Court Reverses Attorney Sanctions
Last week, the Eighth Circuit reversed an order by Judge PK Holmes of the Western District of Arkansas, who imposed sanctions on counsel who dismissed a class action, Adams v. USAA, in his court and turned around and filed in state court. Judge Holmes ruled that counsel for the putative class stipulated to the dismissal for the “improper purpose of seeking a more favorable forum” and used “properly attached federal jurisdiction as a mid-litigation bargaining chip.” But the Eighth Circuit found that counsel’s conduct was proper because “a reasonable lawyer would have had a colorable legal argument that a stipulation of voluntary dismissal . . . is permissible in a case in which the class has not yet been certified.”
In the case, the Adams’s accused USAA of breaching its duty to indemnify the couple by depreciating the labor costs that would be incurred with repairs to the properties.
The plaintiff attorneys initially said they believe that “hundreds if not thousands” of Arkansas policyholders had been damaged by USAA’s actions and asked that the case be certified as a class action.
The case remained in federal court for 17 months then in June, 2015 lawyers for the plaintiffs and USAA voluntarily dismissed it and filed the next day in Polk County Court. A deal was immediately approved that Judge Holmes said limited payments to claimants, but secured attorneys fees of $1.8 million.
The lawyers, the judge wrote, violated Rule 11, Federal Rules of Civil Procedure, covering Rule 11. Signing Pleadings, Motions, and Other Papers; Representations to the Court; Sanctions.
“Defense counsel removed this action to federal court and then took advantage of the more difficult certification and settlement process in this forum to negotiate a settlement designed to result in a lower payout to an overinclusive class in exchange for a high attorney’s fee,” the April 15 opinion said.
“The result of Defense counsel invoking federal jurisdiction and then all Respondents treating that jurisdiction as a bargaining chip during pending litigation is that the Court was not treated as a forum in which to resolve a dispute but as leverage in negotiations that benefited everyone but the class members. This gamesmanship is improper in any case.”
The Class Action Fairness Act of 2005 gives federal courts jurisdiction over certain class actions and directs the Courts to give greater scrutiny to class action settlements, especially those involving corporations.
Seven Defendants in Asbestos Lawsuit Awarded Summary Judgment
On July 21, the U.S. District Court for the District of Delaware recommended an award of summary judgment to seven defendants, including Honeywell, Pfizer, and FMC, named in an asbestos lawsuit. The court said that the evidence did not establish that the defendants’ products were a substantial contributing factor in the plaintiff’s development of lung cancer.
In Harold and Judy Haynes v. Air & Liquid Systems Corp., et al., Haynes was deposed on December 6 and 7, 2016., In the opinion the court stated that, “plaintiffs did not produce any other fact or product identification witnesses for deposition.”
In the case against one of the defendants, Buffalo Pumps, the court noted: “Mr. Haynes identified Buffalo Pumps as the manufacturer of pumps that he worked on while serving in the Navy as a boiler tender from 1959 to 1963. Mr. Haynes testified that he worked on pumps manufactured by Buffalo Pumps twenty to thirty times while he was aboard the USS Powell. Mr. Haynes could not remember the specific kind of work he performed on Buffalo Pumps’ products while aboard the USS Powell. (Additionally, Mr. Haynes could not recall how many times he worked on pumps manufactured by Buffalo Pumps during his six months aboard the USS Buckley in 1963.”
“Mr. Haynes stated that he did not have knowledge of when the pumps were installed on either the USS Powell or the USS Buckley. Furthermore, Mr. Haynes testified that he did not know the maintenance history of any of the pumps manufactured by Buffalo Pumps on either ship. He did not know whether the packing or gasket material used on the pumps, on either ship, contained asbestos.”
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