FORT SMITH — More than a dozen lawyers from across the country faced an ethics hearing with possible sanctions in the U.S. District Court in Fort Smith on Thursday.

FORT SMITH — More than a dozen lawyers from across the country faced an ethics hearing with possible sanctions in the U.S. District Court in Fort Smith on Thursday.


Chief District Judge P.K. Holmes III said he wanted to explore the possibility that lawyers on both sides of the case agreed to "forum shopping," that is, moving from one court to another to obtain favorable hearings. The case involved was Adams v. USAA, a class-action lawsuit that stems from a 2009 Mena tornado damage insurance claim.


Law firm Keil & Goodson in Texarkana filed suit for Mark and Katherine Adams against United Services Automobile Association in San Antonio for depreciating labor costs on their insurance claim adjustment. Ultimately the defendants settled, with $3.4 million reserved for USAA claims holders and $1.85 million for legal fees and expenses.


The case was first filed in state court in Texarkana, Ark., and moved to federal court in the Western District of Arkansas one month later in January 2014. When both sides requested in March 2015 a second stay to work out details in a proposed settlement, Holmes said no and ordered the case to go forward. Instead, attorneys from both sides agreed to request the federal case be dismissed and, one day after dismissal in federal court, the case was refiled in Polk County circuit court.


Much of Thursday’s hearing involved Holmes’ attempt to establish a clear timeline and determine if attorneys for both sides had agreed to refile in state court before asking the case to be dismissed in federal court.


Reports in Arkansas Business pointed out the legal maneuvering as part of an investigation of Keil & Goodson of Texarkana and Taylor Law Partners of Fayetteville after Little Rock attorney Robert Trammell filed an objection in Polk County Circuit Court to challenge the class-action settlement, which he said was unfair to the class members and favored the law firms under investigation.


Gwen Moritz, editor of Arkansas Business, said after the hearing Thursday that although she did not expect a federal judge’s hearing as a result of the article, the hearing was "affirmation that there was something there."


John Elrod of Fayetteville, speaking in defense of the attorneys who worked with Keil & Goodson for the Adams case, including the Taylor Law Partners of Fayetteville, saw it differently.


"We believe everything that was done in this court, in their own little silos, was permitted by the rules," Elrod said.


David Matthews of Rogers, representing the attorneys for USAA, likewise said his clients acted in the "spirit of the law"and fully understood that their actions would be closely studied and under public review.


Matthews objected to the judge’s notes citing an Arkansas Business report as inspiration for Thursday’s "show of cause" hearing. Matthews said the report was "critical," "very disrespectful," and showed "utter disdain" for the lawyers’ actions.


John C. Goodson of Keil & Goodson, the husband of Arkansas Supreme Court Justice Courtney Goodson, was present at the hearing Thursday.


Retired U.S. District Judge James M. Moody of Little Rock, now with Wright, Lindsey & Jennings, also spoke on behalf of Stephen Engstrom, attorney for the plaintiffs in Adams v. USAA, saying he has known Engstrom for many years and "never seen unethical conduct." Moody said all lawyers on both sides were "doing what was right," to "get the most money for their clients." Sanctions are "not warranted," Moody said.


In his defense of the plaintiffs’ attorneys, Elrod said the reputations of many attorneys on both sides will be in jeopardy if sanctions are imposed.


Holmes said Thursday he would need some time to go over the details for possible sanctions in a later hearing.


"This will require some time and attention," he said. "We will get a decision as soon as we can."