Stonebridge Life Ins. Co. v. Pitts
| Decision Date | 18 May 2006 |
| Docket Number | No. 13-05-131-CV.,13-05-131-CV. |
| Citation | 236 S.W.3d 226 |
| Parties | STONEBRIDGE LIFE INSURANCE COMPANY, f/k/a J.C. Penney Life Insurance Company, et al., Appellants, v. Gayle G. PITTS, et al., Appellees. |
| Court | Texas Court of Appeals |
James David Brown, Joel W. Reese, Winstead, Dechrest & Minick, P.C., Dallas, Craig T. Enoch, Winstead, Sechrest & Minick, P.C., Austin, Frank E. Weathered, Dunn, Weathered, Coffey, Rivera & Kasperities, P.C., Atty's at Law, Corpus Christi, for Appellants.
Tamera L. Venzke, John P. Venzke, The Venzke Law Firm, LLP, Houston, Stephen Gardner, Atty. At Law, Dallas, David H. Berg, Berg & Androphy, Houston, J.A. "Tony" Canales, Canales & Simonson, P.C., Corpus Christi, for Appellees.
Before Chief Justice VALDEZ and Justices HINOJOSA and YAÑEZ.
Appellants, Stonebridge Life Insurance Company (f/k/a J.C. Penney Life Insurance Company), J.C. Penney Direct Marketing Services, Inc., and AEGON Special Markets Group, Inc. (n/k/a AEGON Direct Marketing Services, Inc.), bring this interlocutory appeal from the statewide certification of a class of consumers who purchased accidental death and dismemberment ("ADD") insurance from appellants. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(3) (Vernon Supp. 2005). Appellants complain that the trial court erred in certifying the class action for the following reasons: (1) individual issues will predominate over common issues; (2) the trial court did not conduct a rigorous analysis and the certification order is inadequate; (3) a class action is not a superior method of resolving this dispute; and (4) the class representatives do not satisfy the typicality requirement. We affirm.
Appellants market and sell ADD insurance policies to individual consumers over the telephone. Appellants purchase consumer information, including names, telephone numbers, credit card account numbers, and bank account information from other businesses, primarily issuers of credit cards. Appellants then call the consumers whose information they have acquired and, using a standardized telemarketing script, offer ADD insurance policies on a free sixty-day or ninety-day trial basis. Consumers are told that, if they do not cancel their policies after the expiration of the trial period, their enrollment will continue and they will be billed for the premiums. Appellees contend, however, that the consumers are never informed that their credit card information is already known to appellants and that their pre-existing credit card accounts will be billed automatically if they do not affirmatively act to cancel the policy.
Appellees, a group of consumers who purchased these ADD policies by consenting to the free trial enrollment, filed a class action petition against appellants alleging that appellants improperly charged appellees' credit card accounts for the insurance premiums after the expiration of the trial period. Appellees originally sought to classify a nationwide class of plaintiffs with the following causes of action: (1) money had and received, (2) conspiracy, and (3) violations of the Texas Theft Liability Act. See TEX. CIV. PRAC. & REM.CODE ANN. § 134.001 (Vernon Supp.2005). The trial court certified the nationwide class; appellants appealed this certification to this Court.
During that appeal, this Court concluded that the trial court failed to analyze potential conflicts of law between the fifty states represented in the nationwide class, and held that "appellees failed to show that common issues of law or fact predominate" given appellees' failure to address conflict of law issues. See J.C. Penney v. Pitts, 139 S.W.3d 455, 462 (Tex.App.-Corpus Christi 2004, no pet.). We therefore reversed the certification order and remanded to the trial court to properly conduct this conflict of law analysis. See id.
On remand, appellees amended their petition to assert only a single cause of action, money had and received, and sought certification of a class composed of only Texas consumers. The trial court held another certification hearing and subsequently approved the following class definition:
All individuals in Texas, (1) from whom Defendants received premium payments for (ADD) insurance from November 28, 1996, until the date of certification, (2) by means of either a credit card charge or bank account debit initiated by any Defendant, (3) after a telemarketing contact initiated by Defendants, (4) who did not provide written authorization prior to Defendants' receipt of payment, and (5) who have not made a claim or received benefits due to making any claim from Defendants under any ADD policy.
