Federal Judge P.K. Holmes of Fort Smith issued a 32-page ruling yesterday indicating he contemplates punishment of 16 lawyers who moved a class action lawsuit against an insurance company out of his court to a state court in Polk County after a settlement had been worked out.

Some have criticized the settlement as inadequate to those damaged by alleged underpayments of auto insurance claims and too profitable for the lawyers involved. The lawyers are getting $1.8 million and $3.4 million has been set aside for claims.


Lisa Hammersly wrote about the order in this morning’s Arkansas Democrat-Gazette. Holmes has set a hearing June 10 to assess the relative improper action  he’s found by 16 lawyers in the case. His punishment could range from mild — a caution — to a requirement that lawyers have to notify clients they’d been found to have acted in bad faith in the case. This, to put it mildly, would be bad for their business.

The 16 lawyers include John Goodson, the wealthy Texarkana lawyer and University of Arkansas trustee whose own wealth and contributions from other class acton lawyers have powered his wife, Courtney Goodson, in races for Arkansas Supreme Court. She lost a race this year to be chief justice, but remains on the court.


The hearing will be interesting. Will all the lawyers stand together and accept full and equal responsibility for tactics in the case? Or might some fingers be pointed at ringleaders of the wheeling and dealing?

PS: Interesting to note an objection filed to the judge’s effort to get data on claims paid in the case. Information relevant to that has been put under seal in state court, an attorney for the class action lawyers said, and it wouldn’t be right to reveal it in federal court. There’s a blur of opposition to drawing conclusions from the data. This much is known: Out of almost 15,000 people with potential claims that the insurance company improperly depreciated, only 651 claims, or about 4 percent of those eligible, have been submitted so far. This tally was written in a letter in late February. It was marked confidential, but it was filed in open court yesterday shortly before the judge’s order was filed.

Mark Friedman at Arkansas Business, who’s been on top of this case from the outset, has more on what appears to be an unusually low claim rate — something critics had predicted.


Also: Here’s Friedman’s story on the broader order.