The Texas Supreme Court has granted review in a class action certification case raising some of the same issues as the Mosaic Baybrook case we reported yesterday. In American Campus Communities, Inc., et al. v. Beth Berry, Brooke Berry, Yael Spirer, and Hailey Hoppensteing, Individually and on behalf of all others similarly situated (No. 21-0874), plaintiffs sought to certify a class on behalf of all tenants of more than 30 dorms and residential properties owned and operated by American Campus Communities and its subsidiaries (ACC). The plaintiffs allege that ACC violated §92.056(g), Property Code, which requires a residential lease to contain language in underlined or bold print that informs the tenant of remedies available under the Property Code if the landlord does not discharge its duty to repair or remedy conditions that materially affect the physical health and safety of the tenant. The suit seeks statutory penalties of one month’s rent plus $500, court costs, attorney’s fees, and injunctive and declaratory relief. A Travis County trial court granted the plaintiffs’ motion to certify a class action under Rule 42 for leases executed, renewed, or extended between October 1, 2014 and March 21, 2018. The Austin Court of Appeals affirmed (but narrowed the scope of the action somewhat).

ACC admits that leases executed from 2008 to 2018 did not contain the statutory notice, and there is a dispute about whether a 2018 addendum to ACC’s leases satisfies the statute. Plaintiffs accuse ACC of knowingly excluding the notice in an attempt to “constructively inhibit, restrict or waive its landlord duties and corresponding tenant rights and remedies” in violation of the Property Code. ACC responds that even though the leases did not include the notice, §92.056 or the waiver provision in §92.006 do not create a private right of action for strict liability. It contends that the judicial remedies sought by plaintiffs under §92.0563 “apply only when a landlord has violated subsection (b) of Section 92.056(b)” (tenant notification of condition, tenant being current on rent, landlord’s failure to make diligent efforts to repair). Consequently, establishing a violation is fact specific to each tenant and defeats the predominance prong of the Rule 42 test. Plaintiffs respond that ACC is trying to argue the merits of the case in an interlocutory appeal of an order under Rule 42, which is limited to the question of whether the trial court abused its discretion in certifying the class.

The court of appeals’ analysis determined that “the trial court has certified two straightforward strict-liability claims that—as the trial court correctly observed in its certification order—will ‘prevail, or fail, in unison on the basis of the common proof and the ultimate legal conclusions,’ such as (1) whether a landlord is strictly liable to its tenants for mere failure to include in its lease the language mandated by Section 92.056(g), (2) whether omitting the required language also constitutes a violation of the anti-waiver provision in Section 92.006(c), (3) whether ACC had knowledge of the ‘legislated requirements’ of residential leases in using its uniform leases, and (4) what scope of control American Campus Communities, Inc. exercised over its subsidiaries.” Since the trial court already resolved the first two issues by summary judgment in plaintiffs’ favor, the court of appeals ruled that it had no authority to review that determination at this stage in the litigation. It further held that the numerosity, typicality, and adequacy prongs of Rule 42 were met.

This case shares at least one significant issue with Mosaic Baybrook: the extent to which appellate review of a Rule 42 order should take into consideration substantive law questions. In Mosaic Baybrook, the central legal question is whether a statute applies retroactively. If it does, the case is over. In this case, the question is whether a statutory violation creates a private right of action for strict liability. If it does not, the case is over. Should those questions be determined in an interlocutory appeal of the class certification order? Strictly speaking, no. But when certification turns on a legal question about the applicability or interpretation of a statute, should there be a window for review? Perhaps SCOTX will give us the answer.

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