A Guide to Class-Action Strategies Used by Certain Arkansas Law Firms

Some law firms now use a five-step strategy for class-action lawsuits to maneuver around a 2013 U.S. Supreme Court ruling. (See John Goodson’s New Class-Action Strategy Takes Place of One Blocked by US Supreme Court.)

Step 1	Plaintiffs’ attorneys filed suit in state court seeking class status
Step 2	By stipulating that the value of the case would not exceed $5 million, the plaintiffs prevented defendants from unilaterally moving the case to federal court, as allowed by the federal Class Action Fairness Act.
Step 3	Plaintiffs’ attorneys then began making exhaustive and expensive discovery demands that defendants had to comply with even as they waited often months or years for locally elected judges to hold hearings on their motions.
Step 4	Defendants eventually settled in order to limit costs, and those settlements could be much more than the plaintiffs originally stipulated that the cases were worth. Attorneys’ fees paid out under this strategy totaled hundreds of millions of dollars.

RESULT:	Defendants eventually settled in order to limit costs, and those settlements could be much more than the plaintiffs originally stipulated that the cases were worth. Attorneys’ fees paid out under this strategy totaled hundreds of millions of dollars.

Step 1	Plaintiffs’ attorneys file suit in federal court seeking class status.
Step 2	Defendants move the case from state court to federal court, as allowed by the federal Class Action Fairness Act.
Step 3	Plaintiffs and defendants petition the federal court to stay the case in order to pursue a settlement.
Step 4	Both sides agree to dismiss the case from federal court before or shortly after a virtually identical case is filed in state court.
Step 5	A settlement agreement is filed in the state court version of the case. Federal judges typically scrutinize settlement offers more closely than in state court, including the fees paid to plaintiffs’ attorneys.

RESULT:	Legal observers suggest that cases may be moved back to state court because the agreed-upon settlements might not be approved in federal court.