BBB Is a Racket, SoCal Law Firm|Says in $200 Million Demand

LOS ANGELES (CN) - The Better Business Bureau is a "Mafia-like racket" that uses "blackmail" and "coercion" to set its "bogus 'ratings,'" and defamed a law firm for refusing to submit to its "shakedown," the Brookstone Law office claims in a $200 million complaint.

Brookstone Law of Newport Beach sued the Better Business Bureau of the Southland and the Council of Better Business Bureaus, in Superior Court. The lead defendant is based in Colton, a far eastern L.A. suburb.

Brookstone claims that the Better Business Bureau, which rates more than 4 million businesses, is often mistaken for a government agency, and markets itself as an "unbiased" consumer advocate, but is anything but. "(M)ore than 70 percent of consumers in the United States believe the BBB is a government organization," the complaint states.

It continues: "Operating under the guise of 'legitimate authority' which was never given, the highly profitable BBB abuses non-member businesses and consumers through intimidation, coercion, bogus 'ratings,' favoritism and blackmail. Businesses caught up in this Mafia-like racket have used terms such as shakedown, criminal, illegal, immoral, and unjust when they find out the truth about the BBB, and how their businesses are affected by this fraudulent organization."

Brookstone claims the BBB "heavily favors" firms that pay to join its accreditation program, and that BBB ratings are "intentionally biased and inconsistent."

Brookstone says the BBB gave it an 'F' rating at its website, where millions of Americans go to get information on businesses.

It claims the BBB also revoked its "accreditation," citing Brookstone's involvement in mass joinder lawsuits.

A mass joinder lawsuit appears similar to a class action, but though mass joinder plaintiffs spread the cost of attorneys' fees, their claims are made individually, the Los Angeles Times reported in a Sept. 25, 2011 article that cited the Better Business Bureau.

The second paragraph in that Times article, in the Business section, stated: "Mass joinders can be just another way to separate desperate borrowers from their money - as much as $5,000 or more in upfront fees, according to the St. Louis Better Business Bureau. The bureau warned earlier this year that the mailings are the latest twist in scams that promise to force lenders to modify the loans of borrowers who no longer can afford their house payments or who owe more than their homes are worth."

In the first two paragraphs of its own complaint, Brookstone states: "Brookstone is a consumer advocacy law firm that focuses on real estate litigation, business law, criminal law, entertainment law, and intellectual property law.

"Brookstone enjoyed a sterling reputation as one of the toughest litigation law firms in Orange County and Los Angeles County."

The complaint adds: "Defendants' rating of Brookstone is inaccurate and inconsistent with the rating criteria published by defendants. In fact, on multiple occasions, defendant's rating of Brookstone has fluctuated several letter grades in a single day, and then appeared as 'not rated,' an unlikely - if not impossible - occurrence under defendants' advertised rating formula.

"Moreover, defendants have systematically disregarded Brookstone's attempts to assist the BBB in understanding the true events and occurrences resulting in consumer complaints filed against Brookstone, to respond to Brookstone's successful resolution of consumer complaints, to communicate with defendants, and to repair Brookstone's public image damaged by defendants' biased and deceptive rating system and other practices."

In September 2011, attorney Mitchell Stein sued Brookstone, accusing it of using false advertising to lure distressed homeowners into making claims against banks.

That came the month after the California attorney general sued Stein and others, accusing then of running a foreclosure scam that suckered "thousands of California homeowners."

Stein countersued the attorney general, claiming she was trying to deny his clients the right to counsel of their choice.

In March this year, a Superior Court judge threw out Stein's $1 billion lawsuit against Brookstone, and ordered Stein and the others to pay Brookstone's legal costs, Brookstone wrote on its home page in a post that sang a litany of Stein's legal problems.

In its new complaint, Brookstone claims it has lost clients and prospective clients because of the Bureau's "deceptive" rating.

Brookstone claims the Connecticut attorney general agrees with its analysis of the BBB.

"In or around November 2010, Connecticut Attorney General Richard Blumenthal criticized the BBB's letter-grade rating system as 'potentially harmful and misleading to consumers' following an extensive investigation," Brookstone says in its complaint. "Blumenthal stated: 'I find no reasonable basis for tying rating points to a membership fee - in essence, creating what could be viewed as a 'pay to play' system, rather than a transparent and equitable 'rating' system.'"

Also that year, ABC News reported that a man had received an A+ rating for his business after paying the BBB's membership fee, though the businesses he registered with the BBB did not exist, Brookstone claims. ABC News "also reported [that] owners were told that the only way to improve their rating was by paying the fee. In one case a C was turned immediately to an A immediately after a payment and in another case a C-minus became an A+," according to the complaint.

The complaint continues: "Chef Wolfgang Puck said that some of his businesses receive F letter grades because he refuses to pay the BBB's membership fees."

Brookstone seeks damages and punitive damages for defamation, trade libel, lost sales, deceptive business practices, intentional interference with prospective economic advantage, and negligent interference with prospective economic advantage.

Brookstone's managing attorney Vito Torchia filed the complaint for the firm.

Better Business Bureau spokeswoman Katherine Hutt told Courthouse News that it was "not aware" of Brookstone's claims against BBB of the Southland, and said she could not comment.

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