TEXARKANA, Ark. (Legal Newsline) - A federal judge from the U.S. District Court for the Western District of Arkansas ruled Tuesday that plaintiffs in a class action case were engaged in "what amounts to improper forum shopping."
They had asked to dismiss their complaint and re-file after the defendants moved the original case to federal court.
The case, Thatcher v. Hanover Insurance Group, was originally filed in Miller County, Ark. But the defendants moved it to federal court because the litigation met the Class Action Fairness Act of 2005 guidelines.
The plaintiffs then moved to dismiss the case without prejudice. They maintained that the amount of damages did not meet the CAFA threshold - as the defendants claimed.
The district court granted the plaintiff's dismissal. But this was appealed to the U.S. Court of Appeals for the Eighth Circuit, which reversed the district court. It said, "determining whether the district court had subject matter jurisdiction was at the crux of the issue of whether the motion to dismiss was being used for the improper purpose of seeking a more favorable forum."
The appellate court remanded the case, instructing the district court: "After the trial court determines whether it has subject matter jurisdiction, it can consider whether dismissal without prejudice is appropriate, taking into consideration whether the motion to dismiss is a forum-shopping measure. Alternatively, if the court finds that it does not have subject matter jurisdiction, it should remand to the state court."
The district court determined, after the case was remanded, that the sum of the calculations of the possible damages would total $6,614,773. This amount exceeds the CAFA threshold of $5 million needed to move the case to federal court.
The plaintiff also did not furnish, according to the district court, "a good reason why it wants to voluntarily dismiss its case, re-file in state court and eliminate the first three counts stated in his amended complaint." It concluded that the "obvious reason... is to avoid removal of the class action to federal court upon it being re-filed as a breach of contract action only. That clearly amounts to improper forum shopping and the analysis need proceed no further."
The district court also noted that the plaintiff and the attorneys "are not to be permitted to shop for a new and hopefully more favorable forum if it turns out that their complaint - as drawn - places them in a court not of their liking."
Some claim the Miller County courts are well liked by plaintiffs attorneys. The system has been the subject of controversy in another class action case involving insurance companies that used the software tool Colossus being sued.
The defendants have moved their case to federal court, citing CAFA. But the plaintiffs want to keep the case in Miller County. The defendants claim the county courts are biased in favor of plaintiffs and they would be inundated with unnecessarily expensive discovery requests which are intended to force a settlement.
Among the plaintiff's attorneys in the 'Colossus' case are John C. Goodson, of Keil & Goodson in Texarkana, and Brad E.Seidel, Nix, Patterson & Roach in Camden, Ark. These are the same law firms involved in Thatcher v. Hanover.