IN THE SUPREME = COURT OF TEXAS

IN THE SUPREME COURT OF TEXAS

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No. 03-1189

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DaimlerChrysler = Corporation,=20 Petitioner,

Bill Inman, David = Castro,=20 and John Wilkins, Each Individually and on Behalf of All Others = Similarly=20 Situated, Respondents

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On Petition for Review from = the

Court of Appeals for the Thirteenth = District of=20 Texas

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Argued January 6,=20 2005

=20 Chief Justice = Jefferson,=20 joined by Justice O=92Neill, Justice = Green, and=20 Justice Johnson, = dissenting.

In=20 determining the propriety of a class action, the question is not whether = the=20 plaintiff or plaintiffs have stated a cause of action or will prevail on = the=20 merits, but rather whether the requirements of [the procedural rule = governing=20 class actions] are met.

&nb= sp; &nbs= p; = ; = &= nbsp; &n= bsp; &nb= sp; &nbs= p; = ; =20

Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974) = (quoting=20 Miller v. Mackey Int=92l, 452 F.2d 424, 427 (5th Cir. 1971)).[1]

=20 This case comes to us on appeal of a trial court=92s order = certifying a=20 nationwide [2] class action against = DaimlerChrysler. The=20 trial court had previously denied DaimlerChrysler=92s motion for summary = judgment,=20 which asserted that the class allegations failed to state a cause of = action.[3] In the court of appeals, = Chrysler=97for the=20 first time=97asserted that the plaintiffs lacked standing to sue. Today, = the Court=20 agrees and, in doing so, improperly equates standing with the merits of = the=20 plaintiffs=92 claim. Because this contravenes fundamental tenets of the = standing=20 doctrine, our rules of procedure, and the statute governing = interlocutory=20 appeals, I respectfully dissent.

Standing

=20 The Court never reaches the choice-of-law issue, instead = dismissing the=20 entire action based on its conclusion that the plaintiffs lack standing. = But=20 standing =93focuses on the party seeking to get his complaint before a . = . . court=20 and not on the issues he wishes to have adjudicated.=94 Simon v. E. = Ky. Welfare=20 Rights Org., 426 U.S. 26,=20 38 (1976) (quoting Flast v. = Cohen, 392=20 U.S. 83, 99 (1968)). Today = the Court=20 inverts traditional standing doctrine, focusing not on the party but on = the=20 issues to be adjudicated.

=20 Putative class representatives, like any other plaintiffs, must=20 demonstrate standing to sue. M.D. Anderson Cancer Ctr. v. Novak, = 52=20 S.W.3d 704, 710 (Tex. 2001). Here, each named = plaintiff has=20 alleged a personal interest in the case and a type of injury that is = generally=20 redressable under Texas law, which requires = only =93(1) a=20 real controversy between the parties, that (2) will be actually = determined by=20 the judicial declaration sought.=94 Austin Nursing Ctr., Inc. v. = Lovato, 171 S.W.3d 845, 849 (Tex. 2005) = (quoting Nootsie, Ltd. v. Williamson County = Appraisal=20 Dist., 925 S.W.2d 659, 662 (Tex. 1996)); see also Warth v. Seldin, = 422 U.S. 490,=20 501 (1975)(noting that =93[f]or purposes of ruling on a motion to = dismiss for want=20 of standing, . . . reviewing courts must accept as true all material = allegations=20 of the complaint, and must construe the complaint in favor of the = complaining=20 party=94); Brown v. Todd, 53 S.W.3d 297, 305 n.3 (Tex. 2001) = (=93Because=20 standing is a component of subject matter jurisdiction, we consider [it] = as we=20 would a plea to the jurisdiction, construing the pleadings in favor of = the=20 plaintiff.=94). As both of those conditions are satisfied here, the = class=20 representatives have standing to prosecute their claims.

=20 As the Court notes, in most states (including Texas), the = law on=20 warranty claims based on unmanifested = defects is=20 unclear. ___ S.W.3d at ___ (citing Compaq Computer = Corp. v.=20 Lapray, 135 S.W.3d 657, 679 (Tex. 2004)). = Absent a=20 full record, in which the claim=92s contours can be thoroughly vetted, I = am not=20 prepared to say the plaintiffs=92 claims of economic injury are = conclusively=20 unsound. At least one court has distinguished between no-injury product=20 liability claims, which are based in tort, and warranty claims based on = unmanifested defects, which are contractually = based. As the=20 Fifth Circuit noted in a class-action case in which boat owners sought = benefit=20 of the bargain damages:

