# Opposition Brief — H&R Block, Inc. v. Carnegie

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2005
- **Citation:** 543 U.S. 1051

## Text

Supreme Court, U.S. |

C3) ec — |

No. 04-518 OFFICE OF THE CLERK

IN THE
Supreme Court of the United States

H&R BLOCK, INC., H&R BLOCK SERVICES, INC.,
H&R BLOCK EASTERN TAX SERVICES, INC.,
BLOCK FINANCIAL CORP. and HRB ROYALTY, INC.,

Petitioners,

V.

LYNNE A. CARNEGIE,
on behalf of herself and all others similarly situated,

Respondents.

On PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES CourRT OF APPEALS
FOR THE SEVENTH CIRCUIT

RESPONDENTS’ BRIEF IN OPPOSITION

STEVEN E. ANGSTREICH RoGER W. KirBy
MICHAEL CoREN Counsel of Record
CAROLYN LINDHEIM PETER S. LINDEN
Levy, ANGSTREICH, FINNEY, KirBy McINERNEY
BALDANTE, RUBENSTEIN & Squire LLP
& Coren, P.C. 830 Third Avenue
1616 Walnut Street New York, NY 10022
Fifth Floor (212) 371-6600
Philadelphia, PA 19103
Attorneys for Respondents

(Additional Counsel Listed on Signature Page)

i

COUNTER QUESTION PRESENTED

This petition follows an earlier petitioner’s effort to
obtain approval of a settlement that the Seventh Circuit rejected
on intimations of collusion, and that the district court then
finally refused to approve. In that settlement process: (a)
petitioner drafted or acquiesced in a complaint that contained
the RICO class claims that it now would dismiss; (b) over many
years, both before and after the Seventh Circuit rejected that
settlement, petitioner repeatedly used and vigorously supported
the settlement class to secure nationwide anti-suit injunctions
against other prior filed class actions; and (c) reaped tens of
- millions of dollars by its misconduct and use of this RICO class
to obtain anti-suit injunctions. Under these specific
circumstances:

Did the court of appeals misapply this Court’s
precedents in holding defendant petitioner estopped from
challenging a rule 23(b)(3) RICO class certification?

TABLE OF CONTENTS
Page No

COUNTER QUESTION PRESENTED ............. i
TABLE, OF CORTEEEED se csvctasesanprcncsverces ii
TABLE OF AUTHORITIES .............0ceeeeee ili
COUNTERSTATEMENT OF THE CASE .......... 1
REASONS FOR DENYING THE WRIT ............ 8
Point I. _ The Court’s Estoppel Holding is

Simply a Fact-Specific Application

of This Court’s Precedent ............ 10
Point II. The Manageability of This Class

Action Presents No Issue of

Systemic Importance ................ 11

ili

TABLE OF AUTHORITIES
Cases

Amchem Products, Inc. v. Windsor,
gi EF ee 4,9, 11

Broussard v. Meineke,
155 F.3d 331 (4" Cir. 1998) ...... wien ds TER 6

Buford v. H&R Block, Inc.,
168 F.R.D. 340 (S.D. Ga. 1996),
aff'd, 117 F.3d 1433 (11" Cir. 1997) ........ 7,11

Gunnells v. Healthplan Servs., Inc.,
348 F.3d 417 (4 Cir. 2003) ............... 6, 12

Henry v. Cash Today, Inc.,
199 F.R.D. 566 (S.D. Tex. 2000) .............. 13

Holmes v. Securities Investor Protection Corp.,

Et ene frre ror rere 12

In re Sumitomo Copper Litigation,
194 F.R.D. 480 (S.D.N.Y. 2000),
app. denied, Sumitomo Copper Litigation v.
Credit Lyonnais Rouse, Ltd.,
262 F.3d 134 (2nd Cir. 2001)................. 13

In re Synthroid Marketing Litigation,
198 F.RD. 287 ND. T1999) . 0. ccc ccc eee 13

