Citgo Refining and Marketing, Inc. and Citgo Petroleum Corporation v. Amelia Garza

                             NUMBER 13-03-267-CV

                         COURT OF APPEALS

               THIRTEENTH DISTRICT OF TEXAS

                  CORPUS CHRISTI - EDINBURG

CITGO REFINING AND MARKETING, INC.,

AND CITGO PETROLEUM CORPORATION,                   Appellants,

                                           v.

AMELIA GARZA, ET AL.,                                           Appellees.

             On appeal from the 28th District Court

                     of Nueces County, Texas.

               O P I N I O N ON  R E H E A R I N G

                         Before Justices Hinojosa, Yañez, and Castillo

                                  Opinion by Justice Castillo

We reaffirm our opinion which issued September 30, 2005, except to the extent it concluded that we did not need to reach the issue of whether or not class certification was appropriate.  We here address Citgo's contention on appeal that the trial court abused its discretion in (1) initially certifying the matter as a class action (urging that common issues do not predominate and the requisite vigorous analysis was never performed), and (2) failing to recognize later changed circumstances and decertify the class.  In our previous opinion, we reversed and remanded for further proceedings.  We grant Citgo's motion for hearing, expanding the issues to be considered upon remand, and direct the trial court to conduct the requisite rigorous analysis with respect to the motions to decertify, based on the changed circumstances of the case. 

I. Background

The history of this litigation has been extensively set forth in our opinion of September 30, 2005.  With respect to certification, the record reflects that the trial court held a hearing on those issues beginning on October 19, 1995.  Plaintiff class claims centered on permanent damage to real property and diminution in value, based on negligence, trespass, and nuisance.  The class was originally certified in November 1995.^[1]

Two interlocutory appeals addressed the certification question, the first challenging the original 1995 certification order.  This Court's opinion in Amerada Hess Corp. v. Garza, 973 S.W.2d 667 (Tex. App.BCorpus Christi 1996), pet. dism'd w.o.j., Coastal Corp v. Garza, 979 S.W.2d 318 (Tex. 1998), considered only whether the trial court had appropriately addressed and had not abused its discretion in determining that, at that point in the litigation, the requisites of rule 42 appeared to have been satisfied.  A second interlocutory appeal was later brought to determine whether an order of notice to the class constituted a fundamental alteration in the nature of the class.  See Citgo Refining and Mktg., Inc. v. Garza, 94 S.W.3d 322 (Tex. App.BCorpus Christi 2002, no pet.).

In our opinion of September 30, 2005, we rejected appellees' contention that these earlier reviews of the class certification issue preclude us from considering it further. None of those appeals, in our view, constitute law of the case or preclude us from considering certification issues.

While the second interlocutory appeal remained pending, many defendants settled with the plaintiff class, and on January 23, 1998, the trial court issued an order severing all claims against those settling defendants.  In February 1998, because the trial court had not yet approved the proposed settlement between Citgo and the class, Citgo initiated an independent buyout of the properties located in the Oak Park Triangle.^[2]  The remaining defendants, other than Citgo, were severed out of the case in January 2000. Although differently-defined classes were crafted for many of the settling defendants, the original class structure, as set out in the certification order of November 1995, remains in effect for Citgo and all class members. 

II. Rule 42 and Class Certification

A. Standard of Review

Although we discuss the propriety of the class certification in light of the claims asserted by the named plaintiffs, we in no way evaluate the merits of these claims.  See Intratex Gas Co. v. Beeson, 22 S.W.3d 398, 404 (Tex. 2000) ("Deciding the merits of the suit in order to determine . . . its maintainability as a class action is not appropriate.").  No automatic right exists to maintain a lawsuit as a class action. Southwestern Ref. Co. v. Bernal, 22 S.W.3d 425, 439 (Tex. 2000) (quoting Sun Coast Res., Inc. v. Cooper, 967 S.W.2d 525, 529 (Tex. App.BHouston [1st Dist.] 1998, pet. dism'd w.o.j.)).

Our review of a decision on a class certification order is limited to determining whether the trial court's order constituted an abuse of discretion.  Ford Motor Co. v. Ocanas, 138 S.W.3d 447, 451 (Tex. App.BCorpus Christi 2004, no pet.); see also Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 691 (Tex. 2002).  In reviewing a trial court's decision under an abuse of discretion standard, we must determine whether the trial court acted without reference to any guiding rules or principles.  Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985).  The exercise of discretion is within the sole province of the trial court, and an appellate court may not substitute its discretion for that of the trial judge.  Johnson v. Fourth Ct. App., 700 S.W.2d 916, 918 (Tex. 1985).  Rather, an abuse of discretion occurs only when the trial court reaches a decision that is "so arbitrary and unreasonable as to amount to a clear and prejudicial error of law."  Id. at 917.

Typically, under this standard of review, the appellate court must indulge every presumption favorable to the trial court's ruling.  Fid. and Guar. Life Ins. Co. v. Pina, 165 S.W.3d 416, 422 (Tex. App.BCorpus Christi 2005, no pet.) (citing Graebel/Houston Movers, Inc. v. Chastain, 26 S.W.3d 24, 29 (Tex. App.BHouston [1st Dist.] 2000, pet dism'd w.o.j.)).  On certification issues, however, the appellate court is not bound by this presumption and must independently determine whether the requirements of rule 42 have been fully satisfied.  Pina, 165 S.W.3d at 422; Ocanas, 138 S.W.3d at 451; see also Schein, 102 S.W.3d at 691 ("Compliance with Rule 42 must be demonstrated; it cannot be presumed."); Bernal, 22 S.W.3d at 435.  The supreme court has expressly rejected the approach of "certify now and worry later."  Schein, 102 S.W.3d at 690; Bernal, 22 S.W.3d at 435.  The plaintiffs bear the burden of showing their entitlement to certification.  See Sun Coast Res., 967 S.W.2d at 529; Glassell v. Ellis, 956 S.W.2d 676, 682 (Tex. App.BTexarkana 1997, pet. dism'd w.o.j.). 

