The Confident Entrepreneur With Jennifer Ann Johnson

Legal Landmines: Protecting Your Business with Attorney Chris Roberts

• Jennifer Ann Johnson • Season 3 • Episode 28

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What keeps entrepreneurs up at night? Legal risks. Instead of a defense attorney, we bring you Chris Roberts—a top consumer litigator who files lawsuits against businesses. He shares what actually triggers legal action and how to avoid costly mistakes.

From surprising penalties tied to telemarketing laws to real-world stories like helping a client win $225K after being trapped in a predatory loan, Roberts offers insider advice on preventing lawsuits. Learn how to protect your business with smart contracts, proper documentation, and legal foresight. This episode is packed with practical strategies to help you stay out of court and confidently grow your business.

Visit us at jenniferannjohnson.com and learn how Jennifer can help you build the life you dream of with her online academy, blog, one-on-one coaching, and a variety of other resources!

Jennifer Johnson:

Let's face it, the words lawsuit or legal action can send shivers down any business owner's spine. Not only can litigation be financially devastating, but it can also drain your time, energy and reputation and resources, and that is why it is so crucial to make sure that you are on the up and up when it all comes to legalities. But here's the good news Many legal pitfalls can be avoided with the right knowledge and proactive measures. In today's episode, we're going to explore practical steps that every business owner can take to shield their business from potential lawsuits. From proper contract management to compliance with regulations, from employee relations to customer interactions, we'll cover the essential areas where a little foresight can save you from a major headache down the road. Whether you're a startup founder or an established entrepreneur, this episode will equip you with valuable strategies, protect your business and give you peace of mind.

Jennifer Johnson:

Today, we welcome into the studio Chris Roberts. He's a dedicated and skilled litigator whose primary focus is on representing consumers in class action litigation and individual consumer-related claims. His practice has resulted in millions of dollars being paid to consumers and millions of debt elimination. Beyond his legal work, mr Roberts is a nationally published author and recognized lecturer on class action issues. Welcome, chris.

Chris Roberts:

Thank you, I appreciate the opportunity to be here.

Jennifer Johnson:

I am so excited to dig in because this is an area that I know a lot of entrepreneurs lose sleep over at night. A hundred percent.

Chris Roberts:

I know I've been in their shoes and I want to applaud you first and foremost for thinking outside of the box a little bit and having me on this podcast, because know I've been in their shoes and I want to applaud you first and foremost for thinking outside of the box a little bit and having me on this podcast, because typically, when you see a lawyer appear on a podcast and kind of give tips or things to look at in terms of avoiding litigation, there's nothing wrong with it. But it's typically a defense lawyer, somebody that represents businesses, and I've always thought it would be really helpful for an entrepreneur or a new entrepreneur, someone established, to actually talk to somebody like me, because you want to avoid somebody like me who files these lawsuits. I feel like that it's very proactive. I've always been wondering why people never do that. So I'm very happy to be here today with you and kind of share some of my insights on these issues with you.

Jennifer Johnson:

Absolutely. I think it's the perfect person to talk to, because you know what it's like on the other side.

Chris Roberts:

Correct.

Jennifer Johnson:

So let's dive in. So my first question is, because you've seen this what are some common pitfalls that business owners face, or what are common legal issues that you see that small business owners face?

Chris Roberts:

I see it's not all inclusive, but it gives you some ideas of things that can apply to almost any type of entrepreneurs or as a well-established business. And so one of the things that we do is we do a lot of consumer class action work, and so the areas that we focus on deal primarily with advertising, and so, for example, the big area that we're dealing with right now is telemarketing. That means phone calls, text messages, things of that nature, what we have pre-recorded voice calls, and so what I'm going to say here applies to every business, regardless if you want to do those types of marketing or not. And the biggest thing I would tell you is that, on all the things that I'm going to talk about today, it goes back to the old saying that an ounce of prevention really is worth a pound of cure. It's really helpful to have a lawyer talk about these issues and vet these issues with you on the front end. There may be some expense to it, but there can be a much greater expense if you don't do it down the road.

