Appendix X

new appendix

Trial Plans

The pleadings in this appendix can be found, in both Word and PDF formats, on the companion CD-Rom to this manual.

X.1 Trial Plan Incorporated in a Motion for Class Certication

CAUSE NO 11,725 ) ) ) ) ) IN THE DISTRICT COURT ) LLANO COUNTY, TEXAS v. ) ) 33RD JUDICIAL DISTRICT Nationsbanc Mortgage Corp., ) Defendant. ) ) [PLAINTIFF], individually, and on behalf of all others similarly situated, Plaintiff PLAINTIFFS CLASS ACTION LITIGATION PLAN Plaintiff [PLAINTIFF] offers the following Litigation Plan for resolving the various issues in this proposed Class action: I. BREACH OF CONTRACT A. ELEMENTS OF THE CAUSE OF ACTION. 1. There was a contract between the Class member and NationsBanc Mortgage Corp.; 2. NationsBanc Mortgage Corp. breached the contract; 3. The Class member performed under the contract (required in a minority of fteen states only); 4. The Class member suffered damages as a result of NationsBancs breach. B. PLAN TO RESOLVE ISSUES RELATING TO [PLAINTIFFS] AND THE CLASS BREACH OF CONTRACT CLAIMS. All of the Class members, by denition, had mortgages serviced by NationsBanc within a dened period of time. Accordingly, there will be no dispute over whether the rst element of the cause of action is met. The second elementwhether NationsBanc breached the contracts with Class membershinges upon the issue of whether federal law prohibited NationsBanc from deducting late fees from

the escrow account surpluses of Class members. This is a question of law that can be resolved by the Court on cross-motions for summary judgment. Relatedly, there should be no dispute over whether the terms of applicable federal law were incorporated into the contracts of the Class members; to the extent that NationsBanc contends that this should be in issue, it can also be resolved on cross-motions for summary judgment. [PLAINTIFF] and the Class also note that a minority of fteen statesAlabama, California, Colorado, Hawaii, Illinois, Iowa, Minnesota, Missouri, New Hampshire, New Jersey, New Mexico, Ohio, Oklahoma, Texas, and West Virginiaincludes performance by the plaintiff as an element of a breach of contract claim. [PLAINTIFF] and the Class do not believe that this element will be in issue in this case; however, to the extent that NationsBanc places it in issue and the Court nds that it must be proved by [PLAINTIFF] and the Class, the Court can decide it as a matter of law. As a resident of Texas, [PLAINTIFF] falls within the category of Class members subject to the performance element; the Court can resolve the performance issue as to [PLAINTIFF] and the residents of the fteen-state minority on cross-motions for summary judgment. [PLAINTIFF] and the Class will argue that the required performance is sufficient escrow payments; this occurrence will likely be undisputed because NationsBanc deducted late fees from surpluses in their escrow accounts (i.e., [PLAINTIFF] and the Class members will have exceeded their contractual obligations, much less performed them). If the Court nds in favor of [PLAINTIFF] and the Class on these issues, it then need only determine the measure of damages recoverable by each Class member, which [PLAINTIFF] and the Class contend will be the amount of late fees which NationsBanc deducted from their escrow account surpluses. This, too, is a question of law that can be decided by the Court on a motion for summary judgment. Should the Court nd in favor of [PLAINTIFF] and the Class on this issue, calculation of the amount of damages owed to [PLAINTIFF] and each Class member will be a ministerial task that can be performed by NationsBancs computer system under Court supervision. II. MONEY HAD AND RECEIVED A. ELEMENTS OF THE CAUSE OF ACTION. 1. NationsBanc obtained money from the Class member; and 2. In equity and good conscience, NationsBanc should return that money to the Class member.

351

Appx. X.2

Consumer Class Actions / 2007 Supplement

and (3) common law fraud and misrepresentation. The jury will be asked to determine whether the representations made by Defendants were false, misleading, and deceptive; whether Defendants actions constitute a breach of warranty; and whether the representations made by Defendants constitute common law fraud or misrepresentation. The jury will also be asked to determine the separate liability of the four Defendants. If the jury returns a verdict against [PLAINTIFF], the trial will end and judgment against [PLAINTIFF] and the class will be entered. If the jury nds for [PLAINTIFF], it is possible that the Court can render a judgment for the class based on the jury ndings. If not, the trial will continue as to the class. The Court will then permit additional evidence on issues related to the class, including reliance. Because the representations to class members are virtually identical, the proof related to reliance, to the extent it is not presumed, can be established on a broad basis as to the class, using surveys, expert opinion, or similar methods. Following submission of all such evidence, the case will be submitted to the jury to determine the remaining issues relevant to the class, possibly including whether the representations made by Defendants were false, misleading, and deceptive; whether Defendants actions constitute a breach of warranty; and whether the representations made by Defendants constitute common law fraud or misrepresentation. The jury would also be asked to determine the separate liability of the four Defendants. Final judgment will be based upon the jury verdict.

