Judge OKs combining lawsuits into class action

A federal judge in Texarkana has granted class action certification in two lawsuits accusing major insurance companies of unlawfully depreciating labor costs in claims for property damage in Arkansas.

The suits accuse State Farm Fire and Casualty Co. and American Modern Home Insurance Co. of improperly depreciating the value of labor costs when paying claims for damage to homes, fences and other insured real property in multiple years. Both cases were filed in Miller County Circuit Court in 2014 and later moved to the Texarkana Division of the Western District of Arkansas federal court at the request of the defendants. Texarkana lawyer John Goodson of Keil & Goodson declined to comment on behalf of the plaintiffs.

The suits allege the insurance companies violated Arkansas law when they used software

that depreciated not only the cost of the materials, but labor, as well. The complaints in both cases argue that labor “is not susceptible to aging or wear. Its value does not diminish over time. Consequently, and practically, depreciation simply cannot be applied to labor costs.”

U.S. District Judge Susan Hickey issued orders Wednesday certifying the cases as class actions. Any Arkansan who settled a property damage claim with State Farm or American Modern in the 10 years before the suits were filed in 2014 may be eligible to join the suit. Lawyers for the plaintiffs hope to recover the amount they allege policyholders should have been paid for labor costs minus the amount they were actually paid, plus a 12 percent penalty, as permitted by Arkansas law.

Lawyers for the defendants have argued that the individual claims of would-be class members are so different that class certification isn’t appropriate. Hickey’s orders address those arguments and reject them.

In both cases, Hickey has appointed the following law firms as class counsel: Keil & Goodson of Texarkana; Kessler Topaz Meltzer & Check of California and Pennsylvania; Mattingly & Roselius of Oklahoma; Murphy, Thompson, Arnold, Skinner & Castleberry of Batesville, Ark.; Taylor Law Partners of Fayetteville, Ark.; Stephen Engstrom Law Office of Little Rock; Crowley Norman of Houston; and James Pratt Jr. of Camden, Ark. llarowe@texarkanagazette.com