Chris Roberts:

And so what I see a lot of are businesses not telemarketing the right way. They think text messages, phone calls, they're cheap, they're easy, we can just dial these lists and so it's an easy way for us to market. What they don't realize is that there's a federal law, for example, that if you call somebody without the appropriate permissions or they're on the national do not call list, that can be $500 and potentially up to $1,500 for every single call or text. So if you're talking about somebody that's even sending out a small number of calls or texts like a thousand that can be ruinous for a small business. So it's really important before you market or you do anything with your business, you have an idea to make sure that that idea goes through a lawyer, to make sure there's not going to be litigation down the road.

Jennifer Johnson:

Right, and I find it interesting because really this year, and maybe towards the end of last year, is when I started hearing about the text messaging lawsuits starting to crop up If you send someone a text and they opted out or whatever, and you keep doing it. It's kind of new landscape, if you will, for a lot of businesses because they don't understand how this works.

Chris Roberts:

Well, it's interesting you say that and for a lot of people it's a new landscape. But the thing that we do is we use little known laws to help consumers fight back. And this law, the Telephone Consumer Protection Act, has actually been on the books since 1991. But because the text messages are becoming so much more prolific now, and because there's so much because technology's evolved, they're becoming cheaper and more efficient to send out. That's why you're hearing more about it now. The other thing too and I'm not trying to scare your viewers, but it's got to be cognizant of this is sometimes there's also state laws, because people are fed up with getting these types of marketing text messages or calls, marketing text messages or calls. Now there are states that have adopted laws on top of the federal law, and some of those states the penalty can be $5,000 a text message or a phone call. So you've got to be very careful about this. And again it goes back to making sure you have a lawyer kind of understand what your business is, what you're looking to do.

Jennifer Johnson:

I think your audio cut out.

Chris Roberts:

So it goes back to.

Jennifer Johnson:

One sec. I think your audio cut out.

Chris Roberts:

So it goes back to One sec. I think your audio cut out Is it good.

Jennifer Johnson:

Can you hear me now, you?

Chris Roberts:

can't hear me.

Jennifer Johnson:

Do you think he can hear me? Can you hear?

Chris Roberts:

I can hear you, you can't hear me, you guys can't hear me.

Jennifer Johnson:

There you are.

Chris Roberts:

You can't. Can you hear me now?

Jennifer Johnson:

Now I can hear you you cut out we'll. Just. Can you put a marker so that we know that she has to cut that there? Normally I never cut podcasts, we just do them all the way through and I can hear you perfectly fine too yeah, you like started saying something we were talking about state law and you like went away okay, do you want me to repeat that? I think so. Do you want us to go now? Yeah, just repeat what you were saying.

Chris Roberts:

So what else is significant is, because there's a proliferation of telemarketing, whether phone calls or text messages, that some states have adopted additional laws where it can actually be up to $5,000 for every single one of these calls. And so again it goes back to the point of before you implement an idea in terms of how you're doing marketing, you might have an idea or a concept or a goal of how you want to market, what you want to say in your marketing, things like that Spend a little bit of extra money on the front end and have a lawyer go through what you're trying to achieve and exactly how you're trying to achieve that, to make sure that you don't walk into one of these pitfalls.

Jennifer Johnson:

And I totally agree, and I know because I coach a lot of small businesses and I hear this from them all the time. I don't want to spend my money on that, and it's usually around legal advice. It's like, ah, it's good enough, I went online, but no, it's not. You need to have an attorney review what you're doing, just like you would a contract or a lease negotiation. It's very important because it's your business. That can cost you a lot of money on the other side, like you said, I mean that's exactly right.

Chris Roberts:

If you don't comply with the law and a lot of these things are not really complicated to comply with it's going to cost you potentially a lot more down the road, and we can talk about it and we're going to talk a little about insurance and things like that but that doesn't always cover it, and so you need to be very diligent about that. On the front end end. I mean it's almost like your health right. Like you, from a personal perspective, you want to exercise and eat healthy to prevent things from happening down the road, rather than getting sick and then trying to fix things later on. It's much more difficult to do that and so, just like when you're trying to implement these things or start a new business, that's why it's so important to have a good legal counsel on your side.

