Perdue v. Green
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Immediately following the release of the Supreme Court's previous decision in this case, the Alabama Legislature passed Act No. 2012-198, Ala. Acts 2012, which repealed the statutory provision that underpinned the decision in "Perdue I." In the prior case, the Court vacated the circuit court's judgment that approved a settlement agreement that ended class-action litigation involving the Alabama Prepaid Affordable College Tuition (PACT) program. Class member Carol Perdue objected to the trial court's approval of the settlement; the Supreme Court originally rejected plaintiffs' argument that Ala. Code 16-33C-19 did not prohibit the PACT Board from entering into the settlement, and that the agreement was "clearly contrary to state law." The Legislature specifically repealed 16-33C-19 and caused the Court to revise its previous decision. The Court found that the trial court exceeded its discretion in finding the settlement was fair, adequate and reasonable, found the retroactive application of the 2012 Act constitutional, and remanded the case for further proceedings.
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REL:04/19/2013
Notice: T h i s o p i n i o n i s s u b j e c t t o f o r m a l r e v i s i o n b e f o r e p u b l i c a t i o n i n t h e advance
s h e e t s o f Southern R e p o r t e r . R e a d e r s a r e r e q u e s t e d t o n o t i f y t h e R e p o r t e r o f D e c i s i o n s ,
A l a b a m a A p p e l l a t e C o u r t s , 300 D e x t e r A v e n u e , M o n t g o m e r y , A l a b a m a 3 6 1 0 4 - 3 7 4 1
((334)
2 2 9 - 0 6 4 9 ) , o f a n y t y p o g r a p h i c a l o r o t h e r e r r o r s , i n o r d e r t h a t c o r r e c t i o n s may b e made
b e f o r e t h e o p i n i o n i s p r i n t e d i n Southern R e p o r t e r .
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2012-2013
1101337
C a r o l M. Perdue, i n d i v i d u a l l y and as next f r i e n d and
guardian o f Anna K. Perdue
v.
L i s a Nix Green e t a l .
1101506
W i l l i a m D. Motlow, J r . , and Shane Sears
v.
L i s a Nix Green e t a l .
Appeals from Montgomery C i r c u i t Court
(CV-10-900013)
1101337; 1101506
On R e t u r n t o Remand
PER
CURIAM.
Immediately f o l l o w i n g the r e l e a s e of our p r e v i o u s o p i n i o n
i n t h i s m a t t e r , see Perdue v. Green,
2012]
So. 3d
passed
A c t No.
[Ms. 1101337, M a r c h 16,
( A l a . 2012) ("Perdue I " ) , t h e l e g i s l a t u r e
2012-198,
A l a . Acts
2012
("the 2012
Act"),
r e p e a l i n g the s t a t u t o r y p r o v i s i o n u n d e r p i n n i n g our d e c i s i o n i n
Perdue
I , i n w h i c h we v a c a t e d t h e j u d g m e n t o f t h e Montgomery
Circuit
Court
litigation
Tuition
approving
involving
a
s e t t l e m e n t agreement
concluding
t h e Alabama P r e p a i d A f f o r d a b l e C o l l e g e
("PACT") p r o g r a m .
The l e g i s l a t u r e ' s
action
requires
t h i s Court t o a l t e r our p r e v i o u s d e c i s i o n .
BACKGROUND
As
d i s c u s s e d i n Perdue
I, this
program and i t s b o a r d o f d i r e c t o r s
case
involves
t h e PACT
("the PACT b o a r d " ) .
PACT p r o g r a m a l l o w s p e r s o n s t o p u r c h a s e
The
c o n t r a c t s i n advance
of a c h i l d ' s a t t e n d i n g c o l l e g e ; the c o n t r a c t s p r o v i d e c e r t a i n
tuition
child
payments
from
t h e PACT p r o g r a m ' s t r u s t
subsequently attends a college
or u n i v e r s i t y .
16-33C-5, -6, A l a . Code 1975, a n d J o h n s o n
2d 1103, 1104 ( A l a . C i v . App. 1 9 9 9 ) .
2
fund i f the
v. T a y l o r ,
See §§
770 So.
1101337; 1101506
I n J a n u a r y 2010,
complaint against
the p l e a d i n g s
numerous p l a i n t i f f s
t h e PACT b o a r d .
1
filed a class-action
I n P e r d u e I we s u m m a r i z e d
b e l o w as f o l l o w s :
" A c t i n g u n d e r t h e p r e m i s e t h a t t h e PACT p r o g r a m was
created t o allow the designated
b e n e f i c i a r y of a
PACT c o n t r a c t
to attend
college without
being
required
t o pay
tuition
or mandatory
fees,
r e g a r d l e s s o f t h e f i n a n c i a l h e a l t h o f t h e PACT T r u s t
Fund a n d / o r t h e a b i l i t y o f t h e PACT p r o g r a m t o p a y ,
the p l a i n t i f f s
a l l e g e d t h a t t h e PACT b o a r d h a d
i n d i c a t e d i t s i n a b i l i t y t o f u l f i l l o u t s t a n d i n g PACT
contracts.
...
The
plaintiffs
requested
a
declaratory
judgment
construing
the
respective
r i g h t s and o b l i g a t i o n s o f t h e i n d i v i d u a l c l a s s e s
under
t h e PACT
contracts
and t h e c o n t r o l l i n g
s t a t u t e s so t h e y c o u l d d e c i d e w h e t h e r t o r e m a i n i n
the
PACT p r o g r a m o r t o c a n c e l
their existing
c o n t r a c t s a n d s e e k a r e f u n d ( l e s s any a p p l i c a b l e t a x
penalty).
They a l s o s t a t e d a c l a i m u n d e r 42 U.S.C.
§ 1983, a l l e g i n g v i o l a t i o n s o f r i g h t s g u a r a n t e e d b y
various
provisions
of
the
United
States
Constitution.
"The
PACT
board
answered
and
filed
a
counterclaim.
In i t s 'counterclaim f o r declaratory
r e l i e f , ' t h e PACT b o a r d a l l e g e d t h a t , b a s e d upon
a c t u a r i a l p r o j e c t i o n s , t h e PACT T r u s t Fund l a c k e d
sufficient
assets
to continue
payment o f
full
t u i t i o n e x p e n s e s p a s t t h e y e a r 2015. The PACT b o a r d
further
noted
that
i t had
'adopted
proposed
amendments t o i t s e x i s t i n g r u l e s a n d r e g u l a t i o n s , '
T h e s e p l a i n t i f f s i n c l u d e d L i s a N i x G r e e n ; B r e n t A. G r e e n ;
B l a k e G r e e n ; E l d r i d g e M. F r a n k l i n ; E a s o n L. F r a n k l i n ; K i m b e r l y
H. F r a n k l i n , i n d i v i d u a l l y a n d as n e x t f r i e n d o f J o h n S t e p h e n
F r a n k l i n ; B r i a n A. M c V e i g h , i n d i v i d u a l l y a n d as n e x t f r i e n d o f
S a r a h K. M c V e i g h ; A l l e n R. Hudson, i n d i v i d u a l l y a n d as n e x t
f r i e n d o f Emma L. Hathaway; a n d N i n a M c G i n n i s , i n d i v i d u a l l y
and a s n e x t f r i e n d o f S t e v i e A. G r a v e s .
1
3
1101337; 1101506
which,
though
specifically
aimed
at remitting
payment f o r m a n d a t o r y f e e s a n d e x p e n s e s t o a l l PACT
c o n t r a c t h o l d e r s , m i g h t r e s u l t i n payment o f 'an
amount l e s s t h a n t h e f u l l t u i t i o n a n d f e e s c h a r g e d
by t h e r e s p e c t i v e c o l l e g e o r u n i v e r s i t y ' i n d i r e c t
c o n f l i c t with the p l a i n t i f f s '
i n t e r p r e t a t i o n of
their
contract
rights.
Thus, t h e PACT b o a r d
r e q u e s t e d , p u r s u a n t t o A l a . Code 1975, § 6-6-220 e t
s e q . a n d § 19-3B-101 e t s e q . , t h e t r i a l
court's
a s s i s t a n c e i n c o n s t r u i n g t h e PACT b o a r d ' s p o w e r s a n d
r e s p o n s i b i l i t i e s under t h e s t a t u t e s e s t a b l i s h i n g the
PACT p r o g r a m ; a d e t e r m i n a t i o n
as t o w h e t h e r t h e
proposed
changes t o i t s r u l e s and r e g u l a t i o n s
violated
the
statutory,
constitutional,
or
c o n t r a c t u a l r i g h t s o f t h e PACT c o n t r a c t
holders
a n d / o r t h e PACT c o n t r a c t b e n e f i c i a r i e s ;
and a
d e t e r m i n a t i o n a s t o w h e t h e r t h e PACT b o a r d c o u l d
l i q u i d a t e t h e PACT T r u s t Fund a n d d i s t r i b u t e t h e
remaining assets."
Perdue I ,
While
court,
2010
So. 3d a t
(footnotes
the underlying
the l e g i s l a t u r e
action
was
pending
i n the
trial
e n a c t e d A c t No. 2010-725, A l a . A c t s
("the 2010 A c t " ) , w h i c h ,
among
certain
statutory provisions
Section
12 o f t h e 2010 A c t , w h i c h
2010,
omitted).
relating
other
things,
t o t h e PACT
was e f f e c t i v e
amended
program.
April
30,
a n d w h i c h was c o d i f i e d a t § 16-33C-19, A l a . Code 1 9 7 5 ,
2
" s t r o n g l y e n c o u r a g e [ d ] t h e PACT b o a r d t o make any
financially
beneficial
changes
t o PACT
rules,
p r o c e d u r e s , o r p o l i c i e s , t o t h e e x t e n t t h a t t h e PACT
board i s authorized or permitted
t o make
such
T h e 2012 A c t r e p e a l e d § 16-33C-19 e f f e c t i v e A p r i l 12,
2012.
S e c t i o n 4 o f t h e 2012 A c t p r o v i d e s : " T h i s r e p e a l ... i s
r e t r o a c t i v e t o A p r i l 30, 2010."
2
4
1101337; 1101506
changes and t o t h e e x t e n t t h a t such changes would
not v i o l a t e t h e c o n t r a c t u a l r e l a t i o n s h i p e x i s t i n g
b e t w e e n a PACT c o n t r a c t h o l d e r a n d t h e PACT b o a r d . "
( E m p h a s i s added.)
Ultimately,
action
as
negotiated
a
the t r i a l
class
a proposed
court
action,
and
certified
the
the
parties
underlying
eventually
settlement:
"On May 5, 2 0 1 1 , t h e p a r t i e s s u b m i t t e d a j o i n t
motion, a l o n g w i t h a p r o p o s e d s e t t l e m e n t agreement,
r e q u e s t i n g t h a t t h e t r i a l court approve the proposed
c l a s s - a c t i o n settlement
agreement, t h e p r o f e s s e d
p u r p o s e o f w h i c h was ' t o p r o v i d e C l a s s Members w i t h
t h e maximum amount o f b e n e f i t s f r o m t h e a v a i l a b l e
assets.'
In order t o e f f e c t that s t a t e d purpose,
the
proposed
settlement
agreement p u r p o r t e d
to
m o d i f y t h e t e r m s o f t h e o u t s t a n d i n g PACT c o n t r a c t s .
The
p r o p o s e d m o d i f i c a t i o n was a c c o m p a n i e d b y a
purported
w a i v e r b y t h e c l a s s members o f t h e
a p p l i c a t i o n o f A l a . Code 1975, § 16-33C-1 e t s e q . ,
and t h e t e r m s o f t h e i r i n d i v i d u a l PACT c o n t r a c t s t o
the e x t e n t the p r o v i s i o n s i n e i t h e r t h e s t a t u t e s or
t h e PACT c o n t r a c t s were i n c o n s i s t e n t w i t h t h e t e r m s
of t h e s e t t l e m e n t agreement.
" A d d i t i o n a l l y , t h e p r o p o s e d s e t t l e m e n t agreement
s e t t u i t i o n and f e e payments a t t u i t i o n and f e e
r a t e s a p p l i c a b l e f o r f a l l 2010 ... a n d r e q u i r e d
c l a s s members t o be p e r s o n a l l y
responsible f o r
payment o f any t u i t i o n a n d f e e s n o t c o v e r e d b y t h e
PACT p r o g r a m p a y m e n t s . C l a s s members were
also
a f f o r d e d , as an a l t e r n a t i v e remedy, t h e r i g h t t o
c a n c e l t h e i r PACT c o n t r a c t s a n d t o r e c e i v e r e f u n d s
l e s s any a p p l i c a b l e t a x e s o r p e n a l t i e s .
"The s e t t l e m e n t a g r e e m e n t a l s o i n c l u d e d , as p a r t
o f i t s t e r m s , an a w a r d o f a t t o r n e y f e e s t o c l a s s
members' c o u n s e l i n t h e amount o f $4,950,000 a n d an
a w a r d f o r l i t i g a t i o n - r e l a t e d e x p e n s e s i n t h e amount
5
1101337;
1101506
o f $15,000. The s e t t l e m e n t a g r e e m e n t a l s o c o n t a i n e d
a r e l e a s e o f c l a s s members' p o t e n t i a l c l a i m s a g a i n s t
t h e PACT b o a r d ('and a l l o t h e r r e l a t e d p e r s o n s and
e n t i t i e s ' ) , i n c l u d i n g the f o l l o w i n g :
"'[A]ny
and
a l l matters,
demands,
liabilities,
actions, lawsuits,
liens,
d e b t s , damages, o b l i g a t i o n s , c l a i m s , and
any o t h e r e x p e n s e s , c h a r g e s , o r c o s t s o f
e v e r y k i n d and n a t u r e , known o r unknown,
suspected
or
unsuspected,
howsoever
a r i s i n g , a t l a w o r i n e q u i t y , w h e t h e r on an
i n d i v i d u a l or r e p r e s e n t a t i v e b a s i s , which
were a s s e r t e d o r w h i c h c o u l d have been
asserted
as o f t h e e x e c u t i o n
of
this
S e t t l e m e n t , i n c l u d i n g (but not l i m i t e d to)
t h o s e c l a i m s w h i c h were a s s e r t e d o r w h i c h
c o u l d have been a s s e r t e d i n [ t h e u n d e r l y i n g
a c t i o n ] as w e l l as any and a l l o t h e r c l a i m s
relating
to
the
operation
and
a d m i n i s t r a t i o n o f t h e PACT P r o g r a m a n d / o r
t h e PACT T r u s t Fund, i n c l u d i n g ( b u t n o t
limited
t o ) t h e payment/non-payment
of
t u i t i o n and f e e s and a l l c l a i m s a v a i l a b l e
u n d e r t h e U n i f o r m T r u s t Code ... o t h e r t h a n
the o b l i g a t i o n s embodied i n t h i s S e t t l e m e n t
and
any j u d g m e n t e n t e r e d by t h e c o u r t
approving or adopting t h i s Settlement.'"
Perdue I ,
On
May
So. 3d a t
5,
2011,
.
the
trial
court
entered
an
order
p r e l i m i n a r i l y a p p r o v i n g t h e p r o p o s e d s e t t l e m e n t a g r e e m e n t and
setting
a fairness
hearing.
The
trial
court d i r e c t e d that
n o t i c e o f t h e p r o p o s e d s e t t l e m e n t be p r o v i d e d by m a i l t o c l a s s
members whose a d d r e s s e s
the
PACT p r o g r a m .
were d i s c e r n i b l e
Additionally,
6
from the r e c o r d s of
a n o t i c e was p o s t e d
on t h e
1101337; 1101506
Web
site
f o r t h e PACT p r o g r a m .
were s u b s e q u e n t l y
filed
Numerous w r i t t e n
i n the t r i a l
court
objections
by c e r t a i n c l a s s
members.
Testimony
hearing,
presented
including testimony
PACT b o a r d .
future
subsequent
b y an a c t u a r y
fairness
employed by t h e
testified
liabilities.
The p r o p o s e d
settlement,
i t was
t o e n s u r e t h a t t h e a v a i l a b l e f u n d s were
d i s t r i b u t e d so t h a t a s many b e n e f i c i a r i e s a s p o s s i b l e
received
a s much a s p o s s i b l e , a n d t h e l i m i t s
payments r e n d e r e d t h e s e t t l e m e n t
the
the
o f t h e PACT p r o g r a m were i n s u f f i c i e n t t o meet
a s s e r t e d , was i n t e n d e d
evenly
at
As d e t a i l e d i n P e r d u e I , t h e a c t u a r y
that the assets
its
was
chairman
of
t h e PACT
on t h e t u i t i o n
actuarially viable.
board
testified
that
Further,
the
PACT
program's i n v e s t m e n t s had n o t p e r f o r m e d as w e l l as a n t i c i p a t e d
and
that
i t s obligations
chairman t e s t i f i e d
agreement,
to
other
i t s assets.
than the proposed
The
settlement
t h e PACT b o a r d h a d no s o l u t i o n t h a t w o u l d a l l o w i t
provide
benefits
beneficiaries.
were
that,
f a r exceeded
provided
to
a l l PACT
contract
C e r t a i n persons o b j e c t i n g
an
opportunity
holders
to the
at the hearing
and
settlement
t o argue i n
o p p o s i t i o n a n d r a i s e d numerous i s s u e s , i n c l u d i n g t h e argument
that
the proposed
settlement
a g r e e m e n t was c o n t r a r y
7
to the
1101337; 1101506
2010 A c t .
approved
I n an o r d e r e n t e r e d J u l y 27, 2 0 1 1 , t h e t r i a l
the proposed
was f a i r ,
adequate,
Carol
M.
s e t t l e m e n t agreement,
finding
that i t
and r e a s o n a b l e .
Perdue,
individually
a n d as n e x t
friend
g u a r d i a n o f h e r d a u g h t e r , Anna K. P e r d u e ; W i l l i a m D.
Jr.;
a n d Shane S e a r s
"the
objectors"),
appealed the t r i a l
agreement.
Perdue
3
I,
court
and
Motlow,
( h e r e i n a f t e r c o l l e c t i v e l y r e f e r r e d t o as
a l l o f whom a r e o b j e c t i n g
class
members,
c o u r t ' s judgment a p p r o v i n g t h e s e t t l e m e n t
A l t h o u g h t h e o b j e c t o r s r a i s e d numerous i s s u e s i n
this
pretermitted
Specifically,
Court
addressed
discussion
of
only
the
one
issue,
remaining
which
issues.
we f o c u s e d on § 16-33C-19:
" I t i s clear that the l e g i s l a t u r e , i n enacting
A c t No. 2010-725, a t t e m p t e d t o r e c t i f y t h e f i n a n c i a l
d i f f i c u l t i e s o f t h e PACT p r o g r a m . ... T h a t s a i d , t h e
l e g i s l a t u r e also c l e a r l y undertook t o preserve the
benefits
originally
promised
t o PACT
contract
holders.
S e c t i o n 12 o f A c t No. 2010-725, now
c o d i f i e d a t § 16-33C-19 a n d q u o t e d above, p r o v i d e s
t h a t t h e PACT b o a r d was ' s t r o n g l y e n c o u r a g e d ' t o
make 'any f i n a n c i a l l y b e n e f i c i a l c h a n g e s t o PACT
r u l e s , procedures, or p o l i c i e s , to the extent that
the
PACT b o a r d i s a u t h o r i z e d o r p e r m i t t e d t o make
P e r d u e i s t h e a p p e l l a n t i n c a s e no. 1101337; M o t l o w a n d
S e a r s a r e t h e a p p e l l a n t s i n c a s e no. 1101506.
A l t h o u g h we
c o n s o l i d a t e d t h e two a p p e a l s , s e p a r a t e b r i e f s were f i l e d i n
e a c h a p p e a l . We s o m e t i m e s r e f e r t o t h e a r g u m e n t s made i n one
or
t h e o t h e r a p p e a l , a s w e l l as t o t h e a r g u m e n t s made
c o l l e c t i v e l y by t h e o b j e c t o r s .
3
8
1101337; 1101506
such changes and t o t h e e x t e n t t h a t such changes
would not v i o l a t e the c o n t r a c t u a l
relationship
e x i s t i n g b e t w e e n a PACT c o n t r a c t h o l d e r a n d t h e PACT
board.'
The PACT b o a r d was t h u s e n c o u r a g e d t o make
changes, b u t l i m i t e d i n making o n l y t h o s e changes
that
'would
not v i o l a t e ' the then
'existing'
c o n t r a c t u a l r e l a t i o n s h i p between i t and t h e c o n t r a c t
h o l d e r s . ...
