Opinion ID: 1688626
Heading Depth: 1
Heading Rank: 2

Heading: Reason for the Order

Text: The reason for this summary procedure was set forth in the order itself, which stated in part: This action is one of a large number of cases pending in this Circuit which contain class allegations. These class actions, by their very nature, are more complex and demand an inordinate amount of the Court's time and resources. Many times these actions are brought against the same defendant in multiple State and Federal jurisdictions by different plaintiffs, resulting in a `race to the courthouse' for class certification. Unlike the Federal Courts, our State Courts have no procedure in place to address the problems that arise in multi-jurisdiction litigation. (Emphasis added.) This rationale echoes that stated by Truman and Eloise McIlwain, the respondents in Ex parte Citicorp Acceptance Co., 715 So.2d 199 (Ala.1997): [T]he conditional certification procedure is mandated by the abatement rule adopted by this Court in Ex parte [First Nat'l] Bank of Jasper, [675 So.2d 348 (Ala. 1995) (`FNB of Jasper I `) ]. Under [FNB of Jasper I ], when any trial court issues an order of class certification, it abates all other class action proceedings involving the same claims. If a trial court does not certify a case promptly, then another trial court may certify the same claims and abate the proceeding in the initial trial court. It is no coincidence that the Court of Civil Appeals decision in [ Ex parte Voyager Guaranty Insurance Co., 669 So.2d 198 (Ala.Civ.App.1995),] came only a few months after this Court's decision in [FNB of Jasper I]. A prompt certification order is needed to protect the jurisdiction of the trial court while it engages in the ongoing assessment of whether it will enter a final judgment with a certified class. The lack of a conditional certification procedure would invite a `race for justice' where class discovery and class certification evidentiary hearings would be conducted in multiple courts until one issues an order of certification. [Since FNB of Jasper I], trial courts throughout this state have followed the conditional certification procedure to protect their jurisdiction.... This Court should remember that in Alabama, there is no procedure for coordinating related litigation in various Circuits of the State. Compare the Multi-District Litigation Procedure in the federal system. Instead, [this state] has applied the abatement rule that the Legislature has mandated by statute. Conditional certification is a simple and efficient mechanism that is used to implement the abatement rule and to avoid duplicative class litigation. Brief of Respondents in Opposition to Petition for Writ of Mandamus, at 17-18 (emphasis added). These comments and the dispositive issues presented in this case and the related cases, namely, Ex parte American Bankers Life Assurance Co. of Florida, Ex parte Citicorp Acceptance Co., Ex parte Equity National Life Insurance Co., and Ex parte Mercury Finance Corp. of Alabama, lead unmistakably to two conclusions: (1) trial judges are conditionally certifying large numbers of class actions because of a race to certification, and (2) the race was set in motion by FNB of Jasper I. We shall address these conclusions in turn, but in reverse order.
The McIlwains, the plaintiff respondents in Ex parte Citicorp, interpret FNB of Jasper I as holding that as soon as any trial court issues an order of class certification, it abates all other class action proceedings involving the same claims. Ex parte Citicorp, Brief of Respondents in Opposition to Petition for Writ of Mandamus, at 17. This interpretation of FNB of Jasper I is widely shared and often vocalized by Alabama litigants in briefs and oral arguments. This is true despite the fact that this Court, in First Nat'l Bank of Jasper v. Crawford, 689 So.2d 43 (Ala.1997) (FNB of Jasper II ), carefully characterized that proposition as based on dictum. 689 So.2d at 46. In FNB of Jasper I and II, we attempted to articulate a rule that would resolve a conflict produced by the filing of six different complaints, each containing substantially identical class allegations, against the same defendant, in three different counties, on the same day. 675 So.2d at 348. In both cases, the First National Bank of Jasper sought to confine class litigation to one forum. It did so, however, solely on the authority of Ala.Code 1975, § 6-5-440, the abatement statute, which provides: No plaintiff is entitled to prosecute two actions in the courts of this state at the same time for the same cause and against the same party. In such a case, the defendant may require the plaintiff to elect which he will prosecute, if commenced simultaneously, and the pendency of the former is a good defense to the latter if commenced at different times. Whether the popular interpretation of FNB of Jasper I is correct is now a moot issue, for we have today overruled FNB of Jasper I and FNB of Jasper II to the extent they held that § 6-5-440 applies to class actions. Ex parte State Mutual Ins. Co., 715 So.2d 207 (Ala.1997) (withdrawing opinion of April 4, 1997). Ex parte State Mutual involved two competing actions, one of which was based on a complaint containing class allegations filed in Greene County against State Mutual Insurance Company (State Mutual). The other action was based on a complaint without class allegations, filed in Hale County against the same defendant. 