In the latest multimillion-dollar Telephone Consumer Protection Act settlement, a debt collection company agreed to pay $18 million to end a consolidated class action in California federal court.
Portfolio Recovery Associates, LLC, was accused of making autodialed calls to consumer cell phones without consent over a seven-year period, from December 2006 to July 2013. Multiple lawsuits were filed against the company alleging violations of the TCPA, and the cases were consolidated in California federal court. In 2011 the court entered a preliminary injunction against Portfolio's continued use of certain dialing equipment to call cell phones and certified a class.
The parties then engaged in settlement negotiations and finally reached a deal earlier this year. Pursuant to the terms set forth in the plaintiffs' unopposed motion in support of preliminary approval of the agreement, the class will consist of approximately 7.4 million U.S. residents.
Class members will be entitled to both monetary and injunctive relief. The injunctive relief already in place "will be continued and expanded" to prohibit Portfolio "from using its Avaya Proactive Contact Dialer to place calls to any person's cellular telephone numbers without prior express consent."
As for monetary relief, Portfolio agreed to pay a total of $18 million. After the fund is used to pay attorneys' fees of up to $5.4 million, notice and administration costs not to exceed $3.325 million, and incentive awards for six named plaintiffs of $6,250 each, the remainder will be split on a pro rata basis among class members. Any remaining funds will be paid to the National Association of Consumer Advocates as cy pres relief.
"This is a substantial recovery for this case," the plaintiffs wrote in their motion. "[B]ased on historical claims rates for claims in TCPA cases, it is anticipated the claims rate will be between 2 percent and 5 percent. Even under conservative assumptions, the pro rata relief from the remaining $18 million common fund … would be over $60 at a 2 percent claims rate (150,000 claimants) and over $24 at a 5 percent claims rate (375,000 claimants). Hence, the range of expected recovery is well within the range received in other TCPA cases."
The plaintiffs moved for an order preliminarily approving the proposed settlement as "fair, adequate and reasonable," particularly given "the purposes of the TCPA and the risk, expense, and uncertainty of continued litigation."
To read the motion in support of preliminary approval of the settlement inIn re Portfolio Recovery Associates, LLC, click here.
Why it matters: TCPA class actions continue to result in multimillion-dollar settlements, from Capital One's record-breaking $75 million deal to what was touted as the highest per-class-member agreement by Western Union (with $8.5 million promised to 823,472 individuals). Portfolio Recovery Associates' promise to pay $18 million keeps the trend alive.