A little over five months since denying one of Chicago’s leading class action plaintiffs’ firms the chance to pursue racketeering charges against another group of lawyers accused of acting as “professional objectors” to extort payments, a Chicago federal judge said she will allow the Edelson P.C. firm to move ahead with one final remaining element of their lawsuit – an attempt to secure a court order restricting the ability of those lawyers to practice law in Illinois, and so limit their ability to collect on a $225,000 payday from Edelson.
In her July 20 ruling, U.S. District Judge Rebecca Pallmeyer rejected the attempt by the defendants to dismiss the case in its entirety, saying she believed the law gave her the jurisdiction to preside over Edelson’s contentions Bandas and his associates violated Illinois law by practicing law in the Prairie State, despite not being licensed to do so, by “covertly” managing litigation, while essentially pretending pleadings had been prepared by “in-state figureheads.”
The ruling comes as the latest steps in litigation dating back to late 2016, when Edelson principal Jay Edelson and his firm first filed suit in federal court, accusing the Bandas lawyers, and a collection of other allegedly involving lawyers and other individuals, of essentially running a protection racket against other lawyers attempting to close out and collect on class action settlements.
Jay Edelson
The litigation centers on a $13.8 million settlement the Edelson firm had hammered out in a lawsuit they had brought on behalf of a class of plaintiffs against Gannett Co. over alleged violations of the federal Telephone Consumer Protection Act. That law has been frequently relied upon by Edelson and a number of other plaintiffs’ trial lawyers to slap businesses with class action lawsuits and extract relatively large paydays of their own.
However, as Edelson attempted to secure a Cook County judge’s approval of the settlement, Bandas and his associates filed objections to the settlement, which Edelson contended were groundless and meritless. After the judge tossed aside those objections and approved the settlement, Edelson alleged the Bandas objectors contacted the Chicago law firm, and requested a mediation session. At that session, Edelson alleged Bandas offered no recommendations or requests to improve the settlement, but instead merely offered to drop any attempt to drag the matter out further on appeal in exchange for $400,000 in fees.
Edelson purportedly ultimately agreed to pay $225,000.
However, Edelson then filed suit, accusing Bandas and other lawyers associated with him of similarly serially objecting to dozens of other class action settlements, merely to extract attorney fee payments. Others accused in the lawsuit included law firms Noonan Perillo & Thut, of Chicago, and the Darrell Palmer Law Offices, of Solana Beach, Calif. Individual defendants include lawyers Bandas, Darrell Palmer and C. Jeffery Thut.
In February 2018, however, Pallmeyer gutted the racketeering charges. While the judge agreed the allegations against Bandas and his associates held merit, Pallmeyer said she could not take the steps requested by Edelson, and declare “criminal” the activity over which Bandas and his associates stand accused.
Finding otherwise, she said at the time, would chill negotiations between parties involved in a lawsuit, as both sides would fear “lawful hard bargaining” or a bluff based on exaggerating one’s leverage could quickly become the target of a countersuit under RICO.
“… Parties to litigation, including objectors to class settlements, must have the freedom to negotiate and settle their disputes outside of court, and criminalizing a person's lack of candor regarding negotiating positions may compromise that freedom,” Pallmeyer wrote in her February decision.
In her July decision, Pallmeyer continued to hold that line. She further trimmed the case, rejecting Edelson’s attempts to argue the Bandas associates serial objections constituted an improper abuse of court process. She also agreed to dismiss Thut and a number of other “Doe” defendants, in large part at the request of the Edelson firm, to remove any Illinois defendants and defeat any procedural attempt by Bandas to use those Illinois defendants to remove the case from federal court to state court.
However, Judge Pallmeyer said at least one element of Edelson’s suit may be able to hold up under the law: Edelson’s accusations Bandas and Palmer practiced law in Illinois during the Gannett case’s resolution, when they were not authorized to do so.
In court filings, Edelson has asserted the accusations should carry particular weight, because Palmer is not even licensed to practice law in his home state, after California suspended his law license.
Should the evidence and arguments lead her conclude Bandas and Palmer had violated the Illinois Attorney Act by practicing law in Illinois without a state license, Pallmeyer noted it would prevent them from collecting any of the $225,000 in fees Edelson had agreed to pay them in mediation, and would bar them from bringing any other such objections in Illinois.
And at this point, she noted, neither Bandas nor Palmer are licensed to practice in Illinois.
“Bandas is licensed to practice only in Texas, and Palmer is not licensed to practice anywhere,” Pallmeyer wrote.
Pallmeyer noted federal courts have rarely taken up jurisdiction on this particular state law question. But she said there is nothing in the law or precedent preventing her from doing so.
However, she said, her decision does not fully address the question of whether Bandas and Palmer actually practiced law in Illinois.
“It may perhaps be important that the mediation session, for example, was conducted telephonically between individuals then-residing in Texas (Bandas), California (Edelson), and Florida (the mediator),” Judge Pallmeyer wrote. “Plaintiff has alleged that Bandas and Palmer covertly managed the Gannett litigation and drafted all of the pleadings for in-state figureheads … with the explicit purpose of evading the court’s jurisdiction. The court concludes only that these allegations are sufficient to state a plausible claim for the unauthorized practice of law.”
Bandas is represented in the action by attorneys with the firm of Freeborn & Peters LLP, of Chicago.
Noonan Perillo & Thut is represented by the firms of Gair Eberhard Nelson Dedinas Ltd., of Chicago, and Johnson & Bell Ltd., of Chicago.