ZaaZoom Will not Face Nationwide Class

(CN) - A federal judge refused to certify a nationwide class of payday-loan applicants who say ZaaZoom Solutions ripped them off using personal information to cash electronic checks.

Lead plaintiff Amber Marsh sued ZaaZoom and its alleged accomplices in 2011, claiming that they "lured" her into applying for a payday-loan online and then used her bank information to enroll her in membership programs for online coupons without her permission.

ZaaZoom allegedly used remotely created checks, or RCCs, drawn on the applicants' accounts to pay for the membership programs.

U.S. District Judge William Orrick entered default judgment against ZaaZoom Solutions, Zaza Pay, MultiEcom, Online Resource Center, Automated Electronic Checking and Data Processing Systems on Dec. 2, 2013. A month later, he approved a $527,750 settlement of the claims against the First Bank of Delaware, one of the two defendant banks.

Separate motions to dismiss whittled the allegations to five claims against payment processor Jack Henry & Associates, three of them falling under the unlawful, fraudulent and unfair prongs of California's Unfair Competition Law. The other two claims alleged conversion and negligence. Marsh's federal negligence claim against the First National Bank of Central (FNBCT) Texas also survived.

Orrick certified a California class in March, but found that a nationwide class "would violate due process to apply California law to non-Californians."

"The Ninth Circuit has found it proper for plaintiffs to make a 'renewed motion for certification only after the plaintiffs created subclasses with proper representatives for each,'" Orrick said.

In a renewed motion for a nationwide class, Marsh against asked Orrick for certification under California negligence and conversion law, or in the alternative, certification either under Texas law or under the law of the state of each nationwide plaintiff.

Orrick denied the motion Monday, reiterating that California law cannot be applied to a nationwide class.

"Marsh again fails to show that due process would allow California law to be applied to a nationwide class," he said. "For California's law to be applied that way, it must have a significant contact or significant aggregation of contacts to the claim asserted by each member of the plaintiff class, contacts creating state interests, in order to ensure that the choice of its law is not arbitrary or unfair. The problem for Marsh is that she only provides facts about the actions of the ZaaZoom defendants and not the defendants that are at issue in this motion: Jack Henry and FNBCT."

Texas law does not apply, Orrick said, adding that he will not certify a class with so many plaintiffs from so many different states because it would make the case unmanageable.

"I decline to certify a nationwide class that will have 50 subclasses applying the laws of 50 different jurisdictions," he said. "The court would be forced to go through - and to have the jury go through - an individual analysis of each state's negligence law in order to determine defendant's liability for negligence with regard to each individual defendant. Such a class would fail to meet the predominance or superiority requirements of Rule 23."

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