Ark. SC dismisses farmer's appeal over law firms' fees

By Jessica M. Karmasek | Jun 20, 2012


LITTLE ROCK, Ark. (Legal Newsline) - The Arkansas Supreme Court this month dismissed an appeal over attorneys fees by a farmer who sued Bayer for its contamination of the nation's long-grain rice supply.

Lenny Joe Kyle appealed the decision of the Woodruff County Circuit Court, which ruled that a group of law firms -- or "leadership group" -- was entitled to a percentage of his total recovery in his suit against Bayer CropScience LP and Bayer Holding Inc.

The firms include: Gray, Ritter and Graham PC; Wolf, Haldenstein, Adler, Freeman and Herz LLC; Seeger, Weiss LLP; Neblett, Beard and Arsenault LLP; Emerson, Poynter LLP; Whatley, Drake and Kallas LLP; Looper, Reed and McGraw; and Chapman, Lewis and Swan.

The Court, in its June 14 ruling, dismissed the appeal without prejudice. The order being appealed, it said, is not final and absent is an effective Rule 54(b) certification.

In August 2006, the U.S. Department of Agriculture announced that the nation's long-grain rice supply was contaminated with genetically-modified rice developed by Bayer.

The announcement, in turn, caused the price of American rice to plunge, as foreign markets either banned or restricted the importation of rice from the United States.

The contamination also spawned numerous lawsuits against Bayer in federal and state courts.

In December 2006, the Judicial Panel for Multidistrict Litigation centralized all of the federal lawsuits in the U.S. District Court for the Eastern District of Missouri.

In April 2007, the MDL court appointed the firms above as a "leadership group" to coordinate pretrial preparations for the federal litigation.

The MDL court subsequently established a common-benefit trust fund to compensate the group for its efforts.

The court also ordered Bayer to "hold back" certain percentages of any plaintiff's recovery for placement in the fund.

And while the MDL court ruled that it did not have jurisdiction to order like contributions from state court plaintiffs, it urged state court judges handling the cases to "consider requiring participation in the fund by the parties over whom they have jurisdiction."

In August 2008, Kyle filed his complaint against Bayer in circuit court.

The 15-day trial began in February 2010. In the end, the jury awarded the farmer $532,643 in compensatory damages and $500,000 in punitive damages.

Before the entry of judgment, the leadership group filed a motion to intervene seeking to collect 11 percent of Kyle's total recovery for placement in the common fund.

The law firms alleged Kyle and his counsel benefited from the "extensive work "performed by the group and claimed Kyle would be "unjustly enriched" if they were not compensated for their efforts.

Although Kyle opposed, the circuit court granted the law firms' motion to intervene on April 21, 2010.

The court then held a hearing on the firms' complaint in intervention on May 27, 2010. In an order dated June 22, 2010, the court granted the complaint.

The circuit court found that Kyle's attorneys benefited from the work performed by the leadership group and ruled that the firms were entitled to a 5 percent hold-back from Kyle's gross recovery to be transferred to the MDL court for distribution.

Kyle moved for reconsideration, and the court granted the motion in part in an order entered Aug. 4, 2010.

In the order, the court adhered to its ruling creating a common-benefit fund in favor of the law firms but rescinded its decision to transfer the fund to the MDL court. It also vacated the award of a 5 percent hold-back as being premature, as neither party had "presented evidence as to the amount requested or its justification or lack thereof."

The order further stated the court would schedule a hearing on the amount to be withheld for the common-benefit fund.

However, it denied Kyle's request for a jury trial, ruling that the claim of unjust enrichment sounded in equity and therefore there was no right to a jury trial on the issue.

Then, on Jan. 21, 2011, the circuit court entered an order recounting the procedural history of the case and restating its rulings.

The order also contained a determination and certificate pursuant to Rule 54(b) of the Arkansas Rules of Civil Procedure stating in part that "(b)ecause the legal concept of a common benefit fund appears to be one of first impression in the State of Arkansas... disallowing an immediate appeal to review this issue would result in a hardship and injustice on the parties."

Kyle then appealed.

He argued before the state's high court that the post-judgment intervention orders are void; state law does not permit the recovery of attorney's fees and expenses in a single-plaintiff case by attorneys who had no attorney client contract or relationship with the plaintiff; the motion to intervene was untimely; intervention is not authorized under Rule 24 of the state's Rules of Civil Procedure; and if intervention is allowed, then a jury should determine the amount, if any, of the fees.

Justice Courtney Hudson Goodson, who wrote the Court's six-page opinion, explained that Rule 54(b) requires the circuit court's order to include "specific findings" of any danger of hardship or injustice that "could be alleviated by an immediate appeal" and to "set out the factual underpinnings that establish such hardship or injustice."

"As is evident from reading the order, it contains no factual findings explaining why hardship or injustice would result if an immediate appeal is not permitted," she wrote.

"The order merely states a conclusion that hardship and injustice would result on the basis that the case involves an issue of first impression.

"Without specific findings to support this conclusion, the order does not satisfy the requirements of Rule 54(b)."

Also, the Court noted, the circuit court has yet to decide the amount of the hold-back due to the law firms.

"An order that contemplates further action by a party or the court is not a final, appealable order," Goodson wrote.

"The fact that a significant issue may be involved is not sufficient in itself for the appellate court to accept jurisdiction of an interlocutory appeal."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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