Posts belonging to Category Settlements

Gallup, Inc. has agreed to pay up to $12 million to settle three separate class actions which alleged that the Washington D.C.-based pollster violated the Telephone Consumer Protection Act of 1991 (“TCPA”) by autodialing class members’ cell phones without their prior consent. Soto v. The Gallup Organization, Inc., No. 13-61747 (S.D. Fla., complaint filed Aug. 12, 2013). See Plaintiffs’ Motion for Preliminary Approval of Class Action Settlement (May 15, 2015) available here, Settlement Agreement (May 15, 2015) here, and Order Granting Preliminary Approval (June 16, 2015) here.

Congress passed the TCPA in response to consumer complaints about invasive telemarketing practices, including “robodialing,” or the use of automatic telephone dialing systems (“ATDS”) to deliver artificial or prerecorded voice messages. Among other practices, the TCPA prohibits “a[] person . . . [from making] any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any [ATDS] or an artificial or prerecorded voice . . . to any telephone number assigned to a . . . cellular telephone service.” 47 U.S.C. § 227(b)(1). The TCPA directs the Federal Communications Commission (“FCC”) to prescribe implementing regulations, and creates a private cause of action for individuals to receive $500 in damages for each violation, or treble damages for all “willful” and “knowing” violations.

The Soto plaintiffs alleged that Gallup robodialed over 6.9 million cell phones during the class period. These calls were allegedly placed using an ATDS that had the capacity to store or produce numbers and dial them at random. Under the preliminarily approved settlement, Gallup agreed to establish a $12 million settlement fund, including $4 million in attorneys’ fees and costs, $2.5 million in settlement administration costs, and $2,000 incentive awards to each of the three plaintiffs. The $5.5 million balance will be divided evenly among all class members who submit claims for payment. Based on previous settlements, the parties anticipate that participating class members will receive between $25 and $80 per claim.

According to the FCC, TCPA complaints comprise the largest category of informal complaints filed with the agency. See FCC Encyclopedia, Quarterly Reports-Consumer Inquiries and Complaints, Top Complaint Subjects. The FCC received “approximately 63,000 complaints about illegal robocalls each month” during the fourth quarter of 2009, and “[b]y the fourth quarter of 2012, robocall complaints had peaked at more than 200,000 per month.” See Federal Trade Commission Staff’s Comments on Public Notice DA 14-1700 Regarding Call Blocking, CG Docket No. 02-278, WC Docket No. 07-135, at 2 n.5 (Jan. 23, 2015). The FTC also reports that, “[f]rom October 2013 to September 2014, [it] received an average of 261,757 do-not-call complaints per month, of which approximately 55% (144,550 per month) were complaints about robocalls.” Id. at 2 n.4. TCPA litigation is likewise on the rise. According to one estimate, “TCPA lawsuits were up 116 percent in September 2013 compared to September 2012. Echoing that trend, year-to-date TCPA lawsuits have increased 70 percent in 2013.”

Authored By:
Eduardo Santos, Associate
CAPSTONE LAW APC

On July 2, 2015, Judge Edward M. Chen of the Northern District of California granted final approval of a $40 million settlement reached between the Federal Trade Commission (“FTC”) and TracFone Wireless, Inc., d/b/a Straight Talk Wireless, Net10 Wireless, Simple Mobile, and TelCel America (“TracFone”). See In Re TracFone Unlimited Service Plan Litig., No. 13-3440 (N.D. Cal. July 2, 2015) (Order Granting Motion for Final Approval of Class Action Settlement and Granting for Award of Attorneys’ Fees, Costs, and Representative Service Awards) (available here). Class members alleged that TracFone advertised and sold “unlimited” data plans that, in reality, were quite the opposite. TracFone admitted to slowing down (aka “throttling”) or suspending its customers’ data service, and sometimes terminating customers’ cellular service entirely, when those customers exceeded a monthly data usage cap set by TracFone. TracFone did not disclose the data usage cap and subsequent data interference to class members prior to their purchase of “unlimited” data plans.

