A recent case highlights the importance of carefully drafting
settlement agreements. In that case, a federal district court judge
held that a prior class action settlement precluded the plaintiff
from filing released claims in a new lawsuit under the Telephone
Consumer Protection Act ("TCPA"). The judge invoked the
prior class action settlement, which involved the same defendant,
to conclude that the plaintiff consented to calls (and was
therefore precluded from making a claim under the TCPA) based on
the plaintiff's failure to opt out of a prior settlement.
Andrews v. Sallie Mae, Inc., No. 13-cv-2662-CBA, 2014 BL
329753 (S.D. Cal. Nov. 20, 2014).
The plaintiff's complaint alleged that Sallie Mae, Inc. called his cell phone 100 times in the year before he filed his complaint and 3,000 times in the preceding four years. In response, Sallie Mae asserted that a class action settlement in the case of Arthur v. Sallie Mae, Inc., No. 10-cv-198 (W.D. Wash.) barred recovery for calls made prior to September 17, 2010. The settlement agreement in Arthur provided that any settlement class member who "does not submit a valid and timely Revocation Request will be deemed to have provided prior express consent to the making of Calls by Sallie Mae" to phone numbers that were identified in various Sallie Mae records. The email notice of the class action settlement that went to the plaintiff informed him that, "Sallie Mae has agreed to stop making automated calls to the cell phones of Class Members who file a valid revocation request." The notice further provided that, "[i]f you do nothing you will not stop the automated calls nor receive any monetary award, and you will also lose the right to sue." Andrews did not opt out of the class action settlement and did not submit a Revocation Request to the settlement administrator.
The plaintiff nevertheless challenged the settlement agreement's application to the question of whether he provided consent to receive calls. The court rejected the argument that he was not a member of the prior settlement class. The court also rejected the plaintiff's argument that the prior settlement in Arthur conflicted with FCC precedent, noting that "'[t]he FCC has repeatedly held that persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.'" (quoting In the Matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 7 F.C.C. Red. 8752 (1992).) The court explained that, "[b]y failing to opt out or submit a Revocation Request, plaintiff knowingly released his number to defendant and permitted defendant to call him." The court did not foreclose the plaintiff entirely, finding that there was a disputed question of fact regarding whether the plaintiff later revoked his prior express consent.
The Andrews case highlights the importance of drafting settlement agreements with an eye toward binding other plaintiffs for claims that predate the effective date of the settlement agreement and any related releases. Carefully written releases, notices to class members, and settlement agreements can minimize the risk of follow-on litigation with respect to matters that TCPA defendants thought were behind them.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.