"The s e t t l e m e n t a g r e e m e n t s t a t e s : 'The p u r p o s e
and e f f e c t o f t h i s S e t t l e m e n t s h a l l be t o m o d i f y t h e
d i s p o s i t i v e t e r m s o f t h e PACT T r u s t Fund a n d / o r t h e
terms o f t h e c o n t r a c t u a l r e l a t i o n s h i p s between C l a s s
Members a n d t h e PACT B o a r d . '
I t was u n d i s p u t e d i n
t h e t r i a l c o u r t a n d i t i s u n d i s p u t e d on a p p e a l t h a t
the terms o f t h e s e t t l e m e n t
agreement a l t e r t h e
contract
o f e a c h PACT c o n t r a c t h o l d e r ,
although
t h e r e i s some d i s p u t e as t o how d i f f e r i n g v e r s i o n s
o f t h e PACT c o n t r a c t s a r e a f f e c t e d . The o b j e c t o r s do
not
c o n s e n t t o any such m o d i f i c a t i o n
of t h e i r
c o n t r a c t s o r w a i v e any s t a t u t o r y r i g h t s . Thus, t o
t h e e x t e n t t h e PACT b o a r d a c t e d
t o change i t s
e x i s t i n g r u l e s , procedures, or p o l i c i e s t o accept
m o d i f i c a t i o n o f t h e PACT c o n t r a c t s , a s i t i n d i c a t e d
i n i t s c o u n t e r c l a i m t h a t i t h a d done, i t v i o l a t e d
t h e c o n t r a c t u a l r e l a t i o n s h i p w i t h t h e PACT c o n t r a c t
h o l d e r s by e x c e e d i n g t h e e x p r e s s l i m i t a t i o n s e t o u t
i n § 16-33C-19."
Perdue I ,
We
So. 3d a t
rejected
board that
arguments
(footnotes
omitted).
by t h e p l a i n t i f f s
a n d t h e PACT
§ 16-33C-19 d i d n o t p r o h i b i t t h e PACT b o a r d
e n t e r i n g i n t o t h e s e t t l e m e n t agreement:
"Here, i t w o u l d c o n t r a v e n e t h e p l a i n language o f §
16-33C-19
to
allow
the implementation
of
a
settlement
agreement t h a t c l e a r l y ' v i o l a t e [ s ] t h e
c o n t r a c t u a l r e l a t i o n s h i p e x i s t i n g b e t w e e n [the] PACT
Contract holder[s]
a n d t h e PACT b o a r d . '
Thus,
however w e l l - i n t e n t i o n e d , t h e s e t t l e m e n t
agreement
9
from
1101337; 1101506
is
clearly contrary to state
law.
1 6
" During the f a i r n e s s hearing, the t r i a l court
a s k e d t h e c h a i r m a n o f t h e PACT b o a r d w h e t h e r , ' i f
[the
t r i a l c o u r t ] gave a p p r o v a l t o [ t h e p r o p o s e d ]
s e t t l e m e n t , [ t h e c o u r t ] w o u l d ... be v i o l a t i n g t h e
laws o f t h e S t a t e o f Alabama.'
The c h a i r m a n
responded: 'I b e l i e v e i t would.'"
1 6
Perdue I ,
So. 3d a t
.
We
concluded:
" I n u n d e r t a k i n g t o remedy t h e f i n a n c i a l p r o b l e m s
facing
t h e PACT p r o g r a m ,
the l e g i s l a t u r e
has
e x p l i c i t l y p l a c e d c e r t a i n l i m i t s on t h e PACT b o a r d ' s
a u t h o r i t y t o c r a f t s o l u t i o n s t h a t would v i o l a t e the
contractual
rights
provided
t o PACT
contract
h o l d e r s . N e i t h e r t h e PACT b o a r d , u n d e r § 16-33C-19,
n o r t h e j u d i c i a r y , u n d e r A l a . C o n s t . 1 9 0 1 , § 43, h a s
the a u t h o r i t y t o ignore the e x p l i c i t s t a t u t o r y law
specifically
enacted
t o address
a
particular
situation.
... T h e r e f o r e , we c a n r e a c h no o t h e r
c o n c l u s i o n but t h a t the t r i a l court exceeded i t s
d i s c r e t i o n i n a p p r o v i n g a s e t t l e m e n t agreement t h a t
is
plainly
'adverse t o t h e enactments of t h e
legislature,
[and] i s [ , t h e r e f o r e , ] i l l e g a l a n d
void.'
C a r r i n g t o n [ v. C a l l e r ] , 2 Stew. [175,] a t
192 [ ( A l a . 1 8 2 9 ) ] . "
Perdue
I,
So. 3d a t
.
We
thus
vacated
the
trial
c o u r t ' s o r d e r a p p r o v i n g t h e s e t t l e m e n t a n d remanded t h e c a u s e .
While
t h e PACT
pending i n t h i s
board's
Court,
application
the l e g i s l a t u r e
f o r rehearing
was
p a s s e d t h e 2012 A c t ,
w h i c h , among o t h e r t h i n g s , s p e c i f i c a l l y r e p e a l e d § 16-33C-19.
As
t o t h e r e p e a l o f § 16-33C-19, t h e 2012 A c t s t a t e d t h a t i t
was " r e m e d i a l
and c u r a t i v e and i s r e t r o a c t i v e t o A p r i l
10
30,
1101337; 1101506
2010," t h e e f f e c t i v e d a t e o f t h e 2010 A c t .
we g r a n t e d
the a p p l i c a t i o n f o r rehearing
case t o t h e t r i a l
court to consider
On J u l y 11, 2012,
a n d remanded
the c o n s t i t u t i o n a l i t y of
t h e r e t r o a c t i v e a p p l i c a t i o n o f t h e 2012 A c t .
[Ms.
1101337, J u l y 11, 2012]
trial
court
on
September
So. 3d
17,
this
P e r d u e v. G r e e n ,
( A l a . 2012).
2012, e n t e r e d
an
The
"Order
on
Remand" i n w h i c h i t c o n c l u d e d t h a t t h e r e t r o a c t i v i t y p r o v i s i o n
o f t h e 2012 A c t was
On r e t u r n
court's
their
t o remand, t h e o b j e c t o r s
ruling.
initial
court's
constitutional.
challenge
the t r i a l
A l t e r n a t i v e l y , t h e y renew t h e c h a l l e n g e s i n
briefs
approval
on
appeal
i n Perdue
of the settlement
I to the
agreement,
which
trial
were
p r e t e r m i t t e d b y o u r d i s p o s i t i o n o f t h e one i s s u e .
DISCUSSION
I.
The
C o n s t i t u t i o n a l Challenge
limitation
t o t h e 2012 A c t
i n § 16-33C-19 on t h e power o f t h e PACT
b o a r d t o d i m i n i s h t h e c o n t r a c t u a l r i g h t s o f t h e PACT c o n t r a c t
holders
was t h e l i n c h p i n o f o u r h o l d i n g
i n Perdue I and t h e
s o l e b a s i s f o r t h i s C o u r t ' s v a c a t i o n o f t h e judgment
approving
the
that
settlement
agreement.
There
i s no
dispute
the
r e t r o a c t i v e r e p e a l o f t h a t Code s e c t i o n w o u l d have t h e e f f e c t
of
removing
§
16-33C-19
as a b a s i s
11
f o r our d e c i s i o n
and
1101337; 1101506
invalidating
presented
on
the
rationale
return
to
of Perdue
remand
I; instead,
i s whether
the
the
issue
retroactive
a p p l i c a t i o n o f t h e 2012 A c t i s c o n s t i t u t i o n a l .
" ' " T h i s c o u r t r e v i e w s de novo a t r i a l
court's
interpretation
of
a
statute,
because
only
a
question
of
law
is
presented."
S c o t t B r i d g e Co. v. W r i g h t ,
883 So. 2d 1221, 1223 ( A l a . 2 0 0 3 ) .
" C o n t i n e n t a l N a t ' l Indem. Co. v. F i e l d s ,
1033, 1034-35 ( A l a . 2 0 0 5 ) . L i k e w i s e ,
926 So.
"'"[o]ur
review
of
constitutional
c h a l l e n g e s t o l e g i s l a t i v e e n a c t m e n t s i s de
n o v o . " R i c h a r d s v. I z z i , 819 So. 2d 25, 29
n. 3 ( A l a . 2001) . A d d i t i o n a l l y , a c t s o f t h e
l e g i s l a t u r e are presumed c o n s t i t u t i o n a l .
S t a t e v. A l a b a m a Mun. I n s . C o r p . , 730 So.
2d 107, 110 ( A l a . 1 9 9 8 ) . See a l s o Dobbs v.
S h e l b y C o u n t y E c o n . & I n d u s . Dev. A u t h . ,
749
So. 2d 425,
428
( A l a . 1999)
("In
reviewing
the
constitutionality
of
a
l e g i s l a t i v e act, t h i s Court w i l l sustain
the
act
'"unless
i t i s clear
beyond
r e a s o n a b l e doubt t h a t i t i s v i o l a t i v e of
the f u n d a m e n t a l l a w . " '
W h i t e v. R e y n o l d s
M e t a l s Co., 558 So. 2d 373, 383 ( A l a . 1989)
( q u o t i n g A l a b a m a S t a t e Fed'n o f L a b o r v.
M c A d o r y, 246 A l a . 1, 9, 18 So. 2d 810, 815
(1944)).").
We a p p r o a c h t h e q u e s t i o n o f
the c o n s t i t u t i o n a l i t y o f a l e g i s l a t i v e a c t
" ' " w i t h e v e r y p r e s u m p t i o n and i n t e n d m e n t i n
f a v o r o f i t s v a l i d i t y , and s e e k t o s u s t a i n
r a t h e r t h a n s t r i k e down t h e e n a c t m e n t o f a
c o o r d i n a t e branch of the
government."'"
Monroe v. H a r c o , I n c . , 762 So. 2d 828, 831
(Ala.
2000)
(quoting
Moore
v.
Mobile
I n f i r m a r y A s s ' n , 592 So. 2d 156, 159 ( A l a .
1 9 9 1 ) , q u o t i n g i n t u r n M c A d o r y, 246 A l a . a t
9, 18 So. 2d a t 815) .
12
2d
1101337; 1101506
" ' M o r e o v e r , i n o r d e r t o overcome t h e
p r e s u m p t i o n o f c o n s t i t u t i o n a l i t y , ... t h e
p a r t y a s s e r t i n g the u n c o n s t i t u t i o n a l i t y of
t h e A c t ... b e a r s t h e b u r d e n " t o show t h a t
[the A c t ] i s not c o n s t i t u t i o n a l . " Board of
T r u s t e e s of Employees' R e t i r e m e n t Sys. of
Montgomery v. T a l l e y , 291 A l a . 307,
310,
280 So. 2d 553, 556 ( 1 9 7 3 ) .
See a l s o T h o r n
v. J e f f e r s o n C o u n t y , 375 So. 2d 780,
787
( A l a . 1979) ( " I t i s t h e l a w , o f c o u r s e , t h a t
a p a r t y a t t a c k i n g a s t a t u t e has t h e b u r d e n
of
overcoming
the
presumption
of
constitutionality
").'
" S t a t e ex r e l . K i n g v. M o r t o n , 955
(Ala. 2006)."
M a d a l o n i v. C i t y o f M o b i l e ,
The
objectors maintain
37 So.
So.
3d 739,
t h a t the
2d 1012,
1017
742-43 ( A l a . 2009) .
a p p l i c a t i o n of the
2012
Act i n t h i s case would v i o l a t e c e r t a i n c o n s t i t u t i o n a l r i g h t s .
More s p e c i f i c a l l y , t h e y m a i n t a i n
of the
2012
Act
impairs
4
that retroactive application
rights accruing
t o them u n d e r
their
outstanding
PACT c o n t r a c t s a n d / o r t h e r e p e a l e d p o r t i o n s o f
the
2010
which
the
Act,
enactment
of
rights,
the
2012
they
Act.
work a l e g i s l a t i v e
otherwise,
and
does
to
prior
the
directly
of
any
impair
rights,
any
to
objectors'
a r g u e t h a t t h e 2012
curtailment
not
vested
Contrary
p o s i t i o n , however, the a p p e l l e e s
not
say,
Act
does
vested
or
contractual
As r e q u i r e d by § 6-6-227, A l a . Code 1975, t h e a t t o r n e y
g e n e r a l was n o t i f i e d o f t h e p r e s e n t c o n s t i t u t i o n a l c h a l l e n g e
t o t h e 2012 A c t .
4
13
1101337; 1101506
obligation.
"An a c t t h a t i s e x p r e s s l y r e t r o a c t i v e w i l l be g i v e n
retroactive e f f e c t unless i timpairs vested r i g h t s .
A l a b a m a A l c o h o l i c B e v e r a g e C o n t r o l Bd. v. C i t y o f
P e l h a m, 855 So. 2d 1070 ( A l a . 2003) . S e c t i o n 95 o f
Art.
IV o f t h e Alabama
C o n s t i t u t i o n o f 1901
provides:
' A f t e r s u i t h a s b e e n commenced on any
c a u s e o f a c t i o n , t h e L e g i s l a t u r e s h a l l have no power
t o t a k e away s u c h c a u s e o f a c t i o n , o r d e s t r o y any
e x i s t i n g defense t o such s u i t . ' . . . "
Ex
parte
Blake
625
F.P., 857 So. 2d 125, 137
( A l a . 2003) .
v. S t a t e ex r e l . G o i n g , 178 A l a . 407, 411, 59 So. 623,
(1912)
repealed
vested
("It i s a general
r u l e ... t h a t when a s t a t u t e i s
i t s t a n d s as i f i t h a d n e v e r e x i s t e d , e x c e p t a s t o
rights
which
have
accrued
under
i t s operation.").
F u r t h e r , A l a . C o n s t . 1 9 0 1 , A r t . I , § 22, p r o v i d e s
law,
See a l s o
impairing
the o b l i g a t i o n s
of contracts
t h a t "[no]
...
shall
be
passed by t h e l e g i s l a t u r e . "
In h e r b r i e f ,
that
Perdue appears t o s t a r t
a l l PACT c o n t r a c t h o l d e r s
have a v e s t e d
c o n t r a c t s and t h a t t h e s e t t l e m e n t
contractual
rights.
plaintiffs'
class
She t h e n
counsel
with
right
i n their
agreement d i m i n i s h e s
points
and
the premise
the
t o statements
PACT
board
those
by t h e
members
i n d i c a t i n g t h a t t h e 2012 A c t i s a " b l e s s i n g " o r " e n d o r s e m e n t "
of t h e s e t t l e m e n t
agreement and argues t h a t such b l e s s i n g o r
14
1101337; 1101506
endorsement
of
the
settlement
l e g i s l a t i o n diminishing vested
agreement
equates
to the
rights:
" I n t h e words o f t h e A p p e l l e e s , 'the L e g i s l a t u r e has
undertaken t o g r a n t i t s endorsement o f t h e p a r t i e s '
e f f o r t s t o a c h i e v e a c l a s s wide compromise.'
In
o t h e r w o r d s , t h e y a v e r t h a t [ t h e 2012 A c t ] was
passed (according t o C l a s s Counsel) f o r the sole
purpose of r e t r o a c t i v e l y g a i n i n g approval of a p r i o r
settlement which i t s e l f admittedly diminished the
c o n t r a c t u a l r i g h t s o f t h e C l a s s Members.
"However,
[ t h e 2012 A c t ] ... c a n n o t be so
a p p l i e d i f d o i n g so w o u l d i m p a i r t h e v e s t e d c o n t r a c t
rights
o f PACT
purchasers
and
beneficiaries.
...[I]t
c a n n o t be a p p l i e d r e t r o a c t i v e l y
i fi t
impairs a substantive, vested r i g h t . "
Perdue's b r i e f
on r e t u r n t o remand, a t 20.
We d i s a g r e e .
As t h e a p p e l l e e s
not i m p a i r a n y t h i n g .
a r g u e , t h e 2012 A c t does
W h i l e i t removes c e r t a i n p r o h i b i t i o n s on
t h e a c t i o n s o f t h e PACT b o a r d - - i . e . ,
removes t h e b a r r i e r o f §
16-33C-19 t o t h e PACT b o a r d ' s n e g o t i a t i o n o f t h e s e t t l e m e n t
agreement
with
the c l a s s
members--the
legislation
itself
n e i t h e r d i m i n i s h e s , removes, o r i m p a i r s any c o n t r a c t u a l r i g h t s
or
o b l i g a t i o n s , vested
o r n o t , n o r m a n d a t e s any p a r t i c u l a r
result.
The o b j e c t o r s p o i n t t o n o t h i n g
curtails
the r i g h t s
indeed,
we
are
and remedies
cited
no
i n t h e 2012 A c t t h a t
o f PACT c o n t r a c t
authority
indicating
holders;
that
a
l e g i s l a t i v e enactment g r a n t i n g a u t h o r i t y t o a S t a t e e n t i t y can
15
1101337; 1101506
run
a f o u l o f § 22 o r § 95 o f t h e A l a b a m a C o n s t i t u t i o n .
the
settlement
agreement t h a t a l t e r s t h e r i g h t s found i n t h e
PACT c o n t r a c t s ,
Perdue
It is
n o t t h e 2012 A c t .
also
contends
that
§
16-33C-19
provides
" d e f e n s e " t h a t , u n d e r § 95, c a n n o t be r e t r o a c t i v e l y
a
repealed.
As n o t e d a b o v e , § 95 s t a t e s : " A f t e r s u i t h a s b e e n commenced on
any
cause
take
away
of action,
such
the l e g i s l a t u r e s h a l l
cause
of action,
defense t o such s u i t . "
(Emphasis
have no power t o
or destroy
added.)
any e x i s t i n g
Perdue
states:
"[A]n absolute
defense t o t h i s o v e r r e a c h by t h e
[PACT b o a r d ] was A l a . Code [1975,] § 16-33C-19,
which a l l o w e d r u l e changes, b u t e x p r e s s l y p r o h i b i t e d
t h e PACT B o a r d f r o m m a k i n g any changes t o t h e PACT
Program
that
would
'violate
the
contractual
r e l a t i o n s h i p e x i s t i n g b e t w e e n a PACT c o n t r a c t h o l d e r
and t h e PACT B o a r d . ' T h a t same code s e c t i o n was
deleted
b y [ t h e 2012 A c t ] , t h u s e l i m i n a t i n g a
d e f e n s e t o t h e [PACT b o a r d ' s ] c o u n t e r c l a i m . D o i n g so
c l e a r l y v i o l a t e s A r t i c l e I V § 95 o f t h e A l a b a m a
Constitution."
P e r d u e ' s b r i e f on r e t u r n t o remand, a t 25 ( f o o t n o t e
omitted).
I n e x p l a i n i n g what c o n s t i t u t e s a " d e f e n s e t o s u c h
for
purposes
that
to
o f § 95, t h i s
[the 'existing-defense'
matters
of substance
C o u r t has s t a t e d :
"We
have
p r o v i s i o n o f § 95] a p p l i e s
and n o t t o m a t t e r s
s t a t u t e s which are remedial i n nature;'
o f form
[and] t h a t
suit"
held
'only
or to
'"no p e r s o n
has a v e s t e d r i g h t i n a p a r t i c u l a r remedy ... o r i n p a r t i c u l a r
16
1101337; 1101506
modes o f p r o c e d u r e . " ' "
T y s o n v. J o h n s - M a n v i l l e
399
( A l a . 1981)
So.
2d
263,
269
(quoting
Sales
Corp.,
State
Bd. o f
O p t o m e t r y v. Lee O p t i c a l Co. o f A l a b a m a , 284 A l a . 562, 565,
226
So. 2d 623, 625 ( 1 9 6 9 ) ,
Jr.,
Sutherland
1943)).
on
q u o t i n g i n t u r n 2 F r a n k E. H o r a c k ,
Construction
the " e x i s t i n g
Further,
Statutory
defense"
§
2218
must be
(3d e d .
"vested."
Id.
S e c t i o n 16-33C-19 was e n a c t e d a f t e r t h e u n d e r l y i n g a c t i o n
was
filed
i n the t r i a l
settlement
court.