715 So.2d at 209. The Hale County action was commenced after the Greene County action, but before a class was certified in the Greene County action. Id. at 209. In the Greene County Circuit Court, State Mutual and the class representatives argued that, on the basis of § 6-5-440, as interpreted in FNB of Jasper I, the certification in Greene County ipso facto abated the Hale County individual action. Ex parte State Mutual Ins. Co., at 210. The trial court disagreed and amended the class definition to exclude the plaintiffs in the Hale County action. Id. at 210. State Mutual and the class representatives appealed to this Court, seeking a judgment directing the Greene County Circuit Court to vacate its order excluding from the class the plaintiffs in the individual action. Id. at 211. On appeal, they reiterated the arguments they had made in the trial court regarding the application of § 6-5-440 as interpreted by FNB of Jasper I. Ex parte State Mutual Ins. Co., at 211. Initially, on April 4, 1997, this Court issued an opinion in which it refused to vacate the trial court's order. However, State Mutual and the class representatives sought a rehearing. The rehearing application was accompanied by briefs of numerous amici curiae addressing the development of class-action practice in Alabama since FNB of Jasper I and FNB of Jasper II. Ex parte State Mutual Ins. Co., at 212. Some of those amici expressed concerns identical to the ones presented by the respondents in Ex parte Citicorp, and by the trial court in its order in this case. One such concern, described as claim jumping, was explained as follows: `[A] plaintiff could file a purported class action in Jefferson County, Alabama, and spend 12 months preparing the case for a class action hearing, but prior to the conduct of that hearing, another plaintiff could file an action in another Alabama county copying the exact same Jefferson County complaint, but substituting in a new named plaintiff and getting a different Alabama Circuit Court to certify the newly filed action as a class action. Under this Court's [April 4, 1997] holding in the instant case, the certification in the second filed action would abate the previously filed action and negate 12 months' work that had been done toward preparing for the class certification hearing.' Ex parte State Mutual Insurance Co., 715 So.2d at 212 (quoting Amicus Curiae Brief (Filed by Various Class Action Firms), ¶ 2). After an extensive review of the history of the class-action device and the common-law abatement rule, which is codified in § 6-5-440, this Court reconsidered its previous holding in that case; it issued a new opinion reversing the trial court's order amending the class. Ex parte State Mutual Ins. Co., 715 So.2d at 219. However, it did so on the ground that § 6-5-440 has no application to class actions. Thus, it was necessary to overrule FNB of Jasper I and FNB of Jasper II, to the extent they were based on § 6-5-440. Ex parte State Mutual Ins. Co., 715 So.2d at 219. In overruling those cases, we acknowledged that our ... attempt to incorporate, or fuse, the abatement rule with class-action procedureas we did in FNB of Jasper I  ha[d] ... resulted in chaos, Ex parte State Mutual Ins. Co., 715 So.2d at 214, and that class-action practice in Alabama has been in a state of confusion ever since FNB of Jasper I was decided. 715 So.2d at 212. Although Ex parte State Mutual Ins. Co. involved a conflict between a class action and an individual action, we stated: [B]ecause § 6-5-440 is inapplicable in cases involving class actions competing with individual actions, a fortiori, § 6-5-440 is inapplicable in cases such as FNB of Jasper I and FNB of Jasper II, which involved competing class actions. Ex parte State Mutual Ins. Co., at 220 (emphasis in original). Indeed, in saying so we specifically had in mind arguments regarding claim jumping and the race to justice, such as those that are made in this case. We, therefore, concede that trial judges have been conditionally certifying large numbers of class actions in order to protect the jurisdiction of their courts and that they have been doing so in direct response to FNB of Jasper I. In the following subpart of this opinion, we shall discuss why the abrogation of the unworkable rule of FNB of Jasper I has removed the incentive for conditional certifications.