The trial court must conduct a "rigorous analysis" to determine whether certification requirements have been met.  Bernal, 22 S.W.3d at 435; accord, Schein, 102 S.W.3d at 688.  This rigorous analysis must include indicating how the claims will likely be tried so that conformity with rule 42 can be meaningfully evaluated.  Schein, 102 S.W.3d at 688.  Courts are to "go beyond the pleadings" and understand the "claims, defenses, relevant facts, and applicable substantive law" in order to make a meaningful determination that the requirements of certification have been met.  Bernal, 22 S.W.3d at 435. 

Further, we agree that the requirements of Bernal are appropriately applied to determine whether class certification is proper.  See State Farm Mut. Auto Ins. Co. v. Lopez, 156 S.W.3d 550, 556 (Tex. 2004) (holding that the analysis required by Bernal is properly applied even where a certification order issued prior to Bernal).  Accordingly, we perform that analysis here. 

                                    B.  The Nature of Class Actions

The class action serves as a mechanism to eliminate or reduce the threat of repetitive litigation, prevent inconsistent resolution of similar cases, and provide a means of redress for individual claims that are too small to make independent actions economically viable.  Ford Motor Co. v. Sheldon, 22 S.W.3d 444, 452 (Tex. 2000).  A principal purpose of the class action device is efficiency and economy of litigation.  See id. (discussing the origins and general design of the class action device).  When properly used, a class action saves the court's and the parties' resources by allowing class-wide issues to be tried in an economical fashion.  See id. (citing Gen. Tel. Co. v. Falcon, 457 U.S. 147, 155 (1982)).

Thus, class actions 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."  Gen. Motors Corp. v. Bloyed, 916 S.W.2d 949, 952 (Tex. 1996) (citing Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326, 339 (1980)). Class actions also facilitate the spreading of litigation costs among numerous litigants with similar claims.  Bloyed, 916 S.W.2d at 953 (citing U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 403 (1980)). 

However, the class-action format "must not unduly restrict a party from presenting viable claims or defenses without that party's consent." Bernal, 22 S.W.3d at 435-36 (citing Tex. R. Civ. P. 815; Tex. Gov=t Code Ann. ' 22.004(a)^[3] (providing that state procedural "rules may not abridge, enlarge, or modify the substantive rights of a litigant.")).  Accordingly, the class-action device may not alter the parties' burden of proof, right to a jury trial, or substantive prerequisites to recovery.  Bernal, 22 S.W.3d at 437.

A trial court's decision to certify a class can have "staggering economic consequences."  Schein, 102 S.W.3d at 701 (O'Neill, J., dissenting).  Thus, even though it is an efficient device, the right to litigate a claim as a class action is not unfettered; a trial court may certify a class action only if the plaintiff satisfies the requirements of the rule.  Tex. R. Civ. P. 42; Sheldon, 22 S.W.3d at 452‑53 (citing Weatherly v. Deloitte & Touche, 905 S.W.2d 642, 647 (Tex. App.BHouston [14th Dist.] 1995, writ dism'd w.o.j.), mandamus denied, 951 S.W.2d 394 (Tex. 1997)).

C. The Statutory Requirements for Certification

A member of a class may sue or be sued as a representative party of the class only if all of the following requirements of Texas Rule of Civil Procedure 42(a) are satisfied:  (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).  Additionally, at least one of the enumerated requirements set forth in rule 42(b) must be met:  (1) adjudication of separate actions would create a risk of inconsistent results or impairment of the interests of other members not parties to the adjudication; (2) the defendant has acted or refused to act on grounds applicable to the entire class; (3) the object of the action is the adjudication of claims affecting specific property involved in the action; or (4) common questions of law or fact predominate over any questions affecting only individual members, and a class action is the superior method of fairly and efficiently adjudicating the controversy.  Tex. R. Civ. P. 42(b).  

When reviewing the merits of the court's decision, we are limited to considering the material that was before the court at the time that it ruled.  Lebron v. Citicorp Vendor Fin., 99 S.W.3d 676, 679 (Tex. App.BEastland 2003, no pet.); Monsanto Co. v. Davis, 25 S.W.3d 773, 781 (Tex. App.BWaco 2000, pet. denied). 

Rule 42 is patterned after its federal counterpart.  Bernal, 22 S.W.3d at 433; compare Fed. R. Civ. P. 23 with Tex. R. Civ. P. 42.  Consequently, federal decisions and authorities interpreting current federal class-action requirements are persuasive authority in applying rule 42. Bernal, 22 S.W.3d at 433.

1. Numerosity

A putative class, to satisfy the numerosity requirement, must show that "the class is so numerous that joinder of all members is impracticable." Bernal, 22 S.W.3d at 433. The determination of the numerosity issue is not based on numbers alone.  In Chastain, the court stated:

The test is whether joinder of all members is practicable in view of the size of the class and such factors as judicial economy, the nature of the action, geographical location of class members, and the likelihood that class members would be unable to prosecute individual lawsuits.

Chastain, 26 S.W.3d at 29, 32 (citing Weatherly v. Deloitte & Touche, 905 S.W.2d 642, 653 (Tex. App.BHouston [14th Dist.] 1995, writ dism'd w.o.j.)). 

