Cheminova America Corp. v. Corker

• Citation: 779 So.2d 1175
• Parties: CHEMINOVA AMERICA CORPORATION v. Iris CORKER et al. Acuderm, Inc. v. Iris Corker et al.
• Decision Date: 30 June 2000
• Court: Supreme Court of Alabama

779 So.2d 1175

CHEMINOVA AMERICA CORPORATION v. Iris CORKER et al.

Acuderm, Inc. v. Iris Corker et al.

1977.

Supreme Court of Alabama.

June 30, 2000.

Rehearing Denied September 1, 2000.

Edward G. Isaacs Bowron, John Charles S. Pierce, and Michael A. Montgomery of Pierce, Ledyard, Latta & Wasden, P.C., Mobile, for appellant Acuderm, Inc.

Clarence M. Small, Jr., and Rhonda Pitts Chambers of Rives & Peterson, Birmingham, for appellant Cheminova America Corp.

Steve Olen and Steven L. Nicholas of Olen & Nicholas, P.C., Mobile; and Patrick H. Sims of Cabaniss, Johnston, Gardner, Dumas & O'Neal, Mobile, for appellees Iris Corker and Tommy Bell.

ENGLAND, Justice.

These appeals are from a class-certification order, filed pursuant to Act No. 99-250, Ala. Acts 1999, codified at §§ 6-5-640 through -642, Ala.Code 1975 (Cum.Supp. 1999). The Act requires a trial court to hold a "full evidentiary hearing" on class certification under Rule 23, Ala. R. Civ. P. This Court has consistently held that a trial court's class-certification order is to be reviewed by an abuse-of-discretion standard. Ex parte Government Employees Ins. Co., 729 So.2d 299, 303 (Ala.1999). We find no abuse of discretion in the court's entering the class-certification order; therefore, we affirm.

The trial judge held a full evidentiary hearing, which met the requirements of §§ 6-5-640 through -642. The trial judge made the following findings of fact:

"For the purpose of certification, the court should not conduct a mini trial on the merits of the litigation. Consequently, the court finds the following facts only to the extent that they aid the Court in deciding the issues of certification.

"Skin Cap was a product manufactured by Defendant Cheminova International, S.A., a corporation headquartered in Madrid, Spain. Defendant Cheminova America is a corporation with its principal place of business in South Florida, which served as the American distributor of Skin Cap.

"Skin Cap was an over-the-counter medication which purportedly contained the ingredient zinc pyrithione. While the label of the product did not contain any reference to psoriasis, beginning in 1996 there was widespread discussion about the use of the product as a psoriasis treatment.

"In early 1997, Defendant Acuderm, Inc. began promoting and distributing Skin Cap for Cheminova America. On March 6, 1997, Acuderm and Cheminova America entered into a letter agreement whereby Acuderm became a non-exclusive medical distributor of Skin Cap. While Acuderm did not promote Skin Cap as a psoriasis treatment, it was clear that it intended to and did market the product for use as a psoriasis treatment. Prior to entering into a letter agreement with Cheminova, Acuderm was aware of concerns and rumors that Skin Cap contained a steroid, and specifically obtained assurances from the manufacturer, Cheminova, that this product was safe and contained no steroids. Acuderm purchased and sold approximately 22,000 units of Skin Cap pursuant to its agreement with Cheminova America.

"Even before Acuderm began selling Skin Cap, rumors persisted that Skin Cap contained steroids. However, Acuderm's literature specifically stated that the product was steroid free.

"On August 13, 1997 Acuderm received from the Federal Food and Drug Administration (`FDA') a warning statement dated August 8, 1997, stating that Skin Cap contained a potent corticosteroid and should not be used without a physician's supervision. On September 11, 1997, Acuderm agreed to recall all its Skin Cap products. Pursuant to that recall, Acuderm agreed to reimburse physicians and patients for any unused Skin Cap products. However, shortly thereafter, Acuderm soon refused to reimburse its customers for their Skin Cap purchases.

"The FDA tested several samples of the Skin Cap product, and on each occasion found high levels of super potent corticosteroids in the product.

"Acuderm sold the product directly to users, and also sold it to pharmacies such as Nixon Drugs. Acuderm maintains, and has produced in discovery, invoices and billing information providing the name, address and purchase price of products sold to each of its direct customers.

