In In re Capital One Telephone Consumer Protection Act Litigation, — F.Supp.3d —-, 2015 WL 605203 (N.D.Ill. 2015), Judge Holderman approved a TCPA-class settlement, but reduced Plaintiffs’ counsel’s fee request by approximately 30%.
The Settlement Agreement requires Defendants to establish a non-reversionary settlement fund of $75,455,099. (Settlement Agreement § 2.42.) After subtracting notice and administration costs ($5,093,000), Class Counsel’s requested service awards for the five Named Plaintiffs ($25,000), and Class Counsel’s requested fee award ($22,636,530)–all of which will be paid out of the settlement fund–the value of the settlement to class members is $47,700,569. (Dkt. No. 305.); see Pearson v. NBTY, Inc., 772 F.3d 778, 780–81 (7th Cir.2014) (citing Redman v. RadioShack Corp., 768 F.3d 622, 630 (7th Cir.2014) (holding notice costs, administration costs, and attorneys’ fees are not part of the value received from the settlement by class members).
The District Court found that the small amount to each claimant did not justify rejecting the class settlement.
More importantly, $34.60 per claimant is not insignificant considering Capital One’s counsel’s estimate that Plaintiffs will recover nothing through continued litigation. (Dkt. No. 267.) The court recognizes that Plaintiffs would indeed face myriad hurdles by proceeding to trial. First, at a trial, Plaintiffs would have the burden to effectively rebut Capital One’s chief defense that the class members’ consented to be contacted on their cell phones. Capital One argues that it obtained consent to call from each class member because every version of Capital One’s standard cardholder agreement contained provisions expressing that Plaintiffs consented to receive calls through an autodialing technology. (Dkt. No. 267 at 2.) Plaintiffs admit that they agreed to the terms of their cardholder agreements, but argue they did not agree to be contacted “in violation of the TCPA.” (Dkt. No. 262.) Many class members, however, even provided their cell phone numbers to Capital One as their primary contact numbers. ( Id.) Under an FCC order in 2008 implementing the TCPA, autodialed collection calls to “wireless numbers provided by the called party in connection with an existing debt are made with the ‘prior express consent’ of the called party,” and are therefore permissible. In Re Rules and Regulations Implementing the Telephone Consumer Prot. Act of 1991, 23 F.C.C.R. 559 ¶ 9 (2008) (“2008 TCPA Order”); 47 U.S.C. § 227(b)(1)(A)(iii). The FCC’s same 2008 TCPA Order, however, states that “prior express consent is deemed to be granted only if the wireless number was provided by the consumer to the creditor, and that such number was provided during the transaction that resulted in the debt owed.” 2008 TPCA Order ¶ 10. Plaintiffs interpret the FCC’s 2008 TCPA Order to mean that the cell phone number must have been provided during the origination of the credit relationship, i.e., during the transaction. (Dkt. No. 262 at 21.) As United States District Judge J.P. Stadtmueller commented in a recent opinion, however, the 2008 TCPA Order is “far from clear.” Balschmiter v. TD Auto Finance LLC, 2014 WL 6611008, at *8 (E.D.Wis. Nov. 20, 2014). Furthermore, in this district, the only district judge to have addressed the issue held that a caller is entitled to summary judgment against a TCPA claim when it can show the plaintiff provided a cell phone number as a contact number. See Greene v. DirecTV, No. 10 C 117, 2010 WL 4628734, at *3 (N.D.Ill. Nov. 8, 2010) (Kocoras, J.). The parties’ disparate interpretations of the 2008 TCPA Order are reflective of the split opinion among practitioners and the courts, a split that at least injects uncertainty into this litigation and will continue to warrant caution by plaintiffs and defendants until clearer guidance is provided. See, e.g., Baird v. Sabre, Inc., 995 F.Supp.2d 110, 1006 (C.D.Cal.2014) (noting the FCC’s series of TCPA Orders are not “model[s] of clarity”). Second, should Plaintiffs proceed to trial, there would be manageability concerns that may pose serious obstacles to class certification, thus depriving Plaintiffs of the benefits of a class action. Rule 23(b)(3) requires that “questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3). In assessing predominance, a court must analyze “the likely difficulties in managing a class action,” id. 23(b)(3)(D), which “encompass[ ] the whole range of practical problems that may render the class action format inappropriate for a particular suit.” Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 164 (1974). Identifying consenting class members and the precise timing and nature of that consent would require Capital One to locate documents and analyze call recordings for nearly all of the 17.5 million class members. These individual determinations do not always comport with Rule 23(b)(3)’s manageability requirement and have caused some courts to reject class certification on numerous occasions. See, e.g., Balschmiter, 2014 WL 6611008, at *19–20; see also Jamison, 290 F.R.D. at 107 (denying certification of TCPA litigation where “parties would need to scour [defendant’s] records” to determine consent). Third, without the prompt and final resolution a settlement provides, Plaintiffs run the risk that forthcoming FCC orders may extinguish their claims. There are three sets of petitions currently before the FCC, all of which would eliminate or reduce Capital One’s TCPA liability in this case. The first is the FCC’s definition of an autodialer. Although the TCPA defines an autodialer as “equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers,” 47 U.S.C. § 227(a)(1), the FCC has expanded the definition to cover predictive dialers that can “store or produce telephone numbers,” even if they do not “us[e] a random or sequential number generator.” See In re Rules and Regulations Implementing the Tel. Consumer Prot. Act of 1991, 18 F.C.C.R. 14014, 14091–93 (2003). The FCC is considering petitions seeking to exclude from the TCPA predictive dialers used for non-telemarketing purposes, such as debt collection. ( See Dkt. No. 267 (collecting petitions).) The second and, perhaps, more pressing set of petitions to the FCC ask the FCC to clarify how and when consent may be expressed by consumers. See Michael O’Rielly, FCC Commissioner, TCPA: It is Time to Provide Clarity, FCC Blog (Mar. 25, 2014) ( available at http://www.fcc.gov/blog/tcpa-it-time-provide-clarity) (asserting that “the FCC needs to address this inventory of petitions as soon as possible,” and “answer … whether consent can be inferred from consumer behavior or social norms”). The final set of petitions seeks to clarify that a caller does not violate the TCPA when it makes autodialed calls to another cell phone subscriber by mistake. ( See Dkt. No. 267 (collecting petitions).) If the FCC were to issue orders favoring callers in connection with any of the issues discussed above, Plaintiffs claims would be completely barred or materially limited. In light of Capital One’s potentially meritorious defenses and the legal uncertainty concerning the application of the TCPA, the court concludes that Plaintiffs would probably face an uphill battle proceeding to trial and, once there, obtaining relief. The settlement provides value that is fair considering the very real possibility that Plaintiffs may recover nothing if they were to proceed further with the litigation.
After a lengthy analysis, the Court reduced the Plaintiffs’ counsel’s fee request to $15,668,265 (about 20.77% of the $75,455,099 settlement amount.