Tens of thousands of faxes will cost Roche Diagnostics Corporation $17 million in a Telephone Consumer Protection Act settlement.
Last year, Econo-Med Pharmacy Inc. sued Roche alleging that the company sent “tens of thousands” of faxes to pharmacies across the country advertising products such as Accu-Chek test strips. The faxes did not contain the TCPA’s required opt-out notice, the plaintiff alleged, seeking to recover under the federal statute and Indiana’s Deceptive Consumer Sales Act.
In addition to the usual pre-trial motions and discovery, the proceedings were stayed while Roche pursued a Petition for Waiver with the Federal Communications Commission. Last November, the FCC granted its waiver request through April 30, 2015 for non-compliant faxes that were sent without the required opt-out information. Not long after, the parties agreed to mediation and reached a deal.
The settlement agreement requires Roche to establish a non-reversionary fund of $17 million. Class members (pharmacy recipients dating back to April 2012) are eligible for an estimated $500 each, with up to one-third of the fund (or $5.6 million) possible for class counsel and a $5,000 class representative award for Econo-Med.
The value of the deal “falls well within the range of a reasonable settlement,” the plaintiff argued in its memorandum in support of preliminary approval of the agreement, noting that the estimated cash payments are “directly in line with the statutory damages provided in the TCPA.” The estimated recovery also exceeds the average recovery in similar TCPA cases, the plaintiff added, citing approval of deals where class members received $30.21, $80.26, and $255.95.
Roche, which did not oppose the motion in support of settlement, denies any wrongdoing in the case.
To read the decision in Econo-Med Pharmacy v. Roche Diagnostics Corp., click here.
Why it matters: In addition to avoiding the usual “risks, uncertainties, and delays of continued litigation,” the plaintiff acknowledged that settling the case would avoid the risk of an unfavorable development in the U.S. Court of Appeals for the D.C. Circuit in Bais Yaakov of Spring Valley v. FCC. That case presents the issue of whether the FCC had the authority (and reasonably exercised it) when it retroactively waived violations of the opt-out requirement. On March 31, the D.C. Circuit issued its decision, ruling that the Solicited Fax Rule, which imposed opt-out requirements on solicited faxes, was unlawful. The D.C. Circuit, finding opt-outs were not required for solicited faxes, did not reach whether the waivers were properly issued. It is likely that the plaintiff secured a favorable settlement just in time–two weeks before the D.C. Circuit overturned the Solicited Fax Rule.