WINTERS et al v. JONES et al
OPINION. Signed by Judge John Michael Vazquez on 1/8/18. (sr, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
Not for Publication
JEFFREY A. WINTERS, et al,
Civil Action No. 16-9020
JOSEPH K. JONES, et a!,
John Michael Vazguez, U.S.D.J.
This class action comes before the Court on three motions to dismiss Plaintiffs’ Amended
Complaint. The three groups of Defendants who have filed the motions are (1) Defendants
Joseph Jones, Benjamin Wolf, and Jones, Wolf & Kapasi LLC, D.E. 39; (2) Defendants Laura
Mann and the Law Offices of Laura S. Mann, D.E. 49; and (3) Defendants An Marcus, Yitzchak
Zelman, and Marcus & Zelman LLC, D.E. 50.
Plaintiffs Jeffrey Winters and Collection
Solutions, Inc. (“Plaintiffs”) filed a single brief in opposition, D.E. 56, to which all Defendants
replied, D.E. 58, 59, 60.’ The Court reviewed all the submissions in support and in opposition,
In this Opinion Joseph Jones, Benjamin Wolf, and Jones, Wolf& Kapasi LLC’s motion to
dismiss (D.E. 39) will be referred to as “Jones MTD.” Defendants Laura Mann and the Law
Offices of Laura S. Mann’s motion to dismiss (D.E. 49) will be referred to as “Mann MID.”
Defendants An Marcus, Yitzchak Zelman and Marcus & Zelman LLC’s motion to dismiss (D.E.
50) will be referred to as “Marcus MID.” Plaintiffs’ brief in opposition (D.E. 56) will be
referred to as “P1. Opp.” Joseph Jones, Benjamin Wolf, and Jones, Wolf& Kapasi LLC’s reply
brief (D.E. 57) will be referred to as “Jones Rep.” Defendants Laura Mann and the Law Offices
and considered the motion without oral argument pursuant to Fed. R. Civ. P. 78(b) and L. Civ. R.
78.1(b). For the reasons stated below, Defendants’ motions to dismiss are GRANTED. The
Amended Complaint suffers from defective legal theories, both substantively and as pled.
Moreover, Plaintiffs’ factual allegations are severely lacking in light of the federal pleading
A. Factual Background
Plaintiff Collection Solutions, Inc. is a New Jersey corporation that primarily provides
debt collection services. First Amended Complaint (“FAC”)
¶ 1. Plaintiff Jeffrey Winters is the
sole shareholder of Collection Solutions, Inc. Id. Defendants Joseph Jones and Benjamin Wolf
are attorneys who practice at the finn of Jones, Wolf & Kapasi, LLC. Id.
¶ 2. Defendant Laura
Mann is an attorney and the principal at the firm of Laura S. Mann, LLC. Id.
¶ 3. Defendants
An Marcus and Yitzchak Zelman are attorneys and the principals of the firm of Marcus &
Zelman, LLC. Id. ¶4.
Plaintiffs claim that “the particular actionable conduct perpetrated by Defendants against
was the class action litigation
Jtttiette Chctpct, et aif] v Charles I. Turner
Esq., and United Credit Specialists et al.,2 in the Federal District Court of New Jersey, Case No.
of Laura S. Mann’s reply brief (D.E. 58) will be referred to as “Mann Rep.” Defendants An
Marcus, Yitzchak Zelman and Marcus & Zelman LLC’s reply brief(D.E. 59) will be referred to
as “Marcus Rep.”
Plaintiff Collection Services, Inc. is operated under the trade name of United Credit Specialists.
Charles Turner is in-house counsel for both Collection Solutions, Inc. and United Credit
Specialists. FAC ¶ 1.
2:l5-cv-03 125.” (“Chapa Case”) Id.
i. Plaintiffs settled the Chapa Case for S 12,000 in
September 2016. Id. Plaintiffs allege that the Chapa Case is illustrative of Defendants’
enterprise pursuant to The Racketeer Influenced and Corrupt Organizations Act (“RICO”) of
joining together to bring sham class action lawsuits against debt collection agencies. Id.
Specifically, Plaintiffs allege that at some point prior to 2013, Defendants formed a RICO
avoided Small Claims Courts or unprofitable immediate payment
of nominal claims without attorney’s fees, by filing sham putative
class actions in Federal court en masse on theory that the vast
majority of the relatively deep-pocket defendants (mostly debt
collection companies) would view a quick settlement for under
$100,000 as basically a nuisance claim; with the rare contested
case only confinriing to victim defendants the practical advisability
of settling early on a class basis.
To perpetuate the alleged sham class actions, Defendants “search out, solicit, and develop
professional [p]laintiffs retained to pose as theoretical ‘least sophisticated consumers.” Id.
8(3). Defendants then, according to Plaintiffs, falsely impute “imaginary” false damages to
those professional plaintiffs. Id. To support these allegations, Plaintiffs point to five cases filed
on behalf of the same plaintiff (Marni Truglio), where An Marcus on behalf of Marcus &
Zelman LLC was co-counsel. Three of those cases were allegedly opened and then settled
within months of each other. Id.
While Plaintiffs word their FAC to suggest that Defendants collectively were involved in the
Chapa Case, neither Defendants Mann and the Law Office of Laura S. Mann or Defendants
Marcus, Zelman, and Marcus & Zelman LLC represented any party in that lawsuit. Mann MTD
at I; Marcus MTD at 4-5.
Plaintiffs further allege that Defendants knowingly bring the sham class actions in frill
awareness that actual damages and typicality do not exist. Plaintiffs support this allegation by
pointing to a lecture at a Federal Fair Debt Collection Practices Act (“FDCPA”) seminar on
October 8, 2013, where both Mann and Jones spoke. FAC
At the seminar, according to
Plaintiffs, Mann admitted that actual damages rarely occur and Jones stated that “you’ve got to
prove actual damages.” Id.
