New Hampshire memorabilia company beats back class action bid

But plaintiff says he won’t give up in suit against RR Auction

A nasty class action suit filed against RR Auction Company LLC, an Amherst, N.H., memorabilia company, has been tossed out in California.

The New Hampshire company characterized the fraud suit as “extortion by litigation.”

But the plaintiff, Michael Johnson, said he would continue to pursue the litigation to include charges of bid-rigging levied in an affidavit signed in 2008 by RR’s former bookkeeper. She signed the document only a week after after she was accused of embezzling $450,000 from RR. The employee committed suicide a month later, and her husband settled with the company.

Johnson filed the suit as an individual back in April 2012, charging that the company sold him fake merchandise. He expanded it to a class action in October of that year, demanding as much as $5 million before the class certification ruling, according to a settlement letter disclosed by RR.

The March 13 ruling by Santa Barbara, Calif., Judge Donna Geck, however, ruled against class certification, noting that Johnson has unable to come up with any people in California with a similar grievance. Besides, she said, even finding out if they were a member of the class would require showing that the materials were fake on an individual basis, a time-consuming and costly process.

The memorabilia in question in the lawsuit, according to Johnson’s website, include such items as a signed copy of Eric Clapton’s “Layla” LP, a signed postcard of Paul McCartney shown with the dog who inspired the song, “Martha My Dear,” and a drumhead signed by all of the members of The Rolling Stones.

Success symbol

The company, which claims it has not been sued in its 35 years of doing business, said that Johnson bought less than $100,000 in merchandise from the company, had not specified which items were not authentic, and has yet to identify any other customer with a similar grievance.

RR also says that it has no way of knowing whether the items in question were the actual ones that RR sold, or whether they are similar items that were bought years later.

“We are going to fight for our reputation,” said Bobby Livingston, RR executive vice president, told NHBR. “These are the kind of things you expect when you are successful. Call it a symbol of our success.”

That success includes the sales of a famous original signed photo of Albert Einstein sticking out his tongue, President Kennedy’s 1963 convertible and a pair of guns that once belonged to the notorious outlaws Bonnie and Clyde, all authenticated by third parties specializing in that type of collectable.

If a third party could not authenticate the items, RR promised a lifetime money back guarantee.

Johnson, however, is challenging RR’s very claim to authenticity, alleging that one of its third party authenticators, PSA/DNA Authentication Services, had ties to RR.

In his case, he charges, PSA/DNA reversed its determination of about 20 items of the roughly 75 that he had bought from RR, according to the deposition.

His website also lists 10 items with their original negative determinations in May 2011. (One of those items, a Led Zeppelin album cover signed by all of the members of the band, was sold to him by an authenticator contracted by RR). The rest, Johnson told NHBR, were sold to him by RR.

But, Johnson said, after contacting RR, Livingston and CEO Bob Eaton – then a PSA/DNA authenticator – he had talked to PSA/DNA, and the firm told him that the items were all good. And he produced an email from Livingston to Eaton dated July 26, 2011 entitled:

“Re: PSA-now they are real.

“PSA should be should be REFUNDING all the money he spent to get the rejecting letters and/or giving him LOA (letters of authenticity) for his stuff that they are authentic NOW.”

That implies that they weren’t authentic before, Johnson said.

“It doesn’t take a 2-year-old to figure out what is going on,” Johnson said.

After that, Johnson said he wanted a refund for all his merchandise.

(Johnson says the total is between $100,000 and $115,000. RR claims he bought a total of $90,000 of which about $15,000 worth was claimed inauthentic. But the items in question and the amount paid for them are not listed in the legal complaint.)

RR complained they never got to examine the items to determine their authenticity, or even if they had sold it, noting the large time lag between the purchase of the first item in 2005 and his first complaint in 2011.

When Johnson filed his class action suit he referred to the statutory limit of $5 million, according to documents supplied to NHBR. Then in Feb. 7, he offered to settle the case for $1.25 million, but that offer quickly escalated. At the end of March 6, the offer was for $2.75 million, and by March 20, “when the class action certified” the number will climb to $5 million.

When asked why the figure was set so high, Johnson stressed that settlement offer was confidential and should not have been released to the press.

Targeting credibility

Certifying a class is no easy task. The first step is for Johnson’s attorney to find other class members by publicizing the lawsuit and contacting them directly.

After some legal wrangling, attorneys for RR said it sent letters to all 393 of its California customers during that class period, giving them the opportunity to opt out of being involved in such litigation. RR sent the remaining customers to Johnson and his attorneys, who sent them a letter inviting them to join the lawsuit.

(In order to get beyond California, Johnson would have to move his lawsuit to federal court, or other defendants would have to file from other states.)

In opposing the class motion, RR put forward several arguments.

First, when it searched it records it was unable to come up with a single person who claimed inauthenticity who did not receive a refund. There were 12 California customers, nine of whom got their money back, and the others were “resolved to their satisfaction.”

Second, there was an inherent conflict of interest because many customers buy as well as sell, each vouching for the authenticity of their items. Thus a member of the class could wind up suing another member. (Indeed, Johnson himself sold items though RR.)

Each side in the case has attacked the other’s credibility.

Livingston told NHBR that Johnson has been involved in numerous lawsuits, some involving family members and one against a prior attorney. (Johnson admitted to five lawsuits in his deposition.) But Johnson pointed to Eaton’s deposition when he said he couldn’t recall facts of lawsuits in which he was a plaintiff or defendant.

He noted that NHBR had previously reported a lawsuit filed by RR against a former bookkeeper – Karen Burris – who was charged embezzlement before committing suicide in 2008.

“How could you not remember something like that?” Johnson asked NHBR.

Shortly before the judge's ruling, Johnson filed Burris’ affidavit, in which she offered “evidentiary information” to current and past clients “who may have been defrauded by RR’s pattern of unethical and illegal practices over the almost six years of my employment there.”

The statement alluded to a fake signature on an Elvis Presley guitar and inauthentic signed Beatles albums. While the company has issued refunds when asked, it allegedly did not follow up with those who might have bought the items that did not complain, the statement said.

Finally, Burris’ statement detailed a system of bid-rigging through the use of fake clients to jack up auction prices.

“There was a constant culture of cavalier bending of the laws of New Hampshire,” she charged in the statement.

RR said that Johnson failed to disclose that the Burris statement came a week after RR fired her and filed the embezzlement suit against her. The company attached various checks and wire transfers to document its claim.

While Judge Beck found the affidavit “interesting,” she noted that it pertained to items sold before 2008, which was before the class period.