### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-17-00664- CV

Acm e Iron & M etal Com pany, a d /b/a of Txalloy, In c.; and Mayfield Paper C om pany, I nc., Appellan ts

v. Republi c Waste Service s of T exas, Ltd., som etim es d/b/ a Trashaw ay Service s and Duncan Disp osal, App ellee

F ROM TH E DISTRI CT COURT O F TO M GREEN CO UNTY, 119 TH JUDICI AL DISTRICT

NO. B 1402 26C, H ONO RAB LE B EN WO ODW ARD, JUDGE P RESIDING

M E M O R A N D U M O P I N I O N

This is an interlocutory appea l of an order of the trial court deny ing a motion to cer

tify

a class filed by plaintiffs below—Ac me I ron & Metal Company (Ac me), a d/b/a of Tx alloy , I nc., and May field Paper Company , I nc. (May field) (collec tively , Plaintiffs). See Tex. Ci v . Prac. & Rem. Code § 51.014(a) (3) (per

mitti ng interlocutory appea l of order ref using to cer

tify class); Tex. R. Civ. P. 42 (outlining proce dures and require ments for class ce rt i fi cation). Plaintiffs filed suit ag ainst appellee Republic Waste Service s of Texas, L td. ( Republic), sometimes d/b/a Trasha way Service s and Dunca

n Disposal, for brea ch of contra ct and other claims associate d with Republic’s provision of waste- collection service s to commerc ial customers in the City of San Ang elo (the City ). For the following rea sons, we will aff irm the trial cour

t’s order denying c lass cer

tification.BACK GR OUND The City and Republic executed a waste- disposal-servic es contra ct in Fe bruar y 1989 (the 1989 Contract) for a ten-y ear term, which was extended for an additional five y ear s, until 2004. The 1989 Contract provided Republic a “non-e x clusive” “privileg e” to provide commerc ial wastecollection service s in th e City and provided that Republic “shall contra ct direc tly with its commerc ial customers as to the terms of remova l and disposal of solid waste.” The 1989 Contract provided that rate s for commercia l customers were to be “established wit h the C ity .” By contra st, ra tes for residential c ustomers would be “ established by ordinanc e or r esolution of the City Council.” Effe ctive Au gu s t 1, 2004, the C ity and R epublic ex ecute d a new, ten-y ear contra ct (the 2004 Contract) for t he provision of residential and commercial waste s ervic es. I n contra st to the prior contra ct, the 2004 Contract provide d Republic “the exclusive r ight, privileg e, and permit

. . . [t o] eng ag e[] in the business of waste collection and disp o s al , ” u n l es s a commerc ial entity obtained its own hauling and disposal permit. Unlike t h e prior contra ct, the 2004 Contract also provided that Republic “will be responsible for billing and collection of all char g es for commerc ial service in acc ordanc e with the rate s for comm erc ial waste collection service established by City ordinanc e or r esolution.”

After the 2004 Contrac t ex p i red, the City reque sted proposals for a new ten-y ear waste- collection-se rvice s contra ct. Proposals wer e submitt ed by Republic and one other company . I n the bid-revie w proce ss, th e Ci ty ’s auditor raised questions about Republic’s historical calc ulations of cer tain fuel-sur char g e and environmenta l fee s under its prior contra cts

. Republic eng ag ed an

ac counti ng firm t o conduct an audit of i ts commerc ial billing s tatements i n response to t h e C i t y ’s

2concern s and ultimately publicly stated that it would fully ref und its commerc ial customers “any fee s incorre ctly

char g ed to their a ccounts.” Three day s afte r Republic’s public statement, Plaintiffs filed a lawsuit ag ainst it. The la w s u it a ll e g e d th a

t Re p u b li c h a d c h a

r g e d Pl a in ti f f s a n d o th e r s im il a

r ly s it u a te d c o mm e r c ia l c u s to me r s

u n a u t h o r iz e d “ F u e l/ E n v ir o n me n ta l Re c o v e r y F e e s ” f o r y e a r s . Pl a in ti f f s s o u g h t d a

ma g e s a n d a t t o r n e y ’ s fee s on their claims ag ainst Republic for brea ch of contra ct, unjust enric hmen t , violations of the Dec eptive Trade Pra c tic es Act (DTPA), fra ud, and neg lige nt misrepre sentation. About a month afte r Plaintiffs filed their lawsuit, the City awa rded the contra ct to Republic. Plaintiffs filed a m o t i o n for class cer tification, seeking to cer

tify two subclasses: (1) class members char g ed alleg edly unauthorized fee s by Republic betwee n Marc h 2000 and J uly 2004 (the 2000 Subclass) a nd (2) c lass members c harg ed allege dly unauthorized fee s by

