Legal Alert: Multi-Million Dollar Settlements Prompt Record Filing of TCPA Lawsuits

by Eversheds Sutherland (US) LLP
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High-dollar settlements of class actions filed under the Telephone Consumer Protection Act appear to have prompted the filing of a record number of new TCPA cases in federal courts nationwide. In the largest TCPA settlement announced to date, on July 29, 2014, a federal court in Illinois preliminarily approved a $75 million settlement in a case against Capital One alleging the company made automated calls to cell phones without first obtaining the recipients' consent. Because the TCPA provides for statutory damages of $500 per violation (and up to $1,500 per willful violation) with no maximum cap on recovery, potential exposure in a TCPA class action can quickly escalate into the millions. As highlighted below, there have been a number of recent seven and eight-figure TCPA settlements. The trend of high-dollar TCPA settlements may spur a further uptick in TCPA class actions and related individual cases.

Below is a summary of recent class-action settlements under the TCPA. Given the large potential exposure in TCPA cases, and particularly in light of 2013 amendments to FCC rules heightening the standards for consumer consent, companies engaging in automated communications with consumers will need to be increasingly focused on TCPA compliance to mitigate the potential litigation risk.

In Re: Capital One TCPA Litigation, No. 1:12-cv-10064 (N.D. Ill.)

Settlement: $75.5 million.

Date: July 29, 2014 (Preliminary Approval)

This is the largest settlement to date under the TCPA. This multi-district class-action litigation, combining three complaints, asserted that the defendants violated the TCPA when they used an automatic telephone dialing system (“ATDS”) to call customers’ cellular telephones without prior express consent. The defendants argued that the terms of its customer agreement constituted prior express consent, making the calls permissible. In addition to money damages, the defendants agreed to change their practices for cold calling customers’ cellular telephones. On July 29, 2014, the court granted preliminary approval of the parties’ nearly $75.5 million settlement ($75,455,098.74). The final Approval Hearing is scheduled for December 9, 2014.

Benzoin v. Vivint Home Security, Inc., No. 12-cv-61826 (S.D. Fla.)

Settlement: $6 million

Date: June 9, 2014 (Preliminary Approval)

Plaintiffs’ alleged that the defendant violated the TCPA when it used an ATDS to call cellular phone numbers that were registered on the National Do Not Call Registry for the purposes of generating sales leads for a home security company. Defendant Vivint maintained that it was not liable for the alleged violation because it was not the entity that made the calls. The parties settled for a reported $6 million plus injunctive relief. If finally approved by the court, each of the possible 602,810 class members may receive up to $500. The court granted preliminary approval of the settlement agreement on June 9, 2014 and the final fairness hearing is scheduled for August 25, 2014.

Rose v Bank of America, No. 11-cv-2390 (N.D. Cal.)

            Settlement: $32 million

            Date: April 4, 2014 (Final Approval Hearing)

This settlement resolved six separate TCPA lawsuits against Bank of America. At the time it was reported as potentially the largest cash payment for settlement of a TCPA class action. In total, the complaints alleged that Bank of America made unauthorized ATDS and prerecorded voice collection calls to 7.7 million mortgage loan and credit card customers. The court preliminarily approved the parties’ $32 million settlement on December 6, 2013 and held a final approval hearing on April 4, 2014. The plaintiffs filed unopposed motions for final approval on August 1, 2014.

Steinfeld v. Discover Financial Services, et al., No. 3:12-cv-1118 (C.D. Cal.)

            Settlement: $8.7 million

            Date: March 31, 2014 (Final Approval)

Plaintiffs alleged that the defendant violated the TCPA when it called the class members on their cellular telephones using an ATDS and/or using an artificial or prerecorded voice without obtaining their prior express consent. The named plaintiff was a cardholder and provided the defendant with his phone number. Despite defendant’s defenses, the parties settled the claims for monetary damages and injunctive relief. On March 31, 2014, the Court granted final approval of the parties’ $8.7 million settlement.

Hanley v. Fifth Third Bank, No. 1:12-cv-1612 (N.D. Ill.)

Settlement: $4.5 million

Date: December 23, 2013 (Final Approval)

The plaintiff’s class-action complaint alleged that defendant Fifth Third violated the TCPA when it placed calls to cellular telephones using an ATDS or using an artificial or prerecorded voice after the plaintiff and putative class members revoked consent for such calls. Fifth Third denied the allegations. On December 23, 2013, the Court granted final approval of the parties’ $4.5 million settlement agreement.

