According to a motion filed Wednesday in Polk County Circuit Court, the terms of a pending class action settlement seem to have been reached through "collusion" between the defendant in the suit — United Services Automobile Association
, an insurance company serving members of the U.S. military — and plaintiff attorneys representing the class.
Little Rock attorney Robert Trammel
, representing four Arkansas veterans who are or were USAA policyholders, filed the motion to dismiss the proposed settlement. In an attached brief, Trammel said the proposed settlement lays out terms that give a raw deal to USAA members while enriching the class action attorneys who represent their interests, or claim to.
The complex backstory to this issue, laid out in detail by Arkansas Business
earlier this week, revolves around the question of venue. The Texarkana law firm of class action attorney John Goodson
has a history of steering suits into state courts with friendly judges. But federal law allows defendants in class action suits to remove certain class actions to federal court. In 2013, Goodson's firm took up a class action suit against USAA, claiming it had slighted “hundreds if not thousands” of homeowners in Arkansas. The suit was moved to federal court. Then, suddenly, it was moved back to state court — in Polk County — with the consent of both plaintiff and defendant, and settlement already attached.
Trammel questions the motivations and characterizes the move as "forum shopping." He writes:
It was intentional that the notice was silent about any disclosure that the parties have worked on this case for two years in federal court. USAA first wants to leave state court. USAA wants to come back. What changed? That information is relevant for the class members to understand why there is an empty state docket sheet as to actions taken leading to the settlement. That is a critical factor to consider in indicating collusion involved in the terms of the proposed settlement, and its "quality" related to justice being served. Commentary around this case suggests the preferred venue had become unfriendly.
Trammel's motion minces no words. "Everything about this case has a sham aspect to it," it declares. "USAA has no desire to reveal to its members anything it has done in concert with the Class Counsel. It wants to buy its peace, but at the expense of the class members."
The main thrust of the argument is that the proposed settlement includes the stipulation that USAA only has to compensate class members who file a claim, a torturous process. Here's how Trammel characterizes the settlement:
We will pay no veteran or member anything unless you file a 'claim' in 90 days. Before that, you must digest a 10-page, single-spaced maze of caveats and limitations called the 'Notice.' Any changes in legal status over the 8 years will require you to produce probate, estate, legal, and financial paperwork. You must sign under the threat of perjury. ...
If every member does what you were told, USAA could pay out as much as $3,445,598. We realize that human nature being what it is, half the rebates from Apple or Staples are lost. Few will labor through an obnoxious 10 pages of instructions. We made it hard for a reason. In reality, the Class Counsel will likely be paid an amount much greater than the total payout to the veterans and other members. ...
USAA, the motion says, would keep any money not paid out.
Trammel also says Goodson's firm (described here as "Class Counsel") has done little for the plaintiff class members:
From looking at the Xeroxed-single-spaced-from-a-binder-and-filed-as-original prepacked nature of this class action, it is difficult to see what Class Counsel has done besides package up a settlement for their benefit, without evidence of much work required to do it. ...
Class Counsel actually can do noble work generally, by providing accountability for the misconduct to consumers resulting in small losses. And it is risky and they should be paid well, but due to historical abuses there is proof required to verify the value to the class.
Here's the full motion to dismiss filed by Trammel. Polk County Circuit Judge Jerry Ryan has not yet ruled on the motion.
Robert Trammel - Motion to dismiss USAA