PITTSBURGH - Federal law
has turned a shoebox full of cheap cell phones into a treasure chest.
2014, Melody Stoops began a business venture that would lead to the collection
of at least 35 cell phones that she stored in a shoebox. Though she lived in a
small town in central Pennsylvania, she used Florida area codes when she
registered for a new phone number for each.
Why? After a 2013 guilty plea to theft in Colorado,
it was a strategic part of her new career.
“I knew that
people had hardships in Florida, that they would be usually defaulting on their
loans or their credit cards,” she testified in October 2015.
More than 25
years after its passage, a federal telemarketing law hasn’t just created a
cottage industry for lawyers – it has spawned a group of professional
plaintiffs like Stoops who are armed with several cell phones for the purpose
of receiving debt collection calls often intended for other individuals.
lead to demand letters and lawsuits – sometimes filed as class actions – under
1991’s Telephone Consumer Protect Act (TCPA). Penalties can be as high as
$1,500 per call, and the cost for a company to defend itself against the allegations
is significantly higher.
conducted by Legal Newsline showed Stoops isn’t alone with her business plan. Other
plaintiffs across the country have done the same while seeking a return on the
simple investment of a disposable phone and a new number. For some, only one
number is needed to file dozens of lawsuits.
blamed AT&T for trying to reach out to a customer who had signed up for
possible home invasion alerts. Another plaintiff with 30 lawsuits lost his
Social Security Disability benefits because he recovered too much from TCPA lawsuits
(one defendant insinuates the amount approaches $800,000).
company recently alleged that a Los Angeles-area attorney named Todd Friedman
has teamed with a client in a lawsuits-for-profit scheme, while other
plaintiffs firms offer free apps that create a call log for users who are
interested in bringing TCPA claims.
Stoops filed lawsuits against nine companies and sent approximately 20 demand
letters. A federal judge ruled in her case against Wells Fargo that the calls
were not “a nuisance and an invasion of privacy” under the TCPA because she
admitted she had filled her shoebox with phones for the purpose of filing TCPA
no case - Wells Fargo was awarded dismissal. She has not filed a lawsuit since.
The TCPA was
signed into law in 1991, when only 3 percent of Americans subscribed to a
wireless telephone service. It was
designed to protect consumers upset with unwanted calls from telemarketers,
specifically those made with an automated dialing machine.
restricted calls made to residential phone lines without prior express consent
from the consumer. Exceptions included calls made for emergency purposes or to
collect a debt on behalf of the United States.
If a company
violates the TCPA, it is subject to fines of $500 per call, and if the
violation is found to be “knowing” or “willful,” that amount is tripled.
receiving calls they believe to be in violation have two options to try to
phone, tell the company to stop calling and hope the calls keep coming. Those
calls could be construed as “willful” violations of the TCPA and lead to triple
answer the phone, never tell the company to stop calling but chronicle how many
times it does. This would lead to only $500 claims but keeps the company
popular option, according to TCPA defense attorney Jessica Klander of Bassford
Remele in Minneapolis, is to amass as many calls as possible by never answering
the phone. That’s because most of the companies she represents stop calling
when told to.
always going to be instances where that doesn’t happen, but in most instances
they stop calling,” she said.
we see folks not answering, then documenting the calls.”
Spencer said he started researching the TCPA in 2011. According to court
documents filed by AT&T, he eventually bought 15 inexpensive cell phones
for the purpose of filing TCPA lawsuits in Nevada federal court.
AT&T tried to send an emergency text to a customer who had signed up for
the company’s home security system, it found out that Spencer had acquired that
customer’s phone number.
customer had requested a text alert when her front or kitchen door opened. She
did not notify AT&T that she had changed her number.
is seeking to exploit the TCPA to recover a $2.7 million jackpot in statutory
penalties because he inadvertently received – on a five-dollar disposable cell
phone that he seldom used – emergency text alerts that the previous user of his
cell phone number had requested,” AT&T’s attorneys wrote in November while
asking for summary judgment.
waited for the text alerts to accumulate, and then filed this lawsuit seeking
millions of dollars unrelated to any alleged harm that he experienced.”
testified that he purchased his phones for “marketing purposes” and that he was
involved in real estate matters. He also says he told AT&T to stop texting
him, though the company sent him more than 2,000 messages.
blamed him for not attempting to block the texts, ask his wireless provider for
a new number or not use one of his other disposable phones.
kept sending Plaintiff text messages for over two months, sometimes sending
more than 40 text messages in a single day,” argued Spencer’s lawyer, Craig
Perry of Las Vegas.