Jennifer Johnson:

Right, and now I know you probably don't, and I don't, perhaps you do, but well-directed contracts, whether it be between you and your customer or you and a vendor, whatever the case may be important, I would guess.

Chris Roberts:

Absolutely important, and especially business to business, especially consumer to business. And one thing that has prevented me from filing a lot of lawsuits and it's a little tip that I would give your business audience here is to put what's called an arbitration provision and a class waiver provision in your contracts.

Chris Roberts:

What that does, if they're properly drafted is it makes it difficult for a consumer who has a grievance to number one bring a case in court. They would have to bring in an informal proceeding not informal, but a less formalized proceeding known as arbitration which can be more cost effective. And also it precludes, for the most part, depending on how the provision is drafted consumers from bringing a class action. So they might have a small damage, but now you've insulated yourself from having a larger damage in terms of that being a class action. And the United States Supreme Court has repeatedly blessed those contracts and I can't tell you how many great cases I hate them, I hate them. I hate these contracts and I can't tell you how many great cases I hate them, I hate them. I hate these provisions, but I can't tell you how many good cases I've seen come into my office and these provisions are there and so, when they're written properly, they can be lifesavers for especially small businesses.

Jennifer Johnson:

Now I want to go back for a second, just in case our listeners don't understand what a class action lawsuit is. Can we?

Chris Roberts:

talk about that quick. Sure, I appreciate you asking that. So a class action lawsuit the easiest way to think about it is this so a business might shortchange you by a hundred dollars. Well, there's a famous judge named Justice Posner, from the seventh circuit, and he has this, this quote, and it says only a lunatic files a lawsuit over 30 bucks.

Chris Roberts:

Okay, so, so most people don't file a lawsuit over 30 or a hundred bucks, but if a business has a systematic practice of, let's say, shortchanging somebody by a hundred dollars, now a single person can bring that case as a what's called a putative class action, and that means they're not only trying to represent themselves, they're trying to represent the thousands, tens of thousands, hundreds of thousands, sometimes millions of people that have also been shortchanged in this way. So in our example, instead of exposure for $100, it's $100 times 1,000, 10,000, 100,000, a million people. And when we go back to our earlier example of a phone call or a text message, let's say somebody only got two text messages, that might be $1,000 for that person, but even if there's only 500, 1,000 people that are called, that is seven, eight-figure liability in a hurry. And so class action is basically an efficient way to pull all these claims into potential claims into a single case and and hopefully that explains a little bit, but it potentially large financial exposure for business.

Jennifer Johnson:

That makes sense. Now I have a question about this too. We're talking about class action, and you know, when you think of class action, it's typically oh, like you said, they shortchanged a customer by 100 and maybe it's tens of thousands of people. Is this permissible from an employee standpoint? Can an employee do a class action lawsuit?

Chris Roberts:

Absolutely, absolutely. We've recently filed one, for example, under the Fair Labor Standards Act. Sometimes these things are called collective actions, sometimes there's. I'm not going to get into the legal nerdity of a collective action versus a class action, but conceptually they're very similar. So I can give you an example We've had cases where an employee or an independent contractor is misclassified, for example, as an independent contractor, when they should really be an employee.

Chris Roberts:

That's the biggest one. We see the other thing there's cases called donning and doffing, cases where, for example, people are required to wear certain uniforms at a job but the work requires them to clock in after they put that uniform on and the people by law are supposed to be compensated for that time they're putting on the uniform, taking it off. So we've had cases like that as well. So there's all sorts of employment related class actions that are out there as well. They're obviously different breed than some of the advertising, but the concept is the same that a small amount of damages. Maybe you're not paying overtime to an independent contractor and it's only a thousand bucks, but if you've got 10,000 employees, that can add up in a hurry.

Jennifer Johnson:

Totally. I know that that would be an area that most people would not think about. The whole uniform situation, like most people come to work, if you're working somewhere that you have to wear a uniform, you're usually wearing it go to the site and put your uniform on.

