Yet Another Bank Reaches Multimillion-Dollar TCPA Deal

by Manatt, Phelps & Phillips, LLP

Manatt, Phelps & Phillips, LLP

Following the lead of other banks facing putative class actions under the Telephone Consumer Protection Act (TCPA), JPMorgan Chase Bank agreed to pay recipients of unwanted phone calls $3.75 million.

What happened

The TCPA makes it unlawful to use an automatic telephone dialing system (ATDS) to make a call to a cellular telephone number without the prior express consent of the called party. A pair of plaintiffs filed suit in Florida federal court in October 2015 asserting that they received calls from the bank without having provided consent.

According to Michelle James and Nichole Seniuk, the bank autodialed cell phone numbers with calls intended for its own customers regarding Chase deposit accounts. However, the bank ran afoul of the statute because the calls reached parties different from those who Chase was trying to call because the cell phone numbers had been reassigned to new individuals.

For example, Seniuk told the court she received about 60 calls from Chase between March and April 2015 after purchasing a new cell phone earlier in the year. Even after she explained to the bank that it had reached a wrong number and requested that the calls stop, Chase continued to call, she alleged.

The plaintiffs noted that Chase raised a host of defenses to the lawsuit, including a one-call safe harbor for calls made to reassigned cellular telephone numbers established by the Federal Communications Commission after the settlement was reached. The bank also had a strong argument that at least some of the claims would be dismissed under the "emergency purposes" exemption of the TCPA, as discovery indicated that some of the calls were made for the purpose of notifying consumers of potential fraudulent activity on their bank accounts.

But Chase elected to reach a deal with the plaintiffs while reiterating that it acknowledged no liability under the TCPA. The settlement "is fair, reasonable, and adequate, and in the best interests of the class, particularly in light of the substantial risks and uncertainties of protracted litigation," the plaintiffs argued in their unopposed motion for preliminary approval of the deal.

The agreement requires Chase to pay $3.75 million into a settlement fund. Once the fund makes payments for administration costs, class representative awards of $5,000 each for James and Seniuk, attorneys' fees of no more than 30 percent of the fund, and $15,000 in expenses, the remainder will be divided on a pro rata basis between class members.

If each of the estimated 675,000 class members—defined as all people who received a cell phone call from Chase over the prior four years placed using an ATDS that was directed to a phone number associated with a deposit account but made to a different party than the person associated with the bank's records—submits claims, payment would be about $5.55. Adjusted for the typical rate of claims filed (approximately 4 to 6 percent in TCPA cases), class members will likely receive in the range of $45 to $75, the plaintiffs said.

The settlement provides "substantial, immediate cash relief to the class," the motion argued, and class members will receive an amount that compares favorably to TCPA settlements generally.

To read the motion in support of preliminary approval of the settlement in James v. JPMorgan Chase Bank, click here.

Why it matters

Banks have been some of the hardest-hit defendants in the rampant TCPA class action litigation that has swept the country over the last few years. Two of the three costliest settlements involved bank defendants, including HSBC paying $40 million in 2015 to end a case against it in Illinois federal court. Notably, this case evidences the dangers presented by calling reassigned numbers, an issue that was addressed far from favorably for defendants in the FCC's July 2015 ruling.

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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