Federal Ruling Opens Door for Alabama Class Actions

Major trial lawyers in the state are actively looking for private, class-actions under the Alabama Deceptive Trade Practices Act, or ADTPA, thanks to a July ruling by the 11th U.S. Circuit Court of Appeals.

The appeals court ruled that federal procedural rules, which permit class actions in federal court, trump Alabama’s consumer protection law, which prohibits individuals from filing deceptive trade practices class-action lawsuits and only permits individuals to file a suit for their own claims. The Alabama law allows individuals to recover up to three times actual damages but doesn’t allow them to file claims on behalf of a class.

Under Alabama law, only the attorney general or a district attorney can file an ADTPA class action and then the act only allows them to seek recovery of actual damages on behalf of the class. Consequently, the Alabama Deceptive Trade Practices Act has not been used as a consumer class action weapon.

Because of the 11th Circuit ruling, Alabama will likely begin seeing a proliferation of deceptive trade class actions in its federal courts by out-of-state plaintiffs.

The decision in question involved a class action suit filed under the ADTPA in federal court, which could be done since some plaintiffs lived outside of Alabama. The plaintiffs alleged that pressure-treated wood they had purchased for new fences rotted after three years even though the wood company represented in advertising that it would last 15 to 20 years.

The Alabama Civil Justice Reform Committee, of which the Alabama Retail Association is a member, is examining options to prevent these class actions. In the meantime, retailers and other businesses need to be aware of this litigation threat.