Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-99-00766-CV

Henry Schein, Inc.; Easy Dental Systems, Inc.; and Dentisoft, Inc., Appellants

v.

Shelly E. Stromboe, D.D.S.; Alan B. Helig, D.D.S.; Bart Presti, D.D.S.; Kelly Presti;

and Jeanne N. Taylor, D.D.S. on behalf of themselves and all

others similarly situated, Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT

NO. 98-00886, HONORABLE SUZANNE COVINGTON, JUDGE PRESIDING

This is an interlocutory appeal from a trial court order certifying a class action. See

Tex. Civ. Prac. & Rem. Code Ann. § 51.014 (a)(3) (West Supp. 2000). In five issues, appellants

Henry Schein, Inc., Easy Dental Systems, Inc., and Dentisoft, Inc. contend that the trial court

abused its discretion in certifying the class because appellees failed to satisfy certain prerequisites

under subsections (a) and (b) of rule 42 of the Texas Rules of Civil Procedure. We will affirm

the order granting class certification.

FACTUAL AND PROCEDURAL BACKGROUND

Henry Schein, Inc. ("Schein") claims to be the nation's largest seller of dental office

supplies and equipment. In 1995, one of Schein's subsidiaries, Easy Dental Systems, Inc., began

selling two computer software packages designed to aid dentists in the management of their office

records. The Windows versions of the software were called "Easy Dental Lite" and "Easy Dental

for Windows." The DOS version was called "Easy Dental for DOS."

In 1998, two dentists who had purchased the software, Dr. Shelly Stromboe and

Dr. Jeanne Taylor, filed suit against Schein and its subsidiaries, Easy Dental Systems, Inc. and

Denti-Soft, Inc. (collectively, "Easy Dental"), seeking to hold them jointly and severally liable

for breach of contract, breach of express and implied warranties, fraud, negligent

misrepresentation, promissory estoppel, and violations of the Texas Deceptive Trade

Practices--Consumer Protection Act (the "DTPA"). See Tex. Bus. & Com. Code Ann. §§ 17.41 -.63 (West 1987 & Supp. 2000). Specifically, Stromboe alleged that the Windows versions of the

software were defective. The problems Stromboe experienced with the software ranged in severity

from minor malfunctions to complete operational failures. (1) Taylor alleged that after purchasing

the DOS version of the software, Easy Dental charged her for technical support despite its promise

to provide the service for free. Taylor also alleged that Easy Dental sent her unsolicited software

enhancements and upgrades, forcing her either to pay for the software or return it. Both Taylor

and Stromboe complained that Easy Dental had falsely represented that its software would be fit

for managing their office data and patient records. Shortly after filing their petition, Stromboe and

Taylor filed a motion requesting certification of a nationwide class of similarly situated plaintiffs,

which they alleged to be approximately 20,000 in number.

From November to July 1998, the parties conducted extensive discovery regarding

the merits of the case and the propriety of class certification. Following a five-day evidentiary

hearing on the issue of class certification, the trial court signed an order granting appellees' motion

for class certification on November 1, 1999. (2) The trial court divided the plaintiff class into two

subclasses--the "Windows subclass" and the "DOS subclass." The Windows subclass included

"[a]ll purchasers of Easy Dental Windows software prior to Easy Dental 98, including Easy Dental

Lite and Easy Dental version 2.0, 2.1, 2.39, 2.41, 3.0, 3.01, 3.02 and 3.03." The DOS subclass

included "[a]ll purchasers and/or persons who received Easy Dental DOS software releases up to

and including version 10.0." The trial court named Stromboe representative of the Windows

subclass. Dr. Alan Helig and Dr. Kelly Presti were appointed representatives of the DOS

subclass. (3) On November 16, 1999, the trial court issued findings of fact and conclusions of law,

stating in part:

In light of the amount any individual Plaintiff could recover in this case and the fact

that Plaintiffs are owners and operators of small businesses, the Court finds that the

economics of pursuing their claims individually would not be feasible for the

members of both the DOS and Windows subclasses. The joinder of all members

is not practicable in view of the size of the class and judicial economy, the nature

of the action, geographical locations of class members, and the likelihood that class

members would be unable to prosecute individual lawsuits.

Easy Dental then filed this interlocutory appeal, maintaining that the trial court

abused its discretion in certifying the class under rule 42(b)(4) because (1) common issues do not

predominate over individual issues; (2) the trial court failed to conduct a proper conflict-of-law

analysis; (3) the claims of the class representatives are not typical of the absent class members'

claims; and (4) the class representatives will not adequately represent the interests of the absent

class members. Finally, Easy Dental argues that mandatory class certification under rule

42(b)(1)(A) is improper because (5) the suit is one primarily for monetary damages, rather than

injunctive relief.

STANDARD OF REVIEW

Trial courts enjoy broad discretion in deciding whether to grant or deny a motion

for class certification. See Rainbow Group, Ltd. v. Johnson , 990 S.W.2d 351, 356 (Tex.

