Inside the Miller County Class-Action Strategy Invalidated by U.S. Supreme Court

by Mark Friedman  on Monday, Mar. 25, 2013 12:00 am  

Attorney John Goodson (inset) and his pursuit of class-action lawsuits led to a U.S. Supreme Court ruling last week that will make it easier for defendants in  to move their cases out of Miller County Circuit Court and into federal court. (Photo by Evan Lewis)

Knowles’ lawsuit didn’t say how much Standard Fire should have paid for his specific claim.

But it did say this: Knowles sought to represent a class of hundreds or thousands of Arkansas policyholders, and he and the rest of the class would not seek more than $5 million in damages and attorneys’ fees.

Those two points are key. Under CAFA, a lawsuit involving a class of plaintiffs from multiple states can be moved out of a state court and into federal court by motion of the defendants. Similarly, the defendants can unilaterally move a class-action case into federal court if the plaintiffs claim damages, including attorneys’ fees, of more than $5 million.

Having the plaintiff stipulate from the get-go that the case is not worth more than a few million bucks might seem to be a good thing.

But defendants in cases filed in Miller County by Keil & Goodson, Nix Patterson and Houston-based Crowley Norman say the stipulations were a ruse to keep the cases in front of friendly local judges who would slow-walk defense motions while requiring the defendants to comply with expensive, exhaustive “discovery” demands for documents and other evidence.

Keil & Goodson partners Matt Keil and John C. Goodson, a member of the University of Arkansas Board of Trustees and husband of Arkansas Supreme Court Justice Courtney Hudson Goodson, didn’t return several calls seeking interviews about the Knowles case, either before or after the Supreme Court’s ruling.

Attorneys from Nix Patterson & Roach also didn’t return calls for comment, nor did Richard Norman, a Crowley Norman partner.

But their strategy has been consistent and undeniable. By January 2012, the three firms had filed more than 25 class-action complaints in Arkansas state courts in which they stipulated, before the cases were certified as class actions, that damages would be less than $5 million “in order to try to evade federal jurisdiction,” according to a brief filed in one of those cases by Little Rock defense attorney Lyn Pruitt.

The Supreme Court’s decision “takes away from the plaintiffs a huge ability to manipulate” where the case is filed, said Georgene Vairo, a professor at Loyola Law School at Los Angeles and author of “The Complete CAFA: Analysis & Developments Under the Class Action Fairness Act of 2005.”

“It’s definitely a win for the defendants,” she said.

(It was a loss for Arkansas Attorney General Dustin McDaniel. Click here to read more.)

‘This Catch-22’



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