Posner: ‘Baseless’ Class Suit Just a Cash-Grab

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By Perry Cooper

A class-action firm drew a strong rebuke for bringing a baseless suit against its telecommunications services provider ( Cafferty, Clobes, Meriwether & Sprengel LLP v. XO Commc’ns Servs. LLC , 7th Cir., No. 16-3472, 3/8/17 ).

“It can’t have brought this suit just to recover a $9,000 termination fee (less, actually, because it hadn’t paid the entire fee); it must have hoped that a class would be certified,” Judge Richard Allen Posner wrote March 8 for the U.S. Court of Appeals for the Seventh Circuit.

Cafferty, Clobes, Meriwether & Sprengel LLP brought a class action against XO Communications Services LLC over the termination fee the provider charged when the law firm canceled its contract.

The firm complained the contract’s automatic renewal feature was unfair, even though “it is child’s play for the customer to keep track of the deadline,” the court said.

Real Motive: Big Payout

The court emphasized that the firm isn’t “some hapless consumer bamboozled by a huge company.” It pointed to the law firm’s website, which boasts that it has won billions from companies for class plaintiffs.

Here, “its real aim, doubtless, was, in the words of its website, to ‘recover billions of dollars for the benefit of represented plaintiffs and classes,’” the court said.

Judges William Joseph Bauer and Diane S. Sykes joined the opinion.

Lite DePalma Greenberg LLC represented the law firm.

Barack, Ferrazzano, Kirschbaum & Nagelberg LLP represented XO Communications.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com

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