This week, a Pennsylvania federal judge refused to approve a proposed $4 million settlement for violations of the Telephone Consumer Protection Act (TCPA) because it would provide the 67,000 class members with only $35 each. In the 50-page opinion, U.S. District Judge Michael Baylson said that Flagship Credit Acceptance LLC (Flagship) ought to be able to provide a significantly higher amount of compensation to the alleged victims for its automatic telephone calls in violation of the TCPA.
Judge Baylson said, “Flagship’s most recent press release reported that its portfolio of managed receivables has grown to $2.9 billion, so class members may reasonably be left wondering why a company with almost $3 billion in assets can only afford a $4 million settlement.”
The judge further stated that “de minimis class action recoveries,” like this one under the TCPA, may not be worth the significant administrative and logistical burdens faced by many courts, especially when the case results in only a small award for the affected individuals.
The lead plaintiff, Robert Ward, and his attorneys, informed the court of this settlement in July 2019, which also included a $1.3 million portion for attorneys’ fees and a $10,000 incentive payment for Ward. However, Judge Baylson ruled that there was insufficient evidence that $4 million was a reasonable amount for Flagship to pay, especially where the TCPA allows for statutory damages of $500 for each call in violation of the Act. Judge Baylson added that there has been insufficient inquiry into whether Flagship’s insurance would pick up any part of the settlement. Until the parties are able to address his concerns or provide sufficient evidence that this settlement amount is fair, the proposed settlement is denied.
This is an interesting decision in a TCPA class action case and could have some effect on future TCPA class action settlements.