Tiuts, Plaintiffs assert that Defendants know that courts would not
certify these preliminary classes of plaintiffs if the litigation reached the certification stage. id.
Plaintiffs continue that Defendants are unconcerned over class deficiencies because Defendants
file these lawsuits only for the attorney’s fees. Id.
To that end, Defendants allegedly
maximize the number of cases they bring by not consolidating litigation efforts. Id.
Other relevant allegations from the FAC are discussed further below.
B. Procedural History
On December 5, 2016, Plaintiffs filed their initial Complaint. D.E. 1. Marcus, Zelman,
and Marcus & Zelman LLC filed a motion to dismiss. D.E. 19. Mann and the Law Offices of
Laura S. Mann also filed a motion to dismiss. D.E. 21. Plaintiffs, in response, filed the FAC on
February 6, 2017.
In their FAC, Plaintiffs allege seven counts: a federal RICO
violation (Count I); a federal RICO conspiracy (Count II); a New Jersey RICO violation (Count
III); a New Jersey RICO conspiracy (Count IV); fraud (Count V); negligence (Count VI); and
legal malpractice (Count VII).
In alleging a federal RICO violation, Plaintiffs claim that
Specifically, Plaintiffs claim that “Defendants filed separate lawsuits on behalf ofa single
alleged class representative against each of several defendant victims, instead of filing a single
lawsuit against the several defendant victims.” Plaintiffs add “Defendants filed separate lawsuits
on behalf of several alleged class representatives against a single defendant victim, instead of
filing a single lawsuit including the several alleged a class representatives against that single
defendant victim.” FAC ¶ 8(E)-(f).
Defendants committed several predicate acts, including wire fraud, obstruction ofjustice, witness
tampering, and extortion. As to the New Jersey RICO violation, Plaintiffs assert that Defendants
committed several other predicate acts, including theft by extortion, theft by deception, and
deceptive business practices.
The current motions followed. Plaintiffs also later submitted a letter asking the Court to
consider the case of Mctin St. at Wootwich, LLC v. Ammons Supermarket, Inc., 451 N.J. Super.
135 (App. Div. 2017).
Defendants Jones, Wolf, and Jones, Wolf & Kapasi LLC submitted a
letter refuting the relevance of Main St. at Wootwich, LLC and asking the Court to consider
Grubb v. Green Tree Servicing, LLC, No. Civ. No. 13-0742 1 (D.N.J. July 24, 2014).
Rule 12(b)(6) governs motions to dismiss for “failure to state a claim upon which relief
can be granted.” For a complaint to survive dismissal under the rule, it must contain sufficient
factual matter to state a claim that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Mt. Corp. v. Twombty, 550 U.S. 544, 570 (2007)). A claim is facially
plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. Although the plausibility
standard “does not impose a probability requirement, it does require a pleading to show more
than a sheer possibility that a defendant has acted unlawfully.” Connelly v. Lane Const. Corp.,
809 F.3d 780, 786 (3d Cir. 2016) (internal quotation marks and citations omitted). As a result, a
plaintiff must “allege sufficient facts to raise a reasonable expectation that discovery will
uncover proof of [his] claims.” id. at 789.
In evaluating the sufficiency of a complaint, district courts must separate the factual and
fowter v. UPMC Shadvside, 578 f.3d 203. 210-2 11 (3d Cir. 2009).
Restatements of the elements of a claim are legal conclusions, and therefore, not entitled to a
presumption of truth. Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011). The
Court, however, “must accept all of the complaint’s well-pleaded facts as true.” fowler, 578
F.3d at 210. In deciding a motion to dismiss the Court may also consider any “document integral
to or explicitly relied upon in the complaint.” Schmidt v. Skolas, 770 f.3d 241, 249 (3d Cir. 2014)
(citing In re Burlington Coat factoiy Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (quotation
& emphasis omitted)). Even if plausibly pled, however, a complaint will not withstand a motion
to dismiss if the facts alleged do not state “a legally cognizable cause of action.” Turner v. IF
Morgan Chase & Co., 2015 WL 12826480, at *2 (D.N.J. Jan. 23, 2015).
As noted, Plaintiffs allege that Defendants violated the federal RICO statute, 18 U.S.C.
1961 et sec]., and the New Jersey RICO statute, N.J.S.A. 2C:4 1-1 et seq. FAC
Plaintiffs assert that Defendants committed fraud, negligence, and legal malpractice through their
participation in the RICO scheme. Thus, the Court has federat question jurisdiction over the
federal RICO claim and stipplemental jurisdiction over the New Jersey RICO, fraud, negligence,
and legal malpractice claims.6
At the outset, the Court notes that Defendants Mann and the Law Offices of Laura S. Mann as
well as Defendants Marcus, Zelman, and Marcus & Zelman LLC argue that Plaintiffs lack
standing to assert the relevant RICO claims because they were not involved in the Chapa Case.
Mann MTD at 5; Marcus MTD at 45. The Court, however, does not reach the standing
arguments because it dismisses the FAC on the other grounds.
Plaintiffs’ New Jersey RICO, fraud. negligence, and legal malpractice claims are brought
pursuant to the Court’s supplemental jurisdiction, 2$ U.S.C. § 1367. These claims are
Plaintiffs claim that Defendants’ RICO liability stems from their filing of class actions
pursuant to the FDCPA. In 1977, Congress enacted the FDCPA to “eliminate abusive debt
collection practices by debt collectors.” Kavmark v. Bank of Am., NA., 783 F.3d 16$, 174 (3d
Cir. 2015), cert. denied sub nom. Udren Law Offices, P.C. v. Kavmark, 136 S. Ct. 794 (2016)
(quoting 15 U.S.C.
