Striking the Mother Lode: Court Grants Final Approval of $3.5M TCPA Class Action Settlement Providing Award of Over $800 Per Claim, and $1.05M in Attorney Fees

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The District Court for the Northern District of California recently granted Plaintiffs’ Motion for Final Approval of a $3.5 Million class settlement in Gergetz v. Telenav, Inc., No. 16-CV-04261-BLF, 2018 WL 4691169 (N.D. Cal. Sept. 27, 2018).  The $3.5M settlement provides for a whopping $800+ per claim recovery to the class, and an award of $1.05M in fees (after the Court took a teensy haircut). 

The parties in Gergetz had inked a deal back in April 2018 to settle this text message class action for $3.5M, and to certify two subclasses – a “no consent” subclass, and a “stop” text message subclass.  Per the court’s ruling, the administrator estimated there were 200,000 potential class members, out of which 145,984 class members (72%) were sent notice.  Claims by those class members – about 2,000 of them – would be valued based on an “award unit” system that would give “units” worth a specified dollar amount based on the number and type of text received by each claimant, with each “award unit” worth an estimated $810.  The court found that these figures – when compared to recoveries from other TCPA class actions – to be “exceptionally good”.

So how does this stack up with the recently-rejected Snyder settlement we reported on last month?  It’s tough to draw comparisons since we’re not exactly comparing apples to apples.  Aside from the fact that the cases involved different scenarios (a debt collection class action versus a text message telemarketing class action), Snyder had 8.5 times more class members, 95% of which were sent notice, with an enormous 16% claims rate – far higher than the usual TCPA settlement.  By comparison, just over 70% of the relatively small 200,000 person class was sent notice in Gergetz, and a paltry 1% of those class members actually submitted a claim.  So it’s no wonder the per-claim award here – starting at about $810 and going up from there depending on the number of texts claimed – was so high. 

The only hiccup encountered here was in the court’s approval of the $1,155,000 fee award requested by class counsel (33% of the fund).  The court found that the “benchmark” for a reasonable award in common fund settlements is 25% of the funds, and the 33% that counsel was asking for was “slightly overreaching”.  However, the court recognized the 25% amount could be increased due to “special circumstances”.  And the court found that an increase from 25% to 30% was justified based on the “exceptional results achieved, the risk of litigation, the fine quality of Class Counsel’s work, and the contingent nature of the fee.” 

The court then performed a “lodestar cross-check” to ensure that the 5% increase was reasonable.  According to class counsel, their total hourly fees on the case amounted to $383,102 based on an hourly rate that the court found was “below market”, so the court rounded that figure up to $400,000 in performing its cross-check.  To get to $1,050,000 from $400,000, the Court applied a 2.625 multiplier.  The court found that multipliers between 1 to 4 are typical for common fund cases, and found a 2.625 multiplier was appropriate since class counsel was working on a contingent fee basis, had to decline other work to litigate this case, and got an “excellent result” for the class members.  And the court’s exercise here ultimately resulted in about a $100,000 haircut off the fees requested by counsel from $1,155,000 to $1,050,000. 

But in any event, I don’t think we’ll hear much complaining from class counsel since – according to the court’s ruling – this case was settled while still at the pleading stage.

There’s no doubt the Gergetz settlement provided for an exceptionally high per-claim recovery, although much of that was driven by the small size of the class, and the miniscule claims rate.  However, when examining the settlement on a per-class member basis, the settlement wasn’t too far off from what was proposed in SnyderSnyder involved $1.7M class members and a $17.5M fund, amounting to $10.29 per class member.  Gergetz involved 200,000 class members, and a $3.5M fund, amounting to $17.50 per class member.  Given the fact that Ocwen was trying to settle claims for a class that was 8.5 times larger than Gergetz – and because “the potential for individual issues regarding consent loomed relatively large” in Snyder – we’d even say that the deal reached in Snyder was in many respects better than the one reached in Gergetz.  And yet, the settlement in Gergetz received final approval, while the court in Snyder rejected the class settlement, and wondered aloud whether class counsel “sold the class short.”



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