EX PARTE THE WATER WORKS & SEWER BD.

• Decision Date: 04 December 1998
• Citation: 738 So.2d 783
• Parties: Ex Parte The WATER WORKS AND SEWER BOARD OF THE CITY OF BIRMINGHAM. Re Larry Wallace et al. v. The Water Works and Sewer Board of the City of Birmingham et al. Ex Parte The Water Works and Sewer Board of the City of Birmingham et al. Re John C. Rockett, Jr., et al. v. The Water Works And Sewer Board of the City of Birmingham et al.
• Court: Alabama Supreme Court

738 So.2d 783

Ex Parte The WATER WORKS AND SEWER BOARD OF THE CITY OF BIRMINGHAM.

Re Larry Wallace et al. v. The Water Works and Sewer Board of the City of Birmingham et al.

Ex Parte The Water Works and Sewer Board of the City of Birmingham et al.

Re John C. Rockett, Jr., et al. v. The Water Works And Sewer Board of the City of Birmingham et al.

1974.

Supreme Court of Alabama.

December 4, 1998.

Rehearing Applications Denied June 11, 1999.

Charlie D. Waldrep, K. Mark Parnell, and Mary H. Thompson of Gorham & Waldrep, P.C., Birmingham; and Billy L. Church and Alan Lasseter of Church & Seay, P.C., Pell City, for petitioner Water Works and Sewer Board of the City of Birmingham.

A. Dwight Blair of Blair, Holladay & Parsons, Pell City; Gayle Gear of Dawson & Gear, Birmingham; and M. Clay Ragsdale and E. Ansel Strickland of Law Offices of M. Clay Ragsdale, Birmingham, for respondent Larry Wallace.

H. Jadd Fawwal of Fawwal & Fawwal, P.C., Bessemer; and Jon B. Terry and Leslie S. White of Bains & Terry, Bessemer, for respondent John C. Rockett, Jr.

SEE, Justice.

These petitions for the writ of mandamus involve the certification of two class actions filed in separate circuit courts against a utility company, its directors, and others, alleging the misuse of public funds. The Water Works and Sewer Board of the City of Birmingham petitions this Court for writs of mandamus ordering the St. Clair Circuit Court and the Jefferson Circuit Court, Bessemer Division, to decertify the respective classes, to hold that certain counterclaims are compulsory, and to abate a portion of the second-filed action. Because the trial courts failed to perform a rigorous analysis of the prerequisites of Rule 23, Ala. R. Civ. P., and erred in it analysis of whether certain counterclaims could be brought, and because a significant portion of the second-filed class action should have been dismissed pursuant to § 6-5-440, Ala.Code 1975, the "abatement statute," we grant the petitions.

I.

A. The Wallace Action

On November 12, 1996, Larry Wallace filed a complaint containing class allegations (the "Wallace Action") in the Circuit Court of St. Clair County, against the Water Works and Sewer Board of the City of Birmingham, and the Board's directors (collectively, the "Birmingham Water Works Board"). The complaint was filed on behalf of the customers of the Birmingham Water Works Board. The complaint alleged that certain disbursements of public funds held by the Birmingham Water Works Board were not expressly authorized by law and that these disbursements had wrongfully inflated customers' water bills. Specifically, the complaint alleged conversion, fraudulent suppression, and breach of fiduciary duty. The complaint sought monetary relief in the form of restitution, compensatory damages, and punitive damages, and it sought equitable relief in the form of an accounting and an injunction to eliminate similar illegal expenditures in the future.

On April 18, 1997, the St. Clair Circuit Court held the first of two hearings concerning the certification of the class. On July 11, at the second hearing, the Birmingham Water Works Board argued that this action was not appropriate for class certification because, it asserted, it would have compulsory counterclaims against thousands of the class members for nonpayment of their water and sewer bills. On September 15, the trial court entered a three-page order certifying the class as a Rule 23(b)(3), Ala. R. Civ. P., class that includes "all rate payers of the Water Works Board of the City of Birmingham for the period beginning January 1, 1993 up through and inclusive of the date of this order." The trial court further stated in its order that the Birmingham Water Works Board could not file counterclaims against the class members alleging nonpayment of the water and sewer bills because, it held, the counterclaims were permissive counterclaims, and because the counterclaims would engender confusion and disruption in the administration of the class action.