The key=20 distinction between this case and a =93no-injury=94 product liability = suit is that=20 the Coghlans=92 claims are rooted in basic = contract law=20 rather than the law of product liability: the Coghlans=20 assert they were promised one thing but were given a different, less = valuable=20 thing. The core allegation in a no-injury product liability class action = is=20 essentially the same as in a traditional products liability case: the = defendant=20 produced or sold a defective product and/or failed to warn of the = product's=20 dangers. The wrongful act in a no-injury products suit is thus the = placing of a=20 dangerous/defective product in the stream of commerce. In contrast, the = wrongful=20 act alleged by the Coghlans is Wellcraft's failure to uphold its end of their = bargain and=20 to deliver what was promised. The striking feature of a typical = no-injury class=20 is that the plaintiffs have either not yet experienced a malfunction = because of=20 the alleged defect or have experienced a malfunction but not been harmed = by it.=20 Therefore, the plaintiffs in a no-injury products liability case have = not=20 suffered any physical harm or out-of-pocket economic loss. Here, the = damages=20 sought by the Coghlans are not rooted in the = alleged=20 defect of the product as such, but in the fact that they did not receive = the=20 benefit of their bargain.

Coghlan v. Wellcraft=20 Marine Corp., 240 F.3d 449, 455 n.4 (5th Cir. 2001).

=20 The Fifth Circuit also noted that =93the determination that there = has been=20 no injury in [cases like this] must be an evidentiary one.=94 Id. at = 455=20 (holding that district court acted prematurely by dismissing case on the = pleadings). Most courts recognize that the failure to state a cause of = action is=20 best addressed outside the context of class certification. Indeed, one = court has=20 noted that =93the substantive question of whether the implied warranty = of=20 merchantability protects against an unanticipated diminution in = secondary market=20 values=94 is better reserved for =93another, more appropriate time =97 = i.e., outside=20 the context of rulings on Rule 23 motions for class certification.=94 = Carlson=20 v. Gen. Motors Corp., 883 F.2d 287, 297 (4th Cir. 1989)[4]; see also Briehl v. Gen. Motors Corp., 172 F.3d 623, 628 = n.8 (8th=20 Cir. 1999) (noting that, in evaluating the trial court=92s ruling on a = motion to=20 dismiss for failure to state a claim, class certification decisions are=20 =93singularly unhelpful since none of the cases address[] the = substantive question=20 of whether a plaintiff claiming only lost resale value damages states a = valid=20 claim=94 and noting that most courts =93explicitly reserve[] the = question for a=20 decision outside the context of a Rule 23 motion to certify a class=94) = (citations=20 and quotations omitted). Not only that, but because Rule 42, like its = federal=20 counterpart, requires certification =93at an early practicable = time,=94 Tex. R. Civ. P. 42(c)(1)(A); = see=20 also Fed. R. Civ. = P.=20 23(c)(1)(A), trial courts will generally face class certification = decisions=20 before a case is ripe for summary judgment. See Curtin v. United = Airlines,=20 Inc., 275 F.3d 88, 92 (D.C. Cir. 2001); Cowen v. Bank United of = Tex.,=20 FSB, 70 F.3d 937, 941 (7th Cir. 1995); see also 7B Charles Alan Wright, Arthur R. = Miller &=20 Mary Kay Kane, Federal Practice and Procedure (3d ed. 2005) =A7 = 1798=20 (noting that, in class action cases, trial courts should be =93very = careful=94 in=20 ruling on early summary judgment motions =93to make certain that all the = available=20 evidence is before [them]=94).

=20 The Court notes=97accurately=97that two similar class actions = have been=20 brought in other states =93without success.=94 ___ S.W.3d at ___. But = that is only=20 part of the story. While both cases involved putative class actions = involving=20 the Gen-3 buckles, neither was decided on the basis of standing. The = Quacchia court held that common issues did = not=20 predominate, and thus the trial court did not abuse its discretion in = refusing=20 to certify the class. Quacchia v. = DaimlerChrysler=20 Corp., 19 Cal. Rptr. 3d 508,=20 515 (Cal. Ct. App. 2004). Similarly, in Hiller, the trial court = found=20 that class certification was inappropriate, as class members had not=20 demonstrated predominance. Hiller v. DaimlerChrysler Corp., No. = 02-681,=20 2007 Mass.=20 Super. LEXIS 442, 2007 WL 3260199, *4-5 (Mass. Super. Ct. Sept. 25, 2007). But neither = court held,=20 as this Court does, that trial courts lacked subject matter jurisdiction = over=20 the plaintiffs=92 claims. Indeed, in concluding that a plaintiff suing = for=20 allegedly defective Gen-3 buckles stated a cognizable claim, a = Florida court = noted:

This case=20 turns on a relatively simple question, at least as to damages =97 Is a = car with=20 defective seatbelt buckles worth less than a car with operational = seatbelt=20 buckles? Common sense indicates that it is, but, at this stage of the = case, we=20 need not decide that issue. Rather, we only determine that Collins is = entitled=20 to go forward with her case.

