Both Sides Await Conference on Cross Motions for Appeal in Third Circuit RICO Case

Very early in 2018, a New Jersey District Court judge granted defendants’ motion to dismiss claims against them in the case of Winters, et.al. v. Jones, et. al, (Case No 2:16-cv-09020, U.S. District Court, District of New Jersey. insideARM first wrote about it when the case, which dropped many a jaw in the ARM community, was originally filed in December of 2016.

Nutshell re-cap

In case you missed the gist of the case, plaintiff and collection agency owner Winters and his class action co-plaintiffs accused some New Jersey law firms of scheming to solicit clients in order to file bogus class-action lawsuits, with the aim of seeking fast settlements from defendants interested in avoiding the expense and hassle of trial. A copy of the original complaint can be found here.

Judge dismissed RICO case without hearing oral arguments

Fast-forward to January 2018, when insideARM reported in an update that New Jersey District Court Judge John Vazquez dismissed the complaint without oral arguments. Vazquez bluntly wrote that Winters’ First Amended Complaint (FAC) was “riddled with factually unsupported accusations and wholly conclusory language” and “suffers from defective legal theories, both substantively and as pled. Moreover, Plaintiff’s factual allegations are severely lacking in light of the federal pleading requirements.”  

He gave plaintiffs 30 days within which to file a second amended complaint (SAC), adding that “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 anecdotal information — all of which is benign on the surface (if not common practice)…”

A copy of the judge’s Order can be found here.

A copy of the judge’s Opinion can be found here. The Opinion is not for publication. 

Editor’s Note:  An unpublished opinion is a decision of a court that is not available for future citation as precedent because the court deems the case to have insufficient precedential value. 

Defendants in the case had also requested that the court sanction Winters et. al. for filing suit with what they perceived were such flimsy claims. The judge declined to penalize plaintiffs under Rule 11, although in his Opinion on the matter, he did note that if plaintiffs decided to submit a Second Amended Complaint (SAC) and not prevail, nothing would prevent defendants from re-requesting that the court issue sanctions after a future decision and order.

Both sides appeal to the Third Circuit

As winter (the season) marched on, Winters (the plaintiff) filed an appeal to Vasquez’ decision to dismiss. A copy of Winters’ appeal can be accessed here.

Defendants are also appealing Vasquez’ decision to decline to issue Rule 11 sanctions.

The cross-motions for appeal were originally scheduled for conference in mid-April, but are now on for conference in early June, in the Third Circuit.  We’ll stay on top of the appeals as they unfold.

insideARM perspective

Winters and co-plaintiffs seem almost activist in their determination to keep fighting against perceived frivolous litigation. In part, that sense comes from the original allegations in this case, which were sensational to say the least: Defendants were accused of federal RICO violation, a federal RICO conspiracy, a New Jersey RICO violation, a New Jersey RICO conspiracy, fraud, negligence, legal malpractice, wire fraud, obstruction of justice, witness tampering, and extortion.

If this case does nothing else, it shines a light on a problem congesting the courts; professional plaintiffs with seemingly no injuries, who are betting that collection agencies will opt to offer a quick settlement at a lower cost than a drawn-out regulatory lawsuit--even if baseless.

On the issue of sanctions, it was interesting to see that, where collection agencies as defendants are are almost never granted motions for sanctions against plaintiffs, here the tables were turned, and again the plaintiff sidestepped a motion for sanctions. This is a case many will keep watching. Let’s see what shakes out of the Third Circuit Court of Appeals this summer.