Chris Roberts:

It's not usually in the context of you know somebody working at Walmart and they've got to. You know, they've got to put their you know their bright reflector outfit on before they go into work, but those are the types of cases that you'll sometimes see class actions arise under Okay, do you do a lot with intellectual property at all? I do not.

Jennifer Johnson:

Okay, all right. Any thoughts on how people can really protect you and maybe you don't, because that's not the area that you practice in, but any thoughts for our listeners on intellectual property.

Chris Roberts:

It's very important to be cognizant of images and videos that you use. I go back to the same advice I had earlier in terms of an ounce of prevention is worth a pound of cure. Get a copyright lawyer, get a trademark lawyer If you need, get a patent lawyer. Ruinous for businesses, for example, to come up with this idea. Spend tons of money on branding only to learn that somebody else is using the mark in the scope of commerce and you can't use the mark anymore. You'd rather know that up front, and you know I can.

Chris Roberts:

Let me give you kind of an embarrassing personal story on this regard, as and I'm business owner. I own, I'm an owner of my two-person law firm. I run the. This is years ago, but I run the facebook page, uh, for our firm and nobody's on there's like we have like two, three hundred followers.

Chris Roberts:

We're not really big on facebook, but I found an image and I thought it was a creative commons image of a gavel and it said something like consumer law and so I put it up there. Very, it was not even on the front page, it was some obscure, obscure part of the facebook page and I get a letter. The law firm gets a letter saying, hey, this is a copyrighted image. Pay us, you know, a thousand bucks to settle the case, and you know we ended up resolving it before there was any litigation or whatnot. But it was an important lesson to me to be absolutely certain that the images and the videos that you're using in your promotional materials are things that you are allowed to use. Sounds, images, videos, all those things I encourage people to be cognizant of that.

Jennifer Johnson:

And I had something similar happen to me. We posted it on Facebook and it turned out to be somebody else's and it wasn't. We didn't actually post it, but a marketing agency that we work with posted it, but it was still. We were still on the line for it and we settled, obviously without needing to get anyone involved, but that it hurts. And here's the bejesus out of you. I've got to say you get this letter and you're like what?

Chris Roberts:

Yeah, it makes you a little nervous and and I mean I mean the positive of it is learning experience and then going forward. You know kind of how to do things and sometimes the best life lesson is kind of a negative experience.

Jennifer Johnson:

Right.

Chris Roberts:

So, um, but yeah, people have to be very cognizant of that. There's, but there are lawyers that specialize in patents. There's lawyers that specialize in copyright, things like that.

Jennifer Johnson:

Now, what role does documentation play in the realm of all possible litigation issues, things that legal issues, that small businesses?

Chris Roberts:

can face. Now, when you say what rural documentation means, can you be a little more specific? I just want to make sure I give you it.

Jennifer Johnson:

Sure, Like you know, should we be documenting absolutely everything that we do and, you know, putting it in a file? And if we were proper, properly documenting things, would that help us? When we're up against someone who's who's suing us, when we're up against you in court.

Chris Roberts:

Well, it depends, right, because because part of that documentation there could be a smoking gun right, there could be something very negative.

Chris Roberts:

I go back to the kind of fundamental advice, though, and I think a lot of what you're referring to, probably more in terms of the documentation, comes up in the context of employment related issues, right, like hiring, firing, reprimand, things like that. Have an employment lawyer, develop these policies and procedures for you If you've got HR professional work together with you on that. I'm not an employment expert, but I have enough sense to know that if I'm starting a business and I'm going to have employees and you know multiple employees working for me, you need to have these systems in place, and so the employment lawyer will be able to best steer you in the right direction in terms of what documentation should be kept, which documentation should be made in the first instance. I mean, no one should ever be like destroying documents or anything like that, but I don't think should ever be like destroying documents or anything like that, but I don't think employment lawyer might say differently, but I don't think we have to record every, every single thing.

Jennifer Johnson:

Right.