Collins v.=20 DaimlerChrysler Corp., 894 So.2d 988, 989-90 (Fla.=20 Dist. Ct. App. 2004) (holding that Florida consumer protection statute = did not=20 require that =93a defect manifest itself by failing to operate in an = emergency or=20 by causing injury=94=97actual injury in form of insufficient product = value was=20 enough, and whether =93allegations have merit remain[ed]=20 to be decided=94).

=20 The Court relies in part on Rivera v. Wyeth-Ayerst Labs., = 283 F.3d=20 315 (5th Cir. 2002). But the Fifth Circuit=92s recent decision in = Cole v.=20 General Motors Corp., 484 F.3d 717 (5th Cir. 2007), shows why = Rivera=20 is inapposite. In Cole, Cadillac DeVille owners=20 sued General Motors, alleging that the DeVilles had a=20 defect that caused the airbags to deploy inadvertently and that GM had = failed to=20 repair or replace the airbags within a reasonable time. None of the = class=20 plaintiffs had actually experienced an inadvertent deployment, and GM = (which had=20 previously recalled the vehicles) challenged their standing to sue. = Cole,=20 484 F.3d at 719-20. The Fifth Circuit, distinguishing Rivera, = concluded=20 that the plaintiffs had standing to pursue their claims:

In=20 Rivera, purchasers of a prescription drug sought recovery of = economic=20 damages after learning that the manufacturer had withdrawn the drug from = the=20 market because the drug had caused liver damage to other patients. We = concluded=20 that the Rivera plaintiffs lacked standing because they described = their=20 claim as emanating from the drug manufacturer=92s failure to warn and = sale of a=20 defective product, but the plaintiffs did not claim that the drug had = caused=20 them any physical or emotional injury. Although the plaintiffs = quantified their=20 injury in terms of economic damages, we concluded that merely asking for = economic damages failed to establish an injury in fact because the = plaintiffs=20 never defined the source of their economic injury. The plaintiffs could = not=20 assert benefit-of-the-bargain damages because they had no contract with = the=20 manufacturer. Due to these factors, we determined that the injuries that = the=20 plaintiffs alleged were suffered not by them, but rather, by the = non-party=20 plaintiffs suffering liver damage. And we referred to the Rivera=20 plaintiffs=92 claim as a =93no-injury products liability=94 suit.

=20 Rivera is distinguishable from the instant case. In = Rivera,=20 the plaintiffs sought damages for potential physical injuries; because = they=20 never suffered actual physical injuries, they could only allege injuries = that=20 were suffered by non-parties. The Rivera plaintiffs did not = assert=20 economic harm emanating from anything other than potential physical = harm. Here,=20 although plaintiffs do not assert physical injuries (either their own or = those=20 of other persons), they do assert their own actual economic injuries. = Plaintiffs=20 allege that each plaintiff suffered economic injury at the moment she = purchased=20 a DeVille because each DeVille was defective. Plaintiffs further allege = that each=20 plaintiff suffered economic injury arising from GM=92s unreasonable = delay in=20 replacing their defective [airbags]. Plaintiffs seek recovery for their = actual=20 economic harm (e.g., overpayment, loss in value, or loss of usefulness)=20 emanating from the loss of their benefit of the bargain. Notably in this = case,=20 plaintiffs may bring claims under a contract theory based on the express = and=20 implied warranties they allege. Whether recovery for such a claim = is=20 permitted under governing law is a separate question; it is sufficient = for=20 standing purposes that the plaintiffs seek recovery for an economic harm = that=20 they allege they have suffered. See Parker v. District of=20 Columbia, 478 F.3d 370, 377(D.C. Cir. 2007) (=93The Supreme Court = has made=20 clear that when considering whether a plaintiff has Article III = standing, a=20 federal court must assume arguendo = the merits=20 of his or her legal claim.=94) (citing Warth=20 v. Seldin, 422 U.S. = 490, 501-02=20 (1975)). We therefore conclude that plaintiffs have established a = concrete=20 injury in fact and have standing to pursue this class action. =

Id. at = 722-23=20 (emphasis added) (citations omitted).[5]

=20 This Court=92s attempt to distinguish Cole reveals the = extent to=20 which it has misread that case. In its discussion of Cole and=20 Rivera, the Court asserts that:

An=20 important difference between these two cases is that the Cole = plaintiffs=20 alleged a defect that would cause GM=92s side-impact air bags to deploy = by itself=20 unexpectedly during normal operation, something GM conceded in its = voluntary=20 recall, while the Rivera plaintiffs alleged a defect in = medication which=20 had caused injury only when taken by someone contrary to Wyeth=92s = instructions.=20 In Cole, injury was a matter of time; in Rivera, it might = never=20 happen. The air bags in Cole=92s vehicle might deploy improperly = regardless of=20 what she did, just as they might in the other vehicles in which they = were=20 installed. Taking Duract had not hurt = Rivera, and=20 there was almost no chance that the defect she alleged in the drug ever = would=20 injure her, given that she was fully aware of the restrictions on its = use. Any=20 possibility of injury to the plaintiffs in the present case is even more = remote=20 than it was in Rivera.

