The Judge Isaac C. Parker Federal Building and Courthouse in Fort Smith, serving the Western District of Arkansas.
When 17 attorneys submitted briefs explaining why they moved a class-action case out of Chief U.S. District Judge P.K. Holmes III’s court and into Polk County Circuit Court, something was curiously missing. No one cited the 2011 ruling from the 8th U.S. Circuit Court of Appeals in the case of Allen Thatcher v. Hanover Insurance Group.
When Holmes called the lawyers to a two-hour hearing in Fort Smith on Feb. 18, he asked which of them knew the Thatcher ruling. Some of them were intimately familiar with it since, as Holmes noted from the bench, they were attorneys of record in the case.
Thatcher filed a class-action lawsuit against Hanover in Miller County Circuit Court for unjust enrichment, fraud and breach of contract. Hanover, as is the defendant’s right, transferred the case to federal court. Thatcher then asked to dismiss the case from federal court in order to refile an amended complaint in state court. The district court judge granted the dismissal.
Hanover appealed the ruling, “arguing that the district court should have considered whether the motion to voluntarily dismiss was an improper forum-shopping measure,” according to the 8th Circuit ruling. The appeals court agreed and sent the case back to the federal district court.
“In addressing whether a district court should allow voluntary dismissal, we have repeatedly stated that it is inappropriate for a plaintiff to use voluntary dismissal as an avenue for seeking a more favorable forum,” 8th Circuit Judge Bobby Shepherd said in the order.
Thatcher’s attorneys included John Goodson and Matt Keil of Keil & Goodson of Texarkana, and Jason Roselius of Oklahoma. Hanover’s attorneys included Lyn Pruitt of the Mitchell Williams firm in Little Rock, and Wystan Ackerman and Stephen Goldman both of Robinson Cole of Hartford, Connecticut. Those six lawyers are among the 17 facing possible sanctions from Holmes for moving Mark and Katherine Adams v. United Services Automobile Association from Holmes’ court to Polk County Circuit Court. The other attorneys said they were not aware of the Thatcher ruling.
The Adams case was pending in Holmes’ court for 17 months before it was dismissed and refiled in circuit court with a proposed settlement attached. Holmes didn’t know the case had been refiled in state court until he read about it in Arkansas Business.
He then issued a show-cause order and told the attorneys to explain why he shouldn’t sanction them for abusing the federal court system.
Unlike Thatcher, the plaintiffs and defendants agreed to dismiss and refile the Adams case, but Holmes may not consider that to be an important distinction.
At the hearing, Holmes asked why Thatcher was conspicuously absent from their explanations. Attorney David Matthews of Rogers, who represents the USAA attorneys, told Holmes that Thatcher wasn’t discussed because “we didn’t think it was on point.”
Attorney John Elrod of Fayetteville, who represented most of the plaintiffs’ attorney in the Adams case, said he didn’t receive the Thatcher ruling until the day before the hearing.
Both Elrod and Matthews argued that what the attorneys did was proper and that they shouldn’t be sanctioned.
“We’ll see to what extent the judge buys that,” Ted Frank, director of the Competitive Enterprise Institute’s Center for Class Action Fairness in Washington, told Arkansas Business last week.
Thatcher, Frank said, put the plaintiffs’ counsel on notice that dismissing a case just to refile in a different jurisdiction is not acceptable. He filed a friend-of-the-court brief with Holmes making the same point.
“There’s an argument out there that you can’t sanction somebody for doing something wrong if they did it pure of heart,” Frank said, and that’s what the 17 attorneys facing sanctions seem to be claiming.
But, he said, “You have an 8th Circuit case criticizing something you had previously done. It’s hard for you to say, ‘I did it again and I didn’t know that I couldn’t do it.’”
Holmes is expected to decide whether to impose sanctions by mid-March.
Sign up for Daily E-news
