Editor's note: This is the third article in a three-part series, originally published in the Cook County Record's sister publication, Legal Newsline, taking a look at people who have found a source of income by filing lawsuits under a federal telemarketing law. Click here to read Part One, and here for Part Two.
LOS ANGELES - If someone commits to suing companies for a living, there is a chance he or she is going to frustrate one of them into defending itself.
One company recently brought into the world of litigation under the Telephone Consumer Protection Act doesn’t like what it sees. BrandRep is taking its anger out on Beverly Hills, Calif., attorney Todd Friedman, one of the most prolific lawsuit-filers in the country (a search of his name on the federal court database returns more than 2,400 results).
Some defendants say Friedman is also the leader of a lawsuit mill, with BrandRep characterizing it as “legalized extortion.” The case filed by Friedman and frequent plaintiff Jason Alan is only the second TCPA case the company has ever faced in federal court.
The company in August filed a counter-lawsuit against Alan and John Does soon to be revealed as Friedman and the attorneys at his firm. It alleges that Alan registered 30 phone numbers to various businesses in order to invite calls that would serve as the bases of TCPA lawsuits.
“Why does one person need nearly 30 telephone numbers?” attorneys for the company asked in September.
Alan’s alleged plan goes beyond simply collecting as many phone numbers as possible and hoping they once belonged to someone who would be contacted by debt collectors, as a Pennsylvania woman admitted to doing. He registered his numbers with various businesses and published them in the Yellow Pages and the Los Angeles Times classified section.
BrandRep says 22 of Alan’s phone numbers have been published as numbers for a group of plumbing businesses. This has the effect under the TCPA of providing worldwide written consent to be called, BrandRep claims.
Lead source companies confirmed that the numbers were for business purposes and have gone through a verification process, then sold the leads to companies like BrandRep, the company says. This is what led the company to call Alan.
“Companies such as BrandRep are then damaged by buying these bad leads because no true business advertised by Jason Alan exists,” the company wrote in its counter-claim. “However, a fabricated business exists in order to fabricate, create, and/or devise a new scheme to litigate against businesses who call his cell phone.”
At the time BrandRep submitted its filings, the company said Friedman had filed 390 TCPA lawsuits in Los Angeles federal court. Friedman doesn’t just represent TCPA clients – he’s also the plaintiff in a few cases.
Friedman, naturally, wasn’t pleased with the company’s claims. BrandRep also accused Friedman of sharing attorneys fees with his plaintiff.
“BrandRep is skating on thin ice, as evidenced by the razor thin allegations it lays forth in its absurd and implausible fraud claims…” he wrote in August. “Such bizarre allegations are more worthy of a suspense novel than they belong (in) a legitimate court of law.
“Even more shocking than these defamatory allegations is the fact that Defendant openly retaliated against Plaintiff by filing these counter-claims, in a brazen attempt to strong-arm Plaintiff and his counsel into dismissing this valid and important class action lawsuit.”
BrandRep likened the alleged scheme to the business practices of the Trevor Law Group, which was also based in Beverly Hills before it was accused of shakedown tactics. The firm used one plaintiff – the Consumer Enforcement Watch Corporation – to file lawsuits against companies listed on the Bureau of Automotive Repair as violators of certain laws.
BrandRep alleges Alan and Friedman have created lawsuits like an automobile factory would manufacture its own cars, using boilerplate complaints so they could file a large number of complaints easily.
Friedman called the company’s claims “frivolous” and says they show the company has no idea how to comply with the TCPA.
“This is precisely why this class action case is so important. Instead of acknowledging its own widespread privacy violations, BrandRep shockingly has attempted to cast blame on (Alan) and his counsel… in retaliation for bringing a meritorious and legitimate class action against this serial robocaller,” Friedman wrote.
Youtube videos and a website promote Alan’s business broker services. They feature a phone number different than the 22 BrandRep says he uses to amass TCPA claims.
Calls to the number are the subjects of other lawsuits. Alan, who has filed more than 30 suits, claims Lighthouse Insurance Group called the number three times in April 2015 to sell insurance.
A different defendant that had a third party call the number said Alan asked for a $10,000 business loan during an eight-minute phone conversation. When it sent a follow-up text message, Alan filed a lawsuit.
Another Friedman client, Casey Blotzer, sued at least 30 companies from 2012-2015, including RCF, LLC.
