Ever wonder how prolific class action firms find their lead plaintiffs?

Paying them upfront is a no-no—just ask Bill Lerach—but in an explosive lawsuit, a Southern California firm is accused of bribing cash-strapped 20-somethings to serve as lead plaintiffs and submit false testimony.

It's “one of the largest frauds perpetrated by lawyers on the courts in American history,” asserted lawyers for Natural Immunogenics Corp. in a suit against the Newport Trial Group that's entering its third year of litigation in the U.S. District Court for the Central District of California.

Newport Trial Group no longer exists by that name. But six-lawyer Pacific Trial Attorneys is located at the same address and has the same founder, Scott J. Ferrell, a 1996 Georgetown Law graduate.

Ferrell did not respond to a request for comment.

Jenna GreeneHe's certainly busy. According to a Pacer search, Ferrell has been counsel in 760 cases.

For example, he represented non-practicing entities that sued scores of businesses for patent infringement.

He's also brought class actions against multiple companies for failing to inform people who call their customer service hotlines that their calls are being recorded—or hit companies that failed to respond within 30 days to a written request about whether they've shared a customer's personal information.

And he's used the same few plaintiffs for class actions against business websites that aren't accessible to the visually impaired, suing everyone from Dunkin' Donuts to Deere and Company.

In the last two weeks alone, Ferrell filed class action suits against the makers of both Alexia Sweet Potato Fries and Glutino Gluten Free Pretzels for slackfill—having too much empty space in their packaging—and The J.M. Smucker Co. and Transnational Foods Inc., alleging that their non-stick olive oil cooking sprays don't contain real olive oil.

It's a living. Probably a lucrative one.

The funny thing is, the suit that turned the tables on the firm stems from a claim that—at least to me—is one of its more sympathetic.

The fight began in 2012, when Ferrell filed a putative class action against Natural Immunogenics in U.S. District Court for the Southern District of California for false advertising and unfair competition.

The Florida-based company sells dietary supplements made from silver—an 8 ounce bottle of its Sovereign Silver retails for $28.79 on Amazon.

“Defendant claims its products have the ability to support consumers' immune systems based on 'silver's well-established biological catalytic activity which may excite higher life forms into maximal states of immune function when the silver is in an oligodynamic state,'” states Ferrell's complaint.

Scientific argle bargle aside, “Sovereign silver's alleged ability to provide immune support has never been scientifically substantiated,” he wrote.

The federal government backs him up on this.

The National Institutes of Health warns that colloidal silver “isn't safe or effective for treating any disease or condition… There are no high quality studies on the health effects of taking colloidal silver, but we do have good evidence of its dangers.”

The firm's lawsuit against Natural Immunogenics might well have succeeded—U.S. District Judge Larry Burns certified it as a class in 2014 —but for a basic problem. The original named plaintiff, Andrew Nilon, didn't show up for his deposition. Four times.

The firm eventually substituted a new lead plaintiff, Giovanni Sandoval.

“When deposed,” wrote Peter Arhangelsky of Emord & Associates for Natural Immunogenics, “Sandoval lacked knowledge of NIC's product, called the product by the wrong name repeatedly, did not recognize the names of any expert witness in the case (plaintiff or defense), could not remember his California address, refused to provide identification, and lied repeatedly under oath concerning his criminal record (which would have revealed his residency).”

Which was Arizona. But the California suit required a California plaintiff.

The judge dismissed the case, but declined to sanction the firm, ruling in 2015 that defense counsel should have raised the issues “at the time they occurred; these objections are inexplicably late.”

But Natural Immunogenics was not willing to let it go. The company turned around and sued the firm in the Central District of California for fraud, unfair competition, malicious prosecution, extortion and RICO claims.

According to the company's second amended complaint, Nilon was a sham plaintiff who never even bought Natural Immunogenics's silver product.

Under Ferrell's direction, a firm rep allegedly “bribed Nilon to ratify and support whatever statements [Newport Trial Group] and its attorneys made in litigation on his behalf regardless of the veracity.” According to the complaint, he was promised $1,000 in return.

As for all the missed depositions, Nilon in an affidavit originally said he couldn't make it because his grandmother was sick—more lies, according to Natural Immunogenics. “Instead, he withdrew from the action because he no longer wished to be involved in litigation that would ultimately require him to testify falsely under oath in deposition to maintain the fraudulent scheme,” wrote Arhangelsky for the company.

(Stepping back for a moment—is it ever not a lie when someone invokes a sick grandmother as an excuse?)

The complaint also alleges that the firm paid several of Nilon's friends to participate in other litigation, such as suing cosmetic maker Kiss My Face over claims that its products were organic, and the Himalaya Drug Company for failing to say a customer's call was being recorded. The friends allegedly followed firm instructions to buy products or make calls.

Ferrell and his firm are vigorously defending themselves—the docket already has 701 entries.

“There is absolutely no evidence that the [Newport Trial Group] defendants ever promised to give any witnesses anything of value in order to influence any testimony, corruptly or otherwise,” wrote the firm's outside counsel from Callahan & Blaine.

As for the RICO charges, the firm argues that the “allegations relating to [Natural Immunogenics] are completely unrelated and dissimilar to the allegations in the other actions and were not intended to further a scheme designed to obtain a 'rapid out-of-court settlement.'”

Besides, they noted, the firm litigated the silver case for three years, “which is entirely inconsistent with the purpose of the alleged scheme.”

And they say Natural Immunogenics has unclean hands. The company “has been selling snake oil for 20 years, and has every intention of continuing to do so. NIC's claim that its snake oil provides 'immune support' is not only false, misleading and deceptive, but it also would appear to violate the Federal Food and Drug Cosmetic Act.”

But the fiercest fight now is over discovery.

In a July 26 petition to the U.S. Court of Appeals for the Ninth Circuit, the firm objected that the district court ordered the production of “privileged litigation files by applying the crime-fraud exception without affording the petitioners a meaningful hearing on the documents at issue.”

The district court judge, James Selna, explained his reasoning in a June 12 decision that does not bode well for the firm.

Natural Immunogenics, he wrote, “has put forth sufficient evidence to support its contention that defendants operated a fraudulent scheme to manufacture litigation.”

“Specifically, NIC has established that in camera review may reveal evidence that defendants have a pattern of manufacturing litigation, which involves the [Newport Trial Group] defendants identifying companies vulnerable to false advertising or wiretap litigation, recruiting individuals to serve as lead plaintiffs, instructing the individuals on exactly what steps to take to give them the appearance of having suffered actionable injuries, and concealing and misrepresenting the contrived nature of the lawsuits from the courts.”

He added, “Such conduct, while possibly constituting fraud on the targeted defendants, is indicative of a vast scheme or conspiracy to commit fraud on the court.”

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