(251) 299-0101

CLASS ACTION - DISMISSAL OF CLASS ALLEGATIONS AT PLEADING STAGE - SUFFICIENCY OF CLASS DEFINITION - HALL V. ENVIRONMENTAL LITIGATION GROUP, P.C.

Hall v. Environmental Litigation Group, P.C., [Ms. 1151077, Sept. 1, 2017] __ So. 3d __ (Ala. 2017). In a unanimous decision by Justice Shaw, (Stuart, C.J., Bolin, Parker, Main, Wise, Bryan, and Sellers, JJ., concur) the Court reverses the circuit court’s “denial” of the plaintiff’s class allegations. The Court first considered the applicable standard of review. While it noted that federal authorities striking class allegations apply a combination of Rules 12(f), 23(c)(1), and 23(d)(4), the Court noted that the circuit court’s order went further and denied the class allegations. The circuit court’s order stated “‘plaintiff class allegations are hereby stricken and the claims denied.’” Ms. *14. The Court concluded the order dismissed the class allegations with prejudice. Ibid.

The Court also noted that while a 12(b)(6) motion should generally not be used to test the sufficiency of a pleading after an answer is filed, motions pursuant to Rule 12(c) are appropriate where a 12(b) motion could have been but was not filed. Ms. *15-16, citing Pontius v. State Farm Mut. Auto Ins. Co., 915 So. 2d 557, 562 (Ala. 2005). Even though Defendant’s motion challenging the class allegations was not filed until after it had filed an answer, because the motion asserted plaintiffs could not meet the requirements of Rule 23, the Court treated the trial court’s order granting the motion as an order granting a Rule 12(b)(6) motion. Ms. *16.

The defendant Environmental Litigation Group, P.C. (“ELG”) had agreed to represent the plaintiffs and a number of other parties in pursuing claims for injuries arising from asbestos exposure pursuant to 40% contingent fee contracts with provisions requiring the client to reimburse ELG for expenses. ELG began charging a “administrative-service-expense” charge in the amount of $250.00 for living clients and $600.00 for clients who were deceased which was deducted from settlement proceeds due to be passed on to the client. Clients were advised of these charges in a memorandum from ELG. The trial court reasoned that the agreements were ambiguous in regard to the meaning of “expense” and therefore the claims challenging the charging of the administrative expense charge were not appropriate for class treatment. This order was entered before any class certification discovery was taken.

After noting that the memorandum disclosing the flat additional charges referred repeatedly to services and work performed by ELG attorneys and staff, the Court held “[v]iewing the allegations in the light most favorable to the plaintiffs, we conclude that the new charge does not meet what is described in the expense provision, even if such provision is ambiguous.” Ms. *25.

The Court also rejected an alternative basis for dismissal of the class allegations that the class definition was fatally defective because it did not “‘specify a particular group harmed during a particular time period via a particular manner.’” Ms. *29, quoting Fisher v. Ciba Speciality Chemicals Corp., 238 F.R.D. 273, 301 (S.D. Ala. 2006). The Court agreed with plaintiffs “that any challenge regarding the sufficiency of the plaintiffs’ class definition appears premature.” Ms. *30. “To avoid pre-certification dismissal, Rule 23 requires only that class representatives propose a class definition that is objectively ascertainable ....” Ms. *32-33.

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