Morgan v. Deere Credit

Between February 1988 and December 1991, approximately 15,000 Texas residents (the residents) (plaintiffs) purchased boats or recreational vehicles from Deere Credit (defendant), an Iowa company. In doing so, many residents entered into financing agreements that included standardized language providing that Iowa law governed the transaction. However, Deere failed to comply with Texas statutory law requiring that all choice-of-law clauses be printed in bold. In January 1992, Deere discovered the error and sent letters to 10,000 Texas residents, informing them of the noncompliance and giving them the option to ratify the choice-of-law provision at issue. Many of the notified residents began asserting that Texas law applied to the contracts and alleged that the contracts violated the Texas Consumer Credit Code, Texas usury laws, and the Texas Deceptive Trade Practices Act. The residents filed a state action against Deere, attempting to avoid their obligations under the financing agreements and to recover damages. The residents moved for certification of a mandatory class pursuant to Texas Rule of Civil Procedure 42(b), which was identical to Federal Rule of Civil Procedure (FRCP) 23(b). The trial court granted the residents’ motion. Deere appealed, asserting that the trial court erred in finding certification proper under Texas Rule of Civil Procedure 42(b)(1)(A).