WASHINGTON (Legal Newsline) - The plaintiffs firm Keller Postman has previewed its argument for dismissal of a lawsuit against it that complains it files massive amounts of arbitration claims to hide frivolous ones.
Fox Broadcasting's Tubi unit sued the firm earlier this year, accusing it of filing thousands of fraudulent arbitration claims to extort a $71 million settlement. Keller Postman used Instagram ads, YouTube videos and other advertising to recruit nearly 24,000 clients who filed arbitration demands against Tubi for offering targeted ads based on their age, sex and other demographic data, Tubi said.
Keller Postman "gambles that a company will pay a global settlement with all claimants that allows Keller Postman to profit greatly, all to make the claims go away to avoid paying the arbitration fees." The firm is on the brink of a nine-figure score for representing Texas against Meta and recently sued a marketing firm over Camp Lejeune ads it says never happened.
Keller Postman responded July 31 in D.C. federal court with a four-page notice of intention to file a motion to dismiss. It says it can't be punished for pursuing its client's interests "on a matter fairly debatable in the law."
"Tubi's ad hominem attacks cannot overcome a dispositive fact, which Tubi must and did allege: all of Keller Postman's actions were to win recoveries in arbitration for its clients and then distribute the majority of such recoveries to its clients," the notice says.
Keller Postman has advised its thousands of clients to challenge the enforceability a 45-day delay it included in its arbitration clause. The sides are currently choosing an arbitrator who will decided whether its enforceable.
The firm’s alleged business strategy is to swamp companies with mass arbitration so they will pay a quick settlement instead of $2,000 or more per claimant in arbitration fees – in Tubi’s case, some $48 million.
Keller Postman boasts on its website that its clients “turn the arbitration game against the companies that harm them,” using “the latest technology to pursue thousands of arbitration claims all at once.”
Tubi accused Keller Postman of deliberately neglecting to collect basic information from its clients, however. A third of the claims have emails that don’t correspond to any Tubi customers, the company said, 11% never received streaming ads and many others claim they received service in states where Tubi doesn’t operate.
Tubi also accused Keller Postman of violating ethics rules by advising its clients to ignore a contractual requirement to provide basic information before filing arbitration claims.
Keller Postman, like most plaintiff firms, opposes arbitration in favor of class actions, which can provide more lucrative fees and involve less work for the lawyers who file them. A 2015 report by the Consumer Financial Protection Bureau, however, found that settled class actions between 2010 and 2013 delivered around $32 per consumer while the lawyers took in $425 million in fees. The much smaller number of arbitrations that went to a decision delivered an average of $5,389 per consumer. Class actions also took about twice as long to resolve as arbitrations, according to that study.
Some law firms turned to mass arbitration because of the clauses in many arbitration agreements – added to prevent courts from finding such agreements unconscionable – requiring companies to pay arbitration fees up front. Mass arbitration places stricter ethical requirements on plaintiff lawyers, however, since they represent thousands of individual clients each entitled to advice on their particular case and whether to accept or reject a settlement offer.
Tubi says Keller Postman has ignored those requirements, using the very targeted ad technology it accuses Tubi of abusing to recruit clients it then presents with take-it-or-leave-it settlement offers. The law firm has been sued several times by disgruntled clients as well as companies accusing it of abusing the arbitration process.
In this case, Tubi says, the threat of imposing hefty arbitration fees went away after JAMS, the leading arbitration service, changed its rules on May 1 to streamline mass arbitration. That change lowered the up-front fee in mass arbitration to $7,500, no matter how many claims are filed. Tubi still seeks money for tortious interference in its agreements with customers and legal fees.