The Beaumont Court of Appeals in Texas has departed from state law in its improper certification of a nationwide class action suit that would ultimately make law for the entire country, according to the National Association of Independent Insurers (NAII).
NAII filed an amicus brief in the case of LaPray v. Compaq urging the Texas Supreme Court to review the lower court ruling and uphold established Texas law that sets specific standards be met when certifying a class action suit.
In the case, LaPray alleges that Compaq breached its warranties in selling computers with defective floppy disks. Compaq argued that the class members never suffered any loss of data due to the alleged defect. The insurance industry is interested in this case because the lower court’s ruling is inconsistent with the fair application of Texas’ class action rules.
“Only through the consistent, fair and rigorous application of class action rules can the court winnow out meritless class actions at an early stage and eliminate the unnecessary burden of defending against these suits,” said Laura Kotelman, counsel for NAII. “The Beaumont Court of Appeals disregarded the ground rules set out for the court regarding class action certification determinations and created a backdoor certification loophole.”
The insurance industry is the frequent target of groundless class action suits. Regardless of the merits, insurers are forced to waste resources in defending themselves, which ultimately drives up costs for all consumers. “When used appropriately, class action suits are a valuable tool. However, the rules regarding class certification must be uniformly and rigorously employed. In Compaq , the court strayed from the rules and as a result reduced the predictability of the established requirements for certification of a class. The decision indicates that it is necessary for the Texas Supreme Court to review and re-establish the law,” said Kotelman.
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