Further,
the bar to the
agreement r e c o g n i z e d
i n P e r d u e I as c r e a t e d b y §
16-33C-19 was n o t i n t h e n a t u r e
o f a s t a t u t o r y o r common-law
affirmative
of a c t i o n or a claim.
briefs
defense
before
us
t o a cause
do
not discuss
or
address
The
whether
the
argument t h a t t h e PACT b o a r d d i d n o t have t h e power t o a c c e p t
the
settlement
"existing
citation
agreement
§
16-33C-19
c o n s t i t u t e d an
d e f e n s e " a s c o n t e m p l a t e d b y § 95, a n d t h e r e
t o caselaw,
such
analysis f o rthat issue.
or
under
a u t h o r i t y showing
as T y s o n ,
discussing
i s no
the proper
I n o t h e r w o r d s , we have no a n a l y s i s
that
the l e g a l
argument
regarding the
e f f e c t o f § 16-33C-19 e q u a t e s t o a " d e f e n s e " as t h a t t e r m i s
contemplated
requires
in §
that
95.
Rule
arguments
in
17
28(a)(10),
appellate
A l a . R.
briefs
App.
P.,
contain
1101337; 1101506
d i s c u s s i o n s o f f a c t s and r e l e v a n t l e g a l a u t h o r i t i e s t o s u p p o r t
a p a r t y ' s p o s i t i o n ; i f t h e b r i e f s do n o t c o n t a i n t h e l e g a l a n d
f a c t u a l a n a l y s i s n e c e s s a r y t o comply w i t h
argument i s w a i v e d .
998
the r u l e , then the
W h i t e Sands G r o u p , L.L.C. v . PRS I I , L L C ,
So. 2d 1042, 1058
(Ala.
2008).
Because
t h e b r i e f s on
r e t u r n t o remand do n o t e x p l a i n how § 16-33C-19 c o n s t i t u t e s an
"existing
defense"
under
§ 95, a n d b e c a u s e no a u t h o r i t y i n
s u p p o r t o f t h i s a r g u m e n t i s p r e s e n t e d , t h e argument i s w a i v e d .
M o t l o w a n d S e a r s a p p e a r t o a d v a n c e t h e p o s i t i o n t h a t some
contract
holders
may h a v e r e l i e d
A c t as a " r e p r e s e n t a t i o n "
to pay f u l l
the
t h a t t h e S t a t e was o b l i g a t i n g
t u i t i o n on t h e PACT c o n t r a c t s .
2010 A c t made c e r t a i n f u t u r e
expressed
on t h e p a s s a g e o f t h e 2010
funding
the l e g i s l a t u r e ' s b e l i e f that,
itself
However, a l t h o u g h
appropriations
based
a c t u a r i a l p r o j e c t i o n s , t h e p r o g r a m w o u l d be f u l l y
on
and
certain
funded, see
§ 1 6 - 3 3 C - 1 6 ( b ) , A l a . Code 1975 ( r e p e a l e d b y t h e 2012 A c t ) , t h e
2010
Act actually
expressed
no
obligation
or
guarantee.
B e c a u s e t h e 2010 A c t was e n a c t e d a f t e r t h e u n d e r l y i n g
was f i l e d ,
action
t h e c l a s s members c l e a r l y were n o t r e l y i n g on t h e
s u b s e q u e n t l y added f u n d i n g
provisions
o f t h e 2010 A c t o r t h e
r e s t r i c t i o n s on t h e PACT b o a r d ' s p o w e r s i n t h e 2010 A c t when
t h e y p u r c h a s e d t h e i r c o n t r a c t s o r when t h e y f i l e d t h i s a c t i o n .
18
1101337; 1101506
Further,
t h e now
at a l l times,
repealed
2010
both before
and
a f t e r the enactment of
A c t and u n d e r t h e
t h e c l a s s members c o n t i n u e
to withdraw from the
settlement
agreement,
t o have t h e o p t i o n t o r e m a i n i n o r
PACT p r o g r a m .
We
see
no
merit
in
this
Act
will
argument.
Here, the
not
r e t r o a c t i v e a p p l i c a t i o n of
result
a
in
taking
of
the
r i g h t s t o payments of t u i t i o n
was
p a s s e d and
hurdle
by
this
board's
ability
to
consent
of
class,
members'
fees;
the
presume
valid,
that
this
rather
than
to
Court
negotiate
in
r a t h e r , the
Perdue
the
2012
Act
t o remove a
to
the
the
G i v e n t h a t A l a b a m a law r e q u i r e s
this
is
2012
in
Act
required
i t down, and
the
is
that,
PACT
a l t e r a t i o n of
Court
to u p h o l d the
constitutionality
I
2012
the
the
settlement
constitutional
to
seek
that
the
f a i l e d t o show t h a t i t i s u n c o n s t i t u t i o n a l , we
by A l a b a m a law
contractual
with
that
strike
a
results
contractual obligations.
to
2012
i s a p p l i e d r e t r o a c t i v e l y i n order
identified
Court
and
class
the
of
the
r u l i n g of the
to
sustain
objectors
are
trial
and
i t
have
constrained
court
as
r e t r o a c t i v e a p p l i c a t i o n of
to
the
Act.
II.
Remaining Challenges to the
Because the
2012
Act
has
Settlement
removed § 16-33C-19 as
19
a
basis
1101337; 1101506
on
which
to
settlement
challenge
a g r e e m e n t , we
a s s e r t e d by
trial
now
court's
The
reviewing
initial
Class-Certification
a
approval
of
c o n s i d e r the a d d i t i o n a l
the o b j e c t o r s i n t h e i r
A.
"In
the
Process
order,
this
question
c o u r t a p p l i e d the c o r r e c t l e g a l s t a n d a r d i n
reaching
i t s decision."
U n i v e r s i t y Fed.
Credit
Grayson,
878
286
(citing
Metals
Co.
So.
2d
v. H i l l ,
280,
825
So.
1.
Both the
( A l a . 2003)
2d 100,
Rigorous
plaintiffs
and
no
c o u r t to the
challenges
the
PACT b o a r d
on
appeal
before
i t
certified
the
subject
required
by
§
Additionally,
23(a)
and
they
23(b),
specifically,
the
trial
2002)).
stipulated
lodged
court
6-5-641,
that
the
Ala.
Civ.
P.,
case;
trial
M o t l o w and
Sears
failed
to
the
Ala.
conduct,
"rigorous
Code
p r e r e q u i s i t e s of
were
not
they argue, there i s a l a c k of both
20
that
i n the
classes,
maintain
R.
v.
Reynolds
appropriate i n this
process.
contend
analysis"
(Ala.
were i n i t i a l l y
class-certification
that
104
Union
Analysis
c e r t i f i c a t i o n o f a c l a s s a c t i o n was
therefore,
Court
court exceeded i t s d i s c r e t i o n
i n e n t e r i n g t h e o r d e r ; h o w e v e r , we r e v i e w de novo t h e
whether the t r i a l
grounds
appeal.
class-certification
l o o k s t o see w h e t h e r t h e t r i a l
the
met.
1975.
Rule
More
commonality
1101337;
and
1101506
typicality
between
the
class
members
and
r e p r e s e n t a t i v e p a r t i e s do n o t c l e a r l y a n d a d e q u a t e l y
the
"the
protect
i n t e r e s t of the c l a s s . "
Other than t h e i r general c i t a t i o n t o the requirements of
R u l e 23 a n d c a s e l a w e s t a b l i s h i n g t h e n e c e s s i t y o f a r i g o r o u s
analysis,
no
demonstrating
argument
is
that the t r i a l
offered
court's
or
authority
a n a l y s i s and r e s u l t i n g
order i n t h i s case a r e l e g a l l y i n s u f f i c i e n t .
of Motlow and Sears's
restates
the general
to contain
court's
dissatisfaction
citations
certification
d e f i c i e n c i e s attendant
A close
reading
b r i e f r e v e a l s t h a t t h i s argument
with
t e r m s , as d i s c u s s e d i n more d e t a i l b e l o w .
fails
cited
order
settlement
Notably,
to the record
and a l s o
the
fails
simply
the b r i e f
or to the
to identify
to the c e r t i f i c a t i o n hearing.
5
trial
any
W i t h no
T h e t r i a l c o u r t ' s "Amended O r d e r o f C l a s s C e r t i f i c a t i o n "
r e f l e c t s t h a t " [ t h e ] m a t t e r came b e f o r e [ t h e t r i a l c o u r t ] f o r
h e a r i n g on c e r t i f i c a t i o n o f t h i s c a s e as a c l a s s a c t i o n . " I t
f u r t h e r r e f l e c t s t h a t t h e d e c i s i o n t o c e r t i f y was b a s e d upon
" f u l l c o n s i d e r a t i o n o f ... a r g u m e n t s p r e s e n t e d . "
I t therefore
a p p e a r s t h a t t h e t r i a l c o u r t c o n d u c t e d a h e a r i n g on t h e i s s u e
of c l a s s c e r t i f i c a t i o n .
We n o t e , h o w e v e r , t h a t when P e r d u e ' s
c o u n s e l p r e s e n t e d argument r e g a r d i n g t h e n o n - o p t - o u t s t a t u s o f
the c l a s s d u r i n g t h e f a i r n e s s h e a r i n g , t h e f o l l o w i n g exchange
occurred:
5
"THE COURT: L i s t e n . B u t what I'm s a y i n g , when
t h e w h o l e c l a s s was i n i t ... s h o u l d n ' t p o t e n t i a l
c l a s s members have o b j e c t e d a t t h a t t i m e ?
21
1101337;
1101506
"[Perdue's counsel]:
o b j e c t e d , Y o u r Honor.
"THE COURT:
That's a l l .
Okay.
They
-- t h e y
That's
what
could
I'm
have
saying.
[ P e r d u e ' s c o u n s e l ] : B u t I'm -- I'm n o t -¬
"THE
COURT: D o e s n ' t t h e r u l e [ ]
R u l e 23, d o e s n ' t i t r e q u i r e
require
that?
that?
"[Perdue's counsel]: A c t u a l l y ,
Y o u r Honor, you
d i d n ' t s c h e d u l e a h e a r i n g on t h i s a n d y o u d i d n ' t a s k
for
o b j e c t i o n s on t h i s . A l l t h a t was s a i d -¬
"THE COURT: Went [ s i c ] s e n t
a --
tell
" [ P e r d u e ' s c o u n s e l ] : A l e g a l n o t i c e . You d i d n ' t
anybody t o c o m p l a i n o r t o b r i n g an o b j e c t i o n .
hire
"THE COURT: B u t l i s t e n . P e o p l e have a r i g h t t o
l a w y e r s w h e n e v e r t h e y want t o .
" [ P e r d u e ' s c o u n s e l ] : C e r t a i n l y t h e y do. Y o u r
Honor.
A n d t h e y a l s o have a r i g h t t o g e t f a i r
n o t i c e a n d due p r o c e s s when t h e r e ' s
litigation
pending before the Court.
"THE COURT: W e l l -"[Perdue's c o u n s e l ] : And
—
"THE COURT: -- t h e y d i d have n o t i c e .
"[Perdue's counsel]:
Of t h i s
hearing."
A l t h o u g h we n o t e t h a t t h e a p p e l l a t e r e c o r d c o n t a i n s no
transcript
of a c l a s s - c e r t i f i c a t i o n
hearing,
given the
ambiguity o f t h e f o r e g o i n g and i n l i g h t o f t h e p l a i n language
o f t h e t r i a l c o u r t ' s o r d e r , we assume t h a t t h e t r i a l c o u r t
22
1101337; 1101506
citations
to
applicable
authority
in
support
of
the
scant
argument p r e s e n t e d and no argument a p p l y i n g l e g a l a u t h o r i t y t o
the
facts
analysis
of
the
claim
present
i s waived
case,
1058;
and
Madaloni,
objectors'
f o r purposes
R u l e 28(a) ( 1 0 ) , A l a . R. App.
at
the
P.;
37
of
rigorous-
appellate
W h i t e Sands Group , 998
So.
3d
at
749
("It
review.
So.
is
2d
the
a p p e l l a n t ' s burden to r e f e r t h i s Court to l e g a l a u t h o r i t y t h a t
supports
[his]
argument.").
2.
Motlow
and
certification
imposition
"opt-out"
Sears
of
of the
the
Non-opt-out
Class
also
that
class
settlement
provision
argue
both
the
action--and,
t e r m s on
trial
ultimately
that class--without
v i o l a t e s the
class
members'
p r o c e s s r i g h t s and
c o n f l i c t s w i t h " d i c t a of the U n i t e d
Supreme
Motlow
Court."
and
Sears's
court's
brief,
at
24.
its
an
due-
States
This
e n t e r e d t h a t o r d e r , as i n d i c a t e d , f o l l o w i n g a h e a r i n g on t h a t
i s s u e . R e g a r d l e s s , h o w e v e r , we n o t e t h a t we have p r e v i o u s l y
declined to hold "that a p r e - c e r t i f i c a t i o n e v i d e n t i a r y hearing
i s r e q u i r e d i n e v e r y c a s e -- o r e v e n i n most c a s e s . " Ex p a r t e
F i r s t N a t ' l Bank o f J a s p e r , 717 So. 2d 342, 346 ( A l a . 1 9 9 7 ) .
See a l s o § 6 - 5 - 6 4 1 ( d ) , A l a . Code 1975
( p r o v i d i n g t h a t the
t r i a l c o u r t " s h a l l " h o l d an e v i d e n t i a r y h e a r i n g "on m o t i o n o f
any p a r t y " ) . F u r t h e r , b e c a u s e we u p h o l d t h e c e r t i f i c a t i o n o f
because
a n o n - o p t - o u t c l a s s u n d e r R u l e 2 3 ( b ) ( 1 ) and ( b ) ( 2 ) , A l a . R.
er
C i v . P., see P a r t I I . A . 2 , i n f r a , any p r o c e d u r a l e r r o r i n t h i s
Part
regard i s harmles
23
1101337; 1101506
argument, however, i s f r a u g h t w i t h i n c o n s i s t e n c i e s .
The
record
filing
of
a
agreement
reflects
that,
stipulation
that
f o l l o w i n g the
evidencing
class-based
PACT
board's
i t s qualified,
relief
was
proper
general
and
that
c e r t i f i c a t i o n c o u l d l a t e r be r e e v a l u a t e d , i n December 2010
trial
court
entered
Specifically
the
finding
order
that
the
certifying
underlying
the
case f o r c l a s s c e r t i f i c a t i o n
f o r the
under
23(b)(2),
and
Rule
[ A l a . R.
b o a r d ] on
[,
R.
Ala.
Civ.
c l a s s e s and
In
trial
P.],"
Plaintiffs
[PACT
[sic]
trial
court
certified
their
court's
Rule
damages."
Bank
v.
pinpoint
stand
several
subclasses.
brief,
Motlow
and
certification
Sears,
order,
i n keeping
initially
23(b)(2)
In
Snow,
support
823
citation
f o r the
when
of
So.
to
the
predominant
their
2d
667
argument,
(Ala.
Snow i n c l u d e d
relief
they
2001) .
in their
p r o p o s i t i o n f o r which
with
argue
"Alabama C o u r t s do n o t a l l o w a m a n d a t o r y c l a s s t o be
under
"an
f o r the
the
P.,]
was
under Rule 2 3 ( b ) ( 1 ) ( A ) ( B )
[ i t s ] Counterclaim
Civ.
class.
action
appropriate
the
the
that
certified
sought
cite
Compass
Although
brief
is
does
i t is identified,
the
not
Snow
does, g e n e r a l l y , h o l d t h a t " c e r t i f i c a t i o n of a c l a s s p u r s u a n t
to
Rule
23(b)(2)[,
Ala.
R.
Civ.
24
P.,]
is
improper
i f
the
1101337; 1101506
primary r e l i e f
(citations
sought
omitted).
their brief,
lawsuit
relief
"
as
construing
i n t h e same a r g u m e n t s e c t i o n o f
has never
asked
[ f o r ] or sought
M o t l o w a n d S e a r s ' s b r i e f , a t 24.
I,
claims
Later
823 So. 2d a t 678
however, Motlow and Sears acknowledge t h a t " t h e
[present]
Perdue
i s money damages."
So. 3d a t
including
a
(identifying
request
the respective
for a
rights
p a r t i e s u n d e r t h e PACT c o n t r a c t s
and
We a g r e e .
appears
To
of
the United
declaratory
settlement
extent
that
States
the
agreement, which
judgment
obligations
of the
a n d a c l a i m u n d e r 42 U.S.C.
t h a t Snow i s i n a p p l i c a b l e .
the
See
the p l a i n t i f f s '
§ 1983 a l l e g i n g v i o l a t i o n s o f r i g h t s g u a r a n t e e d
provisions
monetary
by
Constitution).
various
Thus, i t
6
objectors
releases
argue
that
non-class-based
the
claims
f o r m o n e t a r y damages,
somehow e v i d e n c e s t h a t m o n e t a r y r e l i e f
is
and
at
issue
certification,
here
we
thus
disagree.
required
In
First
Rule
Alabama
23(b)(3)
Bank
of
W i t h o u t c i t i n g a u t h o r i t y , M o t l o w a n d S e a r s a r g u e t h a t any
c l a s s c e r t i f i e d p u r s u a n t t o R u l e 2 3 ( b ) ( 3 ) , A l a . R. C i v . P., i s
required
t o have an o p t - o u t p r o v i s i o n .
See Adams v .
R o b e r t s o n , 676 So. 2d 1265, 1270 ( A l a . 1995) ( " [ I ] n a c l a s s
a c t i o n b r o u g h t u n d e r R u l e 2 3 ( b ) ( 3 ) , t h e members o f t h e c l a s s
are e n t i t l e d t o 'opt o u t ' o f t h e c l a s s a c t i o n and pursue a
separate l a w s u i t . " ) . Nevertheless,
as s e t o u t a b o v e , t h e
p r e s e n t c l a s s e s were n o t c e r t i f i e d p u r s u a n t t o R u l e 23(b) ( 3 ) .
6
25
1101337; 1101506
Montgomery, N.A.
held that
v. M a r t i n ,
425
So.
2d
415
( A l a . 1982),
"the f a c t t h a t a Rule 23(b)(1) or
(b)(2)
suit
we
may
u l t i m a t e l y r e s u l t i n a m o n e t a r y r e c o v e r y f r o m a d e f e n d a n t does
not p r e v e n t c e r t i f i c a t i o n under t h o s e s u b d i v i s i o n s . "
2d a t 423
425
So.
( c i t i n g S e n t e r v. G e n e r a l M o t o r s C o r p . , 532 F.2d
511
(5th
C i r . 1976); Robinson
(4th
C i r . 1971)).
378
F.
Cir.
Supp. 949
See
438 U.S.
class
901
(1978)
Tex.
444
F.2d
v. C i t y o f San A n t o n i o ,
F.2d
993
remanded on o t h e r g r o u n d s ,
r e s t i t u t i o n were s o u g h t a l o n g
court erred
i n c e r t i f y i n g the
c l a s s as a n o n - o p t - o u t c l a s s u n d e r R u l e 2 3 ( b ) ( 1 ) and
1.
The
F a i r n e s s , Adequacy,
and
Reasonableness
o b j e c t o r s m a i n t a i n that the t r i a l
r e a s o n a b l e as
to
the
class-action
litigation.
23(e),
trial
A l a . R.
agreement
a l l class
acknowledge,
Rule
(b)(2).
o f the Proposed S e t t l e m e n t Agreement
concluded that the settlement
and
(5th
T h e r e f o r e , t h e o b j e c t o r s have f a i l e d
t h a t the t r i a l
B. A s s e s s m e n t
791
(upholding c e r t i f i c a t i o n of Rule 23(b)(2)
where an a c c o u n t i n g and
demonstrate
Corp.,
1 9 7 4 ) , a f f ' d , 520
v a c a t e d and
with injunctive r e l i e f ) .
to
Lorillard
a l s o Muzquiz
(W.D.
1 9 7 5 ) , judgment
v.
court
See
C i v . P.
26
approve
Perdue
The
was
members.
must
court
erroneously
fair,
adequate,
the
objectors
As
a
I,
proponents
settlement
So.
3d a t
o f any
in
;
class-
1101337; 1101506
action
s e t t l e m e n t bear
proposed
trial
settlement i s f a i r ,
the
trial
court's order
agreement t o determine
discretion.
Perdue I ,
So.
reasonable.
" [ g ] r e a t weight,"
approving
whether the
that
trial
3d a t
such
a
and
the
The
we
settlement
court exceeded i t s
; Grayson,
878
So.
2d
286.
