Kelly v. PALMER, REIFLER, & ASSOCIATES, PA

681 F. Supp.2d 1356

Veronica KELLY, individually and on behalf of others similarly situated, Plaintiffs, v. PALMER, REIFLER, & ASSOCIATES, P.A., Defendant.

Case No. 08-21843-CIV.

United States District Court, S.D. Florida, Miami Division.

January 11, 2010.

Adam M. Moskowitz, Thomas A. Tucker Ronzetti, Alaina R. Fotiu-Wojtowicz, Kozyak Tropin & Throckmorton, Coral Gables, FL, Alison Clasby Harke, Lance August Harke, Harke & Clasby, Miami, FL, Jeffrey L. Kodroff, Spector Roseman Kodroff & Willis PC, Philadelphia, PA, for Plaintiffs.

Alan Seth Feldman, Lydecker Diaz Lee Behar Berga & De Zayas, Miami, FL, for Defendant.

ORDER ADOPTING MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION AND GRANTING SUMMARY JUDGMENT AGAINST PLAINTIFFS

FEDERICO A. MORENO, District Judge.

THE MATTER was referred to the Honorable Edwin G. Torres, United States Magistrate Judge for a Report and Recommendation on Plaintiffs Veronica Kelly, Lil Simon, and Ron Baum's Motion for Partial Summary Judgment on Liability for Violations of FDUTPA (D.E. No. 119), filed on May 27, 2009, and Defendant's Motion for Summary Judgment (D.E. No. 165), filed on August 14, 2009. The Magistrate Judge filed a Report and Recommendation (D.E. No. 216) on October 30, 2009. The Court has reviewed the entire file and record. The Court has made a de novo review of the issues that the objections to the Magistrate Judge's Report and Recommendation present, and being otherwise fully advised in the premises, it is

ADJUDGED that United States Magistrate Judge Edwin G. Torres's Report and Recommendation (D.E. No. 216) is AFFIRMED and ADOPTED. Most of the Plaintiffs' objections concern Magistrate Judge Torres's finding that Defendant did not go beyond rendering traditional legal services to its clients. The Plaintiffs rely on this Court's early discovery order compelling Defendant to produce records over Defendant's objection that the work product immunity applied because it was engaged in the practice of law. The Court did not have the benefit of a fully-developed record at that time and, now that it does, it agrees with Magistrate Judge Torres's finding that Defendants were engaged in the practice of law. It is therefore

ADJUDGED that:

1. Plaintiffs Veronica Kelly, Lil Simon, and Ron Baum's Motion for Partial Summary on Liability for Violations of FDUTPA is DENIED.

2. Defendant Palmer, Reifler & Associates, P.A.'s Motion for Summary Judgment is GRANTED and summary judgment is entered in the Defendant's favor and against each of the Plaintiffs on all counts.

3. This case is CLOSED and all pending motions are DENIED as moot.

VERONICA KELLY, a citizen of Pennsylvania, LIL SIMON, a citizen of Florida, and RON BAUM, a citizen of Florida, individually and on behalf of all others similarly situated Plaintiffs vs. PALMER, REIFLER & ASSOCIATES P.A., a Florida partnership Defendant.

REPORT AND RECOMMENDATION ON MOTIONS FOR SUMMARY JUDGMENT

EDWIN G. TORRES, United States Magistrate Judge.

This matter is before the Court on Defendant Palmer, Reifler & Associates, P.A.'s ("Palmer Law Firm" or "the firm") Motion for Summary Judgment D.E. 165 and Plaintiffs Veronica Kelly, Lil Simon, and Ron Baum's (collectively, "Plaintiffs") Motion for Partial Summary Judgment on Liability for Violations of FDUTPA D.E. 119. The Honorable Federico A. Moreno referred this case to the undersigned Magistrate Judge for all pretrial proceedings D.E. 62. After considering the motions and related filings, and the entire record in this case, the Court recommends that Defendant's motion for summary judgment be Granted, and Plaintiffs' motion be Denied, for the reasons set forth below.

I. BACKGROUND

This lawsuit concerns demand letters sent by the Palmer Law Firm pursuant to various states' civil theft recovery statutes. These statutes, which have been enacted in all fifty states, allow retail stores and other commercial entities to recoup losses sustained as a result of retail theft. The Palmer Law Firm has been retained by numerous retailers and commercial entities to pursue civil damages and penalties against individuals detained in the clients' stores for shoplifting, pursuant to these civil theft recovery statutes.

Plaintiffs Veronica Kelly, Lil Simon, and Ron Baum or their children received civil theft demand letters from the Palmer Law Firm. Plaintiff Kelly, who resides in Pennsylvania, received three letters from the firm in connection with an incident at J.C. Penney involving her minor child. D.E. 119-5¹ at 2 ¶ 3. The first letter Kelly received stated:

Dear Parent/Guardian of :

This Law Firm represents JCPENNEY concerning its claim against you in connection with an incident involving your child in their store 67 on 3/1/2008.