“Plaintiffs’ own complaint and its paucity of factual allegations reveal this is nothing more than a lawyer-driven strike suit as this is the 25th time in the Central District of California alone the Law Offices of Todd M. Friedman and (Blotzer and co-plaintiff Edward Makaron) have worked together to fill the court’s docket by filing TCPA class actions since January 2013,” the company wrote in July 2015.
Friedman did not address the company’s claim, instead reminding a Los Angeles federal judge that RCF is accused of using an “intrusive and obnoxious robo-dialer” to cold-call thousands of consumers in violation of federal law.
Fellow target Dura Medic says it was tricked into calling Blotzer as it tried to collect on crutches provided to Jabaree Williams. On his hospital form, Williams had provided Blotzer’s Social Security number, though the last three pairs of numbers were transposed.
Williams listed Blotzer’s address and Blotzer’s phone number, which he also claimed was his own. A defendant in another Blotzer case said she allowed her husband, daughter and daughter’s boyfriend to use her phone number when entering into financial transactions and called her lawsuit frivolous.
“(I)t appears that (Blotzer) has engaged in a ‘set-up’ designed to ‘trick’ Dura Medic into calling her cellular telephone. Indeed, (Blotzer) is no stranger to TCPA litigation...” the company’s attorneys wrote in May 2013.
That case settled five months later, before Friedman responded to the claims. In 2015, after filing 30 lawsuits, Blotzer was deposed for the first time, and her testimony was used in Northstar Location Services’ motion for summary judgment. Three weeks later, the case settled.
Defense attorneys complain that the TCPA has had a hard time adapting to the way technology has changed in its 26 years. Plaintiffs attorneys, though, are having no problems utilizing new tools.
Block Calls Get Cash is a free app developed for Lemberg Law. It creates legal documentation for telemarketing and debt collection calls that is evaluated by the firm. “Remember, there is zero out-of-pocket cost to you to bring a TCPA claim,” the website reminds.
The same idea is behind the Agruss Law Firm’s Stop Calls Get Cash – “You won’t pay us a penny. Download our free app to stop the harassment, get money, and you won’t pay us a penny for our services,” its site says.
Meanwhile, the FCC has struggled to process the concerns of defendants in the wireless age, the other side says.
“One of the, sort of, criticisms by the defense industry is that it hasn’t kept up with that,” says TCPA defense attorney Jessica Klander, of Bassford Remele in Minneapolis.
“The FCC has come down with guidance to try and assist interpreting the statute to be more modern by defining what an Automatic Dialing System is, in terms of what that means in modern tech, and by including a safe harbor provision if it’s a repurposed number – the debt collector gets a chance to stop calling.
“The guidance wasn’t clear, so it hasn’t done much to clarify the law, but that was the intention.”
Republican Sen. John Thune, of South Dakota, complained in a Commerce, Science and Transportation Committee hearing last year that the law is “showing its age.”
“(A)nd there are opportunities to build on its consumer benefits while also ensuring consumers fully benefit from modern communications,” he said.
Democrats in the committee were opposed to creating more relaxed standards for robocalls, especially Claire McCaskill of Missouri. If defendants have evidence they obtained consent prior to a call, they should push back against plaintiffs lawyers, she said.
“Take them to trial and kick them in the rear in the courtroom,” she said.
Plaintiffs filed nearly 5,000 TCPA lawsuits last year, and trials rarely occur. Every argument in a TCPA case is essentially made to broker a settlement.
Attacking the lawyers filing these claims seems to be a new strategy, and it is unclear whether it will be successful. The counter-claim against Friedman and his law office idles while a judge determines whether to impose a stay during a challenge to the FCC’s interpretation of an automatic telephone dialing system.
Friedman has challenged whether BrandRep can even pursue the strategy. “Defendant’s conspiratorial claims rest on the assumption that Plaintiff and his counsel are engaged in some sort of elaborate scheme to frivolously sue numerous companies and extort sums out of them in settlements,” he wrote.
“Even if this were true (it’s not, and it’s ridiculous) BrandRep has failed to demonstrate it has standing to bring these claims.”
Friedman says he hasn’t acquired any money or property from BrandRep, so the company can’t bring a claim for restitution.
Elsewhere, attorneys who represent Jan Konopca in his 31 TCPA lawsuits in New Jersey face a similar attack. Collection Solutions sued Yitzchak Zelman and his firm, as well as two other firms, in December, alleging they have conspired to develop professional plaintiffs for the purpose of bringing class actions under the Fair Debt Collection Practices Act.
