southeast Tex., Inc., 971 S.W.2d 439, 442 (Tex. 1998). Thus, we must decide whether the trial court's order is ripe for review and whether MMC has standing to challenge it.

A. Ripeness

Texas courts have no authority to render advisory opinions. Patterson, 971 S.W.2d at 442-43. This prohibition encompasses cases that are not yet ripe. Id. The ripeness doctrine avoids premature adjudication on a hypothetical set of facts. Id. at 444. Cortez contends that MMC's challenges to the class-certification order and the settlement are not ripe. We address each of these arguments in turn.

1. The Class-Certification Order

This Court has not determined when an order certifying a settlement-only class becomes ripe for appellate review. But we have held that the trial court must conduct a complete review of Rule 42's criteria before determining that a case may proceed as a class action. Southwestern Ref. Co. v. Bernal, 22 S.W.3d 425, 435 (Tex.2000). And we have noted that settlement does not eliminate the need for a rigorous inquiry into the class action's propriety. General Motors Corp. v. Bloyed, 916 S.W.2d 949, 954 (Tex.1996). Our focus here is when that rigorous inquiry should occur so that it becomes ripe for appellate review.

Cortez claims that, in this case, the class-action inquiry will occur at the fairness hearing, and the trial court will then review Rule 42's numerosity, commonality, typicality, and adequacy-of-representation criteria. Because no final determination has been made, he reasons, appellate review of the trial court's order is premature. But Cortez's argument echoes the "certify now and worry later" approach that we have rejected. Bernal, 22 S.W.3d at 435. We require courts to "perform a `rigorous analysis' before ruling on class certification to determine whether all prerequisites to certification have been met." Id. (emphasis added). We see no reason why settlement-only classes should merit less rigorous treatment.

It is true that settlement-only classes present different concerns than litigation classes. Thus, in deciding whether to certify a settlement-only class, class-action criteria designed to protect absent class members demand heightened scrutiny. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997)¹; Bloyed, 916 S.W.2d at 954. These protections may lose effect if the trial court waits until the fairness hearing to consider them.

For example, the trial court has a special responsibility to protect absent class members from unwarranted or overbroad class definitions. See Amchem, 521 U.S. at 620, 117 S.Ct. 2231; Ford Motor Co. v. Sheldon, 22 S.W.3d 444, 453 (Tex. 2000) ("A properly defined class is essential to the maintenance of a class action."). Strict scrutiny of Rule 42's criteria will likely inform and influence the trial court's class definition. For instance, careful consideration of whether, or which, common questions of law or fact will predominate over individual class members' questions will influence the class's structure and, by definition, the necessary class notice. If notice is sent to a broadly defined settlement class without regard to these considerations, the trial court's ability to later adjust the class at the fairness hearing and still protect all class members' interests may be severely limited.

The trial court in this case "conditionally" certified an "opt-out" class, and ordered notice sent to "[a]ll persons who underwent cardiac surgery at [MMC] from December 1, 1993 until May 21, 1999." The opt-out deadline is five days before the scheduled fairness hearing. Consequently, the class members must make their election before the trial court determines at the fairness hearing whether the class was properly defined in the first instance. And absent class members may be confused if, after considering Rule 42's criteria, the trial court redefines the class or determines that it cannot ultimately be maintained. See Crown, Cork & Seal Co., Inc. v. Parker, 462 U.S. 345,...