## Facts

- About 15,000 Texas residents financed boat and recreational vehicle purchases through Deere Credit between 1988 and 1991 using standardized retail installment contracts.
- The contracts contained an Iowa choice-of-law clause that was not printed in bold type.
- Texas consumer-credit law required choice-of-law clauses in consumer credit contracts to be in bold type.
- Deere discovered the formatting noncompliance in January 1992 and sent letters to about 10,000 customers offering an opportunity to ratify the choice-of-law clause.
- Consumers asserted Texas law governed and alleged violations of the Texas Consumer Credit Code, Texas usury laws, and the Texas Deceptive Trade Practices Act, seeking damages, statutory penalties, and relief from contractual obligations.
- A related federal class action involving Deere and similar issues was pending.
- In state court, the trial court certified a mandatory class under Texas Rule of Civil Procedure 42(b)(1)(A), limited to Texas consumers who opted out of, or were not included in, the federal class action.

## Issues

1. Whether the trial court abused its discretion by certifying a mandatory class under Texas Rule of Civil Procedure 42(b)(1)(A) based on a risk that individual suits would result in inconsistent adjudications imposing incompatible standards of conduct on Deere.

## Decision

- The court of appeals affirmed the class certification order.
- It held the trial court did not abuse its discretion in certifying a mandatory class under Rule 42(b)(1)(A).
- The court concluded that separate adjudications over the same standardized contracts and statutory questions created a substantial risk of inconsistent rulings on the enforceability of the choice-of-law clause and the governing law, potentially forcing Deere into incompatible obligations.

## Legal Principles

- A mandatory class under Texas Rule of Civil Procedure 42(b)(1)(A) may be certified when separate actions would risk inconsistent or varying adjudications that would establish incompatible standards of conduct for the opposing party.
- Incompatible-standards certification is supported where standardized contract language and common statutory issues make piecemeal litigation likely to generate conflicting rulings on core legal questions.
- Appellate review of class certification is for abuse of discretion; a certification order is affirmed if the trial court’s ruling falls within a reasonable range of choices supported by the record.

## Conclusion

The court upheld mandatory class treatment because individualized litigation over identical consumer contracts and the same statutory compliance question could produce conflicting rulings on the governing law and related liabilities, subjecting the lender to incompatible standards of conduct, and the trial court’s determination was not an abuse of discretion.


Morgan v. Deere Credit, Inc., 889 S.W.2d 360 (Tex. App.—Houston [1st Dist.] 1994, no writ)