Attorneys ordered to hearing on court-shopping concerns

Texarkana attorney John Goodson and more than a dozen other lawyers have been ordered to appear before a federal judge in Fort Smith to answer allegations that they shopped for court venues to benefit themselves.

Chief U.S. District Judge P.K. Holmes III on Monday set the hearing for 10 a.m. Feb. 19 at the federal courthouse in Fort Smith.

Goodson, husband of Arkansas Supreme Court Associate Justice Courtney Goodson, has specialized in the kind of lawsuit at issue, known as a class action because the plaintiffs seek to represent a larger group of people called a "class."

Holmes filed a show-cause order on Dec. 21 requiring attorneys on both sides of a multimillion-dollar class-action lawsuit, Adams v. United Services Automobile Association, to "show cause as to why a non-monetary sanction should not be imposed."

Holmes wants Goodson and the other attorneys from Arkansas, Texas, Oklahoma, Pennsylvania and Connecticut to show they did not file federal court documents in the lawsuit "for any improper purpose."

Specifically, Holmes' show-cause order cites filings that removed the case from Polk County Circuit Court in Mena to federal court in Fort Smith before re-filing the case in Polk County for a settlement.

The judge's order also wants the attorneys to explain whether they:

• Forum-shopped for a court "that counsel believed would best suit their own interests at any given time (to the detriment of [plaintiff] class members)."

• Wasted "government resources expended in adjudicating and monitoring this matter over 17 months only so counsel could gain leverage in settlement negotiations."

• Waged "generally inappropriate procedural gamesmanship" in federal court with "no intent to actually litigate claims in good faith."

John Goodson, other attorneys and Holmes late Monday did not immediately return calls and emails seeking comment.

Holmes' December order came seven days after an Arkansas Business article on Dec. 14 reported that a Little Rock attorney, Robert Trammell, had challenged a $5 million-plus settlement in the Adams case in Polk County Circuit Court in Mena. Holmes' order cited the article in a footnote.

The case revolved around whether the insurer illegally depreciated the cost of labor in claims for a certain type of property insurance policy known as "actual cash value," according to federal court records.

Adams v. United Services Automobile Association was one of about 20 similar class actions over the issue filed against numerous insurance companies in state and federal courts in Arkansas by John Goodson's Keil & Goodson firm in Texarkana and several co-counsels that often work together on class-action cases.

The Adams case was originally filed in Polk County on Dec. 5, 2013, then moved to federal court Jan. 15, 2014.

After more than two dozen filings and stays pending settlement negotiations in federal court, Holmes on May 5, 2015, set a jury trial date.

About a month later, on June 19, the Adams plaintiffs and their lawyers, including John Goodson, filed a stipulation for dismissal. Holmes dismissed the case June 22.

The next day, according to Arkansas Business, "a nearly identical complaint was filed in Polk County Circuit Court along with a stipulation of class-action settlement."

"The clear inference to be drawn" from the dismissal in federal court and quick refiling in state court, Holmes wrote in his order, "is that counsel wished to evade the federally-mandated review of the class and the proposed settlement by this court in particular."

Federal court rules require a judge to approve class-action settlements only if the agreement is "fair, reasonable, and adequate," he wrote.

The United Services Automobile Association insurance company, whose clients are military service members and their families, was required in the Polk County settlement to set aside $3.4 million for class members who were underpaid in their actual cash value claims.

The plaintiffs' attorneys would receive up to $1.85 million in fees and expenses.

In a Nov. 16 filing in Polk County, Trammell said the proposed settlement wasn't fair to class members, while favoring their attorneys.

Trammell, a graduate of the U.S. Naval Academy in Annapolis, Md., said Monday that several retired military officers had received notifications about the settlement.

"Most observed that the notice made it difficult to understand," Trammell wrote in a Monday email. Several decided to object, and Trammell appeared on their behalf.

"This was a pre-packaged deal filed in Mena, with something for everyone -- but the class members," Trammell wrote in response to questions from the Arkansas Democrat-Gazette.

The notice to the class was a "complicated 10-page, single-space notice to class members" that contained a short deadline for filers, Trammell wrote:"Most importantly, USAA will keep all the money put up, not claimed by Feb. 1."

Besides the Keil and Goodson firm, federal court documents list law firms for the Adams plaintiffs that include: The Roselius Law Firm in Oklahoma City; Crowley Norman LLP in Houston, Texas; Kessler Topaz Meltzer Check LLP in Radnor, Pa.; Taylor Law Partners in Fayetteville; Murphy, Thompson, Arnold, Skinner & Castleberry in Batesville; and Stephen Engstrom Law Office in Little Rock.

Law firms for the insurance company include Mitchell, Williams, Selig, Gates & Woodyard of Little Rock, and Robinson Cole LLP in Hartford, Conn.

Metro on 01/12/2016

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