UPDATE: Judge rethinking punishment for attorneys in insurance settlement case | Arkansas Blog

Friday, June 24, 2016

UPDATE: Judge rethinking punishment for attorneys in insurance settlement case

Posted By on Fri, Jun 24, 2016 at 11:09 AM

click to enlarge CENTER OF ACTION TODAY: Judge P.K. Holmes and Fort Smith courthouse. - ARKANSAS BUSINESS
  • Arkansas Business
  • CENTER OF ACTION TODAY: Judge P.K. Holmes and Fort Smith courthouse.
A hearing begins at 10 a.m. today in Fort Smith federal court for Judge P.K. Holmes to decide what punishment, if any, he'll hand out to lawyers in a class action lawsuit against an insurance company abruptly pulled from his court after pending more than a year and then quickly settled in a state court.

UPDATE: The judge did not rule from the bench. He said he was taking the issue under advisement and after reading briefs submitted in the case, he said he was rethinking the issue of whether lawyers had acted in bad faith. Arkansas Business covered the hearing and has a report here.

Attorneys essentially argued during the brief hearing that publicity about the case amounted to sufficient punishment.

The judge has objected strenuously to the action for its appearance of forum shopping. The 13 plaintiffs attorneys, led by John Goodson of Texarkana, got an instant payment of $1.8 million. Some $3.4 million was set aside for insurance company customers underpaid on damage claims because of depreciation of labor costs, but only about $400,000 was claimed when the claims period expired.

I thought the three lawyers for the insurance company made a strong argument against punishment in their case. The transfer of courts was a product of mediation, they said, and central to the deal. Their client, USAA, wanted the settlement for business reasons. They were not representing the class action plaintiffs. They noted, too, that no judge before had called for a review of similar resolutions of other class action cases.


The 13 plaintiffs' lawyer have made similar claims, but, of course, they had some duty to the people damaged by the insurance company in weighing their arguments.

The judge has limited options if he decides punishment is in order. But even entering a finding of abuse of process would amount to what the defense lawyers called a "scarlet letter" that could harm the lawyers for the rest of their careers.

Noted: Even if the judge decides no punishment is warranted, all but one of the lawyers involved are named in a civil suit filed in Saline Circuit Court on behalf of the class of plaintiffs represented in the case.

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