2.  Typicality

Typicality requires that "the claims or defenses of the representative parties are typical of the claims or defenses of the class."  Bernal, 22 S.W.3d at 433.  A class representative must possess the same interests and suffer the same injury as unnamed or absent class members.  Falcon, 457 U.S. at 156; State Farm Mut. Auto Ins. Co. v. Lopez, 45 S.W.3d 182, 191 (Tex. App.BCorpus Christi 2001), rev'd on other grounds, 156 S.W.3d 550 (Tex. 2004). To be typical, class representatives' claims need not be identical, but must arise from the same event or course of conduct giving rise to the claims of other class members and must also be based on the same legal theories.  Weatherly, 905 S.W.2d at 653.  Other courts have described this as a requisite "nexus between the injury suffered by the representative and the injuries suffered by other members of the class."  Dresser Indus., Inc. v. Snell, 847 S.W.2d 367, 372 (Tex. App.BEl Paso 1993, no writ).

3.  Adequacy

The adequacy of representation requirement consists of two elements:  (1) it must appear that the representatives, through their attorneys, will vigorously prosecute the class claims; and (2) there must be an absence of antagonism or conflict between the representatives' interests and those of the class members. Chastain, 26 S.W.3d at 32 (citing Sun Coast Res., 967 S.W.2d at 538).  Determining adequacy of representation includes a consideration of the following factors:  (1) counsel's adequacy, (2) potential conflicts of interest, (3) the plaintiff's personal integrity, (4) the representatives' interests and those of the class members, (5) whether the class is unmanageable, and (6) whether the plaintiff can afford to finance the class action.  Chastain, 26 S.W.3d at 32; Forsyth v. Lake LBJ Investment Corp., 903 S.W.2d 146, 151 (Tex. App.BAustin 1995, writ dism'd w.o.j.).

4.  Commonality

The proponent of class certification must establish that there are questions of law or fact common to the class.  Tex. R. Civ. P. 42(a); Bernal, 22 S.W.3d at 433.  "Questions common to the class" are questions that, when answered as to one class member, are answered as to all class members.  Rio Grande Valley Gas Co. v. City of Pharr, 962 S.W.2d 631, 641 (Tex. App.BCorpus Christi 1997, pet. dism'd w.o.j.).  This requirement does not mean that all or even a substantial portion of the legal and factual questions must be common to the class.  A single common question may provide adequate grounds for a class action under appropriate circumstances.  Id.; see Sun Coast Res., 967 S.W.2d at 532 ("The threshold of 'commonality' is not high.") (quoting Jenkins v. Raymark Indus., Inc., 782 F.2d 468, 472 (5th Cir. 1986)).  In most cases in which appellate courts have found an absence of commonality, the opinions have emphasized the great factual diversity of the individual claims and the ultimate dependence of any common legal questions on the facts of each individual claim.  See, e.g., Bernal, 22 S.W.3d at 436.

5.  Rule 42(b)BPredominance and Superiority

In addition to satisfying the requisites of rule 42(a), the class representative is required to demonstrate that a class action is maintainable because it satisfies one of the requisites of rule 42(b).  See Tex. R. Civ. P. 42(a); 42(b).  Here, although there is no specific finding, argument centered on and the record reflects that certification was based upon satisfaction of the present rule 42(b)(3), that common questions of law or fact predominated over individual issues.^[4] 

The commonality requirement under rule 42(a) is distinguished from the more stringent provision of rule 42(b)(3) that common questions of law or fact must predominate over questions involving individual members.  Tex. R. Civ. P. 42(a); Tex. R. Civ. P. 42(b)(3); Bernal, 22 S.W.3d at 433.  Predominance is "one of the most stringent prerequisites to class certification;" its exacting standards act "as a check on the flexible commonality test under Rule 42(a)(2)."  Bernal, 22 S.W.3d at 435. 

A non-exhaustive list of factors relevant to the predominance inquiry includes (1) the interest of members of the class in individually controlling the prosecution or defense of their particular actions, (2) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class, (3) the desirability or undesirability of concentrating the litigation of the claims in the particular forum, and (4) the difficulties likely to be encountered in the management of a class action.  Tex. R. Civ. P. 42(b)(4); Bernal, 22 S.W.3d at 433-34.  The test for establishing predominance of common issues is whether those issues will be the object of most of the efforts of the parties and the court, not whether common issues outnumber individual issues.  Id. at 434.

A trial court ruling on commonality and predominance must first identify the substantive issues controlling the litigation's outcome. Chastain, 26 S.W.3d at 33. The purpose of this requirement is to determine whether the character and nature of the case satisfy the requirements of the class-action procedural rule, not to weigh the substantive merits of each class member's claim.  Id.

Next, the trial court must correctly identify the elements of the named plaintiffs' causes of action.  Then,

The question the court must decide before certifying a class, after rigorous analysis and not merely a lick and a prayer, is whether the plaintiffs have demonstrated that they can meet their burden of proof in such a way that common issues predominate over individual ones. 

Schein, 102 S.W.3d at 694. 

As to the effect of damages calculations on commonality and predominance, the fact that damages must be computed separately for each class member does not necessarily mean in itself that individual issues predominate over common issues of law and fact.  Sun Coast Res., 967 S.W.2d at 534.  Nor will the existence of affirmative defenses prevent class certification.  Chastain, 26 S.W.3d at 30; see, e.g., Manning, 914 S.W.2d at 613-14 (including affirmative defenses of contributory negligence, superseding cause, and failure to comply with warranty); Dresser Indus., 847 S.W.2d at 373 (including affirmative defenses of limitations, lack of misrepresentation, and ratification).

