A federal judge in Savannah has made it considerably more difficult to bring massive class-action claims against banks.

U.S. District Judge William T. Moore Jr. ruled July 11 that a class action against H&R Block and five lenders was simply too complex to go forward. The judge, instead, ordered the parties to file individual cases against the six companies or to drop their claims.

Banking lawyers hailed the ruling, saying the 52-page decision provides a blueprint for judges to eliminate other class actions consumers have filed against banks.

"This case will serve as an important precedent for other banks trying to block certification of a class where the plaintiffs are asserting civil racketeering, state unfair practices, or fraud charges," said Alan Kaplinsky, a partner at the Philadelphia law firm of Ballard, Spahr, Andrews & Ingersoll, which represented several of the lenders.

"This reaffirms what the courts have said in the nonbanking context," agreed Jeffrey S. Saltz, a partner at the Philadelphia law firm of Wolf, Block, Schorr and Sollis-Cohen. "Certifying a class action for a fraud just leads to too many problems."

Class actions have become an increasingly potent weapon against banks. A lawyer consolidates scores of similar grievances against an institution and then files a single suit. The lawyer normally receives fees and a percentage of the award. The rest is split among the consumers. The suits typically accuse a bank of improperly disclosing a fee or loan term.

Judge Moore said that although there is nothing inherently wrong with class actions, they don't work when millions of consumers have to prove they relied on inaccurate information provided by a bank.

The problem, the judge said, is that the bank has to question each plaintiff individually to learn if the person really relied on the allegedly inaccurate information. That becomes an administrative nightmare, he said. The parties would be better off filing separate suits, he said.

"With a class of this size, effective management of the case cannot be realized," the judge wrote.

The decision stems from H&R Block's rapid refund program, which offers short-term loans to taxpayers who file their returns electronically.

A group of consumers charged they didn't realize they were applying for a loan when they used the rapid refund. Rather, they thought they were just getting their refund sooner. They sued H&R Block and the lenders, claiming violations of the antiracketeering and consumer protection laws.

The battle isn't over yet. Lawyers for the consumers have appealed the case to the U.S. Court of Appeals in Atlanta. They assert that the judge can allow the case to proceed by simply presuming that all the customers relied on misleading information.

"If, as the trial court has held, class-wide reliance of defendant's material misrepresentations cannot be presumed at the certification stage, large fraud class actions will virtually never be possible," the consumers said in the appeal.

But the banks countered yesterday, saying in a brief that the judge was correct when he ruled that the case was unmanageable. They cited dozens of cases supporting a judge's right to make this call.

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