B. The Rockett Action

On May 9, 1997, John Rockett and other individuals filed a complaint containing class allegations (the "Rockett Action"), in the Bessemer Division of the Circuit Court of Jefferson County against the Water Works Board of the City of Bessemer (the "Bessemer Water Works Board"); the Birmingham Water Works Board; and various individuals who either are members of the respective boards or manage them. The complaint was filed on behalf of customers of the Bessemer Water Works Board and on behalf of customers of the Birmingham Water Works Board who lived in Bessemer. The complaint states that the Bessemer Water Works Board purchases all of its water from the Birmingham Water Works Board for distribution to the Bessemer Water Works Board's customers in Bessemer. Thus, the customers of the Bessemer Water Works Board are also indirect customers of the Birmingham Water Works Board. However, according to the complaint, some Bessemer residents are served directly by the Birmingham Water Works Board and, therefore, are direct customers of the Birmingham Water Works Board.

The complaint alleges, as does the complaint in the Wallace action, that the Birmingham Water Works Board improperly used public funds for illegal purposes. It also alleges various distinct wrongs by the Bessemer Water Works Board, including the making of exorbitant and illegal expenditures that harmed the class members, directly or indirectly, by inflating the amounts charged, and paid by them, on their water bills. The complaint seeks monetary relief in the form of actual damages and punitive damages and seeks equitable relief in the form of an accounting and an injunction to eliminate similar illegal expenditures in the future.

On May 15, 1997, the Jefferson Circuit Court issued a two-page order conditionally certifying the Rockett Action to include as plaintiffs "all resident citizens of the Bessemer Division of Jefferson County who purchase water from the Defendant." On June 10, the Birmingham Water Works Board filed counterclaims against certain class members, alleging that they had not paid their water bills. On June 20, the Birmingham Water Works Board filed a motion to dismiss. The Birmingham Water Works Board argued that § 6-5-440, Ala.Code 1975, the abatement statute, prohibited simultaneous actions based on the same cause of action against the same party. On July 16, the Rockett Action plaintiffs filed a motion to strike the Birmingham Water Works Board's counterclaims. On July 17, the trial court denied the Birmingham Water Works Board's motion to dismiss and denied in part the motion to strike the counterclaims, stating that only "active participating plaintiff[s]" could be subjected to a counterclaim.

The Birmingham Water Works Board and the other defendants filed these petitions, asking this Court to vacate the certification orders for both actions and to reverse the orders of the trial courts that deny the Birmingham Water Works Board the right to assert counterclaims against all delinquent class members. The defendants also ask this Court to order the Jefferson Circuit Court to abate that portion of the Rockett Action dealing with the alleged wrongful acts of the Birmingham Water Works Board that are the subject of the Wallace Action previously filed in the St. Clair Circuit Court.

II.

A writ of mandamus "is a drastic and extraordinary writ," and will 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 the court." Ex parte Alfab, Inc., 586 So.2d 889, 891 (Ala.1991). A writ of mandamus may not be issued to control or review the exercise of discretion, except where an abuse of discretion is shown. Ex parte Auto-Owners Ins. Co., 548 So.2d 1029, 1030 (Ala.1989) (citing Ex parte Edgar, 543 So.2d 682 (Ala.1989)).

A. Class Certification Orders

In Ex parte Green Tree Financial Corp., 684 So.2d 1302, 1307 (Ala.1996), this Court stated:

"[T]he one against whom certification has been entered has a clear legal right to a writ [of mandamus] directing that the class action certification be set aside if the party seeking class action certification failed to carry the burden of producing sufficient evidence to satisfy the requirements of Rule 23—in the event of such a failure, the trial court's certification of the action as a class action constitutes an abuse of discretion."

(Emphasis added; citations omitted.) The plaintiff's sufficient evidence must appear in the trial court's rigorous analysis of the Rule 23 criteria before class certification is proper. See Ex parte Citicorp Acceptance Co., 715 So.2d 199, 204 (Ala.1997); see generally Green Tree, 684 So.2d at 1308. Rule 23(a) contains four criteria that must be supported by evidence and that must be rigorously analyzed before a class can be certified: (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of representation. In Green Tree, 684 So.2d at 1307, this Court held that an order that "merely parrots the formulaic language of Rule 23(a)" is insufficient to support class certification. Accord Citicorp, 715 So.2d at 203 ("[C]lass actions may not be approved lightly and ... the determination of whether the prerequisites of Rule 23 have been satisfied requires a `rigorous analysis.'"); Weathers v. Peters Realty Corp., 499 F.2d 1197, 1200 (6th Cir. 1974) ("There must be an adequate statement of the basic facts to indicate that each requirement of the rule is fulfilled.").

1. The Wallace Action

The Birmingham Water Works Board contends that the named plaintiff in the Wallace Action failed to present sufficient evidence to support a finding of the class-certification criteria provided in Rule 23, Ala. R. Civ. P. Thus, the Birmingham Water Works Board asserts, class certification is...