Mary Hall, as personal representative of the Estate of Adolphus Hall, Sr., deceased, and Anaya McKinnon, as personal representative of the Estate of Wanzy Lee Bowman, deceased
Environmental Litigation Group, P.C.
Circuit Court, CV-13-901014
Hall, as personal representative of the estate of Adolphus
Hall, Sr.,  and Anaya McKinnon, as personal
representative of the estate of Wanzy Lee Bowman (hereinafter
collectively referred to as "the plaintiffs"),
appeal from the Jefferson Circuit Court's dismissal of
their class-action claims against Environmental Litigation
Group, P.C. ("ELG"). We reverse and remand.
and Procedural History
the second time this matter has come before the Court. Our
previous decision, Hall v. Environmental
Litigation Group, P.C, 157 So.3d 876, 878 (Ala.
2014) ("Hall I"), discusses the
pertinent factual and procedural history:
"On March 19, 2013, the plaintiffs filed a complaint in
the Jefferson Circuit Court against ELG, requesting a
declaratory judgment and alleging one count of unjust
enrichment and one count of breach of contract. The
plaintiffs asserted those claims on behalf of the estates
they represented and on behalf of 'others similarly
situated as a class action pursuant to Rule 23, ' Ala. R.
Civ. P. The plaintiffs' complaint included the following
factual allegations: in the 1990s, ELG agreed to represent
hundreds of clients who had been exposed to asbestos,
including Adolphus Hall and Bowman; ELG entered into an
attorney-employment agreement with each client; pursuant to
that agreement, ELG agreed to 'take all legal steps
necessary to enforce the said tort claim, ' and in return
ELG would receive 40% of amounts collected from any
settlement or judgment as its fee; the agreement also
permitted LG to reimburse itself for reasonable expenses
related to the clients' claims; on February 23, 2012, ELG
sent a memorandum to all of its 'asbestos clients'
stating that, as a result of additional work required to
obtain the proceeds of a settlement that ELG had negotiated,
ELG would begin charging an
'administrative-service-expense charge' in the amount
of $250 for living clients and $600 for clients who were
deceased, which could be deducted from settlement proceeds
due to be passed on to the client; between April 2011 and
July 2012, the estate of Adolphus Hall received settlement
proceeds from three asbestos defendants and, from those
proceeds, ELG deducted $192.01 in expenses and a $600
administrative-service-expense charge, in addition to
deducting 40% of the settlement proceeds as an attorney fee;
and, in December 2012, the estate of Wanzy Lee Bowman
received settlement proceeds from one asbestos defendant and
ELG deducted $68.64 as an 'administrative credit' in
addition to deducting 40% of the proceeds as an attorney fee.
The plaintiffs alleged that the
administrative-service-expense charge 'is nothing more
than an extra attorney fee collected by ELG in addition to
the 40% contingent fee' provided as the attorney fee in
the attorney-employment agreement.
"The plaintiffs asked the circuit court to enter an
order declaring that ELG had breached the attorney-employment
agreement 'by charging, without legal authority, more
than 40% for attorney staff services'; that ELG had been
unjustly enriched by its wrongful activities; that the
plaintiffs were due monetary relief; and that the plaintiffs
were entitled to recover an attorney fee and reasonable
expenses related to the prosecution of this action. In
addition, the plaintiffs alleged separate counts of unjust
enrichment and breach of contract, which were based on
ELG's alleged breach of the attorney-employment
"In response to the plaintiffs' complaint, ELG moved
the circuit court to dismiss the complaint pursuant to Rule
12(b)(6), Ala. R. Civ. P., for failure to state a claim upon
which relief could be granted. ELG attached several documents
to its motion to dismiss, including the attorney-employment
agreement signed by Adolphus Hall and Mary Hall, the
attorney-employment agreement signed by Bowman, and an
'adoption and ratification' of Bowman's
attorney-employment agreement signed by McKinnon. ELG also
attached the memorandum dated February 23, 2012, from ELG to
its asbestos clients informing them of the implementation of
the administrative-service-expense charge.
