Numismatic News article on First Strike lawsuit.
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Makes for interesting reading (emphasis added):
LAWSUITS FILED OVER 'FIRST STRIKES'
by Todd Hafer
"I consider it outright fraud," said the Miami, Fla., attorney who filed a class-action lawsuit against Numismatic Guaranty Corporation and Professional Coin Grading Service alleging that the third-party grading services are deceiving eventual buyers by labeling coins as first strikes.
Attorney Charles Lipcon, of Lipcon, Marqulies and Alsina, representing plaintiff Thomas Francisco and "others similarly situated," said the practice by NGC violates Florida's Deceptive and Unfair Trade Practices law and PCGS is violating California's Unfair Practices Act.
The suit, filed Nov. 7 in U.S. District Court, Southern District of Florida, Miami Division, states that NGC graded more than 100,000 gold and silver coins in 2005 and 2006 that were given the special designation of "first strikes." PCGS gave the first-strike label to more than 50,000 gold and silver coins in the same time period.
"This designation has been and is currently being used by sellers of coins as a promotional tool in order to promote and sell these coins as being special or different, when in fact they are not special or different," the civil complaint states.
It continues, "In the world of coins, the designation 'first strike' has a meaning that a particular coin is one of the first coins struck from a certain die set. Normally, these coins are considered more valuable and more desirable because of being one of the first coins of that particular issue to be struck."
The complaint states that the companies are using the first-strike designation "not for the first coins struck by the U.S. Mint, but rather for coins that are shipped by the Mint during the first month after the coin is issued."
It says that NGC and PCGS are aware that promoters and sellers of first-strike coins "are incorrectly informing the coin-buying public that the designation on these coins means that these coins are among the first coins struck by the United States Mint and therefore are worth more money than other identical coins without the designation of "First Strikes."
The lawsuit states that designating the coins as first strikes is unfair and deceptive because the term is being used not to show that the coins are the first coins struck by the U.S. Mint, but rather for coins that are shipped by the Mint during the first month after the coin is shipped.
The complaint said the companies profited "as that allows its customers to use the designation as a marketing tool and as a means to charge more money to the public and to the plaintiff."
Lipcon said dealers are selling the coins for as much as four times what they are really worth based on the first strike label.
"The term is being b*stardized in order to create a product to sell," he said.
The U.S. Mint issued an advisory earlier this year saying that it does not track the order or date of the coins it mints and that by the release dates, about 50 percent of the coins have already been minted. The advisory said that the date on the box they are shipped in represents the date that the box was packed, which does not correlate with the date of manufacture.
"If you look at the numbers, there can't be tens of thousands of first-strike coins," Lipcon said.
"It depends on your definition of first strike," said PCGS CEO Michael Haynes. He said the PCGS definition is coins that are released in the first month of production.
Haynes said a value is always placed on coins that are struck earlier in the process. The less wear on the die, the sharper the strike usually is.
Haynes said the free market holds sway in the process.
"Buyers can buy or not buy and sellers can submit or not submit," he said. "We are not in the business side of coins -- we do not buy or sell them."
NGC officials were not available for comment as of the Numismatic News deadline.
Lipcon said that PCGS filed to trademark the first-strike designation. He said earlier this year, NGC filed to have the trademark withdrawn.
"What's interesting is that both filings contained the correct description of "first strike" as the first official coin off the press," Lipcon said.
The complaint also quotes John Albanese, the founder of NGC, but who is no longer associated with the company, "... coin dealers and grading services must stop calling the bullion coins first strikes or risk losing credibility with collectors ... It's flat-out wrong. It's really just a marketing gimmick."
The lawsuit asks for compensatory damages, including the difference between the cost of buying a coin labeled "first strike" and a similar coin without the label, ordering the companies to give up all funds it wrongfully collected for putting the labels on coins, attorney's fees, costs and expenses of filing the civil action and the placement of an injunction against the companies to continue applying the first-strike label.
Neither NGC or PCGS had been served papers on the lawsuit. They have 20 days after they receive the complaint to file a response.
Contact Lipcon, Marquelies and Alsina, One Biscayne Tower, Suite 2480, 2 South Biscayne Blvd., Miami, FL 33131; telephone, (305) 373-3016; e-mail, clipcon@lipcon.com.
LAWSUITS FILED OVER 'FIRST STRIKES'
by Todd Hafer
"I consider it outright fraud," said the Miami, Fla., attorney who filed a class-action lawsuit against Numismatic Guaranty Corporation and Professional Coin Grading Service alleging that the third-party grading services are deceiving eventual buyers by labeling coins as first strikes.
