Justia Class Action Opinion SummariesArticles Posted in Supreme Court of Alabama
Ex parte 4tdd.com, Inc., et al.
4tdd.com, Inc. ("4tdd"), Thomas Todd Martin III, and Martin & Associates Consulting Company, LLC ("MACC"), petitioned the Alabama Supreme Court for a writ of mandamus to instruct the Mobile Circuit Court ("the trial court") to dismiss a derivative shareholder action filed against them by Sheila Hale, individually and on behalf of the shareholders of Bay Area Nutrition, Inc., on the ground, inter alia, that Hale did not satisfy the requirement of Rule 23.1, Ala. R. Civ. P., that she allege with particularity in her complaint the efforts she had made to obtain the requested relief from the corporate directors of Bay Area Nutrition, Inc. ("BAN"), before filing an action against them. The Supreme Court determined, after careful consideration, that Hale indeed failed to comply with Rule 23.1, and directed the trial court to direct 4tdd.com, Martin and MACC's motion to dismiss. View "Ex parte 4tdd.com, Inc., et al." on Justia Law
Barnhart v. Ingalls
Deborah Barnhart, Brooke Balch, and Vickie Henderson, current and former officers of the Alabama Space Science Exhibit Commission ("the Commission") petitioned the Alabama Supreme Court for mandamus relief. The Commission sought to have the circuit court dismiss the claims asserted against them in the underlying class action or, in the alternative, to vacate the order certifying those claims for class-action treatment. The Commission is required by law to maintain records of its revenue and expenditures and to periodically make those records available for audit by the Department of Examiners of Public Accounts ("DEPA"). After an audit, DEPA determined the Commission had not complied with Alabama law (1) in its payment of annual longevity bonuses to Commission employees and (2) in the manner it compensated Commission employees for working on certain State holidays. The Commission disagreed with the results of the audit; none of the recommended changes were made, and as a result, several former Commission employees sued the Commission and the Commission officers, alleging that the plaintiffs, as well as other past and present Commission employees, had not received all the compensation to which they were entitled during their tenures as Commission employees. The Supreme Court determined the Commission did not establish the named plaintiffs’ retrospective relief and declaratory relief claims were barred by the doctrine of State immunity, and the trial court did not err by dismissing those claims for lack of subject-matter jurisdiction. However, the individual-capacities claims were barred inasmuch as those claims were essentially claims against the State regardless of the manner in which they have been asserted, and the trial court accordingly erred by not dismissing those claims for lack of subject-matter jurisdiction. Further, the named plaintiffs met their burden for class certification, and the trial court did not exceed its discretion by certifying their retrospective-relief and declaratory-relief claims for class-action treatment. Accordingly, the trial court's order certifying this action for class treatment was reversed insofar as it certified the individual-capacities claims; in all other respects it was affirmed. View "Barnhart v. Ingalls" on Justia Law
Baldwin Mutual Insurance Company v. McCain
Baldwin Mutual Insurance Company ("Baldwin Mutual") appealed a circuit court’s class certification in a suit filed by Gloria McCain. McCain owned a house insured by Baldwin Mutual. The policy provided that any covered property losses would be settled “at actual cash value at the time of loss but not exceeding the amount necessary to repair or replace the damaged property.” McCain's house was damaged twice, she filed claims and was reimbursed by Baldwin Mutual. In each incident, an independent adjuster examined McCain's damaged property and prepared an estimate. Baldwin Mutual paid McCain's claim in accordance with the estimate prepared by the adjuster. The record contained no allegation or evidence indicating that McCain sought more money from Baldwin Mutual in connection with those claims or that she was unhappy in any way. Nevertheless, McCain’s complaint alleged Baldwin Mutual had wrongfully been reducing the amount paid on claims made on actual-cash-value policies inasmuch as its practice was to deduct some amount for depreciation not only of the damaged materials and the labor costs of initially installing those damaged materials (based on their condition prior to the covered damage and their expected life span), but also of the labor costs associated with the removal of the damaged materials. The trial court certified a class based on McCain's claims, and Baldwin Mutual appealed the certification order. The Alabama Supreme Court reversed the certification order because "the class definition proposed by McCain in her brief submitted after the class-certification hearing was materially different from the class definition offered by McCain in her original complaint." Upon remand, McCain filed a second amended complaint that retained the allegations in her first amended complaint and amended the definition of the proposed class. In response to the amended complaint, Baldwin Mutual moved for motion for a summary judgment, contending that McCain's claims were barred by res judicata based on a final judgment of the trial court in "the Adair litigation," which allegedly involved the same claims and same parties. The Alabama Supreme Court concluded the trial court erred in certifying McCain's action for class treatment because the claims of the purported class representative were subject to res judicata. View "Baldwin Mutual Insurance Company v. McCain" on Justia Law
