Defendants turn tables in new suit

This article was originally printed in Numismatic News.
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Claims that a widely publicized law suit was demonstrably false and that its high profile corporate plaintiff maliciously prosecuted it against three well-known coin dealers, is now on the docket in southern California in a case filed March 24 and assigned to Judge Robert J. Moss.

Superior Court, Orange County, is the venue for a suit against Collectors Universe (the parent company of the Professional Coin Grading Service), three lawyers, and a respected Tustin, Calif., business and real estate law firm.

The suit is brought by three dealers who had been accused by PCGS last May 13, 2010, of conduct that violated the federal “Lanham Act” and the California Unfair Competition statute.

Collectors Universe claimed then that these three experienced numismatists tried to pull the wool over their eyes and submitted coins for “slabbing” on which “work” had been done to improve their visual appearance.

PCGS also claimed breach of contract – submitters must contractually pledge not to knowingly submit doctored coins (no use of putty, lasers and the like to enhance a coin’s appearance and its putative value), and common law fraud, which requires no written agreement at all.

At the heart of the PCGS claim against the dealers, is that “ ‘coin doctors’ have submitted ‘doctored’ United States coins to PCGS for grading on multiple occasions for a period of years, either directly through dealers ... or indirectly through other dealers.”

They give examples of that including a claim that “Defendants knew that these coins had been “doctored,” by themselves and/or by other persons engaged by them for that purpose. Their methods included lasering the surfaces of extremely rare proof gold coins to remove surface imperfections, building up commonly worn or weakly struck portions of coins with exotic metals and other physical and chemical processes.”

On Dec. 13, 2010, the court dismissed with prejudice Collectors Universe’s claim.

This allows all three men to claim that the underlying prosecution of the civil claim was improper – and to bring a claim for damages against Collector’s Universe. Their theory: malicious prosecution.

Malicious prosecution is a tort action and is the remedy for baseless and malicious litigation.

The three dealers seek damages of at least $100,000 and punitive damages from Collectors Universe. Thus far, the defendants who must be served with process have yet to respond.

Anticipate that the next legal action will be either an answer to the complaint or a motion addressed to it.