__S.W.3d = at__.=20 Based on this description, one would think that Cole turned on = the=20 likelihood of personal injury to the plaintiffs. As seen above, however, = the=20 Cole panel distinguished Rivera on very different grounds. = The=20 Fifth Circuit found that the plaintiffs in Cole had = standing not=20 because unexpected air bag deployment was inevitable[6] or otherwise more likely to = cause harm to=20 the plaintiffs than the drug in Rivera, but because the = plaintiffs=20 alleged that the defect=97and GM=92s failure to cure it in a reasonable=20 time=97deprived them of the benefit of their bargain. The plaintiffs = here, like=20 those in Cole, have made a claim for economic = damages=97replacement cost=20 and loss of use=97arising from, among other things, an alleged breach of = warranty.=20 This is sufficient to establish the plaintiffs=92 standing, Cole, = 484 F.3d=20 at 722-23, and neither the Court=92s dim view of their ability to prove = a defect=20 nor its disdain for their bid to adjudicate the rights of =93ten million = vehicle=20 owners and lessees across the nation=94 in Nueces County deprives them = of it.=20 __S.W.3d at__.

=20 Similarly, the Court=92s analogy to M.D. Anderson misses = the mark.=20 In that case, we held that a plaintiff who was never defrauded lacked = standing=20 to sue on behalf of those who were. See M.D. Anderson Cancer Ctr. v.=20 Novak, 52 S.W.3d 704, 707-11 (Tex. 2001). In this case, by = contrast, each of=20 the plaintiffs purchased a vehicle equipped with Gen-3 buckles, and they = allege=20 economic damages equal to the cost of replacing the defective buckles. = Their=20 injury=97as alleged=97is complete.[7] Perhaps M.D. Anderson = would be=20 applicable if the plaintiffs did not own the vehicles but were suing on = behalf=20 of those who did, but that=92s not the case here. Taking their pleadings = as true,=20 as we must,[8] it is the plaintiffs=97not some = unrelated=20 third parties=97who have suffered an economic injury. For standing = purposes, they=20 need not show that the seat belts =93fail[ed] to operate=20 in an emergency or . . . caus[ed] injury.=94 Collins, 894 So.2d at 990. = Their injury,=20 as alleged, is manifest today, because the economic value of the product = they=20 purchased is not as warranted.[9]

=20 The Court correctly notes that standing is a prerequisite to = subject=20 matter jurisdiction. ___ S.W.3d ___. It may be raised not only by a plea = to the=20 jurisdiction, but by any number of procedural methods, including summary = judgment. Bland I.S.D. v. Blue, 34 S.W.3d 547, 554 (Tex. = 2000). This=20 rule facilitates review of subject matter jurisdiction, which is so = important=20 that it can be raised for the first time on appeal. It makes little = sense,=20 however, to stretch this reasoning to permit review of ordinary = merits-based=20 issues that are raised in a motion for summary judgment.[10] We have never before held that = any time=20 a plaintiff=92s claims fail as a matter of law, the trial court is = deprived of=20 jurisdiction.[11]

=20 Moreover, crafting new standing rules creates a host of problems, = not the=20 least of which involves collateral attacks on judgments. Without = standing, a=20 court lacks subject matter jurisdiction to hear the case. Id. at 553-54; Tex. Ass'n=20 of Bus. v. Tex. Air Control = Bd., 852=20 S.W.2d 440, 443 (Tex. 1993). Because =93a judgment = will never be=20 considered final if the court lacked subject-matter jurisdiction,=94 = Dubai=20 Petroleum Co. v. Kazi, 12 S.W.3d 71, 76 = (Tex.=20 2000), the Court=92s holding =93opens the way to making judgments = vulnerable to=20 delayed attack for a variety of irregularities that perhaps better ought = to be=20 sealed in a judgment.=94 Restatement=20 (Second) of Judgments =A7 12 cmt. b = (1982);=20 see also Dubai, 12 S.W.3d at 76. = Additionally, by=20 holding that standing requires the plaintiff to establish the validity = of its=20 claim, and because standing may be raised for the first time on appeal, = a=20 class-action defendant could=97on interlocutory appeal of a = certification=20 order=97seek dispositive rulings on all of the plaintiffs=92 claims, = even without=20 first asking the trial court to determine the merits of the claims and = absent=20 any sort of evidentiary record. Defendants who lose at trial may now, = under the=20 guise of standing, raise affirmative defenses that were never pleaded = in, or=20 considered by, the trial court.

