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Preman v. Pollo Operations, Inc.

United States District Court, M.D. Florida, Orlando Division

April 12, 2018

MARK PREMAN, Plaintiff,
v.
POLLO OPERATIONS, INC., Defendant.

          REPORT AND RECOMMENDATION

          GREGORY J. KELLY UNITED STATES MAGISTRATE JUDGE.

         This cause came on for consideration without oral argument on the following motion:

MOTION: PLAINTIFF'S UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF REVISED CLASS ACTION SETTLEMENT AND CERTIFICATION OF SETTLEMENT CLASS (Doc. No. 57)
FILED: November 15, 2017
THEREON it is RECOMMENDED that the motion be GRANTED IN PART and DENIED IN PART.

         I. FACTUAL BACKGROUND

         A. The Class Action Complaint

         The matter before the Court is a proposed class action settlement under the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq. (“TCPA”). Doc. No. 57. Unless stated otherwise, the following facts are taken from Plaintiff's class action complaint (the “Complaint”). Doc. No. 1. Defendant operated Pollo Tropical, a Caribbean-themed restaurant chain with locations in Florida, Texas, Georgia, and Tennessee. Id. at ¶ 10. Defendant engaged in a marketing campaign which involved sending Pollo Tropical coupons via text message to consumers' cellular phones. Id. at ¶ 12. Defendant used an automatic telephone dialing system to send the coupons. Id. Defendant obtained consent from cellular phone subscribers (“Initial Owners”) before sending such coupons. Doc. No. 58-1 at 3. After an Initial Owner ended their cellular phone subscription, the Initial Owner's phone number was sometimes reassigned (“Recycled Numbers”) to a new owner. Id. Some of these new owners (“New Owners”) would receive text message coupons from Pollo Tropical. Id. Defendant did not obtain written consent from any of the New Owners to send text message coupons to them. Doc. No. 1 at ¶ 12.

         Plaintiff, a New Owner, received fifteen to twenty text message coupons from Pollo Tropical between January 2015 and February 2016. Doc. No. 1 at ¶ 18. Plaintiff did not provide express consent to receive these text message coupons. Id. at ¶ 22. On March 17, 2016, Plaintiff, on behalf of the New Owners, filed the Complaint asserting two causes of action under TCPA. Id. at ¶¶ 35-46. Count I alleges negligent violation of TCPA, and Count II alleges knowing and/or willful violation of TCPA. Id.

         B. The Settlement

         On January 30, 2017, the parties filed a status report stating that they reached an agreement on a class-wide settlement following their mediation. Doc. No. 38. On November 15, 2017, Plaintiff filed an unopposed motion (the “Motion”) for preliminary approval of the parties' revised class action settlement agreement (the “Agreement”) and certification of the Settlement Class.[1]Doc. No. 57. On April 10, 2018, the Motion was referred to the undersigned for a report and recommendation. In the Motion and attached memorandum of law (Doc. No. 58), Plaintiff requests a Court order: 1) scheduling a preliminary settlement approval hearing to determine whether the Agreement should be preliminarily approved and the Settlement Class be certified; 2) certifying, for settlement purposes, the Settlement Class pursuant to Federal Rule of Civil Procedure 23(a), (b)(3), and (e) and granting preliminary approval of the Agreement in accordance with an attached proposed order (the “Proposed Preliminary Order”); 3) approving the notice plan set forth in the Agreement and the form and content of the notice attached thereto (the “Proposed Notice”); 4) approving the Angeion Group as the Settlement Administrator and directing that the Proposed Notice be provided to the Settlement Class; 5) approving and ordering the opt-out and objection procedures set forth in the Agreement; 6) requiring objections, if any, to the Agreement to be submitted no later than forty-five days before the date set for the final settlement approval hearing; 7) appointing Plaintiff as Class Representative; 8) appointing John A. Yanchunis, Sr., and Jonathan B. Cohen as Class Counsel; 9) requiring any application by Class Counsel for attorneys' fees, costs, and expenses to be filed no later than ten business days prior to the final settlement approval hearing; and 10) scheduling a final settlement approval hearing to determine whether the proposed settlement, a motion seeking a service award to the Class Representative, and/or a motion for attorneys' fees, costs, and expenses to Class Counsel should be finally approved. Doc. No. 57 at 1-2; Doc. No. 58 at 26.[2]

