A federal judge has reprimanded lawyers from Arkansas and two other states for 'forum shopping'
FORT SMITH — Five lawyers from Arkansas, Oklahoma and Texas were reprimanded Wednesday for having acted in “bad faith” with a prohibited practice called “forum shopping” that violates a Federal Rule of Civil Procedure.
In a 15-page ruling, Chief U.S. District Court Judge P.K. Holmes III of the Western District of Arkansas in Fort Smith determined the five attorneys for a plaintiff in Mena violated rules and abused the judicial process in “bad faith” when they moved to dismiss a class action insurance case with United Services Automobile Association over labor pricing in June 2015 from Holmes’ court to the Circuit Court of Polk County, where it was settled the next day for a value of $3.4 million with $1.8 million in legal fees.
The group of 10 attorneys for USAA was also found to have violated Rule 11 and abused the judicial process for having allowed the settlement to take place, Holmes concluded, but they “did not act in bad faith.” The lawyers from around the nation were ordered to appear for a show cause hearing in February, followed by another hearing in late June. The show cause hearings stems from a December 2015 article in Arkansas Business.
The lawyers reprimanded Wednesday include D. Matt Keil and John C. Goodson of Texarkana, Ark., Jason Earnest Roselius of Oklahoma, along with R. Martin Weber Jr. and Richard E. Norman of Houston.
“A finding that these Respondents violated the Rule will be sufficient deterrent to their own future misconduct, and the publicity this case has received and changes the Court is instituting to its management of putative class actions will deter other attorneys from misconduct,” Holmes wrote.
The judge went on to explain that while the reprimand is a lesser sanction than injunctive sanctions proposed in the court’s prior opinion “any sanction appearing on the Respondents’ record is going to lead to further inquiry by other courts into the misconduct that necessitated that sanction, thereby putting those courts on notice of the potential for similar misconduct in their own cases.”
Goodson is the husband of Arkansas Supreme Court Justice Courtney Hudson Goodson, who lost her bid this year for another eight-year term. Her term expires in 2018.
Holmes also reversed a previous finding of misconduct by Little Rock attorney Stephen C. Engstrom and pointed out that a lesser sanction for the five attorneys still vindicates judicial authority.
In his ruling, Holmes states the lawyers violated a tradition of federal court “authority and obligation to protect putative class members” and misinterpreted a 2003 amendment to Rule 23 that allows parties to “start over” in a different court.
“Respondents did not ‘start over again’ after their dismissal from this Court,” Holmes wrote. “Rather, they took a case that they had fundamentally resolved in this Court and continued it in anther court. With respect to sanctions now issuing in this case, Plaintiffs’ counsel should recognize the difference between unilaterally taking an improper action and transparently making a good-faith argument to a court that such an action is not improper and should be allowed.”