Antitrust Law Daily Wrap Up, PRIVACY—N.D. Ill.: $40M settlement of TCPA suit against HSBC Bank receives final approval, (Mar 3, 2015)

By Linda O’Brien, J.D., LL.M.

The federal district court in Chicago has given final approval to the nearly $40 million settlement of a consumer’s class action suit brought against HSBC Bank for its unauthorized contacts to bank credit card holder’s cellular telephones using automated messages in violation the Telephone Consumer Protection Act (Wilkins v. HSBC Bank Nevada, N.A., February 27, 2015, Holderman, J.).

Michael Wilkins was the holder of a HSBC Bank credit card. Wilkins filed a class action complaint against HSBC, alleging that, between 2010 and 2012, HSBC repeatedly contacted him on his cellular telephone with an automated message at all times throughout the day for non-emergency purposes. Wilkins asserted that he never consented to HSBC calling him on his cell phone or calling him using an automated message. Thus, the bank’s contact on his cell phone through the use of an automatic telephone dialing system was in violation of the Telephone Consumer Protection Act (TCPA). A second plaintiff, Kenneth Mills, was added in an amended complaint filed in March 2014. In July 2014, the court granted preliminary approval to the class action settlement. The plaintiffs moved for final approval of the settlement.

The settlement requires HSBC to establish a settlement fund of $39,975,000 for an estimated class of over nine million members. Class counsel requested that its fee award and incentive awards for class representatives be paid from the settlement fund.

Settlement. The court found that the settlement was fair, reasonable, and adequate. The most important factor relevant to the fairness of the settlement was the strength of the plaintiffs’ case on the merits balanced against the amount offered in settlement, the court noted. Upon review of other TCPA class actions, the settlement represents that third largest cash settlement in the history of the TCPA. However, the plaintiffs faced potential challenges in successfully litigating the case, such as whether class members consented to be contacted on the cell phones using an automatic dialer and the difficulty of discovery in assessing predominance for class certification.

The likely complexity, length, and expense of continued litigation weighed in favor of the proposed settlement. The plaintiffs would have had to retain experts to analyze data, the case would have involved significant motion practice, and any judgment in favor of the plaintiffs would be delayed by any appeal taken by the defendants. Furthermore, there was scant opposition to the settlement. Only 27 class members requested to be excluded from the settlement, representing approximately .0003 percent of all class members. Of the approximately nine million class members, the court received only nine timely objections to the settlement agreement.

The court accepted class counsel as experienced litigators, especially in the TCPA context, and they strongly supported the settlement. Finally, the court found that the parties completed a sufficient amount of discovery to value their respective positions in the case.

Attorney fees and incentive award. Class counsel sought a fee award of almost $12 million, equal to 30 percent of the settlement fund. In evaluating the reasonableness of the award, the court first subtracted the administration and notice costs and incentive awards and found that the requested fee exceeded the market rate for TCPA class actions. Reviewing similar cases, the court noted that a 23.75 percent fee accounted for the risks in this particular case. Hence, class counsel was granted $9 million in fees based on the estimated TCPA market fee scale. The court also concluded that the incentive award of $5,000 to the class representatives was consistent with awards granted in similar litigation.

The case is No. 14 C 190.

Attorneys: Alexander Holmes Burke (Burke Law Offices, LLC) for Michael Wilkins. Julia B. Strickland (Stroock & Stroock & Lavan, LLP) and Lisa Marie Simonetti (Vedder Price LLP) for HSBC Bank Nevada, N.A., and HSBC Card Services, Inc.

Companies: HSBC Bank Nevada, N.A.; HSBC Card Services, Inc.

Cases: Privacy IllinoisNews