TRENTON, N.J. (Legal Newsline) - Attorneys accused of a “Mafia-style” racketeering scheme are fighting allegations they conspired to develop professional plaintiffs for the purpose of bringing class action lawsuits.
Law firms named in a New Jersey lawsuit filed by Collection Solutions in December have filed their own motions to dismiss. They are accused of manufacturing class actions under the Fair Debt Collection Practices Act for the purpose of winning attorneys fees.
The New Jersey law firms named as defendants are Jones, Wolf & Kapasi, Marcus & Zelman and the Law Offices of Laura S. Mann.
Marcus & Zelman says the lawsuit against it was brought to quiet those who have been harmed by the company’s debt protection practices and to shame the attorneys representing them in public.
“The Defendant attorneys’ sterling reputations have already been tarnished as the filing of the initial complaint already generated several news stories made available to the general public, the New Jersey legal community, and the greater national legal community,” attorneys for the firm wrote in its motions to dismiss, filed March 7.
The firm complained that Collection Solutions used the term “Mafia-style,” which "pounced upon" by news outlets "hungry for the latest legal scandal." A footnote mentions five articles, three of which used the term "Mafia" in the headline.
“The damage is done, but should not be allowed to continue,” the motion says.
The 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.”
Marcus & Zelman says the complaint fails to establish a relationship between it and the other defendants sufficient to sustain a racketeering claim.
The plaintiff also has not met the heightened scrutiny required for a fraud claim and can’t allege negligence and legal malpractice because it did not have an attorney-client relationship with Marcus & Zelman, the firm says.
Collection Solutions has until April 3 to respond to the motions to dismiss.
From Legal Newsline: Reach editor John O’Brien at firstname.lastname@example.org.