The remedy for the race-to-certification problem is found in Ex parte Liberty National Life Insurance Co., 631 So.2d 865 (Ala. 1993). That case, like FNB of Jasper I, involved competing class actions. The first action containing class allegations was commenced against Liberty National Life Insurance Company (Liberty National) in the Barbour County Circuit Court in October 1992. Id. at 866. On March 10, 1993, that court certified a non-opt-out class pursuant to Ala. R. Civ. P. 23(b)(2). 631 So.2d at 866. Approximately three weeks later, another action containing class allegations virtually identical to those in the Barbour County complaint was commenced against Liberty National in Mobile County. Id. In fact, the plaintiffs in the Mobile County action sought to attack collaterally the action in Barbour County. The complaint filed in Mobile County stated that the Mobile plaintiffs were seeking to challenge the validity of the Barbour County class certification. Id. (Emphasis added.) Liberty National moved the Mobile County Circuit Court to dismiss the action in that county, but the court denied the motion. Id. at 866-67. Liberty National then sought a writ of mandamus from this Court directing the Mobile County Circuit Court to dismiss the action challenging the class-action certification in Barbour County. Id. at 867. This Court issued the writ of mandamus. Id. In doing so, it explained: The law is clear that the circuit court in which jurisdiction over a controversy is first invoked has exclusive jurisdiction over that controversy until that controversy is concluded, subject only to appellate review. Ex parte Burch, 236 Ala. 662, 184 So. 694 (1938). `It is uniformly held that where two or more courts have concurrent jurisdiction, the one which first takes cognizance of a cause has the exclusive right to entertain and exercise such jurisdiction, to the final determination of the action and the enforcement of its judgment or decrees.' ... `It is a familiar principle that when a court of competent jurisdiction has become possessed of a case its authority continues, subject only to the appellate authority, until the matter is finally and completely disposed of, and no court of co-ordinate authority is at liberty to interfere with its action....' ... `All the authorities recognize the importance of carefully preserving the boundary line between courts of concurrent jurisdiction, in order to prevent conflicts, and to preserve in harmony their relations to each other.'  Ex parte Burch, 236 Ala. 662, 665, 184 So. 694, 697 (1938). These principles have been restated numerous times: `[W]here two courts have equal and concurrent jurisdiction, the court that first commences the exercise of its jurisdiction in a matter has the preference and is not to be obstructed in the legitimate exercise of its powers by a court of coordinate jurisdiction.'  Ex parte State ex rel. Ussery, 285 Ala. 279, 281, 231 So.2d 314, 315 (1970) .... The Barbour Circuit Court initially exercised jurisdiction over this matter, and it must be permitted to retain jurisdiction without any interference by any other circuit court. It appears from the express language of their complaint and their arguments in the Mobile Circuit Court that the Mobile plaintiffs were attempting to have a second circuit court review the case and reverse the orders of the first circuit court to exercise jurisdiction.... In view of the class action pending in Barbour County, the Mobile Circuit Court should have dismissed or stayed the action filed by the Mobile plaintiffs. The law does not permit a second circuit court to adjudicate the same controversy that is being litigated in a pending action in another circuit court of competent jurisdiction. The writ of mandamus in case number 1921440 is, therefore, due to be granted. 631 So.2d at 867 (emphasis added). See also Adams v. Robertson, 676 So.2d 1265 (Ala. 1995), cert. granted, 518 U.S. 1056, 117 S.Ct. 37, 135 L.Ed.2d 1128 (1996), cert. dismissed as improvidently granted, 520 U.S. 83, 117 S.Ct. 1028, 137 L.Ed.2d 203 (1997); Benefield v. Liberty National Life Ins. Co., 632 So.2d 1328 (Ala.1994). The rule applied in Ex parte Liberty National Life Insurance Co. is well established. Cf. Peck v. Jenness, 48 U.S. (7 How.) 612, 624-25, 12 L.Ed. 841 (1849); Ex parte Moore, 382 So.2d 548, 550 (Ala.1980) (The first court seized of the issues involved, if identical, whether by action for declaration, or other judgment, must be permitted to retain jurisdiction of the case); Ex parte State ex rel. Ussery, 285 Ala. 279, 281, 231 So.2d 314, 315 (1970); Dorrough v. McKee, 264 Ala. 663, 669, 89 So.2d 77, 82 (1956); Gay, Hardie & Co. v. Brierfield Coal & Iron Co., 94 Ala. 303, 