"ELG subsequently filed a supplement to its motion to
dismiss, arguing that the plaintiffs had, 'in essence,
... asserted that ELG has charged its clients an excessive
fee and [they] ask this court to enter a declaratory judgment
to that effect.' ELG further argued, among other things,
that Rule 1.5, Ala. R. Prof. Cond., directly addresses the
issue of excessive attorney fees; that the Alabama State Bar
was not a party to the action; and that a declaratory
judgment in the present case would constitute only an
advisory opinion by the circuit court because, it argued, the
Alabama State Bar has sole authority to enforce the Alabama
Rules of Professional Conduct and to determine whether an
attorney fee is excessive under Rule 1.5. Thus, ELG argued,
the circuit court was required to dismiss the plaintiffs'
complaint for lack of subject-matter jurisdiction.
See Rule 12(b)(1), Ala. R. Civ. P. (providing that
'lack of jurisdiction over the subject matter' is a
defense that may be made by motion). ELG cited B.W.T. v.
Haynes & Haynes, P.C., 20 So.3d 815, 822 (Ala. Civ.
App. 2009), to support its position. The plaintiffs filed a
response to ELG's motion to dismiss, arguing, among other
things, that their complaint was not 'based merely on an
ethics charge of "excessive fees"' but was
based on an allegation that 'ELG ha[d] breached the terms
of the [attorney-employment agreement, ] which ELG drafted
and entered into with each client.'
''. . . .
"On November 20, 2013, the circuit [court] entered an
order ... dismissing the case with prejudice. The plaintiffs
timely filed a notice of appeal. On appeal, the plaintiffs
argue[d] that the circuit court erred in dismissing their
complaint because, they [said], the allegations in their
complaint articulated a breach-of-contract claim against ELG
and because their complaint was not an ethics complaint
against ELG, which, they contend, would have been subject to
the exclusive jurisdiction of the Alabama State Bar. In
response, ELG assert[ed] that the circuit court properly
dismissed the plaintiffs' complaint because, ELG says,
the circuit court did not have subject-matter jurisdiction
over the plaintiffs' complaint."
157 So.3d at 877-79 (footnotes omitted).
appeal, this Court disagreed with the circuit court's
holding. We held that "[t]he 'crux' of the
plaintiffs' claims [was] that ELG breached the
attorney-employment agreement by allegedly taking as an
attorney fee more than 40% of the settlement proceeds"
and, thus, the plaintiffs' claims "[fell] within the
subject-matter jurisdiction of the circuit court." 157
So.3d at 881. Unlike B.W.T. v. Haynes & Haynes,
P.C., 20 So.3d 815, 822 (Ala. Civ. App. 2009), which ELG
cited, "the 'crux' of the plaintiffs' case
[was] not whether ELG's fee arrangement with the
plaintiffs violated Rule 1.5, Ala. R. Prof. Cond." 157
So.3d at 881. We therefore reversed the circuit court's
order of dismissal and remanded the matter for further
remand, ELG moved for a status conference to establish a
discovery schedule and to consider class
certification. Shortly thereafter, the plaintiffs filed a
"First Amended Class Action Complaint" that added
to the previously pending individual and class-based claims a
count against ELG pursuant to the Alabama Legal Services
Liability Act, § 6-5-570 et seq., Ala. Code 1975.
Additionally, the plaintiffs filed a motion seeking,
after discovery, class certification pursuant to
Rules 23(b)(2) and 23(b)(3), Ala. R. Civ. P.
numerous additional filings by the parties and the trial
court's appointment of a special master, who recommended
the denial of ELG's renewed dismissal request, on
February 23, 2016, ELG filed a "Motion to Dismiss Class
Claims or, Alternatively, for Partial Judgment on the
Pleadings." In that motion, ELG sought the dismissal of
only the plaintiffs' class-based claims on the ground
that the claims "require individualized inquiries"
that would destroy the "commonality" required for
class-based relief because, according to ELG, the contract at
issue was ambiguous. Specifically, the parties disagree on
whether the "Administrative Service Expense Charge"
(hereinafter "the new charge") assessed to the
plaintiffs was permitted under the terms of the
attorney-employment contract, which allowed recoupment of
ELG's "expenses, " or whether the new charge
was an additional "fee." ELG further maintained
that the plaintiffs' proposed definition of a class,
which included all past and present ELG asbestos clients who
executed a contingency-fee contract, was both "overly
broad" and "inconsistent with and contradicted by
the allegations in the Complaint."
