About That First Florida Telephone Solicitation Act Class Action Settlement…

Venable LLP

Venable LLP

The plaintiff in Alvarez v. Sunshine Life & Health Advisors LLC the first Florida Telephone Solicitation Act (FTSA) action to settle on a class basis — filed his motion for preliminary approval of the settlement. And the settlement is an interesting one. The settlement provides that the defendant will make available $2,556,000 as part of a common fund from which the following amounts will be paid:

  1. Each settlement class member who submits a valid claim form will receive a check in the amount of $300;
  2. An incentive award to the plaintiff in the amount of $5,000 for his service as the putative class representative;
  3. Attorneys’ fees and costs totaling 20% (or $511,200) of the common fund; and
  4. The costs of settlement notice and administration.

There are a couple of things that struck me as I reviewed the settlement agreement. First, if the claims, incentive award, attorneys’ fees and costs, and notice and administration costs do not reach $2,556,000 total, the difference “shall remain with Defendant.” This is conceptually similar to a reverter. However, at $300 available per claimant, the take rate may be high, especially compared to take rates in other telemarketing class action settlements, which often are in the single digits. Something to watch.  

Another provision of the Alvarez settlement that seems odd (to me at least) is that the release includes language that is specifically required by California law to ensure that a class member does not inadvertently waive unknown claims merely by signing a general release. That makes some sense given that the “Settlement Class” is defined to be “[a]ll persons,” without geographic limitation, who received a marketing text message from the defendant since July 1, 2021 (emphasis added). However, Alvarez is an FTSA class action. And the FTSA, by its terms, is limited to telecommunications received by “consumers located in Florida.”

I suppose that, given that the defendant touts itself as having “provided insurance coverage to over a quarter million of Americans nationwide” since 2013, it is possible that some of the class members may be non-Florida residents with non-Florida area codes — for example, Californians who happened to receive one or more of the complained-of text messages while traveling in Florida. It also may be the case that the class includes Florida residents whose cellular telephone numbers have California area codes. Or, perhaps, despite its nationwide business operations, the defendant only sent text messages to identifiable Florida residents (e.g., the defendant may have physical addresses associated with each class member).

Either way, the inclusion of the California general release language in the settlement seems out of place. Maybe the reason for its inclusion is simply an abundance of caution to limit any argument by a California-based class member that she did not mean to release any unknown claims by taking part in the Alvarez settlement. But if that’s the reason, then it underscores why FTSA classes should never be certified in the first place: there is simply no way to determine, on a class-wide basis, where a specific person is located (i.e., in Florida or outside the state) when she receives a specific text message. Indeed, that’s why several years ago, in Booth v. Appstack, Inc., the Western District of Washington decertified a state class under the Washington State telemarketing law. And that was a residential landline case involving call forwarding. The problem of identifying where a class member may or may not be at the time of receipt is far more acute in the context of text messages to cell phones. 

Finally, while not particular odd or out of sorts in telemarketing class action settlements generally, the requested amount of attorneys’ fees and costs—more than half a million dollars—is a heck of a haul for the class counsel. All that they did was file their form FTSA complaint, serve form discovery, defeat a motion to dismiss brought on standing grounds only (using a largely form opposition brief), and participate in oral argument on that motion. Alvarez was filed just 10.5 months ago. Since then, class counsel have filed and litigated (or are in the midst of litigating) at least 42 other FTSA cases of which I am aware. That’s likely an understated number as well. It also does not take into account non-FTSA cases filed by the same attorneys. It will be interesting to see whether and how the Alvarez plaintiff’s attorneys justify their fees, and what their lodestar winds up being.

Regardless, there you go. I promised in June 2022 to give you the terms of the Alvarez settlement once they became publicly available. And, as my father (via famed Yukon poet Robert Service) hammered into me as a child, “a promise made is a debt unpaid.”  

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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