Judge in Ark. Colossus class action did not 'play'
FORT SMITH, Ark. (Legal Newsline) - A Sebastian County, Ark., judge known for being a no-nonsense jurist apparently had no patience for class action attorneys who asked him to be more like Miller County Circuit Court Judge Kirk Johnson.
Sebastian County Judge Stephen Tabor last November denied the attorneys' request to consolidate motions and delay ruling in a class action involving insurance claims adjustment software known as "Colossus."
As a result of Tabor's order, the plaintiffs voluntarily dismissed the case from Sebastian County Circuit Court and re-filed it less than two hours later in Miller County Circuit Court, where years earlier some of the same attorneys reached settlements ranging from $500,000 to $53 million with approximately 25 groups of insurance companies in an identical case. Attorneys fees and costs were in the millions.
Date stamps on the case files show the Sebastian County matter was voluntarily dismissed at 1 p.m. on Dec. 7. The re-filed case in Miller County shows a date stamp of 2:43 p.m. on Dec. 7.
Today, a fresh battle in the new Colossus case is currently before another judge - U.S. District Judge Susan Hickey - who is deciding jurisdictional questions at the Western District of Arkansas, where the case was removed months ago.
Some of the issues, controversies and players in the present case look a lot like those in the first Colossus class action filed in Miller County.
Hensley v. Computer Science Corp. was filed shortly before the enactment of the Class Action Fairness Act in 2005, a tort reform measure which shifted most class action cases to federal court. Judge Johnson oversaw Hensley, which alleged that Colossus was used to underpay claims.
Several years into the Hensley litigation, the groups of insurance companies began to settle with the plaintiffs' attorneys. Insurance companies held that if they had to fight the case in the Miller County Court system it would be cheaper to settle - even if the settlement costs in the millions - rather than pay for the costs of massive discovery and defending over a protracted period of time.
Hensley was brought about by lead attorney John Goodson of Keil & Goodson in Texarkana. Goodson, who also is a lead attorney in the new Colossus, married Arkansas Supreme Court Justice Courtney Hudson Goodson in November.
In December, Justice Goodson wrote the unanimous court decision that upheld a lower court ruling that struck the cap on damages from the state's Civil Justice Reform Act of 2003. The Act had placed a cap on punitive damages at three times the amount of compensatory damages, with the amount limited to $1 million. The Arkansas Trial Lawyers Association applauded the court's decision.
The candidate Goodson, who ran for the seat in 2010, had accepted more than $99,000 in gifts and cash from John Goodson, according to financial disclosure reports.
Tabor, who did not elaborate in his ruling that was unfavorable to the plaintiffs, has imposed tough criminal sentences in Sebastian County, population of approximately 125,000. The courthouse is located in Fort Smith, which is approximately 180 miles north of Miller County's courthouse in Texarkana.
Tabor recently sentenced a man to 75 years in prison for possessing child pornography.
And in March, he told a criminal defendant, "You shake your head at me and I'll double your bond," according to a local news report. "I'm not here to play games with you."
The New Colossus
The new Colossus case was originally filed in Sebastian County in June 2010 as a personal injury matter involving plaintiff Freda McClendon. Following a wreck caused by an uninsured driver, McClendon sued her insurer claiming it failed to pay her a $25,000 policy limit. She added plaintiffs Patricia Higgs and Eddie Basham and sued an additional 50 insurance companies in a third amended complaint turned into a proposed class action.
Their attorneys, Goodson and Brad E. Seidel of Nix, Patterson & Roach in Daingerfield, argued that the named insurance companies allegedly used Colossus to underpay insurance claims.
They alleged that the software can be used to adjust bodily injury claims made by uninsured and underinsured motorists based upon settlement ranges generated by Colossus, and that the software is marketed to insurance companies as a way to save money by paying less on claims.
The new insurer defendants removed the case to federal court last August, arguing complete diversity among the parties.
However, U.S. District Judge P.K. Holmes III remanded the case back to Sebastian County in August and noted that the defendants did not argue federal jurisdiction or specific monetary issues - reasons for federal jurisdiction under the Class Action Fairness Act.
When the case returned to Tabor's court in Sebastian County, the plaintiffs filed a motion to stay and to establish grouped briefing schedules. While the motion re-explained the heart of the lawsuit, it also asked for Tabor to schedule issues and handle the proposed class action in the same manner that Johnson handled in the Hensley case.
In the motion to stay, Goodson's co-counsel, W.H. Taylor and William B. Putman of Taylor Law Partners in Fayetteville, argued that Tabor must rule on the defendant's motions to dismiss only right before he rules on the plaintiffs' motion for class certification.
Taylor argued that this was "efficient" and provided the parties with "substantial time" to complete discovery.
He wrote that if Tabor ruled on defense motions to dismiss he would be delving into the merits of the case, which is forbidden in Arkansas.
In their motions to dismiss, some of the insurers argued that they do not have any Arkansas policy holders. And other insurance companies, like the group of Chubb Insurance Companies, stated that it did not use the software to adjust any policies for Arkansas residents.
Taylor provided Tabor with a sample scheduling order filed in Johnson's court.
"Judge Kirk Johnson developed an efficient system of handling cases where such issues are presented which takes into account the need to avoid merits determination before certification but also accommodates defendants by setting their motions to dismiss for hearing as soon as possible," the plaintiffs' motion stated.
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