In
was
a d e q u a t e , and
court's f i n d i n g s are accorded
review
at
the burden of demonstrating
d e t e r m i n i n g whether the p r e s e n t
settlement
agreement
f a i r , a d e q u a t e , and r e a s o n a b l e , t h e t r i a l c o u r t c o n s i d e r e d
t h e f o l l o w i n g f a c t o r s o u t l i n e d i n Adams v. R o b e r t s o n ,
2d 1265
676
( A l a . 1995):
"(1) t h e l i k e l i h o o d o f s u c c e s s a t t r i a l
(2) t h e
r a n g e o f p o s s i b l e r e c o v e r y ; (3) t h e p o i n t on o r
below the range of p o s s i b l e r e c o v e r y a t which the
s e t t l e m e n t i s f a i r , a d e q u a t e , and r e a s o n a b l e ;
(4)
the
complexity,
expense,
and
d u r a t i o n of
the
litigation;
(5)
the
substance
and
amount
of
o p p o s i t i o n t o t h e s e t t l e m e n t ; (6) t h e s t a g e o f t h e
p r o c e e d i n g s a t w h i c h t h e s e t t l e m e n t was
achieved;
and (7) t h e f i n a n c i a l a b i l i t y o f [ t h e d e f e n d a n t ] t o
w i t h s t a n d a g r e a t e r j u d g m e n t and t h e p o t e n t i a l f o r
a j u d g m e n t o r j u d g m e n t s i n an amount o r amounts
l i k e l y t o t r i g g e r t h e Due P r o c e s s c o n s i d e r a t i o n s (as
r e c o g n i z e d i n G r e e n O i l Co. v. H o r n s b y , 539 So. 2d
218 ( A l a . 1989)) r e l a t i n g t o p u n i t i v e damages.
See,
B e n n e t t v. B e h r i n g C o r p . , 737 F.2d 982, 986
(11th
C i r . 1 9 8 4 ) ; C i t y o f D e t r o i t v. G r i n n e l l C o r p . , 495
F.2d
448,
463
(2d
C i r . 1974);
and
Bryan
v.
P i t t s b u r g h P l a t e G l a s s Co., 494 F.2d 799 (3d C i r .
1 9 7 4 ) , c e r t . d e n i e d , 419 U.S. 900, 95 S.Ct. 184, 42
L. Ed. 2d 146 ( 1 9 7 4 ) .
A n o t h e r f a c t o r c o n s i d e r e d by
t h e t r i a l c o u r t was w h e t h e r p r o p e r n o t i c e was g i v e n .
27
So.
1101337; 1101506
. . .
"
676
So.
2d a t 1273.
2d
1016,
1032
evaluating
fairness,
See
(N.D.
the
a l s o K n i g h t v. A l a b a m a , 469
A l a . 2006).
terms
adequacy,
of
and
a
As
F.
Supp.
explained i n Knight,
class-action
reasonableness,
settlement
the
trial
in
for
court
" s h o u l d compare t h e t e r m s o f t h e s e t t l e m e n t a g r e e m e n t w i t h t h e
likely
a
rewards t h a t the
successful t r i a l
(quoting
Cotton
v.
of
' c l a s s w o u l d have r e c e i v e d f o l l o w i n g
the
case.'"
Hinton,
559
469
F.2d
F.
Supp.
1326,
2d
1330
at
1032
(5th C i r .
1977)).
The
o b j e c t o r s contend
court's
determination
respects:
a.
t h a t i n the p r e s e n t case the
was
defective
in
the
trial
following
7
L i k e l i h o o d of success
at
trial
I n i t i a l l y , the o b j e c t o r s argue t h a t the t r i a l c o u r t e r r e d
in
concluding
that
the
class
members'
potential
lack
of
success s h o u l d the matter proceed t o t r i a l weighed i n f a v o r of
the approval of the s e t t l e m e n t .
t h a t an e x a m i n a t i o n
Specifically,
maintain
o f t h e t h r e e f a c t o r s i d e n t i f i e d by them as
r e l e v a n t t o t h i s d e t e r m i n a t i o n , "(1)
the m e r i t s of the
class
We a d d r e s s e a c h f a c t o r i n t h e o r d e r i n w h i c h t h e y a p p e a r
Perdue's b r i e f .
7
in
they
28
1101337; 1101506
members' c l a i m s ,
and
(2) t h e d e f e n s e s r a i s e d b y t h e
(3) t h e m a n a g e a b i l i t y
trial
court's
As
factor,
the settlement
other than l e g i s l a t i v e
the
o f t h e t r i a l , " does n o t s u p p o r t t h e
determination.
to this
approving
defendants,
the t r i a l
court's
final
agreement s p e c i f i c a l l y
found
a p o t e n t i a l judgment
a w a r d i n g f u l l b e n e f i t s t o a l l c l a s s members; t h u s ,
the t r i a l
i t was u n a b l e t o " s a y t h a t t h e c l a s s members
w o u l d l i k e l y o b t a i n a more f a v o r a b l e o r more e q u i t a b l e
at
trial
than
Settlement."
they
would
receive
Because t h e u n d i s p u t e d
fairness hearing
were i n s u f f i c i e n t
that,
a p p r o p r i a t i o n s and i t s c u r r e n t a s s e t s ,
PACT b o a r d h a d no means o f h o n o r i n g
court concluded,
judgment
under
the
result
proposed
e v i d e n c e adduced a t t h e
i n d i c a t e d t h e a s s e t s o f t h e PACT t r u s t
t o f u l l y pay t u i t i o n
PACT c o n t r a c t s , we a r e c o n s t r a i n e d
fund
under the o u t s t a n d i n g
t o agree w i t h
the t r i a l
c o u r t t h a t t h e a w a r d g u a r a n t e e d t o e a c h c l a s s member u n d e r t h e
terms of t h e s e t t l e m e n t
agreement l i k e l y
exceeds the reward
the
receive
were
c l a s s members w o u l d
trial.
We
nature
See K n i g h t ,
successful at
469 F. Supp. 2d a t 1033.
f u r t h e r note
of the r e l i e f
proceeding
i f they
that, given
afforded
the alleged t i m e - s e n s i t i v e
by t h e s e t t l e m e n t
agreement,
t o t r i a l w o u l d have consumed c o n s i d e r a b l e t i m e a n d
29
1101337; 1101506
w o u l d have
program.
further depleted
the l i m i t e d
assets
o f t h e PACT
As e x p l a i n e d b y t h e c o u r t i n K n i g h t :
"A h e a r i n g
or t r i a l
a l s o w o u l d have
required
t e s t i m o n y from e x p e r t s and v a r i o u s w i t n e s s e s .
To
s a y t h e l e a s t , a h e a r i n g o r t r i a l w o u l d be l e n g t h y
and l o g i s t i c a l l y c o m p l i c a t e d , a n d w o u l d r e s u l t i n
g r e a t expense f o r a l l p a r t i e s .
For those
reasons,
the Court concludes
t h a t t h e r i s k s f a c e d by t h e
p a r t i e s and t h e d i f f i c u l t y i n managing a t r i a l o r
hearing counsel i n favor of accepting the proposed
Settlement Agreements."
469
F. Supp. 2d a t 1 0 3 3 .
8
In consideration of the foregoing,
I n f a c t , the t r i a l court's order included the f o l l o w i n g
f a c t u a l f i n d i n g s r e g a r d i n g t h e c o m p l e x i t y o f t h e m a t t e r and
a n t i c i p a t e d expense s h o u l d t h e matter p r o c e e d t o a c t u a l
litigation:
8
" F u l l l i t i g a t i o n o f t h i s c a s e w o u l d be c o m p l e x ,
expensive,
a n d t i m e c o n s u m i n g . The c a s e i n v o l v e s
r i g h t s , o b l i g a t i o n s , a n d d u t i e s u n d e r 40,000 PACT
C o n t r a c t s t h a t w i l l be p a i d o u t o v e r a span o f two
d e c a d e s . W h i l e t h e C o u r t i s i n f o r m e d t h a t enormous
amounts o f t i m e have b e e n e x p e n d e d on b o t h s i d e s o f
t h i s case, i t i s obvious t h a t f u r t h e r l i t i g a t i o n of
t h e c a s e w i l l n e c e s s i t a t e s i g n i f i c a n t l y much more
time, e f f o r t , and expense. I f t r i e d , t h i s case w i l l
require
extensive
and expensive
actuarial
and
f i n a n c i a l evidence.
E x p e r t t e s t i m o n y on many i s s u e s
w i l l be n e c e s s a r y .
Most i m p o r t a n t l y , such expenses
and d e l a y s w o u l d c o n t i n u e
t o erode the l i m i t e d
available
funds a t t h e detriment
of the c l a s s
members as a w h o l e .
"The C o u r t i s o f t h e v i e w t h a t p r o c e e d i n g t o
t r i a l i n t h i s case, w i t h subsequent appeals, would
be n o t o n l y d e t r i m e n t a l t o t h e c l a s s members, i t i n
a l l l i k e l i h o o d w o u l d be f a t a l t o t h e PACT T r u s t
Fund.
B a s e d upon t h e e v i d e n c e o f r e c o r d , b y t h e
30
1101337; 1101506
we c o n c l u d e t h a t t h e t r i a l c o u r t d i d n o t e x c e e d i t s d i s c r e t i o n
in
the
determining
that this
settlement
b.
f a c t o r weighed i n favor of
agreement.
S t a g e o f p r o c e e d i n g s where s e t t l e m e n t
The
objectors
next
maintain
approval of the settlement
the
settlement
its
i n f a n c y and w i t h o u t
limited
requests
coupled
opposing expert
both while
depositions
class
The
regard,
and
counsel's
discovery."
they contend
written
failure
that
discovery
to obtain
an
s h o r t f a l l demonstrates that the
c a s e was n o t i n t h e p r o p e r p o s t u r e
court's
court's
o r t o d e p o s e t h e PACT b o a r d members o r t h e i r
actuary regarding the funding
trial
trial
t h e case remained i n
More s p e c i f i c a l l y ,
of
with
the
t h e b e n e f i t o f "any r e a l
a t 52.
number
that
achieved
a g r e e m e n t was i n a p p r o p r i a t e i n t h a t
was a c h i e v e d
Perdue's b r i e f ,
the
approving
contrary
trial
court,
noted
that,
f o r settlement
and t h a t t h e
c o n c l u s i o n was e r r o n e o u s .
i n support
at
the
time
of
i t s finding
the
initial
in
proposed
time
this
case
could
be t r i e d ,
a p p e a l e d , and
finalized,
the
PACT
Trust
Fund
would
be
s i g n i f i c a n t l y (and p e r h a p s c o m p l e t e l y ) d e p l e t e d . I f
t h a t were t o o c c u r , a l a r g e p e r c e n t a g e o f t h e c l a s s
members w o u l d u l t i m a t e l y r e c e i v e l e s s t h a n t h e l e v e l
o f b e n e f i t s t o be p r o v i d e d
under t h e proposed
S e t t l e m e n t . ... "
31
this
1101337; 1101506
s e t t l e m e n t was r e a c h e d
had
been p e n d i n g
as a r e s u l t
f o r more t h a n
of mediation,
a year.
the matter
I t f u r t h e r found
as
follows:
"The
r e c o r d s and m a t e r i a l s f i l e d w i t h t h e C o u r t
d i s c l o s e t h a t t h e r e has been e x t e n s i v e d i s c o v e r y ,
both
formal
a n d i n f o r m a l . These
parties,
and
p a r t i c u l a r l y t h e i r counsel, are i n t i m a t e l y f a m i l i a r
w i t h t h e f a c t s , f i g u r e s , law, r i s k and c o m p l e x i t y o f
the
case.
Both
sides
of t h i s
case
have h a d
s u f f i c i e n t o p p o r t u n i t y t o e v a l u a t e t h e s t r e n g t h s and
weaknesses
of
their
respective
theories
and
positions
"
The
has
o b j e c t o r s argue t h a t " [ t ] h e f a c t t h a t a l l d i s c o v e r y
been
important,
completed
because
and
t h e case
i t
development o f t h e f a c t s
i s ready
ordinarily
to permit
the p o s s i b l e m e r i t s of the case."
for trial
is
assures
sufficient
a reasonable
j u d g m e n t on
K n i g h t , 469 F. Supp. 2d a t
1033.
Given the wealth of i n f o r m a t i o n r e g a r d i n g the f i n a n c i a l
crisis
f a c i n g t h e PACT b o a r d ,
hold contrary to the t r i a l
counsel
their
court that the p a r t i e s
lacked a sufficient
respective
achieved.
cases
at
understanding
the time
that
and t h e i r
of the merits of
settlement
was
F u r t h e r , a l t h o u g h no e x p e r t was o b t a i n e d t o t e s t i f y
on b e h a l f o f t h e p l a i n t i f f s ,
for
however, t h i s Court d e c l i n e s t o
both
the o b j e c t o r s cross-examined
class
counsel
and c o u n s e l
t h e PACT c h a i r m a n
and t h e
PACT b o a r d ' s a c t u a r y r e g a r d i n g t h e p r o f f e r e d f i n a n c i a l
32
data.
1101337; 1101506
Again,
too, the undisputed
hearing
suggests that
e v i d e n c e adduced a t t h e f a i r n e s s
the delay
would
have
and expense a s s o c i a t e d
additional
discovery
ultimately
available for distribution.
unable t o conclude that the t r i a l
the
stage
against
approving
c.
The
properly
the
a t which
We
objectors
contend
court erred i n deciding
was
achieved
that
the t r i a l
t h e c l a s s w o u l d have
According
underlying
action
to
Perdue,
actually
receiving f u l l
court
agreement
the
with
following
initiation
class
of the
members'
t h e a c t i o n was f i l e d
benefits.
each
Motlow and Sears
provides
l i t t l e o r no r e l i e f t o c l a s s members i n l i g h t o f t h e
the
settlement
to
contend
Contrary
the
failed
further
legislature's
that
agreement.
of success f o r the
diminished
contractual b e n e f i t s i n that before
member was s t i l l
d i d not weigh
received
because i t d i d not f a c t o r a " l e v e l
[class]."
that
recovery
compare t h e t e r m s o f t h e s e t t l e m e n t
rewards
the funds
are, therefore,
t h e terms of t h e s e t t l e m e n t
Range o f p o s s i b l e
likely
trial
settlement
further depleted
with
agreement
s t a t u t o r y assurances of f u l l
actually
funding.
t o t h o s e c l a i m s , however, i t i s u n d i s p u t e d
PACT p r o g r a m
with or without
i s f a c i n g an e c o n o m i c
shortfall
that
and t h a t ,
i n i t i a t i o n o f t h e u n d e r l y i n g a c t i o n , and even
33
1101337;
with
1101506
the funding
could
not
benefits
expect
to
that
t h e 2010
continue
indefinitely,
that the t r i a l
something
a d d e d by
to
nor could
A c t , each c l a s s
receive
a class
c o u r t w o u l d have o r d e r e d
the
undisputed
full
member
trial
payment
evidence
of
anticipate
t h e PACT b o a r d
indicates
c l e a r l y incapable of doing, i . e . , paying f u l l
PACT c o n t r a c t s .
member
t o do
i t
was
tuition for a l l
In support of i t s f i n d i n g i n t h i s regard, the
court stated:
"The u n c o n t r o v e r t e d e v i d e n c e i n t h i s c a s e i s
t h a t t h e PACT T r u s t Fund h a s a s i g n i f i c a n t a c t u a r i a l
d e f i c i t , i . e . , i t s a s s e t s a r e i n s u f f i c i e n t t o pay
the p r o j e c t e d l i a b i l i t y a s s o c i a t e d w i t h f u l l t u i t i o n
and m a n d a t o r y f e e p a y m e n t s . The C o u r t t h e r e f o r e
believes
that the
'limited
fund'
d o c t r i n e has
a p p l i c a t i o n . O r t i z v F i b e r b o a r d C o r p . [ , ] 527 U.S.
115 ( 1 9 9 9 ) ; Ex p a r t e H o l l a n d , 692 So. 2d 811 ( A l a .
1997).
Under
the
limited
fund
d o c t r i n e , the
f o l l o w i n g i s s u e s g e n e r a l l y must be e s t a b l i s h e d : (1)
there are m u l t i p l e claimants against the defendant
on t h e f u n d ; (2) t h e d e f e n d a n t on t h e f u n d has o n l y
a l i m i t e d amount t o p a y t h o s e
claims;
(3) t h e
l i m i t e d amount i s i n s u f f i c i e n t t o p a y a l l o f t h e
c l a i m s i n f u l l ; and (4) a l l o f t h e c l a i m a n t s a r e , o r
can b e , b r o u g h t b e f o r e t h e c o u r t .
"In t h i s case t h e r e a r e a p p r o x i m a t e l y
40,000
o u t s t a n d i n g PACT C o n t r a c t s owned by a p p r o x i m a t e l y
30,000 i n d i v i d u a l s . The e v i d e n c e i s e q u a l l y c l e a r
t h a t t h e PACT T r u s t Fund i s a l i m i t e d f u n d w i t h
f i n i t e assets.
As o f May 2011, t h e T r u s t Fund h a d
a p p r o x i m a t e l y $440 m i l l i o n i n a s s e t s .
I t a l s o has
an income s t r e a m , i n f u t u r e d o l l a r s , o f $548 m i l l i o n
as p r o v i d e d u n d e r [ t h e 2010 A c t ] . Those
annual
i n s t a l l m e n t s a r e s c h e d u l e d t o b e g i n i n 2015. The
present value of the t o t a l a s s e t s , according to the
34
1101337; 1101506
State
Treasurer
and
the
PACT
actuary,
is
a p p r o x i m a t e l y $830 m i l l i o n .
On t h e o t h e r h a n d , t h e
p r e s e n t v a l u e o f t h e o b l i g a t i o n s owed b y t h e T r u s t
Fund u n d e r PACT C o n t r a c t s w e l l e x c e e d s $1 b i l l i o n .
" G i v e n t h e l i m i t e d f u n d d o c t r i n e ... i t i s
l i k e l y t h a t t h e o n l y s o l u t i o n a t t r i a l w o u l d be t h e
same
as
that
accomplished
by
the
proposed
Settlement, i . e . , to e q u i t a b l y d i v i d e the l i m i t e d
f u n d s among t h e c l a s s members. B e c a u s e t h e r e i s no
a l t e r n a t i v e source o f f u n d i n g w i t h which t o pay
b e n e f i t s , t h e e x p e c t a t i o n o f any g r e a t e r r e c o v e r y
w o u l d be e n t i r e l y s p e c u l a t i v e .
Moreover, because
t h e a s s e t s o f t h e PACT T r u s t Fund w o u l d c o n t i n u e t o
be d e p l e t e d d u r i n g o n g o i n g l i t i g a t i o n , t h e r a n g e o f
p o s s i b l e r e c o v e r y a v a i l a b l e t o t h e c l a s s members
w o u l d a c t u a l l y be l e s s i f an e q u i t a b l e d i v i s i o n i s
delayed u n t i l t r i a l .
Because of t h e s i g n i f i c a n t
r i s k t h a t a m a j o r i t y o f t h e c l a s s members w o u l d
r e c o v e r l e s s (or perhaps nothing) i f the proposed
Settlement i s not approved, the Court concludes t h a t
t h i s f a c t o r weighs i n f a v o r of a p p r o v a l . "
( E m p h a s i s added.)
As
court,
d e m o n s t r a t e d by t h e f o r e g o i n g f i n d i n g s o f t h e t r i a l
i t appears both
t h a t the proposed
resolution
of the
l i t i g a t i o n by s e t t l e m e n t i s f a i r and r e a s o n a b l e and t h a t i t i s
at
least
on p a r w i t h
the a n t i c i p a t e d
result
(and t h e o n l y
r e s u l t i d e n t i f i e d as p o s s i b l e ) s h o u l d t h e m a t t e r p r o c e e d
trial
on t h e m e r i t s .
The s e t t l e m e n t
agreement
to a
i s aimed a t
p r o v i d i n g the highest l e v e l of b e n e f i t s p o s s i b l e t o a l l class
members.
court
T h e r e f o r e , we a r e u n a b l e
erred
i n finding
that
t o conclude
the settlement
35
that the t r i a l
agreement
was
1101337;
1101506
reasonable
as compared t o t h e r a n g e o f p o s s i b l e r e c o v e r y i n
this action.
d.
