U.S. District Judge for the District of New Jersey John Michael Vazquez. Courtesy photo

A federal judge in Newark has denied most of a series of dismissal motions filed by Jacoby & Meyers in a suit contesting its billing practices.

U.S. District Judge John Michael Vazquez granted Jacoby & Meyers' motion Tuesday to dismiss a claim for unjust enrichment, but declined to dismiss the case based on a lack of standing for plaintiff Barbara Smalls. He also declined to throw out allegations that defendants Andrew Finkelstein, his firm Finkelstein & Partners, and a company called Total Trial Solutions are alter egos.

Jacoby & Meyers and Finkelstein & Partners share many office locations in New York and New Jersey. Finkelstein is listed on the websites of both firms.

Vazquez also denied Jacoby & Meyers' motions for dismissal on summary judgment of claims for breach of fiduciary duty, breach of contract, and deceptive business practices under New York state law. He also denied Jacoby & Meyers' motion to strike a plaintiff's expert, Andrew Bluestone.

The ruling is a victory for the potential class members in litigation claiming Jacoby & Meyers inflated its bills in hundreds of personal injury cases by billing certain trial-preparation tasks to Total Trial Solutions.

The ruling on the alter ego theory is particularly important for the plaintiffs, said Joseph Santoli, a Ridgewood lawyer who represents the class along with Olimpio Lee Quitieri of Squitieri & Fearon in Jersey City.

The suit is a consolidation of two putative class actions, with Nancy Harding and Jeff Harding serving as named plaintiffs in the first, and Barbara Smalls as named plaintiff in the second. The suits claim Jacoby & Meyers and Finkelstein & Partners took more than the customary 33% cut of payouts in personal injury cases by deducting fees charged by Total Trial before computing the contingency fee. Total Trial performs duties such as drafting complaints and reviewing files that are typically performed by lawyers as part of their contingency fees, the suits claim.

The defendants counter that the services billed to Total Trial are a "legitimate expense" and consistent with the language of the retainer agreements.

The Harding plaintiffs' claims are dependent on their allegations that Finkelstein, Finkelstein & Partners and Total Trial Solutions are alter egos.

The defendants argue that Finkelstein's status as a common owner and decision-maker at both Finkelstein & Partners and Total Trial is not sufficient to pierce the defendants' corporate veil, as plaintiffs seek.

Vazquez said under the alter ego theory of veil-piercing, a corporate veil may be pierced when multiple corporate entities disregard the corporate form and conduct business as a single entity, and when doing so caused the alleged harm.

"Plaintiffs provide sufficient facts through which a reasonable jury could conclude that there was a disregard of the corporate form between Total Trial and F&P, such that piercing the corporate veil may be appropriate in this instance," Vazquez said.

"We've done a lot of work in discovery on proving that Total Trial was an alter ego of Finkelstein and Jacoby and Meyers, and it was pleasing to see that the judge agreed with that," Santoli said.

Santoli says the ruling means that either a trial or a settlement should come soon. "Obviously, we're interested in resolving it for the class. There are a lot of people involved, a lot of money that went to Total Trial that shouldn't have gone to them. If we go to trial, we feel confident the class will be compensated. If they decide they'd like to discuss settlement, we're willing to do that," Santoli said.

James Cecchi and Lindsay Taylor of Carella, Byrne, Cecchi, Olstein, Brody & Agnello in Roseland, who represent the defendants, did not respond to requests for comment.

Jacoby & Meyers' website lists 62 attorneys and 13 offices in New York, New Jersey and Connecticut. Finkelstein & Partners lists 67 attorneys, many of whom also practice at Jacoby & Meyers. Finkelstein & Partners lists 17 offices, many with the same addresses as Jacoby & Meyers' offices.

In 2011, Jacoby & Meyers brought a suit to challenge a ban on law firm ownership by nonattorneys. Jacoby & Meyers withdrew that suit three years later after a federal judge told the firm its attempt to legitimize an alternate business structure should be decided by the state Supreme Court's Advisory Committee on Professional Ethics.