The Houston [1st] Court of Appeals has reversed a trial court order certifying a class action against a manufacturer of electronic valves for water filtration systems.

 

Background

The facts of Pentair Residential Filtration, LLC v. Paul Belsome, et al. (No. 01-23-00422-CV; August 30, 2024) are as follows. Pentair manufactures electronic valves that control the flow of water into and out of mineral and brine tanks in water softening in filtration systems. The two valves discussed in this case, the Fleck 5810 and the Fleck 5812, aren’t available to the public, but distributors sell them to dealers who then sell and install them for homeowners. In June 2020, dealer Paul Belsome sued Pentair after several water treatment systems he installed for Houston-area homeowners failed. After repeated attempts to repair the same problem, he began referring his customers to his attorney. Seventy of them joined. According to Belsome and the homeowners, the Fleck valve relied on a defective piston that would inevitably fail. Their engineering expert, Dr. A. Shabeer concluded that the piston failed because of a manufacturing defect. Belsome and the homeowners asserted claims for breach of express and implied warranties and violation of the Magnuson-Moss 5 Warranty Act (MMWA). The homeowners also pleaded causes of action for strict liability; negligent design, manufacturing, and marketing; and violations of the Texas Deceptive Trade Practices Act. The homeowners sought damages for repair costs, high water bills, and mineral build up on their fixtures and appliances. Pentair served and general denial and moved for dismissal under Rule 91a.

Two of the homeowners, Feroz Mohammed and Yaser Nabi, petitioned for statewide class treatment of the warranty and MMWA claims. Pentair objected, asserting that there was no agreement on who warranted what to whom. Mohammed and Nabi produced two warranties while Pentair produced a third. Nabi’s warranty was a two-page limited warranty from nonparty Fleck Controls, Inc/ for defects within sixty months from the date of shipment (Pentair’s expert said that this warranty predated the Fleck valves discussed), while Mohammed produced a two-page limited warranty from Pentair for defects within five years from the manufacturing date. On the other hand, Pentair’s warranty was a five-page warranty to the original purchaser for defects within five years from the manufacturing date. Pentair also maintained that the statewide class treatment was inappropriate because the issues were limited to Belsome’s customers in the Houston area. Pentair further asserted there were several factors at play in each individual case that could not be managed fairly as a class such as whether the class member’s water system was installed properly, whether the valve had caused or manifested the ‘defect’, whether Pentair had cured the issue, and more.

Nevertheless, the trial court certified the class with Mohammed and Nabi as class representatives. The certification order defined the class as all individual persons in Texas who purchased a Pentair Fleck 5810 or 5812 valve. The trial court determined that common issues predominated over individual factors affecting class members because each class member purchased the same valve and received the same Pentair warranty. The trial court stated that they would try the case in a single jury trial, but didn’t address how Pentair’s defenses would be managed. Pentair appealed.

Class Representatives’ Standing under the Magnuson-Moss Warranty Act

In an opinion by Justice Landau, the court of appeals reversed and remanded to the trial court. Pentair first argued that Mohammed and Nabi lacked individual standing to bring a claim under the MMWA because they did not make a warranty claim before they sued and did not give Pentair an opportunity to cure any warranty issue. Since a class representative needs individual standing to bring a claim on behalf of a class, Pentair asserted that the MMWA claim must be dismissed for lack of subject matter jurisdiction. The court rejected this argument, observing that though the MMWA does prohibit filing of individual action unless the defendant has been given an opportunity to cure, it makes an exception for class action cases. The statute’s language granting an exception to class actions, incidentially, is still debated by federal courts.

Pentair’s appeal, however, doesn’t address this exception and instead asserts that Mohammed and Nabi lacked constitutional standing to assert a class claim because they did not individually comply with the cure before suing. The court likewise rejected this argument, holding that “compliance with [MMWA’s] cure provision [is] a statutory requisite to relief, not a constitutional one” (17). The concluded that class representatives Mohammed and Nabi have standing in the true constitutional sense, because unlike the class representative in Basham who didn’t give Audiovox a chance to cure by returning the defective radios for a refund, Mohammed and Nabi had redressable injuries because Belsome fixed both their water treatment systems to no effect. The appellate court overruled Pentair’s first standing challenge.

Class Certification

Pentair argued that the trial certification order did not comply with TRCP Rule 42(c) (1) (D) because the trial court didn’t explain how the common issues predominate or how the individual issues and Pentair’s defenses can be handled in one trial. As the court stated, “[i]t is “improper to certify a class without knowing how the claims can and will likely be tried.” Bernal, 22 S.W.3d at 435. To that end, a certification order “must state,” among other things, (1) “the elements of each claim or defense asserted in the pleadings”; (2) “why the issues common to the members of the class do or do not predominate over individual issues”; and (3) “how the class claims and any issues affecting only individual members, raised by the claims or defenses asserted in the pleadings, will be tried in a manageable, time efficient manner.” TEX. R. CIV. P. 42(c)(1)(D)(i), (vi), (viii).

The homeowners claimed that the certification order addressed every element required by Rule 42 and analyzed Pentair’s defenses. According to the court, however, although the trial court listed Pentair’s defenses, they didn’t think the certification order sufficiently answered Pentair’s argument of individual issues affecting the predominance of the class. For example, although there were three different warranties produced, the trial court suggested that they all obligated Pentair to provide free Fleck valves because the Fleck valves had a common defect. However, Pentair asserted defenses based on a lack of warranty coverage or other explanations for why the valve didn’t work that the trial court didn’t address, such as improper installation and exposure to certain chemicals that Belsome did not check for in the water before installation.

“In short,” the court concluded, “there are warring factual contentions that may affect individual warranty coverage, causation, and whether the Fleck valves are problematic at large, statewide, or primarily for Belsome’s Houston-area customers. Based on its pleaded defenses, Pentair has shared its intention to bring individual challenges related to the installation and maintenance of individual class member’s water treatment systems. The difficulty is we cannot tell whether these issues will be a factor at trial— particularly considering the expansion of the class beyond Belsome’s customers in the Houston area to the entire state—or can be dealt with efficiently and fairly [in a class action lawsuit] (26).” The court thus found that the trial court abused its discretion in granting class certification.

TCJL Intern Dilara Muslu provided the research and drafting for this article.

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