Finally, a class action must be the superior means by which to address the claims.  Superiority exists when "the benefits of class-wide resolution of common issues outweigh any difficulties that may arise in the management of the class."  Union Pac. Res. Group, Inc. v. Hankins, 51 S.W.3d 741, 754 (Tex. App.BEl Paso 2001), rev'd on other grounds, 111 S.W.3d 69 (Tex. 2003); Chastain, 26 S.W.3d at 34.  In determining whether a class action is superior, factors the trial court may consider include (1) class members will benefit from the discovery that has already been completed, thereby eliminating duplication of effort, (2) the trial court has already spent substantial time and effort becoming familiar with the issues of the case, which weighs favorably for a fair and expeditious result, and (3) class members have an interest in resolving common issues by class action.  Hankins, 51 S.W.3d at 754-55; Chastain, 26 SW.3d at 35.

III.  The Original Class Certification in 1995

A.  The Proceedings

The initial certification hearing took place over two lengthy days in October 1995.  Extensive briefing and evidence were submitted by all parties.  Counsel for the plaintiff class urged that numerosity was satisfied, inasmuch as more than thirteen thousand people, with approximately four thousand separate family units or pieces of property, were within the requested geographic boundaries and definition of the plaintiff class. Claims (including diminished property values) were alleged to arise out of the same practice or course of conduct on the part of the defendants and to be common to all.  It was urged that the key issue that would predominate and encompass the bulk of the litigants' efforts was to "what extent and in what amounts defendants negligently and intentionally discharged toxic chemicals into the plaintiff class's environment."  The plaintiff class urged that issues of the existence and extent of any discharges, as well as impact on real estate values (which could be crafted over the plaintiff class by a mathematical model), would be common to the plaintiff class and predominate.^[5] 

Class representatives, as owners of property within the proposed plaintiff class boundaries exposed to the defendants' alleged negligent and nuisance activities with the resultant air and groundwater pollution, were presented as having claims typical of the plaintiff class.^[6]  Representatives and counsel were also presented as being adequate to ensure vigorous prosecution of the suit, with no internal conflicts within the plaintiff class. Class representatives were located throughout the area.  Class certification was urged as appropriate and superior, and as the only means by which many of these lower-income people could bring forward a suit. 

The plaintiff class presented extensive evidence in support of its motion for certification, including (1) evidence that spills at various facilities did occur, (2) numerous affidavits and reports of experts relating to air particulate and groundwater emissions, pollution, contamination, and dispersion modeling,^[7] and (3) communications from the Nueces County Appraisal District reflecting reduced property values in the Oak Park Triangle area directly attributable to the presence of pipelines, and pollution or contamination.

Testimony at the hearing included that of some proposed class representatives.  Ms. Simms expressed familiarity with the issues involved, a history of trying to rectify the problem short of litigation, familiarity with the claims of her neighbors, and a zeal to maintain that involvement in the capacity of class representative.  She also testified that neither she nor her neighbors could afford to independently pursue litigation against the defendants.  Reverend Verlon Friar, another long-time resident who was well-known in his neighborhood, also displayed familiarity with and knowledge of the basic tenets and status of the suit.

The defendants, including Citgo, urged that they were not a unified block, inasmuch as the facilities in issue had been constructed or purchased at different times and served different functions; the various alleged contaminants could not have originated uniformly with all of the defendants, and instead issued from different sources at different times. Defendants urged that resultant problems with assessing comparative responsibility strongly undermined common issues and any usefulness that certification might otherwise serve. Defendants also tendered argument and expert testimony challenging the proposed medical monitoring class.  They expressed concerns with how the case could be tried and stressed the difficulties in determining property values on a class-wide basis, suggesting that the court proceed instead with bell-weather trials.  Evidence submitted to counter arguments of the proposed plaintiff class included EPA documents, deposition testimony, affidavits and reports of various experts challenging the plaintiffs' emissions analysis and air dispersion modeling (both in theory and application),^[8] and therefore the proposed plaintiff class boundaries.  Defendants tendered expert testimony of a real estate appraiser who contended that properties he examined as a sample were neither common nor typical of all those proposed to be included in the plaintiff class, that not all properties had sustained groundwater contamination,^[9] and not all diminution in value could be attributed to location.  Defendants contended that the location of properties, their varying neighborhoods, the distinction between residential or commercial uses, and the individual perceptions of the various owners created problems that could not adequately be addressed by crafting subclasses and militated against any class certification. Defendants also urged that the existence of nuisance claims, with the potential defense of the statute of limitations, meant that individual issues would predominate.

A rebuttal witness for the plaintiff class, Dr. Smith, testified as to economics and cost-benefit analysis with respect to property valuations. His model, based on market analyses and appraisal values,^[10] took into consideration that all properties in the proposed plaintiff class were not affected in an equal manner.  He was able to craft his model estimating percentage impact on or loss to valuation from pollution based on a property's distance from the facilities in issue.  He spoke of general diminution in value as a whole of approximately 23% over the proposed plaintiff class area, with a very sharp increase in diminution of value of up to 60% as one approached the facilities.  Demarcation lines corresponded to some of the city streets and highways.  He specifically noted differences near boundaries such as I-37, Agnes, Port, and Leopard streets. He testified that percentage injury would be nearly the same to properties in proximal distance from the facilities, regardless of the use or any special attributes of the property.^[11]

The trial court issued an order certifying the plaintiff class on November 14, 1995, composed of three classes and various subclasses:

(1) All persons who, as of June 1, 1991, were vested with fee title to real property zoned for single family residential use within the following geographical area bounded by Interstate Highway 37 on the South; Navigation Boulevard on the West; the Defendants' Properties on the North and North Port on the East [the "I-37 North Class"].  Each class member shall, with respect to each separate residential property owned by such class member also be a member of an I37 North Class Acquisition Date Subclass. A class member may also be a member of the I37 North Free Phase Hydrocarbon Property Damage subclass [the "Oak Park Triangle Class"]; and^[12]