Nichols v. HealthSouth Corporation
Employee-shareholders Steven Nichols, Deborah Deavours, Terry Akers, Thomas Dryden, and Gary Evans appealed a circuit court’s dismissal of their action against HealthSouth Corporation ("HealthSouth"). The employee shareholders at one time were all HealthSouth employees and holders of HealthSouth stock. In 2003, the employee shareholders sued HealthSouth, Richard Scrushy, Weston Smith, William Owens, and the accounting firm Ernst & Young, alleging fraud and negligence. The action was delayed for 11 years for a variety of reasons, including a stay imposed until related criminal prosecutions were completed and a stay imposed pending the resolution of federal and state class actions. In their original complaint (and in several subsequent amended complaints) the employee shareholders alleged that HealthSouth and several of its executive officers mislead investors by filing false financial statements of HealthSouth from 1987 forward. When the employee shareholders filed their action, the Alabama Supreme Court's precedent held: (1) that "[n]either Rule 23.1[, Ala. R. Civ. P.,] nor any other provision of Alabama law required stockholders' causes of action that involve the conduct of officers, directors, agents, and employees be brought only in a derivative action," and (2) that claims by shareholders against a corporation alleging "fraud, intentional misrepresentations and omissions of material facts, suppression, conspiracy to defraud, and breach of fiduciary duty" "do not seek compensation for injury to the [corporation] as a result of negligence or mismanagement," and therefore "are not derivative in nature." In the present case, the Alabama Supreme Court concluded the employee shareholders' claims were direct rather than derivative and that, the trial court erred in dismissing the employee shareholders' claims for failure to comply with Rule 23.1, Ala. R. Civ. P. Furthermore, the Court found employee shareholders' eighth amended complaint related back to their original complaint and thus the claims asserted therein were not barred by the statute of limitations. Accordingly, the judgment of the trial court was reversed and the cause remanded for further proceedings. View "Nichols v. HealthSouth Corporation" on Justia Law
Walker v. Johnson
Georgia Urology, P.A., and several of its member physicians filed objections to challenge a $124 million attorney fee awarded by the Jefferson Alabama Circuit Court to class counsel as part of the settlement of Johnson v. Caremark Rx, LLC ("the Caremark class action). After the trial court overruled their objections and its judgment approving the settlement became final, the objectors appealed the attorney fee to this Court. Caremark Rx bought MedPartners; MedPartners was the subject of dozens of securities-fraud lawsuits alleging that it had made false statements regarding its financial condition and anticipated future performance. Many of those lawsuits were eventually consolidated into a class action. In 1999, the MedPartners class action was settled for $56 million based on MedPartners' assertions that the negotiated settlement exhausted its available insurance coverage and that it possessed limited other assets it could use to pay a larger award or settlement. Post-settlement, however, it was revealed in unrelated litigation that MedPartners actually held an excess-insurance policy providing unlimited coverage during the period in which the alleged fraud had been committed. In 2003, the Caremark class action was initiated against MedPartners' corporate successor Caremark Rx, and its previous insurer asserting fraud and suppression claims based on the $56 million settlement agreed to in the MedPartners class action. The objectors appealed the fee award to the Alabama Supreme Court, arguing that they had been given insufficient opportunity to object to class counsel's requested attorney fee inasmuch as their objections were due before class counsel's attorney-fee application was filed, and that the attorney fee ultimately awarded was excessive. The Supreme Court vacated the order entered by the trial court awarding class counsel an attorney fee of $124 million. On remand, class counsel may file a new attorney-fee application, including more detailed information regarding the time expended in this case and how that time was spent. The objectors would then be given a reasonable opportunity to review that application and may, if they still have objections to class counsel's new application, file those objections with the trial court. After the trial court considers those objections and enters a new order making an award of attorney fees, any party with a grievance may file a new appeal to the Alabama Supreme Court. View "Walker v. Johnson" on Justia Law
Hall v. Environmental Litigation Group, P.C.