Republic betwee n Aug ust 2004 and J uly 2014 (th e 2004 Subclass). Republic filed a motion for summary judgme nt on all of Plaintiffs’ claims. The trial court conducte d a single hear ing on both Plaintiffs’ motion to certify

and Republic’s motion for summary judgme nt. The trial cour t denied Plaintiffs’ motion for class ce rtification, concluding that Plaintiffs f ailed to e stablish a

ny of the re quirements under Rule 42(a) and (b). See Tex. R. Civ. P. 42(a) , (b). Wit hout signing a separ ate order , the trial court made a docket entry that it g rante d summary judgme nt reg arding Plaintiffs’ “2004 Claims” but denied it reg arding their “2000 Claims.” Plaintiffs broug ht this interlocutory appea l from the denial of their c ertifica

tion moti on.

3STANDARD OF REVIEW Appellate courts revie w a class-c ertifica tion or der f

or abuse of discretion. Bowden

v. Phi l l i p s P etr ol. Co. , 247 S.W .3d 690, 696 (Tex. 2008); Compaq Comp. Corp. v. Lapray , 135 S.W .3d 657, 671 (Tex. 2004). A trial court abuses its discretion if it acts arbitra rily , unrea sonably , or wit hout ref

ere nce to any g uiding principles. Bowden , 247 S

. W

. 3 d at 6 9 6

. A t rial court has no discretion in deter

mining what the l aw is or i n apply ing the law to the facts, and a clea r failure b y the court to corr ect l y an aly ze or apply the law will constitute an abuse of discretion. W alker v. Pack er , 827 S.W .2d 833, 840 (Tex. 1992) (orig . proce eding ). A party seeking to reve rse an order deny ing class cer

tification must demonstrate that Rule 42’s require ments are satisfied and that the “trial court’s ref usal to cer

tify the class was leg ally

unrea sonable under the fac ts a nd circ umstances of the case .” Ridgeway v. Burlington N. Santa F e Corp. , 205 S.W .3d 577, 581 (Tex. App.—For t Worth 2006, pet. denied)

. “Ac tual confor mance with R u l e 4 2 i s indispensable, and compliance with the rule must be demonstrated, not presumed.” Stonebridge Life Ins. Co. v. Pitts , 236 S.W .3d 201, 205 (Tex. 2007).

“Eve n if cer

tification would have been pr oper, a denial may still not be an abuse of discretion,” see V

i n s on v. Texas Commerce Bank-H ous., Nat’l Ass’n , 880 S.W .2d 820, 824 (Tex. App.—Dallas 1994, no writ), beca use “[s] o long as the trial court acte d rationally in the exercise of its discretion, [a Texas court of appea ls] will uphold its ruling denying cer tification,” City of

Aledo

v. Brennan , No. 02-14-00147- CV, 2016 WL 3157354, at *5 (Tex. App.—For t Worth J une 2, 2016, pet. den i ed ) (mem. op.). The Texas Supreme Court has reje cted a “ce rtify now and worry later” approa ch. Southwestern Ref. Co. v. Bernal , 22 S.W .3d 425, 435 (Tex. 2000).

4DISCUSSIO N Under Texas la

w, “ther e is no rig ht to litigate a claim as a class action.” Id. at 439. “Rather , Rule 42 provides only that the cour

t may cer tify a cla ss action if the plaintiff satisfies the require ments of the rule.” Id. For this rea son, a party seeking to reve rs e an order denying class

c e r ti f ic a ti o n f a c e s a “ f o r mi d a b le ta s k

. ” R id

ge wa y , 2 0 5 S. W. 3 d a

t 5 8 1 ; s e e S

o lo tk o v . Le g a lZ o o m . c o m , Inc. , No. 03-10-00755- CV, 2013 WL 3724770, at *3 (Tex. App.—Austin J uly 11, 2013, pet. denied) (mem. op.). Plaintiffs bore the burden of establishing all prer equisites for class trea tment. Lapray , 135 S.W .3d at 672.