(2) All persons who, as of June 1, 1991, [are] members of the I37 North Residential Property Damage Class and whose real property within that class overlies and/or has been contaminated by the subsurface plume of toxic contaminates which geographical area is not greater than the area of the striped triangle on the Property Damage Class Map in Plaintiff's Exhibit 31 [the "Oak Park Triangle Class"];^[13]

(3) All persons who, as of June 1, 1991, owned real property zoned for single family residential use within the following geographical area bounded by the Agnes Street on the South, Baldwin Boulevard/ Navigation Boulevard on the West, Interstate Highway 37 on the North and Port Street on the East [the "I-37 South Class"].  Each class member shall be, with respect to each separate residential property owned by each such class member, a member of a Location Subclass.  Each Location Subclass Member shall also be a member of an I37 south Class Acquisition Date Subclass.^[14]

The order certifying the plaintiff class, in addition to identifying the various classes and subclasses, states "The Court finds the Plaintiffs have satisfied their burden of presenting some evidence that reasonable class definitions and other conditions of Rule 42 are satisfied with respect to the Plaintiffs' proposed property damage classes."^[15]

B.  Analysis

The original appeal to this Court from the certification order (1) challenged appellees' standing to sue, (2) charged certification violated the parties' right to a jury trial, and (3) claimed certification was precluded by comparative responsibility statutes.  This Court reviewed all requisite prongs under rule 42, and found no abuse of discretion.  See Amerada Hess Corp. v. Garza, 973 S.W.2d at 680.  In this appeal, Citgo urges that no rigorous analysis was performed, the trial court did not indicate how claims would be tried, claims of the class representatives were not typical, common issues did not predominate, and certification was not the superior method by which to address these issues.

We note the extensive discussion of numerosity, commonality, and typicality presented in our earlier opinion, Amerada Hess v. Garza, 973 S.W.2d at 674-77.  We agree with our analysis of those prongs.  The principal changes in class certification analysis since that 1996 opinion have occurred in connection with the demand for rigorous analysis and satisfaction of the predominance requirement.  See Bernal, 22 S.W.3d at 435.  Therefore, our opinion here focuses on those prongs. 

We have reviewed the record and conclude first that the trial court did conduct the requisite rigorous analysis.  It had voluminous written materials before it at the time of the certification hearing.  Each party had the opportunity to and did present extensive briefing and evidence addressing all requisite prongs under rule 42.  The certification hearing itself consumed two full days and included witness testimony and argument.  The trial court actively participated, making inquiries where it deemed appropriate to clarify argument and evidence before it.  The certification order which ultimately issued did not rest upon pleadings or mere assurances that any problems with predominance or superiority could be overcome, but rather upon extensive analysis.  See Schein, 102 S.W.3d at 688 (citing Bernal, 22 S.W.3d at 435).  The subclass structure corresponded to expert testimony and analysis that was in evidence. The court expressly refused to certify claims or a class for medical monitoring, finding that the plaintiff class failed to satisfy its burden in that regard.  With respect to property damage claims and diminution in value, it concluded that common issues of fact and law predominated. 

We are mindful that rigorous analysis is not complete without an indication of how the claims will likely be tried.  Bernal, 22 S.W.3d at 435.  Here, no express trial plan is included in the trial court's order. The trial court does not expressly identify in the order the causes of action or the substantive issues that will control the case.  See Lopez, 156 S.W.2d at 557.  Nevertheless, we believe that the key information is apparent from the order, which states the plaintiff class is certified only as to property damage claims. The trial court's structure of classes reflects the substantive issues that will control structure of the case and essentially accomplishes the same objectives that would be served by a more express order under Bernal.  See Bernal, 22 S.W.3d at 435.  Classes were created to distinguish between air pollution and groundwater pollution. The subclass structure took into account distance from the facilities in question, as well as date of acquisition of property.  Each of these factors and subclass structures were based upon concrete evidence and modeling tendered at the certification hearing by the plaintiff expert.  The trial court had the opportunity to hear, weigh and reject testimony of defense witnesses that individual questions would predominate over common ones.  The trial court could reasonably conclude, as reflected in the structure of subclasses, that common questions would predominate and that individual damage issues could be accounted for by proper modeling and thus would not predominate. Those same divisions would guide how the case was presented to a jury.

We cannot conclude that the trial court's conclusions, based upon an apparent careful and measured examination of the issues and facts before it, constituted an abuse of discretion, even under the auspices of Bernal.

            We note Justice Hecht's concerns in Garza:  "If common issues of law and fact did not predominate in RSR because of the necessity of proving the damage to each tract by a single pollutant from a single source, they cannot possibly predominate in the present case involving three pollutants from ten sources."  Garza, 979 S.W.2d at 325 (Hecht, J., dissenting). However, as the majority in that case pointed out, RSR Corp. v. Hayes, 673 S.W.2d 928 (Tex. App.BDallas 1984) involved claims for property damage and personal injury based on pollution from a lead smelter, and was distinguishable from the underlying matter because of the personal injury claims:  "[P]ersonal injury mass tort class actions need to be distinguished from property damage class actions.  The latter have been more frequently certified and inherently tend to involve both greater homogeneity among class members and greater commonality in their factual issues."  Garza, 979 S.W.2d at 321 (citing John C. Coffee, Jr., Class Wars: The Dilemma of Mas Tort Class Action, 95 Col. L. Rev. 1343, 1344 n.2 (1995)).  The court also noted that the subclass structure crafted by the trial court in this matter could produce the commonality of issues lacking in RSR. Id.