Toni Spillman v. Domino’s Pizza LLC and RPM Pizza, LLC, No. 10-cv-349 (M.D. La.)

Settlement: $9.75 million

Date: May 24, 2013 (Final Approval)

The plaintiffs alleged that the defendants caused the transmission of multiple unsolicited, pre-recorded advertising telephone calls and text messages to their home and cellular telephones over a four-year period without prior consent and in violation of the TCPA. The $9.75 million settlement covered customers in Louisiana, Alabama and Mississippi and settlement payments were to be in the form of cash and merchandise vouchers. On May 24, 2013, the Court granted final approval of the parties’ settlement.

Ellison v. Steve Madden Ltd, No. 2:11-cv-05935 (C.D. Cal.)

Settlement: $10 million

Date: May 7, 2013 (Final Approval)

The nationwide class-action complaint alleged violations of the TCPA when class members received unsolicited text message advertisements. The texts were allegedly sent to more than 203,000 consumers advertising the defendant’s products and events. The Court granted final approval of the settlement on May 7, 2013. The defendant was to pay up to $10 million into a settlement fund, beginning with an initial funding of $5 million and contributing additional $1 million increments as needed to pay claims up to the $10 million cap.

Meilleur v. AT&T Inc., No. 2:11-CV-01025 (W.D. Wash.)

Settlement: $4 million

            Date: March 13, 2013 (Final Approval)

The plaintiff brought this class action alleging that an automated call from AT&T to his residential phone violated the federal Do Not Call regulations and, therefore, the TCPA. The automated call notified the plaintiff that someone in his household made an international call, for which he would be billed. The plaintiffs alleged that this type of automated call, using an artificial or prerecorded voice, was made to an estimated class of 15,000 people. AT&T took the position that the calls did not violate the TCPA or state law because it was not soliciting business but merely notifying a customer of the call and the charges incurred. The court denied a Motion to Dismiss on February 3, 2012, and the case was settled several months later. On March 13, 2013, the Court granted final approval of the parties’ $4 million class-action settlement.

In re Jiffy Lube International Inc., No. 3:11-MD-02261 (S.D. Cal.)

Settlement: $35 to $47 million

Date: February 20, 2013 (Final Approval)

According to the complaint, defendant Heartland Automotive Services, Inc., a Jiffy Lube franchisee, and its telemarketing vendor allegedly violated the TCPA with a text-message promotional campaign that was transmitted to more than 2.3 million consumers’ cellular telephones without their consent. The defendants unsuccessfully moved to dismiss based on First Amendment and vicarious liability grounds, and were also unsuccessful on a motion to compel arbitration. The settlement, reportedly valued at $35-$47 million in cash and customer discounts, also included an injunctive relief component prohibiting the defendants from sending further commercial text messages without written consent from the recipient, the proof of which the defendants must maintain for two years. The Court granted final approval of the parties’ settlement on February 20, 2013.

Addison Automatics, Inc. v. Precision Electronics Glass, Inc. and Philip Rossi, No. 1:10-cv-06903 (N.D. Ill.)

Settlement: $16 million

            Date: December 14, 2012 (Final Approval)

The plaintiffs claimed that, during a six-month period, they received 31,751 unsolicited fax advertisements from the defendants with whom they had no established business relationship. The plaintiffs alleged that the faxes violated the TCPA and state law. The defendants’ commercial general liability insurance and umbrella policy providers denied coverage and refused to defend under the various policies. The parties settled the matter for nearly $16 million ($15,875,500). The Court granted final approval of settlement on December 14, 2012.

Arthur et al. v. SallieMae et al., No. 10-cv-00198 (W.D. Wa.)

Settlement: $24 million

Date: September 17, 2012 (Final Approval)

Plaintiffs alleged that SLM Corp., the parent company of Sallie Mae Inc., violated the TCPA when it called or texted approximately eight million borrowers’ cellular telephones using an ATDS and seeking to collect debt payments. In addition to the monetary settlement, the parties agreed to injunctive relief restricting future calls to class members. On September 17, 2012, the court granted final approval of the parties’ $24.15 million nationwide class-action settlement. At the time, this was the largest TCPA settlement ever approved.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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