App.--Austin 1999, pet. dism'd); Vinson v. Texas Commerce Bank--Houston, N.A., 880 S.W.2d

820, 823 (Tex. App.--Dallas 1994, no writ). On appeal, our review is strictly limited to

determining whether the trial court abused its discretion in ordering class certification. See

Rainbow Group, Ltd. , 990 S.W.2d at 356 ; Vinson, 880 S.W.2d at 823 . We may not substitute

our judgment for that of the trial court. See Rainbow Group, Ltd. , 990 S.W.2d at 356 ; Vinson,

880 S.W.2d at 823 . That the trial court, in the opinion of the appellate court, made an error in

judgment does not alone demonstrate an abuse of discretion. See Rainbow Group , Ltd. , 990

S.W.2d at 356 ; Dresser Indus., Inc. v. Snell , 847 S.W.2d 367, 371 (Tex. App.--El Paso 1993,

no writ). Rather, a trial court abuses its discretion in certifying a class if it fails to properly apply

the law to the undisputed facts or acts arbitrarily, unreasonably, or without reference to any

guiding principles. See Rainbow Group , Ltd. , 990 S.W.2d at 356 ; Vinson, 880 S.W.2d at 823 .

A trial court does not abuse its discretion if its decision is based on conflicting evidence. See

Rainbow Group , Ltd. , 990 S.W.2d at 356 ; Vinson, 880 S.W.2d at 823 .

In deciding whether to grant class certification, a trial court may consider the

pleadings and other material in the record, along with any evidence presented at the hearing. See

Rainbow Group , Ltd. , 990 S.W.2d at 356-57 ; Employers Cas. Co. v. Texas Ass'n of Sch. Bds.

Workers' Compensation Self-Ins. Fund , 886 S.W.2d 470, 474 (Tex. App.--Austin 1994, writ

dism'd w.o.j.). The evidence on which a trial court bases its certification ruling need not be in

a form necessary to be admissible at trial. See Texas Commerce Bank Nat'l Ass'n v. Wood , 994

S.W.2d 796, 801 (Tex. App.--Corpus Christi 1999, pet. dism'd); Microsoft Corp. v. Manning,

914 S.W.2d 602, 615 (Tex. App.--Texarkana 1995, writ dism'd). In our review of the trial

court's decision, we view the evidence in the light most favorable to the trial court's action and

entertain every presumption in favor of its judgment. See Rainbow Group , Ltd. , 990 S.W.2d at

357 ; Vinson , 880 S.W.2d at 823 .

GENERAL REQUIREMENTS OF CLASS CERTIFICATION

The Texas Supreme Court recently observed that "[w]hen properly applied the class

action device is unquestionably a valuable tool in protecting the rights of our citizens."

Southwestern Refining Co., Inc. v. Bernal , 43 Tex. Sup. Ct. J. 706, 715 (May 11, 2000). Indeed,

class action suits furnish an efficient means for numerous claimants with a common complaint to

obtain a remedy where it is not economically feasible to obtain relief within the traditional

framework of a multiplicity of small individual suits for damages. See Nissan Motor Co., Ltd. v.

Fry , No. 13-99-199-CV, slip op. at 6 (Tex. App.--Corpus Christi Aug. 17, 2000, no pet. h.)

(citing General Motors v. Bloyed , 916 S.W.2d 949, 952-53 (Tex. 1996)). Quoting the United

States Supreme Court, the Texas Supreme Court noted in Bernal :

[T]he very core of the class action mechanism is to overcome the problem that

small recoveries do not provide the incentive for any individual to bring a solo

action prosecuting his or her rights. A class action solves this problem by

aggregating the relatively paltry potential recoveries into something worth

someone's (usually an attorney's) labor.

Bernal , 43 Tex. Sup. Ct. J. at 715 (quoting Amchem Prods., Inc. v. Windsor , 521 U.S. 591, 617

(1997)). At the same time, the Texas Supreme Court cautioned that "fairness and justice to all

concerned require adherence to certification standards," and it insisted that courts perform a

"rigorous analysis" before ruling on a motion for class certification so as to ensure that all of the

prerequisites have been met. See id.

In this case, the trial court found that all requirements for class certification had

been satisfied under rule 42(a) and rule 42(b)(4). Rule 42(a) provides:

One or more members of a class may sue or be sued as representative parties on

behalf of all only if (1) the class is so numerous that joinder of all members is

impracticable, (2) there are questions of law or fact common to the class, (3) the

claims or defenses of the representative parties are typical of the claims or defenses

of the class, and (4) the representative parties will fairly and adequately protect the

interests of the class.

Tex. R. Civ. P. 42(a). These four factors are commonly referred to respectively as the

requirements for "numerosity," "commonality," "typicality," and "adequacy of representation."

See, e.g., Forsyth v. Lake LBJ Inv. Corp. , 903 S.W.2d 146, 150 (Tex. App.--Austin 1995, writ

dism'd w.o.j.). Having determined that the four preliminary requirements under subsection (a)

were satisfied, the trial court in this case certified the class under subsection (b)(4). (4) Certification

under rule 42(b)(4) is appropriate when "the court finds that the questions of law or fact common

to the members of the class predominate over any questions affecting only individual members,

and that a class action is superior to other available methods for the fair and efficient adjudication

of the controversy." Tex. R. Civ. P. 42(b)(4). Matters pertinent to these findings include:

(A) the interest of members of the class in individually controlling the prosecution

or defense of separate actions; (B) the extent and nature of any litigation concerning

the controversy already commenced by or against members of the class; (C) the

desirability or undesirability of concentrating the litigation of the claims in a

particular forum; (D) the difficulties likely to be encountered in the management

of a class action.

Id.

