Ex parte United Propane Gas, Inc.
United Propane Gas, Inc. In re: Cullman Security Services, Inc., on behalf of itself and other similarly situated entities
Circuit Court, CV-17-900061
PETITION FOR WRIT OF MANDAMUS
Propane Gas, Inc. ("United Propane"), seeks a writ
of mandamus compelling the Cullman Circuit Court to vacate
its order denying United Propane's motion to dismiss an
action filed by Cullman Security Services, Inc.
("CSS"), and to enter an order dismissing the
action. The trial court denied the motion to dismiss on the
ground that "the outbound forum-selection clause
contained in the parties' contract is unfair or
unreasonable because it deprives [CSS] of the ability to file
a class action in contravention of a recognized Alabama
public policy" and found that the parties' contract
was a contract of adhesion. We grant the petition and issue
and Procedural History
Propane, a Kentucky corporation, offers pre-purchase
contracts to its customers, pursuant to which the customers
agree to purchase their anticipated fuel usage for a season
based upon a fixed price per gallon of gas. A pre-purchase
contract gives the customer the advantage of locking in the
price of the gas to be supplied for a determined time and
gives the supplier of propane and propane accessories the
advantage of receiving payment for a known purchase of a
supply of gas from the customer for that period.
corporation with its principal place of business in Cullman,
Alabama, was a customer of Golden Propane Gas, Inc., an
affiliate and agent of United Propane. On September 30,
2013, CSS entered into a pre-purchase contract with United
Propane. CSS agreed to purchase 550 gallons of propane at the
fixed price of $1.6990 per gallon between October 1, 2013,
through March 31, 2014. The contract also included the
following outbound forum-selection clause:
"Customer agrees to pay all costs incurred by
Corporation if it must enforce any of the terms of this
Agreement, including but not limited to, reasonable attorneys
fees, and further agrees to pay all applicable delivery,
finance, system check and motor fuel charges. This
agreement shall be governed by the laws of Kentucky and the
parties agree that the state courts sitting in McCracken
County, Kentucky have exclusive jurisdiction and venue of any
dispute arising hereunder."
signing the contract, CSS paid an outstanding bill for
$607.82 and also paid $1, 382.52 to guarantee the delivery of
550 gallons of propane gas during the upcoming 2013-2014
winter season. In October 2013, United Propane delivered 200
gallons of propane gas to CSS. When CSS requested the
delivery of additional propane gas in January 2014, United
Propane advised that the only way CSS could acquire the gas
would be to purchase it at the rate of $3.599 per gallon.
Consequently, CSS purchased gas from another distributor at
the higher market rate.
April 2014, CSS, on its behalf and on behalf of other
similarly situated gas consumers, filed a class-action
lawsuit against United Propane in the circuit court in
McCracken County, Kentucky. Kentucky circuit courts have
jurisdiction in civil cases when the amount in controversy
exceeds $5, 000, exclusive of interest and costs, in matters
affecting title to real estate, and in matters of equity. See
Ky. Rev. Stat. §§ 23A.010(1)and 24A.120(1).
Kentucky law provides, however, that a class action based on
breach of contract cannot be maintained in a state circuit
court where none of the individual claims is equal to the
statutory jurisdictional amount. See Lamar v. Office of
Sheriff Daviess Cty., 669 S.W.2d 27 (Ky. Ct. App. 1984).
Consequently, the Kentucky court dismissed the complaint
without prejudice because "no claim in [CSS's]
amended complaint alleges an amount in controversy over $5,
000; [CSS's] claims do not affect title to real estate;
and [CSS] has not asserted a valid claim for equitable
relief." The Kentucky Court of Appeals affirmed the
circuit court's dismissal.
February 11, 2017, CSS filed in the Cullman Circuit Court a
"nationwide class action, on behalf of itself and all
other commercial entities and business associations similarly
situated, " seeking redress for "[United
Propane]'s policy and practice to breach uniform written
pre-paid contracts, and to systematically violate its duty of
good faith and fair dealing by uniformly raising prices on
pre-paid commercial contracts and failing to honor the
contracts." The complaint sought damages, a declaratory
judgment, and injunctive relief.
April 11, 2017, United Propane filed a Rule 12(b)(3), Ala. R.
Civ. P., motion to dismiss CSS's action as having been
filed in an improper venue. United Propane argued that the
outbound forum-selection clause in the pre-purchase contract
required CSS to bring the action in Kentucky and that the
case had been previously dismissed by the Kentucky circuit
court for failing to meet the statutory jurisdictional
amount. In response, CSS argued that both it and the class it
seeks to represent were denied the ability to seek any
practical relief in the designated forum because Kentucky,
unlike Alabama, does not allow a class to aggregate damages
to meet the threshold jurisdictional amount. CSS asserted
that it was not economically feasible to litigate smaller
individual claims in a Kentucky small-claims court,
especially given that the court is located a considerable
distance from Cullman, Alabama.
a hearing on the Rule 12(b)(3) motion, the trial court denied
United Propane's motion to dismiss. United Propane timely
filed a petition for writ of mandamus.
"'Mandamus is a drastic and extraordinary writ, to
be issued only where there is (1) a clear legal right in the
petitioner to the order sought; (2) an imperative duty upon
the respondent to perform, accompanied by a refusal to do so;
(3) the lack of another adequate remedy; and (4) properly
invoked jurisdiction of ...