EXCLUSIVE: Confidential contract exposes serial suers' financial operation

ABC15 has obtained a confidential contract that exposes how a controversial Arizona group is attempting to turn lawsuits filed under the Americans with Disabilities Act into a lucrative money-making operation.  

Here are the basics:

Plaintiffs are paid $50 per lawsuit. In return, the company pays all attorney, legal and court costs associated with the case and is “first entitled” to the proceeds.

Read a copy of the “Litigation Funding Agreement” below:

Litigation Management Services Funding Agreement by Dave Biscobing on Scribd

The contract titled “Litigation Funding Agreement” is between a for-profit company called Litigation Management and Financial Services, LLC and its professional plaintiffs.

ABC15 has confirmed through attorneys, sources and internal documents that Litigation Management and Financial Services is comprised of the same people behind the Valley group, Advocates for Individuals with Disabilities, or AID.

In Arizona, AID sued 1700 businesses in a six month period. After an ABC15 investigation, the Arizona Attorney General’s Office intervened and convinced a judge to dismiss all of the group’s open cases. During that time, AID formed Litigation Management Services and recruited attorneys and plaintiffs to file hundreds of cases in Colorado, Nevada and New Mexico.

The plaintiff in New Mexico, Alyssa Carton, has since expressed her regret for working with AID and Litigation Management Services.

Carton, who filed 99 cases against businesses, appeared in U.S. District Court in Albuquerque on Thursday. The hearing was to determine if she qualified for a waiver that would allow her to avoid prepayment of court fees, which amount to roughly $40,000.

Attorneys tell ABC15 that’s another major issue that could mean ethical rules or even laws were violated.

Several of the plaintiffs associated with Litigation Management and Financial Services have applied for fee waivers. But ABC15 discovered those waivers, which require detailed financial and income information, don’t include anything about those plaintiffs’ funding agreements with the company or the money they being paid for the cases.

According to courtroom testimony, Carton's attorney, Sharon Pomeranz, also signed an agreement. Pomeranz told Judge Karen Molzen she became involved with Litigation Management by responding to a job posting on Indeed.com late last summer.

Pomeranz said in courtroom testimony that she's among several other attorneys in other states who are following Litigation Management's "model" in suing businesses.

The judge is going to recommend to Chief Judge Christina Armijo in Albuquerque that the New Mexico cases be dismissed with prejudice. She said she'll also consider possible sanctions against Pomeranz for misleading the court and acting cavalier.

"This kind of litigation undermines the purposes of the Americans with Disabilities Act," Judge Molzen said.

Before the hearing wrapped Thursday, Carton told the attorneys questioning her that the cases "damaged a lot."

"I'm ashamed to be a part of this," she said. "It's awful."

When asked by the attorneys who should pay them for the time and money they've spent defending the cases, Carton deflected to her "team."

"I would hope they'd be held responsible," she said.

The attorneys believe Pomeranz was playing "fast and loose" in having Carton request court fee waivers because of her low income since Pomeranz admitted that Litigation Management was funding the lawsuit efforts.

Judge Molzen quoted a 2004 case from California which made reference to ADA cases being a part of a "cottage industry," and how people with disabilities are brought in as "professional pawns."

"It looks like, to me, that you were such a pawn," the judge told Carton. Carton agreed.

Judge Molzen is expected to decide on sanctions and who will pay the defendants' attorney fees next week.

Contact ABC15 Investigator Dave Biscobing at dbiscobing@abc15.com.

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