Twelve of the lawyers facing punishment by federal Judge P.K. Holmes in Fort Smith for moving a class action case against an insurance company out of his court to a state court where it was speedily settled have  filed their argument against sanctions.

The lawyers, including prominent politico, UA trustee and Washington lobbyist John Goodson of Texarkana, argue there was no improper purpose in the transfer and that other federal judges have allowed such transfers.


Although the Opinion acknowledges that “this Court is not sitting in review of the settlement”  an award of sanctions would necessarily rest on the conclusion that the state court should not have approved what the Opinion characterizes as “a settlement that primarily benefits Plaintiffs’ counsel and USAA” — otherwise, no harm would have flowed from what the Opinion terms Respondents’ actions to “evade federal review”. But the Supreme Court has recognized the right of state courts to interpret their class action rules differently than federal courts—and specifically to apply what the Opinion refers to as a “more lenient approach to certification”….

“In this day and age, sanctions are a badge of reprobation that can haunt an attorney throughout his or her career. They can have ramifications that go far beyond the particular case.” It is within this Court’s discretion to decline to impose any sanction. 

In the case, that had long been pending in Holmes’ court, lawyers got a $1.8 million fee after speedy approval in Polk Circuit Court of a pool of $3.4 million to pay potential claims against USAA Insurance. Critics of the deal said the claims process wasn’t likely to produce a full payout. At last report, only a tiny percentage of potential claimants had come forward.

The judge has set a hearing in the case June 24.