With respect to superiority, evidence reflects that the members of the plaintiff class below were, for the most part, individuals without resources to bring separate independent suits, and that those suits would raise virtually the same questions and involve the same experts and types of analysis.  Evidence reflects that plaintiff class members had an interest in resolving the common issues by class action.  Further, the record reflects that plaintiff class members would benefit from discovery already commenced.  Much written discovery and many depositions of class representatives and other witnesses, as well as of numerous experts, had already occurred at the time of the certification hearing.  The trial court had invested considerable time and effort and was certainly familiar with the issues in dispute.  It could reasonably conclude, at the time and on the record before it, that class certification was not only appropriate but also was the superior means by which to address the claims.  See Chastain, 26 S.W.3d at 34; Sun Coast Res., 965 S.W.2d at 535. 

IV.  The Motion to Decertify, Based upon Changed Conditions

A.  The Proceedings and Case Developments

In October 1999, Citgo moved to decertify the plaintiff class based upon changed circumstances.  Citgo urged that certification was no longer appropriate for numerous reasons.  First, it had conducted the buy-out and secured releases with respect to virtually all properties in the Oak Park Triangle.  Citgo and Koch together had purchased an additional 165 properties, paying more than the worth estimated by the plaintiff class damages expert.  The purchase of nearly all the Oak Park Triangle subclass properties (which encompassed all of the hydrocarbon groundwater contamination class claims) and an additional 165 properties in the Hillcrest area effectively eliminated all residential properties in close proximity to the facility.^[16] 

Secondly, Citgo urged that case history reflected and plaintiff class counsel had acknowledged that the 1995 subclasses had played no role in the case, and that the plaintiff class had effectively abandoned the subclasses in its prosecution of the suit.^[17]  Even the plaintiff class damages expert did not base his later-crafted damage models on the geographical subclasses created in the 1995 order.  Instead, the plaintiff class expert opined that damages increased on a continuum as distance from the closest facility increased. Further, no-one attempted to use the acquisition date of a property in the defined subclasses for any significant purpose.  The plaintiff class expert instead stated that the date a property may have been acquired played no part in his analysis because he could not identify when any diminution occurred;^[18] he focused solely on proximity to facilities. Citgo additionally pointed to the plaintiff class's response to Koch Industries, Inc.'s motion for summary judgment (filed August 20, 1999), in which the plaintiff class stated that the class substructure was solely a judicial creation to attempt to create commonality, but did not reflect reality.^[19]  The plaintiff class stated:

Instead that year [1971] is simply one chosen by the Honorable Robert Pate, the trial court judge who was presiding at the time the plaintiffs in this case were certified as a class.  In his certification order . . . Judge Pate unilaterally created a number of different sub-classes based on geography and duration of ownership.  Presumably, Judge Pate created the sub-classes in order to enhance commonality or to aid in the calculation of damages, though it is not clear. The plaintiffs never sought the creation of such sub-classes and the certification order does not identify any reasons for their creation.

Third, Citgo urged that inherent conflicts had arisen between plaintiff class members located close to facilities and those located at a further distance, destroying typicality and adequacy of representation. Citgo urged these conflicts arose because when the plaintiff class expert sought to preserve claims of outlying properties, date problems with respect to when substantial damage occurred necessarily triggered statute of limitations concerns for properties in close proximity to the facilities.^[20]  Additionally, Citgo urged that the combined effect of (a) the expert's opinion as to when "substantial injury" occurred, coupled with (b) application of the expert's own discount rate (based on date of acquisition), and (c) the Citgo buy-out, was that numerosity was destroyed.  Citgo also pointed to the plaintiff class's admission that plaintiff class members located 1.069 miles or more from the facilities had no loss or damage at all.

Plaintiff class claims also now encompassed a 1997 event involving a fire at Citgo.  This event occurred years after certification and did not impact all residences in the plaintiff class in the same manner as earlier claims (based on groundwater contamination and air pollution from aggregate emissions over time) might have done. Further, claims related to the 1997 event had been separately litigated by many in the plaintiff class, and they were now barred by res judicata from resurrecting or recovering again for those same claims.  Inclusion of that event further complicated proof issues and allocation of damages.^[21]  Finally, Citgo urged that many plaintiff class members had died since certification, and Texas law prohibits recovery of exemplary damages for injury to real property on behalf of a decedent. 

Citgo urged that the various changed circumstances had destroyed any earlier commonality, typicality, adequacy or numerosity. Citgo urged that discovery and progression of theories in the case had exacerbated individual concerns, including when damage became "substantial," and that these concerns necessarily outweighed and predominated over any of the originally-hoped-for common issues.

Appellees disputed Citgo's contentions, conceding only that two factors had changed since the initial certification:  some of the plaintiff class had died, and Citgo conducted its buy-out.

A hearing on the motion to decertify was held on November 22, 1999.  The plaintiff class essentially argued that trial was set and justice demanded that it go forward as scheduled in January 2000.  They urged that Citgo only urged the certification argument as a means to postpone that trial.  The motion was denied on November 24, 1999. 

In January, trial did not go forward.  Instead the trial court approved the Citgo settlement first tendered to the court in fall 1997.  In March 2000, the plaintiff class filed an amended petition and included an alternate claim for breach of the settlement agreement. 

At a June 2001 pre-trial hearing, the court was again asked to revisit the issue of decertification, in light of Bernal and the other changes in circumstances.  The court requested additional briefing.  On July 6, 2001, Citgo filed a Supplemental Motion to Decertify, stressing the absence of any rigorous analysis, any trial plan, and the failure of the plaintiff class, as defined, to satisfy the requisites of Rule 42.^[22]  Citgo urged that potential problems had only been exacerbated, the class definition, as certified, precluded Citgo from adequately and vigorously presenting individual defenses,^[23] and that certification was not the superior method by which to resolve remaining claims.

