AUSTIN - On Friday, the Texas Supreme Court reversed the certification of a class action lawsuit brought against American Campus Communities, which manages dozens of properties.
Headquartered in Bee Cave, Texas, American Campus is the nation’s largest developer, owner and manager of high-quality student housing communities, according to the company’s website.
Four former tenants sued American Campus, alleging it violated section 92.056(g) of the Property Code by omitting required language from its leases. The plaintiffs asked the district court to certify a class of more than 65,000 former American Campus tenants.
According to the high court’s opinion, the plaintiffs claim that the missing lease language makes American Campus strictly liable to each class member for a statutory “civil penalty of one month’s rent plus $500.” They further claim that the absent lease language amounts to a statutorily prohibited contractual waiver of American Campus’s repair obligations, which, if true, would subject American Campus to “actual damages, a civil penalty of one month’s rent plus $2,000, and reasonable attorney’s fees.”
Court records show the district court denied American Campus’s motion for summary judgment and granted the plaintiffs’ motion for class certification. An appellate court affirmed a modified version of the certification order, omitting the plaintiffs’ request for class-wide injunctive relief but authorizing class-wide litigation of the claims alleging statutory strict liability for the missing lease term.
In its opinion, the high court states that certification of a plaintiff class under Rule 42 of the Civil Code (prerequisites to a class action) converts a conventional lawsuit into a “far more complicated and consequential case.”
Justices found that a lease’s failure to mention the statutory duty is “in no sense a waiver of the statutory duty,” and that Section 92.0563(b) authorizes a claim against a landlord who knowingly contracts to waive his statutory duties, “not a claim against a landlord who fails to state his statutory duties in his leases.
“In today’s case, we are asked what happens when the proposed class claims are facially defective as a matter of law,” the opinion states. “In other words, when the claims for which the plaintiffs seek class certification have no basis in law, even taking all the allegations as true, can class certification nevertheless be granted? The answer is no.
“No valid purpose is served by authorizing class-wide litigation of a legally baseless theory of liability on which the plaintiffs cannot recover no matter what facts come to light during litigation. The rigorous analysis of the claim required by Rule 42 cannot meaningfully or usefully be performed on a facially defective claim. In such cases, including this case, class certification must be denied.”
Supreme Court case No. 21-0874