All class acti ons must satisfy the four threshold require ments in Rule 42(a) of the T e xa s Ru le s o f Ci v il Pr o c e d u r e : ( 1 ) n u me r o s it y ( “ th e c la s s is s o n

u me r o u s th a

t jo in d e r o f a ll me mb e r s is im p ra ct i ca b l e” ); (2) commonality (“the re are questions of law or fac t common to the class”) ; (3) ty picality (“the cla ims or defe nses of the repr esenta tive parties are ty pical of the claims or defe nses of the class”) ; and (4) adequa cy of repr esenta tion (“the repr esenta tive parties will fairly and adequately protec t the interests of the class”)

. Tex. R. Civ. P. 42(a) ; see Bernal , 22 S.W .3d at 433. I n addition to the subsection (a) prer equisites, class actions also must satisfy at least one of the subdivisions of R ule 42(b). See Tex. R. Civ. P. 42(b) (directing that only cer tain kinds of actions

can be class actions); Bernal , 22 S.W .3d at 433. To satisfy the subsection (b) prer equisites, Plaintiffs soug ht to de monstra

te that (1) common questions of law or fac t predominate over questions aff ecting only individual members and (2) class trea tment is “super ior to other available methods for the fair and eff icient adjudication of the controve rsy .” Tex. R. Civ. P. 42(b)( 3); Bernal , 22 S.W .3d at 432.

5The propriety of cer tif ication must be analy

zed with respe ct to eac h respe ctive subclass. Bowden , 247 S.W .3d at 698–709 (ana ly zing whether it was ap p ropriate to cer tify three separ ate subclasses) ; see also Capital One Bank v. Rollins , 106 S.W .3d 286, 289, 294 (Tex. App.—Houston [1st Dist.] 2003, no pet.) (se parately analy zing each subclass under Bernal ). The trial court deter

mined that Plaintiffs failed to satisfy eac h of the fore g oing prer equisites with respe ct to both subclasses. Be cause it was Plaintiffs’ burden to satisfy eac h prer equisite, to preva il on appea l they must show that the trial court’s ruling was err oneous as to eac h one. We beg in by considering whether the trial court abused its discretion in deter mining that Plaintiffs did not meet their burden to establish predominanc e.

Courts deter

mine if common issues predominate by identify ing the substant i v e issues that will c ontrol the outcome of the litigation, assessing which issues will pr edominate, and deter mining if the predominating issues are , in fac t, those common to the class. Bernal , 22 S.W .3d at 433–34 (noting that predominanc e require ment i s “o n e of the most stringe nt prer equisites to

cer ti fi ca t i o n ” and is “fa

r more demanding than the commonality require ment” (interna l quotes omitted)); see also Stonebridge Life Ins. , 236 S.W .3d at 205 (“B eca use predominanc e is one of the most stringe nt prer equisites to class-a ction cer tification, it is considere d first in o u r revie w and must be rig orously applied.”)

. “The test for predominanc e is not whether common issues outnumber

uncommon issues but

. . . whether common o r i n d ividual issues will be the object of most of the eff orts of the litigants and the court.” Bernal , 22 S.W .3d at 434 (quoting Central 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.)). We will consider the tria l court’s c onclusions reg arding eac h subclass sepa

rate ly

.

6The 2004 Subclass I n their motion to cer t ify , Plaintiffs conce de that the 2004 Subclass has no actua l damag es due to the fac t that Republic has made full ref unds to Plaintiffs o f t h e ch ar g es incurre d betwee n 2004–2014:

Plaintiffs’ reque st for cer tification of the 2004 Subclass is made b as ed o n a g oodfaith arg ument for t h e ex tension, modification, or reve rsal of exis ting law. Under curr ent Texas la

w, Plaintiffs do not have a ctual dama g es for the claims included in the 2004 Subclass, due to Republic’s ref und of the overc harg es for that time period. Plaintiffs acknow ledg e that this Court is bound by the exis ting law.

. . . Plaintiffs

. . . acknow ledg e that exis ting prec edent would fore close t h ei r substantive claims reg arding the 2004 Subclass.

. . . Plaintiffs thus do not seek rec overy in this lawsuit of any such unauthorized cha

rg es under

the 2004 Contract.

Rather than seeking damag es, Plaintiffs seek to ref orm Texas law and policy by litigating this case to the Texas Supreme Court to ask for a rule of law that allows lawsuits solely for punitive damag es and attorney ’s fee s; they pursue this ref orm beca use “the curr ent law actua lly provides an incentive” f o r b e h a v io r li k e Re

p u b li c ’ s th a t “ a s s e s s [e d ] im

p r o p e r a n d il le g a l c h a

r g e s f o r y e a r s , a n d o n l y r e f u n d [ e d ] those cha rg es once its mi sconduct be came public knowledg e.” Plaintiffs’ conce ssion that the 2004 Subclass’s cl ai m s are not cog nizable under

curr ent law supports the trial court’s rea sonable conclusion that the claims “fa il as a matter of law.” Fur thermore , beca

use the 2004 Subclass has suffe red no damag es it has no leg ally cog nizable injury , and the potential subclass members there fore have no standing

