TURNABOUT: TCPA Defendant Recovers Damages (Fees) Against Plaintiff That Created His Own Lawsuit—But It Could have Been Worse

Good morning TCPAWorld!

Back in 2019, the Czar wrote about this class action complaint (link) filed by Gino D’Ottavio (Gino) in May of 2018 against Slack Technologies (Slack) alleging violations of the TCPA after he received “numerous unsolicited text messages after signing up for Defendant’s service.” Gino D’Ottavio v. Slack Technologies, No. 118CV09082NLHAMD, 2022 WL 15442211 (D.N.J. Oct. 26, 2022).

Slack, in their Answer (filed June 5, 2018), accused Gino of being a TCPA serial plaintiff “who personally solicited 1,590 text messages from Defendant by entering his own phone number and clicking a ‘SEND LINK’ button in an effort to manufacture a lawsuit.”

Slack also asserted four counterclaims:

  • willful and wonton misconduct;
  • common law fraud;
  • breach of express contract;
  • breach of implied covenant of good faith and fair dealings.

Three months after Slack filed their Answer/Counterclaims, September 20, 2018, Gino’s counsel moved to withdraw, and Plaintiff moved to dismiss the Complaint with prejudice (of course, maintaining he didn’t solicit texts from Slack).

Slack moved for sanctions under Fed. R. Civ. P. 11.

The Court ruled as follows:

  • motion to dismiss; granted;
  • motion to withdraw; denied;
  • motion for sanctions; denied pending discovery.

Gino followed up through counsel—per the Court’s request—that he did not consent to counsel withdrawing from this case. Counsel again tried to withdraw, and this time, the Court granted his motion to withdraw since Gino had allegedly ignored counsel for 9 months.

Now, the much-anticipated update as to the lawyerless Gino is here!

Gino continued to fail to comply with court orders and defend against the counterclaims despite the Court giving him time and opportunity to do so.

The Court then held that entering default judgment was warranted under Federal Rule of Civil Procedure 37 under the factors given by the Third Circuit in State Farm Fire & Casualty Co. The Court concluded:

“(1) Plaintiff is personally responsible for his inaction as he is proceeding pro se,

(2) Defendant is prejudiced by Plaintiff’s failure to participate as it prevents it from pursuing its counterclaims,

(3) Plaintiff has not contacted the Court following his counsel’s withdrawal,

(4) Plaintiff’s conduct appeared to be intentional,

(5) no other sanction would be effective given Plaintiff’s complete failure to respond to discovery requests and orders, and

(6) the Court could not assess the merit of defenses without Plaintiff’s participation.”

Slack was instructed by the Court to offer support for the counterclaims and damages, and the Court ultimately entered a default judgment as to the Slack’s breach-of contract counterclaim and denied the other three (misconduct, fraud, and implied covenant of good faith and fair dealing).

The willful and wanton misconduct claim failed due to the lack of damages as attorney’s fees are not sufficient damages under common law negligence.

As for the common law fraud claim, the Court found the material misrepresentation element was met by entering his number and clicking “SEND LINK” as this “demonstrated and intent that Defendant would rely on.” The element of reasonable reliance was also met with the Court holding misrepresentation that induces sales or solicitations should be treated similarly as a misrepresentation that induces a purchase. This also ultimately failed due to lack of damages outside attorney’s fees which is required under the economic loss doctrine.

The breach of contract claim was however successful. This was because Gino, according to the Court, violated the Defendant’s Acceptable Use Policy. Gino by failing to respond “admits that he used Defendant’s services and accepted the terms of both the User Terms of Service and Acceptable Use Policy. The User Terms of Service created a binding contract and part of that contract encompasses the Acceptable Use Policy which prohibits users from “impersonat[ing] any person or entity, including, but not limited to, an employee of ours.” Gino violated tis when he sent himself the download links then proceeded to represent the messages were sent by “Defendant … or its agent.” Unlike with the willful/wonton misconduct and fraud claim, injury caused by noncompliance is required rather than “damages.” The element was met since Slack was “forced to engage in litigation and incur related expenses.” The contract terms also provided for the recovery of attorney’s fees and costs (“[i]n any action or proceeding to enforce rights under the User Terms, the prevailing party will be entitled to recover its reasonable costs and attorney’s fees”).

Now as for the final counterclaim, breach of the implied covenant of good faith and fair dealing, the Court declined to enter a default judgment here only because they already did so with the breach of contract counterclaim for the same alleged conduct. “[U]nder New Jersey law, ‘[a] breach of the covenant of good faith and fair dealing must not arise out of the same conduct underlying an alleged breach of contract action.” Note, the Court did hint that the conduct alleged here could equate to a breach of this sort.

Despite three of the counterclaims failing to check all the boxes required for recovery, Slack is still getting what they want by just being successful on the breach of contract claim. Slack only asked for attorney’s fees, and attorney’s fees they shall receive.


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