What's Going On with The Diamond Doctor?

Don't worry, Cat, I'm not going to slam the good Doctor.

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I wonder if any Confessor was as startled as I was to be traveling on the Dallas North Tollway and suddenly seeing this flash on one of those big digital billboards:

Huh?  The diamond purveyor to everyone on The Ticket?  They all must head over there after they get their foundations tuned up by All-Pro Foundation Repair.

Before I go any further, I should say that there is no original reporting here.  This is all from the ether that is the Internets, including filings in some of the litigation involved.  I don't know The Diamond Doctor -- one David Blank -- and I have never visited his store.

When you go to that website (HERE) -- it looks pretty lurid.  Too lurid, but I'll get to that in a minute.  The website appears to be sponsored by Cumming Manookian.   That is a two-person law firm based in Nashville.  The person of interest here is Brian Manookian.

I'll get back to that "lawsuit" website in a second, but I do want to note at this point that in 2015, Manookian pleaded guilty to one count of violating the Food, Drug, and Cosmetics Act relating to a scheme to distribute an FDA-unapproved substance called Melanotan II, which had been advertised as an injectable tanning product, one that could reduce the risk of skin cancer to boot.  He was sentenced to a year's probation and fined a grand.  

Another thing you need to know early on is that Manookian has not actually filed any lawsuit against The Diamond Doctor on behalf of any client, or his own behalf.  Nor does he or his firm seem ever to have had much genuine interest in doing so, despite all the talk of lawsuits and compensation and similar lawyerly formulations.

What's his beef?  As you can see from the website, he is accusing TDD of overgrading diamonds.  I'm not going to go into detail on this, but the gist of the accusation -- and it is only an accusation -- seems to be that TDD doesn't use the reputable Gemological Institute of America (GIA) to certify his diamonds as of a particular grade for the various qualities one desires in a diamond (clarity, color, etc.), but instead uses certifying organizations that routinely (and, at least by implication, knowingly) overgrade diamonds, and issue certificates that are then shown to consumers. 

Manookian has conducted his campaign against TDD with multiple websites, Facebook and other social media, YouTube, and, of course, that lurid billboard.

Now that website:  It says lots of things, but one thing it doesn't say is that Cummings Manookian wants you as a client or will file a lawsuit on your behalf.  There is also a popup that appears when the website loads -- actually, sometimes the popup appears, and sometimes it doesn't -- that says:  "DIAMOND DOCTOR AND ITS OWNER, DAVID BLANK, WERE SO PANICKED THAT YOU'D SEE THIS SITE  .  .  .  they filed an emergency lawsuit asking a Dallas Court to order it taken down.  The Court not only immediately rejected their lawsuit, it actually ordered Diamond Doctor's lawyers to prove why they themselves shouldn't be reported for professional misconduct!"  Well, that is interesting, so let's click on the link that says "VIEW THE COURT ORDER" -- but no court order appears. 

But Your Plainsman went a-digging, and found the court's order.  The popup is correct.  TDD did sue Manookian in Texas state court to try to enjoin Manookian's harassment, and the state court judge did deny TDD a temporary restraining order.  The judge doubted that he had personal jurisdiction over Manookian and also had First Amendment "prior restraint" concerns.  He also observed that TDD's lawyer had forwarded copies of his complaint to Tennessee bar authorities, which the judge viewed as a possible violation of Texas ethical rules forbidding using accusations under rules like that in order to gain an advantage in a civil matter, and did indeed call TDD's lawyer to account.  Shortly thereafter, TDD voluntarily dismissed the state court lawsuit.  It wasn't a good effort.

Cummings Manookian's "diamond lawsuit" website has other problems.  Near the bottom, it charges that "David Blank buys known inventories of inferior quality EGL-International diamonds [EGL is apparently one of the accused overgrading certification organizations] from regular wholesalers that he then dumps on unsuspecting Texans.   Shocked?  Listen to David Blank admit it in his own words in a long series of audio recordings."  But there is no link to any such recordings -- none that I could find, anyway.

Having struck out in his first effort to use the courts to fight back, TDD has hired some very prominent Dallas trial lawyers -- I mean, a bunch of them, and not cheap -- and has filed suit against Manookian in the United States District Court for the Eastern District of Texas in Sherman.  (Dallas is in the Northern District.  It would be interesting to know why TDD's lawyers decided to file in that district.)  The voluntary dismissal of the state court suit does not affect the new federal court suit.  The amended complaint in that suit, filed last month, is extremely detailed and its allegations are as lurid as the red on that billboard. (And, in fairness, these are allegations.)  

Boiling TDD's allegations down for the Confessor:    TDD is one of many diamond merchants who has suffered the Manookian accusations of overgrading and harassment campaign.  The most startling part of the story is that TDD, desperate to stop the harassment after the failure of his state court lawsuit, tried to pay Manookian to lay off by attempting to "retain" the Cummings Manookian law firm.  (TDD's pleading actually presents this as TDD's idea, which he seems to have gotten from other diamond merchants who had dealt with Manookian, at least one of whom paid.)  Manookian wanted $5 million; TDD bargained him down to $25.000 a month for ten years -- $3 million.  The idea here was that if TDD "hired" Manookian, the anti-TDD campaign would be a conflict of interest.   However, the deal fell through when, among other things, Manookian allegedly refused to do any actual legal work for TDD.  When those negotiations broke down, Manookian resumed his campaign, and the current federal lawsuit was the result.

