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Stop Means Stop: Court Certifies TCPA Class Action in “Stop” Text Message Case–But Forces Class Counsel to Amend Retainer Agreement to Allow Individual Settlement

red and white stop road signage

Photo by Wendelin Jacober on Pexels.com

 

TCPAland is so full of interesting little stories.

I know from first hand experience that class counsel commonly use an unpleasant little clause to keep their would-be class representatives from settling cases individually. This makes sense to a degree–consumer law firms devote tremendous resources to fighting class actions and want to be protected in the cases where their class representative gets cold feet down the line.

But can class counsel include a clause converting a contingency fee arrangement into one where the class representative has to pay for fees and costs in the event that the class representative dares to settle individually “against the advice” of counsel?

That was among the questions presented in Lanteri v. Credit Protection Association, 1:13-cv-1501, 2018 WL 4625657 (S.D. Ind. Sept. 26, 2018).  There the court faced a clause as follows in class counsel’s retainer agreement with Plaintiff:

If Client abandons the class and settles on an individual basis against the advice of Attorneys, Client shall be obligated to pay Attorneys their normal hourly rates for the time they expended in the case, and shall be obligated to reimburse the Attorneys for all expenses incurred.

Wow, what a clause. As you might imagine, the threat of having to pay huge attorneys fees and costs to class counsel is a mighty big hammer that can be wielded to keep a class representative in line. This, it seems, assures that the class representative works for counsel and not the class. Is that ok?

The Lanteri court took the issue quite seriously, first identifying the Seventh Circuit’s rule that: “Misconduct by class counsel that creates a serious doubt that counsel will represent the class loyally requires denial of class certification.”  And, in the Court’s mind, the fee arrangement caused mischief: “the arrangement creates the appearance of a possible conflict with respect to the Plaintiff’s ability to freely withdraw her claim or settle her claim against her attorneys’ advice.” Lanteri at *5.

Rather than deem class counsel inadequate and deny certification on that basis, the Court offered Lanteri’s counsel the chance to amend the retainer agreement to remove the offending clause. The Court assumed that counsel would do so and went on to certify a Rule 23(b)(3) class in the case. So there you go.

In terms of the 23(b)(3) showing, this was pretty cut and dry. Everyone in the class received a text after a “stop” notification was sent.  The Defendant–as so often happens– apparently opposed certification by arguing about the sufficiency of the stop request rather than by pointing to differences in the experiences and circumstances of class members. Maybe there were none. Who knows. But the bottom line is this: when a defendant fails to present any evidence that class members are in different positions vis consent–or, here, revocation–certification may be possible in TCPA cases. So watch out!

It is worth noting that Lanteri appears to be the first case in the country certifying a “stop”  notification TCPA class action. TCPA revocation classes have been universally rejected at the certification stage–and often at the pleadings stage–as revocation is a highly-fact intensive legal concept. But the unique parameters of this class (stop message notifications sent via text) allowed class counsel to leap these hurdles and earn certification. We’ll keep a close eye on the docket to see where this one heads next.

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