Three times seems to be the charm for the 11th Circuit, which recently revisited for the third time the proposed $35 million nationwide TCPA settlement at issue in Drazen v. GoDaddy.
The proposed settlement, which involves allegations that GoDaddy placed calls and text messages using an automatic telephone dialing machine in violation of the Telephone Consumer and Protection Act, would have provided $35 million in cash or vouchers to pay claims on a claims-made basis, as well as up to $10.5 million in attorney's fees (the lower court had previously reduced the fee to $7 million).
After issuing an important opinion in this case last year regarding Article III standing, in which the Court held that every absent member of the proposed class must satisfy standing under both Supreme Court and 11th Circuit standards, Judge Tjoflat recently issued a 123-page blistering opinion, blasting many aspects of what might be considered routine practice in class action settlements.
Although most of the lengthy opinion is dicta (the two concurring judges only joined in the portion addressing coupon settlements and attorneys fees under CAFA), there are still some important takeaways to consider as parties and counsel successfully navigate class action settlements to final approval:
Give adequate notice to class members of your attorneys’ fees request: the original proposal by the parties only allowed seven days notice to class members to review the proposed attorneys’ fees request, which the Court held did not allow sufficient time to decide whether to opt out or object. Best practices would be to move this date up significantly so there can be no question that class members have plenty of time to evaluate the fees sought.
Cash can also be a “coupon”: although the proposed settlement did involve either a $150 voucher for future services at GoDaddy or a flat $35 cash payment, the 11th Circuit held that “coupons” under the 2005 Class Action Fairness Act can also include some form of “equitable or cash relief.” By extending the definition of coupons for purposes of CAFA, the Court then held that attorneys’ fees must be analyzed under the more restrictive dictates of Section 1712 of CAFA, where counsel are limited to a percentage of the value of the coupons redeemed, lodestar, or a combination of both. Pro tip: Do all-cash settlements.
Watch those “overbroad” releases: Surely defense counsel will want to include affiliates, successors, parents, and whoever else can be reasonably included in the release language of the proposed settlement, yet Judge Tjoflat opined that this standard practice can lead to an “overbroad” class action settlement release. It remains to be seen if district courts will pick up scrutiny of released parties in future class action settlements, but it pays to double check the language to make sure this issue does not get flagged at final approval time.
The select mediators and arbitrators at UWWM’s Center for National Class & Mass Actions have decades of specific experience in class and mass actions and are uniquely qualified to assist you in resolving these legal disputes. For further information and scheduling, please visit our website.
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