=20 We have recognized that =93[i]f . . . = no class=20 member can state a viable claim, dispositive issues should be resolved = by the=20 trial court before certification is considered.=94 State Farm Mut. Auto. Ins. Co. v. Lopez, 156 S.W.3d 550, = 557=20 (Tex. 2004).=20 Here the trial court did precisely that, by denying DaimlerChrysler=92s = summary=20 judgment motion, which alleged that the class members had not suffered = damages,=20 an essential element of their claims. Even if DaimlerChrysler were = entitled to=20 summary judgment on the grounds asserted, the trial court=92s denial of = the=20 motion, a patently interlocutory ruling, is referable to the merits = rather than=20 the plaintiffs=92 standing to assert their claims. The Legislature in = 2003=20 enlarged our interlocutory appellate jurisdiction in class action cases, = by=20 (among other things) broadening our conflicts jurisdiction, but it did = not=20 confer appellate jurisdiction over all interlocutory orders. Instead, = the=20 Legislature confined that jurisdiction in class actions to specific = cases.=20 See, e.g., Tex. Civ. = Prac. &=20 Rem. Code =A7 26.051 (permitting interlocutory appellate = review=97=93as part of=20 an appeal of the order certifying the class action=94=97of pleas to the = jurisdiction=20 in class action cases in which it is alleged that a state agency has = exclusive=20 or interlocutory jurisdiction). Nor did this Court enact rules governing = dispositive motions in class action cases as part of the Legislature=92s = mandate=20 that we =93adopt rules to provide for the fair and efficient resolution = of class=20 actions.=94 Id. =A7 26.001(a); = see also=20 Order of Supreme Court of Texas Adopting Amendments to Rules = of Civil=20 Procedure (Oct. 9, 2003, eff. Jan. 1, 2004) (available at http://www.supreme.courts= .state.tx.us/MiscDocket/03/03916000.PDF).=20

=20 We require that trial courts, in certifying or denying = certification,=20 comply with the detailed requirements of Rule 42. That rule requires, = among=20 other things, that the court delineate the elements of each claim or = defense=20 asserted in the pleadings; any issues of law or fact common to the class = members; any issues affecting only individual class members; those = issues that=20 will be the object of most of the efforts of the litigants and the = court; other=20 available methods of adjudication; why common issues do or do not = predominate;=20 why a class action is or is not superior; and how class and individual = claims=20 will be tried in a manageable, time efficient manner. Tex. R. Civ. P. 42(c)(1)(D). = Moreover,=20 trial courts must conduct a =93rigorous analysis=94 before ruling on = class=20 certification to determine =93whether all prerequisites to class = certification=20 have been met.=94 Bernal, 22 S.W.3d at 435.

=20 But we have never before held that if class representatives = cannot prove=20 their case at the class-certification stage, the trial court lacks = jurisdiction.=20 While =93[t]he court may require plaintiff to supplement the pleadings = with=20 outside material in order to determine whether to certify [a class = action]. . .=20 . this does not mean that the litigant bringing the action as a = representative=20 must establish the merits of the case before a preliminary determination = of the=20 class-action question can be made.=94 7B=20 Wright, Miller and Kane, Federal Practice and Procedure =A7 1798. = Indeed=20 =93although a preliminary evidentiary hearing may be utilized [prior to = class=20 certification], that hearing is directed toward examining the underlying = facts=20 to determine whether they are susceptible to common proof and is not to=20 determine the probability of success on the merits.=94 Id. = The class=20 action is =93a procedural device intended to advance judicial economy by = trying=20 claims together that lend themselves to collective treatment,=94 but = =93[p]rocedural devices may =91not be construed to = enlarge or=20 diminish any substantive rights or obligations of any parties to any = civil=20 action.=92=94 Henry Schein, Inc. v. Stromboe, 102=20 S.W.3d 675, 693 (Tex. 2002) (quoting Tex. R. Civ. P. 815).