April 11, 2016, ELG filed, as a "supplement" to its
motion to dismiss, an "alternate" motion to strike
the plaintiffs' class claims and allegations pursuant to
Rules 12(f), 23(c)(1), and 23(d)(4), Ala. R. Civ. P., which,
according to ELG, "provide a clear path for the Court to
evaluate class claims at an early stage under the burden of
proof and standard of review of Alabama Rule 23" and,
where appropriate, to strike class allegations before the
a hearing--but without permitting the plaintiffs'
requested discovery on the class-certification issue--the
trial court granted ELG's motion to dismiss. The trial
court agreed with ELG that the "[p]laintiffs'
contracts with ELG are ambiguous regarding whether the
'Administrative Service Expense Charge' was an
expense or should have been included in the 40% contingency
fee." The trial court held:
"Specifically, the contract is ambiguous in at least
three ways. First, the definition of expense is open-ended
and ambiguous. Second, the client contracts are silent and
ambiguous regarding how work related to probate, bankruptcy,
and Medicare should be charged to the client. Third, the
client contracts are ambiguous regarding whether
post-settlement work done to make sure that claims that have
already been recovered are paid out to the proper party is an
expense or part of the contingency fee for prosecution and
'enforce[ment of] the said tort claim, ' or outside
the scope of the contract."
result of that ambiguity and of the particular nature of the
asbestos claims themselves, including "the fact that the
current plaintiffs are not even victims of asbestos injuries
but instead are actually second or third generation
descendants of the original clients who signed the fee
agreements in 1992 and 1994" and that ELG's
long-term representation could have given rise to
"situation[s] ... not anticipated and addressed by the
parties on the face of the contract, " the trial court
concluded that "individualized inquiry is required to
resolve the ambiguity and delve into the state of mind of
each party and determine what each party intended at the time
of contracting" and that, therefore, such inquiry
"destroys predominance and commonality and bars class
... breach-of-contract-based claims in this case." In
sum, opining that no amount of discovery would alleviate the
above-identified issues with the plaintiffs' class-based
claims, the trial court granted ELG's motion to dismiss,
"struck" the plaintiffs' claims for class-based
relief, and held that the class-based claims were
"denied." The plaintiffs appeal.
contends that the trial court was authorized to
"strike" the class allegations in the complaint
under the authority of a combination of three rules: Rule
12(f),  Rule 23(c)(1),  and Rule
23(d)(4). In support of this argument, ELG cites
numerous federal court decisions explaining that Rule 12(f),
Fed. R. Civ. P.; Rule 23(c)(1)(A), Fed. R. Civ. P.; and Rule
23(d)(1)(D), Fed. R. Civ. P., together can form the basis for
striking class allegations in the pleading stage and before
the class-certification process begins:
"As an initial matter, the authority to strike class
allegations stems from Federal Rules of Civil Procedure
12(f), 23(c)(1)(A), and 23(d)(1)(D) .... See Gray v. BMW
of North America, LLC, 22 F.Supp.3d 373 (D.N.J. 2014)
(citing Fed.R.Civ.P. 12(f) as authority for the District
Court to strike class allegations); In re Paulsboro
Derailment Cases, [Civ. No. 13-784, April 8, 2014]
(D.N.J. 2014) ('A motion to strike class allegations
implicates Federal Rules of Civil Procedure 12(f) and
23(c)(1)([A]).... A further procedural vehicle is provided by
Federal Rule of Civil Procedure Rule 23(d)(1)(D), which
provides that a "court may issue orders that ... require
that the pleadings be amended to eliminate allegations about
representation of absent persons and that the action proceed
accordingly."'); see also 1 Joseph M.
