Court Rejects Class Action Lawsuit Against RR Auction

Boston memorabilia house RR Auction emerged victorious from a Santa Barbara, California courtroom Friday, when an attempt to bring a class action lawsuit against the company failed the basic tests; including that no one wanted to join the lawsuit.

Superior Court Judge Donna Geck shot down the attempt by Michael Johnson and his lawyer, Dugan Kelley of Christman Kelley & Clarke, to certify the class action in a tentative ruling posted two days before. Johnson’s lawyers didn’t object to the Court’s ruling during the March 13 hearing that lasted only a few minutes.

RR Auction VP Robert Livingston said they spent 2 1/2 years defending themselves against a man Livingston calls a serial litigator who filed a frivolous lawsuit. Someone he claims was once looking to set up a competing autograph business.

Prior Law Firm Sued

Johnson is also suing the first law firm that represented him in this case for malpractice, McCarthy & Kroes, alleging negligence, breach of fiduciary duty, declaratory relief and financial elder abuse.

Among Johnson’s allegations in the suit against his former law firm is that “…the Defendant [McCarthy & Kroes] pled causes of action that were frivolous, untenable, and contrary to California law (e.g. unjust enrichment) thereby driving up the costs, fees, and adding further delay to a case that should have proceeded expeditiously.

“That’s one thing Johnson and we agree on,” said Livingston.

$130,000…or $9,610?

Johnson claims that over $130,000 in autographs he purchased from RR were not authentic, although in his January 30, 2015 declaration he lists only 12 signed items from RR that he sent to authenticators and were rejected, for which he paid $8,008 plus 20% commission ($9,610). Johnson claimed that based on those 12, the authenticator, PSA/DNA, determined that all of the autographs he purchased from RR were forgeries.

Autographs Not Returned

In their filings, RR claims that they were ready to honor their lifetime guarantee of authenticity and refund Johnson’s money, even though they believe the 12 items are actually genuine. But Johnson did not return the autographs to RR so they could issue refunds.

Johnson does not dispute that. In Paragraphs 14 & 15 of his March 6, 2015 declaration, Johnson states:

14. Also, Defendant claims that I somehow did not meet a condition of the guarantee because I allegedly did not return the items to RR Auction. But this argument is also misleading. RR Auction’s “guarantee” between 2008 and 2012 did not state a buyer had to return an autographed item that was found to be a forgery to RR Auction before a refund is due. Nor did the RR guarantee between 2008 and 2012 require a buyer who purchased an autographed item from RR Auction that was later found to be a forgery to send the item(s) first to RR Auction before that buyer could get a refund. Instead, the RR Auction guarantee stated that RR Auction, “may ask the buyer to provide documentation” from the third party authenticator who deemed the autographed a forgery.

15. Nor did RR Auction’s guarantee state between 2008 and 2012 that RR Auction or any of its employees or owners had to physically see or inspect the items first before a refund was given that buyer. Similarly, RR Auction’s guarantee did not state that Defendant had to “determine” or “verify” that the forged item the buyer was requesting a refund on was purchased from RR Auction as a condition precedent to honoring the guarantee.

He is the first person in RR’s history, the company says, to demand a refund while also refusing to return the goods in question.

Johnson set up a website for the lawsuit last fall, rrauctionlawsuit.com, to try to get other California clients of RR to join the class action. He posted the deposition videos of R&R managers, something rarely done in active lawsuits, and an ever-growing list of people whose video depositions he threatened to take, including Autograph magazine’s publisher and community manager of Autograph Magazine Live, Steven Cyrkin.

Johnson’s pleadings claimed that at least 1,000 Californians purchased autographs from RR between 2008-2012 and were potential members of the class. It turns out there were only 393. Twelve of them had contacted RR with authenticity concerns during that period. All 9 who asked a refund under the guarantee got one.

In February Things Got a Little Weird

On February 6 of this year, Johnson’s lawyer Dugan Kelley started to email settlement demands to R&R attorney, Keith Attlesey, threatening to go to the national press, including The Boston Globe, ESPN and The New York Daily News, if RR Auction didn’t settle for $1,250,000 within a week.

The settlement demands escalated weekly, and were scheduled to increase to $5 million before the March 13 hearing to certify the class action.

In a February 24 email to Attlesey, stating that the then-settlement demand of $2,750,000 would expire in three days, Kelley wrote “I have recently come into information bearing on criminal activity as well.”

Livingston calls the emails “litigation by extortion.”

On March 6, Kelley filed a 119-page declaration that entered as evidence hearsay statements from a 2008 affidavit by former RR employee Karen Burris accusing RR of fraud. What Kelley didn’t reveal was that Burris wrote the affidavit after R&R fired her when they discovered that she and her husband, William Burris, had embezzled what would turn out to be more than $450,000 from the company between 2004-2008. R&R filed a police report within a few days after her firing.

Karen Burris committed suicide shortly thereafter. RR Auction eventually settled their lawsuit against Burris’ husband and the police ended their investigation after he paid back a portion of the money.

In the same pleading, Kelley also attached a New York Daily News article about William Boehm, an IT specialist hired by RR to maintain their software. Boehm recently pled guilty to lying to the FBI while employed at an unrelated company, Mastro Auctions, in Chicago. Kelley also added 64 pages from that case into evidence.

“It mattered little to Dugan Kelley that his “information” didn’t supply a scintilla of evidence that RR had engaged in criminal behavior, beyond the hearsay, inadmissible allegations Karen Burris made as a bargaining chip after she was caught,” said Livingston.

Livingston calls the whole lawsuit a set-up. “Johnson clearly wasn’t interested in just a refund.”

Johnson has filed nine different civil actions over the last 25 years, including suing his sister and brother-in-law.

While he could continue the lawsuit against RR on his own, Johnson has lost the ability for it to be class action. Judge Geck ruled that even if there were other aggrieved parties, each memorabilia item is different and authenticated differently, and therefore it would be up to individuals to file suit. A class action needs a similar product and a similar problem to go forth.

RR’s attorney filed objections during the hearing to the Burris and Boehm pleadings, in expectation of a Johnson appeal.

Asked about the outcome, one of Johnson’s other lawyers, Matthew Clarke, expressed disappointment but said “Mr. Johnson is dedicated to the case.”

The law firm later sent out a press release, stating that “In spite of the Court’s ruling on class certification, Mr. Johnson and his attorneys, Christman, Kelley & Clarke PC, are moving forward with Mr. Johnson’s lawsuit against R&R Auction.”

But RR Auction was relieved after hearing Judge Geck’s ruling. A troublesome chapter in its history has ended.

“We’re very pleased with the outcome,” said Keith Attlesey after the decision. “It puts to rest a lot of attacks that Johnson and others have made against RR Auction’s sterling reputation.”

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