§ 1962(e)). Pursuant to the FDCPA, a successful plaintiff is entitled to actual
damages, costs, attorney’s fees, and statutory damages. Jerman v. C’arlisle, McNetlie, Rini,
LPA, 559 U.S. 573, 578, 584 (2010). The Jerman Court noted that the FDCPA
is one of several federal laws “that Congress has enacted to protect consumers” and that:
[a] collateral effect of these statutes may be to create incentives to
file lawsuits even where no actual harm has occttrred. This
happens when the plaintiff can recover statutoly damages for the
violation and his or her attorney will receive fees if the suit is
successful, no matter how slight the injury. A favorable verdict
after trial is not necessarily the goal; often the plaintiff will be just
as happy with a settlement, as will his or her attorney (who will
receive fees regardless). The defendant, meanwhile, may conclude
a qttick settlement is preferable to the costs of discovery and a
protracted trial. And if the suit attains class-action status, the
financial stakes rise in magnitude.
Id. at 616 (emphases added).
Coctrts have observed that in FDCPA cases, class action litigation is preferable because
“in light of the limited quantum of damages available on any class member’s claim,
individualized prosecution by the class members would be inefficient and is therefore unlikely.”
Stair ex rel. Smith v Thomas & Cook. 254 F.R.D. 191, 201 (D.N.J. 200$) (citation omitted);
Little-King v. HaytHayt & Landau, 2013 WL 4874349*7 (D.N.J. Sept. 10, 2013) (noting that
sufficiently related to the federal law claims set forth in Plaintiffs’ Amended Complaint that they
form part of the same case or controversy. De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 30$
(3d Cir. 2003), as amended (Nov. 14, 2003).
“the expense of individual actions in this FDCPA action, weighed against the potential recovery,
would likely be inefficient and cost prohibitive”).
factual Allegations of the FAC
The Court finds that the FAC fails to plead plausible factual allegations against
Defendants. The FAC is riddled with factually tinsupported accusations and wholly conclusoiy
language. Besides inflammatory language and conclusory allegations (most notably “sham”
litigation), Plaintiffs offer by way of “proof’ little more than print-outs from PACER i-eflecting
cases that Defendants worked on. FAC, Ex. B & C. Plaintiffs claim that the following actions
show a fraud of epic proportions: (1) filing a large number of cases, (2) settling a “majority” of
those cases “relatively quickly”; (3) acting as co-counsel in several cases; (4) Jones and Mann
conducting a legal seminar on the FDCPA; and (5) in two cases, Abranzov and franco,
Defendants using the same general format of pleadings and the same general theory of the case.
¶f 8(A)-(B), 9. None of these facts, individually or collectively, reflect any improper
conduct nor can any reasonable inference of wrongdoing be drawn therefrom.
Indeed, as noted above, many federal courts have observed that FDCPA cases generally
involve nominal damages for any individual plaintiff and also settle quickly to avoid the expense
of litigation. Litigators file lawsuits, but Plaintiffs argue that if the lawyers file a “large” number
of cases (whatever subjective, ambiguous number that may be), there is evidence of wrongdoing.
The allegation is absurd on its face, as are claims that attorneys working together, conducting
seminars together, or settling cases quickly reflects some type of impropriety. Plaintiffs suggest
that when two firns use the same form of pleading, they are engaged in wrongdoing. The
suggestion is preposterous. Frankly, the Court is unaware of any litigator who does not use a
prior pleading (whether her own or another’s) at least as a model when drafting a new complaint.
Suffice it to say, Plaintiffs present no legal authority for the negative inferences they wish to
draw from these otherwise benign facts. If Plaintiffs believe that Defendants are conducting
some nefarious scheme, then Plaintiffs will have to conduct much more due diligence to
plausibly plead their claims rather than relying on PACER print-outs, a legal seminar, and other
all of which is benign on the surface (if not common practice).
Plaintiffs do point out that Marcus & Zelman LLC used the same plaintiff, Tmglio, in
five suits over a relatively short period of time. FAC
¶ 8(B), Ex. C. Jones, Wolf& Kapasi LLC,
according to Plaintiffs, also represented Tniglio as a client in one suit. Id. This allegation is as
close as Plaintiffs come to plausibly pleading suspect activity. However, standing alone, it is not
enough to raise the allegations from possible to plausible. In short, Plaintiffs have made no
plausible allegation that Tniglio was not a proper plaintiff in any of the six suits. As Defendants
note, three of the cases involving Tniglio were FDCPA cases, of which two settled and one was
certified as a class. Marcus MTD at 3 1-34.
In addition, Plaintiffs repeatedly allege that Defendants brought cases in which there was
an “almost universal absence of actual damages.” Id.
¶ 8(C). At the outset, apart from
conclusoiy claims that there were no actual damages, Plaintiffs fail to plausibly plead (i.e., set
forth actual factual allegations supporting their position) that Defendants’ clients did not suffer
actual damages. Putting aside this pleading deficiency, Plaintiffs rely on Spokeo, Inc. v. Robins,
136 S.Ct 1540 (2016) for the proposition that a FDCPA plaintiff must have suffered actual
The Court finds Plaintiffs’ Spokeo argument to be unpersuasive for a number of reasons.
To begin, Spokeo was not decided until 2016, while most of the alleged conduct occurred well
prior to the Spokeo decision. Moreover, the Spokeo Court did not find that a plaintiff must incur
actual damages to bring a claim. In Spokeo, the Court addressed whether a plaintiff had
sufficiently alleged an injury-in-fact7 to have standing ttnder the federal Credit Reporting Act of
1970 (“fCRA”). Spokeo, Inc., 136 S.Ct at 1544. The district court had ruled that the Spokeo
plaintiff did not have standing under the FCRA. The Ninth Circuit reversed, finding that the
plaintiff had standing because he had suffered a statutory violation of his rights and because he
had an individualized, rather than collective, interest in the handling of his credit information.
Id. at 1546. The United States Supreme Court remanded the case to the Circuit, finding that, in
assessing the plaintiff’s injury-in-fact, the Circuit had only analyzed whether the alleged injury
was particularized but had failed to also analyze whether the injury was concrete. Id. at 154$.
