Intriguing TCPA Adequacy Decision Illustrates Close-Knit Nature of TCPA Class Action Community

TCPA litigation is big business. TCPA class lawyers make millions for the right case, and competition for good leads is fierce.

As I have said many times, however, TCPA class litigation is among the most complex and nuanced out there, and pitfalls abound both in pursuing and defending these actions. It is not just high-end TCPA defense lawyers that are in hot demand—top TCPA class lawyers find themselves wanted in more cases than they can safely take on.

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One class lawyer of relatively high repute is Keith Keogh. He’s had his run-ins with a couple of courts, such as the District of Minnesota finding his client had “distort[ed]” the evidentiary record in pursuing a certification motion, see Ung v. Universal Acceptance Corp. 249 F. Supp. 3d 985, n. 3 (D. Minn. 2017) and his engagement letter had to be modified before he could be approved as class counsel in Lanteri v. Credit Protection Asst. However, he has also successfully shepherded a number of TCPA class actions through to successful resolutions including arguably the best (from the plaintiff’s perspective) TCPA settlement in history. This makes his involvement in TCPA class suits valuable for would-be class representatives (and lawyers hoping to make a referral fee for his efforts) and somewhat foreboding for defense lawyers hoping to thwart certification in such actions.

But Keogh doesn’t just jump blindly into cases that are brought to him, as highlighted in the recent decision in Wexler v. AT&T Corp., 15-CV-686 (FB)(PK), 2019 U.S. Dist. LEXIS 131869 (E.D.N.Y. Aug. 5, 2019).

Wexler has an extremely interesting procedural history. The case was originally initiated as a putative class with Plaintiff’s husband serving as class counsel. That didn’t last long; however, as a class representative’s husband should not serve as class counsel owing to a potential conflict of interest issues. Nonetheless, when Mr. Wexler first withdrew as class counsel, he initially intended to seek recovery of fees on a quantum meruit theory. That created its own nest of issues that eventually resulted in him disclaiming any recovery to fees in a bid to avoid potential conflict issues.

In the meantime, however, Wexler was working behind the scene with Keogh on a potential engagement to bring him (Keogh) and another lawyer—Scott Owens—into the suit to serve as class counsel. According to the Court’s analysis, there had been “close business dealings between Mr. Wexler and [Keogh]” prior to this potential engagement, however.  Moreover, the original retainer agreement (apparently) did not mention a specific cut coming back to Mr. Wexler but did assign a 40% cut of a fee to Keogh. Although Plaintiff and other potential class counsel executed this retainer agreement, Keogh did not sign it. According to the Wexler decision, this was because Keogh wanted to see if the Defendant would successfully pursue arbitration before taking on representation in the case. Interesting, no?

Plaintiff’s apparent willingness to grant fees to Keogh despite his decision to wait-and-see on the arbitration issue would ultimately have a major impact on the court’s analysis of her adequacy to represent the class. In assessing the adequacy of Mrs. (Dr.) Wexler to continue representing the class as Plaintiff in 2019, the court noted that she had signed that retainer agreement in 2015 even though Keogh had not yet agreed to represent the class and despite the fact that she had never met him. As the court relates matters:

[t]he fact that Plaintiff would agree to give an interest in attorneys’ fees to someone who specifically declined to act as her counsel creates the appearance that Plaintiff had a conflict of interest, such that she would act to benefit those with financial dealings with her husband over members of the class.

The court was also concerned that the original retainer agreement did not make any mention of payment to Mr. Wexler for his fees in the case although he still expected to recover fees. As the Court views this matter, this fact alone demonstrates potential misdealing: “there is no indication of how he was to be paid…  [this] gap creates an appearance that Mr. Wexler had a spoken or unspoken side agreement with Mr. Giardina and Mr. Keogh.” This appearance was apparently heightened by deposition testimony in which “Mr. Wexler testified that he expected to get a ‘reasonable amount’ of fees, but that he was not included in the 2015 Retainer Agreement because ‘it would raise more problems than it would solve’ in light of the potential adequacy issues.”

A new retainer agreement was signed by Mrs. (Dr.) Wexler in 2016 that gave 50% of fees to Keogh and 50%  to another Plaintiff’s firm, but that new agreement clearly reserved to Mr. Wexler the ability to petition the court for a quantum meruit recovery.  As noted above, Mr. Wexler eventually disclaimed his right to any QM recovery in the case—apparently via a status report to the court in 2018—in a bid to salvage his wife’s adequacy to represent the class. But it was too late:

In light of Mr. Wexler’s close business relationships with Plaintiff’s current counsel, along with Plaintiff’s actions and inactions, the undersigned finds that a conflict of interest is apparent between Plaintiff and class counsel, such that divided loyalties impede her from monitoring counsel in this action.

Wow.

So there you have it TCPAWorld. A case that began with the potential class being represented by the husband of the class representative has hit the rocks of adequacy yet again. Keogh wanted to sit on the sidelines and await the outcome of the initial scuffle over arbitration but the class representative’s willingness to turn over fees to him despite his unwillingness to join the case—and apparently in blind reliance on her spouse’s advice—was deemed to create an appearance of impropriety thwarting adequacy given the “close business dealings” between her husband and Keogh.

I guess its a small TCPAWorld after all.

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