Senate committee rejects 'junk lawsuit' bill after lengthy consumer-protection debate

A Senate committee on Oct. 12 considered Senate Bill 4 41, sponsored by Sen. Barr Hester (State Senate District 33), that would narrow consumer litigation tied to pharmacy discount cards and related transactions. After more than an hour of testimony and questions, the committee voted and the bill failed.

The bill’s sponsor described the measure as a “junk lawsuit prevention act” aimed at barring out-of-state plaintiffs’ lawyers from bringing what he called parasitic suits that, he argued, raise costs for Arkansas businesses and consumers. “We have to be concerned about letting these tall building lawyers come into the state … this bill is about are we gonna stand with our citizens, with our small businesses,” Hester said.

Consumer-advocacy witnesses and a lawyer representing a foundation that supports consumer protection pushed back. Bart Calhoun, a partner at McDaniel Wolf Law Firm, testified on behalf of the Bert and Annette Mullins Foundation that the bill would weaken a long-standing consumer-protection statute by removing civil penalties and attorney-fee awards and by adding a mandatory 30-day written notice-and-cure period. “If you take out attorney’s fees in the statute … you’re not gonna get that back in the end,” Calhoun said, describing that change as one of the “most harmful” provisions for consumers.

Defense counsel for parties sued in recent cases argued plaintiffs’ lawyers were using technicalities to pursue statutory penalties where actual consumer harm has not been shown. Martin Casten, an attorney with Friday Ellerge and Clark (defense counsel in related litigation), told the committee that the complaint filed in Pope County alleges no proof of consumer deception and, as the complaint itself acknowledges, the foundation has not used one of the cards at issue. “There has been no accusation of actual damages in the complaint that’s been filed in Pope County,” Casten said.

Committee members focused on several disputed provisions: whether the amendment’s retroactivity to Jan. 1, 2021 would affect ongoing litigation; the practical effect of removing statutory attorney-fee awards; and a 30-day notice-and-cure requirement that witnesses said would remove enforcement “teeth.” Senator Cedric Tucker pressed whether retroactivity would reach cases already filed; Senator Hester acknowledged the amendment narrowed retroactivity to 01/01/2021. Several senators said they were concerned the change would bar meaningful consumer recoveries and leave enforcement to the attorney general alone.

Calhoun warned that removing a statutory fee-shifting mechanism would make private enforcement infeasible for many consumers because prevailing plaintiffs often cannot afford representation without the prospect of recovering fees. Other senators raised questions about the procedural posture of specific pending suits and standing: whether a plaintiff can recover statutory penalties without proving personal injury.

After debate, the committee moved to a roll-call on a motion to pass the bill as amended. The chair announced that the bill failed, reporting four no votes. The committee record shows the motion did not carry and SB 4 41 did not pass the committee.

The discussion laid out the competing policy choices: limiting what supporters described as opportunistic litigation that generates statutory penalties, versus preserving private enforcement mechanisms (attorney-fee awards and penalties) and preventing a cure-and-avoid dynamic that opponents said would blunt consumer protections.

The committee did not adopt any additional revisions after the vote. Several senators asked that statutory language be clarified about standing and remedies in future drafts if the sponsor wishes to pursue a similar concept again.