The settlement provides for the disbursement of $40 million paid by TracFone to the class members in varying amounts based on the timing and level of data interference. Additionally, the court granted injunctive relief to the class, whereby TracFone must disclose “throttle limits or caps, as well as the actual speeds to which customer data will be slowed” alongside any “unlimited data” advertisements and implement a system to notify customers by SMS text message when they reach the data usage cap. Order at 13.

Judge Chen approved the settlement after considering the factors set forth in In Re Bluetooth Headset Prods. Liab. Litig., including:

(1) the strength of the plaintiff’s case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members of the proposed settlement. In Re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 943 (9th Cir. 2011) (citing Churchill Village, L.L.C. v. Gen. Elec., citations omitted).

The court concluded that the terms were fair to both class members and TracFone, noting that TracFone had strong defenses if the case went to trial. The FTC has propounded similar claims against AT&T. See Fed. Trade Commission v. AT&T Mobility LLC, No. C-14-4785 EMC (N.D. Cal. Oct. 28, 2014).

Authored by: 
Trisha Monesi, Associate
CAPSTONE LAW APC

A settlement was reached last week in Zorio v. Walt Disney Worldwide Services Inc., a case brought by former Disneyland employee Reykeel Zorio, who alleged on behalf of himself and other former employees at six Disney facilities that Disney failed to compensate departing employees for accrued vacation time. See Zorio v. Walt Disney Worldwide Services Inc., No. BC549292 (Los Angeles Cty. Sup. Ct. 2014, consolidated with No. BC540154). Originally filed in March 2014 as a representative action, the claims relating to vacation wages were filed again in June 2014 as a class action.  The cases were subsequently consolidated and alleged that the defendants in the action failed to provide earned and vested vacation wages within any permissible time period to employees upon termination or separation.

The proposed settlement will reportedly pay $500,000 to more than 4,000 hourly-paid, non-exempt workers. The decision helps to reinforce the principle that paid vacation is a form of wages, earned as labor is performed, and is therefore compensable upon termination of employment pursuant to California Labor Code section 227.3, as well as sections 201-204.

While an employer is not required to provide its employees with vacation time, California law imposes restrictions on any policy, practice, or agreement implemented to provide paid vacation, and accrued vacation time is considered wages. See Suastez v. Plastic Dress-up Co., 31 Cal. 3d 774 (1982). An employee has no entitlement to be paid for accrued but unused vacation until the employee quits or is discharged. However, all earned and unused vacation must be paid to the employee at his or her final rate of pay within three days of termination of employment. Cal. Lab. Code § 227.3. The Disney Corporation learned this rule the hard way in Zorio.

Authored by: 
Karen Wallace, Associate
CAPSTONE LAW APC

After over 10 years of litigation, a settlement has finally been proposed in a case alleging that FedEx misclassified more than 2,300 California truck drivers who worked for the company between 2000 and 2007. The drivers’ complaint alleged that they were classified as independent contractors, rather than employees; the latter would afford the drivers certain protections such as overtime pay, reimbursement for certain business expenses, and meal and rest periods.

The settlement follows a 2014 order from the Ninth Circuit overturning a lower court’s denial of the plaintiffs’ motion for partial summary judgment on the question of whether they were improperly classified as independent contractors. Alexander v. FedEx Ground Package Sys., 765 F.3d 981 (9th Cir. 2014) (available here) (previously covered by the ILJ here). In Alexander, the Ninth Circuit evaluated a number of different factors under California’s right-to-control test, which courts use to determine whether a company has the right to control the manner and means of its employees’ work. Id. at 988. The Alexander court found that FedEx mandated workers’ clothing “from their hats down to their shoes and socks,” and also required drivers to adhere to a specific work schedule, both of which exemplify a company’s control over the manner and means of the work performed. Id. at 990. As such, the Ninth Circuit determined that “FedEx [had] a broad right to control the manner in which its drivers perform their work,” and that the FedEx truck drivers were employees as a matter of law. Id. at 997.

The proposed settlement will require approval of a California federal judge. If approval is granted, it will finally resolve the claims of the 2,300 FedEx truck drivers misclassified as independent contractors.

Authored by: 
Bevin Allen Pike, Senior Counsel
CAPSTONE LAW APC