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

Heading: Remedy for the Race to Certification

Text: 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.