The plaintiff class did not respond directly to Citgo's arguments, but urged that the 1995 certification order was still viable, that some members of the Oak Park Triangle subclass had never settled with Citgo, that modification would only trigger another appeal, that modification might adversely affect other pending settlements, that Citgo presented no new arguments, and that the trial court had already determined that individual issues did not predominate.^[24]  As to the absence of a trial plan (as required under Bernal) the plaintiff class urged that the fact that trial proceeded against the severed Coastal Corporation defendants adequately demonstrated that the matter could be tried on the merits and that individual issues would not predominate.^[25]

A bench trial commenced on August 13, 2001; the trial court did not reopen the hearing, presumably because the entire issue might become moot depending upon outcome of the trial.^[26]

B.  Analysis

In our 1996 opinion, in which we reviewed the certification issues for the first time, we noted that "[t]he court has the 'duty of monitoring its class decisions in light of the evidentiary development of the case . . . [and] must define, redefine, subclass, and decertify as appropriate in response to file progression of the case from assertion to facts.'"  Amerada Hess v. Garza, 973 S.W.2d at 673-74. 

It cannot be disputed that major changes occurred subsequent to the original certification.  In addition to the shifts in circumstance identified by the parties is the significant development that Citgo is the only remaining defendant in the underlying proceedings.  Any complications that might have previously arisen with respect to multiple defendants and related causation issues are no longer a concern.  The resultant simplification of the suit mitigates in favor of retaining certification of the plaintiff class.

However, the Citgo buy-out did occur, with the resultant elimination of most of the Oak Park Triangle Class (formed to address the groundwater contamination issue).^[27]  We further cannot ignore that the plaintiff class, in its 1999 pleadings, stated that class structure and division into subclasses was simply one chosen by the trial judge and that, while presumably the subclasses were created "in order to enhance commonality or to aid in the calculation of damages," the "plaintiffs never sought the creation of such subclasses and the certification order does not identify any reasons for their creation."  The record further reflects that plaintiff class in fact sought to dissolve itself at one point, presumably because it was not an accurate reflection of the evidence that had arisen through continuing discovery and expert analysis.  The plaintiff class's own expert did not use the plaintiff class structure defined in the 1995 order to craft his damages analysis.  We also cannot ignore the settlements included in the record which, in resolving claims against other co-defendants of Citgo, created distinct settlement classes that do not correspond to the original 1995 certification order or the class definitions set forth therein. 

The trial court was presented with motions requesting it to revisit the issue of class certification in light of the many changed circumstances.  It held one hearing, denied the motion to decertify, then approved the settlement agreement (which was found to have been abandoned in our September 30 opinion), and ultimately moved forward with trial on the breach of contract claim.  Though requested and presented with new motions, the trial court did not hold an additional hearing on decertification prior to trial.  We conclude that, in light of the many and dramatic changed circumstances, regardless of whether they are best considered under modification or decertification, the trial court abused its discretion in failing to adequately address the motions to decertify and to conduct the rigorous analysis demanded by Bernal.

We note that where problems arise with a class definition, appellate courts should be reluctant to step in or redefine the class.  Beeson, 22 S.W.3d at 406. 

[U]nder rule 42(c) (1), the trial court may alter, amend, or withdraw class certification at any time before final judgment.  For example, the contours of the case may change after discovery is completed and as the parties prepare for trial, necessitating modification of the class definition.  Rule 42(c)(1) invests the trial court with the responsibility of managing the class action, and provides it with the tools to respond to changes in the case's development. Prescribing the class definition for the trial court, therefore, interferes with the trial court's discretion to monitor the class.

Id. at 407.  Further, "the trial court's discretion to define, modify, subclassify, or decertify in response to the case's development counsels in favor of remanding to the trial court when an appellate court identifies definitional problems."  Id.

Conclusion

We grant Citgo's motion for rehearing.  We expand the holding in our opinion of September 30, 2005, to include remand to the trial court for further consideration and rigorous analysis of the motions to decertify in light of that opinion and the changed circumstances of the case.  Id.

ERRLINDA CASTILLO

Justice

Opinion on Rehearing delivered and filed

this 23rd day of March, 2006.

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^[1] The plaintiff class also originally brought claims for medical monitoring and personal injury, but these were not included in the certification order.

^[2] See detailed discussion in Part IV below.

^[3] Tex. Gov=t Code Ann. ' 22.004(a) (Vernon 2004).

^[4] At the time this plaintiff class was certified, rule 42 contained four subdivisions; rule 42(b)(4) included the language currently found in rule 42(b)(3).  See Tex. R. Civ. P. 42(b)(4) (1977, amended 2004).

^[5] Evidence tendered for purposes of class certification suggested that all properties in the affected area had sustained diminution in market values that far exceeded what would normally be expected for properties near an encroaching industrial area.  The putative class urged that the adverse impact on property values was significant and could be measured on a class-wide basis, while conceding that some individualized damage calculations would be required, depending upon a property's proximity to the facilities. 

^[6] At the time of this hearing, plaintiffs sought certification of a property damage class (with a subclass for those exposed to groundwater contamination) and a medical monitoring class.  Only the property damage classes were certified and are in issue.

^[7] Also included were expert affidavits and reports relating to health issues and the claims for medical monitoring.  Objections to the evidence were overruled; all evidence was admitted for the single purpose of determining the appropriateness of class certification. 

^[8] Defendants contended that plaintiff experts had made incorrect assumptions with respect to amounts of releases and drift characteristics that were fatal to the models relied upon to establish class-wide characteristics.

^[9] Defendants at the hearing conceded that hydrocarbon contaminants were located in the ground and groundwater beneath a bulk of the properties in the Oak Park Triangle. 

