Wilkes & McHugh test new practice area in Arkansas: Florida firm known for suing nursing homes wades into class-action.
But when he learned that the firm's Little Rock office had filed a class-action suit against computer-maker Hewlett Packard over the functionality of a Microsoft Windows operating system, McCumber started to chuckle.
"That is a complete shock," he said.
John Maxey of Jackson, Miss., defends nursing homes against the negligence and abuse litigation that has traditionally been Wilkes & McHugh's bread and butter. He was similarly surprised to hear that the Little Rock office has filed three class-action suits questioning the roaming fees charged by cell phone companies.
"That's a total departure from what I've seen in Mississippi," Maxey said.
But Roger Glasgow, who defends nursing homes for the Wright Lindsey & Jennings law firm in Little Rock, isn't surprised. Early this year, when momentum for tort reform was clearly building in the Arkansas Legislature, Glasgow said he asked a Wilkes & McHugh attorney what the firm would do if caps on punitive damages disrupted its highly successful model for nursing home litigation.
"This lawyer said, 'Well, we're already working on that. We're going to get into class-action civil litigation, Glasgow said.
Wilkes & McHugh attorneys declined numerous requests for comment on this article. McCumber, Maxey and Glasgow all said the firm's expansion into class-action law makes sense, especially after the passage of tort reform legislation in Florida in May 2001, Mississippi in October 2002 and Arkansas in March.
"The money's drying up in the nursing home business, so you've got to move on to something else," Glasgow said. Plus, he said, representing consumers against large corporations "matches their theme -- 'profits over people' -- that they use in the nursing home cases already."
"Jim Wilkes is all business, for all this talk of reforming nursing homes," McCumber said.
"There's no reason (Wilkes & McHugh) wouldn't be able to diversify because they've built up quite a reserve of fees," Maxey said.
Ironically, it was Wilkes & McHugh's stunning $78.4 million verdict against a Mena nursing home -- $63 million of which was punitive damages -- that supercharged the tort reform movement in Arkansas. Even after being reduced to $26 million ($21 million in punitive damages) by the state Supreme Court, the case stands as the largest tort verdict in Arkansas history.
Class-action cases would not be affected by Arkansas' Civil Justice Reform Act of 2003, which, among other things, placed a $1 million cap on punitive damages in tort cases such as personal injury, wrongful death, medical malpractice or nursing home negligence.
Wilkes & McHugh's Web site (www.wilkes-mchugh.com) lists six areas of practice: nursing home abuse and neglect, medical malpractice, "serious" auto accidents, wrongful death, toxic torts and insurance fraud. (In this case, insurance fraud refers to fraud by insurance carriers who refuse to pay benefits, not fraudulent claims against insurers.)
Although it attracted little attention, Wilkes & McHugh apparently started testing the waters of class-action litigation as early as last August. That's when founding partner James B. McHugh and a lawyer from the Little Rock office, Susan Nichols, filed suit against Hewlett Packard in Phillips County Circuit Court.
Late last year, Wilkes & McHugh hired lawyer Brian G. Brooks away from the consumer protection division of the Arkansas Attorney General's office. He has been added to the plaintiff's team in the Hewlett Packard case and is the only attorney common to all of the cell phone cases.
"I think that's kind of his role over there, to take these kind of cases and run with them," said Kevin Crass, a partner at Friday Eldredge & Clark in Little Rock. He is defending both HP and Alltel Communications Inc. of Little Rock, the wireless subsidiary of Alltel Corp. that is the subject of one of Wilkes & McHugh's class-action suits challenging roaming fees.
While tort reform may have encouraged Wilkes & McHugh to branch out in a new direction, Crass thinks there's a particular reason the firm began its experimentation with class-action in Arkansas: state Supreme Court decisions that have made Arkansas an attractive jurisdiction for class-action complaints filed in state court.
"I suspect they are doing it here for the same reason attorneys from other states are coming here to do this," Crass said.
Last year, a study by the U.S. Chamber of Commerce ranked Arkansas as the sixth-easiest state in which to have a case certified as a class-action lawsuit.
All four of the known consumer class-action complaints that Wilkes & McHugh has filed in Arkansas were originally filed in state courts. The cases against HP and Alltel as well as one against Cingular Wireless LLC were filed in Phillips County Circuit Court, while AT&T Wireless was sued in Pulaski County Circuit Court.
