FORT SMITH -- A federal judge on Wednesday reprimanded Texarkana attorney and University of Arkansas System Trustee John Goodson, his law partner and three other lawyers for ethics violations and abuse of the court system.

Document Federal judge's order reprimanding class-action lawyers View

Photo by David Gottschalk

Attorney Matt Keil enters the Judge Isaac C. Parker Federal Building Friday, June 24, 2016, before a hearing in front of U.S. Chief District Judge P.K. Holmes in Fort Smith.

Chief U.S. District Judge P.K. Holmes III's order said the five took their actions knowingly, or "in bad faith."

Besides Goodson, reprimands went to his Texarkana partner Matt Keil, Jason Roselius of Oklahoma City, and Richard Norman and Martin Weber Jr. of Houston.

Goodson, the husband of Arkansas Supreme Court Justice Courtney Goodson and a major political donor, is one of 17 lawyers whom Holmes accused in December of forum-shopping a class-action lawsuit all were involved in.

[DOCUMENT: Click here to read Judge P.K. Holmes' full order]

The judge said the attorneys dismissed Adams v. United Services Automobile Association (2:14-cv-2013) from his Fort Smith courtroom after 17 months of litigation in order to settle in state court.

Arkansas courts don't require judges to rigorously scrutinize such settlements for fairness to all parties, according to Holmes.

The case's settlement in Polk County Circuit Court in December benefited the plaintiffs' lawyers and the insurance company, at the expense of policyholders who were harmed, Holmes said.

"The severity of the violation was great," Holmes said in his order Wednesday.

The lawyers "engaged in improper mid-litigation forum shopping in a manner calculated to evade federal review and prevent the court from carrying out its obligation" to class members, the judge wrote.

The judge's order said seven more plaintiffs lawyers and three defense attorneys in the Adams case were guilty of the same behavior. But they did not show bad faith, Holmes concluded. The judge decided not to reprimand or discipline them.

Those lawyers are USAA defense attorneys Lyn Pruitt of Little Rock and Wystan Ackerman and Stephen Goldman of Hartford, Conn.; and plaintiffs' lawyers W.H. Taylor, Stevan Vowell, William Putman and Timothy Myers of Fayetteville, Tom Thompson and Casey Castleberry of Batesville, and Matthew Mustokoff of Radnor, Pa.

Reversing an earlier finding, Holmes also ruled that plaintiffs' attorney Stephen Engstrom of Little Rock did not violate ethics rules or abuse the judicial process, and played only a minor role in the Adams case. Holmes made a similar finding this spring regarding defense attorney Stephen O. Clancy of Hartford, Conn.

Attorneys for the lawyers declined to talk about the order or could not be reached for comment Wednesday. They could appeal to the 8th Circuit U.S. Court of Appeals in St. Louis.

The judge's reprimands of Goodson, Keil and the Oklahoma and Texas lawyers likely will have to be noted in future cases in which the five apply to serve as counsel in out-of-state courtrooms, legal experts say.

In states where lawyers aren't licensed, they apply "pro hac vice" to take part in a particular case. They are required to fill out forms that often ask whether they have been disciplined.

If the answer is yes, then the lawyer has to explain, and the judge can refuse to let that lawyer take part in the proceedings.

A reprimand is "certainly something lawyers hope to avoid," said David Sachar, executive director of the Arkansas Judicial Discipline and Disability Commission.

In the Dec. 16 settlement of Adams v. United Services Automobile Association in Polk County Circuit Court, plaintiffs' lawyers walked away with $1.85 million in fees and expenses, according to Holmes' order.

Only 4 percent of eligible policyholders filled out a lengthy claim form to get a portion of the insurance company's estimated $3.44 million settlement pool.

After discovering the case had been settled -- through reading a report in Arkansas Business newspaper -- Holmes at first said he intended to discipline all lawyers involved.

He held an initial hearing Feb. 18, where the judge didn't appear to waver. But a second hearing on the forum-shopping issues, on June 24, caused Holmes to reconsider several points, according to his order.

Holmes decided that one "primary factor for the court to consider is the degree to which any [lawyer's] misconduct here was characterized by bad faith."

Holmes had earlier found "bad faith," for example, by Vowell, Putman, Taylor, Keil and Ackerman in keeping silent on the "penalty of perjury" at the case's settlement hearing in Polk County.

But the June 24 hearing and court filings showed "lack of clarity" in that issue. So Holmes decided that the lawyers' conduct there "is not sufficiently weighty evidence of bad faith."

Holmes expressed some sympathy for USAA defense attorney arguments that their duty was to their client, the insurance company that directed them to settle the case.

"With their client aware that other insurers had settled class actions in Arkansas without negative consequences using this same tactic, the court is left with the impression that the misconduct of Ackerman, Goldman and Pruitt was characterized more by a sense of helplessness in the face of ethical obligations to their client than it was by bad faith," Holmes wrote.

And Holmes decided to reconsider some lawyers' explanations about filing a Rule 26(f) report that the judge had said "deliberately concealed their intent to dismiss and insulate the case from this court's review" and demonstrated "bad faith."

"The court will give the benefit of the doubt to respondents on this issue and will not attribute the filing ... to malice," Holmes wrote.

John Goodson and his firm have settled dozens of class-action cases in Arkansas and other states, earning tens of millions in attorneys' fees.

He and lawyers who work with him also are among the biggest single group of campaign contributors to the current elected members of the Arkansas Supreme Court.

Goodson-connected cases have fared well before that court. His clients have won at least eight cases since 2008, the Arkansas Democrat-Gazette reported in January. The state's online court case database didn't reveal any cases that Goodson clients lost in that time.

A Section on 08/04/2016