N.J. firm argues for sanctions against accuser; Debt collector says RICO case should proceed

By John O'Brien | Apr 24, 2017

NEWARK, N.J. (Legal Newsline) – A New Jersey firm accused of a “Mafia-style” racketeering enterprise has asked a federal judge to punish the debt collection company that made those allegations.

On April 17, Marcus & Zelman filed a motion for sanctions against Jeffrey Winters and his company, Collection Solutions, claiming a racketeering lawsuit filed by them was done so only to destroy the firm’s reputation.

The firm’s argument backs what it already outlined in a March motion to dismiss – that the complaint and its inflammatory language was filed to generate news stories that would tarnish the public’s image of the three accused law firms.

But rather than simply dismiss the complaint, Marcus & Zelman feels the plaintiffs should be punished by U.S. District Court Judge John Michael Vazquez.

Had Plaintiffs’ counsel performed the bare minimum research prior to filing a spurious Complaint, recognizing it would damage Defendants’ reputation, he would have known that New Jersey’s litigation privilege outright bars Plaintiffs from bringing claims for fraud, negligence, and legal malpractice,” the brief supporting sanctions says.

The other firms named as defendants by Collection Solutions are Jones, Wolf & Kapasi and Law Offices of Laura S. Mann.

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.

On April 2, Collection Solutions responded to the firms’ motion to dismiss the lawsuit and their citation of a 2010 decision in Curtis & Associates v. Bushman.

“The RICO Enterprise alleged herein is not a dispute between Parties as in Curtis; it is an assault by criminals on the Courts, the Bar and numerous Fortune 500 or larger companies and entities, including utilities, law firms and department stores; with the collection agencies against which Defendants purport to be consumer champions, largely representing major entity creditors by assignment of purchase of receivables,” the response says.

“For example, as of the date of the initial filing of the Complaint… amongst the 563 federal class actions filed by Defendants, the Honorable Freda L. Wolfson has been burdened with 67 class actions…”

Marcus & Zelman says New Jersey federal courts have punished others for trying cases in the press and that it was dropped by national counsel in a local RICO matter because of the attention this case against it drew.

It also includes a request for Collection Solutions' attorney, David Hoffman, to be sanctioned, noting that a debt collector named Barry Sussman with a criminal history appears to be working as Hoffman's paralegal.

"Sussman is the type of debt collector that Marcus & Zelman protect consumers from," the firm wrote.

"In the ultimate bitter grapes, Sussman, working for Hoffman, has frivolously sought to sue consumer rights attorneys for RICO violations for filing class action lawsuits. Plaintiffs and their counsel must not be allowed to get away with and continue this behavior."

From Legal Newsline: Reach editor John O’Brien at jobrienwv@gmail.com.

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