JTH Tax Inc. v. H&R Block Eastern Tax Services, Inc.,
128 F. Supp 2d 926 (E.D.Va 2001),
aff'd in part and remanded in part,

iv

28 Fed. App. 207 (4th Cir. 2004) ............... 8

Klay v. Humana, Inc.,
382 F. 3d 1241 (11 Cir. 1241) (11% Cir. 2004),
pet for cert filed sub nom,
United Health Group, Inc., et. al. v. Klay
ee AE 6 Nach os ec cer eeeeen was 6, 12, 13

Kleven v. Household Bank, F.S.B.,
334 F.3d 638 (7" Cir.),
cert. denied, 124 S.Ct. 924 (2003) .............. 8

New Hampshire v. Maine,
Bere errrr rere r er ree 10

Peterson v. H & R Block Tax Services, Inc.,
174 PRD. FO GUID TAGS) ove ccccccesess 13

Poulous yv. Caesar’s World, Inc.,
379 F.3d 654 (9 Cir. 2004) ............. 6, 12, 13

Rodriguez v. McKinney, 7
156 F.R.D. 112 (E.D. Pa. 1994) ...........045. 13

Sandwich Chef of Texas v. Reliance National
Indemnity Company,
319 F.3d 205 (Sth Cir.),
cert. den., 1248S. Ct. 101 (2003) ............ 6, 12

Sikes v. Teleline, Inc.,
281 F.3d 1350 (11% Cir, 2002)... 0. cease eee. 6

Smith v. MCI Telecommunications Corp.,
124 F.R.D. 665 (D. Kan. 1989) ............... 13

Vv

Spark v. MBNA Corp.,

178 F.R.D. 431 (D. Dal. 1998) 2.0... ccc cceee 13
Waters v. International Precious Metals Corp.,

172 F.R.D. 479 (S.D. Fla. 1996) .............. 13
Statutes
18 U.S.C. $1961 of 90g, 2... 6c ccees Soa abe passim
eae se es ee pated ween passim
Fed. R. Civ. P. 23(c)(4M(A) ........ absce asin at passim
Other Authorities
18 Moore’s Federal Practice

Be i Pereer rer ery rere ree 10

—o ooo rl ee

1
Respondents request that the Court deny the petition for
a writ of certiorari seeking review of an opinion of the Court of
Appeals for the Seventh Circuit (reproduced at App. 1a-12a).
Citations herein to the opinions below are to the pages of the
copies attached as an appendix to the petition.

COUNTERSTATEMENT OF THE CASE

A brief description of the relevant facts shows that this
petition presents nothing more than non-recurring, fact-specific
issues that present no occasion for this Court’s review. The
court below, in an opinion by Judge Posner, affirmed a district
court order certifying a rule 23(b)(3) class against the defendant
petitioner Block entities (the various H&R Block entities
generally are referred to here as “defenclant”) on mail and wire
fraud charges under RICO, 18 U.S.C. §§ 1961-68.

The court did not hold, as co-defendant Household’s
supporting brief repeatedly asserts (HH Br. at 2, 5, 7-8, 9-13,
17)', that judicial estoppel bars a settling party from objecting
to class certification, except in grounds of manageability, where
the settlement has been rejected. Rather, the decision is a
straightforward, completely fact-specific application of this
Court’s well-settled precedents governing judicial estoppel.
Here, the court applied judicial estoppel to a peculiar instance
where defendants purposefully benefitted from the settlemeni
class both before and after it had been rejected.

Second, petitioners contend thet there is a circuit split
concerning the relationship of RICO and individual reliance in
a class setting. There is no split where, as here, the operative
complaint alleges uniform omissions. None of petitioners’

; “HH” refers to the brief of the Household defendants.
Household is the successor in interest to Beneficial National Bank.

2
citations holds that individual reliance must be shown to sustain
a RICO class claim arising out of uniform omissions (see fn. 5
below).