B. PLAN TO RESOLVE ISSUES RELATING TO [PLAINTIFFS] AND THE CLASS CLAIMS FOR MONEY HAD AND RECEIVED. All of the Class members, by denition, had money taken by NationsBanc from surpluses in their escrow accounts. Thus, there will be no dispute over whether the rst element of the cause of action is met. The second element depends on whether federal law prohibited NationsBanc from deducting late fees from the escrow account surpluses of class members. This is a question of law which, as set forth above, can be resolved by the Court on cross-motions for summary judgment. Should the Court nd in favor of [PLAINTIFF] and the Class on this issue, the remaining issue is whether NationsBanc, in equity and good conscience, should pay the money it deducted to [PLAINTIFF] and the members of the Class. This determination can either be made by the Court on a motion for summary judgment or by a jury using a single jury issue. If resolved by a jury one question will suffice for all Class members accompanied by an instruction as to the Courts RESPA ruling. In addition to these two elements, New York requires a plaintiff to demonstrate that a defendant beneted from its receipt of money; NationsBanc, however, will likely stipulate that it has beneted, so this additional requirement will not be an issue. If not, the Court will certainly hold so as a matter of law. Also, Georgia law includes a demand requirement. [PLAINTIFF] will show that he undisputedly made such a demand, and argue that this demand was good for the entire class, leaving just this additional legal issue to be decided by the Court. This, too, can be resolved by the Court on a motion for summary judgment as to all Georgia members of the Class. If the Court or jury decides the issue in favor of [PLAINTIFF] and the Class, the amount of money NationsBanc must pay to [PLAINTIFF] and the Class becomes a ministerial calculation that can be performed by NationsBancs computer system, under Court supervision.

4.

5.

6.

7.

X.2 Brief Defending Trial Courts Approval of a Class Action Trial Plan
THE TRIAL COURTS TRIAL PLAN IS PROPER. [Responsive to MET-Rx Issue 3 and Baylor Issue 7.] The trial plan shows that the trial court considered the facts, the causes of action, and the law involved in this case, as required by the Supreme Court. Southwestern Rening Co., Inc. v. Bernal, S.W.3d 425, 435 (Tex. 2000). The plan provides: 1. Plaintiff [PLAINTIFF] will present his individual case. 2. Unless a directed verdict is appropriate at the close of [PLAINTIFFS] individual presentation, his individual case will be presented to the jury for determination. 3. [PLAINTIFFS] causes of action are for (1) DTPA violations, (2) UCC warranty breaches,

8.

Order, CR 1446-1447. A trial plan is required to show a reviewing court how the claims can and likely will be tried. Southwestern Rening Co., Inc. v. Bernal, S.W.3d 425, 435 (Tex. 2000). It should identify the substantive issues that will control the case, and provide a way for a reviewing court to determine whether the trial court understood the claims, defenses, relevant facts, and applicable substantive law. West Teleservices, Inc. v. Carney, 37 S.W.3d 36, 4142 (Tex. App.San Antonio 2000). Read together with the entire 27 pages of the Order, the trial plan meets and exceeds these requirements. It certainly identied the controlling substantive issues. The issues raised by Defendantssuch as [PLAINTIFFS] standing to seek injunctive relief and the need to determine individual reliancewere all identied addressed in the Order, although not with the result Defendants would have preferred. This shows that the trial court understood the claims and defenses, and the substantive law.