Opposition
to the settlement
agreement
The o b j e c t o r s a c k n o w l e d g e t h a t , o f t h e 40,000
PACT
contracts
owned
by
30,000
p a r t i c i p a n t s on
p r o g r a m , t h e r e were a t most o n l y a p p r o x i m a t e l y
Based
on t h o s e
objecting
total
figures,
outstanding
the t r i a l
c l a s s members r e p r e s e n t e d
court
"less
t h e PACT
70 o b j e c t o r s .
computed
than
9
that the
0.18% o f t h e
c o n t r a c t owners."
The
received
trial
court
further explained
collectively
challenged
the
that
the objections
settlement
on
the
f o l l o w i n g f i v e grounds (with the t h i r d s t a t e d ground a l l e g e d l y
being
t h e most common):
"(1)[the
trial
court's
alleged
lack
of]
j u r i s d i c t i o n ; (2) t h e r i p e n e s s o r a c t u a l e x i s t e n c e
o f a c o n t r o v e r s y ; (3) t h e f a i l u r e t o e n f o r c e PACT
C o n t r a c t s a g a i n s t t h e S t a t e o f A l a b a m a ; (4) t h e l a c k
of opt out r i g h t s ;
a n d (5) e x c e s s i v e a t t o r n e y s '
The
trial
court's
final
judgment
reflects
that
a p p r o x i m a t e l y 55 c l a s s members f i l e d t i m e l y w r i t t e n o b j e c t i o n s
and t h a t 8 a d d i t i o n a l o b j e c t i o n s were r e c e i v e d a f t e r t h e
established deadline.
By t h i s C o u r t ' s c o u n t , t h e r e c o r d
i n c l u d e s a t o t a l o f 69 s e p a r a t e w r i t t e n o b j e c t i o n s f i l e d b y
class
members; h o w e v e r ,
some
of those
filings
appear
duplicative.
9
36
1101337;
1101506
fees."
We
note
1 0
that
agreement
other
included
expressed
during
challenges
in
the
regarding
written
the f a i r n e s s
hearing
the
settlement
objections
that
i n c l u d e d the l a c k of
i n p u t from the l e g i s l a t u r e ; the a l l e g e d l y d i s p a r a t e
in
were
treatment
t h e s e t t l e m e n t a g r e e m e n t o f PACT c o n t r a c t h o l d e r s b a s e d on
purchase
and/or a n t i c i p a t e d m a t r i c u l a t i o n d a t e s ,
t h e p r o p o s e d s e t t l e m e n t was
not i n the best
i . e . , that
interest
of a l l
c l a s s members; t h a t t h e s e t t l e m e n t a g r e e m e n t c o n f l i c t e d
with
and m o d i f i e d t h e a l l e g e d t e r m s o f t h e o r i g i n a l PACT c o n t r a c t s
in
t h a t t h e s e t t l e m e n t a g r e e m e n t p r o v i d e d f o r payment o f l e s s
than
full
tuition
and m a n d a t o r y f e e s ; c o n c e r n s
proposed tuition-payment
for
an
any s h o r t f a l l ;
cap and t h e c l a s s members'
t h a t t h e s e t t l e m e n t agreement
u n c o n s t i t u t i o n a l t a k i n g of vested
property
r e g a r d t o c l a s s members h o l d i n g p a i d - i n - f u l l
the
settlement
regarding the
agreement
left
class
liability
represented
rights
with
contracts; that
members
in
a
worse
p o s i t i o n t h a n t h e y were i n as a r e s u l t o f t h e 2010 A c t and t h e
apparent
conflict
provisions
between
o f t h e 2010
the settlement
Act; class
agreement
members'
and t h e
dissatisfaction
T h e t r i a l c o u r t ' s o r d e r t h e n c o n s i d e r e d and r e j e c t e d , i n
t u r n , the i n d i v i d u a l m e r i t of these grounds.
10
37
1101337; 1101506
with
the
provision
that
any
funds
remaining
p r o g r a m a f t e r a l l o b l i g a t i o n s were met
the
Education
(regarding
Trust
both
the
Fund;
notice
the
PACT
w o u l d be t r a n s f e r r e d
alleged
of
with
noticing
class
deficiencies
certification
and
n o t i c e d i s c l o s i n g t h e p r o p o s e d s e t t l e m e n t a g r e e m e n t ) ; and
alleged
and,
o v e r b r e a d t h of the
i n p a r t i c u l a r , with
release
of
liability
several
class
objected
fact that
to
the
a p p r o v a l of the
similar
numbers
alternative
the
included
Additionally,
solutions
to
the
agreement.
less
than
settlement
70
c l a s s members o u t
agreement
settlement agreement.
in
the
general,
terms of the
f o r PACT b o a r d members.
members o f f e r e d
proposed settlement
The
s e t t l e m e n t agreement, i n
r e g a r d to the
to
Adams,
this
11
Court
weighs
in
of
30,000
favor
When c o n f r o n t e d
made
the
of
with
following
observation:
"In
reviewing
the
trial
court's
findings
and
P e r d u e s u g g e s t s t h a t t h e r e l a t i v e l y s m a l l number o f
o b j e c t o r s may be a t t r i b u t e d t o numerous f a c t o r s , i n c l u d i n g t h e
purportedly
short
period
for
filing
and
the
purported
"campaign of m i s i n f o r m a t i o n "
a l l e g e d l y u n d e r t a k e n by t h e PACT
b o a r d and c l a s s c o u n s e l i n an e f f o r t t o f r i g h t e n c l a s s members
i n t o a c c e p t i n g the p r o p o s e d s e t t l e m e n t agreement. Perdue's
b r i e f , a t 55. T h e r e i s , h o w e v e r , n o t h i n g b e f o r e t h i s C o u r t
e i t h e r s u b s t a n t i a t i n g those c l a i m s or e s t a b l i s h i n g t h a t the
purported
threat
to
class
members'
benefits
was
"misinformation."
1 1
38
1101337; 1101506
o r d e r , we f i n d p a r t i c u l a r l y i n t e r e s t i n g t h e f a c t
t h a t l e s s t h a n 1,000
c l a s s members, o u t o f 400,000
( l e s s t h a n 1%) o b j e c t e d t o t h e s e t t l e m e n t .
Courts
have a f f i r m e d s e t t l e m e n t s when s u b s t a n t i a l l y l a r g e r
numbers o f t h e
c l a s s had
objected.
See,
e.g.,
H u g u l e y v. G e n e r a l M o t o r s C o r p . , 999 F.2d 142 ( 6 t h
Cir.
1993)
( s e t t l e m e n t w i t h no o p t - o u t p r o v i s i o n
a p p r o v e d o v e r o b j e c t i o n s by 15% o f t h e
class);
C o u n t y o f S u f f o l k v. Long I s l a n d L i g h t i n g Co., 90 7
F.2d 1295
(2d C i r . 1990)
(settlement approved over
objections
of
a
majority
of
the
class
r e p r e s e n t a t i v e s ) ; TBK P a r t n e r s L t d . v. W e s t e r n U n i o n
C o r p . , 675
F.2d
456
(2d C i r . 1982)
(approving
s e t t l e m e n t over o b j e c t i o n s of a m a j o r i t y of the
c l a s s ) ; Reed v. G e n e r a l M o t o r s C o r p . , 703 F.2d
170
(5th
C i r . 1983)
( s e t t l e m e n t a p p r o v e d w i t h 600 o f
1469 c l a s s members o b j e c t i n g ) . "
676
So.
2d a t 1273.
frustration
relatively
Although
evidenced
limited
in
each
number
concerns
of the
settlement
i s cognizant
written
of
undermine
of
objection,
objections
not
r a i s e d t h e r e i n do
approval
t h i s Court
as
well
the
trial
as
the
the
the
court's
agreement a g a i n s t which they
were
lodged.
e.
Payment o f c l a s s c o u n s e l ' s
Citing
challenge
the
the
potential
trial
for
court's
fees
abuse,
approval
the
of
the
objectors
p o r t i o n of
s e t t l e m e n t a g r e e m e n t a w a r d i n g c l a s s c o u n s e l n e a r l y $5
in
attorney
fees.
1 2
The
trial
court
conducted
a
also
the
million
separate
The o b j e c t o r s c r i t i c i z e the f a c t t h a t the fees a c t u a l l y
d i m i n i s h t h e f u n d s i n t h e PACT p r o g r a m , w h i c h a r e i n t e n d e d t o
12
39
1101337; 1101506
hearing
fees
on t h e a p p r o p r i a t e n e s s
and c o s t s ,
of the p l a i n t i f f s '
and f o l l o w i n g
substantial portion of i t s f i n a l
issue.
attorney
Specifically,
fees
was j u s t i f i e d
because " c l a s s counsel
but
protected
'common f u n d . ' "
of
the t r i a l
i t devoted
a
this
c o u r t h e l d t h a t t h e award o f
... n o t o n l y
The t r i a l
hearing
judgment t o e v a l u a t i n g
under
and p r e s e r v e d
the reasonableness
that
motion f o r
t h e common-fund
served
the trust
doctrine
t h e common e s t a t e
assets,
i . e . , the
c o u r t a l s o i n c l u d e d an e v a l u a t i o n
of the requested
f e e based
on t h e
a p p l i c a t i o n o f the f o l l o w i n g g u i d e l i n e s p r e v i o u s l y s e t out by
t h i s C o u r t i n Brown v. S t a t e , 565 So. 2d 585,
"(1)
The m e a s u r e o f s u c c e s s
592 ( A l a . 1990) :
achieved.
"(2) The n a t u r e a n d v a l u e o f t h e s u b j e c t - m a t t e r o f
t h e a t t o r n e y ' s employment, i n c l u d i n g t h e n o v e l t y a n d
d i f f i c u l t y of the questions
presented.
"(3) The l e a r n i n g , s k i l l , a n d l a b o r
perform the l e g a l service properly.
"(4)
The t i m e consumed a n d
i n c u r r e d by t h e a t t o r n e y .
"(5)
The p r o f e s s i o n a l
requisite to
reasonable
experience,
expenses
reputation
and
b e n e f i t t h e PACT c o n t r a c t h o l d e r s a n d t h e i r b e n e f i c i a r i e s .
The t r i a l c o u r t ' s o r d e r r e f l e c t s t h a t t h e amount o f a t t o r n e y
f e e s p r o v i d e d f o r i n t h e s e t t l e m e n t a g r e e m e n t was " i n c l u d e d i n
t h e c a l c u l a t i o n s a n d p r o j e c t i o n s i n o r d e r t o make t h e p r o p o s e d
s e t t l e m e n t v i a b l e and w o r k a b l e . "
40
1101337; 1101506
ability
"(6)
of the
The
attorney.
weight of
[the a t t o r n e y ' s ]
"(7)
The
fee
arrangement
client,
i n c l u d i n g whether
contingent.
responsibility.
between a t t o r n e y
a f e e was
fixed
and
or
"(8) The f e e c u s t o m a r i l y c h a r g e d i n t h e l o c a l i t y f o r
s i m i l a r l e g a l s e r v i c e s and a w a r d s i n s i m i l a r c a s e s .
"(9) The t i m e l i m i t a t i o n s
by t h e c i r c u m s t a n c e s .
i m p o s e d by
the
client
or
"(10) The l i k e l i h o o d t h a t t h e a t t o r n e y ' s employment
i n t h i s c a s e p r e c l u d e d o t h e r employment.
"(11)
The n a t u r e and l e n g t h
r e l a t i o n s h i p w i t h the c l i e n t .
"(12)
The
of
u n d e s i r a b i l i t y of the
the
professional
case.
"(13) Any n o n - m o n e t a r y b e n e f i t s c o n f e r r e d upon
class in this class action."
Recounting
factors
concluded
the
evidence
identified
that
the
in
"significantly
s u c h a c o m p l e x and
Brown,
evidence
which i t termed " f a i r
f e e was
offered in
and
support
the
trial
of
court
each
the
of
the
ultimately
justified
the
requested
award,
reasonable,"
and
t h a t the
awarded
lower
difficult
than
case."
a typical
fee
awarded i n
1 3
The t r i a l c o u r t ' s order i n c l u d e d a u t h o r i t y e s t a b l i s h i n g
t h a t a c u s t o m a r y a t t o r n e y - f e e a w a r d i n common-fund c a s e s
t y p i c a l l y r a n g e s f r o m 20% t o 25% o f t h e r e c o v e r y . See,
e.g.,
R e y n o l d s v. F i r s t A l a b a m a Bank o f Montgomery, N.A.,
471 So. 2d
1238,
1245
( A l a . 1985) .
The t r i a l c o u r t ' s o r d e r f u r t h e r
13
41
1101337;
In
1101506
her
challenge
to
the
attorney-fee
award,
Perdue
c o n t e n d s t h a t t h e common-fund d o c t r i n e i s i n a p p l i c a b l e b e c a u s e
no common f u n d was a c t u a l l y c r e a t e d i n t h i s c a s e ; i n s t e a d , she
asserts,
drain
t h e s e t t l e m e n t a g r e e m e n t and t h e a t t o r n e y - f e e award
t h e PACT p r o g r a m ' s
funds.
However,
the
common-fund
d o c t r i n e does n o t a p p l y o n l y i f a f u n d i s " c r e a t e d " ; i n s t e a d ,
the
"principle
[ i s ] designed
t o compensate an a t t o r n e y whose
s e r v i c e s on b e h a l f o f h i s c l i e n t o p e r a t e d t o c r e a t e , d i s c o v e r ,
i n c r e a s e , p r e s e r v e , o r p r o t e c t a f u n d t o w h i c h o t h e r s may a l s o
have a c l a i m . "
H e n l e y & C l a r k e v. B l u e C r o s s - B l u e
A l a b a m a , 434 So. 2d 274, 276
added).
1 4
The
trial
( A l a . C i v . App.
S h i e l d of
1983)
court h e l d that the settlement
(emphasis
in this
i n c l u d e d t h e f o l l o w i n g c a l c u l a t i o n as t o t h e r e q u e s t e d f e e i n
the present case:
" A c c o r d i n g t o t h e a c t u a r i a l e x p e r t t e s t i m o n y and
report,
this
litigation
has p r o v i d e d t h e c l a s s
members w i t h a b e n e f i t o f a p p r o x i m a t e l y $400 m i l l i o n
( p r e s e n t v a l u e ) o v e r what t h e y w o u l d have r e c e i v e d
h a d r e f u n d s been g i v e n o r i f t h e PACT T r u s t Fund h a d
been a l l o w e d t o h i t z e r o . The f e e r e q u e s t i n t h i s
c a s e i s r o u g h l y 1.25% o f t h a t amount."
The C h i e f J u s t i c e , i n h i s d i s s e n t , a l s o p o i n t s out t h a t
no "common f u n d " was c r e a t e d i n t h i s c a s e . However, as H e n l e y
& C l a r k h o l d s , t h e common-fund d o c t r i n e a l s o a p p l i e s when a
f u n d i s p r e s e r v e d o r p r o t e c t e d . As t h e u n d i s p u t e d e v i d e n c e i n
this
case
indicated,
see supra note
13, t h e s e t t l e m e n t
a g r e e m e n t p r o v i d e d $400 m i l l i o n i n b e n e f i t s t o t h e p l a i n t i f f s .
14
42
1101337; 1101506
case serves
we
to preserve
the
f u n d s i n t h e PACT p r o g r a m ;
thus,
see no m e r i t i n t h e argument t h a t t h e common-fund d o c t r i n e
does n o t a p p l y
As
in this
case.
1 5
to Perdue's c h a l l e n g e
f e e award, we
t o t h e amount o f t h e
n o t e t h a t an a w a r d o f an a t t o r n e y f e e u n d e r
common-fund d o c t r i n e " i s w i t h i n t h e
trial
court,
reversed
on
and
the
appeal"
ruling
absent
exceeded t h a t d i s c r e t i o n .
(Ala. 1998).
agreement
resulted
so,
an
relationship
c a n n o t be
a
in
1.25%
based
"solely
that
question
that
a
to
the
award
"must
an
arbitrary
plaintiffs
So.
2d 1017,
1027
of
awarded
supra
note
bear
a
reasonable
and
generally
percentage
v a l u e of p r o p e r t y or funds at i s s u e i n the p r o c e e d i n g s .
v. F o s t e r , 928
702
See
e x p e n d e d on t h e c a s e "
on
court
settlement
t h a t the a t t o r n e y fee
o f t h a t amount.
be
2d 694,
c o u r t found t h a t the
benefit
the
not
trial
So.
the
of
will
the
Ex p a r t e H o r n , 718
attorney-fee
t o the time
sound d i s c r e t i o n
showing
$400 m i l l i o n and
approximately
Even
on
Here, the t r i a l
approximately
was
attorney-
( A l a . 2005).
of"
13.
the
Carver
In Carver,
we
r e v e r s e d an a t t o r n e y - f e e a w a r d and
remanded t h e c a s e f o r t h e
trial
f e e commensurate w i t h
c o u r t " t o award a r e a s o n a b l e
the
O t h e r than s t a t i n g t h a t the award i s " e x o r b i t a n t , " Sears
and M o t l o w p r e s e n t no argument t h a t i t i s e x c e s s i v e .
1 5
43
1101337; 1101506
t i m e s p e n t , as w e l l as o t h e r f a c t o r s , i n c l u d i n g t h e a b s e n c e o f
p e r i o d i c p a y m e n t s , any
associated with
discharge
of
any
applicable factors
other
legal
risk
responsibilities
appropriate
undertaking,
and
928
"
i n the
2d a t 1027.
The
So.
o b j e c t o r s c i t e no a u t h o r i t y , s u c h as C a r v e r ,
proper standard
the
setting forth
the
f o r t h i s C o u r t t o use i n a n a l y z i n g w h e t h e r t h e
amount o f t h e a t t o r n e y - f e e a w a r d i n t h i s c a s e was
proper.
only
to
challenge
than
Perdue's
the
a t t e m p t on
calculation
stating
it,"
appeal
of
by
the
an
argument
computerized-research
of the
attorney
i n a conclusory
is
any
fee,
fashion that
by
Perdue
inquiries
objectors
other
"no
that
on
evidence
11
the
of
The
justified
the
Westlaw
3,600
database
p u r p o r t e d l y p e r f o r m e d by c l a s s c o u n s e l do n o t i n v o l v e r e s e a r c h
regarding
the
hours
p u r p o r t e d l y i n v e s t e d i n t h e p r o s e c u t i o n o f t h i s c a s e by
class
counsel,
no
this
no
challenge
factors
set
case.
challenge
There
regarding
to the t r i a l
forth
i s no
above;
the
challenge
to
l i t i g a t i o n expenses,
c o u r t ' s r e s o l u t i o n of the
further,
no
alternate
13
and
Brown
method
of
c a l c u l a t i o n o f t h e a t t o r n e y f e e i s p r o p o s e d by t h e o b j e c t o r s .
1 6
The C h i e f J u s t i c e , i n h i s d i s s e n t , u n d e r t a k e s t o examine
t h e " t i m e and l a b o r " p e r f o r m e d by c l a s s c o u n s e l i n d i s c o v e r y
and t h e e x p e n s e s c l a s s c o u n s e l i n c u r r e d .
However, no s u c h
c h a l l e n g e i s found i n Perdue's b r i e f . " ' [ T ] h i s Court i s not
16
44
1101337;
1101506
When a p a r t y f a i l s
supporting
appellant
Court
may
t o make an a r g u m e n t , o r t o c i t e a u t h o r i t y
an a r g u m e n t ,
fails
to cite
affirm
i s w a i v e d : "'Where an
a n y a u t h o r i t y f o r an a r g u m e n t ,
t h e judgment
neither the Court's
l e g a l research
t h e argument
on t h o s e
issues,
this
for i t
is
duty nor i t s f u n c t i o n t o perform a l l the
f o r an a p p e l l a n t . ' " W e l c h v . H i l l ,
727, 728 ( A l a . 1992) ( q u o t i n g Sea Calm S h i p p i n g
608 So. 2d
Co., S.A. v.
C o o k s , 565 So. 2d 212, 216 ( A l a . 1990) ( c i t a t i o n s
omitted)).
G i v e n t h e d e a r t h o f argument on t h i s i s s u e , t h e r e i s no l e g a l
basis
demonstrating
that
d i s c r e t i o n i n approving
The
evidence
objectors
that
class
the
trial
court
exceeded i t s
t h e amount o f t h e a t t o r n e y f e e .
argue
that
counsel
the attorney-fee
had a
conflict
of
award i s
interest.
