Reply Brief — Ballard v. Garrett

No. 02-426

CFRi- ‘

*CB OF THE CL PPR

IN THE

Supreme Court of the Anited States

a

—

TERESA BALLARD, ET AL.,

Petitioners,

Vs

PHYLLIS GARRETT AND ADVANCE AMERICA,

CASH ADVANCE CENTERS OF ARKANSAS, INC.,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI

TO THE SUPREME COURT OF THE

STATE OF ARKANSAS

REPLY BRIEF OF PETITIONERS

DAVID G. NIXON RICHARD A. FISHER

Counsel of Record

THE NIXON LAW FIRM | THE FISHER LAW FIRM

2340 GREEN ACRES RD. 1510 STUART ROAD

SUITE 12 SUITE 210

FAYETTEVILLE, AR 72703 CLEVELAND, TN 37364

TEL: (479) 582-0020 TEL: (423) 479-7009

Counsel for Petitioners

TABLE OF CONTENTS

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SFE ERNE GIP BEER I sss sissicccscsinseiscescispyeceerenseatzeneisnavonee 1

REASONS FOR GRANTING THE PETITION .............ccceseesees 2

I. The Decision of the Arkansas Supreme Court

Conflicts with Recent Precedent of this Court............. 3

II. The Appellate Rule of the Arkansas Supreme Court

Denies Equal Protection to the Petitioners and to All

Other Similarly Situated Litigants. ...... eee 4

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IV. The Question Presented is Important. .......0.0. eee 6

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PETITIONERS’ SUPPLEMENTAL APPENDIX... eee la

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TABLE OF AUTHORITIES

Federal Cases

City News & Novelty, Inc. v. City of Waukesha, 531

U.S. 278, 121 S.Ct. 743, 148 L.Ed.2d 757 (2001)... 5

Devlin v. Scardelletti, 536 U.S. ---, 122 S.Ct. 2005, 153

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Friends of the Earth, Inc. v. Laidlaw Environmental

Services (TOC), Inc., 528 U.S. 167, 120 S.Ct. 693,

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Federal Rules

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State Rules

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STATEMENT OF THE CASE

Despite Respondent Advance America’s repeated

assertions to the contrary, the Petitioners never “refused” to

post the $ 750,000.00 bond ordered by the trial court (Opp.

Brf., pp. 2, 5, 6and never “defied” that order (Opp. Brf., p. 6),

both of which labels connote intentional acts of disobedience

by the Petitioners.1 As the record below clearly shows, the

Petitioners - former payday lending customers of Advance

America -- were unable to raise the $ 750,000.00 to

$ 825,000.00 in cash and property required to comply with

the order.

Advance America then proceeds to inform this Court

that the issue is moot because the underlying trial court

order requiring the bond was set aside on November 18,

2002 - the date their Opposition Brief was filed here. That

statement is simply and patently untrue. As of the date this

Reply Brief is being written, no trial court order to that effect

has been found of record by the Petitioners after repeated

inquiry, although an order is apparently being circulated.

Moreover, if such an order existed, why was it not included

in Advance America’s Appendix? More will be said on this

subject below.

The Petitioners were unaware of the trial court’s October

2, 2002 order denying Garrett's Motion for Contempt until

they received the Respondents’ November 12, 2002 Joint

Motion to Vacate Order Requiring Objectors to Post

Supersedeas Bond by telecopier. On Friday, November 15 -

while Petitioners’ counsel was out of town - a notice arrived

from the trial court for a telephonic hearing on the Joint

Motion to be conducted at 9:00 a.m. on Monday, November

18. Petitioners prepared a written response to the Joint

Motion and transmitted it by Telecopier to the trial court at

‘It should also be remembered that this so-called “supersedeas” bond

was ordered in the absence any supersedeas order whatsoever.

approximately 8:30 a.m. the morning of November 18.

(Supp. App. 1a.) Petitioners did not appear by telephone for

the hearing because counsel mistakenly believed the trial

court was initiating the call and, when counsel discovered

otherwise and called the trial court, the hearing was

concluded. As stated above, Petitioners have made repeated

inquiries of the trial court, its staff, the trial court clerk’s

office and counsel for Advance America for a copy of any

order resulting from that hearing and have been made aware

of no such order being signed or entered by the trial court.

REASONS FOR GRANTING THE PETITION

The weakness of the Respondents’ argument is evident

from the form of their response... Garrett has waived her

right to respond and Advance America has ignored the

equal protection violation sharply focused before us by the

Arkansas Supreme Court's denial of standing. Instead - as

has been typical in these proceedings - procedural

manipulation is being substituted for merit: If the

Respondents can’t win on the merits, they will blatantly

attempt to deprive this Court of jurisdiction to hear the

matter, even if they have to bend the facts and law a little to

get it done.

