HBA-ATS H.B. 1036 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1036
By: Junell
Civil Practices
4/13/1999
Introduced



BACKGROUND AND PURPOSE 

Class action suits are frequently used to resolve claims brought by many
parties with a common complaint because it would be uneconomical to obtain
relief within the traditional framework of a multiplicity of small
individual suits.  Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326 (1980).
Purposes served by a class action suit include the promotion of efficiency,
protection of defendants from inconsistent verdicts, protection of the
rights of absent class members, allowance of recovery by small claimants,
and the diffusion of litigation costs among numerous litigants with similar
claims.  General Motors Corp. v. Bloyed, 916 S.W.2d 929 (Tex. 1996).
Despite these benefits, the potential for abuse exists.  Therefore, the
Texas Rules of Civil Procedure (Rule 42) require the trial court to first
determine whether a class action is superior to other available methods for
the fair and efficient adjudication of the controversy before it can
certify a group of plaintiffs as a class. 

Under Section 51.014 (Appeal from Interlocutory Order), Civil Practice and
Remedies Code, an aggrieved party can file an interlocutory appeal of a
trial court's denial of class certification. However, a writ or error to
the Texas Supreme Court is not available to contest the appellate court's
ruling because the order is final in the court of appeals in the absence of
a dissent or conflict. Nevertheless, the court has not precluded the
possibility that mandamus relief may be available to resolve a question of
class certification.  See Deloitte & Touche LLP v. Fourteenth Court of
Appeals, 951 S.W.2d 394 (Tex. 1997).  This ambiguity has resulted in
confusion to litigants and their attorneys.  If the supreme court were
allowed to hear interlocutory appeals of decisions relating to class
certification, this confusion may disappear.  H.B. 1036 allows an appeal of
an interlocutory order that certifies or refuses to certify a class in a
suit brought under Rule 42 of the Texas Rules of Civil Procedure. 

This bill also adds a new chapter to the Civil Practice and Remedies Code
that applies only to a civil action in which a claimant seeks recovery of
damages on behalf of a class of claimants and in which the interpretation,
application, or violation of an agency statute is involved for at least one
defendant. 
Under this bill, a court is required to dismiss an action if it determines
that a claimant failed to exhaust the claimant's administrative remedies
before filing the action.  In addition, a court must abate or dismiss an
action unless it determines that the interpretation, application, or
violation of an agency statute or rule involves only questions of law and
that the agency is prohibited from making any findings of fact or
conclusions of law or is prohibited from issuing any orders that would aid
the court in resolving the action.  Likewise, a court must dismiss an
action if it determines that a state agency is authorized to order in a
contested case (defined as a proceeding, including a ratemaking or
licensing proceeding, in which the legal rights, duties, or privileges of a
party are to be determined by a state agency after an opportunity for an
adjudicative hearing) all or part of the relief the claimant seeks. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Supreme Court of Texas in SECTION 2
(Sec. 22.015, Government Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subtitle B, Title 2, Civil Practice and Remedies Code,
by adding Chapter 26, as follows: 
 
CHAPTER 26.  CLASS ACTIONS INVOLVING JURISDICTION 
OF STATE AGENCY

Sec. 26.001.  DEFINITIONS.  Defines "agency statute," "claimant,"
"defendant," "rule," and "state agency." 

Sec. 26.002.  APPLICABILITY.  Provides that Chapter 26 applies only to a
civil action in which a claimant seeks recovery of damages on behalf of a
class of claimants and in which the interpretation, application, or
violation of an agency statute is involved for at least one defendant. 

Sec. 26.003.  HEARING.  Authorizes a court, on motion of a party or on its
own motion, to conduct a hearing to determine whether an action should be
dismissed or abated.  Requires the court to notify the named parties of the
date and place of the hearing at least 21 days before the date of the
hearing. 

Sec. 26.004.  DISMISSAL FOR FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES.
Requires a court to dismiss an action if it determines that a claimant
failed to exhaust the claimant's administrative remedies before filing the
action. 

Sec. 26.005.  DISMISSAL OR ABATEMENT IF STATE AGENCY JURISDICTION INVOLVED.
(a) Requires a court to abate or dismiss an action unless it determines
that the interpretation, application, or violation of an agency statute or
rule involves only questions of law and that the agency is prohibited from
making any findings of fact or conclusions of law or is prohibited from
issuing any orders that would aid the court in resolving the action. 

(b) Requires a court to dismiss an action if it determines that a state
agency is authorized to order in a contested case (defined as a proceeding,
including a ratemaking or licensing proceeding, in which the legal rights,
duties, or privileges of a party are to be determined by a state agency
after an opportunity for an adjudicative hearing) all or part of the relief
the claimant seeks. 

(c) Requires a court, if it abates an action under this section, to refer
specific issues or claims within a state agency's jurisdiction to the
agency for action.  Authorizes a court, if it abates an action under this
section, to direct a state agency to report to the court periodically
concerning the disposition of the matters referred to the agency. 

Sec. 26.006.  PERIOD OF ABATEMENT.  (a) Requires a court to provide that
the period of abatement is at least six months, or a longer period that the
court may specify, from the date the court enters the order of abatement. 

(b) Authorizes a court to extend the period of abatement if it determines
that the state agency is proceeding diligently to resolve the matters the
court referred to the agency. 

(c) Provides that the period of abatement ends when a state agency takes
its final action on the matters a court referred to the agency or when the
court determines the agency is not proceeding diligently to resolve the
matters the court referred to the agency. 

Sec. 26.007.  PROCEEDING AFTER END OF ABATEMENT; DISMISSAL.  (a) Authorizes
a court, at the end of the period of abatement, including any extension
granted by the court, to proceed with the action. 

(b) Requires a court to dismiss an action if the court determines the state
agency granted all or a substantial part of the relief sought by the
claimant or if it determines that relief granted by the state agency is an
adequate substitute for the relief sought by the claimant. 

(c) Provides that relief awarded to a claimant may be adequate even if the
relief does not include exemplary damages, multiple damages, attorney's
fees, or costs of court. 

 SECTION 2.  Amends Subchapter A, Chapter 22, Government Code, by adding
Section 22.015, as follows: 

Sec. 22.015.  CLASS ACTIONS.  Authorizes the supreme court, by rule, to
allow certification of a class of persons for the purpose of settling an
action that is different from the persons that may have been certified as a
class for the purpose of litigating the action. 

SECTION 3.  Amends Section 22.225(d), Government Code, to allow an appeal
of an interlocutory order that certifies or refuses to certify a class in a
suit brought under Rule 42 of the Texas Rules of Civil Procedure.   

SECTION 4.  Effective date: September 1, 1999.
            Makes application of this Act prospective.

SECTION 5.  Emergency clause.