Lawsuits under the FDCPA feature similar allegations and statutory penalties as TCPA cases. The lawsuit against Zelman alleges a “classic, Mafia-style racketeering enterprise” among the New Jersey firms Jones, Wolf & Kapasi, Marcus & Zelman and the Law Offices of Laura S. Mann.
This alleged enterprise involves using the FDCPA to file class actions lawsuits in which, Collection Solutions says, there is no chance that a class could ever be certified and no “actual damages” in controversy.
Still, defendants feel pressured to quickly agree to mid-five-figure settlements in what Collection Solutions calls a “litigation ploy to obtain attorneys fees” instead of a “proper attempt to posit and represent a putative class.”
When the Jones firm asked a New York federal judge to certify a class and approve a settlement with Northland Group, accused of sending a debt collection letter that violated the FDCPA to 100,000 individuals, the request was shot down.
Under the proposed settlement, the Jones firm would have received up to $35,000 and lead plaintiff Jeffrey Gallego would have earned $1,000. If there were 100,000 class members, each would have received 16.5 cents, Judge Alvin Hellerstein wrote. The U.S. Court of Appeals for the Second Circuit affirmed the denial of class certification in February 2016.
Collection Solutions is making several serious claims against the firms. In addition to racketeering, the firms allegedly committed fraud, negligence and legal malpractice. The company is seeking class action status on behalf of all the targets of the firms.
The Jones firm says the company’s allegations are “an affront to the legal profession” and contest the argument that there are no “actual damages” to the firm’s clients when they receive a debt collection letter or call in violation of the law.
“A plaintiff is not required to prove actual damages in order to recover statutory damages,” attorneys for the Jones firm wrote in a recent motion to dismiss the case. “Moreover, it is well-settled that litigation activities by attorneys, without more, cannot support the predicate acts required to state a civil RICO claim or otherwise subject attorneys to liability for pursuing a FDCPA claim on behalf of their clients.
“Indeed, exposing attorneys to the type of collateral attack leveled by Plaintiffs in this action would have a chilling effect on open access to courts and encourage the multiplication of such collateral, frivolous litigation.”
Success in these two racketeering claims would likely persuade other companies to consider doing the same. Chevron’s use of the RICO statute has, so far, been key in preventing it from having to pay a multibillion-dollar verdict in Ecuador. U.S. District Judge Lewis Kaplan found in 2014 that the $9.5 billion verdict obtained by plaintiffs attorney Steven Donziger was the product of racketeering, and the Second Circuit agreed in 2016. Donziger is still pursuing enforcement of the verdict.
Less famously, CSX Transportation accused a former Pittsburgh asbestos firm known as Peirce, Raimond & Coulter of conspiring with a West Virginia radiologist to file fabricated claims. CSX won more than $1 million after damages were tripled under the RICO statute.
And other asbestos defendants took note, especially Garlock Sealing Technologies. The company successfully argued during its bankruptcy proceeding that asbestos firms had been manipulating the system by blaming the company for their clients’ injuries in civil courts while doing the same to other companies in the asbestos trust system.
After receiving a landmark ruling in 2014 in North Carolina bankruptcy court that found verdicts and settlements were the products of fraud, the company filed racketeering lawsuits against a handful of law firms. Those suits were ultimately settled as part of Garlock’s bankruptcy trust agreement, but John Crane Inc. took up the baton by filing its own racketeering lawsuits against two of the firms. Those cases are pending.
So TCPA defendants will wait to see if going on the offensive makes a better defense than what has previously been tried.
And Melody Stoops’ name might live forever as the precedent used to dismiss lawsuits brought by plaintiffs who are in the business of filing TCPA lawsuits. A Pennsylvania judge ruled she didn't have standing to sue because she invited the calls that made up her TCPA lawsuits.
Konopca’s attorneys, as they fight racketeering claims, are hoping a New Jersey federal court finds a distinction between Stoops’ actions and Konopca’s.
Konopca had no shoebox full of phones and has not admitted, as Stoops did, that it was his intent to amass TCPA claims. On the witness stand in February, he explained why he waited several years after the deluge of calls to file his 31 lawsuits. He says he wasn't intentionally amassing claims during the four-year statute of limitations.
“I don’t know the rules, regulations and laws,” he said.
Nicholas Malfitano contributed to this report. To read Part One of this three-part series, click here, and click here for Part Two. Reach Legal Newsline editor John O'Brien at firstname.lastname@example.org.