Yesterday, the Court in Pines Nursing Home, Inc. v. PharMerica Corporation heard both parties seeking court approval of a TCPA class action settlement agreement. The case involves allegations by Pine Nursing Home, Inc. (“Pine”) that PharMerica Corporation (“PharMerica”) used a telecopier machine, computer or other device to send advertisements to telephone facsimile machines in violation of the Telephone Consumer Protection Act’s (“TCPA”) Junk Fax Prevention Act of 2005 (“JFPA”). The parties spent months negotiating a settlement agreement before a Court-ordered mediator prior to coming to an accord. Among other things, PharMerica agreed to pay claims, administrative and legal fees which could cost up to $15 million.

How did PhaMerica Allegedly Violate the TCPA?

PharMerica Settles TCPA Class Action

The complaint filed against PharMerica alleges that on February 28, 2011, PharMerica sent an unsolicited fax advertisement to Pine. According to the joint memorandum of law filed by the parties seeking court approval of the settlement agreement, the class of consumers who were sent unsolicited fax advertisements may exceed 11,000.

Pursuant to the settlement agreement, PharMerica will create a net settlement fund that will be calculated as follows: $300 multiplied by the number of fax transmissions sent to class members submitting approved claims up to 5,260 fax transmissions, and then $150 multiplied by the number of fax transmissions sent to class members submitting approved claims in excess of 5,260 fax transmissions. Class members who submit timely claims will be entitled to recover at least $156.50 per fax transmission, and potentially as much as $300 per fax transmission. In addition, PharMerica has agreed to: 1) materially change its fax marketing practices to comply with the JFPA; and 2) provide training to pertinent employees about compliance with the JFPA.

Pursuant to a minute entry recorded on the docket yesterday, the “Court will enter order giving final approval to settlement, and other issues.” The parties must submit a proposed order to the Court by November 16, 2015.

Protect Yourself

During discovery, it was revealed that PharMerica used a third-party fax blasting service to send the advertisements at issue in the case. Noticeably, the fax-blasting marketing company was not named in the litigation and, under the agreement pending court approval, PharMerica is solely responsible for the settlement funds. To prevent a similar eventuality, it is imperative that companies using third party marketers insure that they are TCPA compliant, and draft agreements providing for indemnity in cases where the marketer is not.