PHILADELPHIA – Litigation between a Pennsylvania man who has filed dozens of telephone consumer protection lawsuits is engaged in a supposed scheme to extort settlements from corporate defendants, says one of the companies he has targeted.
James Everett Shelton is accused by FCS Capital in a racketeering lawsuit of conducting a money-making scheme involving the Telephone Consumer Protection Act. FCS Capital and Jacovetti Law filed suit against Shelton and fellow defendants Final Verdict Solutions and Dan Boger on Jan. 9.
Shelton will have to defend himself against recordings brought to the court’s attention earlier this year – though his attorneys deny that Shelton is involved in any type of scheme and said the transcript recordings are “not relevant and are not probative of any fact of consequence.”
“Pillaging them, that’s the point. We’re absolutely pillaging them. I know the other person’s banks before I even file the case. I know how much money they have,” Shelton is recorded as saying.
On the recording, he also admitted to encouraging others to take part in litigation.
“And you know, basically I’ll be like, hey, have you got any calls from these guys? Yeah, I have. You know, they’re on my list here somewhere. I mean, he gets way more calls than I do. So, and then, when I end up getting a judgment against them or end up getting paid from them, I’ll say, Craig, man, look, you should go – you should sue them. I mean, and so, he sues them. And now he’s going to get paid,” Shelton said.
The Craig he’s referring to is Craig Cunningham, another prolific filer of TCPA lawsuits.
Opposing counsel had labeled the recordings as “incredibly damning.”
“While brief, these recordings get to the heart of what defendant Shelton does, and then uses these methods to further include others,” FCS Capital argued.
It will possibly open the door for FCS Capital and other defendants to challenge Shelton’s standing to bring TCPA lawsuits against companies that call his phone. If a call is unwanted, plaintiffs have standing, courts have ruled.
But if a plaintiff admits that he or she welcomes calls for the purpose of bringing lawsuits, then that person can’t argue they’ve been harmed by a call, a Pennsylvania court ruled in the case of a woman who kept 30 phones with different numbers in a shoebox.
Since 2016, Shelton has filed cases in courts around the country, alleging he has been the target of numerous unwanted telephone solicitations from a variety of businesses, in violation of the TCPA. He even has at least one trial win under his belt - a $33,000 victory recently affirmed by the U.S. Court of Appeals for the Third Circuit.
TCPA lawsuits are common (and plenty of people have used them to make money), but trials are rare, as are vehement defenses. Defendants often choose to settle rather than risk an adverse trial verdict or spend thousands on lawyers to defend themselves – particularly when the plaintiff files a class action. The TCPA provides damages in the amount of $500 per phone call, or $1,500 per call for more egregious violations.
“I don’t get out of bed for $500. But basically, what I’ll do is I’ll hit them up for – if it’s a robocall or an ATDS call, I’ll hit them up for $1,500 for [violating] 227(b), if they call me more than twice, and if they call me two times or more, that’s a violation of 227(c), because my number’s on the Do Not Call list,” Shelton said on recordings obtained by FCS.
New proceedings in the ongoing litigation
Counsel for Jacovetti Law was recently permitted to remain on the case, despite being previously sanctioned by U.S. District Court Judge Joshua D. Wolson.
“The Court knows that its sanctions in this case were harsh. That sprung from the Court’s assessment of whether lesser sanctions would correct the problem. Thomas has not shown anything to suggest that the Court’s prior decision was legal error or that it caused a manifest injustice,” Wolson said in a May 20 order denying reconsideration of the sanctions.
“However, given that Mr. Thomas has cured the mistakes identified in the defendants’ motion to disqualify, the Court sees no reason to deprive the plaintiffs of having Mr. Thomas represent them.”
The following day, Shelton and his counsel filed a motion to dismiss the case, on the grounds that Final Verdict Solutions is synonymous with Shelton and not a third-party he allegedly conspired with illegally, thus nullifying the RICO claims in his view, and that the judicial proceedings privilege absolutely immunizes his side from legal liability.
“In plaintiffs’ amended complaint, plaintiffs allege that FVS is ‘an entity’ used by Shelton to commit acts constituting actionable racketeering. Plaintiffs, however, do not specify with allegations of fact as to what kind of entity Final Verdict Solutions constitutes, and this is deliberately by design: FVS is merely a registered fictitious name of Shelton, and thus Shelton is still acting as a sole proprietor when acting under the FVS banner,” says Shelton’s dismissal motion, in part.
“Plaintiffs are thus essentially accusing Shelton in a conclusory manner of conspiring with himself throughout a portion of plaintiffs’ amended complaint and this does not satisfy the conspiracy element which is necessary for a RICO conspiracy claim.”
Shelton’s counsel added, “The sending of pre-suit settlement offers, pre-suit discussions about attempting to investigate the merits of the claim, and/or the use of litigation falls squarely within the scope of litigation – which is subject to the litigation privilege.”
According to Shelton’s counsel, the judicial proceedings privilege applies to statements made in the “regular course of judicial proceedings” that are “pertinent and material” to the litigation.
At the same time, the original, separate-but-related and underlying lawsuit filed by Shelton against FCS Capital has seen both a new motion for reconsideration and concurrent motion for injunctive relief filed on June 1, by counsel Joshua L. Thomas.
“We now have third party evidence that not only has Shelton been working with others to continue this ongoing scheme, but he has also contacted others to now continue to harass the same defendants in this matter,” Thomas said, of new recording transcripts obtained in the case.
Thomas pointed in attached documents to Shelton and others’ connection to the Heidarpour Law Firm in Washington, D.C. – allegedly a serial filing firm well-known in TCPA litigation circles – and mailings FCS Capital received from potential TCPA litigants represented by Heidarpour.
“Given that the plaintiff has now admitted to participating in such schemes, and apparently employs the same tactics used here in other cases with other serial litigants, this should be taken into consideration in this case, it should be reopened and further discovery be permitted, to find out if any of plaintiff’s claims are actually legitimate, or merely part of the ongoing scheme,” Thomas said.
Thomas simultaneously filed a motion for temporary and permanent injunctive relief expressly precluding Shelton’s motion to compel the gathering of post-judgment discovery, which had been filed on May 25 and granted by the court the following day, without opportunity for opposing counsel to respond, Thomas says.
“Since there was an objection, we should have been granted the time to actually respond to the motion, rather than have it summarily granted. When the court granted the motion to compel one day later, there was no order stating that defendants’ objection time would be abridged, nor was on requested,” Thomas states.
“Further, the court gave no reason for this abridged time, of approximately one day, as to why this motion should have been granted. There is no good faith reason for this, and as such, we ask the court reconsider the granting of that motion as well, particularly in light of all evidence presented in this pleading.”
Shelton and Final Verdict Solutions are represented by Bryan Anthony Reo of Reo Law in Mentor, Ohio and Clayton S. Morrow of Morrow & Artim, in Pittsburgh.
FCS Capital and Jacovetti Law are represented by Joshua Louis Thomas of Joshua L. Thomas & Associates, in Chadds Ford.
U.S. District Court for the Eastern District of Pennsylvania cases 2:20-cv-00163 & 2:18-cv-03723
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com