Thus, the Court in Spokeo analyzed standing under the FCRA, not FDCPA. Id. Moreover, even
in addressing standing under the FCRA. the Spokeo Court did not find that actual damages are
prerequisite in all cases for a plaintiff to have standing.
further, the FDCPA expressly permits statutory damages. Jerman, 559 U.S. at 578. And
courts addressing damages under the FDCPA after Spokeo have found that statutory damages are
sufficient for standing under the FDCPA. See In re Horizon Hectlthcare Servs. Inc. Data Breach
Litig., $46 F.3d 625, 637 (3d Cir. 2017) (finding that “although it is possible to read the Supreme
Court’s decision in Spokeo as creating a requirement that a plaintiff show a statutory violation
The plaintiff in Spokeo brought a class action against Spokeo, Inc., a consumer reporting
agency, after learning that the agency’s “people search engine” had generated inaccurate
information about the plaintiff. Spokeo, Inc., 136 S.Ct at 1545.
has caused a ‘material risk of hanu’ before he can bring suit, we do not believe that the Court so
intended to change the traditional standard for the establishment of standing”) (internal footnote
and citation omitted); Hartman v. Medicredit, Inc., 2016 WL 7669858, at *3 (W.D. Pa. Dec. 20,
2016), report and recommendation adopted, 2017 WL 90383 (W.D. Pa. Jan. 10, 2017) (ruling
that the plaintiff had standing because a violation of substantive FDCPA right was a concrete and
particularized injury, as required under Spokeo); Danbert v.
Gip., LLC, 2016 WL 4245560,
at *4 (M.D. Pa. Aug. 11, 2016) (indicating that plaintiff’s allegation of a FDCPA violation
presented a concrete and particularized injury following Spokeo). Thus, Plaintiffs’ allegation
that Defendants brought numerous FDCPA lawsuits lacking actual damages, one of the pillars of
Plaintiffs RICO liability theory, crumbles from lack of factual and legal support.
Plaintiffs’ further claim that their “actionable” matter, the Chapa Case, is illustrative of
Defendants’ RICO enterprise. FAC
17. However, in the Chapa Case, Plaintiffs (who were the
defendants) settled quickly.8 Plaintiffs did not move to dismiss the complaint nor did they seek
Rule 11 sanctions. Instead, Plaintiffs settled the case for $12,000, payable in monthly payments.
After filing this lawsuit, Plaintiffs stopped making the monthly settlement payments.9 However,
In the FAC, Plaintiffs state that they settled the Chapa Case before filing counterclaims or
completing discovery. FAC ¶ 1. The FAC’s wording suggests that the case settled with
insufficient time for discovery. However, the docket entries for the Chapa Case show that
Plaintiffs, who were the Chapa defendants, were the party who delayed discovery. Not only did
the Chapa plaintiffs move to compel discovery but Judge Mannion also ordered Chapa
defendants to show cause why monetary and reprimand sanctions should not issue for their
failure to respond to discovery requests and failure to comply with the Court’s discovery orders.
Chapa v. Thrnei Esq., et al, Civil Action No. 15-3 125, Motion to Compel by Juliette Chapa
(D.E. 16) & Order to Show Cause (D.E. 22).
The Court is unaware of a legal basis that allows Plaintiffs to properly stop making payments
under the terms of a voluntary settlement agreement. The action appears to be a transparent
attempt to bolster Plaintiffs’ current case.
that cessation does not support Plaintiffs’ theory that the Chapa Case is illustrative of
Defendants’ RICO enterprise.
Plaintiffs also rely heavily on Gal/ego
Northland Grp., Inc., 102 F. Supp. 3d 506
(S.D.N.Y. 2015), affd in part, vacated in part, remanded, 814 F.3d 123 (2d Cir. 2016), for
Jones, Wolf, and Jones, Wolf& Kapasi were counsel for plaintiffs in this
matter. Galtego, 102 F. Supp. 3d at 50$. In Gallego, the parties filed a joint motion to certify a
class in anticipation of a settlement. The district court denied the motion pursuant to her
discretion. Id. at 5 10-11. However, the district court did not find fraud or sham litigation.
Moreover, on appeal, the Second Circuit also did not discuss, much less find, fraud or sham
litigation. Instead, the Circuit found that even though both of the plaintiff’s FDCPA theories
lacked merit, they were not so obviously frivolous as to fail to raise a colorable federal question.
Gal/ego v North/and Grp. Inc., 814 F.3d 123, 128—30 (2d Cir. 2016). As to Jones Defendants’
role in bringing the case, the Circuit stated that “innovative lawyers should not be deterred from
advancing legal theories that neither we nor the Supreme Court have authoritatively rejected by
the risk of having their claims branded ‘frivolous’ simply on the basis of non-binding adverse
authority.” Id. Thus, Gallego is not illustrative of, nor does it support, Plaintiffs’ claims of
Defendants’ sham litigation RICO scheme.
The FAC only contains misleading interpretations of the cases it cites as well as factual
allegations that are not plausibly pled. As a consequence, the FAC must be dismissed. However,
the Court will also address the deficiencies in the legal theories underlying the counts in the
Legal Theories of the FAC
A. federal and New Jersey RICO Law
Turning to Plaintiffs’ RICO claims, Plaintiffs allege violations of the federal and state
RICO statutes in Counts One through Four. In Count One, Plaintiffs allege a substantive
violation of the federal RICO statute. 18 U.S.C.
1962, while Count Two cites a RICO
10-18. Section 1962(c) “makes it unlawful ‘for any person employed by or
associated with any enterprise engaged in, or the activities of which affect, interstate or foreign
commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s
affairs through a pattern of racketeering activity.” In re his. Brokerage Antitrust Litig., 618 F. 3d
300, 362 (3d Cir. 2010) (quoting 18 U.S.C.
