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New Jersey Federal Judge Dismisses RICO suit against FDCPA Plaintiff Law Firms

Late last year, a debt collection agency went on the offensive and filed a RICO lawsuit against three FDCPA Plaintiff Law Firms, alleging that the Plaintiff Firms filed frivolous class action lawsuits under the FDCPA as a way to generate a quick settlement from them. Last week, Judge Michael Vazquez, in a sometimes scathing opinion, dismissed the suit, siding with the Plaintiff Firms. Judge Vazquez ultimately concluded that the filing of numerous class action lawsuits violates no laws, but is actually "standard practice." He found that the Amended Complaint was both factually and legally deficient, and the allegations that the Plaintiff Firms engaged in frivolous litigation were baseless. Moreover, Judge Vazquez concluded that filing litigation cannot form a basis for mail or wire fraud under RICO. 

Beyond dismissing the RICO claims for these deficiencies, Judge Vazquez also relied on two doctrines, the Noerr-Pennington Doctrine and the New Jersey Litigation Privilege, as further independent bases for the Plaintiff Firms to bring the cases in question. Ultimately, the Court concluded that the Plaintiff Firms had a right to bring class action suits against debt collectors, and that there are other mechanisms in place to prevent frivolous litigation. Judge Vazquez also noted that the debt collection agency never sought sanctions in any of the cases against any Plaintiff Firm for bringing a frivolous suit, but instead had settled prior to any ruling on the claims. Curiously, the Court did not dismiss the case with prejudice, but noted that there were pending motions for sanctions under Rule 11 that "the Court will rule on . . . separately." In allowing the debt collector to amend, the Court warned that the Plaintiff Firms may also file further Rule 11 motions in the event any amended pleading is filed.

We will update you once the Court issues its ruling. 

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