"Plaintiff Iris Corker was first told of Skin Cap by her dermatologist, Dr. Charles Behlen, around June, 1997. Ms. Corker purchased the Skin Cap product, in her case a spray can, from Nixon Drugs on numerous occasions from June until October, 1997. The Skin Cap had a retail cost of approximately $44 per can. The label on the can described its ingredients, but made no mention of any steroids. Ms. Corker, unaware of any controversy about the ingredients of Skin Cap, purchased the product after the Defendants already knew about persistent rumors that Skin Cap contained corticosteroids—and in fact even after the recall order was issued by Acuderm.

"None of the Defendants ever informed Ms. Corker that the product was dangerous. Ms. Corker received no information from any other source that the product was dangerous even though Acuderm's recall was under way. It was not until December, 1997 that Ms. Corker visited another dermatologist, Dr. Neal Capper, who first explained to her that the product had been marketed illegally. Dr. Capper informed Ms. Corker that some of the problems she was having with her skin were the result of her use of Skin Cap. After discontinuing the use of Skin Cap, Ms. Corkers's psoriasis actually became worse than before the use of the product. This `rebound' effect of the psoriasis is a known anticipated side effect of using corticosteroids in the treatment of psoriasis.

"Plaintiff Tommy Bell, who purchased directly from Acuderm, had an identical experience."

On February 20, 1998, Iris Corker, acting individually and on behalf of a national class of similarly situated individuals, filed a complaint in Mobile County against Laboratories Cheminova Internacional, S.A.,¹ Cheminova America Corporation, Acuderm, Inc., and Nixon Drugs, Inc. Her complaint asserted fraud claims and a claim under the Alabama Extended Manufacturer's Liability Doctrine ("AEMLD"). As last amended, the complaint contained five counts. Counts One and Two stated claims alleging fraud and suppression arising from the alleged mislabeling of the contents of the product. Count Three stated a claim alleging breach of warranty; Count Four stated a claim for restitution of the purchase price paid by the plaintiffs; and Count Five stated a breach-of-contract claim.

On February 2, 1999, Ms. Corker filed a motion seeking certification of the following class:

"persons who purchased and used a product named `Skin Cap' distributed by Cheminova America Corp., either directly or indirectly through Acuderm, Inc."

Ms. Corker filed a third amended complaint on March 31, 1999, in which she added Tommy Bell as an additional class representative. The amended complaint asserted that Acuderm had sold Skin Cap directly to Bell and, therefore, that Acuderm was liable for the purchase price of the product. In April 1999, Cheminova filed a motion to continue the class-certification hearing that was set for April 28.

The trial court orally denied the continuance, at a hearing held on April 23, 1999. A full hearing on Ms. Corker's motion for class certification was held on April 28, 1999, at which the plaintiffs offered 21 documents in support of their argument. Acuderm filed a motion to strike the affidavit of the plaintiff Tommy Bell, but the court never ruled on this motion.

On August 3, 1999, the trial court entered an order certifying the action under Rule 23(b)(3), Ala. R. Civ. P., as a nationwide class action for the recovery of economic damages. The trial judge rejected class treatment of the fraud and suppression claims and rejected class treatment of claims for personal-injury damages under any theory, and it wrote:

"However, Plaintiff's product liability [claim], alleged under Alabama's ... AEMLD, and the fraud [claim, are] not sufficiently common for class treatment. Variations in state law will overcome commonality as to those theories and will prevent certification.

"Furthermore, Plaintiffs' claims for personal injuries, as opposed to those seeking refund of the purchase price involve issues of damages which overcome the predominance of the fact of injury."

The trial judge limited the certification to claims for refunds sought by members of the class:

"As to Plaintiffs' refund claims under contract, equity and the Uniform Commercial Code, a national class is certified, with the subclasses composed of purchasers purchasing directly from Acuderm and another composed of purchasers purchasing directly from a subdistributor of Acuderm. Plaintiffs motion to certify a national products liability and fraud class is denied, as well as Plaintiffs' motion to certify a personal injury class."

Thus, the trial judge certified a class whose claim is that class members are entitled to get their purchase money back because the defendants mislabeled, in a critical way, the product they sold to the class members.

On September 13, 1999, Cheminova and Acuderm appealed from the certification order.

Rule 23(a) Requirements

We must determine whether the trial judge abused his discretion in performing his analysis of the four prerequisites for conditionally certifying a class action under Rule 23(a), Ala. R. Civ. P.:

"(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class."

These four prerequisites are commonly referred to as numerosity, commonality, typicality, and adequacy. Warehouse Home Furnishing Distribs., Inc. v. Whitson, 709...