=20 We have followed the United States Supreme Court=92s directive in = Eisen, holding that =93[d]eciding the merits of the suit in order to = determine the=20 scope of the class or its maintainability as a class action is not = appropriate.=94=20 Intratex Gas Co. v. Beeson, 22 = S.W.3d=20 398, 404 (Tex. 2000) (citing Eisen, 417 U.S. at 177). Prior to = Eisen, the Fifth Circuit held that, in = determining=20 whether a purchaser's action against an issuer for alleged violations of = the=20 securities law could be maintained as a class action, the trial court = improperly=20 considered whether the petition stated a cause of action or whether the=20 purchaser would succeed on the merits. The Fifth Circuit vacated the = order=20 denying class-action status and remanded the case, stating:

The=20 determination whether there is a proper class does not depend on the = existence=20 of a cause of action. A suit may be a proper class action, conforming to = Rule=20 23, and still be dismissed for failure to state a cause of action. Rule = 23=20 delineates the scope of inquiry to be exercised by a district judge in = passing=20 on a class action motion. Nothing in that Rule indicates the necessity = or the=20 propriety of an inquiry into the merits. Indeed, there is absolutely no = support=20 in the history of Rule 23 or legal precedent for turning a motion under = Rule 23=20 into a Rule 12 motion to dismiss or a Rule 56 motion for summary = judgment by=20 allowing the district judge to evaluate the possible merit of the = plaintiff's=20 claims at this stage of the proceedings. Failure to state a cause of = action is=20 entirely distinct from failure to state a class action.

Miller v.=20 Mackey Int'l, Inc., 452 F.2d 424, 427-28 (5th Cir. 1971) (citations=20 omitted). Even if we were to change course and disavow Eisen, the better practice would be to do = so through=20 our rulemaking procedure. Several commentators have suggested just such = a=20 solution with regard to the Federal Rules of Civil Procedure. See, = e.g.,=20 Robert G. Bone and David S. = Evans,=20 Class Certification and the Substantive Merits, 51 Duke L.J. 1251, 1254-55=20 (2002)(submitting that Fed. R. Civ. P. 23 be amended to require = preliminary=20 merits-related inquiries in class-action cases); Geoffrey C. Hazard, = Jr.,=20 Class Certification Based on Merits of the Claims, 69 Tenn. L. = Rev. 1, 4=20 (2001) (proposing amendment to Rule 23 to permit adjudication of the = merits of=20 class claims prior to full-fledged certification); Bartlett H. McGuire, = The=20 Death Knell for Eisen: Why the Class Action = Analysis=20 Should Include an Assessment of the Merits, 168 F.R.D. 366 (1996)=20 (advocating amendment to Rule 23 so that an assessment of the merits = would be=20 included in the Rule 23(b)(3) analysis of the superiority of class = action=20 treatment).[12] After all, Eisen was based in part on the absence of = any=20 provision in the Federal Rules of Civil Procedure that would =93give[] a = court any=20 authority to conduct a preliminary inquiry into the merits of a suit in = order to=20 determine whether it may be maintained as a class action.=94 Eisen, 417 U.S. at 177. But even such = a reform=20 would not go as far as the Court does here=97stripping trial courts of=20 jurisdiction if a claim lacks merit. Because the plaintiffs have = standing, the=20 trial court has subject matter jurisdiction, and the Court errs in = concluding=20 otherwise.

Choice of Law

=20 A threshold question in any appellate review of an order = certifying a=20 multistate class action must be an analysis of whose law governs the = class=20 claims. See Compaq, 135 S.W.3d at 672. In this case, the trial = court=20 certified a multistate class but did not perform a choice-of-law = analysis,=20 concluding that it was unnecessary.[13] Noting this deficiency, the = court of=20 appeals held that =93the trial court still ha[d] significant work to do = on=20 choice-of-law issues=94 and that our decision in Henry Schein = =93compel[led]=20 reversal=94 of the class certification order on that basis. 121 S.W.3d = at 886.=20 After the court of appeals issued its judgment in this case, we decided=20 Compaq, in which we mandated a detailed choice-of-law analysis in = multistate class actions like this one, and we held that the lower = courts erred=20 by failing to conduct such an analysis. Compaq, 135 S.W.3d at 673 = (noting=20 that the lower =93courts never assessed the substance of other states' = laws but=20 instead concluded that the theory was sound under Texas law. A = proper=20 review would have analyzed the relevant law of each state and the = variations=20 among states.=94).

=20 We have recognized that =93[i]n the = context of a=20 nationwide class action, the determination of the applicable substantive = law is=20 of paramount importance. If the court does not know which states' laws = must be=20 applied, it cannot determine whether variations in the applicable laws = would=20 defeat predominance in a [Rule 42](b)(3) class action . . . .=94 = Id. at=20 672. Moreover, =93[i]f the laws of fifty-one = jurisdictions apply in [a] class action, the variations in the laws of = the=20 states and District of Columbia =91may swamp any common issues and = defeat=20 predominance.=92=94 Id. (quoting Castano=20 v. Am. Tobacco Co., 84 F.3d 734, 741 (5th Cir. 1996)).