         In support of the Motion, Plaintiff attaches: 1) the Agreement; 2) the Proposed Notice; 3) declarations from Plaintiff and Mr. Yanchunis; 4) biographies of Plaintiff's counsel detailing their experience in class action litigation; 5) a chart summarizing recent TCPA class action settlements; 6) declarations detailing the means used to identify the Recycled Numbers and the methods for contacting Settlement Class Members; 7) a list of the Recycled Numbers filed under seal; 8) the Proposed Preliminary Order; and 9) a proposed order of final judgment and dismissal with prejudice (the “Proposed Final Order”). Doc. Nos. 53, 58-1 - 58-12.

         C. The Settlement Terms

         1) Parties

         The parties to the Agreement are: 1) Plaintiff, on behalf of himself and the Settlement Class; 2) Defendant; and 3) non-party Heartland Commerce Inc. (“Heartland”). Heartland is a party to the Agreement because Defendant engaged Beanstalk Data LLC, Heartland's predecessor in interest, to coordinate the sending of text messages to Pollo Tropical customers. Doc. No. 58 at 3-4.[3]

         2) Effective Date and Releases

         The Agreement states that it shall not be effective until the Effective Date, which is defined as the later of: 1) the date the Court enters Final Judgment substantially in the form of the Proposed Final Order (Doc. No. 58-2) or in another form agreed to by the parties; or 2) should a Settlement Class Member object to the Agreement, the date on which the period for filing an appeal related thereto has expired or the date on which the settlement and final judgment have been affirmed in all material respects by an appellate court of last resort. Doc. No. 58-1 at 12-13.

         Upon the Court's entry of the Proposed Final Order, all Settlement Class Members, including Plaintiff, who do not opt out of the Settlement Class release Defendant and Heartland “from any and all claims … that have been, could have been, or in the future might be asserted that arise out of or relate to Defendant's or [Heartland's] transmission of text messages between March 1, 2012 and March 15, 2017.” Doc. No. 58-1 at 14.[4] All Settlement Class Members who do not opt out of the Settlement Class are permanently enjoined from commencing any legal action regarding the above-referenced claims against Defendant, Heartland, or any other released party.[5]Id. at 15-16.

         3) The Settlement Fund

         Defendant and Heartland agreed to create a settlement fund of $975, 000.00 (the “Settlement Fund”) Doc. No. 58-1 at 9. Settlement Class Members who timely file a claim shall be paid a pro rata share of the Settlement Fund, up to $50.00 per phone number.[6] Id. at 10. No. more than $50.00 per phone number will be given regardless of the number of text message coupons a Settlement Class Member received or the number of Settlement Class Members assigned to a single phone number. Id.

         Plaintiff shall be paid $5, 000.00 from the Settlement Fund as a class representative service award. Doc. No. 58-1 at 12. The Agreement provides for a proposed attorneys' fee of twenty-five percent of the Settlement Fund, which amounts to $243, 750.00. Id. Class Counsel shall also be reimbursed for costs and expenses not exceeding $5, 000.00. Id. The proposed service award, attorneys' fees, and cost reimbursement are all subject to the Court's approval. Id. Finally, the fees and costs of the Angeion Group, the proposed Settlement Administrator, shall be paid out of the Settlement Fund. Id. at 7.

         4) The Settlement Class

         The Settlement Class is defined as:

All persons who received text messages on behalf of Pollo Operations from March 1, 2012 to March 15, 2017 to telephone numbers that had been reassigned to them after the original or prior owners of the telephone numbers consented to receive such text messages from Pollo Operations, who did not consent to receive such text messages, and who can be identified through the reverse telephone number look-up process utilized by the Settlement Administrator (“Settlement Class”). Excluded from the Settlement Class are: (a) Defendant and its present and former officers, directors, employees, shareholders, insurers, and their successors, heirs, assigns, and legal representatives; and (b) the Court and members of the Court's staff.