(AT&T) does its best to muddy the waters and smear Plaintiff’s character,
the factual basis for Plaintiff’s claim is irrefutable, and (AT&T’s)
liability is clear.”
Spencer and AT&T reached a settlement in May. Terms of TCPA settlement
lawsuits that never reach class action status are confidential.
But the tale
of one plaintiff indicates how lucrative these settlements can be. In fact,
court records suggest he lost his Social Security disability benefits because
he made too much filing lawsuits.
has brought 31 lawsuits in New Jersey federal court. He has three numbers,
including one registered to his ex-wife that has created most of his claims.
was originally a landline but was repurposed to now also serve as a cell
number. One of Konopca’s phone bills from 2011 shows it received more than
1,000 calls in one month.
combined with Konopca’s other two numbers to exceed his 1,000-minute-per-month
plan, causing an extra $96 in charges while giving him a legal cause of action
against those who called the phones.
But the name
on the wireless account is his ex-wife’s. Konopca said last year in a
deposition that they divorced more than a decade ago, but he keeps the number –
which features the same number appearing eight consecutive times – because it
is easy for his 92-year-old mother in Poland to remember.
him he would lose the phone number if he took his ex-wife’s name off the
account, Konopca claimed. In court, FDS Bank has questioned whether Konopca had
“manufactured the circumstances” that led to him suing the company.
his landline though would not give him a cause of action under the TCPA, but
calls to a cell phone potentially would,” attorneys for the company wrote last
year as they fought a motion for summary judgment.
knows how lucrative bringing TCPA cases can be. In fact, he has collected
[redacted] in TCPA settlements.”
to the amount Konopca, who came to America from Poland in 1985, has received in
TCPA settlements have been scrubbed from documents in the FDS Bank case. But
Konopca testified that following a car accident in 1995, he began receiving
Social Security Disability benefits – and that he no longer does.
Q. How do
you pay your rent? Where does the money come from or – that is not fair. Your
house note or cell bills, where does that money come from?
A. I was
getting Social Security Disability.
Q. Okay. So
you do get some form of money in disability payments?
A. I don’t
think I am getting now.
When was the last time you got a disability payment?
A. I don’t
Q. Do you
know why you stopped getting those?
A. I report
some money – I don’t recall exactly.
Q. So, I’ll
cut to the chase. I know that there’s a number of these lawsuits, somewhere in
the neighborhood of 29. Could it be that you got paid on some of those cases
and they discontinued disability.
February hearing on whether Konopca manipulated the system to bring his
lawsuits, and whether that means he has lost his standing to sue, FDS attorney
Matthew Hendricks offered a clue into just how much Konopca has recovered.
asked Konopca how long it would take for him to make $800,000 working
construction. Konopca replied, “I’m not sure.”
Konopca’s attorney’s objection, Hendricks asked Konopca how much he has made
filing TCPA lawsuits. He again pinpointed the $800,000 figure, wondering
whether Konopca had made that much, or more.
know, exactly,” Konopca said.
claims the car accident affected his memory and responded 108 times during his
earlier deposition that he could not recall the answer to a question, said he
remembered telling the company to stop calling him.
against FDS is one of only three that he filed that is still active. A federal
judge in New Jersey is deciding whether he had standing to bring his lawsuit.
attorney, Yitzchak Zelman of Marcus & Zelman, says FDS is classifying his
client as a “conniving schemer” to avoid liability for its own actions.
Konopca, he said, was “not motivated by greed” and that his litigious history
does not cause him to lose legal standing.
testified in court that he attempted to register for do-not-call lists and has
contacted the Long Branch, NJ, Police Department to complain of harassment,
though none of the police reports apparently had a relationship to calls from
FDS. Konopca also said he was not under the direction of any attorneys when he
ported his landline to one of his cell phones.
But FDS says
Konopca’s behavior, phone records and “disingenuous” testimony show that he intended
to receive as many wrong calls as possible during the four-year statute of
limitations for TCPA claims in order to recover as much as possible.
FDS Bank was one of many entities to fall into his trap, a premeditated,
profit-maximizing scheme to exploit a federal statute by manufacturing the very
harm for which he now sues,” the company says.
hearing on standing, Hendricks presented a spreadsheet that showed Konopca used
the cell phone in question to make an outgoing call in only 10 of 34 months
between May 2011 and March 2014 – there were 24,949 incoming calls and 142
outgoing during that time.
