Do Parties in a Class-Action Settlement Agreement have Standing? Supreme Court of Arkansas Says Yes
Hunter v. Runyan, 2011 Ark. 45 (2011)
An issue of first impression arose on February 9, 2011, when the Supreme Court of Arkansas was met with the challenge of determining whether subject matter jurisdiction existed between parties in a class-action settlement as the case was no longer adversarial in nature. Because it is well settled that subject-matter jurisdiction “is considered to be a court’s authority to hear and decide a particular type of case,” the court’s decision was highly significant to all future class-actions in Arkansas.
The issue developed when a class action lawsuit of policyholders of supplemental cancer insurance entered into a settlement agreement with the insurance company. A group of plaintiffs objected to the settlement and filed separate motions to intervene and to stay the circuit court’s proceedings. The circuit court approved the settlement agreement and dismissed all class-member’s claims with prejudice. The appellants appealed the approval of the settlement arguing, as a threshold matter, that the settling plaintiffs and the insurance company did not have subject matter jurisdiction because the parties had reached an agreement. The argument being that without adversity between the parties, there is no standing and thus, no subject matter jurisdiction.
The court stated first that Arkansas jurisprudence is not similar to federal jurisprudence in this area regarding subject matter jurisdiction. Arkansas law does not follow the federal concepts of justiciability. Rather “circuit courts are established as the trial courts of original jurisdiction of all justiciable matters and otherwise assigned pursuant to [the Arkansas] Constitution” and the requirement of “cases and controversies” is limited to federal cases under the U.S. Constitution. It then quoted an Arkansas case in the proposition that “an Arkansas court lacks subject-matter jurisdiction if it cannot hear a matter ‘under any circumstances’ and is ‘wholly incompetent to grant the relief sought.’” The court determined that subject-matter jurisdiction, according to these facts, was governed by Rule 23(e) which requires that “the court must approve any settlement, voluntary dismissal, or compromise of the claims, issues, or defenses of a certified class.” The language of the rule states that is mandatory, which of course means that issues of justiciability should not intervene. Accordingly, the settling plaintiffs and the insurance company had subject matter jurisdiction.
By: Brandon Tittle