Eleventh Circuit Denies Petition for Rehearing, Permits Split Decision Barring Incentive Awards to Stand

The Eleventh Circuit recently decided not to rehear en banc a panel decision which held that a TCPA class action settlement could not include an incentive award for the lead plaintiff.  See Johnson v. NPAS Sols., LLC, No. 18-12344, 2022 WL 3083717 (11th Cir. Aug. 3, 2022).

The matter arose from a putative class action complaint, which alleged that defendant NPAS Solutions, a medical debt collection company, violated the TCPA by repeatedly robocalling plaintiffs to collect debts that did not actually belong to them.  The lead plaintiff in the case, Charles Johnson, retained counsel and was actively engaged in the litigation, including negotiations that resulted in a $1.432 million class settlement.

The proposed settlement agreement provided for direct payments to members of the settlement class, attorney’s fees and costs, and a $6,000 incentive award for Mr. Johnson.  The District Court for the Southern District of Florida approved the settlement over the objection of one class member who challenged the incentive award to Mr. Johnson.  In 2020, a split panel of three Eleventh Circuit judges reversed the settlement’s approval, finding that the district court lacked authority to approve the $6,000 incentive award.  (For an in-depth analysis of the panel’s decision, see our 2020 discussion here.)

A majority of Eleventh Circuit judges agreed not to reconsider the 2020 decision, summarily denying a petition to rehear the case en banc.  Judge Newsom authored a short concurring opinion, stating that the case should not be reheard because it “has been pending too long” and “[t]he parties and the bar are entitled to closure.”  The substance of the August 3, 2022 decision came through Judge Pryor’s dissenting opinion, which was joined by Judges Wilson, Jordan, and Rosenbaum.  According to the dissent, “[b]y holding that incentive awards are unlawful per se, the [2020 panel] opinion broke with decisions from this and every other circuit allowing these awards when properly approved under the strictures of Rule 23.”

The dissenting judges were not persuaded by the panel opinion’s reliance on two United States Supreme Court cases from the 1880s:  Trustees v. Greenough, 105 U.S. 527 (1881) and Cent. R.R. & Banking Co. v. Pettus, 113 U.S. 116 (1885).  “Greenough and Pettus [were] decided long before modern class actions were born” and “in that now-super-seeded legal landscape, the Court rejected compensation for a creditor’s expenses that were—as the panel majority opinion candidly acknowledged—only ‘roughly analogous’ to today’s incentive awards approved under Rule 23.”

The dissent concluded by lamenting that the ruling will “undermin[e] class actions,” as “damages per class member tend to be slight” and “a class representative may spend hundreds of hours providing essential services for the litigation”—a sacrifice that is less likely to occur now that incentive awards are unavailable.  “The ultimate loser,” it predicted, will be “the public.”

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