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Colossus defendants want McDaniel to intervene in class action

By Michelle Keahey | Jul 16, 2012


TEXARKANA, Ark. (Legal Newsline) - Insurance companies battling class action litigation in Miller County, Ark. are asking state Attorney General Dustin McDaniel to intervene.

The group of insurance companies known as ANPAC on July 13 asked for McDaniel's input regarding a state law (§16-63-221) that, among other things, spells out how a plaintiff should describe an amount in controversy in order to establish subject matter jurisdiction.

Plaintiffs want to keep the case - Basham and McClendon v. American National County Mutual Ins. Co. et al - in Miller County Circuit Court with the same judge who years earlier approved $185 million in attorney fees in an identical case. They have repeatedly stated that the Basham lawsuit does not require removal to federal court per the Class Action Fairness Act (CAFA) as the case will only represent Arkansas class members and will not seek more than $75,000 per plaintiff or more than $5 million in total damages, not including injunctive relief and attorney's fees.

Defendants want the case to stay at federal court in the Western District of Arkansas where it currently awaits a judge's order on jurisdiction. They say the amount in controversy would in fact exceed $5 million, arguing that plaintiffs would not be bound by what they stipulate. ANPAC also says that plaintiffs' stipulations regarding the amount in controversy were made in bad faith.

"In short, if this litigation is allowed to continue against the ANPAC Defendants in the Circuit Court of Miller County, Arkansas, it will be tantamount to placing Defendants into an abyss," ANPAC states in a court document that accompanied its letter to McDaniel.

The insurance companies argue that if the state court does not accept its argument in the case regarding the Arkansas statute, then the law should be challenged as unconstitutional.

The underlying lawsuit alleges that insurance companies conspired to underpay uninsured or underinsured bodily injury claims by using the claims adjusting software - Colossus.

The defendants in Basham removed the case on grounds that the Arkansas federal court has proper subject matter jurisdiction per CAFA because the amount of damages being sought exceeded state court jurisdiction.

The plaintiffs argue that the extensive stipulations and alternative pleading contained in their complaint are sufficient to limit damages recoverable in the same manner as a separate affidavit/stipulation would be.

The parties are currently awaiting U.S. District Judge Susan O. Hickey's ruling on the plaintiffs' motion to remand the case to the Judge Kirk Johnson's Circuit Court of Miller County.

The ANPAC group wants an immediate ruling on their motions to dismiss based on jurisdiction and other issues before the federal court rules on the plaintiff's motion to remand.

In its pleadings, the ANPAC group argues that it has been embroiled in over seven years of litigation based on allegations which do not distinguish its conduct from other insurers and the Colossus software manufacturer.

ANPAC states that the other defendant insurance companies "have been dismissed after buying peace by settling in separate lawsuits which probably netted no appreciable benefits to any insured class member, but have earned opposing counsel attorney's fees of over $185 million in Colossus settlements."

The plaintiffs allegedly want to keep nationwide or multi-state class actions in state court "whose judges have reputations for readily certifying classes and approving settlements without regard to class member interest," ANPAC states.

The insurance companies that are included within the ANPAC group are American National Property & Casualty Co., American National General Insurance Co., American National County Mutual Insurance Co., ANPAC Louisiana Insurance Co., and Pacific Property & Casualty Co.

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