Adler v. McNeil Consultants, LLC

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JIM S. ADLER, P.C. and JIM ADLER, Plaintiffs, v. MCNEIL CONSULTANTS, LLC D/B/A ACCIDENT INJURY LEGAL CENTER, QUINTESSA MARKETING, LLC D/B/A ACCIDENT INJURY LEGAL CENTER, and LAUREN VON MCNEIL, Defendants.

No. 3:19-cv-2025-K-BN

United States District Court, N.D. Texas, Dallas Division

February 15, 2023

FILED UNDER SEAL

MEMORANDUM OPINION AND ORDER

DAVID L. HORAN, UNITED STATES MAGISTRATE JUDGE

Plaintiffs Jim S. Adler, P.C. and Jim Adler have filed a Motion for Sanctions for Spoliation of Evidence, see Dkt. No 72-2 (the “Spoliation Sanctions Motion”) “and ask the Court to sanction Defendants [McNeil Consultants, LLC d./b/a Accident Injury Legal Center Quintessa Marketing, LLC d/b/a Accident Injury Legal Center and Lauren Von McNeil (collectively, “Defendants” or “Quintessa”)] for their failure to preserve critical evidence for over two years, all during this litigation,” id. at 5.

As remedies for Defendants' alleged spoliation, Adler asks the Court to order that:

1. “Defendants are deemed to have admitted that they caused substantial instances of confusion among an appreciable number of consumers searching for Adler online and that Defendants took no action to address the ongoing confusion”; 2. “Plaintiffs are entitled to an adverse-inference instruction, the language of which will be determined at the jury-charge conference or another appropriate time;”

3. “Defendants' equitable defenses are stricken”; and

4. “Adler is entitled to an award of attorney's fees incurred in connection with the [Spoliation Sanctions Motion], in an amount to be determined upon supplemental briefing as ordered by the Court.”

Dkt. No. 72-19 at 1; accord Dkt. No. 72-2 at 21-23.

Defendants filed a response, see Dkt. No. 77, and Adler filed a reply, see Dkt. No. 115.

For the reasons and to the extent explained below, the Court grants in part and denies in part the Spoliation Sanctions Motion [Dkt. No. 72-2].

Background

The parties and the Court are familiar with the background of this case, so the Court will not repeat it here. See e.g., Jim S. Adler, P.C. v. McNeil Consultants, L.L.C., 10 F.4th 422 (5th Cir. 2021).

In the Spoliation Sanctions Motion, Adler contends that

[t]he central issue in this lawsuit is Defendants' use of Adler's trademarks as keywords to confuse Adler's existing and potential clients into calling Defendants instead. As part of their bait-and-switch scheme, Defendants keep Adler's clients confused as to Defendants' affiliation with Adler, while trying to convince the victims to hire a competing law firm. Despite the obvious significance of such evidence, Defendants:

(1) did not even begin to preserve the hundreds if not thousands of call recordings of confused clients trying to reach Adler until late 2021; (2) took no steps to preserve Slack messages exchanged by their employees during the intake process; and

(3) permanently deleted the email account of Jason Love - Director of Intake for Defendants' call center - after he left the company in December 2021.

This loss of evidence was not simple negligence. Defendants admit that, from the time this lawsuit was served in September 2019 through at least the Fifth Circuit decision in August 2021, they made no effort whatsoever to preserve any documents. At the same time, Defendants' owner Lauren Mingee told her employees that Defendants had won the lawsuit. Defendants cannot credibly explain their failure to maintain years of call recordings or Slack messages, nor their deletion of Love's email account over two years after Adler filed suit and after Adler served discovery requests. This pattern of conduct - spoliating some of the most direct proof of the confusion and harm caused by Defendants' unlawful scheme while falsely telling employees the case had ended - shows Defendants' bad faith.

To remedy Defendants' abuse of the judicial process, the Court should: (1) enter a deemed factual admission against Defendants regarding confusion during the spoliated period; (2) issue an adverse-inference instruction to the jury about Defendants' spoliation; (3) strike Defendants' equitable defenses; and (4) award Adler his reasonable attorneys' fees incurred in connection with this issue.

Dkt. No. 72-2 at 6.

As factual background, Adler explains that

Defendants call themselves a “legal lead generation” company. However, Defendants' business is far more predatory and troubling than the label suggests.

