Payless ShoeSource will pay up to $6.25 million to settle a class action lawsuit alleging that the company sent unsolicited text messages.
The California suit claimed that Payless, its parent company Collective Brands, Inc., and mobile marketing firm Voice-Mail Broadcasting Corp., used an automatic dialer and violated the Telephone Consumer Protection Act by sending thousands of text messages to promote the sales of Payless’ shoe lines. The texts were sent without prior express consent as required by the Act and some of the recipients were registered on Do Not Call lists.
Pursuant to the settlement, which has received preliminary approval from the court, Payless will issue a $25 merchandise certificate to each class member with an approved claim from a funded settlement pool of up to $5 million.
The company also agreed to implement new procedures and safeguards to prevent unwanted texts from being sent in the future. In addition to providing training to employees and not using any lists of cell phone numbers compiled prior to the filing of the case, the company agreed to establish a “double opt-in” requirement for future text offers. Settlement class members will no longer receive a text message from Payless unless they text the company and request the receipt of such text offers and then subsequently confirm their selection. “That alone makes the litigation a success,” the plaintiffs said in their motion for final approval of the settlement.
On top of the possible exposure of $6.25 million, Payless also agreed to pay for settlement expenses and $1.25 million in class counsel fees and $20,000 in expenses.
To read the settlement agreement in Kazemi v. Payless ShoeSource, click here.
Why it matters: In their motion in support of final approval of the settlement agreement, the plaintiffs argued that the class received “all of the injunctive relief that they could possibly have sought through litigation.” And while each class member would have been entitled to $500 in statutory damages under the TCPA had the suit been successful, the plaintiffs argued that “the maximum potential recovery is, in a sense, largely illusory.” With a potential class composed of 8 million consumers, the over $4 billion award would pose a serious problem to Payless’ financial health. Although the $25 merchandise certificates represent just 5 percent of the maximum potential recovery per class member, when “combined with the injunctive relief that precisely targets the allegedly unlawful conduct at issue in the litigation, such recovery provides truly meaningful benefit to the class,” the plaintiffs argued. The plaintiffs also noted that not a single objection to the settlement was filed, with only one plaintiff choosing to opt-out and over 22,500 claims already filed.