Pursuant to "Damages in actions on retail theft" statute, 42 Pa.C.S.A. § 8308, JCPENNEY may proceed with a civil penalty action against you.

You may settle this matter by making payment to us in the amount of $202.00 within twenty (20) days of the date of this letter. Upon receipt of full payment and clearance of funds, you will receive a written release of the civil penalty claim.

Payment should be made payable and mailed to the Palmer Law Firm. ....

Should payment fail to be made, we will review the file for the possibility of further civil action and may choose to request pre-litigation attorney's fees. Therefore, to avoid a higher demand request, please make payment in full according to the terms stated or call our office to set up suitable payment arrangements.

Id. at 4 (emphasis in original). The letter was signed by a lawyer admitted to practice law in Pennsylvania as "Of Counsel for the Firm."

The second letter to Ms. Kelly noted her failure to pay pursuant to the prior written demand, and advised in pertinent part:

Pursuant to the "Damages in actions on retail theft" statute, 42 Pa.C.S.A. § 8308, JCPENNEY may now proceed with litigation against you.

You may stop a lawsuit from being filed and settle this matter by making payment to us in the amount of $477.00 within ten (10) days of the date of this letter. ....

* * *

Should payment fail to be made, our client may then proceed to file a lawsuit against you, in which case our client may seek attorney's fees, court costs and other legal expenses throughout the litigation. In such case, you would be served by the Sheriff or other means with a summons requiring you or your attorney to appear in court to defend the action. If successful in any such litigation, we estimate that our client would be seeking a final judgment of damages, attorney's fees and court costs in excess of the amount demanded herein.

Please make payment according to the terms herein to avoid such action.

Id. at 5 (emphasis in original). The third letter Kelly received was similar to the second letter, again noting her failure to pay and demanding $477.00. Id. at 6. Kelly has refused to pay because her daughter assured her that she did not steal anything from the retailer. Id. at 3 ¶ 5.

Plaintiff Simon received three letters in connection with an incident at Wal-Mart involving her adult child, Michael, who resides with her in Florida. D.E. 119-6 at 2 ¶¶ 3, 5; D.E. 165-3 at 5-6. The first two letters, sent by Wal-Mart, demanded payment of $200.00. D.E. 119-6 at 2 ¶ 4. The third letter was sent by the Palmer Law Firm and signed by James R. Palmer of the firm. Id. at 4. It was similar to the second letter the firm sent to Kelly and demanded payment of $275.00 to "stop a lawsuit from being filed and settle this matter." Id.. Simon paid $280 to the Palmer Law Firm and received a written release. Id. at 3 ¶ 6; D.E. 165-3 at 24, 30.

Plaintiff Baum received one letter from the Palmer Law Firm in connection with an incident at Macy's involving his minor child. D.E. 165-5 at 11, 22. He paid the $200 demand amount and received a written release. D.E. 192 ¶ 123; D.E. 165-5 at 23-25, 27.

The Palmer Law Firm has approximately 90 employees, six of whom are lawyers. D.E. 119-2 at 24-26. The firm associates with attorneys in other states (the "of counsel" attorneys) who, the firm asserts, render advice on the substantive law of his or her state, respond to opposing parties' phone calls and correspondence, sometimes review case information, execute certified demand letters, and file suit when authorized by the client. D.E. 166-12 at 3 ¶ 8. According to Natt O. Reifler, a partner at the Palmer Law Firm with overall supervision of the firm's legal department and collections, the firm sent out over four million demand letters between June 2004 and March or April 2009, averaging approximately 70,000 per week. D.E. 213-1 at 48-49, 69-70. The majority of people pay after receiving a demand letter, but some do not, and the total figure includes second and third letters as well as the initial demand letter. Id..

The firm's demand letters are based on information provided to the firm by their retail clients, often but not always in an electronic format. Id. at 72, 78; D.E. 119-12 ¶¶ 4, 6. For some of its clients, the firm conducts an individual review of the information provided by the client. Id.. For many other clients, the firm relies, at least initially, on the internal review and loss prevention procedures set up by the individual retailers and discussed with the firm. Id.. For some but not all of its clients, the firm manually calculates the demand amount that is set forth in the letters. Id.. For many clients, there is no separate review by an attorney prior to the firm sending out a demand letter that is signed by an attorney. Reifler Depo. at 78-79, 8; D.E. 119-12 ¶ 6. Reifler estimated that close to one million written releases have been sent out by the firm, meaning close to twenty-five percent of the people who received demand letters paid in response thereto. Reifler Depo. at 94-95. The firm offers many of its retail clients the option of litigation services, often by separate agreement. D.E. 119-9 at 4 ¶ 2.3.e; D.E. 119-10 at 2, § 5; ...