. See Mey ers v. JDC/Firethorne, Ltd. , 548 S.W .3d 477, 484–85 (Tex. 2018) (re iterating constitutional standing test, which require s

concr ete injury to plaintiff and rea l controve rsy to be decide d by court). Acc ording ly , we conclude that the trial court’s ref

usal to cer

tify t h i s s u b class was not leg ally unrea sonable under these

7circ umstances, and the trial court there fore did not abuse its discretion in its ruling perta ining to the

2004 Subclass.

The 2000 Subclass

The trial court found that “ther e are no issues of fac t or law common to the putative class members that are rele vant to the claims of the 2000 Subclass.” I n contra st, the trial court found that there are forty -two “in d i v i d u al questions of fac t or law [t hat] aff ect eac h individual class

mem b er s’ claims and would have to be separate ly deter mined for each individual class member,” which “will be the object of most of the eff orts of the litigants and the Court

. ” T h ese questions include the f

ollowing:

• What are the terms of eac h individual class member[’s] con t ra ct [ ] with Republic?

• Did R ep u b lic brea ch the terms of eac h individual class member’ s contra ct with Republic with respe ct t o the amounts that Republic char ged fo r waste collection ser

vices?

• What was the diffe renc e, if a ny , betwee n (a) the amount Republic and e ach class member ag ree d woul d b e charg ed for waste collection service s; and (b) the amount Republic did c harg e ea ch cla ss member for waste collection service s?

• When did each individual cla ss member’s c auses of action ac crue ?

• When did eac h individual class member know, or should have known in the course of rea sonable diligenc e, that Republic’s char g es wer e alleg edly above what Republic and the individual class member ag ree d would be char g ed for waste c ollection service s?

• Did eac h individual c lass member’ s orig inal contra ct with Re public chang e or introduce a new or differ ent element but leave t h e g ener al purpose and eff ect unc hang ed?
8The trial court conclude d that “[c]omm on issues do no t p re d o m i nate” beca use “individual deter minations of fac t rela ting to liability , aff irmative defe nses, and damag es will have to be decide d separ ately for e ach individual cla ss member.” There is support in the rec ord for this c onclusion. For instance, there was evidenc e t h at Republic’s provision of waste service s to commerc ial customers and its char g es therefo r

wer e individualiz ed, vary ing from month to month and among customers. A sample compar ison of customers’ invoices indicates that some customers wer e assessed a fuel s u rc h ar g e beg inning in Marc h 2000; others wer e assessed the surcha rg e beg inning later that y ear . Over the next few y ear s, Republic modified its billing practices, at times incorpora ting th e fu el surcha

rg e int o the m onthly char g e, and at other times separ atel y d el i n ea t ing the surcha rg e, basing the amount on sever al varia bles and causing the surcha rg e amount to c hang e eac h month for eac h customer. Given these varia tions, it follows that eac h putative class member’ s alleg ed damag es would have to be calc ulated

on the basis of i nvoice- by -invoice fact finding, which would li k el y b e an arduous proce ss in light of the a pproxi mate number

of propose d class member s (more tha n 5,000). Republic’s ex p ert witness, who perf ormed the calc ulations supporting Republic’s ref unds for the 2004–2014 period, opined that to deter mine eac h subclass member’ s damag es, a fac t finder would be require d to deter mine the particula

r service s that eac h p l aint iff rec eived for eac h invoiced month (over the co u rs e o f s ev eral y ear s), the amount of any allowable fuel fee s for that month and for those service s, and the fuel fee that the plaintiff paid. Diffe renc es among customers’ service s and bil ling issues include: container t y pe and siz e, frequenc y of pi ck-ups, and ap p l i ca ble exemptions from fra

nchise and sales taxes. These individual billing issues likely preve nt a uniform

9damage ca l cu l at i on for the subclass. “Where the plaintiffs’ damag e claims focus almost entirely

on fac ts and is s u es specific to individuals rathe r than the class as a whole, the potential exis ts that the class action may deg ener ate in prac tice int o multipl e sui ts separ ately tried. I n such cases, class certifica tion is inappropri ate.” Ibe v. Jones , 836 F.3d 516, 529 (5th Cir. 2016) (holding t hat individualiz ed dama g es issues ca n rende r cla ss cer

tification improper)

