Posted 3/25/2013 12:00 am
Defense attorneys involved in class-action cases in Miller County Circuit Court have called it a “judicial hellhole,” while defenders insist that the complaints are only designed to keep plaintiffs from receiving the evidence they have a right to inspect.
In interviews with Arkansas Business and in hundreds of pages of filings in various court cases, defense attorneys cited a string of examples of nightmare justice in Miller County Circuit Court in Texarkana including:
- One company said it spent 28,631 man-hours gathering "discovery" documents requested by plaintiffs' attorneys at a cost of more than $9 million.
- Another company decided to settle its lawsuit after it was faced with discovery requests that would have cost as much as $45 million.
- A third company said it didn't do business in Arkansas but couldn't get a ruling on its motion to be dismissed from a class-action case that only involved Arkansas residents.
The key complaint defendants have is that they don't receive timely hearings from Miller County Circuit Judge Kirk Johnson on issues of merit, jurisdiction and class status.
All the complaints about not receiving speedy justice stem from Johnson's court. The Miller County Circuit Clerk's office said the county has three circuit judges, Johnson, Brent Haltom and Joe Griffin. The office said a computer randomly and evenly assigns the lawsuits to the judge's courtroom. But Johnson ended up with most of the class actions because original insurance-related lawsuits with dozens of defendants had been spun off into separate cases. And since Johnson had heard part of the cases, the spinoffs were kept in his court, the clerk's office said.
In the meantime, however, the local rules allow the discovery process to continue, leaving defendants with two options: spend millions to satisfy plaintiffs' attorneys' discovery demands or settle. Most have chosen to settle.
Three law firms have been the primary beneficiaries of the Miller County system: Keil & Goodson of Texarkana; Nix Patterson & Roach of Daingerfield, Texas, which has an office in Texarkana, Texas; and Crowley Norman of Houston. During the last seven years, the three firms generated more than $420 million in attorneys' fees from companies that settled 23 lawsuits, nearly all of them filed in Miller County Circuit Court. The settlements paid to the actual class members have generally been sealed.
"We know that there have been other really weird procedural shenanigans that have been going on down there," Ted Frank, a founder of the Center for Class Action Fairness LLC of Washington, D.C., told Arkansas Business.
Defendants hope last week’s ruling by the U.S. Supreme Court in the Miller County case of Knowles v. Standard Fire will make it easier for them to transfer cases from Miller County Circuit Court into federal court, where “you would not see these abuses taking place,” Dan Greenberg of Little Rock, former senior counsel of the Center for Class Action Fairness, told Arkansas Business.
Plaintiffs’ attorneys from the firms Keil & Goodson, Nix Patterson and Crowley Norman didn’t return calls for comment. Judge Johnson also didn’t return calls for comment.
The Arkansas Trial Lawyers Association, however, has defended the justice system in Miller County and questioned the motives of its critics.
Defense attorneys who “portray the Miller County Circuit Court as a ‘magnet jurisdiction,’ a ‘judicial hellhole,’ where greedy attorneys for undeserving plaintiffs pursue senseless lawsuits,” are wrong, ATLA attorney Brian Brooks of Greenbrier said in his brief to the U.S. Supreme Court regarding the Knowles case. “Scratching the thin surface of the support for those contentions reveals that they have no support beyond rhetoric, one-sided hearsay newspaper reports and anecdotes.”
Brooks wrote that defendants are upset because they have to comply with discovery, which is necessary for both sides to try their case.
“Cutting off discovery is but one step away from barring the courthouse door,” he wrote.
It’s unclear exactly when Miller County became a magnet for class-action cases. But in the weeks before Congress passed the Class Action Fairness Act of 2005, a law designed to curb some abuses of class-action cases in state court, Keil & Goodson filed “a bunch” of potential class-action lawsuits in Miller County Circuit Court so the lawsuits wouldn’t be subject to the new federal law, said Frank, of the Center for Class Action Fairness.
Once in Miller County, defendants face a variety of frustrations, starting with immediate discovery demands.
Take, for example, the case of 21st Century Casualty Cos. It was named along with dozens of other insurance companies in a lawsuit brought by Keil & Goodson, Nix Patterson and Crowley Norman. The plaintiffs’ discovery demands included 189 requests for production of documents and a request to inspect its data storage facilities and computer system, the insurer’s attorney, Thomas Rogers of Austin, Texas, said in a brief to the Supreme Court.
