Zimmermann v. Epstein Becker & Green, P.C., No. 10-2174 (1st Cir. 2011)
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A class action was brought against companies engaged in credit repair and debt consolidation, alleging a scheme to defraud debtors in violation of the federal Credit Repair Organizations Act, 15 U.S.C. 1679, and the Massachusetts Consumer Protection Act, Mass. Gen. Laws ch. 93A. The court entered judgment in favor of the class for $259 million, and established a constructive trust over "all fees that consumers paid to the current or former defendant entities." Finding the judgment largely uncollectable, plaintiffs filed complaints against auditing firms and law firms that had assisted defendants in the class action. The district court dismissed. The First Circuit affirmed. The constructive trust cannot be read as intended to claw back monies expended, prior to the imposition of the trust, by defendants, in the ordinary course of business and in exchange for fair value. It is not unjust enrichment for lawyers and accountants to be paid for their services. In addition, plaintiffs were seeking "class-based relief" but did not seek certification of the class as required by FRCP 23.
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