1962(c)). Section 1962(d), in turn, makes it illegal
to conspire to violate section 1962(c). To plead a plausible claim under section 1962 a plaintiff
“must allege (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.”
hi re Ins. Brokerage Antitrust Litig., 618 F.3d at 362 (quoting Lion v. Bank of Am., 361 f.3d 217,
223 (3d Cir. 2004) (citation omitted)).
In Cottnts Three and Four, Plaintiffs allege violations of New Jersey’s RICO statute,
N.J.S.A. 2C:41-2(c). Like its federal counterpart, the New Jersey RICO Act makes it “unlawful
for any person employed by or associated with any enterprise engaged in or activities of which
affect trade or commerce to conduct or participate, directly or indirectly, in the conduct of the
enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.”
Bait, 141 N.J. 142, 155 (1995). N.J.S.A. 2C:41-2(d) makes it illegal to conspire to
violate section 2C:41-2(c). Id. Thus, both the federal and New Jersey RICO statutes require a
plaintiff to show that defendants were part of (1) an enterprise and (2) through that enterprise
engaged in a pattern of racketeering activity.
Before analyzing the substantive counts, the Court wilt first review two doctrines, the
Noerr-Pennington doctrine and the New Jersey Litigation Privilege. Both doctrines potentially
preclude the present matter without necessitating a substantive legal review of the claims. The
doctrines are potentially applicable because Plaintiffs base their allegations on Defendants’ filing
The Noerr-Pennington Doctrine
The Noerr-Penington doctrine protects the F irst Amendment right to petition the
Government for a redress of grievances. United l’Iine Workers ofAm. v Pennington, 381 U.S.
657, 670 (1965); E. R. R. Presidents Conference v. Noerr Motor freight, Inc., 365 U.S. 127, 135
(1961). Pursuant to the doctrine, “those who petition any department of the government for
redress are generally immune from statutory liability for their petitioning conduct.” Giles v.
Phelan, Hal/man & Schmieg, L.L.P, 2013 WI 2444036, at *5 (D.N.J. June 4, 2013). The
protected rights include “litigation: ‘the right to petition extends to all departments of the
Government. The right of access to the courts is indeed but one aspect of the right of petition.”
Id. (quoting C’al. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 510 (1972)).
The Noerr-Pennington doctrine has one exception, for sham litigation. To find sham
litigation, the United States Supreme Court requires a two-prong test to be met:
[f]irst, the lawsuit must be objectively baseless in the sense that no
reasonable litigant could realistically expect success on the merits;
second, the litigant’s subjective motivation must conceal[ ] an
attempt to interfere directly with the business relationships of a
through the use [of] the governmental process—as
opposed to the outcome of that process—as an anticompetitive
Giles, 2013 WL 2444036, at *6 (quoting ProfiReat Estate Inv’rs, Inc.
hithus., Inc., 508 U.S. 49, 60-61 (1993)) (internal quotations omitted).
Here, as discussed, Plaintiffs’ claims spring from lawsuits that Defendants filed with the
courts. Thus, Defendants’ actions fall within the
doctrine’s protections, unless
the sham litigation exception applies. It does not. While Plaintiffs use conclusory language to
accuse Defendants of bringing sham lawsuits, they do not provide plausible factual support for
this assertion. As discussed above, Plaintiffs’ factual allegations are woefully deficient.
The New Jersey Litigation Privilege
Although the Court finds independent bases (discussed below) to dismiss the state claims,
the New Jersey Litigation Privilege (“NJLP”) also appears to act as a bar. The NJLP “shields
‘any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other
participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some
connection or logical relation to the action.” Loigman
Twp. Comm. of Twp. ofMiddletown,
185 N.J. 566, 585 (2006) (quoting Hawkins v. Harris, 141 N.J. 207, 216 (1995)). New Jersey
courts have long recognized that the NJLP provides immunity for defamation actions. Fenning
S. G. Holding Corp., 47 N.J. Super. 110, 117 (App. Div. 1957) (holding that the NJLP “is
responsive to the supervening public policy that persons in such circumstances be permitted to
speak and write freely without the restraint of fear of an ensuing defamation action, this sense of
freedom being indispensable to the due administration ofjustice”). Since that time New Jersey
courts have liberally extended the NJLP to protect “attorneys not only from defamation actions,
but also from a host of other tort-related claims.”
185 N.J. at 583. In fact, as the New
Jersey Supreme noted, state litigation privileges have been applied to a “spectrum of legal
theories,” including “negligence, breach of confidentiality, abuse of process, intentional infliction
of emotional distress, negligent infliction of emotional distress, invasion of privacy, civil
conspiracy, interference with contractual or advantageous business relations, [and] fraud.” Id.
(quoting T. Leigh Anenson,
ABSOLUTE IMMUNITY FROM
LIABILITY: LESSONS FOR LITIGATION
LAWYERS, 31 PEP?. L.REV. 915, 927-28 (2004)).
While the NJLP is extensive, it is not absolute. Under the NJLP, a litigant remains liable
for malicious prosecution as well as for professional discipline resulting from unethical condtict.
Nagel, 358 N.J. Super. 254, 266 (App. Div. 2003). Further, while the NJLP
shields some abuse of process cases, it does not shield all such cases. Id. Thus, remedies exist
for a plaintiff to allege actionable abuse of the judicial system. However, here, Plaintiffs did not
attempt to use these remedies. Further, in response to Defendants asserting NJLP immunity,
Plaintiffs essentially only argue that they did not allege defamation against Defendants. P1. Opp.
at 19. Plaintiffs’ response, therefore, ignores that the New Jersey courts have extended the
NJLP to a variety of tort claims beyond defamation. In sum, Defendants have made an appealing
argument that the FAC’s counts based on New Jersey law are baiTed by the NJLP. Plaintiffs’
response fails to adeqtiately respond to these arguments.