The timeline of their attempt to moot this issue is evident

as is their misrepresentation of fact concerning the trial

court’s order. Their presumption in being able to secure the

order they sought through their Joint Motion to Vacate

should also be noted, however: If their Opposition Brief was

due to be filed on November 18 (the same day for which

they obtained a hearing on their Joint Motion), their Brief

must have gone to the printer containing the presumed fact

that the requested order was obtained and entered.

The “fly in the ointment,” however, was that the relief

they sought from the trial court - once again - was clearly

beyond what the trial court had authority to grant. The

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- - Re

Petitioners in their Response to the Joint Motion

demonstrated this. Where in the past, they were able to

obtain a supersedeas bond in the absence of a supersedeas

order, or obtain approval of a settlement agreement without

putting on any real evidence to show its fairness (other than

some financial information submitted under seal and not

subject to cross-examination), this time the trial court

apparently thought better of it.

I. The Decision of the Arkansas Supreme Court Conflicts

with Recent Precedent of this Court.

Advance America implies that Petitioners were untimely

in raising the constitutional issues of standing and equal

protection below. (Opp. Brf., pp. 4, 7.) It must be

remembered that those issues were not presented until the

Arkansas Supreme Court dismissed their appeal and denied

the Petitioners an opportunity to be heard. They then timely

raised those issues in their Petition for Rehearing to the

Arkansas Supreme Court, which rejected those arguments.

Advance America also incorrectly suggests that this

Court's decision in Devlin v. Scardelletti, 536 U.S. ---, 122 S.Ct.

2005, 153 L.Ed.2d 27 (2002), does not apply because we are

dealing here with the question of appellate standing arising

under ARK. R. App. P. 8. (Opp. Brf., p. 5.) The Arkansas

Supreme Court, however, distinguished Devlin because it

dealt with FED. R. Clv. P. 23, while the instant case dealt

with ARK. R. Clv. P. 23. (App. A, pp. 12a-13a.)

Advance America then attempts to justify the Arkansas

Supreme Court's rejection of Devlin on the grounds that the

appellant in Devlin did not have the ability to opt out of the

settlement. Advance America implies that the Petitioners

deserve to be denied their right of appeal below because

they “attempt[ed] to intervene at the last minute, rather than

opt out of a settlement to which they objected.”2 (Opp. Brf.,

p. 9.) In the first place, this Court only committed one

sentence in Devlin to the fact that the appellant did not have

the ability to opt out of the settlement class. All of the

remainder of the Devlin opinion went to the fundamental

constitutional policies requiring that absent class members

be given a right to be heard if they timely preserve their

objections. This Court has never stated that non-intervening

class members’ only real option is to “take it or leave it.”

Indeed, such a position would be manifestly contrary to the

history of class action practice, which was designed to

permit persons with small individual claims to join together

and seek an economically viable remedy. To prohibit them

from appealing an unfair and inadequate class settlement if

they have the right to opt out and pursue their small

individual claim leaves them with no real remedy at all.

Those who step forward and appeal are - in effect - doing so

as representatives for the remainder of the class who will all

benefit if the appeal is successful. This analysis is also

consistent with this Court’s reversal of the U.S. Court of

Appeals for the Eighth Circuit's decision to dismiss an

appeal for lack of standing? pursuant to Devlin that

concerned an opt-out class.‘

II. The Appellate Rule of the Arkansas Supreme Court

Denies Equal Protection to the Petitioners and to All

Other Similarly Situated Litigants.

Advance America completely ignores this aspect of the

Petition for Certiorari. Perhaps it did so (and opted for

attempting to moot the Petition, instead) because the

Petitioners’ position is so manifestly correct. Even if Devlin

2 Petitioners moved to intervene as soon as the trial court certified the

class and notice of certification and settlement was given.

3In re ral i i . Co. Sales Practi itigation, 268 F.3d

627 (8th Cir.(Mo.) 2001)

4 Henderson v. General American Life Ins. Co., 122 S.Ct. 2584 (Mem),

153 L.Ed.2d 773 (Jun 17, 2002).

ea en EN mENN T rman

did not apply to this situation, the fact that other parties in

Arkansas are allowed to appeal similar orders while the

Petitioners (and all who follow them) are not establishes a

regime for the arbitrary denial of equal protection now and

in the future, especially since the Arkansas Supreme Court

published its opinion and intends for trial courts and-

litigants to rely on it hereafter.