Plaintiffs Mary Hall, as personal representative of the estate of Adolphus Hall, Sr., and Anaya McKinnon, as personal representative of the estate of Wanzy Lee Bowman appealed the dismissal of their class-action claims against Environmental Litigation Group, P.C. ("ELG"). Plaintiffs alleged ELG agreed to represent hundreds of clients who had been exposed to asbestos, including their respective decedents. Plaintiffs alleged ELG charged its clients an excessive fee above and beyond the amount listed in their respective contracts. The trial court dismissed their case with prejudice. The Alabama Supreme Court disagreed with the trial court’s judgment, reversed and remanded. On remand, the trial court appointed a special master, who again recommended dismissal of plaintiffs’ claims. The trial court held that the attorney-employment agreement was ambiguous and that this ambiguity was fatal to the plaintiffs' class-allegation claims. Thus, the trial court dismissed the class claims before the class-certification process began. At this point in the proceedings and under the standard of review, the Supreme Court saw no ambiguity in the attorney-employment agreements, negating the trial court's contrary conclusion as to the individualized inquiry necessary with regard to the plaintiffs' contract claims. The Court therefore reversed the trial court's order dismissing the plaintiffs' claims for class-based relief and remanded the matter for further proceedings. View "Hall v. Environmental Litigation Group, P.C." on Justia Law
Ex parte Caremark Rx, LLC
In June 2000, the Franklin Circuit Court entered a final judgment approving a settlement agreement in “Taff v. Caremark, Inc.,” a class-action lawsuit against the corporate predecessor of the petitioner, Caremark Rx, LLC ("Caremark). Approximately 16 years later, in July 2016, Taff class counsel moved the trial court to enter an order requiring Caremark to produce for them certain information regarding the members of the Taff class so that Taff class counsel could notify those members of a proposed settlement in a separate class-action lawsuit pending against Caremark at the Jefferson Circuit Court, “Johnson v. Caremark Rx, LLC,” in which some of the members of the Taff class might be able to file claims. The trial court ultimately granted Taff class counsel's request and ordered Caremark to produce the requested information. Caremark petitioned the Supreme Court for a writ of mandamus directing the trial court to vacate that order. “The jurisdiction retained by the trial court after it entered its final judgment in Taff is limited to interpreting or enforcing that final judgment; the trial court could not extend its jurisdiction over any matter somehow related to the June 2000 final judgment in perpetuity by simply declaring it so.” The Court therefore granted the petition and issued the writ. View "Ex parte Caremark Rx, LLC" on Justia Law
Alabama Corrections Institution Finance Authority v. Wilson et al.
The Alabama Corrections Institution Finance Authority ("ACIFA") and its ex officio vice president Kim Thomas appealed a judgment entered on a jury verdict awarding $5 million in compensatory damages to Albert Wilson, Donald Simmons, Rufus Barnes, Bryan Gavins, Joseph Danzey, and a class of current and former nonexempt correctional officers employed by the Alabama Department of Corrections ("ADOC"). The correctional officers sued ADOC and its commissioner alleging ADOC was violating its own regulations and state law in the manner in which it: (1) compensated correctional officers for overtime; (2) restricted the way correctional officers were allowed to use earned leave; and (3) paid correctional officers the daily subsistence allowance provided by law. The Supreme Court reversed the judgment in favor of the correctional officers, finding that there was a lack of substantial evidence in support of the officers' claims against ACIFA and against Thomas as ex officio vice president of ACIFA. As such, defendants were entitled to a judgment as a matter of law. View "Alabama Corrections Institution Finance Authority v. Wilson et al." on Justia Law
Howard v. Cullman County
Michael Howard appealed the grant of summary judgment entered against him in the action he commenced on behalf of himself and all other similarly situated taxpayers in Cullman County against Cullman County and its Revenue Commissioner Barry Willingham, in his official capacity. Howard sought a refund of property taxes he and other taxpayers paid in 2013. Howard sought a judgment declaring that, pursuant to former section 40-7-42, the Commission's levy of property taxes for October 1, 2012, through September 30, 2013, was invalid because it was done in May 2013 rather than at the Commission's first regular meeting in February 2013. He also sought the return of property taxes collected in 2013. The Supreme Court found that the trial court correctly concluded that the Commission's failure to follow the timing provision of former 40-7-42 did not invalidate its subsequent levy in 2013 of property taxes upon Howard and other property owners in Cullman County. Therefore, the Court affirmed summary judgment on all of Howard's claims in favor of Cullman County and the revenue commissioner. View "Howard v. Cullman County" on Justia Law