3. RICO Predicate Acts
Defendants make numerous arguments concerning the FAC’s failure to plausibly plead
both a “person” and “enterprise” as required by RICO. The Court, however, does not reach those
contentions because the alleged predicate acts are deficient. The RICO element of a pattern of
racketeering activity “requires at least two acts of racketeering activity within a ten year period.”
In reIns. Brokerage Antitrust Litig., 618 F.3d at 363. The required acts are also called predicate
acts. Here, Plaintiffs allege that Defendants committed the following federal predicate acts: wire
fraud, obstruction ofjustice, witness tampering, and extortion. As to the New Jersey RICO
statute, Plaintiffs allege the following predicate acts: theft by extortion, theft by deception, and
deceptive business practices. Plaintiffs’ theories on Defendants committing each of these
predicate acts are untenable.
As to wire fraud, 1$ U.S.C.
1343, Plaintiffs allege that “[t]he wirings consist of the
filings in Federal Court via the Internet, i.e. through the ECF system, which are interstate wirings
in furtherance of and assistance to the execution of the fraudulent scheme.” FAC
support this allegation Plaintiffs point to attached PACER filings, which they claim illustrate that
Defendants “filed numerous documents in Federal District Court(s) in implementing the RICO
An offense of “wire fraud has two essential elements: ‘(1) a scheme to defraud, and (2) a
wire in furtherance of that scheme.” Katti v Christie, 2017 WL 2953680, at *29 (D.N.J. June
30, 2017) (quoting Annitili
Panikkar, 200 F.3d 189, 200 n.9 (3d Cir. 1999)). To plausibly
allege wire fraud, or any other type of fraud, a plaintiff must also satisfy the heightened pleading
standard of Federal Rule of Civil Procedure 9(b). Federal Rule of Civil Procedure 9(b) states, in
part, that “[i]n alleging fraud or mistake, a party must state with particularity the circumstances
constituting fraud or mistake.” Accordingly, in a fraud claim, Rule 9(b)’s heightened pleading
standard “requires a plaintiff to plead the ‘who, what, when, where, and how’ of the conduct
giving rise to the claim.” Kowct/skv v. Deutsche BankNat’l Tr Co., 2015 WL 5770523, at *8
(D.N.J. Sept. 30, 2015). “The purpose of Rule 9(b) is ‘to provide defendants with notice of the
precise misconduct that is alleged and to protect defendants’ reputations by safeguarding them
against spurious allegations of immoral and fraudulent behavior.” Kowalsky, 2015 WL
(quoting Nctporano Iron & Metal Co. v. Am. Crane Corp., 79 F. Supp. 2d 494,
511 (D.N.J. 2000)). “Plaintiff need not always identify the particular time and place of the
misrepresentation, however, so long as the complaint contains some ‘alternative means of
injecting precision and some meastire of substantiation into [the] allegations of fraud.” Peters v.
Cottntrvwide Home Loans, Inc., 2016 WL 2869059, at *3 (D.N.J. May 17, 2016) (quoting Seville
Inthts. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir. 1984), cert. denied,
469 U.S. 1211 (1985)).
Here, Plaintiffs have done little more than point the Court to PACER filings and assert in
a conclusory fashion that these filings evidence fraud. Plaintiffs have failed to analyze any of
Defendants’ filings to plausibly plead which were allegedly fraudulent and why they were so.
Yet, even if Plaintiffs were able to plausibly set forth factual allegations, the underlying theory of
wire fraud would not find legal support.
Numerous courts have rejected the theory that the filing of complaints, along with other
litigation activity, can be the basis of wire or mail fraud. Curtis & Assocs., PC. v. Law Offices of
Davidli Bushman, Esq., 758 F. Supp. 2d 153, 171 (E.D.N.Y. 2010), affd sub nom. Curtis v.
Law Offices ofDavid M. Bushman, Esq., 443 F. App’x 582 (2d Cir. 2011); see Meade v. Guai:
Bank, No. l:12-CV-1559, 2013 WL 5438750, at *10 (M.D. Pa. Sept. 27, 2013) (holding “that the
filing of court documents alone does not constitute mail fraud for reasons of public policy”);
D’Orange v. feele, 877 F. Supp. 152, 156 (S.D.N.Y. 1995) (agreeing with defendants that
litigation documents “cannot be considered predicate acts because they constitute legitimate
conduct of attorneys acting on behalf of a client in the course of pending litigation”); Spiegel v.
Cont’l Illinois Nat. Bank, 609 F. Supp. 1083, 1089 (N.D. Ill. 1985), affd, 790 F.2d 63$ (7th Cir.
1986) (holding that “Congress could not have intended that the mail fraud statute sweep up
correspondence between attorneys, dealing at arm’s length on behalf of their parties, concerning
an issue in pending litigation”). The courts have applied this prohibition to litigation that was
either frivolous or without merit. Courts have expressly found that, as a matter of law, litigation
activities cannot be the basis of a wire fraud claim under the RICO statute. Kashelkar v. Rabin &
Rothrnan, 97 F. Supp. 2d 383, 392—93 (S.D.N.Y. 2000), affd sub norn. Kashelkar v. Ruben &
Rothman, 1 F. App’x 7 (2d Cir. 2001) (finding that the complaint “constituted nothing more than
the legitimate conduct of attorneys representing their clients in pending litigation” and that this
“Court has soundly rejected the contention that such conduct by attorneys can constitute mail or
wire fraud”). Instead, courts have found that when faced with a court filing that is believed to be
frivolous or without merit, a party has remedies in the form of an action malicious prosecution or
abuse of process. Curtis & Assocs., P.C., 758 F. Supp. 2d at 171 (citations omitted). Of course,
Rule 11 sanctions are also available.
