Very rarely does a single district court ruling completely change litigation strategy and class action dynamics. But this one really may have done just that. Very important case.

But first, some background.

So pretty much everybody out there knows I created R.E.A.C.H., but not everyone knows why.

Troutman Amin, LLP often represents large-scale lead buyers–companies that are in the direct-to-consumer space and rely on third-parties to detect interest in consumers and help to connect those consumers with the lead buyer who will offer products and services the consumer wants.

Our clients rely on representations from the lead seller that the leads are valid and a real consumer is asking for contact. When that turns out not to be the case–i.e. when the lead supplier has provided a “fake lead”–it can lead to a massive TCPA lawsuit. And since the lead suppliers are often small companies whereas our clients are often massive ones, it is the innocent lead buyer–as opposed to the bad-guy lead seller–that faces the risk.

But there is another bad guy element to these cases– repeat litigators who will often use the specter of lead fraud to set up their own lawsuits.

The scam goes like this.

Repeat litigator fills out a form (or has someone else do it for them) using their real phone number but other fake data elements–wrong name, or email address, or address.

In Jackson v. Direct Building Suppliers, 2024 WL 1721144 (M.D. Pa. April 22, 2024) a court just upheld a lead buyer’s ability to sue a litigator for fraudulently submitting a lead form and I can sincerely think of no reason why such counterclaims won’t be brought in every “fake lead” case from now on.

As alleged in the counterclaim– Jackson went on a website and submitted ‘opt-in’ data
requesting a phone call. The data provided Jackson’s phone number and his home address under the name Barry Johnson. An “apparent fake email address of ‘bluebrrd@gmail.com’ ” was also submitted by Plaintiff. (Ya’ll might want to check your records to see if you have a bluebrrd running around in there.)

On September 28, 2021, a third-party vendor contacted Jackson. After confirming his interest, the third-party vendor transferred Plaintiff to Defendant’s representative. (We see this all the time right? Call center contacts litigator who feigns interest.)

Over the course of this call, Jackson responded to “Barry” and “Mr. Johnson” and “feigned an interest in purchasing solar products from” Direct Building Supplies. 34 This individual gave Defendant both Jackson’s home address and another seemingly fake email address of “bluebird3224@gmail.com” and “requested an at home appointment … to purchase solar products.” The representative then “confirmed an appointment at Plaintiff’s home on Friday, October 8, 2021,” and Jackson requested that information be sent to “bluebird3224@gmail.com” so that he may “review the company performing the work.”

Plaintiff sued Defendant alleging his lead was fake and that he merely played along with the caller to see who had made the calls. This is a common trick in TCPAWorld and many courts have tolerated it.

But Direct Building Supplies refused to play that game. And they countersued Plaintiff for fraud arguing that the submission of the fake lead caused it damage in the form “of
ongoing fees and costs, prior expenditures, and reputational damage.”

The Court agreed with DBS– it found the conduct alleged in the counterclaim (i.e. Plaintiff submitted a fake lead) was sufficient to state a claim for fraud. That means a jury will need to determine if the lead was fraudulent or not and–if so– it may award damages to the Defendant. Of course, if the lead is fraudulent the claim may still continue against DBS.

Notably DBS also sued the lead source here– TechMedia Group. So they are really going to battle with a shotgun–and I love to see it.

Importantly–as I already suggested–I see no reason why similar counterclaims cant be brought in every TCPA suit arising out of an alleged fake lead. Not only does this give the Defendant the satisfaction of being able to pursue a bad-guy repeat litigator, it also is a class action killer– there is simply no basis to believe mass fraud takes place on websites. So there is no one in a “similar” position to the Plaintiff that has set up their own claim.

Very fascinating and something class action defense lawyers REALLY need to be paying attention to.