308, 11 So. 353, 354 (1891); Eaton v. Patterson & Hinchman, 2 Stew. & P. 9, 15-16 (Ala.1832). The rule is enforced to prevent unseemly, expensive, and dangerous conflicts of jurisdiction and of process. Ex parte Burch, 236 Ala. 662, 665, 184 So. 694, 697 (1938). The logical import of this rule and the practical effect of its application are that a court lacks subject matter jurisdiction over an action containing class allegations, as long as there is pending in another court a prior-filed action involving substantially identical class allegations. As the trial court aptly observed in its certification order: Unlike the Federal Courts, our State Courts have no procedure in place to address the problems that arise in multi-jurisdiction litigation. However, The application of this rule in situations involving competing class actions, in conjunction with Ex parte State Mutual and the overruling of FNB of Jasper I and FNB of Jasper II, will solve the problems presented in this case and in similar cases. It will obviate problems such as the race to certification and claim jumping. In doing so, it will remove all the incentive for conditional, or ex parte certifications. The following hypothetical scenarios will illustrate the operation and effect of this rule. Hypothetical One. Assume that on January 1, 1998, a complaint containing class allegations against a defendant insurance company is filed in the Jefferson County Circuit Court. Also assume that on June 1, 1998, before the Jefferson County Circuit Court addresses issues of class certification, an attorney, having learned of the Jefferson County action, files an action in the Montgomery County Circuit Court, copying the language and class allegations in the Jefferson County action, but inserting the names of different class representatives. Assume further that the attorney in the Montgomery County action is successful in getting a class certified by June 15, 1998, before the Jefferson County judge addresses the certification issues. Subsequently, a motion is made to stay or abate the Jefferson County action on the ground that the certified Montgomery County action has subsumed the issues and class members in the Jefferson County action. That motion is due to be denied summarily. That is so, because the court that first commences the exercise of its jurisdiction in a matter, in this scenario, the Jefferson County Circuit Court, has the preference and is not to be obstructed in the legitimate exercise of its powers by a court of coordinate jurisdiction. Ex parte State ex rel. Ussery, 285 Ala. 279, 281, 231 So.2d 314, 315 (1970). Indeed, if the parties in the Montgomery County action were to proceed to a judgment in that court before the Jefferson County Circuit Court addressed certification, the judgment would be void. It would be void on the ground that the Montgomery County Circuit Court lacked subject matter jurisdiction as long as a prior-filed action was pending in a sister circuit. This result would remove not only the incentive for certification races and conditional certifications, but also the incentive a class-action defendant might have for electing to proceed in the Montgomery County forum, hoping for a better result in that court. Hypothetical Two. Assume the same facts as in Hypothetical One, except that, in this case, assume that on August 1, 1998, the Jefferson County Circuit Court judge, having conducted full-blown evidentiary hearings on the certification issues, holds that the action does not comply with Rule 23, and denies the plaintiffs' motion for certification. The denial of certification removes the jurisdictional impediment to the action in Montgomery County. Therefore, to the extent the denial of certification is not binding on the putative class members in the Montgomery County action, [2] the Montgomery County action may go forward. This is the rule that should have been applied in FNB of Jasper I and FNB of Jasper II. Its application in class-action cases will obviate the needreal or perceivedfor ex parte or conditional certification as a means of protecting jurisdiction. This is so, because, under this rule, a first-filed case containing class allegations cannot be preempted by certification in a later-filed class action. This rule entirely undercuts the rationale on which the certification was expressly based in this case. In conclusion, the trial court's order of conditional certification failed to comply with Rule 23, for the reasons discussed above. The petition for the writ of mandamus is, therefore, granted. WRIT GRANTED. ALMON, SHORES, and BUTTS, JJ., concur. KENNEDY, J., concurs specially. HOOPER, C.J., and MADDOX, HOUSTON, and SEE, JJ., concur in the result.