III. This Issue is not Moot.

Not only is there no evidence that the trial court has set

aside its original order requiring the bond (which would be

objectionable in itself under Arkansas law), the precedent

created by the Arkansas Supreme Court will continue to

bind future litigants and trial courts.

Moreover, dismissal of this Petition would not

necessarily leave Advance America and Garrett free to

perform the settlement agreement since - as alluded to in the

Petition herein (p. 7, fn. 2) - the Petitioners intend to bring

that issue before this Court via a Petition for Certiorari5 The

fact that Advance America and Garrett have voluntarily

attempted to deprive this Court of jurisdiction by

improperly (and only allegedly) vacating the initial order

does not necessarily render the issue moot where it is

capable of repetition. See, e.g., Friends of the Earth, Inc. v.

Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 191-

92, 120 S.Ct. 693, 709-10, 145 L.Ed.2d 610 (2000); City News &

Novelty, Inc. v. City of Waukesha, 531 U.S. 278, 283-84, 121

S.Ct. 743, 746-47, 148 L.Ed.2d 757 (2001).

* This Petition, the anticipated Petition on the denial of their right to

appeal from approval of the settlement agreement, and the Petition in

Ballard v. Martin, No. 02-542, al! deal with the recent adoption in Arkansas

of procedural rules dealing with class action settlements.

————

aa aa aN

IV. The Question Presented is Important.

This issue presented is fundamental and important: Will

class members who object and are ordered to post bonds on

pain of contempt be allowed appellate review in Arkansas

Courts? Do they have standing to do so? Are they denied

equal protection and due process if appeal is denied them?

The Petitioners believe this questions - while

fundamental - are essential to the developing law of class

action practice in Arkansas and that it is important to “get it

right” from the outset. This Court, with only a light hand on

the tiller, can significantly influence the rights of absent class

members here. 7

CONCLUSION

The Petitioners respectfully request this Court to enter its

order reversing and remanding these proceedings to the

Arkansas Supreme Court for proceedings in conformity with

this Court's ruling.

Respectfully Submitted:

David G. Nixon

THE NIXON LAW FIRM

2340 Green Acres Road, Ste 12

Fayetteville, AR 72703

Tel: 479-582-0020

Fax: 479-582-0030

Richard A. Fisher, Esq.

THE FISHER LAW FIRM

1510 Stuart Road, Ste 210

Cleveland, TN 37364-0191

Tel: 423-479-7009

Attorneys for Petitioners

Teresa Ballard, Kenisha Bryant,

and Cheryl King

s:\check cashing cases\state actions\garrett v. advance america, no. ca 01-1182

(appeal-bond)\ certiorari, reply brief.doc

PETITIONERS’ SUPPLEMENTAL APPENDIX

Appendix A

THE NIXON LAW FIRM

ATTORNEYS & COUNSELORS

SUITE 12

2340 GREEN ACRES ROAD

FAYETTEVILLE, ARKANSAS 72703

TELEPHONE: (501) 582-0020

FACSIMILE: (501) 582-0030

DAVID G. NIXON, J.D., C.P.A.t RALPH T. HUDSON, PARALEGAL

PAIGE E. YOUNG, J.D., LL.M. (TAXATION) KELLY MCNEAL, PARALEGAL

THERESA L. POCKRUS, J.D.

t Admitted in Arkansas and Oklahoma

November 28, 2002

Via Facsimile Only: (870) 246-9378

Honorable John A. Thomas

CLARK COUNTY CIRCUIT COURT

P.O. Box 966

Arkadelphia, Arkansas 71923-0966

Re: Garrett v. Advance America, Cash Advance

Centers of Arkansas, Inc., CIV 99-152 (Clark

County, Ark. Circuit)

la

Dear Judge Thomas:

We write with respect to the Joint Motion to Vacate

Order currently set for telephonic hearing this morning at

9:00 a.m. Thank you for allowing us to appear by telephone.

We received this Motion by telecopier the morning of

November 12 and were out of the office Friday for CLE

when your call came in setting today’s hearing. We did not

have time to formally respond and ask the Court's

indulgence in doing so through this letter. We were also not

sent a copy of the Court’s October 2 Order, but did acquire a

copy of it after receiving this Motion. We also want to make

sure a record is being made of today’s hearing. ~

1. The Background

This is not the first time the Movants have asked you

to do something not permitted by Arkansas law. For

example, they tried to have this Court dismiss this the [sic]

Objectors’ appeal while it was pending in the Arkansas

Supreme Court. They also tried to have this Court hold the

Objectors in contempt while jurisdiction was still in the

Arkansas Supreme Court. As we suggest below, you are

now being asked to perform an act outside of your authority.