Although the class proponents bear the burden of establishing that all four

requirements of rule 42(a) and at least one of the requirements under rule 42(b) are satisfied, see

Rainbow Group, Ltd. , 990 S.W.2d at 356 , they are not required to prove a prima facie case of

liability or make an extensive evidentiary showing in to be entitled to class certification. See Tana

Oil & Gas Corp. v. Bates , 978 S.W.2d 735, 739 (Tex. App.--Austin 1998, no pet.); Union Pac.

Resources Co. v. Chilek , 966 S.W.2d 117, 120 (Tex. App.--Austin 1998, pet. dism'd w.o.j.);

Weatherly v. Deloitte & Touche , 905 S.W.2d 642, 647 (Tex. App.--Houston [14th Dist.] 1995,

writ dism'd w.o.j.).

DISCUSSION

Certification under TRCP 42(b)(1)(A)

We begin by addressing Easy Dental's contention that the trial court abused its

discretion in certifying the class under rule 42(b)(1)(A) because appellees seek as their primary

relief monetary damages rather than injunctive relief. (5) We need not reach the merits of this

argument, though, because appellees expressly waived any certification under rule 42(b)(1)(A)

both in their brief and at oral argument, explaining that they have no intention of trying the case

as a mandatory class action under rule 42(b)(1)(A). In response, Easy Dental cites rule 42(e) of

the Texas Rules of Civil Procedure and asserts that appellees cannot waive the trial court's

certification under rule 42(b)(1)(A) without first obtaining the trial court's approval. See Tex. R.

Civ. P. 42(e) ("A class action shall not be dismissed or compromised without the approval of the

court, and notice of the dismissal or compromise shall be given to all members of the class in such

a manner as the court directs."). However, appellees are not attempting to dismiss or compromise

their causes of action. Rather, they are merely conceding that certification of a mandatory class

under rule 42(b)(1) is inappropriate in this case and are indicating their intention to proceed only

as an opt-out class under rule 42(b)(4).

Even if we were to hold that the trial court's certification under rule 42(b)(1) was

an abuse of discretion, we would nevertheless conclude--as we do in our discussion of Easy

Dental's second point of error--that certification was appropriate under rule 42(b)(4).

Consequently, Easy Dental is unable to show that any alleged error by the trial court was harmful

error. See Tex. R. App. P. 44.1(a); Davis v. Huey , 571 S.W.2d 859, 862 (Tex. 1978); Malone

v. E.I. du Pont de Nemours & Co. , 8 S.W.3d 710, 716-17 (Tex. App.--Fort Worth 1999, pet.

filed). Accordingly, we overrule Easy Dental's first point of error.

Predominance

In its second point of error, Easy Dental argues that the trial court abused its

discretion in ordering class certification under rule 42(b)(4) (6) because common questions of law and

fact do not predominate. Although Easy Dental concedes that some common issues of law and

fact exist, it contends that any such questions are outweighed by the proliferation of individualized

questions of law and fact, specifically issues of causation, reliance, and damages. It also maintains

that many of the common issues identified by the trial court are not in fact common.

A common question of law or fact exists when the answer as to one class member

is the answer as to all class members. See Weatherly, 905 S.W.2d at 648 ; RSR Corp. v. Hayes ,

673 S.W.2d 928, 932-33 (Tex. App.--Dallas 1984, writ dism'd). Those questions that do not

produce common answers are not common questions under rule 42. See Wente v. Georgia-Pac.

Corp. , 712 S.W.2d 253, 257 (Tex. App.--Austin 1986, no writ). In its most recent discussion

of the predominance requirement, the Texas Supreme Court stated:

Courts determine if common issues predominate by identifying the substantive

issues of the case that will control the outcome of the litigation, assessing which

issues will predominate, and determining if the predominating issues are, in fact,

those common to the class. The test for predominance is not whether common

issues outnumber uncommon issues but, as one court stated, whether common or

individual issues will be the object of most of the efforts of the litigants and the

court. If, after common issues are resolved, presenting and resolving individual

issues is likely to be an overwhelming or unmanageable task for a single jury, then

common issues do not predominate. Ideally, a judgment in favor of the class

members should decisively settle the entire controversy, and all that should remain

is for other members of the class to file proof of their claim.

Bernal , 43 Tex. Sup. J. at 710-11 (emphasis added) (internal quotations and citations omitted) .

The supreme court then explained that the predominance requirement "is intended

to prevent class action litigation when the sheer complexity and diversity of the individual issues

would overwhelm or confuse a jury or compromise a party's ability to present viable claims or

defenses." Id. at 711 . The court criticized many courts of appeals for their lax application of the

predominance requirement and emphasized that courts must perform a "rigorous analysis." See

id. at 712 . While observing that "it may not be an abuse of discretion to certify a class that could

later fail," the supreme court stressed that "a cautious approach to class certification is essential."

Id . Furthermore, it added that "[i]f it is not determinable from the outset that the individual issues

can be considered in a manageable, time-efficient, yet fair manner, then certification is not

appropriate." Id. Keeping these principles in mind, we now turn to the facts and circumstances

of the case at hand and examine them through a prism of "rigorous analysis" to determine whether

common issues predominate over the individual issues.

