Single text nets $1.3 million in cards for text recipients

First Call

The Hooters TCPA saga began six years ago, when Hooters started a text message marketing campaign that asked customers to opt in to the company’s advertising and marketing text system. By sending a short code to the company, customers consented to receiving texts about special offers and promotions.

Michael Etzel alleged that he eventually opted out of the message system, and expected that he would not receive another text. Nonetheless, Etzel claims in his April 2015 class action, a new text did come – a solitary missive reading “Hooters Fans: Our mClub has moved! Don’t worry, you’ll still receive exclusive news, just from a new number. Reply STOP to unsubscribe Msg&Data Rates may apply.”

A Case With Wings

Etzel filed suit in the Northern District of Georgia under the Telephone Consumer Protection Act, seeking treble damages under the Act because Hooters had allegedly knowingly ignored opt-out requests. In November 2016, the court denied Hooters’ motion to dismiss that had argued that Etzel’s suit lacked standing because it did not allege any “injury-in-fact that is both concrete and particularized,” as required by the then six-month-old Spokeo Supreme Court ruling. The district court held that even “sending a single text message in violation of the TCPA constitutes an injury-in-fact to the recipient so as to provide standing.”

The Takeaway

Having lost the procedural standing defense, Hooters negotiated a settlementto resolve the litigation. Hooters denied violating the TCPA and that it did not have consent to send the texts, but promised to distribute $1.3 million in gift cards to the recipients of the text, agreed to pay attorneys’ fees of more than $400,000 and paid Etzel $10,000. The ambiguous Spokeo standing standard continues to be less of a shield for class action defendants than the defense bar had hoped, and TCPA claims continue to be popular with plaintiffs’ lawyers due to the law’s statutory penalties, which can become large when aggregated across a class. Had Hooters’ text program opt-in required acceptance of terms that included arbitration and class action waiver, it might have avoided this result, even if it had mistakenly ignored some opt-outs.