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Wednesday, August 21, 2019

FACTA objector alleges 'reverse auction' collusion between plaintiff and defendant in Lopinot’s court

By Record News | Feb 6, 2018

BELLEVILLE – St. Clair County Circuit Judge Vincent Lopinot rushed settlement of a class action against retailer Body Shop, granting conditional approval in 20 days and final approval in two months. 

On Dec. 20, over a class member’s objection, he awarded $500,000 to class counsel, $4,000 to plaintiff Henry Lee, and $12 gift cards to Body Shop customers. 

Objector Jenna Dickenson appealed Lopinot’s action to the Fifth District Appellate Court on Jan. 18, alleging collusion between Lee and Body Shop. 

Her lawyers branded the settlement as a “reverse auction,” meaning Body Shop barred competing suits by choosing a court where it would pay the least. 

Lee sued Body Shop at U.S. district court in New York City in 2016, claiming his receipt showed too many digits from his credit card, in violation of the Fair and Accurate Credit Transactions Act (FACTA). 

Joshua Dickinson of Omaha, Neb., Bryant Lamer of Kansas City, Mo. and Robert Lash of New York City represented Lee. 

Lawyers already pursuing a similar action at district court in Florida moved to intervene in order to transfer Lee’s suit there. 

Tampa lawyer James Giardina wrote that allowing cases to continue in two courts would be antithetical to judicial economy. 

“Yet defendant opposes this motion and amazingly prefers to litigate in two different forums,” Giardina wrote. 

Intervention failed, and Lee and Body Shop reached a settlement. 

Last March, District Judge Laura Taylor Swain of the Southern District of New York conditionally certified a class, granted preliminary approval of the settlement, and issued notice to the class. 

In May, California lawyers suing Body Shop at Central California district court asked Swain to deny final approval and dismiss the suit. 

On behalf of class member Dickenson, Eric Isaacson wrote that customers filed actions with different counsel in Florida and California. 

“Hoping to avoid paying a substantial judgment in one of those cases, Body Shop opted instead to enter a coupon settlement with Lee that, if approved, will bar the competing class actions,” Isaacson wrote. 

He wrote that the class notice didn’t suggest that class members were at risk of anything so serious as identity theft. 

He wrote that Lee didn’t allege that anyone saw the receipt but him. 

“There is therefore no danger that anyone will use that receipt to steal Lee’s identity and commit credit card fraud,” Isaacson wrote. 

He described the settlement as a reverse auction in which class counsel sold out at a lower figure than competing cases might demand. 

On Sept. 19, a decision from Second Circuit appellate judges in a separate case stopped the settlement in its tracks. 

In Katz v. Donna Karan, they ruled that revealing the first six and last four digits didn’t create a material risk of identity theft sufficient to confer standing. 

Lee had received such a receipt. 

On Sept. 22, Judge Swain ordered him to show why she shouldn’t dismiss him. 

On Oct. 16, Lee asked Swain to dismiss the suit without prejudice. 

Swain signed the order on Oct. 18. 

On that date, Lee brought the action to St. Clair County. 

Nothing about the suit changed except that Lamer left the legal team and Thomas Hayde of St. Louis replaced him. 

Lee’s lawyers leaped from beginning to end, by filing an unopposed motion for preliminary approval of a settlement. 

Hayde wrote that the settlement class included at least 7,282 Illinois residents and at least 44 in St. Clair County. 

He wrote that the notice process in New York cost nearly $200,000. 

On Nov. 7, Lopinot conditionally certified a class. 

Lawyer Isaacson, who had opposed the New York settlement, objected to the St. Clair County settlement on behalf of Dickenson on Dec. 1. 

“Body Shop does not even have a store in St. Clair County,” Isaacson wrote.  

“The fact that Lee has no valid federal claim to assert in federal court must mean that he has no valid claim to assert in state court. 

“To hold otherwise would endorse the grossest forum shopping, and would raise serious federalism concerns, with state courts manufacturing federal law claims where federal courts themselves recognize no such claims.” 

He repeated his allegation of a reverse auction designed to protect Body Shop from meaningful liability. 

He wrote that Body Shop would pay Lee a $4,000 bonus to release claims of others. 

At a hearing on Dec. 20, Hayde told Lopinot that Body Shop counsel and class counsel decided to file in St. Clair. 

He said more than 365,000 people stood to benefit. 

Isaacson said, “The class representative didn’t suffer any injury. They didn’t give notice to the class that they were coming to this jurisdiction. 

“They didn’t even tell the federal judge they were coming here.” 

Lopinot said, “So the end result is, we just don’t settle anything and leave all these 350,000, 365,000 people with the ability to go forward on their own if they suffer damage in the future?” 

Isaacson said, “You could settle things with a different release.” 

Lopinot said he would make the final approval. 

Isaacson petitioned the Fifth District within 30 days, in association with Laura Schrick and Natalie Lorenz of Mathis, Marifian, and Richter in Belleville.     

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Organizations in this Story

Body Shop Illinois Fifth District Appellate Court Mathis Marifian & Richter Ltd