Jackson Hewitt bankruptcy stalls class action

By Steve Korris | Jun 10, 2011


HUNTINGTON – If tax preparer Jackson Hewitt cheated customers as a suit in federal court alleges, it didn't cheat them sufficiently to remain solvent.

On May 25, Charles Woody of Charleston notified U.S. District Judge Robert Chambers that Jackson Hewitt filed a bankruptcy petition in Delaware a day earlier.

Chambers presides over a suit alleging Jackson Hewitt charged too much interest on loans it arranged for West Virginia customers who anticipated refunds.

Woody advised Chambers that the bankruptcy petition prevents commencement or continuance of any action against Jackson Hewitt.

"Accordingly, this action has been stayed," Woody wrote.

Plaintiffs Christian and Elizabeth Harper wanted Chambers to certify a class action and define Jackson Hewitt as their agent in arranging a refund anticipation loan.

They wanted him to treat Jackson Hewitt as a credit services organization under West Virginia law, but he certified the question to the Supreme Court of Appeals.

Last year, the Justices told him to apply the law on credit services organizations.

Lawyers for the Harpers read the decision as an endorsement of class action.

"Now that the Supreme Court has determined that Jackson Hewitt is a CSO, there are no individualized issues or any other impediments to class certification," wrote John Barrett, Brian Glasser and Eric Snyder, all of Bailey and Glasser in Charleston.

"Jackson Hewitt's liability has been determined conclusively," they wrote.

They wrote that Jackson Hewitt arranged 40,325 refund anticipation loans in West Virginia through 2008.

For Jackson Hewitt, Woody answered that if the Supreme Court of Appeals interpreted the credit services organization law correctly, the law violates the U.S. Constitution.

In any event, he wrote, the Harpers suffered no actual damages.

Chambers set trial for Nov. 8, but apparently he can scratch it from his calendar.

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