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Winters v. Electronic Merchant Systems

United States District Court, D. New Jersey

July 8, 2019

JEFFREY A. WINTERS, COLLECTION SOLUTIONS, INC., Plaintiffs,
v.
ELECTRONIC MERCHANT SYSTEMS, et al., Defendants.

          ORDER

          Mark Falk, United States Magistrate Judge.

         THIS MATTER is before the Court following a hearing on May 28, 2019, to address the status of the case (ECF No. 70), precipitated by correspondence stating, inter alia, that Plaintiffs had discharged former counsel, David Hoffman, Esq., and proceeded to settle the case with substitute counsel, which Mr. Hoffman objects to;

         and upon review of the docket and the proceedings in this case, the Court concludes as follows:

         FACTUAL AND PROCEDURAL HISTORY

         1. This case has a convoluted procedural history, which is discussed as necessary below. In its current form, it is a fraud and breach of contract putative class action, in which Plaintiffs allege that Defendants have breached various contractual principles by enforcing supposedly “illegible” provisions in contracts and failing to properly account for funds collected on their behalf.

         2. The case was originally filed in New Jersey Superior Court on May 18, 2016. (Notice of Removal, ¶ 6.) Following the filing of two amended complaints, the second of which added class action allegations to the case, the matter was removed from New Jersey Superior Court on November 22, 2017, pursuant to the Class Action Fairness Act of 2005, 28 U.S.C. §§ 1332(d), 1453. (ECF No. 1.) At the time of removal, there were two named Plaintiffs: Collection Solutions, Inc. and its principal, Jeffrey Winters.

         3. On December 5, 2017, Plaintiffs' then-counsel, David M. Hoffman, Esq., filed a letter with the Court requesting a status conference and a “reference to mediation.” (ECF No. 9.)

         4. On December 8, 2017, and January 17 and February 15, 2018, the Undersigned held status conferences with counsel regarding Plaintiffs' request to proceed to mediation, as well as addressing a series of issues and questions about the state of the pleadings and the federal court docket. For example, due to the timing of removal, the parties were unsure as to which was the operative complaint and whether motions that were filed in state court were pending in federal court. In addition, Plaintiffs' counsel indicated that plaintiffs wished to file a third amended complaint.

         5. On February 22, 2018, Plaintiffs filed a motion for leave to file a third amended complaint. The motion was opposed. On September 14, 2018, the Undersigned held an in-person conference that included oral argument on the motion seeking permission to file the third amended complaint. Plaintiffs' motion was granted, and the third amended complaint was filed on September 17, 2018. (ECF Nos. 32-33.)

         6. On September 28, 2018 (later modified by Order dated October 19, 2018), at the request of the parties, the Undersigned referred this case to mediation before the Hon. Dennis M. Cavanaugh (ret.) (ECF Nos. 38, 44.) This referral was to private mediation on the consent of both parties. (Id.) However, as a condition of Defendants consenting to the mediation, the Undersigned permitted Defendants to file their pre-answer motion to dismiss the third amended complaint and have that motion briefed. (Id.) The concept was that the motion to dismiss would be on file and also provide the parties with substantive assistance to prepare for mediation by reflecting their respective views on the merits of the case.

         7. The Order finalizing the referral to mediation made clear that, other than the filing and briefing of Defendants' motion to dismiss the third amended complaint, the case was stayed for 150 days from the date of the Order:

With the exception of the briefing schedule outlined above, this action is hereby stayed for 150 days from the date of this Order. If the mediation is not successful, there shall be a telephone conference before the Undersigned on March 6, 2019, at 3:00 p.m .....

(Order dated October 9, 2018, at ¶ 7) (emphasis added).

         8. On February 24, 2019, within the 150 day stay of the case imposed by the October 9 Order, Mr. Hoffman, Plaintiffs' then-counsel, filed on the docket a two page document titled “Notice of Supplement to First Federal Class Action Complaint Naming Four Additional Class Action Representative Plaintiffs.” (ECF No. 54.) This filing, although referencing four additional representatives, purported to add ...


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