1 7
under a duty t o search t h e r e c o r d i n order t o a s c e r t a i n
whether i t c o n t a i n s evidence t h a t w i l l s u s t a i n a c o n t e n t i o n
made b y e i t h e r p a r t y t o an a p p e a l . ' "
B r a n n a n & Guy, P.C. v.
C i t y o f Montgomery, 828 So. 2d 914, 920 ( A l a . 2002) ( q u o t i n g
T o t t e n v . L i g h t i n g & S u p p l y , I n c . , 507 So. 2d 502, 503 ( A l a .
1987)).
Motlow and Sears note t h a t t h e s e t t l e m e n t
agreement
c o n t a i n s a " c l e a r s a i l i n g agreement."
Such an a g r e e m e n t " i s
one where t h e p a r t y p a y i n g t h e [ a t t o r n e y ] f e e a g r e e s n o t t o
c o n t e s t t h e amount t o be a w a r d e d ... so l o n g as t h e [ a t t o r n e y f e e ] award f a l l s b e n e a t h a n e g o t i a t e d c e i l i n g . " W e i n b e r g e r v.
G r e a t N o r t h e r n N e k o o s a C o r p . , 925 F.2d 518, 520 n.1 ( 1 s t C i r .
1991).
They c o n t e n d t h a t s u c h a g r e e m e n t s a r e s u s p e c t a n d
r e q u i r e g r e a t e r s c r u t i n y . Motlow and S e a r s ' s b r i e f , however,
c o n t a i n s no d i s c u s s i o n as t o how t h a t a g r e e m e n t i m p a c t e d t h i s
17
45
1101337; 1101506
S p e c i f i c a l l y , Perdue contends t h a t t h e " o n l y b e n e f i c i a r i e s " t o
the
settlement
attorney
will
agreement
are the attorneys,
court
settlement
limited
found
that
agreement,
source
available
the s o l u t i o n
of funding
contract
holders.
case:
with
which
With
the r i s k
there
the s e t t l e m e n t
settlement
by t h e
division
of the
the only
i s no a l t e r n a t i v e
t o pay a l l b e n e f i t s
that
c l a s s members w o u l d a c t u a l l y r e c o v e r
amount, o r p e r h a p s n o t h i n g ,
holders,
accomplished
i . e . , the equitable
i n this
reap
However, a s n o t e d a b o v e , t h e
f u n d s among t h e c l a s s members, was l i k e l y
solution
the
will
f e e s w h i l e t h e i r c l i e n t s , t h e PACT c o n t r a c t
receive reduced b e n e f i t s .
trial
who
the majority
to a l l
of the
l e s s than the c o n t r a c t
absent t h e s o l u t i o n p r o p o s e d by
a g r e e m e n t , we see no m e r i t i n t h e argument t h a t
agreement
affords
"no" b e n e f i t
to the class
members.
Perdue a l s o contends t h a t c l a s s counsel
expert
board's
to challenge
actuarial
or to v e r i f y
expert.
argument as t o why t h i s
d i d n o t h i r e an
t h e f i n d i n g s o f t h e PACT
However,
Perdue
presents
no
a d d i t i o n a l e x p e n s e was n e c e s s a r y i n
t h i s c a s e : t h e r e i s no a l l e g a t i o n b y any p a r t y — i n c l u d i n g t h e
case.
46
1101337; 1101506
plaintiffs,
t h e o b j e c t o r s , a n d PACT b o a r d - - t h a t
the a c t u a r i a l
p r o j e c t i o n s b y t h e PACT b o a r d ' s e x p e r t i n c o r r e c t l y s t a t e d t h e
financial peril
o f t h e PACT p r o g r a m .
an e x p e r t w o u l d have e v i d e n c e d
counsel;
there
Perhaps the h i r i n g o f
1 8
more work on t h e p a r t o f c l a s s
i s no argument b y t h e p a r t i e s ,
however,
that
s u c h work was r e q u i r e d .
Perdue
also
contends
that
a
potential
i n t e r e s t a r i s e s when c l a s s - b a s e d r e l i e f
same t i m e
conflict
Knight:
fees
as c l a s s c o u n s e l ' s
i s "plainly
conflict
i s negotiated at the
f e e i s n e g o t i a t e d and t h a t
evident"
of
i n this
case.
As
such
noted
in
"The C o u r t p a y s a t t e n t i o n t o t h e amount o f a t t o r n e y s '
awarded
negotiation
potential
to
class
of c l a s s
counsel
relief
for conflict.'"
because
'the
and a t t o r n e y ' s
469 F. Supp.
fees
simultaneous
creates
2d a t 1036
a
(quoting
M a n u a l f o r Complex L i t i g a t i o n § 30.42, a t 239 (3d e d . 1 9 9 5 ) ) .
However, a c c o r d i n g t o t h e a p p e l l e e s , c l a s s c o u n s e l ' s
negotiated
only
after
class-based
relief
f e e was
had a l r e a d y
been
C l a s s c o u n s e l t e s t i f i e d a t t h e h e a r i n g on t h e a t t o r n e y
f e e s t h a t he b e l i e v e d i t was u n n e c e s s a r y t o h i r e an e x p e r t t o
t e s t t h e p r o j e c t i o n s o f t h e PACT b o a r d ' s e x p e r t b e c a u s e i t was
o b v i o u s t h a t t h e f u n d s i n t h e PACT p r o g r a m were i n s u f f i c i e n t .
Furthermore, c l a s s counsel argued t h a t the l e g i s l a t u r e had
a s k e d t h e R e t i r e m e n t S y s t e m s o f A l a b a m a i n 2009 t o i n v e s t i g a t e
t h e f i n a n c i a l h e a l t h o f t h e PACT p r o g r a m , a n d a r e s u l t i n g
a c t u a r i a l s t u d y c o n f i r m e d t h a t t h e p r o g r a m was u n d e r f u n d e d .
1 8
47
1101337; 1101506
resolved.
Furthermore,
award, the
deposition
Associate
"for
at
of
the
the
the
case,
J u s t i c e B e r n a r d Harwood, was
entered
i n t o evidence
t h e l i m i t e d p u r p o s e s t o show t h a t i t was
V e r y much
length's
"[Mediator:]
I t was
nothing
negotiated
settlement,
t o what t h e a t t o r n e y ' s
c o l l e c t i v e l y w o u l d be,
n i n e h u n d r e d and
fifty
i s s u e as t o a t t o r n e y ' s
arm's l e n g t h good f a i t h
t h i s mediation?
so.
" [ C o u n s e l : ] Would i t be f a i r
was h o t l y d e b a t e d a t t i m e s ?
see
an arm
retired
It stated:
"[Mediator:]
We
attorney-fee
in this
" [ C o u n s e l : ] As p a r t o f t h i s
i t i n c l u d e d an a g r e e m e n t as
fees f o r the c l a s s counsel
and t h a t was
four m i l l i o n
t h o u s a n d d o l l a r s . Was t h a t
f e e s a l s o n e g o t i a t e d a t an
manner d u r i n g t h e c o u r s e o f
t o say t h a t t h a t
issue
h o t l y debated."
i n d i c a t i n g t h a t the
trial
court
exceeded
d i s c r e t i o n i n f a i l i n g to f i n d t h a t a c o n f l i c t of i n t e r e s t
affected
the
attorney-fee
award
compelling
l e g a l argument i s put
increased
scrutiny
court's
approval
Finally,
by
on
mediator
negotiation."
its
hearing
the
of the
she
the
this
and
no
f o r t h d e m o n s t r a t i n g how
any
conclusion
attorney-fee
a w a r d was
case,
that
the
and
c l a s s counsel
evidence
a
actions
conflict
s p e c i f i c a l l y notes that c l a s s counsel
48
trial
in error.
Perdue argues t h a t c e r t a i n postjudgment
PACT b o a r d
interest;
requires
in
was
of
paid
1101337; 1101506
t h e a t t o r n e y - f e e award w h i l e t h i s c a s e was p e n d i n g on a p p e a l .
As e x p l a i n e d i n P e r d u e I :
"Following the entry of the t r i a l
court's
j u d g m e n t , t h e PACT b o a r d on A u g u s t 9, 2 0 1 1 , p a i d t o
the
clerk
of the t r i a l
court
$4,977,500 i n
satisfaction
of the outstanding
judgment f o r
a t t o r n e y f e e s , c a s e - r e l a t e d e x p e n s e s , a n d amounts
awarded t o t h e c l a s s r e p r e s e n t a t i v e s p u r s u a n t t o t h e
terms o f t h e s e t t l e m e n t agreement.
On t h a t same
d a t e , Perdue f i l e d h e r n o t i c e o f a p p e a l .
"The n e x t d a y , c l a s s c o u n s e l p e t i t i o n e d t h e
t r i a l c o u r t f o r d i s b u r s e m e n t o f t h e f u n d s on d e p o s i t
w i t h t h e c l e r k o f t h e t r i a l c o u r t . That motion
s p e c i f i c a l l y r e f e r e n c e d Perdue's pending appeal b u t
stated
that
Perdue
had f a i l e d
to 'include
a
supersedeas
bond
necessary to stay
t h e above
j u d g m e n t . ' The f o l l o w i n g d a y , d e s p i t e i t s a w a r e n e s s
of Perdue's pending appeal, the t r i a l c o u r t e n t e r e d
an o r d e r p e r m i t t i n g i m m e d i a t e d i s b u r s e m e n t o f t h e
funds. In t h a t order, the t r i a l court e x p l i c i t l y
acknowledged Perdue's pending appeal b u t concluded
t h a t Perdue's n o t i c e
'specifically
d e c l i n e d any
a t t e m p t t o s u p e r s e d e any o f t h e j u d g m e n t s e n t e r e d b y
the Court.'"
Perdue
I,
So. 3d a t
(footnote omitted).
This
Court
n o t e d t h a t such d i s b u r s e m e n t o f t h e a t t o r n e y f e e s by t h e t r i a l
c o u r t "appear[ed] c o n t r a r y " t o the disbursement procedures s e t
f o r t h i n the settlement
Nevertheless,
by t h e t r i a l
agreement.
the premature
So. 3d a t
n.13.
d i s b u r s e m e n t was an a c t i o n t a k e n
court, not the p a r t i e s .
Perdue f i l e d i n t h i s C o u r t a motion t o s t a y t h e e x e c u t i o n
of judgment.
The p l a i n t i f f s a n d t h e PACT b o a r d o p p o s e d t h e
49
1101337; 1101506
m o t i o n on t h e g r o u n d s t h a t no s u c h m o t i o n h a d b e e n f i l e d
in the t r i a l
that
delay
c o u r t , t h a t no s u p e r s e d e a s b o n d h a d b e e n p o s t e d ,
i n e x e c u t i o n would
disrupt
t h e PACT
contract-
payment scheme e m b r a c e d i n t h e s e t t l e m e n t a g r e e m e n t ,
a s t a y o f t h e payment o f t h e a t t o r n e y
moot
first
because
the
PACT
board
had
and t h a t
f e e s and expenses
already
satisfied
was
the
judgment.
Perdue
conflict
characterizes
these
of i n t e r e s t because
class
C o u r t t o l e t them keep t h e i r
Chief
Justice
actions
as
Moore,
t h e PACT
and
violation
facts
class
brief,
characterizes
counsel
this
a t 63.
these
"work[ing]
payment o f t h e a t t o r n e y f e e s
demonstrate,
So. 3d a t
.
However, as t h e
t h e PACT b o a r d h a d no r o l e
premature d i s b u r s e m e n t o f t h e funds, and t h e subsequent
acts
a
o f t h e v e r y s e t t l e m e n t a g r e e m e n t t h e y now a s k
t h i s Court t o approve."
above
evidencing
Perdue's
i n h i s dissent,
board
as
c o u n s e l "was u r g i n g
fee."
t o g e t h e r t o a u t h o r i z e immediate
in
actions
o f t h e PACT b o a r d
and c l a s s
c o u n s e l were
i n the
joint
attempts t o
s i m p l y d e f e n d t h e i r e n t i r e j u d g m e n t on a p p e a l .
f.
Plaintiffs'
The
objectors
monetary
next argue
relief
that
the t r i a l
court erred i n
a p p r o v i n g a s e t t l e m e n t a g r e e m e n t p u r s u a n t t o w h i c h t h e named
50
1101337; 1101506
plaintiffs
are
the
relief.
With
agreement
approval,
only
regard
the
to
class
members
this
aspect
trial
court's
receiving
of
the
order
monetary
settlement-
contained
the
following findings:
"An a d d i t i o n a l t e r m o f t h e p r o p o s e d S e t t l e m e n t
i s t h e p r o v i s i o n f o r an a w a r d o f $2,500 t o e a c h o f
t h e d e s i g n a t e d c l a s s r e p r e s e n t a t i v e s . Such awards
a r e commonplace i n c l a s s a c t i o n c a s e s .
They a r e ,
h o w e v e r , t o be c a r e f u l l y s c r u t i n i z e d t o e n s u r e t h a t
t h e y a r e r e a s o n a b l e and n o t done as a t r a d e o f f t o
r e l i e f f o r t h e c l a s s members as a w h o l e . When s u c h
awards are p r o p o s e d , the C o u r t s h o u l d l o o k t o the
actions
t a k e n by
the
class representatives
to
p r o t e c t t h e i n t e r e s t s o f a l l c l a s s members, w h e t h e r
those a c t i o n s r e s u l t e d i n a s u b s t a n t i a l b e n e f i t to
the
c l a s s , and
the
amount o f t i m e and
effort
expended i n the l i t i g a t i o n .
"Documents w h i c h have p r e v i o u s l y b e e n f i l e d w i t h
the Court s u f f i c i e n t l y demonstrate t h a t the c l a s s
r e p r e s e n t a t i v e s have b e e n f u l l y aware o f t h e i s s u e s
involved.
The C o u r t was i n f o r m e d t h a t t h e s e c l a s s
r e p r e s e n t a t i v e s have b e e n d e p o s e d , have p a r t i c i p a t e d
i n p r e p a r i n g and r e s p o n d i n g t o o t h e r d i s c o v e r y , have
p a r t i c i p a t e d i n n e g o t i a t i o n s and m e d i a t i o n o f t h i s
case,
and
have
otherwise
contributed
in
a
s i g n i f i c a n t way t o t h e p r o p o s e d S e t t l e m e n t .
The
C o u r t a l s o n o t e s t h a t none o f t h e o b j e c t i o n s f i l e d
i n t h i s c a s e have c h a l l e n g e d t h e p r o p o s e d a w a r d t o
the c l a s s r e p r e s e n t a t i v e s . A c c o r d i n g l y , the Court
f i n d s t h a t the awards t o the c l a s s r e p r e s e n t a t i v e s
are f a i r , are c o n s i s t e n t w i t h the e f f o r t s undertaken
by
the
class
representatives,
and
have
no
s i g n i f i c a n t i m p a c t on t h e o v e r a l l r e l i e f a v a i l a b l e
t o t h e c l a s s members as a w h o l e . "
Thus, a l t h o u g h
i t i s t r u e t h a t the c l a s s
were a w a r d e d a c t u a l m o n e t a r y
relief
51
under
representatives
the
terms of
the
1101337; 1101506
s e t t l e m e n t a g r e e m e n t , i t i s a l s o c l e a r t h a t t h e amount a w a r d e d
was
small
and
was
representatives
behalf
of the
disputing
for
the
c l a s s as
the
otherwise
aimed
trial
time
and
a whole.
court's
evidencing
discretion in this
solely
that
at
compensating
effort
The
objectors
f i n d i n g s , as
the
they
trial
set
court
Disparate
The
o b j e c t o r s a l s o contend t h a t the t r i a l
a
expended
cite
out
on
nothing
above,
exceeded
or
its
regard.
g.
approving
the
treatment
settlement
o f c l a s s members
that
purportedly
court erred i n
treats
particular
segments o f t h e c l a s s d i f f e r e n t l y f r o m o t h e r segments b a s e d on
the
anticipated
Specifically,
to
matriculation
date
of
the
beneficiary.
Perdue n o t e s t h a t " b e n e f i c i a r i e s m a t r i c u l a t i n g
college
earlier
t u i t i o n paid.
...
will
have
a
higher
percentage
of
Those m a t r i c u l a t i n g t o c o l l e g e l a t e r
their
will
r e c e i v e s i g n i f i c a n t l y l e s s f r o m t h e s e t t l e m e n t when r e d u c e d t o
present
value,
significantly
brief,
at
settlement
i . e . , $35,000 i n 2010
more t h a n
67.
did
will
$35,000 i n 2025 d o l l a r s . "
trial
court's
agreement does not
finding addressing
court
The
dollars
appear
order
to
be
Perdue's
approving
contain
a
conclude
52
that
"[t]he
the
separate
t h i s p a r t i c u l a r f a c t o r ; however, the
specifically
worth
trial
proposed
1101337; 1101506
settlement
shortfall
...
serve[s]
by
distribution
t o address
establishing
of the l i m i t e d
the undisputed
parameters
assets
for
an
funding
equitable
o f t h e [PACT
program],
a l o n g w i t h t h e l e g i s l a t i v e a p p r o p r i a t i o n s o f [ t h e 2010 A c t ] . "
Further,
does
" [ i ] ti s well settled
n o t make
specific
assume
that
support
factual
i t s judgment
(Ala.
454,
the t r i a l
that
court
'"where t h e t r i a l
findings, this
made
such
findings
as
will
would
Poh v. Poh, 64 So. 3d 49, 59-60
C i v . App. 2010) ( q u o t i n g H e r b o s o v. H e r b o s o , 881 So. 2d
456 ( A l a . C i v . App. 2 0 0 3 ) , q u o t i n g
i n t u r n B e r r y h i l l v.
R e e v e s , 705 So. 2d 505, 507 ( A l a . C i v . App.
The
PACT b o a r d
notes
that,
m i g h t n o t be t r e a t e d e q u a l l y
b e n e f i t of the settlement
of
court
court
i n this
a l l c l a s s members
regard,
"the r e l a t i v e
i s d i s t r i b u t e d e q u i t a b l y among a l l
t h e c l a s s members," w i t h
longest —
although
1997)).
those
who
have
been
invested
a n d whose b e n e f i c i a r i e s a r e , t h e r e f o r e , p r e s u m a b l y
c l o s e r t o m a t r i c u l a t i o n -- r e c e i v i n g t h e most r e t u r n on t h e i r
investment
relative
"and
return
[more
...
recent
[having]
investors]
longer
horizons
make a l t e r n a t i v e f i n a n c i a l a r r a n g e m e n t s . "
at
72.
It
further
relies
on
the
receiving
less
[ i n ] which t o
PACT b o a r d ' s b r i e f ,
actuary's
testimony
i n d i c a t i n g t h a t t h e "main g o a l " o f t h e c a l c u l a t i o n s u n d e r l y i n g
53
1101337; 1101506
t h e s e t t l e m e n t a g r e e m e n t was a i m e d a t " m a k [ i n g ] s u r e t h a t as
many b e n e f i c i a r i e s r e c e i v e as many d o l l a r s a s p o s s i b l e
evenly."
spread
Thus, d e s p i t e t h e a l l e g e d l y d i s p a r a t e t r e a t m e n t , t h e
PACT b o a r d n o n e t h e l e s s m a i n t a i n s t h a t t h e s e t t l e m e n t a g r e e m e n t
s a t i s f i e s R u l e 23.
Although
agreement
--
We
perhaps
agree.
not
f o r a l l that
truly
equal,
appears
p o s s i b l e d i s t r i b u t i o n of the fund's
numerous c l a i m a n t s .
As t h e t r i a l
--
the
settlement
presents
the
best
l i m i t e d a s s e t s among t h e
court noted:
" [ I t ] i s ... u n d i s p u t e d f a c t t h a t t h e l i m i t e d a s s e t s
of t h e PACT T r u s t Fund w i l l c o n t i n u e t o be d e p l e t e d
i f the proposed Settlement i s not approved.