Asked if he
was short of money, Konopca simply answered “No.”
If FDS Bank
is successful in its defense, it will come at a cost, though. Defendants pay
approximately $100,000 in attorneys fees and other costs to defend themselves
from the beginning of a lawsuit through a trial. And if the plaintiff is
successful in earning class action status for the lawsuit, that figure can jump
to approximately $500,000.
cases end in a quick settlement. Companies would rather pay off the plaintiff
than pay attorneys to fight the claims at trial and risk an adverse jury
verdict that could reach millions of dollars.
hesitant to – there’s an ability if (defendants) think the claim is frivolous
to move for sanctions or to have their attorneys fees paid – but courts are
hesitant to grant that. It’s a lose-lose,” Klander said.
The hope in
fighting TCPA claims is that it will deter plaintiffs attorneys from targeting
the company in the future. But it’s unclear if that strategy works.
aren’t taking a gamble when filing claims. Costs are paid by the attorneys representing
them on a contingency fee.
a lot of skin in the game for plaintiffs,” Klander said. “They can file
lawsuits, and there’s not a lot of risk.”
recently brought into the world of TCPA litigation doesn’t like what it sees.
BrandRep is taking its anger out on Beverly Hills, CA, attorney Todd Friedman,
one of the most prolific lawsuit-filers in the country (a search of his name on
the federal court database returns more than 2,400 results).
defendants say Friedman is also the leader of a lawsuit mill, with BrandRep
characterizing it as “legalized extortion.” The case filed by Friedman and frequent
plaintiff Jason Alan is only the second TCPA case the company has ever faced in
in August filed a counter-lawsuit against Alan and John Does soon to be revealed
as Friedman and the attorneys at his firm. It alleges that Alan registered 30
phone numbers to various businesses in order to invite calls that would serve
as the bases of TCPA lawsuits.
one person need nearly 30 telephone numbers?” attorneys for the company asked
alleged plan goes beyond simply collecting as many phone numbers as possible
and hoping they once belonged to someone who would be contacted by debt
collectors. He registered his numbers with various businesses and published
them in the Yellow Pages and the Los Angeles Times classified section.
says 22 of Alan’s phone numbers have been published as numbers for a group of
plumbing businesses. This has the effect under the TCPA of providing worldwide
written consent to be called, BrandRep claims.
companies confirmed that the numbers were for business purposes and have gone
through a verification process, then sold the leads to companies like BrandRep,
the company says. This is what led the company to call Alan.
such as BrandRep are then damaged by buying these bad leads because no true
business advertised by Jason Alan exists,” the company wrote in its
counter-claim. “However, a fabricated business exists in order to fabricate,
create, and/or devise a new scheme to litigate against businesses who call his
At the time
BrandRep submitted its filings, the company said Friedman had filed 390 TCPA
lawsuits in Los Angeles federal court. Friedman doesn’t just represent TCPA
clients – he’s also the plaintiff in a few cases.
naturally, wasn’t pleased with the company’s claims. BrandRep also accused
Friedman of sharing attorneys fees with his plaintiff.
skating on thin ice, as evidenced by the razor thin allegations it lays forth
in its absurd and implausible fraud claims…” he wrote in August. “Such bizarre
allegations are more worthy of a suspense novel than they belong (in) a
legitimate court of law.
shocking than these defamatory allegations is the fact that Defendant openly
retaliated against Plaintiff by filing these counter-claims, in a brazen
attempt to strong-arm Plaintiff and his counsel into dismissing this valid and
important class action lawsuit.”
likened the alleged scheme to the business practices of the Trevor Law Group,
which was also based in Beverly Hills before it was accused of shakedown
tactics. The firm used one plaintiff – the Consumer Enforcement Watch
Corporation – to file lawsuits against companies listed on the Bureau of
Automotive Repair as violators of certain laws.
alleges Alan and Friedman have created lawsuits like an automobile factory
would manufacture its own cars, using boilerplate complaints so they could file
a large number of complaints easily.
called the company’s claims “frivolous” and that they show the company has no
idea how to comply with the TCPA.
precisely why this class action case is so important. Instead of acknowledging
its own widespread privacy violations, BrandRep shockingly has attempted to
cast blame on (Alan) and his counsel… in retaliation for bringing a meritorious
and legitimate class action against this serial robocaller,” Friedman wrote.
videos and a website promote Alan’s business broker services. They feature a
phone number different than the 22 BrandRep says he uses to amass TCPA claims.