Attorney Charles Lipcon, of Lipcon, Marqulies and Alsina, representing plaintiff Thomas Francisco and "others similarly situated," said the practice by NGC violates Florida's Deceptive and Unfair Trade Practices law and PCGS is violating California's Unfair Practices Act.
The suit, filed Nov. 7 in U.S. District Court, Southern District of Florida, Miami Division, states that NGC graded more than 100,000 gold and silver coins in 2005 and 2006 that were given the special designation of "first strikes." PCGS gave the first-strike label to more than 50,000 gold and silver coins in the same time period.
"This designation has been and is currently being used by sellers of coins as a promotional tool in order to promote and sell these coins as being special or different, when in fact they are not special or different," the civil complaint states.
It continues, "In the world of coins, the designation 'first strike' has a meaning that a particular coin is one of the first coins struck from a certain die set. Normally, these coins are considered more valuable and more desirable because of being one of the first coins of that particular issue to be struck."
The complaint states that the companies are using the first-strike designation "not for the first coins struck by the U.S. Mint, but rather for coins that are shipped by the Mint during the first month after the coin is issued."
It says that NGC and PCGS are aware that promoters and sellers of first-strike coins "are incorrectly informing the coin-buying public that the designation on these coins means that these coins are among the first coins struck by the United States Mint and therefore are worth more money than other identical coins without the designation of "First Strikes."
The lawsuit states that designating the coins as first strikes is unfair and deceptive because the term is being used not to show that the coins are the first coins struck by the U.S. Mint, but rather for coins that are shipped by the Mint during the first month after the coin is shipped.
The complaint said the companies profited "as that allows its customers to use the designation as a marketing tool and as a means to charge more money to the public and to the plaintiff."
Lipcon said dealers are selling the coins for as much as four times what they are really worth based on the first strike label.
"The term is being b*stardized in order to create a product to sell," he said.
The U.S. Mint issued an advisory earlier this year saying that it does not track the order or date of the coins it mints and that by the release dates, about 50 percent of the coins have already been minted. The advisory said that the date on the box they are shipped in represents the date that the box was packed, which does not correlate with the date of manufacture.
"If you look at the numbers, there can't be tens of thousands of first-strike coins," Lipcon said.
"It depends on your definition of first strike," said PCGS CEO Michael Haynes. He said the PCGS definition is coins that are released in the first month of production.
Haynes said a value is always placed on coins that are struck earlier in the process. The less wear on the die, the sharper the strike usually is.
Haynes said the free market holds sway in the process.
"Buyers can buy or not buy and sellers can submit or not submit," he said. "We are not in the business side of coins -- we do not buy or sell them."
NGC officials were not available for comment as of the Numismatic News deadline.
Lipcon said that PCGS filed to trademark the first-strike designation. He said earlier this year, NGC filed to have the trademark withdrawn.
"What's interesting is that both filings contained the correct description of "first strike" as the first official coin off the press," Lipcon said.
The complaint also quotes John Albanese, the founder of NGC, but who is no longer associated with the company, "... coin dealers and grading services must stop calling the bullion coins first strikes or risk losing credibility with collectors ... It's flat-out wrong. It's really just a marketing gimmick."
The lawsuit asks for compensatory damages, including the difference between the cost of buying a coin labeled "first strike" and a similar coin without the label, ordering the companies to give up all funds it wrongfully collected for putting the labels on coins, attorney's fees, costs and expenses of filing the civil action and the placement of an injunction against the companies to continue applying the first-strike label.
Neither NGC or PCGS had been served papers on the lawsuit. They have 20 days after they receive the complaint to file a response.
Contact Lipcon, Marquelies and Alsina, One Biscayne Tower, Suite 2480, 2 South Biscayne Blvd., Miami, FL 33131; telephone, (305) 373-3016; e-mail, clipcon@lipcon.com.
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Comments
Russ, NCNE
<< <i>Class action lawyers are scum.
Russ, NCNE >>
That may be so (and is), but at least this time, I think he's right.
<< <i>Class action lawyers are scum.