Our review of the record suggests that the trial court was indeed diligent in applying

the rigorous analysis necessary for class certification. Certainly, there is no indication that the

trial court chose to "certify now and worry later." See id. at 711 (expressly disapproving of such

tendencies). Over the course of five days, the trial court heard extensive argument and considered

an immense amount of evidence concerning all issues relevant to class certification. At the

hearings, both sides elicited live testimony and together produced twelve bound volumes of

documents containing more than 180 exhibits. In its findings of fact and conclusions of law, the

trial court concluded that the DOS subclass shared many common issues of law and fact, including

questions of (1) whether Easy Dental promised members of the subclass free and unlimited

technical support; (2) whether Easy Dental breached this agreement; (3) whether Easy Dental was

negligent in representing that it would provide free and unlimited technical support; (4) whether

members of the subclass were denied the benefit of their bargain as a result of any failure by Easy

Dental to provide such technical support; (5) whether any failure by Easy Dental to provide

technical support was fraudulent or a violation of the DTPA; (6) whether members of the subclass

relied upon Easy Dental's promises of free technical support and suffered damages as a result; (7)

whether members of the subclass are entitled to recovery under a claim of promissory estoppel;

(8) whether Easy Dental mailed unsolicited enhancements and upgrades of DOS software to

subclass members, requiring them either to purchase the software or return it; and (9) whether

Easy Dental's mailing, if any, of unsolicited software enhancements and upgrades to members of

the subclass was a violation of the Texas Business and Commerce Code. (7)

With respect to the Windows subclass, the trial court found that common factual

and legal issues included questions of (1) whether the Windows software was defective; (2)

whether members of the subclass failed to receive the benefit of their bargain; (3) whether Easy

Dental's sale of the software constituted a breach of contract; (4) whether Easy Dental's

representations in its advertisements and other communications with the subclass were false,

misleading, or deceptive; (5) whether any of Easy Dental's misrepresentations about the Windows

software violated the DTPA; (6) whether any such misrepresentations constitute an unconscionable

action or course of action under the DTPA; (7) whether Easy Dental breached any of its express

warranties; (8) whether Easy Dental's limitations of warranty are enforceable; (9) whether Easy

Dental knowingly sold defective software; and (10) whether members of the subclass are entitled

to recover under a theory of promissory estoppel.

Our review of the record in this case leads us to conclude that the trial court was

correct in its determination that these issues were common and would predominate at trial over

any individual issues. The depositions and documentary evidence comprising the bulk of the

record directly relate to the issues referenced by the trial court in its findings of fact and

conclusions of law--namely the nature of the defects in Easy Dental's software, the extent of Easy

Dental's knowledge of those defects, Easy Dental's alleged uniform misrepresentations about the

software and the technical support that it would provide, and Easy Dental's alleged common

scheme of sending and billing class members for unsolicited software. It is clear from both the

evidence in the record and the arguments of the parties at the class certification hearing that these

common issues are the most heavily disputed and will be the focus of most of the trial court's and

parties' efforts.

Relying on Bernal , Easy Dental nevertheless maintains that to the extent any of

these issues are common, they do not predominate over the issues requiring individualized

determinations. To address this argument adequately, we must first briefly discuss the particular

circumstances in Bernal . The controlling issue in that case was the propriety of certifying a class

action of 904 plaintiffs against Southwestern Refining Company for personal injuries they

allegedly sustained as a result of a refinery tank fire in Corpus Christi, Texas. Holding that

common issues did not predominate over the individual issues, the Texas Supreme Court reversed

the court of appeals' certification order and remanded the case to the trial court. See Bernal , 43

Tex. Sup. Ct. J. at 715 .

While we recognize that the supreme court's holding in Bernal applies with equal

force to all class actions, whether they may be personal injury suits or suits based on claims of

breach of contract or fraud, it is nevertheless important to note that the facts and issues in this case

are quite different from those noted by the court in Bernal . As the supreme court observed,

"Personal injury claims will often present thorny causation and damage issues with highly

individualistic variables that a court or jury must individually resolve." See id. at 712 (citing

Amchem Prods., Inc. v. Windsor , 521 U.S. 591, 623 (1997)). Consequently, the class action will

rarely be an appropriate device for resolving them. See id. ; see also Fed. R. Civ. P. 23 Advisory

Committee Note, 39 F.R.D. 98 , 103 (1966). Under the facts of Bernal , resolution of the central

issues of causation and damages was uniquely dependent upon each individual class member

because the exposure levels and severity of the injuries varied from member to member. This was

due in part to the fact that the proximity of the proposed plaintiff class members' homes to the

explosion varied greatly, as did the physical location of the class members themselves at the time

of the explosion. While some class members were inside their homes at the time of the explosion,

others were outside, in their automobiles, or out of town. See Bernal, 43 Tex. Sup. Ct. J. at 713 .

Thus, each member's dosage, proximity, activity, age, medical history, sensitivity, and credibility

had to be determined individually, and the supreme court in Bernal concluded that under those

circumstances individual issues predominated. See id.

In contrast to Bernal , the present suit is an action brought by purchasers of two

related computer software applications who complain of a common design defect, uniform

misrepresentations about the availability of free technical support services, and a common scheme

of sending and billing class members for unsolicited software upgrades and enhancements. As

their primary measure of damages, the class members seek the benefit of their bargain and

exemplary damages pursuant to liability under the DTPA. Here, we are not faced with a wide

array of factors that together demand individualized inquiries into issues of causation and damages.

Rather, the most critical inquiries at issue are questions of law and fact common to the entire class,

including whether Easy Dental sold defective software and whether it did so knowingly; whether

Easy Dental made common misrepresentations about its software and technical services; and

whether Easy Dental engaged in a common scheme of sending and billing class members for

unsolicited products.