Calls to the
number are the subjects of other lawsuits. Alan claims Lighthouse Insurance
Group called the number three times in April 2015 to sell insurance.
defendant that had a third party call the number said Alan asked for a $10,000
business loan during an eight-minute phone conversation. When it sent a
follow-up text message, Alan filed a lawsuit.
Friedman client, Casey Blotzer, sued at least 30 companies from 2012-2015,
including RCF, LLC.
own complaint and its paucity of factual allegations reveal this is nothing
more than a lawyer-driven strike suit as this is the 25th time in
the Central District of California alone the Law Offices of Todd M. Friedman
and (Blotzer and co-plaintiff Edward Makaron) have worked together to fill the
court’s docket by filing TCPA class actions since January 2013,” the company
wrote in July 2015.
not address the company’s claim, instead reminding a Los Angeles federal judge
that RCF is accused of using an “intrusive and obnoxious robo-dialer” to
cold-call thousands of consumers in violation of federal law.
target Dura Medic says it was tricked into calling Blotzer as it tried to
collect on crutches provided to Jabaree Williams. On his hospital form,
Williams had provided Blotzer’s Social Security number, though the last three
pairs of numbers were transposed.
listed Blotzer’s address and Blotzer’s phone number, which he also claimed was
his own. A defendant in another Blotzer case said she allowed her husband,
daughter and daughter’s boyfriend to use her phone number when entering into
financial transactions and called her lawsuit frivolous.
appears that (Blotzer) has engaged in a ‘set-up’ designed to ‘trick’ Dura Medic
into calling her cellular telephone. Indeed, (Blotzer) is no stranger to TCPA
litigation...” the company’s attorneys wrote in May 2013.
settled five months later, before Friedman responded to the claims. In 2015,
after filing 30 lawsuits, Blotzer was deposed for the first time, and her
testimony was used in Northstar Location Services’ motion for summary judgment.
Three weeks later, the case settled.
for defendants to fight claims brought by serial plaintiffs has come from the
courts, not Congress. The U.S. Supreme Court’s 2016 ruling in Spokeo v. Robins
required a plaintiff to show concrete harm in order to have standing to bring a
plaintiffs have created a scheme to create these calls, then they can’t prove
they’ve been harmed if they’re called, a Pennsylvania federal judge ruled in
Melody Stoops’ case.
Congress and President give defendants the best chance at legislative reform,
Klander said. But interpretation of the TCPA is left up to the Federal
Communications Commission and changing the law to address the professionals it
has created “doesn’t seem to be on the top of anyone’s mind,” she added.
nonpartisan issue though – this is not the purpose of the statute, it’s not
what it’s intended for,” Klander said.
a clog in the court system with cases that shouldn’t be there. There’s a time
and a place for laws to protect consumers, but for them to seek to financially
benefit – that’s not what the statute’s for.”
subcommittee on communications and technology held a September hearing called
“Modernizing the Telephone Consumer Protection Act,” but no proposed
legislation immediately followed. A bill introduced in January targets
“transparency and efficiency” in the FCC.
The FCC took
on the issue of reassigned numbers in a June 2015 ruling – if a company is
trying to reach a customer who has jettisoned the phone number he or she has
registered, the company will not face liability when it calls the new holder of
the number the first time.
after that, though, are violations under the TCPA. Callers can check a database
to determine whether a number has been reassigned, the FCC says, and they can
include an interactive opt-out mechanism in their artificial or prerecorded
voice calls, among other safeguards.
rejected arguments that callers should have a liability-free year after a
number has been reassigned.
attorneys complain that the TCPA has had a hard time adapting to the way
technology has changed in its 26 years. Plaintiffs attorneys, though, are
having no problems utilizing new tools.
Get Cash is a free app developed for Lemberg Law. It creates legal
documentation for telemarketing and debt collection calls that is evaluated by
the firm. “Remember, there is zero out-of-pocket cost to you to bring a TCPA
claim,” the website reminds.
idea is behind the Agruss Law Firm’s Stop Calls Get Cash – “You won’t pay us a
penny. Download our free app to stop the harassment, get money, and you won’t
pay us a penny for our services,” its site says.
the FCC has struggled to process the concerns of defendants in the wireless
age, the other side says.
