Boulder, Colorado-based Flatirons Bank sued Eastern Point Trust Co. on Monday, alleging the latter squashed competition in the qualified settlement fund marketplace.
Warrenton, Virginia-based Eastern Point allegedly “launched an aggressive, unlawful campaign” against Flatirons by coercing clients and business partners to stop doing business with the Colorado bank and its QSF arm, Justice Escrow, “or else face frivolous litigation,” according to a lawsuit filed in U.S. District Court for the District of Wyoming.
“Specifically, EPTC has concocted a fictitious and outlandish narrative that Flatirons’ proprietary QSF platform, which Flatirons created from scratch, somehow copies or infringes on EPTC’s outdated QSF offering,” the Colorado bank alleged in the lawsuit.
A QSF is a legal tool and trust account established to hold and distribute settlement proceeds in legal cases and potentially avoid tax ramifications. QSF administration firms handle more than $100 billion annually for mass tort, class action and individual cases, according to Flatirons, but the sector is “fragmented, opaque, and reliant on outdated systems, exposing firms, plaintiffs, and other QSF claimants to unnecessary costs, delays, and risks.”
Eastern Point has offered QSFs since 2014, according to its website. Flatirons launched Justice Escrow in 2023 “because the existing system was broken,” Chris White, managing director of Justice Banking at Flatirons, said in a prepared statement. “It was opaque accounting, too many middlemen, and far too much room for delay, risk, and error.”
In a series of letters to Flatirons, its business partners, clients and government entities, Eastern Point allegedly accused Flatirons of theft and espionage, according to the lawsuit. Flatirons’ lawsuit is in response to this alleged “economic and reputational harm.”
“[Eastern Point’s] conduct is designed not to protect consumers, but to preserve EPTC’s complacent monopoly in the QSF market and stifle the very innovation and efficiency that competition is meant to foster. Flatirons’ entry into the marketplace represents lawful competition and technological advancement,” according to the lawsuit.
Eastern Point sued Flatirons in a Virginia court earlier this year, alleging its competitor “unlawfully misappropriated” Eastern Point’s intellectual property with the Justice Escrow platform, which is “nothing more than Eastern Point Trust Company’s QSF 360 platform by another name.”
In an emailed statement, an attorney for Eastern Point called Flatirons’ lawsuit “a defensive maneuver … to discredit Eastern Point’s continuing efforts to vindicate its intellectual property rights and protect its valuable intellectual property from further misuse.”
“Eastern Point expected this maneuver and is prepared to set the record straight in due time,” the attorney said.