Of these common issues, the breach-of-contract question is one of the most

significant. Once a jury answers the question of whether the software contains a programming

defect as to one class member, it will be answered as to all; if the software program on which all

the software packages operate is defective, every class member has received less than the benefit

of his or her bargain. Likewise, as the trial court noted in its findings of fact and conclusions of

law, the issue of damages can be determined on a class-wide basis from Easy Dental's own

business records because appellees seek as their primary measure of damages the disgorgement

of the amounts they paid Easy Dental for the software. Consequently, the damages issue will not

require the time-consuming, individualized inquiries that Easy Dental predicts. (8) Finally, the issue

of exemplary damages is also a common one that may be resolved by asking a jury whether Easy

Dental committed the alleged actions knowingly , if at all. Taken together, all of appellees'

complaints center around Easy Dental's common course of conduct in designing and marketing

its computer software. Consequently, the focus of the trial court's inquiry will be on the conduct

of Easy Dental, not on the conduct of the individual class members.

We are not persuaded by appellant's argument that individual questions involving

reliance, the form and substance of every misrepresentation allegedly made to each individual class

member, and the amount of each class member's consequential damages will overshadow these

pivotal issues and result in an unmanageable proliferation of individual issues. To be sure, some

of these issues may demand some individualized inquiry. But as we will explain, the common

issues of fact and law central to this suit nevertheless predominate.

First, we point out that the issue of reliance is relevant only in regard to appellees'

claims for common-law fraud. However, in practical effect, the common-law fraud allegation in

this case is ancillary to and subsumed by appellees' DTPA claim, (9) which itself was merely added

as a practical means of obtaining a one-time award of punitive damages. Because appellees seek

disgorgement of the software's purchase price as their primary measure of damages for breach of

contract and allege the fraud and DTPA violations solely for the purpose of recovering exemplary

damages, reliance is not a critical issue in this case.

Second, in class actions involving allegations of fraudulent misrepresentations, it

is important to distinguish between those cases where the alleged misrepresentations vary in each

transaction from instances where the alleged misrepresentations are substantially the same as to

all class members. Certainly, when the alleged misrepresentations differ there is a danger that the

class action will disintegrate into numerous individual trials. See Wood , 994 S.W.2d at 803 ; Rio

Grande Valley Gas v. City of Pharr , 962 S.W.2d 631, 643 (Tex. App.--Corpus Christ 1997, pet.

dism'd). Consequently, class certification is often inappropriate in cases involving varying

misrepresentations. See Wood, 994 S.W.2d at 803 . But in cases where the alleged

misrepresentations are substantially similar and the defendant is alleged to have engaged in a

common course of conduct, class certification may be appropriate. See Weatherly, 905 S.W.2d

at 651 ; Adams v. Regan, 791 S.W.2d 284, 289 (Tex. App.--Fort Worth 1990, no writ).

In this case, the misrepresentations allegedly made to each class member are

substantially the same. Appellees alleged a common course of action and introduced evidence of

Easy Dental's advertisements, which promise "FREE unlimited tech support." The representations

in these advertisements and solicitations are the same or substantially similar in substance to the

other misrepresentations allegedly made to class members, notwithstanding the various mediums

by which they were communicated. We do not believe that commonality or predominance is

defeated merely due to the varying methods by which similar misrepresentations were made. We

therefore conclude that the essential issue of whether Easy Dental made material

misrepresentations is common to all class members and will not require the type of individualized

inquiries Easy Dental predicts.

Finally, we reiterate that the primary measure of damages appellees seek is

disgorgement of the software's purchase price. While we recognize that there may be other

sources of consequential damages, the mere fact that some damages may have to be computed

separately for different class members does not preclude class certification. See Health & Tennis

Corp. v. Jackson , 928 S.W.2d 583, 590 (Tex. App.--San Antonio 1996, writ denied); Sun Coast

Resources, Inc. v. Cooper, 967 S.W.2d 525, 534 (Tex. App.--Houston [1st Dist.] 1998, pet.

dism'd w.o.j.); Angeles/Quinoco Sec. Corp. v. Collison , 841 S.W.2d 511, 516 (Tex.

App.--Houston [14th Dist.] 1992, no writ). As the trial court noted in its findings of fact and

conclusions of law, these damages may be efficiently determined through proof-of-claim forms,

individual damage hearings, or other manageable means. Consequently, we are confident that any

individual damages issues may be resolved in a "manageable, time-efficient, yet fair manner." See

Bernal , 43 Tex. Sup. Ct. J. at 712 .

If we were to accept Easy Dental's argument, we believe that the class action

mechanism would be rendered virtually useless. Easy Dental overstates plaintiffs' burden and

would demand that every issue be readily ascertainable from the class as a whole and that no

individual issues remain in order to permit certification. However, rule 42 only mandates that

common issues predominate. See Tex. R. Civ. P. 42(b)(4). Certainly, class certification would

be practically impossible if a finding of complete commonality with respect to all issues were

required.

