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Inappropriate Pay Day?: TCPA Class Action Results in $8.7MM Fee Award to Lawyers Even Though Class Members May Not Have Been Harmed by Challenged Conduct

The TCPAWorld is an extremely fascinating place to live. Especially when it comes to the wonderful world of class action settlements.

As we reported just the other day, the Seventh Circuit recently shut down “blackmail” schemes perpetrated by “objectors” that insert phony challenges to meritorious settlements in a bid to skim a few hundred thousand bucks from the class counsel’s fee award. And now we have a case that may show the flip side of the coin—TCPA class settlements that result in huge pay days to class counsel where the underlying claims of class members may have lacked any merit to begin with.  And no one was there to object.

In Drazen v. Godaddy.com, LLC, CIVIL ACTION: 1:19-00563-KD-B, 2020 U.S. Dist. LEXIS 143273 (S.D. Ala. August 11, 2020) the court awarded Plaintiff’s counsel a massive $8.7MM fee award resulting from a TCPA class settlement involving purportedly illegal robo-text messages sent from GoDaddy. And while $8.7MM is a ton of money, the dollar figure itself is not all that surprising—the TCPA simply mints millionaire Plaintiffs lawyers. Indeed, the TCPA has turned more class counsel into millionaires than any other statute in history. So what’s another $8.7MM in the pot?

The really remarkable part of Drazen, however, is that the settlement was reached although may class members may not even have had standing to recover anything under the TCPA because they were not harmed by the challenged conduct. When the court granted preliminary approval back in May it noted the curious standing issue. In Drazen v. GoDaddy.com, LLC,  CIVIL ACTION: 1:19-00563-KD-B, 2020 U.S. Dist. LEXIS 84727 (S.D. Ala. May 14, 2020) the court recognized that one of the named class representatives received only one text and could not, therefore, represent the class because he lacked standing under Eleventh Circuit law. Nonetheless, the court allowed the case to proceed as to all unnamed class members—91,000 of whom also received only one text and hence had no valid claim. Hmmmmm.

Interestingly, the Court determined that because many of those class members resided outside of the Eleventh Circuit they might have had standing to pursue their claim had they done so on an individual basis. From that, the Court determined they would have standing to recover settlement proceeds in the case before it,

But wait a minute. Just because a class member would have had a valid claim in a different jurisdiction doesn’t mean the claim is valid in the jurisdiction where the suit was pursued. And it seems the appropriate procedure would have been to sever out the non-Eleventh Circuit class members (or at least do a sub-class) since the relative strength of the class members claims inside and outside the circuit are quite different. Indeed, it seems baffling that a class member in the Ninth Circuit—where the case law on standing is very favorable to the claimant—can be represented in a class action in the Eleventh Circuit at all. The law is simply so divergent that the class mechanism is not the “superior” way to resolve the claims.

Indeed, the entire concept of a nationwide class under the TCPA is counterintuitive given the vast differences in substantive rights class members enjoy across the country. Telephone consumers are not created equally and the law is currently not being applied evenly across the nation. So it is equally unfair to a hypothetical Defendant to be sued by out-of-state Plaintiffs lacking valid claims in their home jurisdiction as it is unfair to a hypothetical Plaintiff to have his/her claim resolved in a jurisdiction that does not value his/her claim in the same manner that his/her home jurisdiction would have. What a mess.

But notice that neither class counsel nor the Defendant had any stake in rocking the boat here. The bigger the class the bigger the pay day for Plaintiff’s counsel—and who cares if the value of the claims of out-of-circuit class members are watered down in light of the negative case law in the circuit where the case was brought?—and the bigger the class the bigger the release for the Defendant—who surely paid less for the overall settlement given the positive case law in the Eleventh than they would have paid, say, in the Ninth.

At the end of the day, this is how the sausage gets made. And so long as Class Counsel can recover $8.7MM in a TCPA settlement where 91,000 people wouldn’t even have had valid claims under the law of the forum jurisdiction we can expect to see a lot more sausage.

Meanwhile I’ve got a bunch of people emailing my blog complaining that they only received $8.34 from a settlement that was supposedly valued at $92.00 per class member because of all the fees and costs assessed…

I’m just the messenger folks. If you have concerns about the amount of your payment, take it up with *your* class counsel.

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume X, Number 227

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About this Author

Eric Troutman Class Action Attorney
Of Counsel

Eric Troutman is one of the country’s prominent class action defense lawyers and is nationally recognized in Telephone Consumer Protection Act (TCPA) litigation and compliance. He has served as lead defense counsel in more than 70 national TCPA class actions and has litigated nearly a thousand individual TCPA cases in his role as national strategic litigation counsel for major banks and finance companies. He also helps industry participants build TCPA-compliant processes, policies, and systems.

Eric has built a national litigation practice based upon deep experience, rigorous...

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