Capital One Financial Corp. (“Capital One”), Capital Management Services, L.P. (“CMS”), AllianceOne Receivables Management Inc. (“AllianceOne”) and Leading Edge Recovery Solutions, LLC (“Leading Edge”) (collectively the “Defendants”) have agreed to pay one of the largest Telephone Consumer Protection Act (“TCPA”) settlement amounts in history. According to the settlement agreement, the Defendants have agreed to pay over $75 million to settle a consolidated TCPA class action.  The TCPA class action settlement, which must still be approved by a federal judge, will conclude several class action lawsuits against the Defendants that were filed in the United States District Court for the Northern District of Illinois in December 2012.  The present lawsuit against the Defendants is a collective microcosm of a nationwide movement to hold companies liable under the TCPA for using autodialers and/or prerecorded messages to contact consumers on their cellular telephones without consent.

TCPA Allegations

Although the settlement covers several different lawsuits which have been consolidated, the allegations are largely the same.  According to the underlying complaints, Defendants violated the TCPA by contacting consumers on their cellular telephones via an “automatic telephone dialing system” and/or by using “an artificial or prerecorded voice” message without their prior express consent within the meaning of the TCPA.  Specifically, the calls from Defendants were related to debt collection, and as our readers may remember, under the TCPA, debt collection calls are exempt from the prior express written consent requirement, but they do require a lesser form of consent called prior express consent.  Prior express consent may be obtained if a consumer provides the caller with his/her telephone number or conspicuously publishes his/her phone number to the public without any limiting language.

In the present case, the plaintiffs allege that no consent was ever obtained by the Defendants.

The TCPA Class Action Settlement

The Defendants negotiated the TCPA class action settlement terms over many months, and on July 29, 2014, negotiated a settlement amount of $75,455,098.74 to stop the cases from proceeding to trial.  Specifically, Capital One will pay $73 million into the settlement fund, Leading Edge will pay almost $1 million, AllianceOne will pay $1.4 million and CMS will pay more than $24,000.  After court expenses and fees are deducted from the settlement fund, the settlement amount will be disbursed to consumers around the country that received a call from any of the Defendants between January 2008 to June 2014.  Additionally, the settlement agreement requires the Defendants to overhaul their respective telemarketing practices to ensure compliance with the TCPA on a prospective basis.

The federal court has scheduled a hearing for final approval in December.

Protect Yourself against TCPA Class Action Claims

The TCPA has become the new favorite statute of class action plaintiff’s lawyers across the country.  We have been following a number of class action TCPA cases on a nationwide basis.  This wave of TCPA litigation has resulted in a number of substantial settlement awards, some amounting to over $30 million.  Because of this, it is becoming increasingly important for businesses to understand the scope of the TCPA and act affirmatively to protect themselves against class action claims and regulatory investigation.

To that end, it should be noted that courts in TCPA actions often look to the affirmative efforts of an officer/owner to determine whether he/she directed the acts which resulted in the alleged TCPA violations.  Where the officer/owner undertook deliberate efforts to implement TCPA compliant policies, courts will often rely upon this fact in denying personal liability and dismissing the TCPA action.