United States District Court, E.D. Missouri, Eastern Division
RONALD LEES, on behalf of himself and others similarly situated, Plaintiff,
ANTHEM INSURANCE COMPANIES INC., d/b/a ANTHEM BLUE CROSS BLUE SHIELD, Defendant.
MEMORANDUM AND ORDER
STEPHEN N. LIMBAUGH, Jr., District Judge.
The Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq. ("TCPA") prohibits making automated telephone calls to cellular telephones without the "prior express consent" of the recipient. Plaintiff alleges that defendant Anthem Insurance Companies, Inc., d/b/a Anthem Blue Cross Blue Shield ("Anthem") violated the TCPA when it made such calls to plaintiff and approximately 830, 000 other consumers nationwide. Anthem denies any wrongdoing. The parties engaged in settlement discussions and reached a settlement agreement. This Court preliminarily approved the agreement, which calls for a maximum settlement benefit of $6, 250, 000 and a minimum Settlement Benefit of $4, 750, 000 for the Class. Plaintiff has moved for final approval of the Settlement (#59) and for the award of attorneys' fees and a service award to the class representative (#50). The motion has been fully briefed, and objections have been filed by two class members. A hearing was held on April 9, 2015, and it was attended by counsel for plaintiff, counsel for defendant, and counsel for objector Glenn Kassiotis.
I. Legal Standard
Federal Rule of Civil Procedure 23(e)(2) permits approval of a class action settlement only after determining that it is "fair, reasonable, and adequate." Fed.R.Civ.P. 23(e)(2). "In making that determination a district court should consider (1) the merits of the plaintiff's case weighed against the terms of the settlement, (2) the defendant's financial condition, (3) the complexity and expense of further litigation, and (4) the amount of opposition to the settlement." In re Uponor, Inc., F1807 Plumbing Fittings Products Liab. Litig., 716 F.3d 1057, 1063 (8th Cir. 2013) (internal quotation to Van Horn v. Trickey, 840 F.2d 604, 607 (8th Cir.1988) omitted). A settlement agreement is "presumptively valid." Little Rock Sch. Dist. v. Pulaski Cnty. Special Sch. Dist. No. 1, 921 F.2d 1371, 1391 (8th Cir.1990), cited in In re Uponor, 716 F.3d at 1063.
II. The Settlement
The class members are limited to the 830, 593 specific cellular telephone numbers that were called by Anthem or its agent. Those phone numbers were determined by an independent company that analyzed the records of all telephone calls that defendant's agent, Alta Resources, Inc. ("Alta") made on behalf of defendant Anthem. The Settlement Claims Administrator, Kurtzman Carson Consultants LLC ("KCC") reviewed Anthem's records and conducted research yielding 1, 029, 790 names and addresses associated with those unique cellular telephone numbers ( e.g., multiple addresses may have been linked to a given phone number). KCC ran that data against the National Change of Address Database for increased accuracy and then mailed the court-approved Notice to each of the identified addresses. Mailings returned as undeliverable were sent to any forwarding address. The individual notice effort is estimated to have reached 94.5% of the Settlement Class.
Class members were able to submit claim forms through a Settlement Website containing additional information regarding the litigation and settlement. KCC also used the internet to effectuate notification through publication with online banner advertisements linking to the Website.
KCC received a total of 8, 139 valid claim forms by the deadline of January 11, 2015. An additional 233 claim forms were deemed to have been filed late, and 13 more were unsigned and thus deemed potentially invalid.
At the outset, the Court notes that "a settlement that is the product of arm's-length negotiations conducted by experienced counsel is presumed to be fair and reasonable." Grove v. Principal Mut. Life Ins. Co., 200 F.R.D. 434, 445 (S.D. Iowa 2001) (citing See Manual for Complex Litigation (3d ed.1997) § 30.42). Here, the negotiations appear to have been at arm's-length, and counsel is experienced and knowledgeable with respect to class actions. The Court finds that four fairness factors support approval of this class action settlement. As discussed below, however, the Court will not completely grant the plaintiff's requests.
A. Fairness Factors
First, the merits of plaintiff's case is commensurate with the terms of settlement. The settlement fund is $4.75 million. Each Class Member submitting a valid claim form may receive a pro rata share of the fund up to $500, which is the amount available in statutory damages per violation under the TCPA. Each Class Member's share is determined based on the amount remaining after administration costs, attorneys' fees and costs, and incentive award are deducted. The settlement fund would increase to up to $6, 250, 000 to the extent the pro rata share was less than $36. Under the current terms of the agreement and in light of the costs and fees suggested by plaintiffs, only the $4.75 million fund was necessary, and each class member stands to gain approximately $200. In addition, Anthem will take steps to reduce the chance that cellular telephone owners may in the future receive a call made on Anthem's behalf from an automatic telephone dialing system without prior consent.
Second, the $200 pay-out to Class Members is sizable considering that the maximum statutory recovery, per-violation, is $500. In addition, and with respect to the factor going to the complexity and expense of further litigation, the outcome of this case at trial is far from certain. In particular, prosecution of this case would involve competing interpretations of whether individuals "consented" to receiving calls from Anthem on their cell phones and defining "automatic telephone dialing system." In addition, Anthem has raised multiple affirmative defenses going to agency and consent, and plaintiff would have to prove vicarious liability. Considering the risks inherent to litigation, including unfavorable outcomes at trial and the possibility of appeal of any judgment, the terms of settlement appear fair and reasonable.
Third, the parties do not address the defendant's financial condition as a factor. Certainly, Anthem appears financially able to mount a defense. See Grove v. Principal Mut. Life ...