Arkansas AG Dustin McDaniel Supported Plaintiffs' Attorneys in U.S. Supreme Court Case

Arkansas Attorney General Dustin McDaniel was one of the few state AGs who supported the plaintiffs’ attorneys who used a perceived loophole in federal law to keep potential class-action lawsuits in state courts.

Some of those lawyers have supported him back in the form of campaign contributions. The AG’s office said the contributions did not influence the office’s position on the question.

McDaniel, joined by attorneys general from Delaware and Mississippi, on Dec. 5 filed a brief with the U.S. Supreme Court on the question of whether attorneys could keep potential class-action cases from being moved to federal court by stipulating that the plaintiffs wouldn’t seek more than the $5 million threshold in damages and fees.

Meanwhile, the AGs of Texas, Oklahoma, Utah and 15 other states — in a brief prepared by Alabama AG Luther Strange — supported the defendants. And their side won.

Last week the U.S. Supreme Court, in a unanimous decision in the case of Knowles v. Standard Fire, ruled that the plaintiffs can’t make a binding stipulation on the value of the case before it is even certified as a class action.

McDaniel’s office defended the practice of including a damage cap in lawsuits.

“It has long been held that a plaintiff is the master of his own complaint and can, at his election, plead in a manner to avoid federal jurisdiction,” the brief said.

The other AGs, though, reminded the high court that widespread abuses of the class-action system at the state level led Congress to pass the Class Action Fairness Act of 2005.

“The stipulation maneuver has all the hallmarks of those abuses,” Strange wrote. “It permits class counsel to elude the supervision of state regulators, evade the requirements of due process, and undermine state-level reforms.”

The Texarkana law firm of Keil & Goodson used the $5 million stipulation to keep its class-action lawsuits in Miller County Circuit Court, which frustrated defendants. Keil & Goodson and two Texas firms extracted more than $420 million in attorneys’ fees tied to out-of-court settlements in 23 lawsuits, nearly all of them in Miller County.

McDaniel’s spokesman, Aaron Sadler, declined a request from Arkansas Business to speak to the author of the brief, Senior Assistant Attorney General Eric Estes, before the ruling was handed down. The partners in the Keil & Goodson firm, Matt Keil and John Goodson, also declined to comment.

In his abandoned campaign for governor, McDaniel received the maximum $2,000 in contributions from both Keil and Goodson and from Goodson’s daughter for a total of $6,000 on July 30. The Keil & Goodson firm also gave $2,000 on Aug. 4. The total amount of contributions related to the Keil & Goodson firm was less than 1 percent of the $913,499 raised by McDaniel between July 1 and Sept. 30.

“The Attorney General’s political fundraising had absolutely no effect on the decisions made by this office in a case that is important to our state’s legal system. To suggest otherwise is wrong,” Sadler said in an email statement to Arkansas Business before the Knowles ruling was handed down. “That said, the Attorney General’s campaign is over and contributions have been returned.”