Adding to the growing list of Defendants forced into large settlements under the Telephone Consumer Protection Act (“TCPA”), the Northern District of California approved a $6 million common fund class settlement, inclusive of a 25%, or $1.5 million, attorneys’ fees allocation.
On May 27, 2011, two individuals filed a class action lawsuit against Google and its then-recently acquired subsidiary, Slide, alleging that the companies violated the TCPA by sending text messages to cell phone’s without the consumer’s consent. Google and Slide had just released a “group texting” tool, called “Disco,” that allows an individual to send text message to a large group of people using one cell phone number provided by Disco. According to the complaint, the program allowed messages to be sent through the program without consent, and would only prevent messages once a person affirmatively opted out. The problems compounded, according to the complaint, when one unwilling recipient continued to receive hundreds of text messages from other confused recipients, wondering who was sending the text, and why.
Throughout the litigation, Google attempted several defenses. For example, in early 2012, it argued that the TCPA statute violated the First Amendment, as the text messages sent from friend to friend were protected speech. The judge, Hon. Yvonne Gonzalez Rogers, rejected the argument, holding that the message constituted unprotected commercial speech. Following, Google filed a petition with the FCC, seeking a declaratory ruling that the TCPA did not apply to group texting. With the petition pending, the Court agreed to stay discovery, during which the parties engaged in settlement negotiations, ultimately reaching settlement in October 2012.
On June 26, 2013, the Court entered a final approval of the settlement. The parties agreed to a $6 million common fund, benefiting a settlement class of:
All persons who received the Disco Mobile App Text or other text message sent by or through the Disco Messaging Service informing such Persons about Disco Messaging Service. [omitting exclusions]
The Court further determined the common fund of $6 million to be fair, allowing for a “full” recovery, as, although the messages were sent to 185,688 unique telephone numbers, only a small portion of the Settlement Class was expected to file claims. On this basis, the Court also approved a $1.5 million attorneys’ fees award, noting that 25% of the common fund is the benchmark in the Ninth Circuit. In conducting its analysis of the factors governing approval, however, the Court did reduce the claimed lodestar hours, noting “numerous inefficiencies” and “excessive billing for unnecessary work.”
Facing a $500 per violation statutory risk, Defendants frequently find themselves forced into a settlement posture under the TCPA. As noted above, it is extremely important for companies to explore all possible statutory defenses (such as consent and/or permission) early in litigation. Furthermore, given the volume of decision across the country, several creative tactics can be employed to either reduce, or avoid, liability under this statute. This settlement, however, serves as a reminder that the TCPA remains a very real, and very troublesome, statute. It is critical to understand the nuances of the statute before initiating any marketing campaigns. In a twist on the old Ben Franklin adage, an ounce of prevention will save you many pounds to cure.