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Brown v. Rita's Water Ice Franchise Co. LLC

United States District Court, E.D. Pennsylvania

September 14, 2017

SHERRY BROWN and ERICKA NEWBY, on their own behalf and on behalf of all others similarly situated
v.
RITA'S WATER ICE FRANCHISE COMPANY LLC

          MEMORANDUM OPINION

          SAVAGE, J.

         Class representatives Sherry Brown and Ericka Newby move for approval authorizing the Settlement Administrator to disperse payments to eligible class members. They make the request because there are 18, 359 fewer valid claim forms than the Settlement Administrator and plaintiffs' counsel had originally represented at the final approval hearing. The Settlement Administrator has since determined that there are only 10, 164 valid and non-duplicative claim forms rather than 28, 523. Plaintiffs have filed the motion to “apprise the Court of this development and obtain final approval for payment of properly submitted, and verified, claims to the actual class members in this case.”

         Because the class members eligible for a payout will receive larger awards than had been contemplated, we shall grant the motion and supplement the Findings of Fact in this class action settlement to reflect the correct number of eligible class members.

         Background

         In this Telephone Consumer Protection Act class action, the complaint alleged that Rita's knowingly or willfully sent class members unauthorized, automated text messages known as “Cool Alerts, ” which announced when certain flavors of products such as water ice, custard, and ice cream became available in the recipient's local store. The plaintiffs claimed that Rita's generated the messages using a list or database of telephone numbers of persons who had not provided them to the defendant, continued to send Cool Alerts to customers even after they had texted “STOP” in response to the texts' instructions, and used outdated and insufficient consent language on its Cool Alerts webpage.

         The parties reached a settlement agreement, which was preliminarily approved on March 23, 2016. The settlement agreement required Rita's to create a three-million-dollar Settlement Fund, out of which notice and administration costs, class representative incentive awards, and attorneys' fees and expenses were to be paid. The remainder was the Net Settlement Fund, from which class members who submitted a valid and timely claim form were to receive a pro rata share, the amount depending on whether they received just one Cool Alert text message or also received at least one other Cool Alert after responding “STOP” to a previous text. The settlement agreement allowed Class Counsel to seek attorneys' fees and expenses up to one million dollars.

         At the preliminary approval hearing, Class Counsel informed the court that based on the number of telephone numbers they had, there were approximately 138, 000 potential class members. Culling this initial list, the Settlement Administrator, A.B. Data, Ltd., found that there were approximately 132, 140 unique telephone numbers. Of those, there were 110, 328 unique names and addresses, who were sent class notice by mail. Decl. of Christine Peters-Stasiewicz (Doc. No. 50-4) (“Peters-Stasiewicz Decl.”), ¶¶ 9-10. As of July 14, 2016, six days after the claim form filing deadline and twelve days before the final approval hearing, the Settlement Administrator submitted a declaration stating that class notices were mailed successfully to 106, 493 persons, and that 30, 636 timely claim forms had been submitted. Id. ¶¶ 16, 19. After conducting a “preliminary review” of the timely submitted claim forms, the Settlement Administrator determined that 28, 523 claim forms were non-duplicative. Id. ¶ 19. Of that group, 28, 137 received one Cool Alert text message and 386 received at least one additional Cool Alert after responding “STOP” to a previous text. Id. ¶ 20. The Settlement Administrator also represented that the 28, 523 claim forms were “undergoing additional reviews, ” and that it would “coordinate to provide the parties with updates to mailing, claims and correspondence statistics following the complete claims and auditing processing once all claims received/postmarked by the July 8, 2016 deadline are fully reviewed.” Id. ¶¶ 19, 23 (emphasis added).

