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The state Supreme Court will once again hear an appeal in a class action suit filed in 1993 over the way H & R Block worked its rapid refund program. The court granted allocatur Tuesday in Basile v. H & R Block Inc., limiting the grant to two main issues. The justices will decide whether the Superior Court misapplied the aggrieved party doctrine by requiring H & R Block to cross-appeal from an earlier class certification order despite the fact that summary judgment was later entered in the company’s favor. The court will also examine whether the Superior Court erred in rejecting the trial court’s ruling that H & R Block’s claims could be tried on a class-wide basis. In June 2007, an en banc panel of the Superior Court led by Judge John L. Musmanno recognized that Rules 501 and 511 of the Pennsylvania Rules of Appellate Procedure allow a non-aggrieved party – in this case H & R Block – to file a cross-appeal to ensure certain issues are preserved in the event the matter is reversed by an appellate court. Musmanno ruled, however, that H & R Block did not file its motion to decertify the class in a timely manner. The panel was hearing the case on remand from the Supreme Court with the instructions to look at how Rules 501 and 511, as well as Pennsylvania Rule of Civil Procedure 1710(d) and two footnotes in prior case law, apply to Basile. The court went against H & R Block, ruling its motion to decertify the class certification was untimely under all of the points the panel was told by the Supreme Court to examine. According to Musmanno’s opinion, the trial court granted in January 1996 an order in Sandra Basile’s favor to assume the existence of an agency relationship in considering whether to certify the class. In May 1997, the class was certified. The different court panels agreed, according to the opinion, that H & R Block could not have appealed those interlocutory orders until they became appealable when the court granted summary judgment in H & R Block’s favor in December 1997. At that time, H & R Block did file a cross appeal but only of the January 1996 order and not of the May 1997 order certifying the class, according to the opinion. “Accordingly, at that time, [H & R Block] should have also challenged the May 1997 order granting class certification in their cross-appeal,” Musmanno said. “To permit otherwise would allow piecemeal litigation of appellate issues.” A motion to decertify the class was not filed until some time in late 2003/early 2004 and was granted in January 2004, Musmanno said. A prior en banc panel of the Superior Court, in 2006, reversed the decertification, ruling it was improperly made after the court ruled on the merits of the case in its summary judgment order, according to the opinion. Superior Court Judge Maureen Lally-Green wrote a dissenting opinion that was joined by Judge Joan Orie Melvin. She said she recognized an appealable order generally subsumes any prior interlocutory orders in a case. “However, this simply means that the losing party may challenge the final adverse order, as well as any prior non-final orders that were also adverse to the losing party,” Lally-Green said. “It does not mean that even the winning party must file a protective cross-appeal, under penalty of waiver, simply because the trial court may have at one point ruled against the winning party before later granting a complete victory.” Lally-Green also said she thought the motion to decertify was timely because the merits of the case hadn’t been decided. There was still another claim existing outside of the summary judgment order filed in H & R Block’s favor, she said. According to opinions filed in the case, Sandra Basile had claimed in her 1993 complaint that the “rapid refunds” Block had promised her when she hired them to prepare her tax returns in the early 1990s were actually short-term, high-interest loans. A class was certified as to Basile’s breach of fiduciary duty claim in 1997. Several months later, however, Philadelphia Common Pleas Senior Judge Stephen E. Levin ruled in favor of a Block motion for summary judgment.On appeal, a 1999 Superior Court panel reversed Levin’s decision as to summary judgment. But in 2000, the state Supreme Court concluded it had not been proved that Block had been acting as the plaintiffs’ agent for the purposes of the transactions in question, but sent the case back down for resolution of other challenges to the plaintiffs’ claims. On remand, a Superior Court panel found in 2001 that the class members had presented prima facie evidence of a confidential relationship between themselves and Block and remanded back down to Levin for further proceedings on that issue. It was at this point in the case that Levin allowed Block to file a decertification motion, which he granted in January 2004. In December 2004, a three-judge panel of the Superior Court affirmed.In March 2006, an en banc panel of the Superior Court had ruled 6-3 that Levin should not have decertified the class in Basile since the defense did not challenge the original class certification order immediately after summary judgment proceedings in the case caused that order’s status to shift from interlocutory to appealable. In granting H & R Block’s appeal of the March 2006 ruling, the Supreme Court vacated the order, in essence decertifying the class. The Superior Court, in the June 2007 opinion, once again reversed the trial court’s order decertifying the class. William H. Lamb of Lamb McErlane in West Chester, Pa., and a former interim justice of the state Supreme Court represented H & R Block along with the firm’s appellate team. He said the entire team is delighted the court decided to accept the appeal once again. “Our group takes this as a significant step in the right direction,” Lamb said, adding the issue of cross-appeals and non-aggrieved parties is a very important one. He said this decision is “the test” and will affect several other cases across the commonwealth. Steven E. Angstreich of Levy Angstreich Finney Baldante Rubenstein & Coren of Philadelphia represented Basile. He was unavailable for comment by press time.

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