Doc. No. 58-1 at 6. Thus, the Settlement Class includes all New Owners who: 1) from March 1, 2012 to March 15, 2017, had a Recycled Number that received a text message coupon from Pollo Tropical; 2) did not consent to receive such messages; and 3) could be identified through a reverse telephone number look-up process utilized by the Angeion Group. Id. Excluded from the Settlement Class are: 1) Defendant and its present and former officers, directors, employees, shareholders, insurers, and their successors, heirs, assigns, and legal representatives; and 2) the Court and members of the Court's staff. Id. The Agreement also states that each New Owner included in the Settlement Class is a Settlement Class Member.[7] Id.

         The Agreement also provides information as to how the parties identified the Recycled Numbers of Settlement Class Members:

The Recycled Numbers that will be provided to the Settlement Administrator, and that have been currently filed with the Court, represent the best and preferred method of identifying the Settlement Class Members after carefully considering alternatives and appropriate expert input. The Recycled Numbers were identified from business records in [Heartland's] possession. Specifically, [Heartland], using its proprietary software, ran a search on its internal system for: (i) each cellular telephone number that received a text message during the class period; and (ii) for which a subsequent text message was sent and a response stating that the number was an “Invalid, Blocked, or Deactivated” number was received by [Heartland]; and (iii) after receiving this notification, a subsequent text message was sent by [Heartland] and ultimately delivered to the cellular phone number. The search generated more than 40, 000 cellular phone numbers that fit this criteria.

Doc. No. 58-1 at 7-8. Thus, the parties identified the Recycled Numbers of the New Owners making up the Settlement Class by: 1) collecting each telephone number in Heartland's internal system that received a text from March 1, 2012 through March 15, 2017; 2) finding which of those numbers responded to a subsequent text message with a response stating that the phone number was invalid, blocked, or deactivated (which implies that an Initial Owner cancelled their subscription); and 3) finding which of the previously-stated numbers later received a text message (which implies that an Initial Owner's cellular phone number was reassigned to a New Owner). Id. Plaintiff attaches declarations from two consultants with litigation technology experience stating that such method is the best method available to determine the Recycled Numbers of the Settlement Class Members. Doc. Nos. 58-11, 58-12.

         Upon the parties' approval, the Angeion Group will use a reverse telephone number look- up process to correspond the list of Recycled Numbers to the addresses of each Settlement Class Member and send the Proposed Notice to those addresses. Doc. No. 58-1 at 9-10. The Agreement permits the Angeion Group to engage in reasonable additional due diligence to identify Settlement Class Members if the reverse telephone number look-up process is unsuccessful. Id. at 10. The Angeion Group will also perform other tasks including: 1) mailing the Proposed Notice to Settlement Class Members; 2) assisting the Settlement Class Members in completing claim forms; 3) maintaining a website regarding the settlement; 4) verifying all claims submitted; 5) informing the parties of all persons opting out of the Settlement Class; and 6) providing the parties with a list of accepted and rejected claims and the total to be paid to each claimant.[8] Id. at 6-7.

         5) Notice

         The Proposed Notice states the nature of the lawsuit, the details of the Agreement, the names of counsel and the Angeion Group, the reason for receiving the notice, and the date and time of the final settlement approval hearing. Doc. No. 58-4 at 2-3. Within seven days after preliminary approval of the Agreement, the Proposed Notice will be mailed to the identified addresses of the Settlement Class Members.[9] Doc. No. 58-1 at 10. Settlement Class Members will have sixty days to submit their claims to the Settlement Fund, and they must provide their full contact information and verify ownership of a Recycled Number. Id.; Doc. No. 58-4 at 2. Each Settlement Class Member submitting a claim must provide their full legal name on the claim form, which cannot match the name of an Initial Owner. Doc. No. 58-1 at 11. Furthermore, each Settlement Class Member submitting a claim must identify the date they obtained ownership of a Recycled Number so that the Angeion Group can confirm that a change in ownership of that phone number occurred after the Initial Owner consented to receive text message coupons from Pollo Tropical. Id.