         Based on the representation by A.B. Data that 28, 523 valid claim forms had been submitted, Class Counsel boasted an “outstanding” claims rate of 20.6% of the class, [1]much higher than their expected five to six percent response rate. Mot. for Final Approval of Class Action Settlement (Doc. No. 50-3) at 2, 8, 12-13 (“Each of these claims represents an affirmative vote in favor of the Settlement, and . . . [w]hen considered against the total number of notices sent, the claims rate in this case (20.6%) is far above the rates seen in typical consumer class action settlements” of 2-8%); Mot. for Preliminary Approval (Doc. No. 43-2) at 25; Oral Arg. Tr. at 26:25-27:1-19. Indeed, at the final approval hearing, counsel stated:

I'm willing to wager that there is no [TCPA] settlement out there . . . with a higher claims rate than ours. . . . This is [a] 20.6% claims rate. There is nothing out there like this. . . . This is [an] outstanding settlement. . . . This is the gold standard of TCPA settlements . . . because we have over 20% claims rate, 28, 523 claims. Getting 28, 000 people to do anything, that actually requires them to write or fill something out is moving a glacier and we did it here. . . .

Oral Arg. Tr. at 9:8-13, 17-23 (July 26, 2016). Emphasizing the 20.6% claims rate, Class Counsel requested approval of an award of attorneys' fees and expenses in the amount of one million dollars, which was one-third of the settlement fund and the maximum amount allowed under the settlement agreement. See Pls.' Suppl. Br. in Supp. of Pls.' Mot. for Reasonable Att'ys' Fees & Costs (Doc. No. 55) (“Suppl. Br.”) at 2 (“The 20.6% claims rate reflects the excellent efforts of Class Counsel (in negotiating a strong result and developing an effective notice plan) and the overwhelming approval of the class.”).

         The amount each class member would recover depended on the number and type of claimants.[2] Consequently, at the final approval hearing, we questioned Class Counsel extensively about the claims rate and the amount they were expecting each class member to recover when they negotiated the three-million-dollar settlement, and how that compared to the actual claims and recovery rate of the 28, 523 claimants entitled to a cash payment. Oral Arg. Tr. at 11:1-12, 24-25-12:1-14; 27:2-25 - 28:1-5, 14-16; 29:12-18.

         On March 16, 2017, we granted final approval of the class action settlement, where we: (1) awarded Class Counsel a total of $691, 074.00 in attorneys' fees and expenses; (2) allowed the Settlement Administrator $144, 000.00 to cover class administration costs; (3) awarded $66.54 to each of the 28, 197 class members who received just one Cool Alert; and (4) awarded $731.99 to each of the 386 class members who received a Cool Alert after texting “STOP.” See Final Approval Order (Doc. No. 59) ¶¶ 5(a), 6; Findings of Fact and Conclusions of Law (Doc. No. 58) ¶ 32; Doc. No. 57, ¶¶ 1-2; Attorneys' Fees Op'n (Doc. No. 56) at 6 n.27.

         Now, four months after the court approved the class action settlement, and more than one year after the Settlement Administrator promised to “update” the parties with the results of its “full review” of the claims received and postmarked by the July 8, 2016 deadline, A.B. Data reports a significant reduction in the number of valid claim forms despite receiving 1, 364 additional claim forms[3] since submitting its earlier declaration on July 14, 2016. See Decl. of Eric Schachter (“Schachter Decl.”) (Doc. No. 60-1) ¶¶ 2, 5. Specifically, A.B. Data reports that after completing a full review of all claim forms received, [4] it has determined that it has received only 10, 164 valid and non-duplicative claim forms, [5] which is 18, 359 fewer than the 28, 523 number A.B. Data had reported as valid in July 2016. Of the valid claim forms, 9, 684 class members received one Cool Alert text message and 480 received at least one additional Cool Alert after responding “STOP” to a previous text. Schachter Decl. ¶ 7.

         Based on the reduced number of valid claim forms, the total number of award units is 14, 964. Schachter Decl. ¶ 7.[6] The value of each award unit is $144.00, [7] which means that 9, 684 class members are each entitled to receive an award of $144.00 and 480 class members, $1, 584.00. The award amounts applied in the ...


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