Russ, NCNE >>
and how do you define companys charging collectors extra fees for designations when they have no idea which coins were in fact the first strikes.. and then the president of said company comes up with a completely lame explanation which makes no sense at all
"It depends on your definition of first strike," said PCGS CEO Michael Haynes. He said the PCGS definition is coins that are released in the first month of production. Haynes said a value is always placed on coins that are struck earlier in the process. The less wear on the die, the sharper the strike usually is"
..but the us mint already said the first stike coins have no correlation to when they were shipped out to collectors or postmarks on any packages.. nice try mr haynes
<< <i>Unless PCGS and NGC are in collusion with those selling it I don't see how this will affect them in a court of law. They can name them billybongs or whatever they want. It's their designation for whatever criterial they wish. Kind of like grading standards. There is legitimately a lot of play in how you define them. I think the term first strike is stupid as it applies in this situation but I can't see how it's actionable for PCGS or NGC. >>
because they are charging people an extra fee above and beyond the normal grading fee for a designation when they in fact have no idea if the coins were first strike coins or not.. do you believe any grader at pcgs could consistently differentiate a coin that had a postmark on the box qualifying it as a first strike and a coin that was postmarked after the cutoff date.. if not then the designation is bogus and so are all the extra fees they are charging for the designation
"It depends on your definition of first strike," said PCGS CEO Michael Haynes. He said the PCGS definition is coins that are released in the first month of production"
the words first strike have a very clear meaning to all numismatists going back over 200 years.. and now pcgs is saying a first strike coin is one that has a certain arbitrary postmark on the shipping box which has nothing to do whether or not the coin was a first strike at the mint???????
<< <i>Haynes said a value is always placed on coins that are struck earlier in the process. The less wear on the die, the sharper the strike usually is. >>
-Are they serving Kool Aid at the company picnic?
<< <i>Class action lawyers are scum.
Russ, NCNE >>
You are absolutely correct. However, The only difference I see between what class action lawyers do to line their pockets vs. what these TPGs are doing with First Strikes to line theirs is that the targets are different. This is a match made in hell.
<< <i>Typical class action suit, attorneys collect millions and the plaintiffs receive twenty Dollar coupons. >>
You forgot the first part that starts the ball rolling: companies engaging in questionable practices. If the lawyers make a lot of money it's because the companies are giving them what looks like a feast. I wouldn't be too concerned about PCGS and NGC, they knew what they were doing and I wouldn't be surprised if they factored in the possible costs and consequences of a lawsuit. Given that they both talk about the common defintion in their government filed documents, I'm sure they talked it over with their lawyers when they did it. So if you think about it, we may have lawyers to thank for First Strike in the first place
Now if the designation were "first struck", rather than "first strike", it may have merit.
The actual words will matter in court.
Although collectors may be led to think the coins were the first struck coins, it can easily be argued that this is not the defination of the phrase "first strick".
By the way, just what exactly does first strick mean?
Is this a baseball game where you get three strikes?
Ray
Depending on what mint the coin was struck at will also determine how weak or strong the coin was struck because some mints where allocated weaker dies then other mints. Also take into account the mint mark, type and date to come up with a coins grade.
The issue is unfair and deceptive trade practices by those involved.
"Keep your malarkey filter in good operating order" -Walter Breen
<< <i>By the way, just what exactly does first strick mean? >>
Did they quote what PCGS said the traditional meaning is in their TM filing? Also what NGC said it was in their attempt to get PCGS's trademark removed? From the article it seems both PCGS and NGC defined first strike in a way that's inconsistent with how they defined First Strike(s).
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
by manufacturers and food producers and some lawyer goes after TPG's for gimickry and hyperbole.
They add chemicals to shrimp and seafood so that they absorb more water so now we not only
pay $7 a pound for shrimp but also for water and the chemical which we injest. They're starting
to add more water to chickens now. One labeled 7% retained moisture released so much water
in the skillet that it boiled rather than fried. The water actually rose half way up the skillet. I guess
7% is what's left in it after cooking off a pound or two.
It's disingenuous at best to claim these sold for 4x what they'd bring without the designation. Sell-
ers of these often sell things for four times what they bring from hobby sources. If it were shown
that this fits the definitions of the law then the actual damages based on overpayments would be
nearly inconsequential.
It's the insistence on and defense of gimickry and hyperbole that I find sad. It would be easy to make this entire thing go away with a little ethical behavior.
Regarding chickens, you'd better pay extra for free range; for all but the poorest in America, food is so cheap that it is worth paying extra for fewer chemicals and better quality.
<< <i>Cladking -- I have to agree there are some strange priorities (and our tax dollars may fund a bloated court system). >>
It's not a question of priorities, they are parallel issues, not serial.
<< <i>Regarding chickens, you'd better pay extra for free range; for all but the poorest in America, food is so cheap that it is worth paying extra for fewer chemicals and better quality. >>
Whole Foods is doing extremely well in the US and I think Walmart is starting to have more in that area as well.