^[10] Data was based upon 1994 tax appraisal values, but Dr. Smith testified that diminution was a continuous process over years.  He agreed that persons who lived further away or who had only recently purchased property would have sustained less negative impact.

^[11] At the conclusion of testimony, counsel for the putative class clarified that some class representatives indeed owned commercial properties within the proposed plaintiff class area, and additional business owners were ready to serve in the capacity of representatives, but were also satisfied with those already proposed as representatives.  Additional affidavits from both residential and business owners were tendered as evidence to counter defense arguments that most persons in the affected area were unconcerned about the issue.  Objections to the affidavits were overruled. Counsel also addressed the superiority of a class action over the bell-weather trials alternative, including the economic savings that could be realized if certification did occur.

^[12] Subclasses were defined based upon date of acquisition of property, whether (1) before June 1, 1971, (2) after June 1, 1971 but before June 1, 1976, (3) after June 1, 1976 but before June 1, 1981, (4) after June 1, 1981 but before June 1, 1986, and (5) after June 1, 1986 but before June 1, 1991.

^[13] This class was crafted to deal with the groundwater contamination claims. 

^[14] Subclasses were defined by location of the property in relation to Leopard Street, and date of acquisition (comparable to the dates identified for the I-37 North Class).

^[15] Certification of the plaintiff class was appealed and affirmed in August 1996.  See Amerada Hess Corp. v. Garza, 973 S.W.2d 667, 671, 682 (Tex. App.BCorpus Christi 1996, writ dism'd w.o.j.). See also Coastal Corp. v. Garza, 979 S.W.2d 318 (Tex. 1998).

^[16] Citgo pointed out that the buy-out compensated those property owners in amounts in excess of the damages identified by the plaintiff class expert, such that they were entitled to no additional damages, and further provided Citgo with complete releases.

^[17] We would also note that on January 22, 1998, the plaintiff class moved to dissolve itself, in order to moot the pending interlocutory appeal. That motion was never ruled on and was withdrawn on July 16, 1998, subsequent to the supreme court's dismissal of the appeal for want of jurisdiction.

^[18] The expert did acknowledge that the more recent the acquisition, the greater the discount to his estimated purchase price, reflecting diminution up to that date.  However, neither the estimated purchase price nor extent of damage was determined by date of acquisition.  The expert stated that injuries to the properties became "substantial" over a period between the early 1980's and early 1990's, with the bulk of damages occurring in the mid to late 1990's.

^[19] The plaintiff class notice as it was proposed in 1999 did not reference any of the subclasses, and referred only to the entire geographical area encompassed within the plaintiff class.

^[20] Damages for permanent nuisance require a "material or substantial injury."  See Vestal v. Gulf Oil Corp., 231 S.W.2d 523, 525 (Tex. Civ. App.BFort Worth 1950), aff'd, 235 S.W.2d 487 (Tex. 1951).  The plaintiff class urged that a cause of action for permanent nuisance accrued when the property sustained "substantial injury." The plaintiff class damage expert opined that severity of impact on properties directly correlated to distance from the facility, and that by a certain date, "substantial damage" in the amount of 21% diminution in value had occurred to properties within a one-third mile radius of the facility.  The expert projected a growth rate for this radius over time.  Citgo urged that this approach necessarily meant that, at the time of the hearing, property beyond that radius had not yet sustained the requisite "substantial damage," such that a cause of action had not yet even accrued.  Further, the plaintiff class expert conceded that some members of the plaintiff class were so distant from the facility that they had sustained no damages at all.

^[21] Citgo also argued that numerous members of the plaintiff class had, at different times, been party to various suits against various defendants for other specific incidents, each time claiming property damage and diminished value.  While such claims would not necessarily negate the possibility of recovery in this instance, they could impact those members' amount of recovery in light of other recoveries they might have received.

^[22] In this supplemental motion, Citgo notes that although the original certification order created a subclass of the Oak Park Triangle for alleged groundwater contamination, a rule 11 agreement was later entered into, confirming that such claims would not be asserted against Citgo.  Additionally, at the time of this motion, all but one Oak Park Triangle property had been purchased by Citgo in its buy-out.

^[23] At this point in the litigation, there apparently remained between 2,000 and 3,000 plaintiff class members.

^[24] The plaintiff class further urged that Citgo's issues would be moot if the plaintiff class prevailed in its claims for breach of the settlement agreement.

^[25] Propriety of the plaintiff class in the severed case and trial against Coastal Corporation is not before us; we note, however, the plaintiff class's acknowledgment that Coastal Corporation also argued that individual issues predominated. 

^[26] As noted in our earlier opinion of September 30, 2005, trial proceeded on the claim for breach of the settlement agreement.  A hearing on the question of decertification was set prior to trial before a visiting judge.  However, an objection to the judge was lodged; the hearing did not go forward.  Although the issue was brought up before the trial court, it was not resolved before trial commenced. We reject the contention that the issue was waived.  At all points in the process, Citgo raised motions in opposition to the class, and requested either decertification or a new hearing.  In April 2002, Citgo objected to the proposed class notice (relating outcome of the trial); Citgo even brought an interlocutory appeal which was rejected as premature. In September 2002, the court held a hearing on the motion for entry of judgment and attorneys' fees.  Following this hearing, the plaintiff class tendered a proposed final judgment to which Citgo objected based upon conflicts in the class and arguments for decertification.  Once final judgment issued in April 2003, this appeal ensued.

^[27] This class was defined as "All persons who, as of June 1, 1991, [are] members of the I37 North Residential Property Damage Class and whose real property within that class overlies and/or has been contaminated by the subsurface plume of toxic contaminates which geographical area is not greater than the area of the striped triangle on the Property Damage Class Map in Plaintiff's Exhibit 31".