Hall v. Envtl. Litig. Grp., P.C., 248 So. 3d 949

Background

Plaintiffs (personal representatives of estate clients) sued ELG alleging ELG deducted an "Administrative Service Expense Charge" in addition to a 40% contingency fee provided in signed attorney-employment agreements.
Plaintiffs sought class relief for all past and present ELG asbestos clients who signed contingency-fee contracts, asserting breach of contract and other claims.
The trial court, after limited proceedings and without class-certification discovery, dismissed (struck) the class claims, finding the contracts ambiguous and the class definition overly broad.
The trial court concluded ambiguity would require individualized inquiries about each class member’s intent/interpretation, defeating Rule 23 commonality/predominance.
On appeal, the Alabama Supreme Court treated the dismissal as a Rule 12(b)(6) failure-to-state-a-claim dismissal and considered the complaint and the ELG memorandum describing the new charge.
The Court reversed: it held the complaint (and memorandum) plausibly alleged the charge was not an "expense" reimbursable under the contract but an extra fee (thus no ambiguity that would defeat class treatment at the pleading stage); it also held dismissal for an overbroad class definition was premature.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether class claims may be dismissed pre-certification because the contract is ambiguous	Contracts plainly compensate ELG via the 40% contingency for prosecution/enforcement work; the new charge is extra and part of that fee	The agreement contemplates reimbursement of expenses; the Administrative Service Expense Charge fits the expense provision and the contract is ambiguous	Reversed: viewing allegations in plaintiffs' favor, the memorandum shows the charge can be an extra fee, not an expense; no ambiguity warranting pre-certification dismissal under Rule 12(b)(6)
Whether the new charge is an "expense" permitted by the contract or an additional fee exceeding 40%	Charge is for services necessary to prosecute/enforce claims and thus included in the contingency fee	Charge is an allowed expense (including fixed estimates) under the contract's expense-reimbursement clause	Held for plaintiffs at pleading stage: charge described as a flat fee for services, not reimbursement of out-of-pocket expenses; therefore it need not be treated as an expense under the contract
Whether individualized inquiries into each class member's intent preclude Rule 23 commonality/predominance	The contract language and memorandum allow a common question whether the charge was an unauthorized extra fee	The contracts are ambiguous and long-term representation created varied circumstances requiring individual proof	Reversed: court finds no contractual ambiguity on the pleaded record that would categorically require individualized intent inquiries before discovery/class-certification proceedings
Whether the class definition was fatally overbroad at the pleading stage	Proposed class sufficiently notifies defendant and is ascertainable; refinements can occur at certification	Class includes persons never charged the fee and is therefore overly broad and unascertainable	Held: dismissal for overbreadth was premature; ascertainability and definition issues are for class-certification process and pre-certification dismissal is disfavored

Key Cases Cited

Hall v. Environmental Litigation Group, P.C., 157 So.3d 876 (Ala. 2014) (prior opinion in same litigation addressing jurisdictional/claim framing issues)
B.W.T. v. Haynes & Haynes, P.C., 20 So.3d 815 (Ala. Civ. App.) (discussing State Bar/ethics enforcement as distinct from contract claims)
University Federal Credit Union v. Grayson, 878 So.2d 280 (Ala. 2003) (ambiguity in contract language can defeat class commonality)
Mann v. GTE Mobilnet of Birmingham, Inc., 730 So.2d 150 (Ala. 1999) (contract ambiguity rendered class certification improper)
General Motors Acceptance Corp. v. DuBose, 834 So.2d 67 (Ala. 2002) (ambiguity prevents satisfying Rule 23 commonality/predominance)
FabArc Steel Supply, Inc. v. Composite Constr. Sys., Inc., 914 So.2d 344 (Ala. 2005) (definition of contract ambiguity)