Jason Garcia and Harry Wessel | Sentinel Staff Writers
July 9, 2008
A law firm owned by a new appointee to the board that runs Orlando International Airport is facing a potential class-action lawsuit that accuses it of running a deceptive "collection mill" on behalf of Wal-Mart, Publix and dozens of other large retailers.
Filed in federal court in Miami, the suit accuses Orlando-based Palmer, Reifler & Associates of harassing and intimidating suspected shoplifters into paying large penalties, even if they have not been convicted of a crime.
Palmer, Reifler's founding partner is James Palmer, 48, a prominent political fundraiser who was appointed in May by Gov. Charlie Crist to the governing board of the Greater Orlando Aviation Authority. The authority runs OIA and Orlando Executive Airport.
The lawsuit was filed on behalf of a Pennsylvania mother who said she was inundated with threatening letters from Palmer's firm after her daughter was accused of trying to shoplift a pair of sunglasses from a J.C. Penney department store. The suit is seeking class-action status to represent other consumers who have been similarly targeted despite not being convicted of stealing.
In court filings, lawyers for the Pennsylvania woman have asked a judge to shut down much of Palmer, Reifler's operations and to force the firm and its partners to repay "the tens of millions of dollars they have extorted for themselves and their retail clients."
A spokesman for Palmer, Reifler said Tuesday the firm does not comment on pending litigation. In a statement on the firm's Web site designed to answer critics of its practices, partner Natt Reifler says: "We do our best to represent our profession, our clients and ourselves with the highest legal standards in our industry."
Palmer, Reifler & Associates is one of the country's leading firms in "civil recovery," the process by which businesses are allowed to go after accused shoplifters for large fines that typically far outstrip the cost of any merchandise in question. Supporters say civil-recovery laws help ensure that shoplifters, rather than all consumers, foot the bill for the costs businesses incur trying to prevent theft -- from installing surveillance cameras to hiring security guards.
In Florida, where experts say civil-recovery laws are especially favorable to businesses, a store can seek a minimum of $200 and as much as three times the amount of any actual damages, plus attorney's fees.
Palmer, Reifler contracts with individual businesses to collect the penalties on their behalf -- typically through agreements that allow the firm to keep between 13 percent and 30 percent of any money it collects. The firm says it has more than 50 retail clients, including Wal-Mart Stores Inc., Publix Super Markets Inc., Walgreen Co. and Sears Holdings Corp.
Thousands of letters
The firm employs aggressive tactics, sending letters and making phone calls that threaten possible lawsuits and seek escalating penalties. A partner in the firm has estimated that Palmer, Reifler sends 80,000 to 120,000 letters each month.
It is exactly those tactics that have sparked the latest lawsuit against the firm.
The suit arose after the 15-year-old daughter of Veronica Kelly of Allentown, Pa., was accused of trying to shoplift a pair of sunglasses at a J.C. Penney store. Although lawyers for Kelly say her daughter was not convicted of shoplifting, they say Kelly was subsequently besieged with letters from Palmer, Reifler seeking penalties -- first $202, then $477.
In their suit, Kelly's lawyers accuse Palmer, Reifler of attempting to scare people into making such payments by threatening to sue them, even though the firm has filed "few, if any, civil actions on behalf of its retail clients." They also accuse the firm of churning out hundreds of thousands of similar "generic form letters" while performing little or no research into individual cases.
The suit alleges that Palmer, Reifler's tactics constitute mail fraud and racketeering. "We look forward to the allegations being addressed by the court," said Alison Harke, a Miami lawyer representing Kelly.
This isn't the first time Palmer, Reifler has faced scrutiny. The Florida Bar received six complaints last year against the firm -- from five different states -- all focused on its civil-recovery demand letters.
One involved a 14-year-old boy who unsuccessfully attempted to shoplift an $11 pair of sunglasses from Ron Jon's Surf Shop in Cocoa Beach. His mother received a letter on Palmer, Reifler letterhead demanding payment of $475 within 10 days, warning that, "in the event a lawsuit is filed, you would be served by the sheriff or other means with a summons. . . ."
The Florida Bar investigated and dismissed the complaints but stated in a letter last December to James Palmer that "your methods and professionalism in sending demand letters and subsequent collections activities are questionable." The letter from the 9th Judicial Court Grievance Committee concluded: "You are herein warned that harassment techniques in an effort to collect for your clients are not acceptable and will not be tolerated by this committee in the future."
Law firm defends tactics
Despite the controversies, the firm has consistently defended its tactics.
"Our reputation as a law firm was built and is strengthened by our diligence in protecting client interests through meticulous care in how we pursue civil recovery," Natt Reifler wrote in the statement on the firm's Web site. The statement came in response to a Wall Street Journal article earlier this year that raised questions about civil-recovery practices.
And while the firm declined this week to discuss the new lawsuit, spokesman Joe Kilsheimer noted that The Florida Bar -- despite its stern words -- opted to not take any further action against Palmer, Reifler. "We think that speaks for itself," Kilsheimer said.
Jason Garcia can be reached at firstname.lastname@example.org or 407-420-5414. Harry Wessel can be reached at email@example.com or 407-420-5506.
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