Petitioner H&R Block marketed its “instant tax refund”
program as part of its tax preparation services. Far from
obtaining an instant refund, trusting and vulnerable taxpayers
unknowingly received short-term, high interest bank loans,
generally from co-defendant Beneficial National Bank:
“Although the bank is the lender, the tax preparer [Block]
arranges the loan . . . [and] the customer is told neither that the
bank pays the tax preparer a fee for having generated the loan
nor that the tax preparer receives an ownership interest in the
loan” (App. 2a). These loans generate huge profits. “The
annual interest rate on such a ‘refund anticipation loan’ (RAL)
will often exceed 100%”(App. 2a). The plaintiff, for example,
“paid charges of $110 on a nine-day loan of $500” (App. 13a).

Beginning in the early 1990s, numerous class actions
were brought throughout the country against defendant
asserting various federal and state law claims. Of special
significance, the Supreme Court of Texas had affirmed
certification of a state-wide class action in which defendant
faced significant monetary exposure. “The total amount
sought,” observed Judge Posner, “could have reached $2
billion” (App. 36a). The present class action was filed in the
Northern District of Illinois by prior class plaintiffs and their
since defrocked counsel. Despite virtually no litigation activity
by class counsel, defendants and plaintiffs proposed a
nationwide settlement (App. 57a). A district judge approved
that settlement in July 2000, overruling objections that the
settlement was a sellout by supine class counsel interested only
in securing fees. The court also certified the settlement class,
which asserted the RICO class claim now under attack.

Defendant participated in drafting and acquiesced in the

Silica

3
settlement complaint that contained the RICO allegations
defendant now questions (App. 16a-17a). Then, defendant
vigorously supported the propriety of the class, of the
settlement, and of this RICO class claim (see App. throughout).
Defendant also persuaded the judge to enter a nationwide anti-
suit injunction, which among other things, halted the Texas
proceeding on the very eve of trial (App. 36a-37a.).

The Seventh Circuit rejected the settlement and vacated
the anti-suit injunction (App. 28a-47a). The court decried class
counsels’ “singularly feeble” representation, and it concluded,
inter alia, that counsel were “almost certainly inadequate”(App.
38a). The court ordered that further proceedings in the district
court be before a different judge.

On remand, defendant again defended the propriety of
the RICO class and “vigorously argued for (the settlement’s]
renewed approval” (App. 50a), insisting that the settlement
class could be maintained, and that the remand was intended
only to cure minor evidentiary deficiencies in the record. Once
again, defendant sought to restrain the Texas proceeding and
others (App. 50-51a).?- The application of estoppel principles

. In addition of the injunction of Haese v. H&R Bloc, Inc.,
et al, No. 96-423 (Tx. Dist. Ct. Kleberg Cty,) in Green v. H&R Block, Inc.,
No. 24-C-97-196023 (Md. Cir. Ct.), throughout: April 2002 Block sought to
stay the Maryland trial due to the revised settlement for the existent class,
and to delay the start of the Maryland trial. On February 10, 2003, ten
months after the Seventh Circuit had rejected the settlement (App. 28a ef
seq.), the Green court granted the relief sought by petitioners.

Also post-remand, Block likewise scught a stay of the Alabama
proceeding styled Mitchell v. H&R Block, Inc., 2t al., No. CV-95-2074 (Ala.
Cir. Ct.), asserting in December 2002 that because the class “remains
certified,” the Mitchell case should remain on the administrative docket.

In Affatato v. Beneficial Corp., Case No. 1:96 CV 5376. Dkt. No.

4

to class action settlements thus arose in the peculiar
environment of a defendant urging the continued existence of
the class and profiting thereby even after the settlement had
been rejected on appeal. After an evidentiary hearing at which
defendant proffered numerous legal and economic experts
(App. 51a), the district court rejected the settlement,
disqualified class counsel as inadequate, and allowed for the
appointment of new class plaintiff and counsel (App. 48a-75a).
No appeal was taken from these orders (App. 3a-4a).