Finally, as stated previously, our review is strictly limited to determining whether

the trial court abused its discretion in ordering class certification. See Rainbow Group , Ltd., 990

S.W.2d at 356 ; Vinson , 880 S.W.2d at 823 . Trial courts are afforded broad discretion in deciding

whether to grant or deny a motion for class certification, and we may not substitute our judgment

for that of the trial court merely because we reach a different conclusion. See Rainbow Group ,

Ltd., 990 S.W.2d at 356 ; Vinson , 880 S.W.2d at 823 . A trial court abuses its discretion in

certifying a class only if it has failed to properly apply the law to the undisputed facts or has acted

arbitrarily, unreasonably, or without reference to any guiding principles. See Rainbow Group

Ltd. , 990 S.W.2d at 356 ; Vinson , 880 S.W.2d at 823 . We apply this discretionary standard of

review because the trial court, rather than the intermediate appellate court, is in the best position

as fact finder to judge whether certification is appropriate, which includes making the subjective

determination of whether common issues will predominate. Because of its experience handling

the case, the trial court is more familiar with the issues and arguments of the parties. The

appellate court, on the other hand, lacks the benefit of the trial court's unique experience and

knowledge with regard to the case. We also give the trial court broad discretion because it is the

court that will actually be burdened with handling and managing the litigation.

Because the facts and circumstances here as evidenced by the record provide a

reasonable basis for the trial court's conclusion that common issues predominate, we are unable

to conclude that the trial court abused its discretion. We therefore overrule Easy Dental's second

issue.

Choice of Law

In its third point of error, Easy Dental complains that the trial court abused its

discretion in applying Texas law to all the class members' claims. It maintains that a proper

choice-of-law analysis dictates that the trial court apply the law of multiple jurisdictions, which

would necessarily result in varying adjudications and thereby render the class action

unmanageable. See Tex. R. Civ. P. 42(b)(4)(D) (courts are to consider "the difficulties likely to

be encountered in the management of a class action" when determining whether common questions

predominate and whether class action is superior to other available methods).

For resolving conflicts-of-law issues, Texas has adopted the "most significant

relationship" test as articulated in the Restatement (Second) of Conflict of Laws (1971) (the

"Restatement"). See DeSantis v. Wackenhut Corp ., 793 S.W.2d 670, 679 (Tex. 1990); Duncan

v. Cessna Aircraft Co. , 665 S.W.2d 414, 420-21 (Tex. 1984). In the absence of a valid choice-of-law provision, section 188(1) of the Restatement provides the general rule to apply in disputes

sounding in contract: "The rights and duties of the parties with respect to an issue in contract are

determined by the local law of the state which, with respect to that issue, has the most significant

relationship to the transaction and the parties under the principles listed in § 6." (10) Maxus

Exploration Co. v. Moran Bros., Inc ., 817 S.W.2d 50, 53 (Tex. 1991) (quoting §188(1) of the

Restatement); DeSantis , 793 S.W.2d at 679 . Section 188(2) of the Restatement provides that the

following factors shall be considered in analyzing a conflicts question arising from a contract

dispute: "(a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of

performance, (d) the location of the subject matter of the contract, and (e) the domicile, residence,

nationality, place of incorporation, and place of business of the parties." Maxus , 817 S.W.2d at

53 (quoting § 188(2) of the Restatement).

Taking these factors into consideration, we concur with the trial court that the

relevant contacts in this case favor the application of Texas law with regard to appellees' contract

claims. As the trial court correctly noted in its findings of fact and conclusions of law, every

licensing agreement for the Windows subclass designated Texas law as the law to apply in the

event of suit. Likewise, each DOS licensing agreement that made any mention of the applicable

law specified that Texas law should govern. Furthermore, both the DOS software and the

Windows software were designed, developed, programmed, manufactured, and shipped from

Dallas, Texas.

We reach the same conclusion with regard to the law applicable to the class

members' tort-related claims for common-law fraud, negligent misrepresentation, and violations

of the DTPA and Unsolicited Goods Statute. The Restatement provides that "all conflicts cases

sounding in tort will be governed by the most significant relationship test as enunciated in §§ 6

and 145." Gutierrez v. Collins , 583 S.W.2d 312, 318 (Tex. 1979). While still considering the

specific guidance provided by section 145 (11) and section 6 of the Restatement, we remain mindful

that appellees' tort-related claims are clearly derivative of, and completely interrelated with, their

claims for breach of contract. Thus, we apply much the same analysis. See Nunez v. Hunter Fan

Co. , 920 F. Supp. 716, 721 (S. D. Tex. 1996). Upon considering all the relevant factors and

policy considerations, we conclude that Texas law should likewise apply to the plaintiffs'

remaining tort-related causes of action, all of which arise out of the parties' contractual

relationships. We overrule Easy Dental's third point of error.

Adequacy of Representation and Typicality

In its final two issues, Easy Dental (1) attacks the adequacy of the representation

that the representatives of the DOS subclass will provide absent class members and (2) maintains

that the claims asserted by the DOS representatives are not typical of the absent class members'

claims. (12) See Tex. R. Civ. P. 42(a)(3), (4). As we have observed on at least one previous

occasion, "typicality and adequacy of representation are closely related, 'for demanding typicality

on the part of the representative helps ensure his adequacy of representation.'" Forsyth v. Lake

LBJ Inv. Corp., 903 S.W.2d 146 , 150 n.6 (Tex. App.--Austin 1995, writ dism'd w.o.j.) (quoting

Horton v. Goose Creek Indep. Sch. Dist. , 690 F.2d 470 , 485 n.27 (5th Cir. 1982)). Thus, we will

address these issues together.

Before an action may be certified, the representatives must demonstrate that their

claims and defenses are typical of the claims and defenses of the class members. See Tex. R. Civ.

