The Ninth Circuit recently affirmed orders by the District Court for the Northern District of California certifying two national classes in an action under Racketeer Influenced and Corrupt Organizations Act (RICO), the Fair Credit Reporting Act (FCRA), and the California Unfair Competition Law (UCL).
Plaintiffs, small businesses and small business owners, alleged fraudulent dealings in their leases of “point of sale” credit and debit card processing equipment from defendants, a group of entities that financed their acquisition of the equipment. Plaintiffs alleged two fraudulent schemes — first, that defendants defrauded them by collecting or attempting to collect past taxes that were not actually due or paid to any taxing authority (the national “Post-Lease Expiration” class) and second, that defendants used an incorrect method in their collection of property taxes from plaintiffs by using the acquisition cost, rather than the equipment cost, as the tax base (the “Property Tax Equipment Cost Basis” class). Defendants challenged certification of both classes and this appeal ensued.
On the certification of the Post-Lease Expiration class, the bulk of defendants’ argument was that the named plaintiff’s claims involved legal theories, injuries, damages, and defenses that were not typical of the class. Specifically, defendants argued that the named plaintiff suffered unique damages because the unauthorized payments were never actually debited from her bank account by automatic payment, and therefore she did not pay the claimed tax liability. However, the Ninth Circuit rejected this characterization of plaintiff’s claims, holding that the named plaintiff’s claim was “reasonably coextensive with that of the class” because she alleged the same “overall course of misconduct against other members of the class,” and that the named plaintiff was injured by the same scheme as the other class members. On a similar basis, the court also held that the commonality and predominance requirements were satisfied.
In addition, the court held that the Property Tax Equipment Cost Basis class satisfied the commonality, predominance, and superiority tests. For this class, the court determined that the case would turn on interpretation of the leasing contracts – specifically, whether the use of acquisition cost or equipment cost was a proper means of calculating taxes – such that the inquiry would not vary based on the laws of each taxing jurisdiction.
Just Film, Inc. v. Buono, No. 14-16132 (9th Cir. Feb. 7, 2017).
