In the latest multimillion-dollar settlement in a TCPA class action, Discover Bank and class members have asked a federal court judge to grant final approval to an $8.7 million deal.
The plaintiffs filed suit under the TCPA and alleged that the bank used an autodialer to make illegal robocalls without consent over a six-year period. After multiple mediation sessions and continued negotiations, the parties reached an agreement. In addition to the $8.7 million fund – from which the plaintiffs will receive their pro rata share either in cash or as a credit to their Discovery account – class members can fill out a revocation request form to halt future autodialed and/or prerecorded calls from Discover.
Class counsel estimated that the roughly 9 million class members will receive payments in the range of $20 to $40 after deductions are made for plaintiff incentive awards, the costs of notice and administration, and an estimated $2.175 million in attorney’s fees.
In reaching the deal, both parties acknowledged challenges in continuing the litigation. The plaintiffs admitted that moving forward with the suit was “especially risky” based upon a clause in Discover’s customer agreement mandating individual arbitration and prohibiting class actions. Given the U.S. Supreme Court’s recent decisions embracing similar arbitration agreements, the plaintiffs opted for settling rather than being forced to individually arbitrate their claims.
In addition, both sides were prepared to battle over the issue of “prior express consent.” The class argued that a customer doesn’t provide such consent unless a cell phone number is given at the point of loan origination, while Discover took the position that the number could be provided at any time during the life of the loan.
California federal court judge Jeffrey S. White gave preliminary approval to the settlement in September. Response from the class has been “very positive.” Of the more than 61,000 claims filed, just 133 requested an exclusion and none expressed any valid objections, according to plaintiffs’ unopposed motion for final approval.
To read the motion for final settlement approval in Steinfeld v. Discover Financial Services, click here.
Why it matters: In the motion for settlement, the parties were quite candid in their recognition that both sides had legitimate arguments that could result in a lengthy legal process, increased costs, or in a possible defeat for either side. Most significantly, Discover had fully briefed its motion to compel arbitration. Had the court granted the motion, the class members would have been forced to arbitrate their claims on an individual basis – a scenario that would most likely have ended the case. The bank elected to settle the case, however, to avoid continued litigation. By so doing, it joined a growing number of defendants that paid seven or eight figures in TCPA suits – such as Domino’s $9.75 million settlement, Papa John’s $16.5 million deal, and Sallie Mae’s agreement to pay $24 million.