P. 42(a)(3). "Class representatives satisfy the typicality requirement when they show that their

claims have the same essential characteristics as those of the class as a whole." Microsoft , 914

S.W.2d at 613 (citing Chevron U.S.A., Inc . v. Kennedy , 808 S.W.2d 159, 162 (Tex. App.--El

Paso 1991, writ dism'd w.o.j.)); Wiggins v. Enserch Exploration, Inc. , 743 S.W.2d 332, 334

(Tex. App.--Dallas 1987, writ dism'd w.o.j.). "To be typical, the named claims must arise from

the same event or course of conduct giving rise to the other class members' claims. The claims

must be based on the same legal theory." Microsoft , 914 S.W.2d at 613 . However, "[t]he class

representatives' claims need not be identical or perfectly coextensive." Hi-Lo Auto Supply, L.P.

v. Beresky , 986 S.W.2d 382, 387 (Tex. App.--Beaumont 1999, no pet.). All that is required is

that the representatives' claims are substantially similar to those held by the class as a whole. See

id. The requisite degree of typicality in the class representatives' claims has been expressed as

a "substantial similarity or a nexus between the representative's injury and the injury to the class."

Id. (citations omitted).

Having surveyed the record, we conclude that the DOS representatives' claims are

typical of the absent class members' claims. Just as they have asserted on behalf of the absent

class members, the DOS representatives charge that Easy Dental sent and charged them for

unsolicited software in violation of the Texas Unsolicited Goods Statute. See Tex. & Bus. Com.

Code Ann. §§ 35.42, .45. (13) Likewise, the class representatives allege that Easy Dental falsely

represented that it would provide consumers free and unlimited technical support. Easy Dental

nevertheless contends that Presti's and Helig's fraud and DTPA claims are not typical of the class

members' claims because both dentists stated that they (1) relied on oral, rather than written,

misrepresentations and (2) never actually paid for the technical support for which they were

billed. (14) This argument is without merit.

Essentially, Easy Dental invites us to consider the merits of appellees' claims, as

well as the merits of its defenses to appellees' claims. However, when deciding whether to certify

a class, a trial court is not to determine the merits of the suit. See Tana Oil & Gas Corp., 978

S.W.2d at 741 , Employers Cas. Co. v. Texas Ass'n of Sch. Bds. Workers' Compensation Self-Ins.

Fund, 886 S.W.2d 470, 473-74 (Tex. App.--Austin 1994, writ dism'd w.o.j.). Setting the merits

aside, it is clear that all the claims asserted by the class representatives and those raised on behalf

of the absent class members arise from the same events or course of conduct and are based on the

same legal and remedial theories. See Microsoft , 914 S.W.2d at 613 . Furthermore, the injuries

alleged by the class representatives and those alleged on behalf of the absent class members are

substantially similar. See Hi-Lo Auto Supply, L.P., 986 S.W.2d at 387 . Consequently, we hold

that the trial court did not abuse its discretion with regard to this point.

In addition to satisfying the typicality requirement, the class representatives must

also show that they will fairly and adequately protect the interests of the absent class members.

See Tex. R. Civ. P. 42(a)(4); Forsyth , 903 S.W.2d at 150 . For there to be adequate

representation, the class representatives' interests must not be antagonistic to those of the

remaining class members, and class counsel must be sufficiently qualified and experienced to

prosecute the action vigorously. See Employers Cas. Co. , 886 S.W.2d at 475 . The critical

question is whether the class representatives, through their attorneys, will vigorously prosecute

the class claims. See Weatherly , 905 S.W.2d at 652 ; see also Rio Grande Valley Gas Co. , 962

S.W.2d at 644 (class representatives must demonstrate willingness and ability to take active role

in and control litigation).

In this case, Easy Dental does not challenge the adequacy of representation insofar

as the qualifications or experience of class counsel are concerned. Rather, appellant claims that

the representatives lack the requisite knowledge and commitment and will not vigorously represent

the class members. We disagree.

The record provides more than a sufficient basis for the trial court's conclusion that

Helig and Presti possess the degree of knowledge and commitment necessary to serve as class

representatives. Both Helig and Presti provided depositions and appeared at the class certification

hearing. Presti testified that in order to protect the interests of the class, he would see the case

through to trial or settlement, zealously prosecute all the claims, and would not put his interests

ahead of the interests of the class. Likewise, Helig testified that he would continue to prosecute

the action and that, at the very least, he would place the interests of the class on the same level as

his own interests. Contrary to Easy Dental's assertions, the evidence in the record does not

clearly indicate that the representatives have relinquished all control over the litigation or relegated

to their attorneys the task of overseeing and safeguarding the interests of the DOS subclass.

Because there is adequate evidence in the record from which the trial court could

reasonably conclude that Helig and Presti will adequately represent the absent class members and

that their claims are typical of the absent class members' claims, we are unable to conclude that

the trial court abused its discretion. Accordingly, we overrule Easy Dental's final two issues.

CONCLUSION

Having reviewed the record and considered the arguments of both parties, we

conclude that the trial court did not abuse its discretion in ordering class certification. The trial

court's order is affirmed.

Mack Kidd, Justice

Before Chief Justice Aboussie, Justices Kidd and B. A. Smith

Affirmed

Filed: September 14, 2000

Publish

1. These problems included difficulty installing the software; difficulty converting files

from a DOS environment to a Windows environment; instability and "locking up"; recurring

operating errors; inaccurate account statements; printing difficulties; data corruption; lost

information and transactions; and slow processing.