Defendants use search-engine marketing techniques to capture and redirect online traffic from persons conducting a search on their mobile device. Specifically, Defendants target auto-accident victims searching on their phones for well-known personal injury law firms, including Adler's firm. Defendants conduct their scheme by purchasing the trademarks and brand names of well-known personal-injury firms as search-engine keywords. For example, Defendants purchase “Jim Adler” as a Google keyword. As a result, an accident victim or existing client looking up “Jim Adler” on their phone may instead be shown a paid Google ad for Defendants.

Defendants' resulting ads use only generic, non-branded ad copy like “Texas Car Accident Lawyers” and “Get The Money You Deserve! Let Us Fight On Your Behalf.” This language, by design, encourages an affiliation with the personal injury firm the accident victim was trying to reach (in this case, Adler). Further, unlike most Google search ads, Defendants' mobile ads do not link to a branded website; instead, they use a "click to call" or "call only" mechanism. When the accident victim taps the ad on their mobile device, it brings up a prompt to automatically call a phone number belonging to Defendants. The prompt does not identify who the number belongs to and contains no information other than an unidentified number. These calls go to Defendants' intake center.

When an accident victim calls Defendants through one of Defendants' "click to call" or "call only" Google ads, Defendants' intake specialists are trained to further confuse the victim and steer them away from the law firm they were trying to reach (in this case, Adler) and toward competing firms with whom Defendants have referral arrangements. Specifically, when victims ask whether they have reached the Adler firm, Defendants' script instructs their intake specialists to respond: "This is the intake department, are you calhng in regards to a new case or an existing case?" Rausa Decl. ¶ 4, Ex. 3. If pressed further, Defendants' intake specialists are instructed to repeat that the victim has reached "the intake department" and, if the confused victim is an existing client of another law firm, urge them to accept a second opinion from one of Defendants' competing law firms. [Mike Walker, Defendants' Chief Operating Officer, confirmed this at his deposition. See Rausa Decl. ¶ 5, Ex. 4 ("Walker Dep.") at 95:18-22 ("Q. And if someone asked again, but is this the Adler law firm, the call center agent was instructed to say, sir/ma'am, this is the intake department, correct? A. Yes.").] Confused accident victims, believing they reached Adler, then share personal inforination and details about their accident with Defendant's intake specialist, [REDACTED] See Rausa Decl. ¶ 6, Ex. 5 (L Dep.") at 133:15-134:11; see also Walker Dep. 117:9-118:10. [The script instructs intake specialists to move quickly in obtaining information about an accident: "get the [date of incident], injuries/treatment, liability, and insurance in 2 minfutes] and continue call." See Rausa Deck, Ex. 3.]

Asked why Defendants' intake specialists are taught to answer the phone this way, Defendants' owner Lauren Mingee claimed that "intake department" is a "d/b/a" for Quintessa. Mingee admits that such a greeting could be confused as the intake department for a law firm (such as Adler's firm), but when asked about that risk of confusion, she testified that it would be addressed only "if that concern was brought up" by the caller. Defendants do not instruct their intake specialists to plainly answer "No" when a caller asks whether they are the intake department for Adler or any other specific firm. Defendants' owner Mingee claimed that such a "blanket statement" would be inappropriate, and she has repeatedly “refused” to issue that instruction.

[REDACTED]

As a result of Defendants' Adler keyword purchases and misleading tactics, accident victims have signed retainers with Defendants on the mistaken belief that they were engaging Adler, typically without ever being told otherwise. See, e.g., Id. 293:14-18; Rausa Deck, Ex. 6 (Dep. Ex. 39) (discussing an instance in which "the signed client thought he had hired Adler even after signing a retainer [with Defendants] and being warm transferred to [Defendants' referral firm]"). Defendants' referral firms have complained to Defendants about receiving retainers for clients looking for or already engaged with Adler. See, e.g., Id. 302:24-303:6; Rausa Decl., Ex. 6 (Dep. Ex. 40) (email to Defendants from a referral firm: "I'm on the phone with [client] who is advising she signed with Jim Adler and was set up with treatment at a clinic today. She's not sure how she was referred to us, but she is currently signed with Adler."). And on multiple occasions, Defendants' referral firms have told Defendants that their intake process is misleading and unethical. E.g., Id. 330:20-331:13; Rausa Decl., Ex. 6 (Dep. Ex. 51) (advising Defendants that referred clients were "currently still under the representation of Jim Adler" and that Defendants' actions were "unethical"); id. 336:6-22 (advising Defendants that their intake specialists "deliberately misled" the victim into believing he was signing with Adler).

Dkt. No. 72-2 at 7-10 (cleaned up).

Adler explains that "[t]he spoliated evidence [at...