The district court subsequently granted rule 23(b)(3)
certification of the new class plaintiff's RICO claims, ones that
substantively echo the settlement complaint that defendant had
drafted or acquiesced in (App. 13a-27a). The court recognized
(App. 23a) that, under Amchem Products, Inc. v. Windsor, 521
U.S. 591, 620-21 (1997), classes certified for settlement
purposes must satisfy all the requirements of rule 23(b)(3),
except that of manageability. The court concluded that the class
action was manageable, in the process noting that defendant’s
counsel had “participated in drafting a previous complaint
alleging violations of RICO” (App. 16a-17a).

The Seventh Circuit affirmed (App. 1a-12a). It found
that, except for the issue of “manageability,” defendant was
estopped from challenging the propriety of rule 23(b)(3) class
certification — “especially in a case in which the defendants
were enthusiastic proponents of class treatment until their
opportunistic change of heart” (App. 12a). Judge Posner noted

115, defense counsel advised of the Seventh Circuit decision and asked that
the Affatato action be held in abeyance. The Affatato court stayed its hand
instead of ruling on a fully briefed class motion and on a partial summary
judgment motion on which briefing had commenced and which had
potentially serious consequences to defendants; Dkt. No. 113 (continuing
stay).

5
that, contrary to the claim here, the estoppel resulted from far
more than a simple “change of legal position”:

“f Defendants were enthusiastic proponents of
class treatment until their opportunistic change
of heart.” (App. 12a); see also, 20a-21a:
“Defendants do not even argue that they
obtained no benefit from the injunctions”.

Judge Posner went on to reject the two other arguments
advanced in this petition: (1) that because of a supposed
“reliance” requirement a civil RICO suit could not be certified
as a class action (see App. 6a-10a); and (2) a prior unreviewed
interlocutory ruling by a Georgia district court denying class
certification should have been given nationwide preclusive
effect not because of any precedent of this Court, but because
of one that defendant imputes to the Seventh Circuit (see App.
9a-12a).°

Defendant pins its -eliance argument on
misrepresentations. The complaint, however, does not. It rests
upon omissions.’ The Seventh Circuit easily recognized this as
substantially an omissions case: “It is contended that the
customer is told neither that the bank pays the tax preparer a fee
for having generated the loan nor that the tax preparer receives
an ownership interest in the loan” (App. 2a-3a; 30a).
Defendant’s revision of the operative complaint essentially
means that their proffered body of authorities is without

, Defendants aiso claim that the burden of proof respecting
class certification was inappropriately shifted to them. The district court
explicitly said otherwise (“It is [plaintiff] who bears the burden of
demonstrating manageability...” (App. 24a] (emphasis in original)).

, The complaint has a section entitled “The Uniform
Omissions” containing twenty paragraphs of them.

6
pertinence, as is of course any question of the relationship
among RICO, reliance, and misrepresentations. But to be
unequivocal, neither petitioner has identified any authority that
class allegations of RICO violations concerning uniform
omissions require individual reliance.’

In the event, the only open issue in the court of appeals
was manageability of the rule 23(b\(3) class. Defendant’s
conduct had estopped it from challenging any other aspect of
class certification, and on the facts this class action, grounded
on uniform omissions, is clearly manageable. Moreover,
whether the mail and wire fraud statutes were violated by a
“scheme or artifice” to defraud is a question different from
“whether or not the scheme succeeds and therefore causes
injury” (App. 9a). But no need exists to pursue the inquiry
further here. The petition presents only the question of the
application of estoppel principles to unusual, if not singular,
case-specific facts. Were the petition to present only the