As the trial court characterized the case, there is only one liability issue to be decided: whether appellants obtained money which in equity belongs to the class members by charging their credit cards or debiting their bank accounts for ADD insurance premiums.
The trial court determined the class should be an "opt-out" class and provided requirements for notice to be sent to all potential class members. The court also made findings of fact and conclusions of law regarding the elements of class certification (i.e., numerosity, commonality, typicality, adequacy of class representatives, and predominance and superiority) and determined that because only a Texas class had been certified, further conflict of law analysis was unnecessary. The certification order also covered elements of the trial plan, in particular, discovery issues, class claims and defenses, and damages.
The sole cause of action now asserted by appellees is money had and received. Money had and received is an equitable action that may be maintained to prevent unjust enrichment when one person obtains money, which in equity and good conscience belongs to another. Pitts, 139 S.W.3d at 462 n. 4 (). A cause of action for money had and received is not based on wrongdoing but instead, "looks only to the justice of the case and inquires whether the defendant has received money which rightfully belongs to another." Amoco Prod. Co. v. Smith, 946 S.W.2d 162, 164 (Tex.App.-El Paso 1997, no writ). It is essentially an equitable doctrine applied to prevent unjust enrichment. Hunt v. Baldwin, 68 S.W.3d 117, 132 (Tex.App.-Houston [14th Dist.] 2001, no pet.).
In Texas, class actions are to be certified in accordance with the requirements of rule 42 of the Texas Rules of Civil Procedure. See TEX.R. CIV. P. 42. A trial court's ruling on class certification is reviewed by this Court for an abuse of discretion. See Southwestern Ref. Co. v. Bernal, 22 S.W.3d 425, 439 (Tex.2000). However, we do not indulge every presumption in favor of the trial court's ruling because actual "compliance with [Texas Rule of Civil Procedure] 42 must be demonstrated rather than presumed." Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 691 (Tex.2002); Pitts, 139 S.W.3d at 459. Because rule 42 was patterned after the federal rule, "federal decisions and authorities interpreting federal class action requirements are persuasive in Texas actions." Ford Motor Co. v. Sheldon, 22 S.W.3d 444, 452 (Tex.2000); Pitts, 139 S.W.3d at 459. The trial court additionally "must perform a `rigorous analysis' before ruling on a class certification to determine whether all prerequisites to certification have been met," and the appellate court is able to evaluate the adequacy of this rigorous analysis on appeal. See Bernal, 22 S.W.3d at 435.
Rule 42 certification involves a two-step process. First, the proposed class must meet rule 42(a)'s four requirements: (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation. See TEX.R. CIV. P. 42(a). Second, the class must meet the requirements of one of three subdivisions of rule 42(b); in this case, under rule 42(b)(3), the trial court must establish the elements of predominance of common issues over individual issues and the superiority of a class action as opposed to other forms of litigation. See TEX.R. CIV. P. 42(b)(3).
Appellants argue in their first issue that the trial court's order certifying the class action fails to demonstrate compliance with rule 42(b)(3)'s requirement of predominance. The predominance requirement "prevents class action litigation when the sheer complexity and diversity of individual issues would overwhelm or confuse a jury or severely compromise a party's ability to present viable claims or defenses." Bernal, 22 S.W.3d at 434. "The test for predominance is not whether common issues outnumber uncommon issues but . . . `whether common or individual issues will be the object of most of the efforts of the litigants.'" Id. (quoting Cent. Power & Light Co. v. City of San Juan, 962 S.W.2d 602, 610 (Tex.App.-Corpus Christi 1998, pet. dism'd w.o.j.)); see Pitts, 139 S.W.3d at 460-61. Ideally, a judgment in favor of the named plaintiffs should decisively settle the entire controversy, and all that should remain is for other class members to file proofs of claim. Peltier Enters. v. Hilton, 51 S.W.3d 616, 622 (Tex.App.-Tyler 2000, pet. denied).
Here, the trial court determined that the claims of all class members arose from a common course of conduct by appellants that was identical with regard to each individual consumer, i.e., each consumer was subjected to a common telemarketing effort that included prepackaged telemarketing scripts, which were not deviated from by appellants' representatives. The question that now remains to be decided is whether appellants' use of consumer responses to those scripts as implied consent to automatic credit-card-debiting constitutes a cause of action for money had and received. If the finder of fact determines that the use of these scripts,...
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