The district court in Curtis, also found that United States
Lisen, 974 F.2d 246 (2d
Cir. 1992), was inapposite. Here, too, Eisen does not provide Plaintiffs relief. As the Curtis court
noted, the Second Circuit in Eiseii never addressed whether litigation activities alone can
constitute RICO predicate acts of mail and wire fraud. Id. Further, the court in Cu rtis
highlighted that the facts in Fisen reflected attorneys going far beyond their role as legal
representatives in perpetuating their fraud scheme. Id. Specifically, in Eisen, the Second CirctLit
noted that the:
evidence at trial established that the defendants conducted the
affairs of the Eisen law firm through a pattern of mail fraud and
witness bribery by pursuing counterfeit claims and using false
[that] [t]he methods by
witnesses in personal injury trials, and
which the frauds were accomplished included pressuring accident
witnesses to testify falsely, paying individuals to testify falsely that
they had witnessed accidents, paying unfavorable witnesses not to
testify, and creating false photographs, documents, and physical
evidence of accidents for use before and during trial.
974 F.2d 246, 251 (2d Cir. 1992).
Just as the facts in Elsen differed significantly from the facts in Curtis, they are also in no
way analogous to the facts in this matter. Plaintiffs, here, have not plausibly alleged any facts
that Defendants paid witnesses to testify falsely, paid unfavorable witnesses to not testify, or
created false evidence for use their cases.
Plaintiffs further allege that Defendants obstnicted justice in violation of 1$ U.S.C.
1503 as a predicate act. The FAC sets forth one paragraph to support this claim. FAC
¶ 27. In
the first sentence, Plaintiffs state that Defendants obstructed justice “by virtue of using corrupt
plaintiffs to file lawsuits in Federal Court primarily for the purpose of securing settlements
inuring primarily for the benefit of Defendants.” Id. In the second sentence, Plaintiffs recite the
elements of an obstruction ofjustice claim and perfunctorily state that Defendants’ actions fit
these elements. These two sentences are merely conclusoiy and wholly insufficient to plead a
plausible obstruction ofjustice claim.
Just as cursorily, Plaintiffs then assert that Defendants committed the additional predicate
act of witness tampering in violation of 1$ U.S.C.
one sentence to support their claim. FAC
§ 1512(b)(1) and (b)(2). The FAC provides
¶ 2$. Plaintiffs assert that Defendants committed
witness tampering “by corruptly persuading professional plaintiffs with intent to influence their
testimony in an official proceeding and without testimony in an official proceeding.” FAC
The witness tampering claim is again completely conclusoiy and devoid of the necessary
plausible factual allegations.
Finally, Plaintiffs allege that Defendants committed the predicate act of extortion in
violation of 1$ U.S.C.
§ 1951. Specifically, Plaintiffs claim “that each Defendant obtained and
sought to obtain property from Plaintiffs, i.e. settlements of lawsuits, and conspired to do so,
with Plaintiffs’ consent, induced by the wrongful use of fear of economic harm if such cases
were not settled.” FAC
¶ 29. Here. once again, Plaintiffs offer the Court a single conclusory
sentence to plead liability. Again, the pleading is not plausible. Moreover, several circuits have
found that even meritless litigation does not constitute extortion under Section 1951. See Deck v.
Engineered Lamincttes, 349 F.3d 1253, 125$ (10th Cir. 2003) (finding that “extortion is the
antithesis of litigation as a means of resolving disputes.
recognizing abusive litigation as a
form of extortion would subject almost any unsuccessful lawsuit to a colorable extortion (and
often a RICO) claim (emphasis added)); United States v. Fendergraft, 297 F.3d 119$, 120$ (11th
Cir. 2002) (holding that Defendants’ “threat to file litigation against Marion County, even if
made in bad faith and supported by false affidavits” is not extortion as a matter of law). Thus,
Plaintiffs have not pled a plausible claim of extortion and have not provided any authority
demonstrating that it is a viable legal theory even if plausibly pled..
Turning to the predicate acts under New Jersey RICO statute, Plaintiffs allege three
predicate acts in one paragraph, listing each in bullet point format. FAC
J 35. Plaintiffs first
allege that Defendants committed theft by extortion in violation of N.J.S.A. 2C:20-5. Plaintiffs
support this allegation in one sentence. Stating that “Defendant attorneys purposefully and
unlawfully seek to extort statutory and class action attorney’s fees by filing bogus and sham class
actions subjecting victims to impairment of their credit or business reputation or imposing costs
of litigation exceeding the extortion amount.” FAC
This conclusory allegation is not
2C:20-5 provides that “[a] person is guilty of theft by extortion if
he purposely and unlawfully obtains property of another by extortion.” Under the statute there
are seven provisions (a-g) that list ways a person may commit extortion. Plaintiffs, however, do
not specify which provision(s) they believe Defendants are liable under. Further, no provision
appears to apply to Defendants’ alleged misconduct. The Court, therefore, is at a loss as to how
Plaintiffs’ believe the facts of this case fit within the theft by extortion statute. It will not
speculate. Plaintiffs have not provided sufficient facts to plausibly plead theft by extortion and
the legal theory is suspect at best.
Plaintiffs next claim that Defendants committed the predicate act of theft by deception in
violation of N.J.S.A. 2C:20-4. To support this allegation, Plaintiffs assert that “Defendant
attorneys purposefully and unlawfully represented to the Court and Counsel that they are
pursuing putative class actions in good faith when in fact the basic and sole motivation was
prospective class action attorney’s fees.” FAC
Pursuant to N.J.S.A. 2C:20-4 “[a] person is
guilty of theft if he purposely obtains property of another by deception.” State v. Diorio, 216
N.J. 598, 616 (2014). Under the statute, a person may deceive another in three ways, although
the FAC fails to indicate which theory it is asserting. Again, the Court will not speculate.
Suffice it say, the conclusory allegations are not plausibly pled. The Court further notes that to
the extent Plaintiffs are asserting a theory that requires reliance, the FAC appears to allege the
Plaintiffs in no way relied on the complaint in the Chapa Case when they decided to
finally, Plaintiffs allege that Defendants committed the predicate act of deceptive
business practices in violation of N.J.S.A. 2C:21-7(b) and (e). The FAC fails once again to
plausibly plead facts to support this predicate act. FAC
¶ 35. A person is liable under N.J.S.A.
