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Classes in class-action suits must meet guidelines, SC rules

By Legal News Line | Mar 2, 2007

Justice Dale Wainwright

AUSTIN -- The Texas Supreme Court decertified a class action lawsuit in a unanimous but lengthy opinion released today. In Citizens Insurance Company of America Inc. (CICA) vs. Dr. Fernando Hakim Daccach et. al. (No. 03-0505) the Supreme Court overturned a trial court ruling that was affirmed by the Court of Appeals. Daccach and fellow investors allege CICA sold Texas securities to non-Texas residents without the proper registration. On appeal, CICA challenged the class certification of the plaintiffs by charging that the Appeals Court had erred on seven different issues. The Supreme Court agreed with CICA that the trial court erred in four main areas when certifying the plaintiffs as a single class. "The trial court did not consider the effect of res judicata on the adequacy of the class representative, the superiority of litigating this case as a class action, the typicality of claims within the class, and the predominance of common issues over individual issues," wrote Justice Dale Wainwright in a unanimous opinion. Consequently, the Supreme Court ruled that the class in question be decertified. "While it is not per se inappropriate to abandon claims or for the trial court to certify a specific-issue class, the requirements of class certification must still be met," Wainwright wrote. The case has been remanded to trial court for further proceedings consistent with this opinion.

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