Chris Roberts:

But that's how I would go about it is, again, seek legal counsel's advice on that, and I know it sounds like I'm. I'm suggesting you seek legal counsel's advice for every single thing but, but yeah but it's just just because of the perspective I have and we actually will occasionally do some defense work, but because we do so much plaintiff's work and filing these cases, I see I see kind of the other side of this.

Jennifer Johnson:

Right.

Chris Roberts:

And so a lot of it like, for example, we had a company that we have settled now five class action lawsuits with Against one company.

Chris Roberts:

Against one company, case after case after case after case, and I have a good relationship with the lawyer and I said, look, just kind of in half jest, you know, what you guys should do is really you should hire me and like, just go through this and tell you how I would go about suing you, because then you develop those policies and procedures and protocols to avoid it from happening. And so that's why I have that suggestion turn back to legal counsel. You know there's counsel will do at a reasonable rate, not everyone's charging a thousand bucks an hour. There's people that will be flexible with you, that are good and that are local and that are not all at big firms. So that's what I would really really emphasize to the audience.

Jennifer Johnson:

And again going back to an ounce of prevention, right Yep.

Chris Roberts:

That's right.

Jennifer Johnson:

Insurance. Is there any kind of insurance that will protect a small business against being sued for class action lawsuits, whatever kind it is?

Chris Roberts:

That's a great question and it's a very, very complex question. It depends. Usually, insurance law can vary from state to state, but, generally speaking, whether there is coverage that is invoked depends on what is alleged in the lawsuit. Many policies cover general negligence. However, for example, in the telemarketing cases that I've been talking about, that's called the Telephone Consumer Protection Act, because so many businesses were sued under the Telephone Consumer Protection Act. Now it's more common than not to actually have specific exclusions for claims brought under the Telephone Consumer Protection Act. So it really depends on the type of case that is brought. But here is my suggestion to the audience in this regard you should have a good relationship with two people. Number one, the person that's selling your insurance. You need to tell them exactly what your business is, what your goals are, how you intend to achieve those goals. So you intend to do marketing. You know this way, that way or the other way. So if you're doing telemarketing, you want to let them know, that.

Chris Roberts:

But in the insurance age you should say, look, this is what I'm concerned about. Like, I think we've got our ducks in a row but we might be concerned about a crazy person you know, like Chris suing us for X, y and Z, I need coverage for that. Now they can say, yeah, you're covered under this. But you should not take them at their word on that Because ultimately, what determines whether you're covered is not what the insurance agent's telling you, it's the policy.

Chris Roberts:

So again, it's good to have a good legal counsel in your back pocket because before you sign or before you enter into that policy of insurance, it would be helpful to have counsel look at that. They know your concerns, they know your objectives and so they can tell you. You know what this type of thing is likely covered, this type is not, and you can make the determination whether or not you want that coverage. Maybe you need to pay a little bit extra to get a supplemental rider on that insurance, little bit extra to get a supplemental writer on that insurance it really. But it's really important to have an open dialogue with the insurance broker and your counsel to make sure that, if that's something that you're concerned about and some people should always have this in the back of their mind, especially if they're in like a services or a product-based business services or a product-based business, that you have good counsel on your team, absolutely.

Jennifer Johnson:

I have another question with regard to I really want to know and this is going to catch you off guard perhaps but what is the most interesting case that you've done? And you don't need to share names. That's great. We don't want that. What is the most interesting case that you've done in the business world?

Chris Roberts:

In the business world just in terms of me being a lawyer or against the business.

Jennifer Johnson:

Right Like going up against a business. I mean, besides, the person that has been sued five times and not learned.

Chris Roberts:

So actually, uh, one of my more interesting cases and more impactful cases is actually an individual case and, um, so it was against the loan company and here in Missouri, uh, believe it or not, there are no caps on interest rates. So, yeah, so I've represented, for example, people that have taken out loans with over 750% interest.

Jennifer Johnson:

Oh my gosh, how is it even legal?