2C:21-7(b) if in the course of business he or she “[s]ells, offers or exposes for sale, or delivers
less than the represented quantity of any commodity or service.” further, a person is liable under
N.J.S.A. 2C:21-7(e) if in the course of business he or she “makes a false or misleading statement
in any advertisement addressed to the public or to a substantial segment thereof for the purpose
of promoting the purchase or sale of property or services.” These statutory provisions do not
relate to the Plaintiffs’ allegations. Plaintiffs do not accuse Defendants of selling any
commodities. Plaintiffs are not clients of Defendants who could argue that received improper
legal services. Similarly, the FAC utterly fails to tie any of Defendants’ advertisements to any
alleged impropriety. Thus, the FAC fails to plausibly allege deceptive business practices.
for the foregoing reasons, the alleged predicate acts in both the federal and state RICO
claims are deficient. Thus, given that the substantive RICO counts in the FAC are dismissed, the
conspiracy counts must be as well. See, e.g., Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153,
1191 (3d Cir. 1993) (holding that “[a]ny claim under section 1962(d) based on a conspiracy to
violate the other subsections of section 1962 necessarily must fail if the substantive claims are
themselves deficient”). Therefore, the Court also dismisses Counts II and IV.
In addition to their RICO claims, Plaintiffs in Count five allege that Defendants
committed fraud when they filed their class action lawsuits with the courts. FAC
discussed above, the Court finds that the New Jersey Litigation Privilege immunize Defendants
from liability for fraud, as well as negligence and legal malpractice discussed below, because
Plaintiffs’ allegation stems from Defendants’ filings with the courts. Plaintiffs have also not met
the heightened pleading requirements of Federal Rule of Civil Procedure 9(b) to assert a fraud
claim. The common law elements of fraud are: “(1) a material misrepresentation of a presently
existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that
the other person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting
damages.” Froft Cleaning & Innovative Bldg. Servs., Inc. v. Kennedy funding, Inc., 245 F.
App’x 161, 166 (3d Cir. 2007) (citing Gennaui v. Weichert Co. Realtors, 14$ N.J. 582, 610
(1997)). Plaintiffs have failed to argue with particularity what specific misrepresentations
Defendants made that Plaintiffs relied upon to their detriment. To the contrary, Plaintiffs appear
to claim that they did not rely on anything posited by Defendants. The FAC does not plausibly
In Count Six Plaintiffs claim the Defendants’ actions in bringing the class action lawsuits
constituted negligence. Plaintiffs state that Defendants “implementation of the RICO Plan
constituted negligence which damaged the class of plaintiff victims economically, personally,
physically, and psychologically.” FAC
A plaintiff asserting a claim of negligence has
the burden of proving that three essential elements exist: “(1) a duty of care owed by defendant
to plaintiff; (2) a breach of that duty by defendant; and (3) an injttry to plaintiff proximately
caused by defendant’s breach.” Endre v.
Arnold, 300 N.J. Super. 136, 142 (App. Div. 1997)
(citation omitted). Whether a duty of care exists is a question of law for the court to decide. Id.
Besides not plausibly pleading facts to support negligence, Plaintiffs completely fail to allege
what duty of care was owed to them by Defendants. The negligence count is dismissed.
6. Legal Malpractice
In the FAC’s final Count, Count Seven, Plaintiffs allege that Defendants committed legal
malpractice. FAC ¶J 44-45. Legal malpractice is negligence relating to an attorney’s
representation of a client. Sommers v. McKinney, 287 N.J. Super. 1, 9—10 (App. Div. 1996). It is
the client’s, or plaintiff’s, burden to prove “1) the existence of an attorney-client relationship
creating a duty of care upon the attorney; 2) that the attorney breached the duty owed; 3) that the
breach was the proximate cause of any damages sustained; and 4) that actual damages were
incurred.” Id. Here too, Plaintiffs must show that Defendants owed them a duty of care, either
as a client or, in special circumstances, as a third party. See Banco Pop ular N. Am. v. Gandi, 184
N.J. 161, 181 (2005) (finding that “the invitation to rely and reliance are the linchpins of attorney
liability to third parties”). Plaintiffs have failed to allege facts to plausibly suggest that
Defendants owe them a duty of care either as a client or as third party. Therefore, the FAC does
not plausibly plead legal malpractice.
Therefore, for the reasons discussed above, the Court GRANTS Defendants’ motions to
dismiss, D.E. 39, 49, 50. Defendants encourage the Court to dismiss the matter with prejudice
and have also made two motions for sanctions pursuant to Rule 11 based on Plaintiffs’ filing of
the FAC. Dote v. Arco Chemical Co., 921 F.2d 484, 486—87 (3d Cir. 1990) (Federal Rule of Civil
Procedure 15 invokes a liberal approach to amendment and states that “leave shall be freely
given when justice so requires” unless other factors weigh against such relief). The Court will
nile on the pending Rule 11 motions separately. In light of the ntimerous factual and legal
deficiencies, the Court has real concerns that any attempted amendment of the FAC would be
futile. However, since this is the first motion to dismiss that the Court has ruled on, and it is the
Court’s general practice to give a party at least one opportunity to cure any pleading deficiencies,
the Court will permit Plaintiffs an opportunity to file a Second Amended Complaint. If Plaintiffs
do so, and Defendants do not believe that Plaintiffs have adequately addressed the numerous
deficiencies in the FAC, Defendants can also file another motion for Rule 11 sanctions.
Therefore, Plaintiffs have thirty (30) days to file a Second Amended Complaint, if they so
choose, which addresses the deficiencies set forth herein. If Plaintiffs do not do so, this matter
will be dismissed with prejudice. An appropriate Order accompanies this Opinion.
Dated: January 8, 201$
John Michael Vazqu4)I.SJ.J.
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