Alabama Litigation Review : North Alabama Personal Injury Lawyer & Attorney : Jeff Blackwell : Hornsby, Watson, Hornsby, Blackwell & McKown Law Firm : Commercial Litigation, Workers' Compensation : Huntsville, Decatur, Athens

Last November, I addressed the struggles of our Federal Courts to determine corporate citizenship for purposes of diversity jurisdiction.  My previous entry details the issues surrounding diversity jurisdiction as well as the various tests utilized by Federal Courts to determine corporate citizenship.  At that time, the U.S. Supreme Court had just heard oral argument in Hertz Corporation v. Friend on this issue.

Today, the U.S. Supreme Court issued it opinion in Hertz Corporation v. Friend.  Justice Breyer delivered the unanimous opinion of the Court.  In its decision, the Court stated:

And we conclude that the phrase “principal place of business” refers to the place where the corporation’s high level officers direct, control, and coordinate the corporation’s activities. Lower federal courts have often metaphorically called that place the corporation’s “nerve center.”
.  .  .

We believe that the “nerve center” will typically be found at a corporation’s headquarters.

What is the likely outcome of today's decision?  Clearly, the U.S. Supreme Court opted for a test that will be easier for courts to apply.  This test will also produce a greater consistency of results as opposed to the more subjective tests analyzing all the business operations of a corporation. 

However, from a practical perspective, I believe it will also result in Federal Courts exercising greater jurisdiction over significant claims involving large corporations.  For example, a corporation could have its "nerve center" in Georgia but most of its actual operations in Alabama.  In such a case, the most likely location of a significant injury due to corporate operations would be Alabama.  Yet, the company would be considered a citizen of another state, Georgia, for establishing diversity jurisdiction.  As a result, it would be more likely that a Federal Court, instead of an Alabama Court, would ultimately decide any resulting legal claim.

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First, let me say that this entry is not meant as a criticism of Alabama's judicial system.  In my experience, the vast majority of our judges and court personnel are deeply dedicated to providing a fair and efficient system of justice despite increasingly limited resources.  I am simply writing to discuss three current ideas aimed at improving our system.  What are these ideas?

1. ELECT JUDGES THROUGH NON-PARTISAN RACES
2. MODIFY ALABAMA'S CURRENT TWO-TIER SYSTEM OF TRIAL COURTS
3. ELECT ASSOCIATE JUSTICES OF THE ALABAMA SUPREME COURT BY DISTRICT

The topic of non-partisan judicial races has been a frequent issue before our legislature in the last few years.  A bill to make such elections non-partisan has been introduced yearly since 2004.  Yet, each year political moves seem to trump real debate.  Do we really want judges who must worry about partisan politics?  Asked another way, do we want to risk electing the most partisan and political people as judges?  Or, do we want to elect the people most qualified to listen and apply the law without agenda?  In 2007, Birmingham attorney Thomas Wells (who recently completed a term as President of The American Bar Association) wrote an article concerning our current system for The Birmingham News.  While Wells favors a pure merit selection system for judges, his article notes many of the problems with our current, highly partisan, method of electing judges.

In her recent State of the Judiciary address, Chief Justice Cobb mentioned Alabama's two-tier system of trial courts.  Basically, under our two-tier system, small cases are often handled in the District Court.  Larger civil cases and other matters are handled by the Circuit Court.  However, in many situations, the losing party in District Court can simply appeal to Circuit Court and have a second chance to win their case from the beginning.  What does a decision mean if the loser can simply start fresh in a new court?  Is it efficient to allow a second, new and full, trial process without consideration of the earlier decision?  At present, many of our courts face a crisis of too few resources and too few judges.  I have written previously about the funding crisis in our courts as well as the lack of Circuit Judges in Madison County.  Modifying our system to reduce this unnecessary overlap would certainly help our courts.

Finally, Alabama voters presently elect the Chief Justice of our Supreme Court as well as all 8 associate justices in statewide elections.  On several occasions, proposals have been made to elect the 8 associate justices by district.  Does our current system allow a candidate to neglect certain areas of the state and focus on major media areas when running for office?  Does it allow a candidate with very little practical experience simply to run an advertising campaign statewide?  By focusing on districts, it would seem more likely that the successful candidate had developed a reputation for quality legal skills within their local community.  It might lessen the ability of less qualified candidates to gain election through mass advertising efforts aimed simply at building name recognition.  Moreover, it could provide local courts in that district with a specific justice who could respond to emergency issues.