[Wait for it, wait for it, the Ticket connection is coming.] 

TDD's position on Manookian's charges, according to the amended complaint, is that there is no single standard for grading diamonds, and that there are many reputable grading organizations, including GIA and EGL.  It concedes variability in diamond grading.     He also asserts that he discloses the variability in grading to his customers and offers a money-back guarantee (25 [?] days).  He vigorously disputes that he has cheated any customers or engaged in criminal activity as repeatedly and loudly charged by Manookian.

And in his allegations that TDD's business has been harmed, we find these passages:

     --   "On March 4, 2016, Manookian unsuccessfully tried to buy advertising on a popular Dallas radio station 1310AM."

     --   "A listener to the above-mentioned radio station, 1310 AM, contacted four hosts of its various radio shows, commenting that the listener 'can't listen to [D]iamond [D]octor [advertising] spots without thinking of fraud charges he's facing.'" 

(Fun fact:  TDD's lead attorney, local powerhouse Don Godwin, used to head up a firm called Godwin Gruber with -- yes, Michael Gruber's father, Michael Gruber.  They have since parted company. [Don and Michael pere, not Michael and Michael.])

The amended complaint candidly describes TDD panicked willingness to pay $3 million to "retain" Cummings Manookian, portraying it as a last resort after the failure of of the Texas state court lawsuit.  Still, it's curious.  Perhaps it is because -- as the amended complaint also seems to suggest -- diamond grading is a somewhat  .  .  .  imperfect science.   Sometimes information of that nature is not comforting to the gem-buying public.

Just two weeks ago, TDD's lawyers filed a second lawsuit -- this one in Texas state court in Dallas County (the court is called "County Court at Law") reviving his request for an injunction.  It's clever:  It argues that the negotiations for Cummings Manookian to represent TDD had created a "fiduciary relationship"  -- a relationship of heightened duties of care and loyalty -- between TDD and Manookian, and that his subsequent actions violated that duty.  

On balance, I would have to say -- advantage, Diamond Doctor.  It is unfortunate that he chose to seek counsel at the outset from his co-victimized industry colleagues rather than sophisticated attorneys and to try to make a deal with Manookian, but he seems to have hove to and triced up, strategy-wise.  I'm sure a campaign like Manookian's was (still is -- it's happening now) terrifying to a merchant who believed himself defenseless against the publicity onslaught.  Just based on what I've seen in the public record and websites, if TDD can get past his own willingness to pay off Manookian -- and assuming there isn't some nod-nod-wink-wink industry scheme to overgrade diamonds as Manookian has charged -- TDD should be able to put this terror campaign in his rear-view mirror with his top-flight new legal team.  

However, Manookian also has very fine Dallas lawyers.  He has filed a motion to dismiss the federal case.  Contrary to Blank's contention (set forth in his letter below and elsewhere), the motion emphasizes the fact admitted in TDD's lawsuit that TDD pursued Manookian to "retain" him to stop the harassment, and not t'other way around.  Nevertheless, I'll predict that Manookian's motion to dismiss will fail.

I think the Rock Doc David Blank should have the last word.  Here is his letter to his customers appearing on The Diamond Doctor website (HERE).

We have significantly grown in that time based on our core values of fairness, honesty and transparency.  We value the solid reputation we have achieved and thank you for your trust in our company.  

That reputation is now being threatened by an aggressive propaganda campaign, led by a Nashville law firm, that is intended to disparage and defame our company.  The lawyers are harassing our company through extensive use of Internet advertising, fake social media accounts and door-to-door flyers to imply, without evidence, that The Diamond Doctor takes advantage of its customers. 

We want to set the record straight. 

What’s behind this campaign of harassment is a law firm whose apparent goal is to extort millions of dollars from us and other retail jewelers. In fact, the law firm offered to stop the harassment campaign against us in exchange for hiring them at a price of $3 million.

The Diamond Doctor refused to fall prey to their scheme and filed a civil RICO lawsuit in Federal court to stop the harassment. In the lawsuit, we detail evidence demonstrating the law firm’s efforts to systematically and relentlessly victimize The Diamond Doctor and other retail jewelers through a pattern of racketeering, including attempted extortion, mail and wire fraud, business disparagement and defamation, among others.

More importantly, their implication that The Diamond Doctor takes advantage of its customers is completely and totally unfounded.  The Diamond Doctor sells only high-quality, certified diamond jewelry at a fair and competitive price.

Our philosophy and practice is to stand behind the products we sell. Our doors are always open to answer and discuss customer concerns, if any. The Diamond Doctor offers each customer a money back guarantee for 25 days or a lifetime right to trade-in for a diamond of equal or greater value.

We will continue to fight the Nashville lawyers’ campaign to prey on a successful, small businesses for their personal gain.  With your support I am confident that we will prevail.   

Thank you for allowing me to share the real story and for continuing to be a valued customer. Should you have any questions, please feel free to call me at 972.342.6663.

Sincerely,

David Blank
Diamond Doctor Owner