. See Sikes v. Teleline, Inc., 281 F.3d 1350, 1364 (11" Cir.
2002) (decertifying class because of issues of individual reliance on
numerous materially-differing misrepresentations); Poulos v. Caesars World,
Inc., 379 F.3d 654, 666-67 (9 Cir. Aug. 10, 2004) (affirming refixsal to
certify class; explicitly stating that the case essentially involved affirmative
misrepresentations rather than omissions); Sandwich Chef of Texas, inc. v.
Reliance Nat. Indem. Ins. Co., 319 F.3d 205 (Sth Cir. 2003); Klay v.
Humana, Inc., 382 F.3d 1241 (11 Cir. 2004), petition for cert. filed, 73
USLW 3260 (Oct. 10, 2004) (affirming class certification in case involving
misrepresentations and omissions); Gunnells v. Healthplan Servs., Inc., 348
F.3d417 (4* Cir. 2003) (in non-RICO context, affirming class certification
against central corporate defendants and reversing class certification on
claims against 23 agents who marketed and sold health plan via alleged
misrepresentations); Broussard v. Meineke, 155 F.3d 331, 343-44 (4® Cir.
1998) (involving misrepresentations and omissions in non-RICO context,
holding lower court’s class certification to have been error because
commonality, typicality and adequacy requirements of Rule 23(a) had not
been met, because inter alia defendant directed “different representations to
different franchisees”).

7

question of manageability if all other requirements of rule
23(b)(3) are assumed to be satisfied, that too would be case-

specific.

Expressing extreme skepticism as to the merits of
defendant’s preclusion argument (App. 9a-1 1a), Judge Posner’s
specific conclusion was that defendant had been estopped from
making the argument because it consciously waited four years
“until the settlement was finally rejected” to raise the issue.
“(I]t is too late for the defendants to plead collateral estoppel
when, though knowing of the Buford® decision, which was
issued in 1996 and affirmed the following year, they insisted
until [2003], when the district court on remand from our
decision threw out the settlement, that class treatment of the
RICO claim was entirely appropriate” (App. 1 1a).

é Buford v. H&R Block, Inc., 168 F.R.D. 340 (S.D. Ga.
1996), aff'd, 117 F.3d 1433 (11™ Cir. 1997) (per curiam).

|

8
REASONS FOR DENYING THE WRIT

The brief statement of the case shows that the courts
below decided nothing more than fact-specific, non-recurring
issues invoking conventional estoppel principles. This provides
no warrant for this Court’s review.

Despite its highly publicized, user-friendly advertising
campaigns, defendant in fact prays upon vulnerable, low-
income taxpayers, omitting material information in order to
impose extraordinarily high interest rates and other charges
upon the unwitting clientele, individuals living in the poorest
neighborhoods.’ While defendant bases its reliance argument
on misrepresentations, the complaint rests upon omissions. The
Seventh Circuit: “It is contended that the customer is told
neither that the bank pays the tax preparer a fee for having
generated the loan nor that the tax preparer receives an
ownership interest in the loan” (App. 2a-3a; also, 30a).
Defendant’s revision of the operative complaint essentially
means that their proffered body of authorities is without
pertinence, as of course is its question of the relationship among
RICO, reliance, and misrepresentations. Determinative for
petition purposes is that the decision below rejected defendant’s
contentions regarding RICO also on estoppel grounds (9a-12a).

Seeking to stave off liability from numerous lawsuits
while simultaneously maintaining its huge profits from its
conduct with the willing assistance of feeble, fee-driven class

. These characterizations are those of the Eastern District
of Virginia excoriating defendant’s conduct. JTH Tax Inc. v. H&R Block
Eastern Tax Services, Inc., 128 F. Supp 2d 926, 933, 938 (E.D.Va 2001),
aff'd in part and remanded in part, 28 Fed. App. 207, 211, 214 (4® Cir.
2004), and the Seventh Circuit in Kleven v. Household Bank, F.S.B., 334
F.3d 638 (7™ Cir.), cert. denied, 124 S.Ct. 924 (2003).

