Antitrust Law Daily Wrap Up, PRIVACY—S.D. Cal.: Preliminary approval given to TCPA class action certification and settlement, (Apr 26, 2016)

By Michael Menzhuber, J.D., LL.M.

Preliminary approval of a nationwide class action settlement and certification of a settlement class, in a case alleging violations of the Telephone Consumer Protection Act (TCPA), was granted by the federal district court in San Diego (Stemple v. QC Holdings, Inc., April 25, 2016, Bashant, C.).

In August 2012, Paul Stemple brought suit against QC Holdings for allegedly violating the TCPA by using an automated telephone dialing system to call his cell phone number for debt collection purposes without his consent. After three years of litigation, the parties reached a proposed settlement agreement. The settlement agreement provided for the establishment of a settlement fund to pay awards to the settlement class estimated to include 31,230 class members. Stemple moved for preliminary approval of the settlement and for certification of a settlement class.

Class certification. As a threshold matter, the court found that the settlement class was ascertainable because class members could be identified by reviewing records available to QC and a reverse telephone number look-up could be conducted to determine address information for class members for whom address information was not available.

The court then found that the four prerequisites for class certification under Federal Rule of Civil Procedure 23(a) were met. The numerosity prerequisite was met because the proposed settlement class consisted of approximately 31,230 class members, making joinder of all class members impractical.

There were questions of law and fact common to the class members. Specifically: (1) a common core of salient facts existed with respect to QC’s alleged used of an ATDS and artificial voice to make the unsolicited calls; and (2) a common legal issue existed as to whether QC made these calls in violation of the TCPA.

The typicality requirement was met because both Stemple’s and the class members’ claims: (1) arose from the same alleged conduct of QC, unsolicited phone calls for debt collection purposes using an ATDS and artificial voice; and (2) were based on the same legal theory, violation of the TCPA. Further, there was no indication that Stemple and his counsel had a conflict of interest with the class members and they appeared to have vigorously investigated and litigated the action.

The court also found that the predominance and superiority requirement under Rule 23(b)(3) was satisfied. There was a predominating common issue, whether QC’s alleged practice of using an ATDS to call class members’ cell phone numbers without their consent violated the TCPA. Additionally, a class action was the superior method for adjudicating the claims because: (1) any recovery by an individual class member would be outweighed by the costs involved in obtaining the recovery; (2) there was no known other litigation regarding the claims at issue involving QC; and (3) the parties agreed it was desirable for the court to resolve the class members’ claims.

Preliminary fairness. The court determined that the class action settlement was fair, reasonable, and adequate. The proposed settlement eliminated litigation risks and ensured that settlement class members receive some compensation for their claims. The amount of settlement fund appeared appropriate in light of the claims rate anticipated by the parties. Finally, the case proceedings were at an advanced stage and there was evidence of significant arms-length negotiations and the class counsel had significant experience in handling class actions, the court concluded.

The case is No: 12-cv-01997-BAS (WVG).

Attorneys: Abbas Kazerounian (Kazerounian Law Group, APC) for Paul Stemple. Rebecca J. Schwartz (Shook, Hardy and Bacon) and Rosemary H. Do (Lynberg & Watkins, APC) for QC Holdings, Inc.

Companies: QC Holdings, Inc.

Cases: Privacy CaliforniaNews