The overall case was filed last December in federal court in the Central District of California by Emord’s firm on behalf of a Florida supplement manufacturer called Natural Immunogenics Corp. The suit alleges that defendant Newport Trial Group (now doing business under the name Pacific Trial Attorneys), which has initiated hundreds of class action suits against dietary supplement companies and companies in other industries in recent years, has made it a practice to pay individuals to pose as injured parties for the purpose of initiating baseless suits.
The overall suit uses a unique legal strategy for this kind of case by alleging violations of the federal Racketeer Influenced Corrupt Organizations (RICO) act. The suit alleges that the way NTG finds plaintiffs and files suits amounts to a racket that violates the statute. RICO was signed into law in 1970 and was first intended as a tool to go after high ranking organized crime figures. It has since been used in other applications, such as prosecutions in some jurisdictions of the wide-ranging sex abuse scandal within the Catholic Church, the prosecution of prominent financier Michael Milken (once known as the “Junk Bond King”) and an attempt to prevent the move of the Montreal Expos baseball team to Washington, D.C.
“For at least the past five years, the Defendants have acted in concert and conspired to file state and federal lawsuits against corporate defendants across the country on false pretenses, seeking to extort large payouts in the form of legal fees, damage awards, legal costs, and/or settlements from those defendants. The Defendant Newport Trial Group (NTG) and its above-named attorneys and agents worked in concert to operate an unlawful enterprise by paying individuals to assume the role of plaintiffs, who in fact had no bona fide basis for suit, and to initiate and maintain fabricated class action suits in order to extort money from those defendants,” the original lawsuit alleges.
The lawsuit alleges that NTG’s actions over the years amount to a massive fraud.
According to Emord’s suit, NTG made a practice of identifying young people in need of cash to act as plaintiffs. The suit alleges that in 2012 the firm contacted several young men who were in debt with student loans and without job prospects. According to the lawsuit, one of the defendants was told by a friend that NTG was a “law firm that paid cash for easy work.”
Companies making consumer products aren’t the only target of NTG’s activities, Emord’s lawsuit alleges. The suit details what are claimed to be fraudulent suits filed by NTG using similar tactics against organizations such as American Breast Cancer Foundation, the National Veterans Services Fund and the International Union of Police Associations.
Small award in Anti-SLAPP motion
In the recent motion, the NTG defendants won a judgement in the amount of $8,167 in a motion filed under California’s Anti-SLAPP statute. SLAPP stands for Strategic Lawsuit Against Public Participation and refers to a tactic in which lawsuits are filed to silence critics by burdening them with the costs of litigation. It has come to be seen as a violation of free speech, and a number of states, including California, have statues against the practice. The award is precisely 16.4% of the amount that NTG was seeking.
NTG’s motion revolved around how the plaintiffs were seeking to get information from named parties in the suit. The court said it will allow Natural Immunogenics to get information (‘discovery’ in legal jargon) from a company called Continuity Research, in the form of correspondence between that company and NTG. According to the court’s ruling, “The alleged correspondence contains conversations between Newport Trial Group attorneys about a plan to form sham corporate entities solely to pursue legal claims.” But the court disallowed Natural Immunogenics’ attempt to get information from another party in the suit.
In any case, the recent decision by the court is but one document in a case whose docket now stretches to almost two hundred such filings. The final tag for this case for fees and possible awards will certainly run into the millions of dollars.
“This decision does not in any way alter the Court’s prior decision on the merits of the case, which permits the prosecution of the malicious prosecution counts, the RICO counts, and the unfair competition claim,” Peter Arhangelsky, an attorney in Emord’s firm, told NutraIngredients-USA. Pacific Trial Attorneys declined to comment on the ruling.