It is
t h e v i e w o f t h e C o u r t t h a t i t w o u l d be u n f a i r a n d
i n e q u i t a b l e t o p e r m i t f u l l b e n e f i t s t o be p a i d t o
c e r t a i n c l a s s members [ i . e . , t h o s e members whose
b e n e f i c i a r i e s a r e a l r e a d y m a t r i c u l a t i n g and/or w i l l
reach g r a d u a t i o n p r i o r t o d e p l e t i o n o f the fund's
assets,]
s u c h t h a t t h e r e m a i n i n g c l a s s members
[i.e.,
those
whose b e n e f i c i a r i e s
have n o t y e t
r e a c h e d m a t r i c u l a t i o n age,] w o u l d u l t i m a t e l y r e c e i v e
l e s s t h a n t h e sums t o be p r o v i d e d u n d e r t h e p r o p o s e d
S e t t l e m e n t , and p o s s i b l y n o t h i n g a t a l l . "
Thus,
the evidence
suggests
t h a t the proposed
distribution
p r o v i d e d f o r i n t h e s e t t l e m e n t a g r e e m e n t i s t h e o n l y means o f
e n s u r i n g t h a t e v e r y c l a s s member r e c e i v e s a t l e a s t some r e t u r n
on
h i s or her investment.
1 9
We
a r e , t h e r e f o r e , unable
We n o t e , t o o , t h a t s h o u l d i n v e s t m e n t
a n t i c i p a t i o n s , those excess funds, t o o , w i l l
19
54
to
r e t u r n s exceed
be i n c l u d e d i n
1101337; 1101506
conclude
that
the t r i a l
concluding
that
this
settlement
court
exceeded
factor,
i t sdiscretion i n
t o o , weighed
in
approval.
G i v e n t h e a b o v e , we c o n c l u d e t h a t t h e t r i a l
met t h e a p p l i c a b l e f a c t o r s o u t l i n e d i n Adams,
a.
Additional
of
court d i d not
exceed i t s d i s c r e t i o n i n h o l d i n g that the settlement
2.
favor
agreement
supra.
Considerations
Notice
Motlow and Sears contend t h a t t h e n o t i c e
advising
class
members o f t h e p r o p o s e d s e t t l e m e n t
was d e f i c i e n t i n numerous
respects,
failure
including
i t s alleged
members o f s p e c i f i c s e t t l e m e n t
due
c l a s s counsel
to
inform
class
t e r m s , s u c h as t h e c o m p e n s a t i o n
a n d t h e method b y w h i c h t h a t
was c a l c u l a t e d a n d / o r n e g o t i a t e d ;
i t s failure
compensation
to specify the
2010
r a t e s a t which t u i t i o n payments would, under t h e terms o f
the
settlement
agreement,
be
paid;
the i n s u f f i c i e n t
time
a l l e g e d l y a l l o w e d by t h e m a i l i n g date t o r e v i e w t h e s e t t l e m e n t
and r e s p o n d b e f o r e
of
the notice
t h e s c h e d u l e d h e a r i n g d a t e ; and t h e f a i l u r e
to inform
class
members
of the t o t a l
value
f u t u r e d i s t r i b u t i o n s t o c l a s s members. M o r e o v e r , e a c h c l a s s
member r e t a i n s t h e r i g h t t o s e e k a r e t u r n o f h i s o r h e r
o r i g i n a l investment.
55
1101337; 1101506
and/or p r o j e c t e d b e n e f i t of the
Following
agreement,
the
settlement.
i t s preliminary approval
trial
court
ordered
of
that
the
settlement
approved
n o t i c e be s e n t t o a l l c l a s s members a t t h e a d d r e s s e s
in
the
posted
records
of
on
Web
the
the
PACT p r o g r a m and
site
approved n o t i c e provided,
"NOTICE OF
f o r the
in full,
The
be
court-
follows:
PROPOSED CLASS ACTION SETTLEMENT
"A
proposed
class
action
settlement
('Settlement')
has b e e n r e a c h e d i n t h e
litigation
s t y l e d L i s a N i x G r e e n , e t a l . v. Kay I v e y , e t a l ,
C i r c u i t C o u r t o f Montgomery C o u n t y , A l a b a m a , Case
No.: CV-2010-900013. The p r o p o s e d S e t t l e m e n t w o u l d
change t h e manner i n w h i c h t u i t i o n and f e e s a r e p a i d
by PACT. Among o t h e r t h i n g s , t h e S e t t l e m e n t w o u l d
use F a l l 2010 r a t e s as t h e b a s e l i n e amount t o be
p a i d i n t h e f u t u r e f o r t u i t i o n and f e e s , r e g a r d l e s s
o f t h e y e a r t h a t PACT C o n t r a c t b e n e f i t s a r e u s e d .
Any t u i t i o n and f e e s c h a r g e d above t h a t b a s e l i n e
amount w o u l d n o t be p a i d by PACT, b u t w o u l d be t h e
exclusive
responsibility
of
the
PACT
Contract
p u r c h a s e r or b e n e f i c i a r y . A complete copy of the
proposed
Settlement,
along
with
the
court's
p r e l i m i n a r y approval of the Settlement,
can
be
o b t a i n e d on t h e PACT w e b s i t e , www.8 0 0 a l a p a c t . c o m , o r
by c o n t a c t i n g J . D o y l e F u l l e r f o r C l a s s A a t (334)
270-0020,
jdf@fulercopeland.com,
or
Andrew
P.
Campbell
for
Class
B
at
(205)
251-5900,
a c a m p b e l l @ l s c l a w . c o m . You a r e e n c o u r a g e d t o r e v i e w
t h e s e documents i n f u l l .
"The c o u r t has s c h e d u l e d a h e a r i n g f o r June 20,
2011 a t 1:00 p.m. t o c o n s i d e r w h e t h e r t o g r a n t f i n a l
approval
of
the
Settlement.
I f the
proposed
S e t t l e m e n t r e c e i v e s f i n a l a p p r o v a l by t h e c o u r t , you
56
of
appearing
that notice also
PACT p r o g r a m .
as
forms
1101337; 1101506
w i l l be b o u n d by t h e t e r m s t h e r e o f .
The
approval
hearing
will
be
held
i n Courtroom
4A
of
the
Montgomery C o u n t y C o u r t h o u s e , l o c a t e d a t 100 S o u t h
L a w r e n c e S t r e e t , Montgomery, A l a b a m a .
You
may
appear at the h e a r i n g to o b j e c t to the
Settlement.
However, i n o r d e r t o be h e a r d a t t h e h e a r i n g ,
you
must f i l e a w r i t t e n o b j e c t i o n w i t h t h e c o u r t
no
l a t e r t h a n June 10, 2011.
Any o b j e c t i o n s n o t t i m e l y
f i l e d s h a l l be deemed w a i v e d . F o r f u r t h e r d e t a i l s ,
p l e a s e c o n t a c t c l a s s c o u n s e l o r see t h e PACT w e b s i t e
under
'Proposed
Class
Action
Settlement
Information'."
In i t s f i n a l
found that
with
the
order
"the
...
of approval,
the
trial
d i s t r i b u t i o n o f n o t i c e was
specifically
i n compliance
r e q u i r e m e n t s of the p r e l i m i n a r y a p p r o v a l
Alabama R u l e s of C i v i l
Rule
23(e),
Ala.
P r o c e d u r e , and
R.
Civ.
P.,
members o f
the
objectors
class
fail
to
due
include
that
" s h a l l be
i n s u c h manner as
authority
order,
the
notice
given
court
that
of
directs."
establishes
the n o t i c e c o n t a i n the a l l e g e d o m i s s i o n s they i d e n t i f y .
a l s o no
authority cited
beneficiaries,
who
e s t a b l i s h i n g that
were n o t
a
that
There
designated
i n c l u d e d as named c l a s s members,
were a l s o e n t i t l e d t o n o t i c e .
Further,
t h a t t h e n o t i c e v i o l a t e d R u l e 23(e)
"A
class
settlement
i d e n t i f y the p l a i n t i f f
the
a
to a l l
minimum t i m e frame f o r s u c h n o t i f i c a t i o n o r t h a t r e q u i r e s
is
the
process."
provides
compromise i n c l a s s - a c t i o n l i t i g a t i o n
The
court
they f a i l to e s t a b l i s h
or n o t i o n s
o f due
notice
need o n l y
c l a s s and g e n e r a l l y
57
process.
properly
describe
1101337; 1101506
t h e t e r m s o f t h e s e t t l e m e n t so as t o a l e r t members
' w i t h a d v e r s e v i e w p o i n t s t o i n v e s t i g a t e a n d t o come
f o r w a r d a n d be h e a r d . ' Mendoza[ v. T u c s o n S c h o o l
D i s t . No. 1 ] , 623 F.2d [1338] a t 1352 [ ( 5 t h C i r .
1 9 7 9 ) ] . See I n r e S o u t h F l o r i d a Waste
Disposal
A n t i t r u s t L i t i g a t i o n , 896 F.2d 493, 495 ( 1 1 t h C i r .
1990)
( p e r c u r i a m ) ; B u r n s v. E l r o d , 757 F.2d 151,
155 ( 7 t h C i r . 1985) . The n o t i c e i s 'not r e q u i r e d t o
provide
a
complete
source
of
settlement
i n f o r m a t i o n . ' I n r e Gypsum A n t i t r u s t C a s e s , 565 F.2d
1123,
1125 ( 9 t h C i r . 1977) . See a l s o G r e e n s p u n v.
Bogan, 492 F.2d 375, 382 ( 1 s t C i r . 1 9 7 4 ) . "
B a t t l e v. L i b e r t y N a t ' l L i f e I n s . Co., 770 F. Supp. 1499, 1522
(N.D.
Ala.
Here,
1991).
the notice
Battle.
Not o n l y
properly
clearly
was
distributed
satisfies
the notice,
to
the
the requirements i n
f o r a l l that
plaintiff
appears,
class,
but i t
i n d i s p u t a b l y i n f o r m s c l a s s members b o t h o f t h e m o d i f i c a t i o n i n
the proposed s e t t l e m e n t
and
that
approval
agreement o f t h e i r
of the proposed
contract
settlement
agreement
constitute a final
adjudication of t h e i r claims.
copy o f t h e a c t u a l
settlement
the
notice, the information
to investigate
will
Although a
a g r e e m e n t was n o t a t t a c h e d
to
i n c l u d e d was s u f f i c i e n t t o p l a c e
members a d v e r s e t o t h e p r o p o s e d s e t t l e m e n t
need
benefits
further
t h e terms
on n o t i c e
of
the
of the
settlement
a g r e e m e n t v i a t h e methods i d e n t i f i e d , a n d , i f t h e y so d e s i r e d ,
o f how t o f o r m a l l y
object
to f i n a l
58
approval.
Therefore,
we
1101337; 1101506
are unconvinced t h a t the t r i a l
court,
i n finding that
notice
was a d e q u a t e , e x c e e d e d i t s d i s c r e t i o n .
b.
Overbreadth
Finally,
approval
the
objectors
o f t h e terms
ground of overbreadth.
the
settlement
In t h i s regard,
court's
agreement
on t h e
provides
forrelief
complaint
i n the present
t h e PACT b o a r d members f r o m
the
scope
i n the
context i n
liability for
tort
litigation
a n d f o r w h i c h c l a s s members a l l e g e d l y r e c e i v e d no
The
beyond
that
potential
corresponding
claims
that
or the
and t h a t t h e r e l e a s e c o n t a i n e d
agreement i s o v e r b r o a d
i t releases
trial
they argue b o t h
f o r i n e i t h e r the i n i t i a l
resulting counterclaim
that
the
of the settlement
agreement i m p r o p e r l y
was n o t p r a y e d
settlement
challenge
of
the
present
benefit.
sole
authority
this
Court
can
locate
i n the
objectors' b r i e f s challenging the purportedly overbroad
of the r e l i e f p r o v i d e d ,
however, i s aimed a t t h e i n f r i n g e m e n t
o f t h e c o n t r a c t m o d i f i c a t i o n s i n l i g h t o f t h e 2010 A c t .
objectors
negotiated
c i t e nothing
settlement
nature
a c t u a l l y e s t a b l i s h i n g that a
agreement
cannot
The
mutually
include
relief
d i f f e r e n t than the r e l i e f prayed f o r i n the complaint.
Moreover,
the objectors
fail
59
t o adequately
a l l e g e the
1101337;
value
1101506
and/or v i a b i l i t y
they
c o n t e n d were
that
the
PACT
capacities
of the p o t e n t i a l
improperly
board
released,
members
and t h u s may
were
claims,
which
i n l i g h t of the
sued
be e n t i t l e d
tort
i n their
to State
fact
official
immunity.
See
B u r g o o n v. A l a b a m a S t a t e Dep't o f Human R e s . , 835 So. 2d 131,
132-33
( A l a . 2002)
(a s u i t f o r damages a g a i n s t S t a t e
officials
i n t h e i r o f f i c i a l c a p a c i t i e s i s , i n e s s e n c e , an a c t i o n a g a i n s t
the
State i t s e l f
and c a n n o t p r o c e e d ) .
Finally,
although
the
o b j e c t o r s a p p e a r t o c o n t e n d t h a t t h e r e l e a s e e x c u s e s t h e PACT
b o a r d f o r any f u t u r e mismanagement
fiduciary
opinion
duty,
we
note
i n t h i s matter,
that,
or corresponding
as
s e t out
breach of
i n our
the release extended only
original
to
claims
" ' w h i c h were a s s e r t e d o r w h i c h c o u l d have b e e n a s s e r t e d as o f
the e x e c u t i o n
.
of [the] Settlement.'"
Therefore,
Perdue I ,
we see no m e r i t i n t h i s c o n t e n t i o n .
i t t o say, although
that
the
Suffice
t h e r e l e a s e may be " b r o a d , " t h e o b j e c t o r s
have p r o v i d e d no a u t h o r i t y d e m o n s t r a t i n g
broad
So. 3d a t
trial
court
exceeded
t h a t i t i s so o v e r l y
i t s discretion
in
approving i t .
A f t e r thoroughly
fact
and c o n c l u s i o n s
reviewing the t r i a l
o f l a w , we
court's f i n d i n g s of
cannot h o l d
that
court exceeded i t s d i s c r e t i o n i n f i n d i n g t h a t the
60
the
trial
settlement
1101337;
1101506
a g r e e m e n t was f a i r ,
a d e q u a t e , and r e a s o n a b l e .
CONCLUSION
In
27,
c o n s i d e r a t i o n of the foregoing, the t r i a l court's J u l y
2011, o r d e r
September
17,
approving
2012,
the settlement
order
entered
on
a g r e e m e n t and i t s
remand
r e t r o a c t i v e a p p l i c a t i o n o f t h e 2012 A c t t o be
finding
the
constitutional
are a f f i r m e d .
1101337 -- AFFIRMED.
1101506 -- AFFIRMED.
Parker,
Justices,*
J . , and
Windom,
Pittman,
and
Moore,
Special
concur.
Shaw, J . , and L y o n s ,
S p e c i a l J u s t i c e , * concur
Moore, C . J . , c o n c u r s
i n p a r t and d i s s e n t s i n p a r t .
Stuart,
recuse
Bolin,
Murdock,
Main,
Wise,
and
specially.
Bryan, J J . ,
themselves.
* R e t i r e d A s s o c i a t e J u s t i c e Champ L y o n s , J r . , and C o u r t o f
C i v i l A p p e a l s J u d g e s C r a i g S. P i t t m a n and T e r r y A. Moore were
a p p o i n t e d t o s e r v e as S p e c i a l J u s t i c e s i n r e g a r d t o t h e s e
appeals.
C o u r t o f C r i m i n a l A p p e a l s P r e s i d i n g Judge Mary
B e c k e r Windom was a p p o i n t e d t o s e r v e as a S p e c i a l J u s t i c e on
r e t u r n t o remand.
61
1101337;
1101506
SHAW, J u s t i c e
(concurring
specially).
I concur i n t h e main o p i n i o n .
I write separately only to
make s e v e r a l o b s e r v a t i o n s .
The PACT p r o g r a m was c r e a t e d w i t h l a u d a b l e i n t e n t i o n s a n d
apparently
operated
effectively
however,
as d e m o n s t r a t e d
opinion,
i t now s t a n d s
the
creation
traditionally
of
after
by t h e f a c t s
number
of
government
reserved
programs
to families
respect to
operating
in
or i n d i v i d u a l s .
were
areas
PACT
1995, i t i s a l l e g e d i n t h i s
pay the c o l l e g e t u i t i o n
1995, p u r c h a s e r s
years;
s e t o u t i n t h e main
as a c a u t i o n a r y t a l e w i t h
contracts purchased before
were t o f u l l y
for a
case,
of the b e n e f i c i a r i e s ;
purportedly
informed
that the
t u i t i o n p a i d d e p e n d e d on t h e f i n a n c i a l h e a l t h o f t h e p r o g r a m .
In
any e v e n t ,
cannot
fulfill
the record
indicates that
i t s financial
t h e PACT
program
o b l i g a t i o n s ; most r e g r e t t a b l y ,
t h e f a m i l i e s a n d i n d i v i d u a l s who have i n v e s t e d i n , a n d r e l i e d
on,
this
once p r o m i s i n g
program bear the f u l l
brunt
of t h i s
f o r f e i t u r e a n d a r e now f a c e d w i t h t h e d i f f i c u l t i e s o f d e a l i n g
with the f i n a n c i a l
In
shortfall
our o r i g i n a l
following
the
plain
e n a c t m e n t s , w h i c h were
o f t h e PACT p r o g r a m .
decision
i n this
case,
language
of
legislature's
intended
62
the
t o rescue
this
Court,
2010
t h e PACT p r o g r a m ,
1101337; 1101506
held
that
rights
t h e PACT
board
could
o f t h e PACT c o n t r a c t
1101337, M a r c h
16, 2012]
2012-198, A l a . A c t s
not a l t e r
holders.
Perdue
So. 3d
authority
branch
to
of
state
reject
so w o u l d
v. Green,
[Ms.
A c t No.
2012 ("the 2012 A c t " ) , h o w e v e r , h a s g i v e n
constitutional exercise
Doing
contractual
( A l a . 2012).
b r o a d p o w e r s t o t h e PACT b o a r d t o a l t e r
judicial
the
intrude
an
government
act that
those r i g h t s .
does
not
i s the
duly
The
have
the
enacted,
of the l e g i s l a t u r e ' s inherent
power.
upon t h e power o f t h e l e g i s l a t u r e i n
v i o l a t i o n o f A l a . C o n s t . 1901, A r t . I I I . , § 43, w h i c h
forbids
the
of
judicial
branch
from
exercising
the
power
the
l e g i s l a t i v e b r a n c h , so t h a t o u r g o v e r n m e n t i s one " o f l a w s a n d
n o t o f men."
2012
A c t i s not u n c o n s t i t u t i o n a l based
application.
the
A l l the J u s t i c e s i n t h i s
case agree
that the
on i t s
retroactive
Our d e c i s i o n t o d a y f o l l o w s t h e l a w p r o v i d e d
legislature,
w h i c h h a s t h e e x c l u s i v e power t o
by
formulate
the p u b l i c p o l i c y o f t h i s S t a t e , s u b j e c t t o t h e c o n s t i t u t i o n .
Boles
v. P a r r i s ,
legislature,
formulate
952 So. 2d 364, 367
( A l a . 2006)
("[T]he
a n d n o t t h i s C o u r t , h a s t h e e x c l u s i v e domain t o
p u b l i c p o l i c y i n Alabama.").
To me, i t i s an u n d e r s t a t e m e n t t o s a y t h a t t h e amount o f
the
attorney
fees
awarded i n t h i s
63
case i s u n s e t t l i n g ,
given
1101337; 1101506
the
source of the
the intended
w o u l d have
i s s u e had
for
funds from which the
f e e must be
p u r p o s e o f t h e PACT p r o g r a m .
reached
trial
judge i n t h i s
purposes of a p p e l l a t e review.
The
and
However, w h e t h e r I
a d i f f e r e n t r e s u l t with
I been the
paid
respect
to
this
case i s i r r e l e v a n t
d e c i s i o n by t h i s
Court
as t o w h e t h e r t h o s e f e e s a r e l e g a l i s u l t i m a t e l y c o n t r o l l e d by
the
applicable
time,
although
r e s p e c t f u l l y disagree
requires.
At
adversarial
dictates
presented
have
law,
a
minimum,
we
J u s t i c e s may,
from time
to
as
to
law
or
however,
s y s t e m upon w h i c h o u r
that
we
t o us
nothing
rule according
by
the
before
what
I
by
believe
means
that
l e g a l precedents are
to
the
p a r t i e s before
me
that
which
f a c t s and
us.
to
based
arguments
In t h a t
disagree
the
vein,
with
I
the
c o n c l u s i o n i n t h e m a i n o p i n i o n t h a t no l e g a l b a s i s - - s u f f i c i e n t
argument p r e m i s e d on
the
presented
demonstrating
approval
on
appeal
a p p l i c a b l e law
and
that
o f t h e amount o f t h e a t t o r n e y - f e e
s e t a s i d e on t h e b a s i s t h a t i n a p p r o v i n g
court exceeded i t s d i s c r e t i o n .