2. By the time the trial court ordered class certification, appellees had amended their

petition to assert additional claims for unjust enrichment, declaratory judgment, and a cause of

action under Texas's Unsolicited Goods Statute. See Tex. Bus. & Com. Code Ann. §§ 35.42 , .45

(West 1987).

3. During the class certification hearings, the trial court ruled that Taylor was not an

adequate representative for the DOS subclass. The trial court then recessed and provided appellees

an opportunity to name a more suitable class representative. During that time, appellees amended

their petition to add two alternative DOS class representatives, Dr. Helig and Dr. Presti.

4. As we note in our discussion of Easy Dental's first point of error, the trial court also

certified the class under rule 42(b)(1)(A). However, because appellees concede that mandatory

class certification under that subsection was inappropriate, or at least unintended, our discussion

will be limited to determining whether the trial court's certification of a rule 42(b)(4) opt-out class

was proper.

5. Certification of a mandatory class under rule 42 is proper only if the prerequisites of

subdivision (a) are satisfied and, in addition, "the prosecution of separate actions by or against

individual members of the class would create a risk of (A) inconsistent or varying adjudications

. . . which would establish incompatible standards of conduct for the party opposing the

class . . . ." Tex. R. Civ. P. 42(b)(1). At least one court of appeals has held that situations where

some plaintiffs may win a monetary judgment while others may lose on identical facts do not

present a risk of "inconsistent or varying adjudications," as contemplated under the rule. See St.

Louis Southwestern Ry. Co. v. Voluntary Purchasing Groups, Inc., 929 S.W.2d 25, 32 (Tex.

App.--Texarkana 1996, no writ) (no risk of inconsistency exists where defendant is liable for

damages to one plaintiff but not another). But see Adams v. Reagan , 791 S.W.2d 284, 292 (Tex.

App.--Fort Worth 1990, no writ) (while federal counterpart to rule may be satisfied only if

absolute legal quagmire would result from varying adjudications, better state rule is to permit other

considerations in determining whether certification is appropriate).

6. This subsection provides in relevant part: "An action may be maintained as a class action

if the prerequisites of subdivision (a) are satisfied, and in addition: . . . (4) the court finds that the

questions of law or fact common to the members of the class predominate over any questions

affecting only individual members . . . ." Tex. R. Civ. P. 42(b).

7. See Tex. Bus. & Com. Code Ann. §§ 35.42 , .45 (West 1987).

8. With respect to the damages issue, appellant analogizes the case at hand to the facts set

out in a recent, post- Bernal opinion issued by the Texarkana court of appeals, Entergy Gulf States,

Inc. v. Butler , No. 06-99-00082-CV (Tex. App.--Texarkana Aug. 1, 2000, no pet. h.) (op. on

reh'g). Entergy involved a suit by customers of an electric utility who sought to recover the

damages they incurred as a result of unreasonably lengthy power outages triggered by a storm.

See Entergy, slip op. at 3. But unlike the situation here, the class members in Entergy suffered

varying degrees of damages from the disruption of electricity because they were without power

for different periods of time. Furthermore, unlike this case, the plaintiffs in Entergy included

claims for personal injuries.

9. Consumers are not required to prove reliance in order to recover for misrepresentations

under the DTPA. See Weitzel v. Barnes , 691 S.W.2d 598, 600 (Tex. 1985); Celtic Life Ins. Co.

v. Coats , 831 S.W.2d 592, 596 (Tex. App.--Austin 1992), aff'd as modified , 885 S.W.2d 96

(Tex. 1994).

10. Section 6 of the Restatement lists certain policy considerations that courts are to consider

when deciding what law to apply:

(a) the needs of the interstate and international systems, (b) the relevant

policies of the forum, (c) the relevant policies of the interested states and the

relative interests of those states in the determination of the particular issue,

(d) the protection of justified expectations, (e) the basic policies underlying

the particular field of law, (f) certainty, predictability and uniformity of

result, and (g) ease in the determination and application of the law to be

applied.

Maxus , 817 S.W.2d at 53 (quoting § 6 of the Restatement).

11. According to section 145 of the Restatement, in tort cases the factors a court should

consider: "(a) the place where the injury occurred, (b) the place where the conduct causing the

injury occurred, (c) the domicile, residence, nationality, place of incorporation and place of

business of the parties, and (d) the place where the relationship, if any, between the parties is

centered." Gutierrez v. Collins , 583 S.W.2d 312, 319 (Tex. 1979) (quoting § 145(2) of the

Restatement).

12. Easy Dental does not challenge the trial court's finding that the claims asserted by the

representatives of the Windows subclass are typical of the claims belonging to the absent members

of the Windows subclass. Nor does it challenge the trial court's finding that the absent members

of the Windows subclass will be adequately represented. Consequently, our discussion of these

issues will relate only to the DOS subclass.

13. Easy Dental does not dispute that the class representatives' claims are typical of the class

members' claims in this respect.

14. Presumably, most members of the DOS subclass received and relied upon written

misrepresentations and actually paid for the technical support charges.

e prosecution of separate actions by or against

individual members of the class would create a risk of (A) inconsistent or varying adjudications

. . . which would establish incompatible standards of conduct for the party opposing the

class . . . ." Tex. R. Civ. P. 42(b)(1). At least one court of appeals has held that situations where

some plaintiffs may win a monetary