9

counsel, defendant constructed and vigorously maintained a
nationwide settlement of all claims against it, including this
RICO class claim. Even after remand, defendant repeatedly
sought, and secured, nationwide anti-suit injunctions and stays,
halting all other challenges to its conduct (App 20a-21a).
“Defendants do not even argue that they obtained no benefit
from the injunctions” (App. 21a). All totaled, petitioner spent
four years on the insistent premises that the action, including its
RICO class claim, was sustainable and class worthy. Along the
way, defendant exhausted considerable time and energy of the
courts and litigants. For all those years until the court threw out
the settlement in 2003, petitioner “desperately wanted the RICO
claim included in the class settlement . . .” (App. 11a).

Also, throughout the settlement proceedings defendant
vigorously defended the propriety of the class as satisfying all
prerequisites of rule 23(b)(3). See Amchem Products, supra,
521 U.S. at 620-21. Even after the court of appeals had
overturned the settlement and vacated the injunctions,
defendant strongly defended both the class and the class
settlement. On remand, it submitted extensive briefs and
affidavits to support the propriety of the class and of the class
settlement. It continued strenuously to seek to halt proceedings
everywhere (see fh. 2 supra), even having the temerity to ask
the district court again to stay the Texas state court proceedings.

Applying this Court’s non-controversial estoppel
precedents, the Seventh Circuit held that defendant was
precluded from raising any certification issue with respect to the
Rule 23(b)(3) RICO class other than manageability (App. 4a-
7a). And as to the only issue properly before it, the court
concluded that on the particular record the class action was
manageable. These narrow, fact-bound conclusions provide no
basis for a call on this Court’s resources.

10
Point I. The Court’s Estoppel Holding is

Simply a Fact-Specific Application
of This Court’s Precedent

The meaning of this Court’s precedents on judicial
estoppel is not drawn in controversy here. New Hampshire v.
Maine, 532 U.S. 742, 749 (2001). “{W]here a party assumes a
certain position in a legal proceeding, and succeeds in
maintaining that position, he may not thereafter, simply because
his interests have changed, assume a contrary position...” See
also 18 Moore’s Federal Practice § 134.30, pp. 134-62 (3d ed.
2000); App. 4a-Sa. The petition does not ask the Court to
reconsider them or to reformulate them. No circuit split is
alleged to exist. Rather, the petition merely argues that the
Court’s principles have been misapplied on the unusual facts of
this case (Pet. pp. 23-30). This argument, we note, comes from
a defendant who throughout this extended litigation, even after
the Seventh Circuit rejected the settlement, sought to use this
class action as a vehicle by which it would secure a plenary
indulgence from all meaningful liability for its deceptive
conduct, and the RICO claim in particular; defendant
“desperately wanted the RICO claim included in the class
settlement . . .” (App. 11a). To that purpose and with
acquiescence of supine class counsel (App. 30a-33a, 38a, 52a-
64a, 74a-75a), defendant helped draft a complai containing
the very RICO claims asserted here (App. 16a-17a), and sought
to enjoin all other proceedings (App. 5a, 20a-21a, 36a-37a,
56a). Tens of millions of dollars in profits were obtained
during this period. For their part, “defendants do not even
argue that they obtained no benefit from the injunctions” (App.
21a). In finding an estoppel, Judge Posner emphasized these
very facts (App. 3a-Sa). This holding provides no occasion for
this Court’s intervention: nothing more is involved than a fact-
dependent, non-recurring application of settled judicial

11

Defendant’s apparent claim that the district court should
have accorded preclusive effect to an order of a Georgia district
court opinion denying class certification also was rejected on
fact-specific estoppel grounds (App. 9a-lla).’ As to the
decision, defendant “prevailed in the present litigation, until the
settlement was finally rejected, by arguing that Buford was
wrong. They are estopped to argue now that it was right” (App.
11a).

