A recent decision of the Texas Court of Appeals in Austin (Third District) caught my eye. Not because it involved insurance; rather, it was a securities class action challenging a board of directors’ approval of a corporate transaction. See Brigham Exploration Co. v. Boytim, No. 03-13-00191-CV, 2014 Tex. App. LEXIS 9068 (Tex. Ct. App. – Austin Aug. 15, 2014). What caught my attention was that the court of appeals held that it was an abuse of discretion for the trial court to issue an order certifying a class without addressing the defendant’s affirmative defenses.
The court explained that the Texas class action rule explicitly requires a trial plan in every order certifying a class. (While numerous other courts have required this, it is not typically inserted in the class action rule itself.) The court ruled that “by failing to include analysis of the pleaded defenses, the trial court failed to conduct the required ‘rigorous analysis’ before ruling on the class certification.” Id. at *10. On that basis alone, the court of appeals found that the trial court abused its discretion.
This is a nice arrow for defendants to have in their quiver in Texas. And the rationale should help elsewhere too. I’ve said this here before, and I’m sure I’ll say it again: in opposing class certification, affirmative defenses can potentially make a real difference.