CORPUS CHRISTI, Texas (Legal Newsline) – A Texas personal injury law firm accused of lying to clients about administrative fees has asked a federal court to throw out the case.
Herrman & Herrman says in a June 20 motion to dismiss that the former clients hoping to pursue a class action against the firm have failed in their attempt to state a racketeering claim. The lawsuit hopes to tie the firm and its members together as a conspiracy accused of violating the Racketeering Influenced and Corrupt Organizations Act.
The plaintiffs haven’t shown that acts alleged to be mail or wire fraud, like emails among the defendants, are strong enough to meet stringent civil RICO pleading standards, the motion says.
“Plaintiffs fail to identify with specificity, how each act of alleged wire fraud furthered the alleged fraudulent scheme regarding the $195 administrative fee,” the motion says.
“The emails and faxes Plaintiffs refer to are further evidence of contractual terms of the employment contract each plaintiff entered with H&H and are all actions taken during the ordinary course of business.”
The suit, filed April 14 in Corpus Christi federal court, says the firm has defrauded clients of more than $600,000 in the past three years. It did so by charging a $195 administrate fee to cover copies, postage, phone calls, scanned documents and faxes for pre-litigation clients, the suit says.
The firm pushes this pre-litigation fee on clients by telling them they have to pay “all expenses” if a lawsuit is filed – “The representation agreement leaves the client with the impression that the $195 ‘administrative fee’ is designed to save pre-litigation clients money,” the suit says.
One plaintiff says she paid $195, but the firm only spent $18.60 for her expenses and pocketed the rest. Another plaintiff says her expenses were only $7.55.
Assuming the same mark-up established by the three plaintiffs, lawyers estimate $632,537.10 in pocketed expenses money on 3,510 estimated clients. Mikell West and Robert Clore of the Bandas Law Firm are representing the plaintiffs.
Also at issue is the firm’s contracts with clients that allegedly prevent them from settling claims without H&H’s approval.
“Even if a client decides a proposed settlement is in his or her best interest, he or she cannot settle unless Herrman and his associates are satisfied with their contingency fees and give their approval,” the suit says.
None of this proves a racketeering scheme, the firm said in its motion to dismiss.
“Nothing about the alleged circumstances in which these communications occurred permit the Court to draw inference – much less a strong inference – that Defendants acted with the requisite fraudulent intent,” the motion says.
“Rather, the circumstances alleged permit an equal, if not greater Inference that the defendants’ conduct, in communicating with third party insurance companies as per terms of their contract entered into by the parties, was lawful.”