Five Attorneys Reprimanded for Class Deal Do-Over

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By Perry Cooper

Aug. 5 — Five attorneys were formally reprimanded August 3 for improperly dismissing a class action in federal court to refile it in a more-favorable Arkansas state court ( Adams v. United Servs. Auto. Ass'n, 2016 BL 253031, W.D. Ark., No. 14-2013, 8/3/16 ).

The attorneys represented a proposed class of homeowners challenging the method used by insurer United Services Automobile Association to calculate homeowner's insurance claims.

After reaching a settlement, the parties agreed to dismiss the suit from federal court and immediately file a new action in state court with a motion for class certification and settlement approval.

The state court gave final approval to the deal, which resulted in a 4 percent claims rate from the $3.45 million settlement fund. Plaintiffs' counsel was awarded $1.85 million in fees.

Under Eighth Circuit law, a “party is not permitted to dismiss merely to escape an adverse decision nor to seek a more favorable forum.”

Rule 11 Reprimand

The U.S. District Court for the Western District of Arkansas found that five attorneys for the plaintiffs acted in bad faith by engaging in “improper mid-litigation forum shopping in a manner calculated to evade federal review and prevent the Court from carrying out its obligation to putative class members.”

The court reprimanded those attorneys—D. Matt Keil and John C. Goodson of Keil & Goodson in Texarkana, Ark.; Jason Earnest Roselius of Mattingly & Roselius in Oklahoma City, Okla., and Richard E. Norman and R. Martin Weber Jr. of Crowley Norman LLP in Houston—under Fed. R. Civ. P. 11.

The court cleared 10 other attorneys involved in the case, finding they abused the judicial process but not in bad faith.

“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,” the court said.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bna.com

To contact the editors responsible for this story: Steven Patrick at spatrick@bna.com and Jeffrey D. Koelemay at jkoelemay@bna.com

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