In what is believed to be the largest Telephone Consumer Protection Act (TCPA) settlement on record, Capital One Bank, related companies, and their third-party collection vendors reached a $75 million deal to settle suits on behalf of a class of customers who received calls at over 21 million distinct cellular telephone numbers.
The case involved four class action suits consolidated in Illinois federal court. The plaintiffs alleged that the defendants – Capital One, and vendors Capital Management Systems, Leading Edge Recovery Systems, and AllianceOne Receivables Management – violated the TCPA by making prerecorded calls to cellular phones without prior express consent.
Although the bank argued that its customer agreements provided it with the necessary consent to make the automated calls at issue, the parties reached a deal after multiple mediation sessions and months of negotiation.
Pursuant to the settlement agreement, Capital One will pay approximately $73 million to a settlement fund with the other defendants adding around $2 million. A nationwide class of plaintiffs who received a challenged phone call attempting to collect on a credit card debt that was placed either by Capital One (between January 18, 2008, and June 30, 2014) or by the vendor defendants (between February 28, 2009, and June 30, 2014) are eligible to submit a claim.
Class members are entitled to one cash award each, calculated by a formula detailed in the agreement. The parties have estimated that the cash payout will be between $20 and $40 for each class member submitting a valid claim.
While individual cash awards will thus be small (and do not take into account the number of calls received), the parties told the court that “the core relief” under the settlement was Capital One’s business practice changes. “As a benefit to all Settlement Class Members, Capital One has developed and implemented significant enhancements to its calling systems designed to prevent the calling of a cellular telephone with an autodialer unless the recipient of the call has provided prior express consent,” according to the joint motion in support of preliminary approval of the deal.
Class counsel will not face objections to attorneys’ fees up to 30 percent of the settlement fund, and class representatives will each seek $5,000. The final approval hearing is set for December 2014.
To read the proposed settlement agreement in In re: Capital One Telephone Consumer Protection Act Litigation, click here.
To read the court’s order granting preliminary approval, click here.
Why it matters: U.S. District Court Judge James F. Holderman granted preliminary approval of the settlement on July 29 allowing “the largest settlement cash sum – by far – in the 22-year history of the TCPA,” according to the memorandum in support of the motion for preliminary approval. However, while the settlement fund is large, with over 21 million telephone numbers covered in the settlement agreement, the anticipated payment per class member is nowhere near the $500-per-call violations often sought for violations of the TCPA. This case will be one to watch to see if final approval is indeed achieved.