64
the
facts--has
trial
been
court's
a w a r d i s due
t h a t amount t h e
to
be
trial
1101337; 1101506
LYONS, S p e c i a l J u s t i c e ( c o n c u r r i n g
specially).
I concur f u l l y i n the main o p i n i o n .
endorse t h a t aspect
w h i c h he
the
of
the
unsettling,"
by
the
" i t i s an
attorney
So.
c o n s t r a i n e d by
to
o f J u s t i c e Shaw's s p e c i a l c o n c u r r e n c e i n
observes that
amount
I write specially
3d
u n d e r s t a t e m e n t t o say
fees
awarded
at
,
yet
in
this
notes
that
case
that
he
l i m i t a t i o n s i m p o s e d on an a p p e l l a t e
the a d v e r s a r i a l system, thereby
preventing
him
from
is
is
court
going
b e y o n d t h e m a t e r i a l s b e f o r e t h e c o u r t i n o r d e r t o r e a c h a more
palatable
result.
I f t h e a w a r d o f an a t t o r n e y f e e e x c e e d e d a t r i a l
subject-matter
jurisdiction,
s u c h as where payment o f t h e
w o u l d be i n c o n s i s t e n t w i t h t h e d o c t r i n e o f s o v e r e i g n
this
Court
could
raise
court's
the
issue
on
its
immunity,
own
motion,
notwithstanding
t h a t t h e i s s u e had n o t b e e n a s s e r t e d by any
the
the
p a r t i e s to
229,
funds
250
are
So.
2d
appeal.
677,
clearly
not
678
Aland
(1971).
State
("The
Graham, 287
However,
funds;
s o v e r e i g n immunity i s presented.
1975
v.
the
therefore,
Ala.
PACT
no
of the
trust
issue
65
of
See § 1 6 - 3 3 C - 6 ( b ) , A l a . Code
s t a t e , and
c l a i m or i n t e r e s t i n them.").
of
226,
amounts on d e p o s i t i n t h e PACT T r u s t Fund s h a l l
constitute property
fee
the
s t a t e may
have
not
no
1101337; 1101506
I,
t o o , am " h o l d i n g
attorney
as I j o i n
i n upholding the
f e e , b u t I do so f o r t h e r e a s o n s
set f o r t h i n the
main o p i n i o n
a n d a s a m p l i f i e d b y J u s t i c e Shaw i n h i s s p e c i a l
concurrence.
Justice
circumstance
result
likes
my n o s e "
of a
judge
Scalia
finding
he o r she d i s l i k e s .
t h e r e s u l t s he r e a c h e s
soften
that
adhere
to
criticism
the
Nevertheless,
proper
recently
dealt
i t necessary
He s a i d :
boundaries
such
of
the
to uphold
"The j u d g e
i s a bad judge."
t o say t h a t
with
who
a judge
always
I
2 0
a
would
does n o t
appellate
I do n o t l i k e t h e r e s u l t I have r e a c h e d
review.
today.
Tasha Tsiaperas,
" C o n s t i t u t i o n a 'dead, d e a d , d e a d '
document, S c a l i a t e l l s SMU a u d i e n c e , " D a l l a s News, J a n u a r y 28,
2013.
On t h e d a t e t h i s o p i n i o n was r e l e a s e d , t h e a r t i c l e
could
be
accessed
at
http://www.dallasnews.com/news/
c o m m u n i t y - n e w s / p a r k - c i t i e s / h e a d l i n e s / 2 013012 8 - s u p r e m e - c o u r t justice-scalia-offers-perspective-on-the-law-at-smu-lecture.
ece.
20
66
1101337; 1101506
MOORE, C h i e f
Justice
(concurring
i n part
and d i s s e n t i n g i n
part).
I n P e r d u e v. G r e e n ,
3d
[Ms. 1101337, M a r c h 16, 2012]
So.
( A l a . 2012) ("Perdue I " ) , t h i s C o u r t h e l d t h a t , " t o t h e
extent
t h e PACT B o a r d
procedures,
contracts,
acted
or p o l i c i e s
t o change
i t s existing
to accept m o d i f i c a t i o n
o f t h e PACT
... i t v i o l a t e d t h e c o n t r a c t u a l r e l a t i o n s h i p w i t h
t h e PACT c o n t r a c t h o l d e r s b y e x c e e d i n g t h e e x p r e s s
s e t o u t i n § 1 6 - 3 3 C - 1 9 [ , A l a . Code 1 9 7 5 . ] "
Therefore,
the settlement
approved
the t r i a l
court's
order
limitation
So. 3d a t
by t h e t r i a l
" c l e a r l y contrary to state law."
vacated
rules,
So. 3d a t
approving
court
. This
the
.
was
Court
settlement
a g r e e m e n t a n d remanded t h e c a s e .
While
t h e PACT
board's
application
P e r d u e I was p e n d i n g i n t h i s C o u r t ,
f o r rehearing
in
the l e g i s l a t u r e passed A c t
No. 2012-198, A l a . A c t s 2012 ("the 2012 A c t " ) , r e p e a l i n g § 1633C-19, A l a . Code 1975. I a g r e e w i t h
opinion
not
that
Part
I of the majority
t h e r e t r o a c t i v e a p p l i c a t i o n o f t h e 2012 A c t i s
unconstitutional
a n d does
not impair
the
contractual
r i g h t s o r o b l i g a t i o n s o f t h e PACT c o n t r a c t h o l d e r s . I d i s s e n t ,
however,
from P a r t
I I of the majority
opinion
regarding the
a w a r d o f $4,950,000 i n a t t o r n e y f e e s b e c a u s e s u c h a f e e i s n o t
67
1101337;
1101506
justified
case
under
excessive.
clearly
in this
the
facts
presented
I am
also persuaded that
the
and
is
settlement
a g r e e m e n t i n t h i s c a s e s h o u l d n o t have b e e n a p p r o v e d b e c a u s e
there
exists
counsel
an a p p a r e n t c o n f l i c t o f i n t e r e s t b e t w e e n
and t h e members o f t h e c l a s s
When
considering
reasonableness
action,
the
itself.
fairness,
of a proposed settlement
adequacy,
and
agreement i n a
class
a c o u r t must p a y s p e c i a l " a t t e n t i o n
attorneys'
fees
simultaneous
awarded
to
class
n e g o t i a t i o n of c l a s s
class
t o t h e amount o f
counsel
relief
because
and a t t o r n e y ' s
'the
fees
c r e a t e s a p o t e n t i a l f o r c o n f l i c t . ' " K n i g h t v. A l a b a m a , 469 F.
Supp.
2d
1016,
1036
(N.D.
A l a . 2006)
Complex L i t i g a t i o n § 30.42, a t 239
this
potential
(quoting
(3d e d . 1 9 9 5 ) ) .
f o r c o n f l i c t between
class
Manual f o r
Because of
members and t h e i r
attorneys i n c l a s s - a c t i o n matters,
a c o u r t r e v i e w i n g an award
of a t t o r n e y fees i n a c l a s s - a c t i o n
s e t t l e m e n t must be
to s c r u t i n i z e the reasonableness
careful
o f t h e a t t o r n e y f e e s . As t h e
f e d e r a l d i s t r i c t c o u r t e x p l a i n e d i n Bowen v. S o u t h T r u s t
o f A l a b a m a , 760 F. Supp.
889, 892
(M.D.
A l a . 1991):
"In d e t e r m i n i n g whether p l a i n t i f f s ' counsel i s i n
f a c t e n t i t l e d t o f e e s , and i f s o , i n what amount,
the
c o u r t must be
sensitive
to the
potential
c o n f l i c t o f i n t e r e s t b e t w e e n p l a i n t i f f s and t h e i r
c o u n s e l , and must be p a r t i c u l a r l y c a r e f u l t o i n s u r e
68
Bank
1101337; 1101506
that the ultimate d i v i s i o n of settlement
f a i r t o a b s e n t c l a s s members."
Accordingly,
trial
this
court's
Court
award
reasonableness
as
should
of c l a s s
well
as
more
carefully
counsel's
f o r the
funds i s
examine t h e
attorney
inherent
fees f o r
conflict
i n t e r e s t w i t h c l a s s members t h a t e x i s t e d when e x o r b i t a n t
were
agreed
to
by
the
n e g o t i a t i o n s . With regard
I
cite
remand
Carol
M.
counsel's
regarding
fees
this
board
during
and h e r b r i e f
dissent.
Those
on a p p e a l .
fees,
on r e t u r n t o
briefs
whether the a p p e l l a n t s
fees
settlement
to the issue of the attorney
Perdue's b r i e f
throughout
themselves
PACT
of
speak f o r
challenge
class
The C o u r t does n o t n e e d t o s e a r c h
t h e r e c o r d t o make t h e a p p e l l a n t s ' c a s e f o r them; P e r d u e makes
her
case by c i t i n g t o t h e r e c o r d i n h e r b r i e f s t o t h i s
See
Perdue's
brief,
a t 42-66;
Perdue's
brief
Court.
on r e t u r n t o
remand, a t 54-58.
As
Perdue n o t e s i n h e r b r i e f
on o r i g i n a l
submission,
f a c t t h a t w e i g h s a g a i n s t s u c h an e x c e s s i v e a t t o r n e y - f e e
i s t h a t t h i s c a s e was s e t t l e d i n t h e e a r l y p r e t r i a l
the proceedings,
PACT
board
a
award
stages of
o n l y s i x d e p o s i t i o n s h a v i n g been t a k e n by t h e
a n d a t most
two d e p o s i t i o n s
by
class
counsel.
P e r d u e ' s b r i e f , a t 51-53. F u r t h e r m o r e , a s P e r d u e a r g u e s , c l a s s
69
1101337; 1101506
c o u n s e l n e v e r d i s c l o s e d an e x p e r t , a n d t h e r e i s no i n d i c a t i o n
t h a t an e x p e r t was e v e n c o n s u l t e d . P e r d u e ' s b r i e f , a t 43, 5 1 ¬
52,
59, 64-65.
Moreover,
nothing
i n the record
shows
that
c l a s s c o u n s e l d e p o s e d members o f t h e PACT b o a r d o r t h e a c t u a r y
upon whose t e s t i m o n y
t h e s e t t l e m e n t amount was b a s e d .
a l l e g e s a s much i n h e r b r i e f .
58-59,
64-65.
Finally,
costs
Perdue's b r i e f ,
and expenses
Perdue
a t 43, 51-52,
of class
counsel
were c a l c u l a t e d t o be o n l y $15,000.
In l i g h t o f t h e f o r e g o i n g , t h e time and l a b o r r e q u i r e d o f
class
counsel
warrant
to this
point
case
do n o t a p p e a r t o
an a w a r d o f $4,950,000 i n a t t o r n e y
a l r e a d y s t r a i n e d PACT t r u s t
46,
i n this
fund.
fees
out of the
See P e r d u e ' s b r i e f ,
59-63. See a l s o R u l e 1.5, A l a . R. P r o f . C o n d u c t
labor
expended
by
an
attorney
a r e t o be
d e t e r m i n i n g whether a f e e i s e x c e s s i v e ) .
a t 43,
(time and
considered
in
2 1
I n most c l a s s a c t i o n s , a common f u n d i s c r e a t e d e i t h e r
by a f i n a l j u d g m e n t i n t h e a c t i o n o r t h e s e t t l e m e n t o f t h e
c l a s s a c t i o n and i s m a i n t a i n e d by c l a s s c o u n s e l f o r t h e
b e n e f i t o f c l a s s members. I n t h i s c a s e , a s t h e m a j o r i t y
o p i n i o n r e c o g n i z e s , c l a s s c o u n s e l d i d n o t c r e a t e a common f u n d
b e c a u s e t h e PACT t r u s t f u n d a l r e a d y e x i s t e d when c l a s s c o u n s e l
was r e t a i n e d a n d t h e f u n d was m a i n t a i n e d b y t h e PACT b o a r d . I n
a f o o t n o t e , t h e m a j o r i t y s t a t e s t h a t t h e "common-fund d o c t r i n e
a l s o a p p l i e s when a f u n d i s p r e s e r v e d o r p r o t e c t e d . "
So. 3d
at
n. 14. I a g r e e . However, t h e f a c t t h a t c l a s s c o u n s e l d i d
n o t have t o c r e a t e a common f u n d s u g g e s t s t h a t c o u n s e l d i d n o t
have t o do a s much work a s i s u s u a l l y r e q u i r e d i n c l a s s - a c t i o n
2 1
70
1101337; 1101506
Perhaps
class
most
counsel
problematic
and
the
i s that
PACT
the i n t e r a c t i o n s of
board
during
settlement
n e g o t i a t i o n s l e a v e t h e i m p r e s s i o n t h a t t h o s e p a r t i e s l a c k e d an
adversarial
conflict
relationship.
at length
Perdue
discusses
i n her b r i e f s
to this
this
Court.
alleged
Perdue's
b r i e f , a t 42-44, 59-66; P e r d u e ' s b r i e f on r e t u r n t o remand, a t
53-58. As one o b j e c t o r n o t e d :
"'I'm n o t t o o happy w i t h
I've
seen i n t h e c o u r t here w i t h o p p o s i n g c o u n s e l .
they
are holding
different
hands more t h a n
they
s i d e s . ' " Perdue's b r i e f ,
Class counsel
"Settlement
what
Seems l i k e
are representing
two
a t 42.
d i s t r i b u t e d t o t h e members o f t h e c l a s s a
D e s c r i p t i o n " and a " Q u e s t i o n s and Answers"
both of which repeated
the f i n a n c i a l conclusions
form,
o f t h e PACT
b o a r d a n d t h e a c t u a r y r e t a i n e d b y t h e PACT b o a r d , e v e n t h o u g h
c l a s s c o u n s e l h a d n e v e r r e t a i n e d t h e i r own e x p e r t t o c h a l l e n g e
o r v e r i f y t h o s e c o n c l u s i o n s . P e r d u e ' s b r i e f , a t 43, 51-52, 56¬
59,
64-65; P e r d u e ' s b r i e f
appears t h a t c l a s s counsel
of
t h e PACT b o a r d
on r e t u r n t o remand, a t 55-56. I t
took a t face value
and i t s a c t u a r y
regarding
a l l the claims
the f i n a n c i a l
c o n d i t i o n o f t h e t r u s t fund and used those c l a i m s t o encourage
litigation.
71
1101337; 1101506
t h e c l a s s members t o r e a c h a s e t t l e m e n t . See P e r d u e ' s
at
43, 46, 51-52, 58-59, 64-65; P e r d u e ' s b r i e f
remand, a t 54-56. M o r e o v e r , a l t h o u g h
brief,
on r e t u r n t o
c l a s s counsel had never
d e p o s e d an e x p e r t t o r e f u t e t h e f i n d i n g s o f t h e a c t u a r y h i r e d
by t h e PACT b o a r d , t h e " S e t t l e m e n t D e s c r i p t i o n " a n d " Q u e s t i o n s
and
Answers"
class
form
i n strong
distributed
language
by c l a s s
about
the
counsel
warned t h e
consequences
of not
s e t t l i n g the case:
"[I]f
t h i n g s c o n t i n u e d on c o u r s e , b y t h e f a l l o f
2012 t h e PACT f u n d w o u l d n o t have enough money t o
e v e n g i v e y o u y o u r money b a c k . A n d w i t h i n a few
y e a r s t h e PACT f u n d w o u l d be c o m p l e t e l y o u t o f
money.
"The
s e c o n d a l t e r n a t i v e was t o s i m p l y s h u t t h e
P r o g r a m down b e f o r e t h e p o i n t o f no r e t u r n ( f a l l
2010) a n d i n s u r e t h a t e a c h PACT p a r t i c i p a n t a t l e a s t
g o t t h e i r money b a c k .
" I s t h i s what y o u b a r g a i n e d f o r ? No, i t i s n o t . I s
t h i s b e t t e r t h a n s i m p l y s h u t t i n g t h e P r o g r a m down?
We b e l i e v e i t i s .
" I f t h a t was t h e r u l i n g , b y t h e t i m e t h i s c a s e was
f u l l y l i t i g a t e d t h e PACT f u n d c o u l d be o u t o f money
and y o u c o u l d have l o s t e v e r y t h i n g .
" I f t h i s c a s e l a s t e d p a s t t h e f a l l o f 2012 a n d we
were n o t a b l e t o h o l d t h e S t a t e l i a b l e on t h e s e
c o n t r a c t s a l l may w e l l have b e e n l o s t .
"
"The a l t e r n a t i v e i s t o s i m p l y go a h e a d , f a c e t h e
i n e v i t a b l e , s h u t t h e p r o g r a m down a n d g i v e e v e r y o n e
72
1101337; 1101506
t h e i r money b a c k . I t i s o u r o p i n i o n t h a t i f t h i s
s e t t l e m e n t i s n o t a p p r o v e d , o r i f a few p e o p l e d e l a y
i t through appeals, t h a t t h e program w i l l c o l l a p s e .
I f t h a t c o l l a p s e o c c u r s a f t e r n e x t f a l l , you f o l k s
won't e v e n be a b l e t o g e t y o u r money b a c k . T h a t i s
unacceptable t o us.
" G i v e n t h a t t h e PACT P r o g r a m was on t h e v e r g e o f
c o l l a p s e , t h e b e n e f i t h e r e was s a v i n g t h e p r o g r a m .
The v a l u e o f t h a t i s i n e x c e s s o f $500 m i l l i o n . "
Perdue's
brief,
particularly
$4,950,000
a t 56-57.
suspect
should
Perdue's
brief,
Perdue's
brief
Such
when
class
the class
at
on
42-44,
return
inducements
counsel
stood
members a c c e p t
46,
52-53,
to settle
to
benefit
the settlement.
55-59,
60-61,
a t 56-58.
t o remand,
seem
And
65;
class
members have e v e r y r e a s o n t o s u s p e c t a l a c k o f an a d v e r s a r i a l
r e l a t i o n s h i p when c l a s s c o u n s e l a n d t h e PACT b o a r d a g r e e d t o
f u l l payment o f a t t o r n e y f e e s p r i o r
the
appeal,
restricted
despite the fact
that the settlement
s u c h payments u n t i l
been completed.
Perdue's
t o t h i s C o u r t ' s r u l i n g on
after
brief,
agreement
the appeal process had
a t 43, 61-63; P e r d u e ' s
brief
on r e t u r n t o remand, a t 56-58.
A f t e r the objectors f i l e d
of
a "Motion t o Stay of E x e c u t i o n
Judgment a n d E x p e d i t e d T r e a t m e n t "
counsel
a n d t h e PACT
board
o p p o s i t i o n t o the motion,
with this
submitted
filings
73
a
joint
Court,
class
response
noted i n Perdue's
in
brief, at
1101337;
43,
1101506
62-63, a n d i n P e r d u e ' s b r i e f on r e t u r n t o remand,
Both
class
counsel
a n d t h e PACT
board
worked
a t 56.
together
to
a u t h o r i z e i m m e d i a t e payment o f t h e a t t o r n e y f e e s i n v i o l a t i o n
of t h e v e r y
settlement
approve.
I
must
opinion
that
a g r e e m e n t t h e y now a s k t h i s
respectfully
"nothing
disagree
indicat[es]
with
that
the
Court t o
the majority
trial
court
exceeded i t s d i s c r e t i o n i n f a i l i n g t o f i n d t h a t a c o n f l i c t of
i n t e r e s t a f f e c t e d t h e a t t o r n e y - f e e award i n t h i s c a s e . "
3d a t
.
In c o n c l u s i o n , a l t h o u g h
of
So.
I f i n d no f a u l t i n t h e e n a c t m e n t
t h e 2012 A c t a n d t h e l e g i s l a t u r e ' s
attempt
to
address
p o t e n t i a l p r o b l e m s w i t h t h e PACT p r o g r a m , I am c o m p e l l e d
disapprove
the
PACT
to
a s e t t l e m e n t agreement t h a t b o t h c l a s s c o u n s e l and
board
have
already
violated,
and I
respectfully
d i s s e n t from t h e m a j o r i t y o p i n i o n b o t h as t o t h e a t t o r n e y f e e s
awarded
a n d as t o t h e a p p r o v a l
entered i n t h i s class
action.
74
of the settlement
agreement
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