So far as preclusion is concerned, there is no claim of
conflict with any decision of this Court or ofa circuit split, only
that the decision may conflict with other decisions within the
Seventh Circuit itself. Why such a conflict is of concern in this
Court is never made clear. See Rule 10 of the Rules of this
Court. In the event, the only issue on this petition is whether
defendant is estopped from raising a preclusion claim because
for four years, “until the settlement was finally rejected,” it took
the opposite position. That question, wholly fact-specific and
entirely unique, is not an issue for the exercise of this Court’s
scarce jurisdiction.

Point II. The Manageability of This Class Action
Presents No Issue of Systemic Importance

The courts below held that defendant was estopped from
challenging any of the elements of the rule 23(b)(3) class action
certification, except that of “manageability.” Amchem
Products, supra, 521 U.S. at 620-21. Although the courts
addressed the manageability of the proposed RICO class, it also
was clear that insofar as defendant’s manageability argument

: This petition in this Court is unclear as to the significance
of Buford (Pet. 10-11, 19, 21). Defendant seems to have retreated from the
preclusion argument it advanced in the court below. We nonetheless address
the Seventh Circuit’s rejection of the preclusion claim.

12

rested on RICO, defendant was estopped, in this case and its
particular history, from pressing that (App. 4a-12a).
Altematively, both courts found that requirement satisfied
because, so far as manageability is concerned, liability — which
turned on defendant’s substantially uniform omissions in failing
to disclose (App. 2a-3a; 30a) — could be separated from those
of individual injury (App. 6a-7a, 10a), and besides courts have
not held that individual reliance need be shown in such RICO
class proceedings (see fn. 5 above and fn. 10 below).

Yet, defendant seeks to persuade that this is an
appropriate occasion to elaborate upon Holmes v. Securities
Investor Protection Corp., 503 U.S. 258 (1992), in the class
action context. The Court is asked to consider whether the
“predominance requirement’ under rule 23 prevents RICO
certification because “each class member must individually
prove reliance in order to establish a meritorious claim.”
Question Presented, par 1. Point 1 (Pet. p. 14) claims the
“need to prove individual reliance when determining whether
common issues predominate under Rule 23(b)(3)”. This
petition is a singularly inappropriate vehicle to address that
issue. Defendant, the court below found, is estopped from
challenging any requirement other than manageability and that
estoppel includes predominance. Manageability is all Judge
Posner addressed.’ (App. 6a-9a).

<% Defendant suggests a conflict between this decision and
others, including the Fifth Circuit’s decision in Sandwich Chef of Texas v.
Reliance National Indemnity Company, 319 F.3d 205 (Sth Cir.), cert. den.,
124 S. Ct. 101 (2003). Other differences aside (see fn. 5 supra), Sandwich
Chef (and other decisions cited by defendant) concerned rule 23’s
“predominance” requirement — a requirement defendant is estopped from
contesting — not manageability, which is the only issue on this petition. See
Sandwich Chef, 319 F. 3d at 221, Poulous, 379 F.3d at 665-66, Gunnells,
348 F.3d at 434-37, and Klay, 342 F.3d. 1241.

13

Defendant thus invites the Court to fight through and
resolve the fact-specific issue of estoppel before it can properly
consider any issue related to the Rule 23(b)(3) predominance
requirement. It is of course telling that, throughout their
arguments about unmanageability and conflicts, neither
defendant nor Household makes contact with or proffers
citations concerning RICO and uniform omissions, the
operative contentions (see App. 2a-3a; 30a).'° Manageability

