Category: RICO

This is a nationwide class action alleging RICO against certain players in the credit card equipment leasing industry.  Merchants who take credit card payments often lease their equipment.  Leased equipment is personal property and subject to ad valorem property taxes. The merchants pay those taxes through their leases, either through higher lease payments or line items on their bills. Plaintiff said Defendant Lessors collected overstated property taxes from merchants and failed to return the excess amounts collected; and after certain leases expired, certain defendants concocted property taxes that weren’t due, created a bogus company to collect them, and lied to ACH processors in order to collect those bogus amounts from the class members’ bank accounts. Plaintiff wasn’t having any of it! After receiving notice of a bogus amount due, she spent time protecting herself and her account wasn’t debited.  Not everyone was so fortunate. Plaintiff filed a class action alleging RICO on behalf of people harmed by this scheme, including those whose accounts were actually debited. The trial court granted her motion for class certification and defendants obtained permission to appeal. Held: Affirmed.

Defendants argued that Plaintiff didn’t meet the typicality requirement of class certification primarily because her account was not debited: “Leasing Defendants describe it as follows: they made misrepresentations to two third-party ACH processors, and the ACH processors relied on the misrepresentations and debited class members’ bank accounts without authorization.”  Their point: What does that have to do with Plaintiff?  According to 9C — enough to obtain class certification.

They key to typicality was that Plaintiff was impacted by or endured the same, overall scheme and course of conduct.  It is true that her injury was different (time lost rather than account debited) and that her injury flowed from the notice she received (and fought back against) and not from the misrepresentation that defendants made to ACH processors who relied on those representations and debited class members accounts.  Still, she endured and was injured by the same scheme, even if, in RICO parlance, her specific injury flowed from a different “predicate act” than the injuries suffered by other class members.

One final comment: Defendants also argued that the commonality and predominance requirements under Rule 23(b)(3) had not been met.  Those elements concern “the relationship between the common and individual issues” in the case, and “tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.”  For example, Defendant argued that Plaintiff could not show that damages could be calculated on a class wide basis, and that common questions therefore did not predominate. Calculating the wrongful debited amounts would of course be easy. But for class members like Plaintiff, damages would have to be calculated using a “time and effort” formula. In upholding the trial court’s class certification, 9C used a common refrain on that analysis of damages for purpose of class certification: “That some individualized calculations may be necessary does not defeat finding predominance.”  The court added: “At this stage, Plaintiffs need only show that such damages can be determined without excessive difficulty and attributed to their theory of liability, and have proposed as much here.”