LakinChapman plans trial over $102 H&R Block 'peace of mind' claim
Steve Korris Oct. 22, 2010, 3:30am
EAST ST. LOUIS – LakinChapman lawyers whose giant class action against tax preparer H & R Block shriveled to a dispute over $102, plan to take it to trial anyway.
U.S. District Judge Michael Reagan, who denied certification of a class alleging Block improperly sold "peace of mind" protection, set trial for two plaintiffs April 25.
Block, figuring Reagan might as well call it off, moved for summary judgment on Oct. 18.
John Clear of St. Louis wrote that plaintiffs can't prove deception or damages.
The former Lakin Law Firm sued H & R Block Tax Services in 2001, in Madison County circuit court, on behalf of Lorie Marshall.
She paid $20 for peace of mind on tax returns for 1996 through 1999.
Peace of mind guarantees payment up to $4,000 for any penalties or interest resulting from Block's errors.
Lakin lawyers later added Debra Ramirez, who paid $22 on her return for 2000.
They claimed peace of mind lacked value because Block seldom committed errors and the Internal Revenue Service seldom audited returns of Block customers.
Associate Judge Ralph Mendelsohn certified the plaintiffs to represent a national class, and he certified Block Tax Services to represent a defendant class of Block entities.
Later he shrank the class to 11 states and decertified the defendant class.
Block removed the case to federal court, claiming Mendelsohn's changes turned it into a new case for purposes of the Class Action Fairness Act.
Block argued that liability for Block Tax Services vastly increased because liability for all Block entities shifted to it.
Reagan disagreed and remanded the case to Madison County.
On appeal, judges of the Seventh Circuit reversed Reagan.
He declared he would not honor Mendelsohn's order, and he held a hearing on class certification this April.
By then, plaintiffs had abandoned the theory that peace of mind lacked value.
Block had countered that by showing it paid $220 million on peace of mind claims.
LakinChapman lawyers pleaded instead that Block omitted necessary information about audit rates, error rates, claims amounts and sales commissions.
Reagan rejected the new theory in September, finding a lack of uniformity in the reasons customers chose to purchase peace of mind.
He found that neither plaintiff presented a case typical of a class.
He turned a suit that would have involved millions of transactions over 13 years into one over four payments from Marshall and one from Ramirez.
He set a trial date, triggering Block's motion for summary judgment.
"Block's sales practices were entirely straightforward," Clear wrote.
"Block accurately described the product it was selling, and offered the opportunity for plaintiffs to ask any questions they wished," he wrote.
"Plaintiffs do not claim they were told anything that was untrue," he wrote.
Reagan ordered plaintiffs to respond by Nov. 12.