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Streaming service Tubi Inc. is taking legal action against the plaintiffs' firm Keller Postman LLC, alleging the firm has engaged in a mass arbitration scheme. Tubi filed the lawsuit in a Washington, D.C., federal court, accusing Keller Postman of submitting over 23,000 allegedly frivolous or fraudulent arbitration demands to force the company into settling.

Tubi's Allegations Against Keller Postman

According to Tubi's complaint, Keller Postman employs a "business model" that involves filing a high volume of arbitration demands against companies. Tubi contends that it has become the latest victim of this practice. The complaint claims Keller Postman pioneered "mass arbitration" by soliciting clients with promises of easy money, filing thousands of simultaneous arbitration claims, and demanding large upfront arbitration costs from the target company.

Tubi Sues Keller Postman Over Frivolous Arbitration Claims: Mass Arbitration Tactics

Keller Postman is accused of soliciting clients via targeted ads on social media platforms like YouTube and Instagram. These ads are often posted by partner firms such as Troxel Law LLP, which Tubi describes as having a minimal online presence. The advertisements suggest that users of the target company's services are owed money and can join the claims process by completing a short questionnaire.

Once a substantial number of clients sign up, Keller Postman allegedly processes these claims without thorough investigation, generating thousands of identical arbitration demands. Tubi claims these demands are intended to coerce a settlement or force the company to pay substantial nonrefundable fees for each arbitration.

Tubi sues Keller Postman Of Filing Frivolous Arbitrations :Financial Impact on Tubi

Tubi's complaint states that it costs approximately $2,000 in arbitration fees to resolve each complaint, leading to potential costs exceeding $45 million for the 23,736 demands filed against it. Keller Postman typically seeks settlements of around $1,500 per client. The complaint alleges that these demands lack relevant facts pertinent to individual claimants, asserting that Keller Postman is aware most claims are likely fraudulent but prioritizes quantity over merit.

Keller Postman's Business Model

The complaint alleges that Keller Postman's business model relies on pressuring companies to settle quickly to avoid exorbitant arbitration fees. Tubi claims that Keller Postman distributes a portion of the settlement proceeds to clients while retaining 40% for itself and its partner firms. Additionally, the complaint asserts that Keller Postman causes its clients to violate their agreements with Tubi, which stipulate that users must attempt to resolve disputes informally before resorting to arbitration.

JAMS Arbitration Fee Reform

The lawsuit notes that Keller Postman initiated its claims against Tubi before arbitration administrator JAMS implemented a reform to combat mass arbitration. The new rules, effective May 1, cap initial arbitration fees for companies receiving more than 75 demands at once at $5,000, with additional fees accruing only if individual claims are found to have merit.

Tubi sues Keller Postman Of Filing Frivolous Arbitrations : Tubi's Legal Demands

Tubi is seeking a court order requiring Keller Postman to withdraw the thousands of arbitration demands and to pay compensatory and punitive damages. The amounts are to be determined at trial.

Tubi sues Keller Postman Of Filing Frivolous Arbitrations : Legal Representation

Tubi is represented by Brandon D. Fox, Kelly M. Morrison, and Sati Harutyunyan of Jenner & Block LLP. Counsel information for Keller Postman was not immediately available, and representatives for both firms did not respond to requests for comment.