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Shoplifter extortion case against Walmart, other dealers are rejected



(Reuters) – A federal judge dismissed a racketeering lawsuit accusing Walmart Inc and six other extortion dealers by forcing the accused store lists to take costly "restorative justice" classes or otherwise being reported to the police.

FILE PHOTO: Walmart's logo is seen outside of one of the shops in Chicago, Illinois, USA November 20, 2018. REUTERS / Kamil Krzaczynski / Filfoto

In a decision late Friday, US district judge sent Lucy Koh in San Jose, California, found no evidence of a nationwide conspiracy to rule accused shoplifters to pay $ 400 in advance or $ 500 in installments for the Utah-based Corrective Education Co. classes, and admit guilt to avoid prosecution.

Shoppinglifting is the main source of stock shrinkage for US retailers, resulting in losses of around $ 559 per event, along with so-called organized retail crime around $ 17.1 billion in 2017, according to the National Retail Federation.

Koh said that the three plaintiffs, who were accused in 2017 of winking from Walmarts in Florida, Georgia and Texas, did not show that retailers had specific knowledge of conspiracy.

She said it was of no importance that the dealers could use the Corrective Education database to conduct background checks before deciding to offer six-to-eight-hour online classes, part of which costs the plaintiffs were reimbursing to resellers.

"The only alleged commonality each of the defendants has with each other is the CEC, which the plaintiffs have chosen not to sue," Koh wrote. "It's not enough to claim a single nationwide conspiracy."

Koh also said she did not have jurisdiction over most defendants in the proposed class action because they did not have enough ties to California and said the plaintiffs had not been charged with suing dealers that did not harm them.

She gave the plaintiffs 30 days to change their claims against Walmart, Corrective Education founders and some of their employees and directors.

Claims against Bloomingdale, Burlington Coat Factory, Kroger Co., 99 Cents Only, Save Mart and Sportsman's Warehouse were rejected with prejudice, meaning they cannot be taken back.

The plaintiffs were identified as Jane Doe, Mary Moe and John Roe. Their lawyers did not respond promptly on Saturday to requests for comment. Walmart and its lawyers did not immediately respond to similar requests.

Scott Gant, a partner of Boies Schiller & Flexner who represented corrective educated defendants, said he was satisfied with Koh's thoughtful opinion.

Walmart suspended the use of the Corrective Education classes in December 2017, Wall Street Journal said that month. The thing is Doe et al., Walmart Inc et al., U.S. Pat. District Court, Northern District of California, No. 18-02125.

Reporting by Jonathan Stempel in New York; Editing by Matthew Lewis

Our Standards: Thomson Reuters Trust Principles.

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