Attorney General Brown Touts Consumer Settlement With H & R Block

    Edmund Gerald "Jerry" Brown, Jr. attorney general of California, former governor, son of former governor, would-be future governor (unless Senator Feinstein throws her hat in the ring), former three-time candidate for the Democratic presidential nomination, former mayor of CalBizLIt's beleaguered City of Oakland, announced the settlement of his case against  H & R Block on New Years Eve.  The subject of the suit was "Refund Anticipation Loans," or "RALs," which consumer organizations contend are usurious and deceptive.

    The settlement of the San Francisco Superior Court case, contained in documents here and here, contains injunctive relief, penalties, attorneys fees and restitution, all to the tune of just short of $5 million according to the AG's press release.  

    But the stipulated judgment, signed by Judge Kramer last week, contains this curious language: 

Any amount paid directly to any customer as part of the settlement of Civil Action 03-C-134 in the Circuit Court of Kanawha County West Virginia (the 'West Virginia Case') may be set off against any amount to be paid under this judgment.

    So, being a curious kind of guy with, obviously, too much time on my hands, I looked up the settlement of that civil action in Kanawha County, a place I'd never heard of before.  What I found was this document, as well as this one and this one.  Taken together, these documents show that much of this claim was already settled in Kanawha County back in 2006, that this involved payment of more than $62 million, and that the settlement was for customers in multiple states, including California.  The settlement agreement has a claims process for payment of as much of $175 each directly to thousands of customers!

    So, under this scenario, how does H & R Block end up paying anything at all in the California case?  I dunno.  So I e-mailed Amy Tan and Sheldon Jaffe, the two deputy AG's who handled the case here, and Jeff Bleich, who represented H & R Block, asking exactly that question.  From Ms. Tan, I got an auto-respond e-mail indicating she was on vacation until January 9.  From Mr. Jaffe, I received the following response:

The provision you refer to is designed to prevent "double recovery"; that is, any eligible California consumer who has recovered funds in the Cummins settlement may have the amount of that recovery deducted from any restitution award made as a result of this settlement if necessary to prevent recovery in excess of 100% of the monies paid as a result of the challenged products or practices.

    And from H & R Block's Director of Communications, Nancy Mays, I received the following information via e-mail:  "To clarify, the set-off is with respect to amounts previously paid to California consumers." 

    Well, I went back and reviewed the documents again.  And  I still don't see how H & R Block pays anything here. It sure looks to me as though ANY payment in the West Virginia case gets deducted from whatever H & R Block has to pay in California.  I'd welcome anything more the deputy AGs can tell us about this -- the language looks awfully broad to me.

    Incidentally, my friends at the Nelson Mullins firm in South Carolina reported last year on Attorney General Brown's unsuccessful attempt to thwart the Cummins settlement.  You can read their take in the article "Pre-CAFA AG Interventions Provide Guidance On The Impact Of The Act's Regulatory Notification Requirement."  (You have to scroll about halfway down the page).