All three cell phone companies have been successful in having their cases transferred out of state courts and into U.S. District Court in Little Rock. But Crass' similar attempt to transfer the Hewlett Packard case to federal court failed.
"They want to stay in state court as much as they possibly can because they can get more provincial juries and the judges may be a little bit more lenient," Glasgow said.
Negligence claims filed against nursing homes have generally been successful in generating either an attractive settlement or a favorable jury award, usually within a year. But class-action law, Glasgow said, requires a large, long-term investment with much less certainty of a payoff. But class-action cases that do pay can generate enormous fees for the plaintiff's attorneys.
Crass said he hadn't noticed any Wilkes & McHugh advertisements in search of HP computer owners to join the class of plaintiffs in that case. But after the cell phone suits were filed -- two on March 20 in Helena and one on March 23 in Little Rock -- Wilkes & McHugh took out half-page ads in the Arkansas Democrat-Gazette seeking cell phone users who think they may have been charged improper roaming fees.
The firm also continues to advertise for potential clients with claims of nursing home abuse or neglect.
"Their advertising has continued and has actually picked up with the ticking clock," Glasgow said, referring to a Wilkes & McHugh television ad that actually featured a metronome, a weighted pendulum used to help musicians play at a constant tempo.
Under Arkansas' version of tort reform, incidents of harm that happened after the act was adopted on March 25 are subject to a $1 million cap in punitive damages. The wording of the television ad suggests that Wilkes & McHugh is primarily interested in cases that would not be subject to that cap, but those would also have to fall under the two-year statute of limitation on medical malpractice claims or three-year statute of limitation on negligence claims.
"That's a salvage operation," Glasgow said. "They have squeezed almost all of the blood out the turnip, but there may be a few drops left. And this is their strategy for getting those last few drops."
Wilkes & McHugh used a similar strategy in Mississippi, where tort reform adopted in October took effect on Jan. 1, according to John Maxey.
"There was a flurry of suits filed in December, but after the first of the year the advertising by Wilkes & McHugh went virtually dark," he said.
"They are not advertising here on TV, and they don't have any billboards," said Vanessa Henderson, executive director of the Mississippi Health Care Association, a nursing home industry lobbying group.
Glasgow said Wilkes & McHugh also has stepped up efforts to get nursing home cases filed and set for trial as soon as possible -- a strategy that he said was designed to pressure nursing home liability insurance carriers and their overburdened defense lawyers to make settlement offers.
"I don't know how many letters we've gotten here in the past few days asking judges to set cases for trial even on top of cases that are already set," Glasgow said.
Stuart Miller, a nursing home defense lawyer with the Mitchell Williams Selig Gates & Woodyard firm in Little Rock, said he hadn't seen any particular increase in trial requests from Wilkes & McHugh.
"That's always been their strategy. They file them and try to get them set," Miller said.
RELATED ARTICLE: Roaming Fees Challenged
THREE OF THE FOUR KNOWN class-action lawsuits filed in Arkansas by the Wilkes & McHugh law firm challenge billing and marketing for long-distance phone service by wireless phone companies.
On March 20, Wilkes & McHugh filed a complaint against Alltel Communications Inc the wireless subsidiary of Alltel Corp, of Little Rock, in Phillips County Circuit Court on behalf of four Phillips County residents and "all others similarly situated."
On the same day, the firm field a similar class-action case in the same court against Cingular Wireless LLC, the cell phone joint venture of SBC Communications Inc. of San Antonio and BellSouth Corp. of Atlanta. The plaintiff is a Phillips County woman "and all others similarly situated."
On March 23, a complaint was filed in Pulaski County Circuit Court against AT&T Wireless of Redmond, Wash. The only named plaintiff in the AT&T suit is a Pulaski County woman.
The lawsuits all accuse the phone companies of misleading advertising that led customers to believe incorrectly that virtually all of their long-distance calls would be included in a flat monthly fee and that their service areas are, broader than they really are.
While similar, the lawsuits complain of specific problems with the "fine print" of the companies' service agreements, which the plaintiffs charge are written to the complete advantage of the company and leave the customer with an unfair burden of objecting to unilateral changes in the contracts.
The three phone companies, all represented by different lawyers, have attempted to have the cases moved to U.S. District Court in Little Rock. All three support the move by citing the Federal Communications Act, which states that no state or local government has authority to regulate telephone or mobile service.