352

Trial Plans / 2007 Supplement

The trial courts Order contains ve pages of discussion of relevant facts, CR 1423-1427. In fact, the trial court so thoroughly discussed relevant facts that Defendants objected that it had discussed them too much. MET-Rx Brief at 4244. The Order identies the substantive issues that will control the caseincluding (1) reliance; (2) whether the representations made by Defendants were false, misleading, and deceptive; (3) whether Defendants actions constitute a breach of warranty; and (4) whether the representations made by Defendants constitute common law fraud or misrepresentation. Order 1447. The Order shows how the case will be tried. It contemplates a two-part trial before one jury. First, [PLAINTIFFS] individual case is to be tried and submitted. If [PLAINTIFF] loses, the case is over. Nothing could be simpler or more direct, nor could the trial court be expected to describe that individual trial in more detail. Defendants do not complain that they dont understand how [PLAINTIFFS] individual case is to be tried. If [PLAINTIFF] is successful in his individual case, the trial proceeds as to the class. The parties are to present additional evidence on issues related to the class, including reliance. The Order does not mandate or restrict the nature or type of proof Defendants may put on. Although the Order states that reliance in this case is subject to class wide proof, it does not prevent Defendants from attempting to put on evidence to rebut class wide reliance, whether on a class-wide or an individual bases. As with the individual part of the trial, Defendants also do not complain that they dont understand how the class case is to be tried. It is worth noting that Defendants did not submit their own proposed trial plan, nor did they ever propose language to be added to the trial plan proposed by [PLAINTIFF]. This is analogous to a defendant making broad objections to a jury charge, but failing to submit its own proposed language. Procedurally, defendants should be denied relief on appeal simply for their failure to propose their own trial plan. In any event, their objections do not have substantive weight. Describing the trial courts work as supercial, MET-Rx Brief at 34, Defendants take a scattergun approach to the trial plan, complaining that (1) the trial court incorrectly assumed that there are misrepresentations common to the class, MET-Rx Brief at 36, (2) the plan does not adequately address proof of reliance, MET-Rx Brief at 36-37, (3) the plan does not list the elements of [PLAINTIFFS] causes of action, MET-Rx Brief at 35, and (4) the plan does not adequately permit Defendants to try their defenses, MET-Rx Brief at 38. Examination of these complaints proves them baseless. [PLAINTIFF] ALLEGES ONLY COMMON MISREPRESENTATIONS. Defendants complain that the trial plan incorrectly assumes that the misrepresentations to the class members by Defendants were virtually identical. MET-Rx Brief at 36. Defendants ignore the fact that [PLAINTIFF] has consistently stated his intent to use the various promotional materials used by Defendants as his proof of representations. The trial court examined the evidence submitted by [PLAINTIFF] and entered these ndings of fact, noting that they were established only for class certication purposes: 6. Specically, Defendants do not in any way advise consumers that using MET-Rx can

Appx. X.2
cause kidney problems. In fact, Defendants represent just the oppositethat there is no reason for concern about excessive protein intake. For example, the MET-Rx website states that [t]he idea that over time, it is possible to consume too much protein is, unfortunately, one of the most pervasive nutritional myths remaining today [emphases added]. [PLAINTIFFS] Class Certication Exhibit 1, the 1993 so-called Owners Manual received by [PLAINTIFF] when he bought MET-Rx products, contains a purported interview with Defendant Connelly. In response to a question, Does MET-Rx cause any adverse reactions? Defendant Connelly merely says that MET-Rx contains protein and that protein can cause mild allergy-type responses in less than 1% of users. Defendant Connelly does not warn of the risks of kidney damage, or any other risks of using the MET-Rx products. Other marketing materials for MET-Rx make similar affirmative misrepresentations. The 1996 and 1999 versions of the Owners Manual atly state that the MET-Rx program is one of the fastest, safest ways on earth to replace unwanted body fat with lean, toned muscle. Class Certication Exhibits 2 & 3. Defendant Connelly gives a signed statement on the rst page of the 1996 version telling all customers that MET-Rx is quite likely the best nutritional tool in existence. Class Certication Exhibit 2. There are no adequate warnings about risk of damage to kidneys, or the risks associated with excess protein or Vitamin D in any of the promotional materials or labels of the MET-Rx products.

7.

8.

9.

10.

Order, CR 1425-1426. The trial correctly concluded, based on signicant evidence, that [PLAINTIFF] would rely on standard, written misrepresentations to the class. RELIANCE. Defendants urge that the case cannot be certied as a class because of the need to determine reliance of individual class members. This is not correct. The issue in Texas is whether a consumer justiably relied on a misrepresentation, which merely requires a plaintiff to show that it was conceivable that he relied on the misrepresentation. United Teachers Assoc. Ins. Co. v. MacKeen & Bailey, Inc., 847 F. Supp. 521, 534 (5th Cir. 1994). Proof of reliance need not come by direct testimony from the lips of the consumer. Colonial Refrigerated Transportation, Inc. v. Mitchell, 403 F.2d 541, 549 (5th Cir. 1968). Indeed, [][w]hat was in a mans mind may be determined not only by what he says he thought, but by what he said and did.[]