=20 It is settled that in reviewing a class certification order, we = must=20 evaluate =93=91the claims, defenses, relevant facts, and applicable = substantive=20 law.=92=94 Bernal, 22 S.W.3d at 435 (quoting Castano, 84 F.3d at 744). In so doing, we = have=20 required =93trial courts [to] abandon the practice of postponing = choice-of-law=20 questions until after certification, as courts can hardly evaluate = the=20 claims, defenses, or applicable law without knowing what that law = is.=94=20 Compaq, 135 S.W.3d at 672 (citing Tracker Marine, L.P. v. = Ogle,=20 108 S.W.3d 349, 351-52 (Tex. App.=97Houston [14th Dist.] 2003, no pet.)) = (emphasis=20 added); see also Spence v. Glock, 227 = F.3d 308,=20 313 (5th Cir. 2000) (holding that "the district court is required to = know which=20 law will apply before it makes its predominance determination"); = Citizens=20 Ins. Co. of Am. v. Daccach, 217 S.W.3d = 430, 441=20 (Tex. 2007). In light of our recent cases on this issue, the court of = appeals=20 correctly held that the case must be remanded to the trial court for = further=20 proceedings.

III

Conclusion

=20 Proposals to modify class action procedure present serious = questions of=20 policy. Standing is different. It implicates a court=92s fundamental = power to=20 adjudicate a claim, rather than an assessment of whether the claim will=20 ultimately succeed. Today, the Court conducts an extraordinary and = unworkable=20 reading of both pleading and precedent to conclude that the plaintiffs = =93lack[s]=20 standing because [their] claim of injury is too slight for a court to = afford=20 redress.=94 ___ S.W.3d at ___. We have never before stretched the = doctrine this=20 far. The Court=92s opinion reveals a visceral distaste for class = actions, see=20 Mejdrech v. Met-Coil Sys. Corp., 319 = F.3d 910, 912=20 (7th Cir. 2003), but that distaste should not upend our substantive law = of=20 standing and subject matter jurisdiction which, even more than the right = of=20 trial by jury, is fundamental to our system of justice. I would affirm = the court=20 of appeals=92 judgment.

__________________

Wallace B.=20 Jefferson

Chief Justice=20

OPINION=20 DELIVERED: February 1, 2008 &nbs= p; = ; = =20

^[1]=20 Texas Rule of Civil Procedure 42 is patterned after Federal Rule of = Civil=20 Procedure 23; consequently, federal decisions and authorities = interpreting=20 current federal class action requirements are persuasive = authority. Sw.=20 Ref. Co., Inc. v. Bernal, 22 S.W.3d 425, 433 (Tex. 2000) (citations=20 omitted).

^[2]=20 In fact, the case is nearly nationwide, encompassing forty-eight = states. =20 California and Nevada residents were excluded from the proposed class=20 definition.

^[3]=20 The motion nowhere asserts that the trial court lacked jurisdiction = based on=20 standing and seeks not dismissal, but a take-nothing judgment. = Rather,=20 DaimlerChrysler moved for summary judgment on the pleadings, alleging = that the=20 plaintiffs sustained no damages, an essential element of each claim, and = that=20 DaimlerChrysler was therefore entitled to judgment on the merits. =20 DaimlerChrysler later supplemented its motion with excerpts from the = class=20 representatives=92 depositions. The trial court denied the motion. =

^[4]=20 That court noted:

In Walsh v. Ford Motor Co., 106 F.R.D. = 378=20 (D.D.C. 1985), for example, the trial court certified an =93all = owners=94 class of=20 plaintiffs, notwithstanding the defendant's protestation that many of = the class=20 members' cars had =93performed as warranted and therefore [were]=20 merchantable.=94 Id. at 396. The court specifically = noted,=20 however, that it was certifying the class solely on the basis of the=20 =93commonality=94 of the prospective members' interests, and that it was = not=20 determining separately whether the plaintiffs had stated a =93viable=94 = cause of=20 action for breach of the implied warranty of merchantability. Id. = at=20 397. Essentially the same can be said for each of the remaining = cases on=20 which the plaintiffs principally rely. See In re Cadillac = V8-6-4 Class=20 Action, 93 N.J. 412, 461 A.2d 736, 743 (1983) (approving = certification of=20 =93all owners=94 class where plaintiffs charged breach of implied = warranty of=20 merchantability on account of =93common defect=94; court holds that = allegation of=20 =93loss-of-bargain=94 damages is sufficient to state cause of action, = but relies on=20 cases where such loss occurred as result of manifest defects in=20 plaintiffs' cars); Landesman v.=20 General Motors Corp., 356 N.E.2d 105, 107-08, 42 Ill.App.3d 363, 1 = Ill. Dec.=20 105, 107-08 (1st Dist. 1976) (court certified class of plaintiffs = claiming=20 damages partly attributable to diminished resale value, but specifically = declined to decide question of whether allegations supported viable = cause of=20 action); Anthony v. General Motors Corp., 33 Cal.App.3d 699, 109 = Cal.Rptr. 254 (2d Dist. 1973) (=93all owners=94 = class=20 certification; no discussion of viability of underlying cause of = action).=20

Carlson, 883=20 F.2d at 297.

