In Bayat v. Bank of the West, 2015 WL 1744342 (N.D. Cal. 2015), Judge Chen granted final approval to a TCPA class action settlement. The settlement class consisted of “All persons within the United States to whom, on or after November 2, 2008 through [July 22, 2014], a non-emergency telephone call was attempted by Bank of the West, or any other entity on its behalf, to a cellular telephone through the use of an automatic telephone dialing system or an artificial or prerecorded voice.” The Court summarized the Order as follows:
The settlement provides both monetary and injunctive relief for class members. Specifically with respect to monetary relief, BOW has agreed to pay $3,354,745.98 into a non-reversionary settlement fund for the benefit of class members. See Docket No. 34–2 (Settlement Agreement) at 5. Class members were required to submit a straightforward claim form to be entitled to a cash award. Id. at III.F (“Cash Awards shall be made to Eligible Settlement Class Members on a claims-made basis only”). After subtracting settlement administration costs of no more than $413,607, and attorneys fees of $455,224.50 from the settlement fund, approximately $2,485,914.48 will remain to pay individual class members. See Jue Decl. at ¶ 24. Each class member who filed a claim will receive an equal distribution from the settlement fund.1 Settlement Agreement at III.F.4. 16,459 individuals filed a timely claims form. Docket No. 69 (Supp. Jue Decl.) at ¶ 5. This represents a claims rate for the monetary relief portion of the settlement of roughly 1.9%. BOW also agreed to cease placing automated phone calls to its customers’ cell phones, but it only agreed to such injunctive relief on an opt-in basis. That is, the settlement allows BOW to engage in the precise conduct challenged by Plaintiffs here unless a class member timely filed a “Request to Stop Calls”2 with the Claims Administrator. Settlement Agreement at III.C.1(c) (providing that “[a]ny Settlement Class Member who does not submit a valid and timely Revocation Request … will be deemed to have provided prior express consent to the making of calls by BOW”). Indeed, under the terms of the settlement, failure to submit a timely Request to Stop Calls is deemed to provide BOW with express consent to place automated calls to those class members in the future. Id. 9,920 class members filed a timely Request to Stop Calls. Supp. Jue Decl.. at ¶ 5. This represents a claims rate for the injunctive relief portion of the settlement of roughly 1.1%. In a separate motion, class counsel have moved for $838,386 in attorneys’ fees, which represents 25% of the common fund amount. Docket No. 57. Class counsel also seek $2,000 incentive awards for each of the named plaintiffs. For the reasons explained below, the Court GRANTS the motion for final approval and GRANTS the request for incentive awards. The Court also GRANTS the attorneys’ fees request in the amount of $455,224.50.
The District Court noted that the case had legal uncertainty, justifying a compromise of the Plaintiff class’ claims.
In approving TCPA class action settlements, a number of courts have recently cited to the legal uncertainty surrounding whether “prior express consent” may be given only at the time of account origination (as Plaintiffs contend) or at any time during the life of the transaction (as BOW argues). See, e.g., In re Capital One Tel. Consumer Prot. Act Litig. (In re Capital One ), No. 12 C 10064, 2015 U.S. Dist. LEXIS 17120, at *22 (N.D. Ill. Feb 12, 2015) (discussing the “disparate interpretations” of the FCC orders, and noting that “the split opinion among practitioners and the courts … injects uncertainty into the litigation” counseling in favor of settlement); Wilkins v. HSBC Bank Nev., N.A., No. 14–C–190, 2015 U.S. Dist. LEXIS 23869, at *21 (N.D.Ill. Feb. 27, 2015) (approving TCPA class settlement in part because “alternative interpretations” of the FCC Orders “will continue to add significant risk to large TCPA litigation until the FCC clarifies the definition of ‘prior express consent’ under the TCPA”). These cases properly recognize that a settlement is in the interests of class members who otherwise may not be entitled to any relief should their claims fail on the merits. See In re Capital One, 2015 U.S. Dist LEXIS 17120, at *22; see also Nwabueze v. AT & T Inc., No. C 09–1529 SI, 2013 WL 6199596, at *4 (N.D.Cal. Nov. 27, 2013). Because the strength of Plaintiffs’ claims is in doubt, the first Churchill Village factor tips in favor of final approval of the settlement.
In the end, the Court granted final approval to the class.