This matter is currently the subject of a Petition for

Certiorari pending in the U. S. Supreme Court. In addition,

the Objectors fully intend and are in the process of filing a

Petition for Certiorari with regard to the dismissal of their

appeal on the settlement agreement itself.

The justifications advanced by the Movants revolve

around allegations that granting their Motion is in the best

interests of the class in order to set aside the existing

superseadas [sic]. However, as you already know, you have

never entered a superseadas [sic] and the parties obligations

under the settlement agreement are not ripe until all appeals

are concluded. Despite allegations of willful misconduct by

the Objectors, their failure to post a $ 750,000.00 was clearly

not willful (i.e., was not a “refusal” to comply)... They

simply lacked the ability to do so, as anyone could see.

So why, after all their effort to subject the Objectors

to contempt (i.e., to punish them for daring to contest these

proceedings), do the Movants now ask you to simply set

aside your original Order? What they tell you is that the

purpose of the supersedeas bond was to protect the class, yet

it was obvious to all that the only party able to provide such

security was Advance America, who was never asked to do

so. The real reason is that now that you have declined to

hold the Objectors in contempt, the Movants simply don’t

want to go to the trouble of responding to the Objectors’

Petition for Certiorari... Or perhaps they’re concerned that

the Objectors are right. In either event, they want you to act

outside the purview of Rule 60 to attempt to deprive the

U.S. Supreme Court of jurisdiction. They created this

situation, but now they want to avoid its consequences when

it has become. [sic]

2. The Law

The Movants’ citation to Davis v. Davis, 291 Ark. 473,

725 S.W.2d 845 (1987) is disingenuous. That case involved a

situation where the prevailing party had practiced a fraud

upon the trial court in preparing a judgment in excess of that

ordered by the trial court. Even though the judgment was

upheld on appeal, the trial court set the judgment aside after

the mandate issued in order to correct the fraud. The

Arkansas Supreme Court approved that action pursuant to

ARK. R. Civ. P. 60(c)(4) (grounds for setting aside judgment

after 90 days). Surely the Movants do not contend that they

practiced a fraud upon this Court in obtaining their own

judgment!

To the contrary, ARK. R. Civ. P. 60(b) clearly controls

this situation (court has plenary control over its orders for a

3a

period of 90 days). Under that Rule, this Court is simply

without jurisdiction to perform the act now requested of it.

See, e.g., City of Little Rock v. Ragan, 297 Ark. 525, 763

S.W.2d 87 (1989):

To correct any error or mistake or to prevent the

miscarriage of justice [emphasis in original], a decree

or order of a circuit, chancery or probate court may

be modified or set aside on motion of the court or

any party, with or without notice to any party,

within ninety days of its having been filed with the

clerk. [Our emphasis. ]

We do not reach the merits of the argument

because we have held frequently that the trial court

.oses the power to act under Rule 60(b) after ninety

days from the filing of the judgment, decree or order

with the clerk. Diebold and First National Bank of

Wynne v. Myers General Agency, Inc., 292 Ark. 456,

731 S.W.2d 183 (1987); Mullen v. Couch, 288 Ark.

231, 703 S.W.2d 866 (1986); Burgess v. Burgess, 286

Ark. 497, 696 S.W.2d 312 (1985); McGibbony_v.

McGibbony, 12 Ark.App. 141, 671 S.W.2d 212 (1984);

Harrison v. Bradford, 9 Ark.App. 156, 655 S.W.2d 466

(1983); Southern Farm Bur. Cas. Ins. Co. v. Robinson

238 Ark. 159, 379 S.W.2d 8 (1964); Fitzjarrald_v.

Fitzjarrald, 233 Ark. 328, 344 S.W.2d 584 (1961); King

& Houston v. State Bank, 9 Ark. 185 (1848). Here,

while appellant's motion was filed on the 89th day

and thus was timely, any power by the court to act

on the motion lapsed with the expiration of the

ninety days.

(Emphasis added.)

It has been more than 90 days since this Court

entered its supersedeas Order. The Objectors pray the Court

to overrule this Motion.

4a

Thank you for your consideration.

Sincerely,

S/ David G. Nixon

David G. Nixon,

For the Firm

DGN/dgn

pec: All counsel of record

Clients

Co-counsel

5a