“One of the,
sort of, criticisms by the defense industry is that it hasn’t kept up with
that,” Klander said. “The FCC has come down with guidance to try and assist
interpreting the statute to be more modern by defining what an Automatic
Dialing System is, in terms of what that means in modern tech, and by including
a safe harbor provision if it’s a repurposed number – the debt collector gets a
chance to stop calling.
guidance wasn’t clear, so it hasn’t done much to clarify the law, but that was
Sen. John Thune, of South Dakota, complained in a Commerce, Science and Transportation
Committee hearing last year that the law is “showing its age.”
are opportunities to build on its consumer benefits while also ensuring
consumers fully benefit from modern communications,” he said.
the committee were opposed to creating more relaxed standards for robocalls,
especially Claire McCaskill of Missouri. If defendants have evidence they
obtained consent prior to a call, they should push back against plaintiffs
lawyers, she said.
to trial and kick them in the rear in the courtroom,” she said.
filed nearly 5,000 TCPA lawsuits last year, and trials rarely occur. Every
argument in a TCPA case is essentially made to broker a settlement.
the lawyers filing these claims seems to be a new strategy, and it is unclear
whether it will be successful. The counter-claim against Friedman and his law
office idles while a judge determines whether to impose a stay during a
challenge to the FCC’s interpretation of an automatic telephone dialing system.
challenged whether BrandRep can even pursue the strategy. “Defendant’s
conspiratorial claims rest on the assumption that Plaintiff and his counsel are
engaged in some sort of elaborate scheme to frivolously sue numerous companies
and extort sums out of them in settlements,” he wrote.
this were true (it’s not, and it’s ridiculous) BrandRep has failed to
demonstrate it has standing to bring these claims.”
says he hasn’t acquired any money or property from BrandRep, so the company
can’t bring a claim for restitution.
Konopca’s TCPA attorneys face a similar attack. Collection Solutions sued
Zelman and his firm, as well as two other firms, in December, alleging they
have conspired to develop professional plaintiffs for the purpose of bringing
class actions under the Fair Debt Collection Practices Act.
under the FDCPA feature similar allegations and statutory penalties as TCPA
cases. The lawsuit against Zelman alleges a “classic, Mafia-style racketeering
enterprise” among the New Jersey firms Jones, Wolf & Kapasi, Marcus &
Zelman and the Law Offices of Laura S. Mann.
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.
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.”
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.
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.
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.
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
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.
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.”
these two racketeering claims would likely persuade other companies to consider
doing the same. Chevron’s use of the RICO statute has, so far, been key in
preventing it from having to pay a multibillion-dollar verdict in Ecuador. U.S.
District Judge Lewis Kaplan found in 2014 that the $9.5 billion verdict
obtained by plaintiffs attorney Steven Donziger was the product of
racketeering, and the Second Circuit agreed in 2016. Donziger is still pursuing
enforcement of the verdict.
famously, CSX Transportation accused a former Pittsburgh asbestos firm known as
Peirce, Raimond & Coulter of conspiring with a West Virginia radiologist to
file fabricated claims. CSX won more than $1 million after damages were tripled
under the RICO statute.
asbestos defendants took note, especially Garlock Sealing Technologies. The
company successfully argued during its bankruptcy proceeding that asbestos
firms had been manipulating the system by blaming the company for their
clients’ injuries in civil courts while doing the same to other companies in
the asbestos trust system.
receiving a landmark ruling in 2014 in North Carolina bankruptcy court that
found verdicts and settlements were the products of fraud, the company filed
racketeering lawsuits against a handful of law firms. Those suits were
ultimately settled as part of Garlock’s bankruptcy trust agreement, but John
Crane Inc. took up the baton by filing its own racketeering lawsuits against
two of the firms. Those cases are pending.
defendants will wait to see if going on the offensive makes a better defense
than what has previously been tried.
Stoops’ name might live forever as the precedent used to dismiss lawsuits
brought by plaintiffs who are in the business of filing TCPA lawsuits.
Konopca’s attorneys, as they fight racketeering claims, are hoping the New
Jersey federal court finds a distinction between Stoops’ actions and Konopca’s.
no shoebox full of phones and has not admitted, as Stoops did, that it was his
intent to amass TCPA claims. On the witness stand in February, he explained why
he waited several years after the deluge of calls to file his 30 lawsuits.
know the rules, regulations and laws,” he said.
Nicholas Malfitano contributed to this report. Reach editor John O'Brien at firstname.lastname@example.org.