<< <i>
Regarding chickens, you'd better pay extra for free range; for all but the poorest in America, food is so cheap that it is worth paying extra for fewer chemicals and better quality. >>
I'm quickly coming to believe the same thing. My biggest problem though is that
there is often an inverse relationship between price and quality in foodstuffs caused
by the natural tendency of things in great supply to be of superior quality.
Call it the "manufactured" class-action suit.....Russ will love these guys.
I don't see how TPGs can be made to pay for the sale price difference since the seller, not TPGs collected that money.
If they had not initiated First Strike on these coins then there would be no problem...But they initiated the First Strike when they new (the mint stated they did not know themselves) and continued to issue the First Strike designation causing people to believe the coins they were buying to be First Strikes when actually they were not!
When you produce a product it better have some liability insurance to back it up...and there is none in this case as the mint came out and said they did not keep records and did not know which were first strikes and which were not...so there is no leg to stand on here.
It is hurting the collecting community by such actions...TGP were created to protect the collector and investor and this is anything but...the games have got to stop or collecting is going to be over.
<< <i>
<< <i>Class action lawyers are scum. Russ, NCNE >>
That may be so (and is), but at least this time, I think he's right. >>
Maybe so, they say even a blind pig finds an acorn every once in a while. However, Russ is right and getting involved with them, or even aligning yourselves with them, in my opinion, brings you down to their level.
If I felt strongly about the FS issue, which I don't, I would keep my criticism seperated from this sleazy lawsuit to protect my credibility.
--Jerry
<< <i>If you have several moments you can read about some REAL POND SCUM.
Call it the "manufactured" class-action suit.....Russ will love these guys.
Weiss and Lerach are lower than pond scum. Hopefully they will be behind bars for most of thier remaining lives.
And with the First Strike suit, you have to wonder what is in it for the lead plantiff other than a $20 coupon.
Check out my current listings: https://ebay.com/sch/khunt/m.html?_ipg=200&_sop=12&_rdc=1
Has anyone though about the collateral damage that this could do to the PNG? I mean because of the fact that NGC is the official grading service of the PNG and the PNG is all about ethics. I just wish everyone would drop this whole "First Strike" thing. It was a bad idea.
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
<< <i>I am not sure whether class action lawyers are scum or not. If so, then all of the plaintiffs should have represented themselves in this matter. >>
Nobody likes lawyers til they need one.
Check out my current listings: https://ebay.com/sch/khunt/m.html?_ipg=200&_sop=12&_rdc=1
1/2 Cents
U.S. Revenue Stamps
This paragraph is buried about a third of the way down in this SEC filing:
First Strikes Program. Every calendar year, the U.S. Mint produces new dies
with the new year engraved on the die for minting the coins of that year,
including the gold and silver bullion coins. In the third quarter of fiscal
2005, PCGS introduced a new program designed to generate submissions of
these coins to us for authentication and grading with a special First
Strike designation. This program was launched based on our belief that the
marketplace would prefer coins struck early in the life of the die so that
the details of the coin would be very sharp, provided that there was
independent evidence of an early strike. To provide assurance to the
marketplace of these early strikes, we required that coins for First Strike
designation be submitted in January of the year as struck on the coin or
otherwise be provided to us in their original, date-stamped, Mint-sealed
containers. With such evidence, we would then encapsulate the coins in our
tamper-evident, clear plastic holders with an imprint on the descriptive
label designating the coins as First Strike coins. We inaugurated our First
Strike program in January 2005 for U.S. Gold and Silver Eagle bullion
coins.
This program was launched based on our belief that the
marketplace would prefer coins struck early in the life of the die so that
the details of the coin would be very sharp, provided that there was
independent evidence of an early strike. To provide assurance to the
marketplace of these early strikes, we required that coins for First Strike
designation be submitted in January of the year as struck on the coin or
otherwise be provided to us in their original, date-stamped, Mint-sealed
containers.
<< <i>Does anybody else see the confliction between the following two statements from the PCGS filing?
This program was launched based on our belief that the
marketplace would prefer coins struck early in the life of the die so that
the details of the coin would be very sharp, provided that there was
independent evidence of an early strike. To provide assurance to the
marketplace of these early strikes, we required that coins for First Strike
designation be submitted in January of the year as struck on the coin or
otherwise be provided to us in their original, date-stamped, Mint-sealed
containers. >>
<< <i>Class action lawyers are scum.
Russ, NCNE >>
Agree 100%
Now lets get back to the topic at hand.
I think the First Strike TPG program is bad for our hobby, do you?