McLaughlin, McLaughlin on Class Actions § 3:4
(11th ed. 2014) (Noting that Federal Rule of Civil Procedure
23(d)(1)(D) 'expressly authorizes a motion to strike
class action allegations by authorizing the court to issue an
order "requiring that the pleadings be amended to
eliminate allegations about representation of absent
persons...."'[).] Rule 12(f) permits a district
court to 'strike from a pleading an insufficient defense
or any redundant, immaterial, impertinent, or scandalous
matter, ' and Rule 23(c)(1)(A) directs the court to make
the class certification determination '[a]t an early
practicable time.' Fed.R.Civ.P. 12(f), 23(c)(1)(A).
"These Rules, together, provide authority for the Court
to strike the class allegations from Plaintiffs'
Complaint, if appropriate, even before Plaintiffs move for
class certification. The Court of Appeals for the Third
Circuit has acknowledged that there are a 'rare few
[cases] where the complaint itself demonstrates that the
requirements for maintaining a class action cannot be met,
' although, '[i]n most cases, some level of discovery
is essential.' Landman & Funk PC v.
Skinder-Strauss Assoc., 640 F.3d 72, 93, 93 at n. 30 (3d
Cir. 2011). Class allegations may be stricken only when no
amount of discovery will demonstrate that the class can be
maintained. Goode v. LexisNexis Risk & Info.
Analytics Group, Inc., 284 F.R.D. 238, 244 (E.D. Pa.
2012) (citing Thompson v. Merck & Co., Inc.,
[No. C.A. 01-1004, January 6, 2004] (E.D. Pa. 2004)); see
also Woodard v. FedEx Freight E., Inc., 250 F.R.D.
178, 182 (M.D. Pa. 2008) (noting that a 'district court
will strike class allegations without permitting discovery or
waiting for a certification motion where the complaint and
any affidavits clearly demonstrate that the plaintiff cannot
meet the requirements for a class action')."
Bell v. Cheswick Generating Station, Genon Power
Midwest, L.P., No. 12-929, Jan. 28, 2015 (W.D.
Pa. 2015) (not selected for publication in F.Supp.3d).
Alabama decisions are cited that have addressed the propriety
of a motion to strike class allegations before
class-certification discovery or the class-certification
process. However, in the instant case, we are not required to
determine such issue, because it does not appear that the
trial court simply struck the plaintiffs' class
allegations. Specifically, ELG's motion to dismiss
requested that the trial court dismiss the plaintiffs'
class claims "with prejudice." The trial
court's order stated: "[ELG's motion to dismiss]
is hereby granted. Plaintiffs' class allegations are
hereby stricken and the claims denied."
(Emphasis added.) It appears that, by stating that the class
claims were "denied, " the trial court was
dismissing them with prejudice. Specifically, stating that
the claims were "denied" is inconsistent with
merely striking the claims or "requiring that the
pleadings be amended" under Rule 23(d)(4). Further, we
see no basis in this case for striking the class claims for
containing "insufficient defense or any redundant,
immaterial, impertinent, or scandalous matter." Rule
12(f). Therefore, we treat the trial court's dismissal as
pursuant to the initial ground specified in ELG's motion
to dismiss: failure to state a claim under Rule 12(b)(6).
a Rule 12(b)(6) motion "'should not be used to test
the sufficiency of a complaint after a responsive
pleading has been filed.'" Pontius v. State Farm
Mut. Auto. Ins. Co., 915 So.2d 557, 562 (Ala. 2005)
(quoting Sims v. Lewis, 374 So.2d 298, 301 (Ala.
1979)). However, "a defense of failure to state a claim
upon which relief can be granted, although typically raised
pursuant to Rule 12(b)(6), can be raised after an answer has
been filed by moving for a judgment on the pleadings"
under Rule 12(c), Ala. R. Civ. P. Pontius, 915 So.2d
Court has discussed the distinction between the standard of
review for a ruling based on Rule 12(c) and one based on Rule
12(b)(6) as follows:
"In ReedElsevier, Inc. v. TheLaw.net
Corp., 269 F.Supp.2d 942, 947 (S.D. Ohio 2003), the
federal district court stated with regard to Rule 12(b)(6)