rs: For completeness, numerous decisions favor certification
of Rule 23(b)(3) RICO classes especially when the claims are based on
uniform non-disclosures, and reject challenges based upon various
requirements of rule 23(b)(3), not just manageability. See, for example:
Poulous v. Caesar's World, Inc., 379 F.3d at 666-67 (recognizing the
difference in RICO cases between affirmative misrepresentation and failure
to disclose cases); Klay v. Humana, Inc., 382 F. 3d 1241 (11" Cir. 1241)
(11" Cir. 2004), pet for cert filed sub nom, United Health Group, Inc., et. al.
v. Klay (Oct. 19, 2004); In re Sumitomo Copper Litigation, 194 F.R.D. 480
(S.D.N.Y. 2000), app. denied, Sumitomo Copper Litigation v. Credit
Lyonnais Rouse, Ltd., 262 F.3d 134 (2d Cir. 2001) (concealing conspiracy
to fix prices); Jn re Synthroid Marketing Litigation, 188 F.R.D. 287 (N.D.
Ill. 1999) (concealing negative information about drug); Waters v.
International Precious Metals Corp., 172 F.R.D. 479, 504-06 (S.D. Fla.
1996) (concealing excessive trading scheme; contains lengthy discussion of
why RICO claims are appropriate on class-wide basis; allowing plaintiffs a
presumption of reliance given alleged fraudulent omissions); Peterson v. H
& R Block Tax Services, Inc., 174 F.R.D. 78 (N.D. I11.1997)
(misrepresenting availability of rapid refund to Earned Income Tax Credit-
claiming taxpayers and omitting fact that EITC-claiming taxpayers were not
eligible for rapid tax return); Spark v. MBNA Corp., 178 F.R.D. 431 (D. Del.
1998) (certifying RICO class of credit card holders alleging
misrepresentations in marketing of credit cards; allows presumption of
reliance); Henry v. Cash Today, Inc., 199 F.R.D. 566 (S.D. Tex. 2000)
(misrepresentations and omissions in making high-interest “payday” loans);
Rodriguez v. McKinney, 156 F.R.D. 112 (E.D. Pa. 1994) (misrepresenting
benefits of educational curriculum provided by school in order to obtain
government funding for student loans); Smith v. MCI Telecommunications
Corp.,i24 F.R.D. 665, 679 (D. Kan. 1989) (MCI’s commission plan for
salespeople contained misrepresentations and omissions). Petitioners were
defendants in Peterson decision, supra. That court certified a RICO class

14

alone is the possible issue left to defendant here, and in finding
this requirement satisfied, the courts below broke no new
ground. A class action in which the issue of liability is properly
separated from that of individual injury is surely manageable.
See rule 23(c)(4)(a) (“an action may be brought or maintained
as a class action with respect to particular issues”). This
petition concerns the application of non-controversial judicial
estoppel principles to a narrow, non-recurrent body of facts.
This is not a matter of systemic importance warranting this
Court’s intervention.

against petitioners arising from omissions/misrepresentations in connection
with a particular branch of the RAL process.

1S
CONCLUSION
The petition for certiorari should be denied.

Dated: November 30, 2004

Respectfully submitted,

Roger W. Kirby, Esq.

Counsel of Record

Peter S. Linden, Esq.

Kirby McInerney & Squire LLP
830 Third Avenue

New York, NY 10022

(212) 371-6600

Steven E. Angstreich, Esq.

Michael Coren, Esq.

Carolyn Lindheim, Esq.

Levy, Angstreich, Finney, Baldante,

Rubenstein & Coren, P.C.

1616 Walnut Street, 5" Floor
Philadelphia, PA 19103
Counsel for Respondents

Of Counsel:

Ronald L. Futterman, Esq.

Futterman & Howard, Chtd.

122 South Michigan Avenue

Suite 1850

Chicago, IL 60603

16
Michael B. Hyman, Esq.
Much Shelist Freed Denenberg
Ament & Rubenstein, P.C.
191 North Wacker Drive, Suite 1800
Chicago, IL 60606-1615

Steven A. Martino, Esq.
W. Lloyd Copeland, Esq.
Taylor, Martino, P.C.
Southtrust Bank Building
61 St. Joseph Street
Suite 1600

Mobile, AL 36602

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386003_1457%3A3. Public record. Not legal advice.