The fourth Churchill Village factor is generally considered the most important, because the critical component of any settlement is the amount of relief obtained by the class. See generally In re HP Inkjet Printer Litig., 716 F.3d 1173, 1178–79 (9th Cir.2013); Laguna v. Coverall N. Am., Inc., 753 F.3d 918, 929 (9th Cir.2014) (Chen, J. dissenting), vacated on other grounds by 772 F.3d 608 (9th Cir.2014) (“[I]nescapably, the core of any settlement is ‘the amount offered in settlement.’ ”). It is also the factor that most cuts against settlement approval here. For despite class counsels’ representation in its briefs that the “relief the Settlement provides is outstanding,” the relief obtained here appears less than outstanding. The net settlement fund available for distribution to the class is approximately $2,485,914.48. This represents a $2.85 recovery for each of the 871,836 class members.4 By contrast, if class members were to prevail at trial, they would be eligible to receive at least $500 in statutory damages for each TCPA violation.5 See 47 U.S.C. § 227(c)(5)(B). Of course, as noted above, it is not particularly likely that Plaintiffs would recover statutory damages for every class member; such a damages award (conservatively totaling $435 million for the class) would be unprecedented, and BOW might raise due process concerns. See, e.g., Parker v. Time Warner Entm’t Co., L.P., 331 F.3d 13, 22 (2d Cir.2003) (musing that “the potential for a devastatingly large damages award, out of all reasonable proportion to the actual harm suffered by members of the plaintiff class, may raise due process issues”). Nevertheless, the current class recovery represents a whopping 99.5% discount from the theoretical verdict value were statutory damages to be awarded to the entire class. This cannot be credibly called an “outstanding” result. Moreover, very few of the 871,836 eligible class members actually filed a claim against the settlement fund, further demonstrating the low value of the recovery to class members. Here, 16,459 individuals filed a timely claims form. Suppl. Jue Decl. at ¶ 5. This represents a claims rate for the monetary relief portion of the settlement of just 1.9%. This claims rate is well below the parties’ estimated claims rate at the preliminary approval stage of between five and ten percent, which was based on the fact that BOW has contact information for over half (56%) of all potentially eligible class members. See Jue Decl. at ¶ 6 (“Direct contact information was available for 483,473 of the estimated 871,836 persons who are potential class members.”). It is also significantly lower than the claims rate obtained in certain other recently approved TCPA settlements litigated by class counsel here. See In re Capital One, 2015 U.S. Dist. LEXIS 17120 at *10 (7.87% claims rate); but see Arthur v. SLM Corp., No. C10–0198 JLR (W.D.Wash. Aug. 8, 2012), Docket No. 249 at 2–3 (claims rate of approximately 2%). That said, for those class members who did file claims, the monetary relief available appears reasonable. Each class member who submitted a claim is due to receive approximately $151 – not a trifling sum by any means, and in excess of the per claimant pay outs recently approved by other courts in TCPA class actions. See Wilkins, 2015 U.S. Dist LEXIS 23869, at *19 (defendant paid $2.95 per class member, and $93.22 per claimant); In re Capital One, 2015 U.S. Dist LEXIS 17120, at *20 (defendant paid $34.60 per claimant); Arthur, No. C10–0198 JLR (W.D.Wash. Aug. 8, 2012), Docket No. 249 at 3 (maximum $120 per claimant). As one court correctly observed in a case with a significantly lower per claimant pay out than this one, a “$34.60 per claimant recovery in this case does not seem so minuscule in light of the fact that class members did not suffer any actual damages beyond a few unpleasant phone calls, which they received ostensibly because they did not pay their credit card bills on time.” In re Capital One, 2015 U.S. Dist. LEXIS 17120, at *20. A $151 payout here is a good result for the class members who filed claims, particularly given that BOW likely could have defensed this action either on the pleadings or at the class certification stage, leaving all class members with nothing. The injunctive relief offered under the settlement, however, is far less impressive. According to class counsel, “the primary goal” of this litigation was to obtain injunctive relief that would put “an end to these unwanted phone calls.” Docket No. 63 at 3. Class counsel states that the settlement “provides Plaintiffs and Settlement Class Members with this exact relief….” Id. Not so. Indeed, if injunctive relief was truly the “primary goal” of this litigation, class counsel fell well short of the mark. The settlement only secures injunctive relief for those class members who opted-in by filing a Request to Stop Calls. See Settlement Agreement at Sec. III.C.1. Only 9,956 class members filed a timely Request to Stop Calls. Suppl. Jue Decl. at ¶ 5. This represents a claims rate for the injunctive relief portion of the settlement of just 1.1%. Thus, over 98% of the eligible class members received no injunctive relief. In fact, those class members who did not obtain injunctive relief are worse off as a result of this settlement. That is because the settlement provides that “[a]ny Settlement Class Member who does not submit a valid and timely [Request to Stop Calls] to the Claims Administrator will be deemed to have provided prior express consent to the making of calls by BOW or third parties calling on its behalf.” Settlement Agreement at Sec. III.C.1.(c). Not only is such an individual releasing claims she might have had against BOW for the allegedly unauthorized calls already made to her, such an individual is also waiving any future claim she might have if BOW continues to engage in the exact same conduct that was the focus of this lawsuit (at least until such point that the consumer exercises his or her statutory rights under the TCPA to direct BOW to stop further calls). Put simply, BOW remains free to place “unwanted phone calls” to 98% of the settlement class, despite the fact that class counsel claims that the “primary goal” of this lawsuit was to put an end to such practices. Thus, the value of any injunctive relief in this case is largely illusory, and in all likelihood is actually negative from the point of view of class members. Despite the minimal injunctive relief on offer in this settlement, the Court is convinced that the total class recovery obtained here is sufficient to approve the settlement, especially in light of the “strong judicial policy that favors settlements, particularly where complex class action litigation is concerned.” In re Syncor ERISA Litig., 516 F.3d 1095, 1101 (9th Cir.2008); see also Franklin v. Kaypro Corp., 884 F.2d 1222, 1229 (9th Cir.1989) (explaining that there is an “overriding public interest” in settling class actions). The Court also observes that two courts have previously approved TCPA settlements with the identical negative injunctive relief provisions present here – albeit without analysis of the likely negative value of such relief. See Arthur v. Sallie Mae, No. C10–0198 JLR, 2012 U.S. Dist. LEXIS 3313, at *32 (W.D.Wash. Jan. 10, 2012); Steinfeld v. Discover Fin. Servs., No. 12–cv–11118 JSW, 2014 U.S. Dist. LEXIS 44855 (N.D.Cal. Mar. 31, 2014). Further, as noted above, it is noteworthy that the Settlement Agreement does not purport to waive future statutory opt-out rights under the TCPA. Thus, for the reasons explained above (and on the record at the final approval hearing) the Court finds that the fourth Churchill Village factor favors final settlement approval.