The Eight Circuit in McKeage v. TMBC, LLC, 847 F.3d 992 (8th Cir. Feb. 13, 2017) affirmed a judgment of $24 million on behalf of a class against a national retailer for charging a fee to prepare the sales contract and other legal documents.
As part of a contract to sell fishing boats and trailers, the defendant charged purchasers a $75 “document fee” to cover the cost of preparing and/or completing documents such as the form contract itself, a bill of sale, a power of attorney form, and title, license, and registration documents. The contract had a Missouri choice of law provision.
The purchasers brought a class action suit alleging that the defendant engaged in the unauthorized pra4ctice of law by charging a fee. The Eight Circuit upheld summary judgment and a damage award of over $24 million for the class.
On appeal, the seller argued that summary judgment was not merited because it did not engage in the unauthorized practice of law in that it did not exercise any legal judgment in completing the forms. The Court determined that the forms were legal documents under well-established Missouri law and that charging a fee in connection with the preparation of legal documents constitutes the unauthorized practice of law. Independent exercise of legal judgment is not required.
The Court also rejected the seller’s argument that the district court erred in applying the Missouri law to sales occurring in other states. Because the seller chose Missouri law, it is bound by it and there is nothing unconstitutional about enforcing a party’s choice to have its contractual duties governed by the law of a particular state.
The Court also determined it was not error for the district court to base the fee award on the fee-shifting provision of the contracts. However, it remanded the case for consideration of whether class counsel is entitled to additional fees from the common fund.
Author
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Jim is a founding partner of Noonan & Lieberman. Jim has more than 25 years of experience in civil litigation on behalf of creditors, servicers, business and real estate owners.