353

Appx. X.2

Consumer Class Actions / 2007 Supplement

Defendants deceived class members through the use of similar misrepresentations. Because all relief is injunctive, there will be need for any class member to individually litigate numerous and substantial questionsindeed, there will be no need for any other class member to litigate individually any other question, whether as to damage or as to liability. Thus, for purposes of this class action, reliance of class members on both the omissions and affirmative misrepresentations can be presumed and no further proof necessary. ELEMENTS OF CAUSES OF ACTION. Defendants claim that the trial plan fails to dene the elements of [PLAINTIFFS] causes of action. MET-Rx Brief at 35. Again, Defendants have made an accusation without any basis. The trial plan discusses the need to try whether the representations made by Defendants were false, misleading, and deceptive; whether Defendants actions constitute a breach of warranty; and whether the representations made by Defendants constitute common law fraud or misrepresentation, as well as each Defendants liability. These acts, coupled with liability, are the elements of these causes of action. Again, Defendants do not complain that they dont understand how to try, for example, a DTPA case. They merely allege, without support, that the trial plan does not contain the elements of a DTPA claim. [PLAINTIFF] contemplates using the Pattern Jury Charges for the trial. There, the only required submissions are whether a defendant engaged in acts prohibited by the DTPA and whether the plaintiff relied. See Tex. Pattern Jury Charges, PJC 102.1 et seq. (State Bar of Texas). The trial plan set forth the elements of the causes of action. DEFENDANTS RIGHT TO RAISE DEFENSES. Defendants complain that the trial plan unduly restricts their right to try individual issues, without saying what those issues are or how the trial plan restricts their ability to do so. MET-Rx Brief at 38. In addition, Defendants have only led general denials and have raised no special or affirmative defenses. CR 131; 138. The Order contemplates that [PLAINTIFF] may put on classwide proof. It certainly does not constitute a holding that the proof [PLAINTIFF] may put on will conclusively establish all class claims. It does not in any way mandate or restrict the nature of type of proof Defendants may put on. It does not prevent Defendants from attempting to put on evidence to rebut [PLAINTIFFS] class-wide proof, whether on a class-wide or an individual basis. CR 1447. What Defendants do is up to Defendants. Absent their participation in formulating the trial plan by submitted their own requested methods of putting on their defenses, the trial plan is more than adequate.

In law, as elsewhere, actions may speak louder than words. Id. [Emphasis added; footnote omitted.] Last year, United States District Judge Joe Kendall certied a class action that involved UCC claims, DTPA, and fraud claims the same causes of action in this caseand issues of reliance. In re Great Southern Life Ins. Co. Sales Practices Litig., 192 F.R.D. 212 (N.D. Tex. 2000). Judge Kendall rst noted that positive proof of reliance is unnecessary in cases involving a failure to disclose. In re Great Southern Life Ins. Co. Sales Practices Litig., 192 F.R.D. at 220, citing Affliated Ute Citizens v. U.S., 406 U.S. 128, 153-54. Thus, as to [PLAINTIFFS] claims that he and the class were harmed by Defendants failures to disclose the risks of the MET-Rx products, reliance must be presumed and is common to the class. Judge Kendall went on to discuss reliance on affirmative misrepresentations. [T]he California Supreme Court, citing Williston, stated that [W]here representations have been made in regard to a material matter and action has been taken, in the absences of evidence showing to the contrary it will be presumed that the representations were relied on. Vasquez, at 814, 804, 973. (citing 12 WILLISTON ON CONTRACTS (3d ed.1970) 480). The Vasquez court went on to hold that if . . . the trial court nds misrepresentations were made to the class members, at least an inference of reliance would arise as to the entire class. Id. This would especially be the case where the home office was telling its agents and potential policy holders that their life insurance premiums would one day soon vanish. Texas courts cite Vasquez with approval. See Life Ins. Co. of the Southwest v. Brister, 722 S.W.2d 764, 774 (Tex. App.Ft. Worth (1986)); Reserve Life Ins. Co. v. Kirkland, 917 S.W.2d 836, 843 (Tex. App.Houston[14th Dist] (1996)). In re Great Southern Life Ins. Co. Sales Practices Litig., 192 F.R.D. at 220 [emphases in original]. A case cited by Defendants, as well as Judge Kendall, actually supports [PLAINTIFFS] proposed method of proving reliance. In Life Ins. Co. of the Southwest v. Brister, 722 S.W.2d 764 (Tex. App.Ft. Worth (1986), the court approved the concept of a class action for fraud perpetrated on numerous persons through the use of similar misrepresentations. Id., at 774. The court added that class actions involving numerous separate transactions were suitable for class action treatment, provided that class members are not required to individually litigate numerous and substantial questions to determine each members right to recover. Id. This is precisely the case here. [PLAINTIFF] seeks to show that

354