Gwen Moritz

Looking Past The Smoke

Gwen Moritz Editor's Note

Looking Past The Smoke

I recently commented in this space on John Steinbeck’s gift for recognizing his characters’ true motives. Of course, he dreamed up the personalities and their actions, so he had a head start in divining their motives.

Judges — like U.S. District Judge P.K. Holmes III in a recent case near to my heart — don’t have that advantage, but they do seem to be able to blow away a smoke screen to illuminate the motives of parties in the cases they consider.

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The U.S. Court of Appeals for the 4th Circuit overturned late last month several voting restrictions that North Carolina’s legislature had enacted almost as soon as a U.S. Supreme Court decision allowed it to do so without pre-approval from the Justice Department. And while the Republicans who control the legislature insisted they only wanted to protect the integrity of elections against the threat of voter fraud, the three appeals court judges simply didn’t believe them.

“Before enacting that law, the legislature requested data on the use, by race, of a number of voting practices. Upon receipt of the race data, the General Assembly enacted legislation that restricted voting and registration in five different ways, all of which disproportionately affected African Americans,” Judge Diana Motz wrote for the court.

The state offered “only meager justifications” for the changes in the law, which “target African Americans with almost surgical precision,” Motz wrote.

Some of North Carolina’s explanations, the judges found, were “post hoc rationalizations” — that is, reasons dreamed up after the fact to avoid admitting the truth. “Thus the asserted justifications,” she concluded, “cannot and do not conceal the State’s true motivation.”

That brings me back to Judge Holmes, the chief federal judge for Arkansas’ Western District, who last week reprimanded five lawyers involved in a class-action case that was dismissed from his court and refiled the next day for quick settlement in Polk County Circuit Court.

The attorneys, Holmes concluded, had negotiated a deal that “benefited everyone but the class members” — the actual victims — and they knew that it would be much more likely to be approved in state court than in Holmes’ court. Sure enough, Circuit Judge Jerry Ryan didn’t ask a single question about the terms of the settlement he approved.

The plaintiffs’ attorneys were promptly paid $1.85 million, while policyholders of the USAA insurance carrier who had been underpaid on homeowners’ claims were forced to jump through hoops in order to get part of the $3.45 million settlement. Only about 4 percent of them did, and the remainder of the money went back to USAA — which is just what the settlement was designed to do.

The attorneys argued that they thought the rules allowed them to play this game, and, gosh, they had gotten away with it before. Holmes rejected their “unreasonable, and likely post-hoc, interpretation” of the applicable rules and law. There’s that Latin again.

The main plaintiffs’ attorneys — partners John Goodson and Matt Keil of Texarkana and three out-of-state attorneys — were reprimanded because Holmes found they acted in bad faith.

But Judge Holmes did seem sympathetic to USAA’s defense attorneys, who he said knew that changing courts just to get a better settlement was improper but also had a duty to settle as their client wished. He found that they had abused the system but he did not sanction them.

I never get tired of pointing out that Judge Holmes learned of this improper class-action strategy from reading the exceptional reporting that our Senior Editor Mark Friedman did back in December. A friend asked if I was disappointed in the reprimand since it wasn’t as severe as Holmes originally contemplated. Why should I be disappointed? I’m not a policyholder who was ripped off and then poorly represented.

Seeing lawyers reprimanded was never our motive. We were surprised when Holmes announced that he was considering sanctions. When Friedman’s story was published, we didn’t know that Holmes didn’t know what had happened to the case after it was dismissed from his docket. How could we possibly have anticipated his reaction?

Friedman’s motive as reporter and mine as editor was to call attention to Goodson and Keil’s new strategy for settling class-action cases in lenient state courts, since the U.S. Supreme Court had found their previous strategy was illegal. I hate to admit it, but Arkansas Business had been late in realizing how egregious the old strategy was, so we were motivated to do a better job for our readers now that we knew what to look for.

Mark’s story was nervy, suggesting as it did that Goodson’s new strategy didn’t pass the smell test. Holmes long ago validated the journalistic value of the reporting, and he seems to think future misconduct will be deterred. What more could I want?

Gwen Moritz is editor of Arkansas Business. Email her at