A federal judge in Atlanta tossed out a bewilderingly complex lawsuit by a group of investors claiming they were the victims of a "diabolical" fraud that netted more than $11 million in a scheme perpetrated by dozens of defendants and a "fictitious" internet communications company.

The claims involve investors in a Georgia-based company, Gotham Media Corp., and a product it developed called VIDGO, described in court filings as "a service that would offer 'a la carte programming,' where consumers could create bespoke cable packages, paying only for their desired content."

In dismissing the suit, Judge J.P. Boulee of the U.S. District Court for the Northern District of Georgia noted that a fellow jurist had already warned that the complaint—a 195-page compendium of 50 causes of action against 42 defendants—constituted an impermissible "shotgun" pleading and ordered them to rewrite it to comport with court rules.  

The plaintiffs lawyers responded by filing an amended complaint that was even more unwieldy, coming in at 258 pages asserting 52 claims. The number of defendants was trimmed slightly, to 36 defendants.  

The amended complaint remains a "quintessential 'shotgun' pleading" of the sort repeatedly condemned by the U.S. Court of Appeals for the Eleventh Circuit, Boulee wrote.

"At 258 pages, it is in no sense a 'short and plain statement of the claim' required by the Federal Rules of Civil Procedure," he said. "Here, it is virtually impossible to know which allegations of fact are intended to support which claims of relief since each cause of action incorporates more than 200 paragraphs.

"Unfortunately, the first amended complaint may be even more confusing and cumbersome than the original complaint and suffers from many of the same deficiencies as the first," Boulee wrote.

The judge rebuffed the plaintiffs' arguments that they should have another chance to amend their suit. 

"In this case, the court thoroughly explained to plaintiffs why the original complaint violated the shotgun pleading rule," Boulee said. Because they "did not meaningfully amend their original complaint, this court finds that plaintiffs should not be afforded another opportunity to amend. Plaintiffs had their chance."

The plaintiffs, a group of investors from New Jersey and Florida, are represented by Bob Kasolas and Carl Soranno of Brach Eichler in Roseland, New Jersey; and Hal Leitman and William Rountree of Rountree, Leitman & Klein in Atlanta. They did not respond to requests for comment.    

The defendants are represented by more than two dozen lawyers from multiple firms,  including James Johnson of Decatur's Johnson Trial Law, who represents 20 individual and corporate defendants with former Knight Johnson colleague Sherri Buda. Johnson said Boulee's ruling serves as a "good cautionary tale: Ignore the Eleventh Circuit and district court orders at your peril.

"While I think the plaintiffs' claims were meritless factually, they'll never get a chance to explore them because their counsel refused to follow instructions," Johnson said.

Johnson said an appeal might be forthcoming but that he would not expect it to succeed.

Swift, Currie, McGhee & Hiers partner Roger Harris, who has two defendant clients, said the order "continues the trend in the federal court system, and certainly in the Eleventh Circuit, that defendants should not have to wade through shotgun pleadings in order to properly evaluate claims against them."  

"Judge Boulee's order also reflects the importance of considering previous rulings of the trial court," he said via email. 

The original complaint was filed on behalf of seven plaintiffs, including five individuals and two LLCs. 

The case "involves numerous cold-blooded, shameless and remarkable fraudulent schemes, artifices, devices and conspiracies to pathologically defraud the plaintiff investors," it said. 

The four primary defendants behind the alleged scheme—Richard Federman, Winston Johnson, Mark Arnold and Robert Kostensky—worked with "silos" of co-conspirators who "knowingly partnered with the primary defendant perpetrators to defraud and swindle plaintiffs of their hard-earned money using the fictional Gotham Media Corporation enterprise as a front to do so."

Beginning in 2016, the defendants began marketing VIDGO as a state-of-art "over the top" streaming internet TV service, such as that offered by YouTube, Hulu, DirectTV and DishTV.  

The defendants, it said, claimed to have procured licensing rights to local channels in all local markets and "the most popular" cable channels such as ESPN, AMC and USA Network.

The complaint said more than $11 million in investor money was "recklessly and pathologically diverted" to the defendants own personal projects and businesses "all having absolutely nothing to do with the VIDGO or any [over the top] television service."

Several defendants filed motions to dismiss and for judgment on the pleadings, and last March Judge Amy Totenberg—ruling on three of them in one order—described the categories the Eleventh Circuit laid out to describe shotgun pleadings in its 2015 opinion in Weiland v. Palm Beach County Sheriff's Office.

The most common, she said, are multicount complaints in which each count adopts all the allegations of the preceding counts, such that the last count is a "combination of the entire complaint."

The next most common are those "replete with conclusory, vague, and immaterial facts not obviously connected to any particular cause of action.

"The third type is one that commits the sin of not separating into a different count each cause of action or claim for relief," Totenberg wrote, while the fourth "asserts multiple claims against multiple defendants without specifying which of the defendants are responsible for which acts or omissions, or which of the defendants the claim is brought against."

After engaging in the "painstaking task of wading through and deciphering plaintiffs' tangled mass of allegations," Totenberg wrote that it was nearly impossible to determine which defendant was accused of what and struck the complaint.

She allowed the plaintiffs to replead, instructing them to "not incorporate all 312 factual paragraphs into each count," and to base each count on a single claim or cause of action. 

The plaintiffs filed their amended complaint in April, which was again greeted with multiple defense motions to strike on shotgun pleading and other grounds. 

In dismissing the suit, Boulee noted that the amended complaint had indeed been changed but not necessarily for the better.

While the new version "did not technically incorporate all 312 factual paragraphs into each count, the vast majority of the fifty-two counts contained within the First Amended Complaint incorporate the entirety of the section entitled 'The Facts,' which consists of almost 250 paragraphs and spans 104 pages," Boulee said.