United States District Court, D. New Jersey
JEFFREY A. WINTERS, et al, Plaintiffs,
JOSEPH K. JONES, et al, Defendants.
MICHAEL VAZQUEZ. U.S.D.J.
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 Ari 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,
The Court reviewed all the submissions in support and in
opposition, 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
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 firm 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 Ari Marcus and
Yitzchak Zelman are attorneys and the principals of the firm
of Marcus & Zelman, LLC. Id. ¶ 4.
claim that "the particular actionable conduct
perpetrated by Defendants against Plaintiffs . . . was the
class action litigation . . . Juliette Chapa, et al[.J
v[.J Charles I. Turner Esq., and United Credit Specialists et
al., in the Federal District Court of New
Jersey, Case No. 2:15-cv-03125." ("Chapa
Case") Id. ¶ l. Plaintiffs settled the Chapa
Case for $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. ¶ 9.
Plaintiffs allege that at some point prior to 2013,
Defendants formed a RICO enterprise that:
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 confirming to victim
defendants the practical advisability of settling early on a
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(B).
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 Ari 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. ¶ 26(D).
further allege that Defendants knowingly bring the sham class
actions in full 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 ¶ 8(C). 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. Thus, 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. ¶ 8(D). To that
end, Defendants allegedly maximize the number of cases they
bring by not consolidating litigation efforts. Id.
relevant allegations from the FAC are discussed further
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. D.E. 29. 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 Defendants committed
several predicate acts, including wire fraud, obstruction of
justice, 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
current motions followed. Plaintiffs also later submitted a
letter asking the Court to consider the case of Main St.
at Woolwich, 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 Woolwich, LLC and asking
the Court to consider Grubb v. Green Tree Servicing,
LLC, No. Civ. No. 13-07421 (D.N.J. July 24, 2014).
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 Atl. Corp. v. Twombly,
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.
evaluating the sufficiency of a complaint, district courts
must separate the factual and legal elements. Fowler v.
UPMC Shadyside, 578 F.3d 203, 210-211 (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 Factory
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. J.P. Morgan Chase &
Co., 2015 WL 12826480, at *2 (D.N.J. Jan. 23, 2015).
noted, Plaintiffs allege that Defendants violated the federal
RICO statute, 18 U.S.C. § 1961 et seq., and the
New Jersey RICO statute, N.J.S.A. 2C:41-1 etseq. FAC
¶ 5. Additionally, Plaintiffs assert that
Defendants committed fraud, negligence, and legal malpractice
through their participation in the RICO scheme. Thus, the
Court has federal question jurisdiction over the federal RICO
claim and supplemental jurisdiction over the New Jersey RICO,
fraud, negligence, and legal malpractice
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." Kaymark v.
Bank of Am., N.A., 783 F.3d 168, 174 (3d Cir. 2015),
cert, denied sub nom. Udren Law Offices, EC. v.
Kaymark, 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. Carlisle, McNellie,
Rini, Kramer & Ulrich 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
occurred. This happens when the plaintiff can recover
statutory 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 quick 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).
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. 2008) (citation omitted); Little-King v. Hayt
Hayt & Landau, 2013 WL 4874349 *7 (D.N.J. Sept. 10,
2013) (noting that "the expense of individual actions in
this FDCPA action, weighed against the potential recovery,
would likely be inefficient and cost prohibitive").