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)

Class-action defendants, especially those whose cases are assigned to Miller County Circuit Judge Kirk Johnson, have had a hard time getting a hearing to determine whether there’s enough of a legal question to even warrant discovery, said Rosen, the California lawyer who had filed a brief in support of Standard Fire.

Judge Johnson didn’t return calls for comment.

After a case is filed in Miller County, Rosen said, the plaintiffs’ attorneys begin pummeling defendants with requests to produce — at their own expense — thousands or even millions of pages of documents. The discovery costs alone could run into the millions, often more than the $5 million to which the plaintiffs have voluntarily limited total damages, before the case is even certified as a class action. Defendants complained that they had to comply with costly discovery demands even before they could get a hearing to determine whether they even belong in the lawsuit.

A judge in federal court, on the other hand, would set a hearing for the defendants “right away” to determine if the case is worthy of moving forward with discovery, Rosen said.

Defendants, he said, were being “forced into this Catch-22. They either have to spend a ton of money on discovery for years being stuck in limbo or settle. And that’s sort of where the plaintiffs want them.”

But not just any state court will do, according to Ted Frank, a founder of the Center for Class Action Fairness.

“If you don’t have the right to take these cases to federal court, the plaintiffs get to pick where they file their case,” Frank told Arkansas Business. “All they have to do is find the one friendly jurisdiction. For a long time, it was Madison County in southern Illinois, and now it looks like it’s Miller County.”

Knowles v. Standard Fire

Standard Fire wanted no part of Miller County justice, which had become infamous among defense attorneys. Even as they accused the plaintiffs of “forum shopping,” defense attorneys were also trying to choose the most favorable court for their clients.

But to bring the roof repair case under federal jurisdiction, Standard Fire found itself in the unenviable position of having to argue that Greg Knowles’ class-action case was actually worth more in damages than Knowles and his attorneys were seeking.

On Dec. 2, 2011, U.S. District Judge P.K. Holmes III of Fort Smith denied Standard Fire’s request to move to federal court because Knowles had stipulated that damages and costs wouldn’t exceed $5 million. The 8th U.S. Circuit Court of Appeals declined to rehear the case.

Standard Fire then asked the U.S. Supreme Court to “determine whether CAFA is a strong remedy for state court abuses in class actions, as Congress expressly intended, or if it has a loophole that allows plaintiff’s lawyers to easily avoid federal jurisdiction.”

 

 

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