Chris Roberts:

The powers that be in the state of Missouri have not prevented that practice from occurring. I'll leave it at that. So we call a lot of people refer these as payday loans. They're really kind of referred to as consumer installment loans here in Missouri. What happens in Missouri courts is that we have different levels of court. There's basically courts where the damages are over $25,000 and there's courts where damage are less over $25,000 and there's courts where damage are less than $25,000. Okay, so the damages less than $25,000 tend to be credit card debt, tend to be these small loans, things like that, and there's tens of thousands of these cases filed every year.

Chris Roberts:

So the lawyers that handle these cases collection lawyers they're bulk filers. They might have a couple thousand cases and they just kind of churn these cases. So I had a client that took out a loan for I believe it was $1,000. The interest rate on that was, I think it was close to 200%. It might've been 180, 190%. And what the game is in these courts for the collection lawyers is they want to get a judgment against you because then they can garnish your wages, they can levy your bank account, they can put liens in your property, things like that. But because there's so many files sometimes these lawyers don't pay attention and so before you take a judgment you have to serve somebody with the lawsuit papers. So my client has a judgment added against her and it's for a couple thousand dollars because the thousand dollars had accrued interest.

Chris Roberts:

Okay, then what happens in Missouri? Let's say you got a thousand dollar loan, a thousand dollars of interest. $2,000 becomes the new principal balance and the 180, 90% starts occurring on the new principal balance. So client comes to me and she's been garnished for like three years and she has been garnished on this $1,000 loan about $6,000. And at this point, after three years, because of the interest rate, her balance is still higher than the original balance. She hasn't made a dent in anything. So I look at the case and I said, oh my gosh, the document they filed with the court literally says you were never served. Says you were never served. And then in the meantime I had filed a separate class action lawsuit against this company for improper service. Basically, the people that were serving the papers were not approved by the court to serve the papers. So then what they did in the case is they try to correct their screw up. They filed a document two years later trying to correct it and that document said the lady still wasn't served.

Jennifer Johnson:

Oh, my goodness.

Chris Roberts:

So so so I get into the case, I get the judgment set aside, I get the garnished funds returned from return to my client and I turn around and sue them, and we took the case to a jury trial in St Louis and the jury awarded her $225,000.

Jennifer Johnson:

Wow.

Chris Roberts:

And so it's not a massive case in terms of some of the numbers that you hear, but it was really impactful for my client because she went from just completely being taken advantage of never seeing it in sight like basically a modern day form of indentured servitude you're just paying that forever to having them actually pay her. So that was that was one of the most interesting and most rewarding case I've certainly done in my career wow, that's.

Jennifer Johnson:

That's quite interesting.

Chris Roberts:

I mean I, you know people don't realize it happens. But um, I've had people with three hundred dollar loans, uh, because the judgments and whatnot, owing uh twelve thousand dollars of interest a single year on those loans it's crazy that happened.

Jennifer Johnson:

Yeah, you would never know. Nope, well, is there anything else that you would like our listeners to know with regard to how they can stay out of legal trouble and not meet you in court?

Chris Roberts:

It's just spend the time and the money to have a good counsel, to be open with your counsel about exactly what you want to do, exactly how you want to do it, because that counsel is going to help you draft agreements, draft policies, draft protocols, draft procedures, how you can market things like that to steer you clear of trouble. Might be scared of us, but in reality it's a very useful tool in society, because businesses that do things the right way should be rewarded. Businesses that do things the wrong way and don't play the rules should be penalized, so that the businesses that are doing it in the right way continue to thrive. And the best way to continue to thrive is to comply with the law. Obviously, not all entrepreneurs are lawyers, so it's good to have somebody on your side that knows the law and that can make sure to steer you in the right direction and to keep you clear of people like me, I suppose.

Jennifer Johnson:

Absolutely Well. It has been insightful speaking with you today, chris. If our listeners would like to get in touch with you, how can they do so?

Chris Roberts:

Sure, I appreciate the opportunity to be here. The easiest way is to go to my website, which is classactiongurucom G-U-R-Ucom. I'd give you my email address. It's on there but everyone will misspell it. But you can go to classactiongurucom. You can schedule a free Zoom meeting with me through there. I'd be happy to speak with you and I really

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