A prominent Chicago civil defense law firm has taken aim at the firm of Edelson P.C., alleging the Chicago-based firm, known for being a prolific filer of digital privacy and technology class actions, should be made to pay for using the courts to spread “lies and defamatory statements” as part of a continuing “self-serving publicity tour.”
On March 28, Johnson & Bell Ltd. filed a complaint in Cook County Circuit Court seeking more than $1 million in damages from the Edelson firm and the firm’s namesake and principal, Jay Edelson, alleging that although Edelson and the firm “fashion themselves as a ‘leader in privacy and tech-related class actions’ … their ‘practice’ largely consists of nothing more than preying upon unsuspecting businesses, conjuring up nonexistent issues and then attempting to extort settlements that benefit no one but themselves through payments for their nuisance lawsuits.”
The complaint seeks a jury trial and redress for a suit Edelson filed against Johnson & Bell regarding its maintenance of confidential client data. In the action, which Johnson & Bell said alleges “completely false claims,” the firm says the defendants “engaged in numerous violations of their ethical duties, have illegally abused the process of the courts to further their own self-aggrandizement and have engaged in a self-serving publicity tour spreading their lies and defamatory statements.”
Johnson & Bell at one point represented Jason Shore and Coinabul LLC in a 2014 class action in which Edelson client Yazan Hussein alleged the defendants did not fulfill obligations to remit silver and gold to customers who submitted bitcoin currency. After briefing on motion to dismiss, Johnson & Bell moved to withdraw from representing Shore and Coinabul, citing communications problems.
Shore and Coinabul failed to appear at subsequent hearings, leading to a default order entered against them and ultimately, on July 6, 2015, judgment in favor of Hussein for more than $1.5 million. Then, on April 15, 2016, Edelson represented Shore and Coinabul in a federal class action against Johnson & Bell regarding client data records.
Johnson & Bell said that complaint included “numerous statements which are demonstrably false and defamatory,” such as allegations about specific servers, computer applications and software language it claims it never used. Johnson & Bell says it repeatedly asked Edelson to prove basis for such statements, but Edelson has “failed to provide any such substantiation for the simple reason that none exists.”
The day before Johnson & Bell planned to file a motion to dismiss the class action, Edelson voluntarily dismissed, with prejudice, but “made the unusual request to have the record in the case unsealed.” On May 9, 2016, Edelson filed a demand for arbitration on behalf of Johnson & Bell, alleging malpractice in the Hussein suit. On July 11, Edelson filed another demand for arbitration nearly identical to the class action.
Johnson & Bell argued, if the malpractice claims were valid, Edelson could have helped Shore and Coinabul get relief from judgment in the Hussein action through federal civil procedure rules, and further that representing both parties concurrently constitutes a conflict of interest under Illinois regulations. After a Dec. 8 order unsealing proceedings in the federal class action, Johnson & Bell say Edelson “set out on a publicity campaign in which he championed and restated the false and defamatory allegations,” including giving copies of the complaint to reporters and news outlets.
Formal allegations in the complaint include defamation, abuse of process and a violation of the Illinois Contribution Among Joint Tortfeasors Act. On that count, Johnson & Bell notes that if it is found liable to Shore and Coinabul in the malpractice arbitration, Edelson could be made to pay a share of any damages because of its alleged negligent acts.
Joining Johnson & Bell in the claim are attorneys from the firms of Konicek & Dillon, P.C., of suburban Geneva, and Williams Montgomery & John, of Chicago.