Low-wage workers win big victory in Alabama's courts
Samantha Nettles and Lenita Merrida are like a lot of LSA’s clients: they work, but don’t earn enough to call it a living wage, and their cash strapped status means they struggle to pay their bills on time. When they both fell behind on their payments to Credit Acceptance Corporation, a company that primarily finances high interest loans for used cars, their cars got repossessed. Then, they got sued for thousands of dollars for missed payments. When they couldn’t pay up, they got hit with judgments and garnishments, and interest on the judgments at rates over 20%.
Both Ms. Nettles and Ms. Merrida faced garnishment of 25% of their paychecks for their delinquent car loans. Each woman earned around only $500 every 2 weeks. When Ms. Nettles came to us, she supported two children by herself, and was pregnant with a third. Ms. Merrida was the sole source of support for her young grandchild.
When these two clients sought our help, we did what we have done for years: we filed what the law calls a Claim of Exemption for each woman, claiming that any wages of less than $1000 per paycheck were protected from garnishment under the Alabama Constitution. This is a long-standing rule of law in Alabama. As long as you can show that you have to spend your whole paycheck on necessary expenses, you can claim the exemption, a pretty routine showing for working women caring for children.
Unfortunately, several years ago, this settled rule of law in Alabama was called into question by an unexpected decision from the Court of Civil Appeals, Alabama Telco v. Gibbons. Emboldened creditors seized on language in the decision to argue that an individual could only claim the $1000 exemption one time, a result that would have overturned years of Alabama law. Two judges in Mobile cited Gibbons in ruling against our clients. The judges held that the most Ms. Nettles and Ms. Merrida could do was to claim the exemption up to $1000, or two paychecks in their case.
We appealed and asked the Court of Civil Appeals to revisit its ruling in Gibbons. We argued that the law ought to be what it has been for over a hundred years. We made the case that low income people are entitled to have the constitution of this state interpreted as it is written, to shield low wages from being ravaged by garnishments.
On Friday, May 12, LSA won a victory at the Court of Civil Appeals on behalf of both our clients. The Court returned to the rule that as long as you can show you are spending your wages on necessary living expenses, you get to hold a minimum sum of $1000 from your paycheck at any given time. Because Ms. Nettles and Ms. Merrida were easily able to make this showing, they are entitled to claim their limited, meager wages as exempt every paycheck.
Our clients have more security to feed their families tonight. The same goes for every low-income working person in Alabama, including those that never walk through LSA’s doors. This is a huge victory for the working poor in Alabama, who can already barely make it from one check to another. We at LSA are thrilled that these working men and women have at least this one protection from devastation.
Farah Majid, in our Huntsville office, handled LSA's appeal. She is a member of our High Impact Litigation Team, making this the first big victory for our newest practice group.