Class Action Defense
When a class of shareholders or consumers alleges that it has been defrauded through regulatory or statutory noncompliance in industries like gaming, payment processing, financial services, and mobile telecommunications, companies turn to Ifrah Law to defend them against those claims.
Our work in this area has resulted in such precedent-setting decisions as the dismissal of all charges in the first class action against online gambling following the government shutdown of three top poker sites. We have also successfully negotiated numerous settlements and withdrawals, providing our clients significant savings in both cost and reputation.
In the securities area, we represent directors, officers, and corporations in class actions challenging corporate actions based on federal and state law, including claims arising from criminal investigations, regulatory investigations, and corporate transactions. We have also represented domestic and international companies facing claims under The Racketeer Influenced and Corrupt Organizations Act (RICO), The Telephone Consumer Protection Act (TCPA), and The Fair Labor Standards Act (FLSA), in addition to tax, privacy, and employment statutes.
The Ifrah team initially works with clients to assess the matter, then determines the best strategy to pursue: depending upon the circumstances, we may challenge the claims immediately, oppose the class certification, or explore settlement options. Because class actions often proceed concurrently with regulatory and law enforcement agency investigations, our team of former prosecutors and regulators is well positioned to navigate the minefields presented by simultaneous class action litigation and government investigations or proceedings.
Successful Resolution of a TCPA Class Action
Michelle Cohen’s client, a publicly-traded enhanced messaging provider, was involved in a large-scale class action alleging violations of the TCPA’s unsolicited facsimile advertising rules. In addition to having provided the client with TCPA advice for over 15 years, Michelle represented them in enforcement matters before the FCC, including obtaining the rescission of an FCC citation, a highly unusual ruling from the FCC, finding that the client had a valid defense to the citation.
This TCPA case involved the alleged sending of 125,000 unsolicited faxes. The class was suing for triple damages of $1500 per violation – up to $180 million. Michelle and her team handled discovery, including depositions and motions. When the other parties decided to enter mediation, Michelle represented her client through the mediation, to the settlement agreement and ultimate dismissal of the case. Given the damages at stake, this case was successfully resolved for Michelle’s client, whose settlement contribution fell below the limits of their insurance policy.
Swift Resolution of a Potential TCPA Class Action
A plaintiff alleged that Ifrah Law’s longtime client, a company that provides fax and voice broadcast services to Fortune 500 businesses, sent faxes to her cellular phone without consent and in violation of the federal Telephone Consumer Protection Act of 1991 (“TCPA”). The plaintiff claimed that she represented a class of persons who had received these attempted faxes on their cellular phones and thus that she and the class were entitled to statutory damages under the consumer protection law which targets unsolicited communications.
During discovery it became apparent that our client had instituted superior compliance protocols, due to the ongoing counsel of Michelle Cohen, leader of our Data Protection and Cyber Security practice group. Michelle had worked with the client for years on ensuring that their business model fit within the “fax broadcaster defense,” which protects innocent fax broadcasters from TCPA liability. Michelle helped create this defense when the FCC first implemented the law. The matter settled swiftly for a nominal amount, due to the lack of substance behind the allegations.
The case is remarkable for its demonstration of Ifrah Law’s superior advice and counsel throughout a client relationship. On the compliance side, Ifrah Law helped our client to anticipate potential challenges under the TCPA and mitigate risk. When the company found itself embroiled in litigation, Ifrah Law was able to bring such a challenge to a quick resolution by demonstrating its compliance while guiding the client through the litigation process. The firm’s attorneys have been involved with the TCPA since its inception in 1991, and we typically work closely with company executives on their compliance protocols and privacy practices, developing a thorough understanding of the types of communications the company initiates and crafting operational and contractual protections to protect the company in the face of potential class actions, other litigation, and regulatory oversight.
Ifrah Law Negotiates Complete Withdrawal of All Counts of Possible Class Action Suit
A former contractor for a long standing firm client filed a class action suit in the Eastern District of Virginia (the famed “Rocket Docket”) based upon alleged tax and Fair Labor Standard Act infringement claims in connection with contract services purportedly provided by the plaintiff to our client in connection with a government contract for security services at an overseas military base.
Ifrah’s team, led by partner George Calhoun, first succeeded in attaining a swift dismissal of the class action tax claims based on the inapplicability of the tax statute at issue to purported employee misclassification. The plaintiff also was forced to amend its complaint to eliminate its employment law claims because the FLSA does not apply to contractors or employees based overseas. The client was thus relieved of the initial threat of a large scale and costly class action suit.
The plaintiff nonetheless continued to pursue the suit against our client based on an individual breach of contract claim. Through the effective discovery conducted by Ifrah’s litigation group, we were able to limit any possible claims by the plaintiff. Most tellingly, we established that the plaintiff had made – and was making – inconsistent claims in his discovery responses and in a lawsuit brought against a third party.
Based on these facts, Mr. Calhoun persuaded opposing counsel to dismiss all claims, ultimately relieving our client from any financial or legal liability.
Ifrah Law Wins Dismissal In PokerStars Class Action
When faced with an attempted class action in the plaintiff-friendly Southern District of Illinois, PokerStars turned to Ifrah Law to defend them. Not only did this case pose the risk of a multi-million dollar hit to PokerStars, but a money judgment would have opened the door for related class actions against online poker operators offering services without a license.
The plaintiffs filed the suit under the Illinois Loss Recovery Act, which allows individuals to collect losses on behalf of third parties, providing third parties fail to make their own claim within six months of losing the wager. Ifrah successfully argued that PokerStars was not liable. The court agreed with Ifrah, stating that PokerStars served as a third part service provider – only providing the forum for others to play and does not have stake decided in how the game plays out.
The Judge’s decision in this case was monumental for the online gaming industry and likely closed the door on future class actions against PokerStars. Further, this case provides precedent for other class actions that may arise against online gaming operators.
(Kelly Sonnenberg v. Oldford Group, Ltd., and Rational Entertainment Enterprises, Ltd. (No. 13-0344-Drh) (S.D. Il.))