Off the Hook?: Court Dismisses RICO Claim Against TCPA Repeat-Player Shelton

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James E. Shelton is certainly no stranger to TCPA litigation. As a court observed just yesterday:

James Shelton has turned the private right of action under the TCPA into a business. He has filed dozens of cases in this District and in other districts around the country. 

While some courts have (properly) cast doubt on Shelton’s standing to pursue TCPA claims in instances where he has engaged in conduct suggesting he might be manufacturing lawsuits, most courts have determined that filing lawsuits repeatedly does not–in and of itself–deprive Shelton of standing to sue.

Well one Defendant Shelton sued decided to try and put a stop to Shelton’s business model by suing Shelton under RICO contending that he was engaging in racketeering activity, ostensibly by conspiring with other TCPA Plaintiffs to manufacture lawsuits. While the case against Shelton initially looked like it might have legs– there were those shocking “pillaging them” transcripts after all– a district court put an unceremonious end to the case yesterday.

The decision is Jacovetti v. Shelton, Case No. 2:20-cv-00163-JDW, 2020 U.S. Dist. LEXIS 158663 (E.D. Pa. September 1, 2020) and here’s the critical language:

The Court concludes that the Amended Complaint does not allege racketeering activity. The Amended Complaint primarily disputes the facts that Mr. Shelton alleged in the TCPA Action. But even if Mr. Shelton made incorrect allegations in the TCPA Action, that litigation conduct does not constitute a scheme or artifice to defraud because absent corrupt activity like bribing witnesses or parties, litigation conduct does not constitute a scheme or artifice to defraud for purposes of a civil RICO case.

The Amended Complaint also points to transcripts of conversations in which Mr. Shelton discussed his litigation strategy. Those conversations demonstrate that Mr. Shelton investigates potential defendants before he sues them to ensure they can satisfy a judgment. That pecuniary approach to litigation might be unseemly, as the Court has observed before. But it is not illegal. Certainly, it does not demonstrate that Mr. Shelton intends to cheat or defraud anyone. It only shows that he intends to collect if he prevails in litigation.

So there you have it. In one court’s view, inaccurate allegations in a TCPA case coupled with discussions about a desire to get paid and a large number of TCPA filings does not, by itself, mean that Shelton is committing RICO violations.

As the Court puts it, “A RICO claim is a serious charge that requires serious facts. Those are lacking here.”

Someone should probably tell Jeff Lohman…

 

 

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Published by Eric J. Troutman

The Czar of TCPAWorld Eric Troutman is one of the country’s prominent class action defense lawyers and is nationally recognized in Telephone Consumer Protection Act (TCPA) litigation and compliance. He has served as lead defense counsel in more than 70 national TCPA class actions and has litigated nearly a thousand individual TCPA cases in his role as national strategic litigation counsel for major banks and finance companies. He also helps industry participants build TCPA-compliant processes, policies, and systems. Eric has built a national litigation practice based upon deep experience, rigorous analysis and extraordinary responsiveness. Eric and his team feel equally at home litigating multibillion dollar telecommunications class actions in federal court as they do developing and executing national litigation strategies for institutions facing an onslaught of individual TCPA matters. They thrive in each of these roles – delivering consistently excellent results – while never losing sight of the client experience. While many firms now tout TCPA expertise, Eric has been there from the beginning. He built one of the country’s first TCPA-only defense teams and began serving as national TCPA counsel for his clients nearly a decade ago. This perspective allows him to swiftly develop the right litigation strategies for dealing with recurring problems, without wasting time on tactics that are bound to fail. Eric’s rich historical perspective and encyclopedic knowledge of the TCPA landscape also make him an invaluable resource to institutional compliance teams struggling to comply with the shifting regulatory landscape. No task is too small – or too big. Indeed, Eric and his team have helped build TCPA-compliant systems and processes for some of the largest and most complex corporate entities in the country. He commonly works with in-house compliance counsel to build and implement enterprise and business-line specific TCPA solutions, performs TCPA audits and drafts and reviews proposed TCPA policies and procedures. He and his team also have the technical expertise necessary to assist call centers seeking to develop TCPA-resistant call path architecture or to modify existing telephony and software integration to better insulate from potential TCPA exposure. Eric has built a reputation for thought leadership. An avid blogger and speaker, he has been at the forefront of the industry’s effort to push for clarity and a return to sanity for the TCPA for years. He was selected to advocate for the financial services industry on important TCPA issues before the Federal Communications Commission and co-authored the nation’s only comprehensive practice guide on TCPA defense. In his spare time, Eric leads defense teams representing banks and other financial services companies in consumer finance litigation matters. He has experience representing clients in UCC, TILA, RESPA FCRA, CCRA, CLRA, FDCPA, RFDCPA and FCCPA claims, as well as in fraud and bank operations issues.

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  1. “While the case against Shelton initially looked like it might have legs” it actually never looked like it might have legs. The case was paralyzed and hamstrung from the beginning by an appalling lack of merit on the defamation claim via clear litigation privilege and the RICO claim via the absence of any supporting facts or evidence to show a corrupt or criminal scheme.

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