. There wa s also evidenc e that putative class members potentially had differ ent contra cts with Republic with differ ent terms—if the members even had contra cts at all—as the 1989 Contract betwee n the City and Republic contemplated that Republic would “contr act direc tly with its commerc ial customers as to the terms of remova l and disposal of s o l i d wa s t e. ” For instance, May field had a writt en cu stomer service ag ree ment with Republic, but Acme had an “unwr itten contra ct,” as did about 2,000–4,000 customers, acc ording to the testimony of Acme’ s owner . Some of Republic’s commerc ial customers contra cted individually with it, while others contra cted with it throug h broker s, and still others contra cted with Repu b li c ’ s n a ti o n a l o f fice for nationwide or reg ional servic es . S o m e o f Republic’s customers had multipl e waste container s in service at the same time while others did not. Additionally , some customers wer e only “tempora ry ,” using Republic’s service s on an as- neede d monthly basis rathe r than unde r an ong oing se rvice contra ct. Plaintiffs’ broad class definition for the 2000 Subclass nece ssarily includes the entire g amut of commerc ial customers who contra cted with Republic betwee n 2000–2004: customers who contra cted for only one or a few months, those who contra cted for sever al months, those who contra cted for the entire period, and those who contra cted for ever y varia tion of periods in betwee n. Plaintiffs offe red no plan for how they would demonstrate, on a class-w ide basis, that ever y customer

10within the subclass definition had the same contra ct, on the same terms, and for the same time

period. Given that Plaintiffs did not demonstrate how they would uniformly establish the exis tence

or terms of eac h customer’ s contra cts with Republic, it is unlikely that they could uniformly establish th a t Re p u b li c b r e a c h e d s u c h a g r e e me n ts ; a d e te r mi n a ti o n o f w h e th e r Re p u

b li c im p o s e d a ny e xc e s s iv e char g es on a customer would depend on what fees that customer’ s contra ct permitt ed R epublic to char g e at any g iven time. Those permissible char g es depend, in turn, on which particula r ag ree ment reg arding char g es exis ted betwee n the City and Republic under the 1989 Contract, as those amounts presumably

varie d over time rather than w ere set by ordinanc e as unde r the 2004 Contrac t. The predominanc e require ment is one of the “most string ent” pr ere quisites to cla ss

cer tification, and it is intended to preve n t class-a ction litigation when the sheer complexit y and d i v ersity of the individual issues would overw helm or confuse a jury or sever ely compr o m i s e a party ’s ability

to present viable claims or def enses. Stonebridge Life Ins. Co. , 236 S.W .3d at 205. “Certific ation is not appropr iate unless it is deter minable from the outset that the individual issues can be considere d in a manag eable , time-eff icient and f

air manne r.” Id. On this recor d, and given the defe rential standard by which we must review or ders denying cer

tification, we cannot say that the trial court acte d unrea sonably in concluding that the proposed subclass did not meet the predominanc e require ment. See Ridgeway , 205 S.W .3d at 581 1

The rec ord supports sever al of the trial court’s other finding s of individualiz ed fac tual and 1 leg al issues raised by Plaintiffs’ cl aim s and Republic’s defe nses that predominate over common issues. For instance, the trial court deter mined that the fac tual issues raised by Plaintiffs’ pleading of the discove ry

rule to t oll the statute of limitations , which would other wise bar the claims of the 2000 Subclass, “would re quire individualized determination of the knowledg e of class member[s] with respe ct to the alleg ed injury at issue.” We need not detail i n t his opinion these additional fac tual and leg al issues perta ining to the predominanc e require ment, as the issues we have a lrea dy 11(noting that appellant seeking to reve rse order deny ing cer tification must demons trate that R u l e 4 2’s requirements are met and that trial court’s refusa l to cer tify was “leg ally unrea sonabl e” under fac ts and circ umstances) ; Domizio v. Progressive Ct y. Mu t. Ins. Co. , 54 S.W .3d 867, 876 (Tex. App.—Austin 2001, pet. denied) (“The g rant or denial of class cer tification will be upheld on appea l so long as the trial court acte d rationally in the exercise of its discretion.”)

. Acc ording ly , we hold that the trial court did not abuse its discreti o n i n d en y i n g Plaintiffs’ motion to cer tify the 2000 Subclass.

CONCLUSION

Be cause we conclude that the trial court acte d within i t s discretion by denying Plaintiffs’ motion for class ce rtification, we aff irm the trial cour

t’s order

.

__________________________________________ David Pury ear , J ustice Be fore J ustices Pury ear , Bour land, and Toth Affir med Filed: Dec ember

12, 2018

discussed amply support the trial court’s rea sonable exercise of discretion with respe ct to the predominanc e require ment. See Tex. R. App. P. 47.4 (Memora ndum opinions should be “no longe r than nec essar

y to advise the pa

rties of the c ourt’s dec ision and the basic r easons f or it.”). 12