         The Proposed Notice also provides procedures for objecting to the settlement or opting out of it. Doc. No. 58-4 at 3. To object to the settlement, a Settlement Class Member must file a written objection to the Clerk no later than forty-five days prior to the date of the final settlement approval hearing. Doc. No. 58-3 at 5. Copies of any written objections must be served on Class Counsel, Defendant's counsel, and the Angeion Group. Doc. No. 58-4 at 3. Settlement Class Members are not required to attend the final settlement approval hearing for the Court to consider their objection. Id. To opt-out of the Agreement, Settlement Class Members must postmark a written request for exclusion within sixty days of the date the Proposed Notice is sent. Doc. No. 58-1 at 10. The written request must be sent to Class Counsel, Defendant's counsel, and the Angeion Group. Doc. No. 58-4 at 3.

         II. APPLICABLE LAW

         Plaintiff seeks preliminary approval of the settlement of this proposed class action. Doc. No. 57. The Agreement contemplates its preliminary approval, certification of a settlement class, the Proposed Notice being sent to the Settlement Class, a period for claims to be submitted by Settlement Class Members, and ultimately, entry of a final order certifying the Settlement Class and approving the Agreement. Doc. No. 57 at 1-2; Doc. No. 58 at 26. “A class may be certified ‘solely for purposes of settlement where a settlement is reached before a litigated determination of the class certification issue.'” Diakos v. HSS Sys., LLC, 137 F.Supp.3d 1300, 1306 (S.D. Fla. 2015). “Whether a class is certified for settlement or for trial, the Court must find that the prerequisites for class certification under Rule 23(a) and (b) of the Federal Rules of Civil Procedure are met.” Id. The Court is mindful that to grant final approval of a settlement class, it must perform a “rigorous analysis” to ensure that the movant meets the Rule 23 requirements before certifying the class. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620, 117 S.Ct. 2231, 2248, 138 L.Ed.2d 689 (1997) (“Confronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems …. But other specifications of [Rule 23] - those designed to protect absentees by blocking unwarranted or overbroad class definitions - demand undiluted, even heightened, attention in the settlement context.”).

         Although not explicitly stated in Rule 23, the Eleventh Circuit also requires that the class representative has standing to sue and that the proposed class is adequately defined and clearly ascertainable. See Prado-Steiman ex rel. Prado v. Bush, 221 F.3d 1266, 1279 (11th Cir. 2000) (“[P]rior to the certification of a class … the district court must determine that at least one named class representative has Article III standing to raise each class subclaim.”). Rule 23(a) is satisfied when the movant shows: 1) the class is so numerous that joinder of all members is impracticable; 2) there are questions of law or fact common to the class; 3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and 4) the representative parties will fairly and adequately protect the interests of the class. Fed.R.Civ.P. 23(a).

         Should the movant seek certification of a class under Rule 23(b)(3), as is the case here, the movant must satisfy two additional requirements in addition to those provided under Rule 23(a). First, the movant must show that questions of law or fact common to the class members predominate over any questions affecting individual members. Fed.R.Civ.P. 23(b)(3). Second, the movant must show that a class action is superior to other available methods for fairly and efficiently adjudicating the dispute. Id.

         If a party attempts to certify a class under Rule 23(b)(3), then notice must be provided to all class members. Miles v. Am. Online, Inc., 202 F.R.D. 297, 305 (M.D. Fla. 2001). Federal Rule of Civil Procedure 23(c)(2) requires that the notice be as “best [as] practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.” Id. (citing Fed.R.Civ.P. 23(c)(2)(B)). When reviewing the settlement for preliminary approval, the Court must review and approve the proposed ...


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