PHILADELPHIA – A federal court in Philadelphia has dismissed RICO claims against a Pennsylvania man who filed dozens of telephone consumer protection lawsuits, saying the specific standard for proving such serious claims was not met.
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 defended himself against recordings brought to the court’s attention earlier this year – though his attorneys denied that Shelton was 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 was 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 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.
On June 17, U.S. District Court for the Eastern District of Pennsylvania Judge Joshua L. Wolson said FCS’s third effort to avoid the judgment reached against it would fail, just as the two previous attempts before it did.
This attempt concerned a yet second group of transcripts that the defendants say implicated Shelton in conspiring with others to execute his TCPA scheme, but Wolson rejected that rationale.
“They base this effort on transcripts that they have obtained of plaintiff James Everett Shelton discussing his litigation strategy. But they have not shown that those transcripts are admissible or relevant. They therefore do not justify reconsideration. FCS also has not shown that the transcripts or anything else justifies putting a hold on Mr. Shelton’s efforts to execute on the judgment in this case,” Wolson said.
“The transcripts have a date of May 15, 2020, and have a case caption from a case in the Cuyahoga County Court of Common Pleas in Ohio. However, nothing on the transcript indicates the date of the conversations, who made the recordings, the circumstances of the conversation recorded, or how the recordings were made.”
In defending himself against the RICO charges, Shelton also won motions for civil contempt and sanctions against the FCS parties.
UPDATE: Shelton Wins Dismissal of RICO Claims
“Civil RICO might be the ‘litigation equivalent of a thermonuclear device,’ but this case is a dud. The Jacovetti parties have not alleged predicate acts to support their RICO claim,” Wolson said.
“At best, they have alleged that James Everett Shelton has turned enforcement of the Telephone Consumer Protection Act into a business and that he takes pecuniary considerations into account when he decides who to sue. Nothing about that constitutes a RICO violation. The Court will therefore grant the FVS parties’ motion to dismiss the complaint with prejudice.”
In the FCS parties’ amended complaint, they asserted a violation of RICO through a pattern of wire fraud. It did not specify which section of RICO is at issue, though Count II asserts a separate claim for wire fraud under 28 U.S.C. Section 1343.
On May 11, the Jacovetti Parties filed a RICO Case Statement. They explained that they asserted claims for violations of 18 U.S.C. Sections 1962(a) and (d). They described the predicate acts as violations of the mail and wire fraud statutes, and posited the existence of an association-in-fact as the illegal enterprise.
Shelton and his counsel moved to dismiss the RICO counts on May 21.
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.”
Wolson agreed.
“The Court concludes that the amended complaint does not allege racketeering activity. The amended complaint primarily disputes the facts that Mr. Shelton alleged in the TCPA action. But even if Mr. Shelton made incorrect allegations in the TCPA action, that litigation conduct does not constitute a scheme or artifice to defraud because absent corrupt activity like bribing witnesses or parties, litigation conduct does not constitute a scheme or artifice to defraud for purposes of a civil RICO case,” Wolson said.
“The amended complaint also points to transcripts of conversations in which Mr. Shelton discussed his litigation strategy. Those conversations demonstrate that Mr. Shelton investigates potential defendants before he sues them to ensure they can satisfy a judgment. That pecuniary approach to litigation might be unseemly, as the Court has observed before. But it is not illegal. Certainly, it does not demonstrate that Mr. Shelton intends to cheat or defraud anyone. It only shows that he intends to collect if he prevails in litigation.”
Wolson dismissed the counts.
“A RICO claim is a serious charge that requires serious facts. Those are lacking here. Because there is no way for the Jacovetti parties to cure that failure, and because they have already had an opportunity to amend their complaint, the Court will dismiss their claims with prejudice,” Wolson stated.
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