^[5] Ultimately, the court = concluded that=20 the district court abused its discretion in certifying the class, as the = plaintiffs =93failed to adequately address, much less =91extensively = analyze,=92 the=20 variations in state law . . . and the obstacles they present to=20 predominance.=94 Cole, 484 F.3d at 730.

^[6]=20 It is far from clear that injury to the Cole plaintiffs was = merely =93a=20 matter of time.=94 In that case, GM indicated that =93it had = received 306=20 reports of inadvertent deployment out of approximately 224,000 affected=20 vehicles.=94 Cole, 484 F.3d at 719. Further, =93[a]ccording to GM . . . the likelihood of inadvertent = deployment decreased significantly over time.=94 Id. at 720 = n.2.

^[7]=20 The court of appeals recognized this, noting that =93=91[r]isk of injury=92 [was] an inaccurate = characterization=94 of the=20 alleged harm. 121 S.W.3d at 879. Rather, the court noted = that=20 =93[e]ach plaintiff claim[ed] injury in the = form of=20 insufficient product value=94 and =93[o]n the basis of these = allegations, each=20 plaintiff claims a concrete and particularized injury in fact sufficient = to=20 confer standing to sue.=94 Id.

^[8]=20 Brown, 53 S.W.3d at 305 n.3. =

^[9]=20 The Court asserts that the plaintiffs =93do not contend that the Gen-3 = buckles=20 made their vehicles worth less than they paid for them.=94 While = the=20 plaintiffs may not use these exact words, they do allege concrete = economic harm=20 stemming from breach of express and implied warranties. See = Tex. Bus. & Comm. Code = =A7 2.714(b);=20 Nobility Homes of Tex., Inc. v. Shivers, 557 S.W.2d 77, 78 n.1 = (Tex.=20 1977) (stating that =93direct economic loss may be =91out of = pocket=92=97the difference=20 in value between what is given and received=97or =91loss of = bargain=92=97the difference=20 between the value of what is received and its value as = represented. Direct=20 economic loss also may be measured by costs of replacement and = repair.=94)=20 (citations omitted).

^[10] The Court states, in response to = the=20 argument that it is incorrectly considering the merits in determining = standing,=20 that =93[w]e do not render judgment that the plaintiffs take nothing, as = we would=20 if their claims failed on the merits; we dismiss the case for want of=20 jurisdiction.=94 ___S.W.3d___. This is quite true, but = utterly=20 non-responsive. The troubling part of the Court=92s opinion is, of = course,=20 not the disposition in and of itself, but how it was reached.

^[11] Indeed, standing is typically = challenged in=20 a plea to the jurisdiction, which is a =93dilatory plea, the purpose of = which is=20 to defeat a cause of action without regard to whether the claims = asserted=20 have merit.=94 Bland, 34 S.W.3d at 554 (emphasis=20 added).

^[12] The Advisory Committee on the = (federal)=20 Civil Rules =93also considered, but did not propose for formal review, a = new=20 provision of Rule 23(b)(3) that would have = required a=20 preliminary hearing on the merits prior to certification.=94 Deborah R. Hensler et al., Class = Action=20 Dilemmas: Pursuing Public Goals for Private Gain 500 n.2=20 (2000). That provision =93encountered opposition from both = plaintiff and=20 defense bars.=94 Id. As one commentator has = noted:

Defendants were torn between the attraction of = drawing=20 trial judges=92 attention to the merits of proposed class actions and = the=20 possibility that such an early merits determination would simply provide = more=20 opportunity for adversarial procedure at a time when the record had not = yet been=20 sufficiently developed to support a sound judicial assessment. = Defendants=92=20 disagreement among themselves on the issue of a preliminary merits = determination=20 subsequently led the Advisory Committee to abandon this = proposal.

Id. = at 44=20 n.103.

^[13] The class certification order = stated that=20 =93[a] class certification order need not address choice of law. . . . = In the=20 absence of a proper choice of law motion, the Court will continue to = presume, as=20 it is entitled to presume, that the law of other jurisdictions is the = same as=20 Texas law.=94