Eleventh Circuit Vacates TCPA Class Settlement for Lack of Standing, Suggesting Reconsideration of Glasser v. Hilton Grand Vacations Co.

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Drazen v. GoDaddy.com, LLC, No. 21-10199 (11th Cir. July 27, 2022)

Plaintiffs’ Claims and Allegations

Plaintiff’s claims, and those advanced in two separately filed class action lawsuits alleging violation of the TCPA by making unsolicited promotional/marketing communications, were consolidated after which time the Parties entered into settlement negotiations. Thereafter, the Plaintiffs submitted a proposed class settlement agreement defining the class as: All persons within the United States who received a call or text message to his or her cellular telephone from the Defendant from November 4, 2014 through December 31, 2016, including certain exclusions.

The District Court’s Consideration of the Proposed Settlement Class

The proposed settlement required that the Defendant make $35 million available for approved claims and settlement costs. Class members could, subject to pro rata reduction in the event that too many class members opted into the class, either receive $35 in cash or a $150 voucher from the Defendant. Class counsel agreed to ask for no more than 30 percent in attorneys’ fees plus costs and expenses, and asked the district court to award each named plaintiff $5,000.

Because the class definition included individuals who received only one text message from the Defendant, the district court requested briefing regarding the implications of Salcedo v. Hannah, 936 F.3d 1162, 1168 (11th Cir. 2019), wherein the Court of Appeals held that receipt of a single unwanted text message was insufficiently concrete injury to give rise to Article III standing. In their briefing, the Parties proposed a new class definition consisting of: All persons within the United States to whom, from November 4, 2014 through December 31, 2016, the Defendant placed a voice or text message call to their cellular telephone pursuant to an outbound campaign facilitated by the web-based software application used by 3Seventy, Inc., or the software programs and platforms that comprise the Cisco Unified Communications Manager, again with certain exclusions.

Citing Cordoba v. DIRECTV, LLC, 942 F. 3d 1259, 1273 (11th Cir. 2019), the district court held that only named plaintiffs need have standing, and the standing issue could be resolved by removing one of the three named Plaintiffs who received a single text message from  the Defendant. As to “absent class members,” who may have only received a single text message, the district court noted that these individuals would only make up about seven percent of the class based on the Defendant’s representations, and “even though some of the included class members would not have a viable claim in the Eleventh Circuit, they do have a viable claim in their respective Circuit [because of a circuit split]. Thus, [Defendant] is entitled to settle those claims in this class action although this Court would find them meritless had they been brought individually in the Eleventh Circuit.”

Objection to Class Settlement and Final Order

After certifying the class for settlement purposes, and considering Plaintiffs’ counsels’ request for an award of attorneys’ fees totaling 30 percent of the settlement fund and costs, the district court reduced the attorneys’ fee award to 25 percent of the fund, concluding that “the issues in this case were not complex” and the “average benchmark” was 25%.” Thereafter, an objection to the settlement was lodged, contending, among other things, that the settlement was a “coupon” settlement under the Class Action Fairness Act (“CAFA”), requiring heightened scrutiny of the attorneys’ fee award. In response, the district court amended its attorneys’ fee order to make its previous awards subject to final evaluation and review of any objections and at the final approval hearing. After briefing from all Parties, the district court entered its final order, certifying the settlement class, while reducing the attorneys’ fee award to 20 percent, and separately vacating $5,000 awards to the named Plaintiffs based on Johnson v. NPAS Sols., LLC, 975 F. 3d 1244, 1260 (11th Cir. 2020).

The Eleventh Circuit’s Ruling

Noting that the Parties did not brief the issue of subject matter jurisdiction, apparently assuming that the class definition satisfied Article III standing muster, the Court held that such jurisdiction was lacking, vacating final settlement approval, and remanding the case to allow the Parties an opportunity to revise the class definition. Citing the United States Supreme Court case Frank v. Gaos, 139 S. Ct. 1041 (2019), the Court noted that Article III’s standing requirements extend to court approval of proposed class action settlements. And, thus, even at the settlement stage of a class action, courts must assure themselves that they have Article III standing. The Court also cited TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021) for the propositions that: (1) To satisfy the concrete injury requirement for standing, a plaintiff alleging a statutory violation must demonstrate that history and the judgment of Congress support a conclusion that there is Article III standing; and (2) Every class member must have Article III standing in order to recover individual damages.

Noting that the district court’s certification of the settlement class was issued before, and without the benefit of TransUnion, supra., the Circuit Court concluded that “[i] f every plaintiff within the class definition in the class action in TransUnion had to have Article III standing to recover damages after trial, logically so too must be the case with a court-approved class action settlement.” The Court also rejected the district court’s reliance on In re Deepwater Horizon, 739 F. 3d 790 (5th Cir. 2014) for the proposition that absent class members need not have Article III standing in the Eleventh Circuit to be part of a nationwide class settlement because they may have standing in another circuit, finding that, at most, In re Deepwater Horizon stands for the proposition that absent class members need not “’prove their claims prior to settlement under Rule 23(e),’” and that “[a]ny class definition that includes members who would never have standing under our precedent is a class definition that cannot stand.”

The Court then pondered the more difficult question of whether absent class members have standing based on receipt of a single cell phone call. Pointing to its previous decision in Glasser v. Hilton Grand Vacations Company, LLC, 948 F.3d 1301 (11th Cir. 2020) that “receipt of more than one unwanted telemarketing call” is sufficient to meet the “concrete injury” requirement for Article III standing, the Court recognized that the differences between Glasser, Cordoba and the present case “may present the need to reexamine Glasser in the future because it ”may affect both the injury-in-fact requirement and the causation analysis.” Adding that in Glaser, the Court did not decide whether a single phone call to a cell phone was a concrete injury for Article III standing purposes, the Court held that: “Because we have not received briefing on whether a single cellphone call is sufficient to meet the concrete injury requirement for Article III standing and because TransUnion has clarified that courts must look to history to find a common-law analogue for statutory harms, we think the best course is to vacate the class certification and settlement and remand in order to give the parties an opportunity to redefine the class with the benefit of TransUnion and its common-law analogue analysis.”

A copy of the opinion can be accessed by clicking here.

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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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