Great story from Arkansas Business’ Mark Friedeman on a new class-action strategy employed by trial lawyer John Goodson’s Texarkana law firm, Keil & Goodson. One Little Rock lawyer claims it’s a way for Goodson and co. to line their pockets — at the expense of their clients.
You might remember that Goodson’s firm was involved for years in dozens of class action suits that resulted in more than $400 million in attorneys fees. How much the firm’s clients received was always deemed proprietary or confidential. The suits were filed in Miller County circuit court, described in this in-depth Fortune story as a class-action “hellhole,” where the court would allow disruptive, expensive discovery motions to proceed for years before basic questions of whether the plaintiffs’ claims were worthy of class status or meritorious. Large corporate defendants settled rather than incur the massive discovery costs.
Congress intervened in 2005, allowing defendants to remove any class action to federal court that would potentially cost the defendant $5 million or more. But Goodson and others found procedural ways around that limitation and continued to file class actions in Miller County, before the U.S. Supreme Court shot down a key part of their strategy.
The new strategy, Arkansas Business reports, features in a class action suit filed against United Services Automobile Association (USAA), an insurer that represents members of the military and their families, over excessive depreciation costs figured in insurance claims.
Since the high court unanimously found the strategy to be illegal, Keil & Goodson and other class-action attorneys have taken a different approach to keeping their class-action settlements out of the hands of federal judges: strike a deal with the defendants to settle the case in state court, where judges may be less stringent in assuring that the victims are compensated as fairly as the attorneys.
That’s what happened in the USAA case. The lawsuit, which never made it to the point of being certified as a class action by a judge, was dismissed from U.S. District Court in Fort Smith on June 22. The next day, a nearly identical complaint was filed in Polk County Circuit Court along with a stipulation of a class-action settlement.
Having a case filed in state court for the purposes of settlement is “a pretty standard way to try to rip off the class,” Ted Frank, the director of the Center for Class Action Fairness in Washington, told Arkansas Business, which asked him to review documents in the USAA case.“
I guess they were worried that … a judge in federal court would have given it scrutiny, and they wanted to get away from that. Because there’s no reason to refile it in state court unless they were trying to avoid federal review.”
Arkansas Business has found two other cases where the Keil & Goodson firm participated in settling class-action lawsuits this year and shared a total of $1.86 million in attorneys’ fees and expenses. Those cases had been in federal court but were refiled in state court for prompt settlement.
Little Rock attorney Robert Trammell is challenging the proposed settlement with USAA in Polk County Circuit Court this week. He says it favors law firms Keil & Goodson and Taylor Law Partners of Fayetteville — at the expense of their clients. Under the terms of the settlement, USAA would pay no fee for alleged wrongdoing and class members would only get some of what was owed to them, and then only if they properly filled out a claim form. “[T]he common thread upon the settlement notice being read by veterans who possess a common sense outlook backed by rigorous education, was: ‘How stupid do they think the veteran is,’ ” Trammell said, as reported by Arkansas Business.
Goodson, of course, is married to state Supreme Court Justice Courtney Goodson, who is running for chief justice of the Court. He’s also a member of the University of Arkansas Board of Trustees.