“This discovery was outrageously overbroad, burdensome and oppressive, seeking all manner of records and information pertaining to the activities of unspecified officers, agents, employees and representatives, not only in Arkansas but across the country, since 1990,” Rogers said in the brief.
Moreover, 21st Century said it didn’t insure Arkansas residents during the time of the alleged abuses alleged in the lawsuit.
Still, as other defendants found, when 21st Century filed a motion to be dismissed from the case, Judge Johnson wouldn’t rule.
“Class-action defendants filed dispositive threshold motions only to have them deferred time and again,” Rogers wrote. “Absent a reviewable ruling, defendants have no avenue by which to vindicate their rights.”
Johnson explained his reasons for not ruling on defendants’ motions in a letter to Little Rock attorney Elizabeth Fletcher, whose client couldn’t receive a hearing on motions to dismiss for several years.
He said in the Oct. 25, 2011, letter that it’s up to him “to make decisions regarding the management of any case including the setting of dispositive motions. In complex litigation, such as class action with multiple defendants, chaos would reign if any other interpretation were allowed. Piecemeal determination of Motion’s [sic] to Dismiss filed by each of multiple defendants at different times would be prohibitively expensive for the parties, essentially dominate the court’s schedule for months and would render the court incapable of maintaining it’s [sic] regular docket.”
But Greenberg, the former counsel for the Center for Class Action Fairness, finds it “highly, highly unusual” that Johnson wouldn’t hear the defense motions sooner. “People are under extraordinary burden before they ever have a chance to have their argument heard in court.”
Terri Beiner, who teaches civil procedure at the William H. Bowen School of Law at the University of Arkansas in Little Rock, said she would expect the class certification process to be completed within a year. But the process could take longer, she said.
“It depends on how complex the case is,” she said. “Sometimes it takes a little discovery to find the facts you need in order to make the motion, but it is something that happens pretty early on.”
When the Foremost Insurance Co. was sued by the Keil & Goodson and Nix Patterson firms in 2004, Foremost felt the weight of the crushing discovery.
The plaintiffs’ lawyers demanded files dating back to 1996, according to a 2007 article in the Southeast Texas Record, a legal journal.
Judge Johnson granted the request, even though Foremost’s attorney, Richard Griffin of Houston, said it would cost $45 million to produce the more than 600,000 claim files the plaintiffs wanted, the article said. Instead, the company decided to settle.
Griffin told Arkansas Business the company decided to settle because of the discovery fees the company was facing. He couldn’t recall the settlement amount.
“The company decided that it was in its best interest to get a national class-action settlement and continue doing business,” Griffin said. “It was a business decision.”
Companies that don’t settle should brace themselves to spend millions.
To meet a discovery request by the plaintiffs’ attorneys, Farmers Insurance Co. devoted 28,631 man-hours to produce the 55 million pages of claim files at a cost of more than $9 million in 2011. That case was filed in 2004 and it’s unclear if it was ever certified as a class-action. A spokesman for Farmers told Arkansas Business in an email that the case was pending and declined to comment further.
“It is inconceivable that a federal district court would have permitted such abusive” discovery, Rogers, 21st Century’s attorney, said in his brief.
The Miller County Circuit Court landed on the American Tort Reform Foundation’s “Judicial Hellholes Watch List” in 2006. One of the cases the foundation cited was a $90 million settlement in 2006 between Google Inc. of Mountain View, Calif., and advertisers who said the Internet search company improperly billed them for “clicks” that didn’t lead to customers seeking their services, according to a July 2006 Associated Press article.
The plaintiffs’ attorneys, led by Goodson, received $30 million while the plaintiffs received coupons toward future advertising, the Judicial Hellholes report said.
In most cases in Miller County, it is unclear what the actual plaintiffs settled for because settlements are sealed.
“The plaintiffs’ lawyers are too embarrassed to say what it is,” said Frank, of the Center for Class Action Fairness. “And from that you can infer it’s very, very little.”
He also said there’s no incentive to make it easy for customers to file claims to receive the settlement in a class-action case.
“The defendants don’t care who gets the money; they just want to get out of the case,” Frank said. “And the attorneys are trying to maximize their fees, so everybody loses except for the lawyers.” n