On May 13, the U.S. Court of Appeals for the Eleventh Circuit
vacated and remanded a proposed TCPA class action settlement agreement. The class, consolidated from three class actions, accused the defendant, the “world’s largest services platform for entrepreneurs,” of violating the TCPA by using an automatic telephone dialing system to send unwanted calls and text messages to promote its products. The $35 million settlement and attorney’s fees, up to $10.5 million, was approved preliminarily in 2020.
According to the appellate court’s opinion, the district court abused its discretion in approving a proposed $35 million settlement because it: (i) did not consider the 2018 amendments to Rule 23(e)(2); (ii) overlooked possible collusion in the settlement agreement; and (iii) inadequately informed class members about the case. Additionally, the court incorrectly calculated the attorneys’ fees and wrongly treated the settlement as a common fund rather than a claims settlement. The class’s counsel was criticized for appearing to represent their own interests over those of the class since they were supposed to receive $10.5 million in fees. The court also found issues with the opt-out process, which was deemed overly complex and likely to discourage class members from opting out. As a result, the judgment was vacated.
