Topic: Settlements

First Circuit Rejects Classwide Settlement, Finds That Would-Be Class Representatives Could Not Adequately Represent Subclasses With Materially Different Claims

The First Circuit recently reversed the District of Massachusetts’s approval of a settlement award that improperly lacked any subclasses within the 4.8-million-person putative class, finding it “too difficult to determine whether the settlement treated class members equitably.”  Murray v. Grocery Delivery E-Services USA, No. 21-1931, — F.4th — (1st Cir. Dec. 16, 2022).

The complaint alleged that defendant Grocery Delivery E-Services USA, d/b/a HelloFresh violated the TCPA through its marketing tactics by (1) calling former customers using an automated dialer, (2) calling former customers that were listed on the National Do-Not-Call registry, and (3) calling former customers that had asked HelloFresh not to contact them.  The named plaintiffs—through a single plaintiff’s attorney that purported to represent the entire 4.8-million-person class—negotiated a $14 million settlement with HelloFresh, which the District Court approved without identifying any subclasses of plaintiffs.

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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.

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4th Circuit Declines to Consider Dish Network’s “Premature” Appeal of District Court’s $11 Million Final Disbursement Order

As readers of this blog may recall, the Middle District of North Carolina recently denied Dish Network’s request for reversion of $11 million in unclaimed funds from the jury-awarded damages in a TCPA class action trial.  See Krakauer v. Dish Network, LLC, No. 14-0333 (M.D.N.C. Oct. 27, 2020). Noting that the TCPA is a deterrence statute, the District Court held that allowing unclaimed funds to revert to the defendant would undermine the function of the damage award, and it determined that such funds should either escheat to the government or be donated to an appropriate charity whose work is related to the objectives of the TCPA. But the District Court did not decide the ultimate recipient of the unclaimed funds, appointing a special master to identify and evaluate potential cy pres recipients and make recommendations to the court.

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Despite Absence of Settlement, Unclaimed Funds To Be Distributed To Government Or Charity Rather Than Revert To Dish Network

Last week, the federal judge presiding over a class action against Dish Network (“Dish”) denied a request for reversion of $11 million in unclaimed funds, deciding instead that the funds—which were the product of a trial rather than a settlement—should escheat to the government or be donated to a charity.  See Krakauer v. Dish Network, LLC, No. 14-0333 (M.D.N.C. Oct. 27, 2020).

In denying Dish’s request for reversion, the court explained that “[t]he TCPA is a deterrence statute, and reversion does not support th[at] statutory goal.”  Id. at 10.  It then cited cases for the proposition that unclaimed funds should not revert to a defendant if doing so would undermine the deterrence function of damages.  Id. at 5 (citing In re Lupron Mktg. & Sales Practices Litig., 677 F.3d 21, 32-33 (1st Cir. 2012); Six Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1307 (9th Cir. 1990)).

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A Divided Eleventh Circuit Holds that Incentive Awards are Prohibited

In a decision that may have far-reaching consequences, a divided panel of the Eleventh Circuit ruled that incentive awards to named plaintiffs—which are routine in TCPA and other class action settlements—are improper. See Johnson v. NPAS Solutions, LLC, No. 18-12344, 2020 WL 5553312, at *1 (11th Cir. Sept. 17, 2020). Despite acknowledging that incentive payments are commonplace in modern class action litigation, the majority held that such awards are prohibited under “on-point Supreme Court precedent” from the late 1800s and required reversal of the district court’s approval of a $1.4 million class settlement.

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Million-Dollar Settlement of Billion-Dollar Claim Found Reasonable in Light of Due Process Problems Posed By Disproportionate Damages

Another court has observed that a billion-dollar aggregate liability under the TCPA likely would violate due process, adopting the Eighth Circuit’s reasoning that such a “shockingly large amount” of statutory damages would be “so severe and oppressive as to be wholly disproportionate[] to the offense and obviously unreasonable.”

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Federal Court Reverses Course and Decertifies Settlement Class

After preliminarily approving a TCPA settlement arising out of allegedly unsolicited faxes, the Middle District of Florida recently reversed course and rejected the settlement in light of the Eleventh Circuit’s finding that the district court had erred in denying a new party’s request to intervene. See Tech. Training Assocs., Inc. v. Buccaneers Ltd. P’ship, No. 16-1622, 2019 WL 4751799 (M.D. Fla. Sept. 30, 2019).

The plaintiffs (Technology Training Associates, Inc. and Back to Basics Family Chiropractic) sued the defendant (Buccaneers Limited Partnership) after they received allegedly unsolicited faxes offering Tampa Bay Buccaneers tickets. The plaintiffs further alleged that the faxes did not comply with the TCPA because they did not include the required opt-out notice.

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Court Holds that Pre-Suit Offer Did Not Moot Claims

The U.S. District Court for the Southern District of Florida recently held that a defendant’s pre-suit proffer of a settlement check and a letter promising not to violate the TCPA in the future did not moot the plaintiff’s claims because the plaintiff did not accept the offer. Edelsberg v. Brea Fin. Gp., LLC, No. 18-cv-62119, 2019 WL 1302828 (S.D. Fla. Eb. 26, 2019). The case highlights the ongoing litigation regarding Article III standing in the wake of the U.S. Supreme Court’s decision in Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016). Continue reading “Court Holds that Pre-Suit Offer Did Not Moot Claims”

Second Circuit Moots Class Claims Based on Offer of Judgment

The Second Circuit last week confirmed that entries of judgment satisfying an individual plaintiff’s claims moot TCPA class actions.

In Bank v. Alliance Health Networks, LLC, No. 15-cv-4037 (2d Cir. Oct. 20, 2016), the Second Circuit affirmed the dismissal of the class claims after an entry of judgment, pursuant to the defendants’ offer of judgment, rendered the class claims moot. The Second Circuit acknowledged that the Supreme Court held in Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016) that an unaccepted offer of judgment does not moot a plaintiff’s claims. “But where judgment has been entered and where the plaintiff’s claims have been satisfied, as they were here when [the plaintiff] negotiated the check, any individual claims are rendered moot.”  Continue reading “Second Circuit Moots Class Claims Based on Offer of Judgment”

Seventh Circuit Holds That TCPA Does Not Shift Attorneys’ Fees or Create Common Funds, Reverses Order Entitling Individual Plaintiffs To More Than $500 Per Violation

In Holzman v. Turza, Nos. 15-2164 & 15-2256, 2016 U.S. App. LEXIS 12594 (7th Cir. July 8, 2016), the Seventh Circuit reversed an order that could have resulted in individual payments of $500 per violation plus attorneys’ fees, i.e., more than the $500 in statutory damages for which the statute provides.

After the plaintiff prevailed on the merits, the trial court directed the defendant to deposit $4.215 million into court, which represented the $500 in statutory damages for each of the 8,430 faxes at issue. It then ordered that one third of the $4.215 million be used to pay class counsel and that two-thirds of the $4.215 million be used to pay class members. Id. at *3. Class members would be sent a check in the amount of $333 per fax, i.e., two thirds of $500. If, however, a check was uncashed or undeliverable, class members who had cashed their checks would receive a second distribution of up to $167 (i.e., so that their total recovery could, in theory, reach $500 per fax).  Id. If any funds remained after that second distribution, then, and only then would they revert to the defendant. Id.  Continue reading “Seventh Circuit Holds That TCPA Does Not Shift Attorneys’ Fees or Create Common Funds, Reverses Order Entitling Individual Plaintiffs To More Than $500 Per Violation”