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On February 5, the Alabama Supreme Court issued an interesting decision addressing important issues of venue.  The case, Ex parte 3M Company, Inc., discusses proper venue in class action claims as well as the proper procedure to transfer a case filed in the wrong venue.  The case presents at least two points that should be carefully considered by class counsel.

To start, I'll try to condense the facts into just a few short sentences.  In Ex parte 3M Company, the plaintiff lived in Lawrence County.  He filed suit asserting class action claims in Franklin County.  Yet, the principal place of business for ALL the named defendants was Morgan County.  The case involved claims that the defendants produced certain biosolid pollutants in Morgan County that had been spread on area farmland, including farmland in Lawrence and Franklin Counties.

Alabama has a specific statute that governs venue in actions against defendant corporations.  To paraphrase the statute, venue against defendant corporations is proper in the following counties:

1. The county where a substantial part of the events or omissions occurred, or a substantial part of the subject real property is located; OR,
2. The county of the defendant corporation's principal place of business in Alabama; OR,
3. The county where the plaintiff resided or had its principal office at the time the claims accrued.

See, Ala.Code §6-3-7.  The Alabama statute also expressly states that in class action claims only the residences of the named class representatives can be considered for determining proper venue.  It is this restriction upon which Alabama's Supreme Court based its decision that venue was not proper in Franklin County.  I certainly agree that if the basis of venue was number 3 above, the county where the plaintiff resided, then the Supreme Court decision correctly followed the statute.  However, Alabama's statute provides three independent grounds to establish venue, using the conjunction "or" between each.  Venue is also proper in a county where a substantial part of the events occurred with no residency limitation.  Is the spreading of biosolid pollutants on farmland in Franklin County a substantial part of the events at issue?  If the alleged pollutants were spread on farmland in Franklin County, then I believe venue would be appropriate.  Yet, it appears that our Supreme Court has broadly applied the residency issue in class claims to drastically narrow a litigant's choice of forum.  The first point to take from this case is to consider carefully the Alabama Supreme Court's interpretation of the venue statute.

The second issue relates to the transfer of cases filed in the wrong venue.  Once the Alabama Supreme Court determined that venue of this class action was not proper in Franklin County, the issue became where to transfer the case.  All the defendants wanted the case transferred to Morgan County.  The plaintiff wanted the case transferred to Lawrence County.  Either Morgan County or Lawrence County would have clearly been a proper venue for the case.  While the plaintiff obviously gets the first choice at venue by virtue of filing the case, the statute allows the defendants the second choice if they all agree and their choice is a proper venue.  The lesson for plaintiff's counsel -- Choose your venue well when you file the claim or it may later be chosen for you.

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This morning, the workers' compensation attorney Jon Gelman had an interesting note on his blog about a recent Medicare recovery case filed here in Alabama.  Essentially, the case involves the United States seeking to recover medical payments made by Medicare on behalf of several injured individuals.

The case raises an often misunderstood and complicated issue that we must handle on a daily basis.  Most often, our clients have some type of health coverage that pays their medical bills.  For many, this coverage is provided by private insurance such as Blue Cross.  For others, coverage may exist through some type of government program such as Medicare, Medicaid, or the Veterans' Administration.  Normally, when we seek medical care our particular coverage provides some level of payment.  Typically, this is the end of the story.  However, each of these plans or programs possesses unique rights to be reimbursed for their payments if an injured individual then recovers for their injuries from some third party, such as a personal injury lawsuit recovery.

Many personal injury attorneys seem to focus exclusively on the value of their case from the perspective of what amount of verdict or settlement can be obtained from the responsible defendant.  Personally, I believe that every case should be prepared for trial, rather than simply a settlement, from the beginning.  While this should be the most important focus of an injured person's legal counsel, it should not be the sole focus.  Too often, legal counsel ignores the complicated issues of medical reimbursement and subrogation.  Each particular type of coverage brings unique recovery rules and rights to the table.  These recovery rights are probably the greatest with Medicare.  In the case of Medicare, the government has far reaching rights to pursue claims against not only the injured party, but also, their legal counsel and the original personal injury defendant.  In the case of Medicare, as opposed to a typical private plan in Alabama, those rights even extend to future medical costs.

Effective legal representation in personal injury cases requires an attorney to understand the complex web of subrogation law and to deal effectively with the specific providers.  This is important to avoid a negative action by the coverage provider such as a lawsuit or a future refusal to provide benefits.  Also, if counsel clearly understands the various rules and how to use them, he can often work a resolution that minimizes any reimbursement, and thus, maximizes the recovery ultimately provided to the injured individual.

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