Papa John’s To Pay $16.335 Million To Settle TCPA Class Action

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1414625_24874503In the marketing space, the Telephone Consumer Protection Act (TCPA) is dominating the headlines.  By various accounts, TCPA filings are up 40-60% in 2013, compared to the same period in 2012.

Papa John’s TCPA Settlement

On May 17, 2013, Papa John’s delivered the latest headline, agreeing to pay up to $16.335 million to settle a nationwide class action for allegedly advertising pizza promotions via text message.  The terms of the settlement contain various redress provisions including:

–       $2,860,000 worth of free pizza vouchers to class members who submit valid claims;

–       $11,000.000.00 to pay cash awards to class members who submit valid claims;

–       $250,000.00 in court administration costs;

–       $2,450,000.00 in payment of attorney’s fees to class counsel; and

–       $25,000.00 to pay representative class members.

Papa John’s TCPA Case Details

In November 2012, the Court certified a national class and a Washington State subclass of all persons who received at least one unsolicited text message that marketed a Papa John’s branded product through Papa John’s affiliate marketer, OnTime4u.  In light of the size of the class, and the substance of the Judge’s ruling, a settlement appeared inevitable.  A large number of interesting issues were addressed by the Court in its class action ruling, including the following:

First, the Court noted that plaintiff had Article III standing.   Despite Papa John’s claims to the contrary, Papa Johns produced documents to indicate that it did play some role in the franchise-level decisions to hire the marketer that sent the subject text messages.  The actual degree of such role would be left for factual determination at trial.

Second, the Court found that plaintiff had statutory standing to sue under the TCPA, despite the fact that she was not the primary account holder of her shared cellular plan and did not pay the bill. The Court found that, since she was the intended recipient of the text message, she had the right to sue Papa John’s under the TCPA.   The Court also noted that because plaintiff was the authorized and sole user of the telephone number at issue, she had standing to sue on the basis of unsolicited text messages.

Third, the Court dismissed Papa John’s argument that individualized issues of whether recipients were charged for text message advertisements would overwhelm the class action “common question” requirement.  The Court reasoned that the TCPA does not require plaintiffs to show that they were charged for text message advertisements to recover damages, so the factual issue was irrelevant.

Take Away

Bottom Line:   Once again, a penny of prevention is worth a pound of cure.  The best way for any marketer or advertiser to succeed in a TCPA class action is to never be named in a TCPA class action lawsuit.  In the case that you are named, it is imperative to take the proper first steps.

If you are marketing products or services directly or indirectly via text message, you should be working with experienced Internet marketing counsel on a regular basis.   Working with counsel fully familiar with the intricacies and nuances of the TCPA, Internet practices and online marketing, to advise you on an ongoing basis, will go a long way toward making sure a class action complaint, or regulatory complaint, never gets filed in the first place.

This topic should be of interest to any company or individual engaging in a commercial venture within the United States, especially those involved in online and offline marketing, text message marketing, telemarketing, and/or consumer product industries.

If you are interested in ensuring that you are compliant with current regulations or if you are facing an investigation from the FTC or other regulatory agency, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

Attorney Advertising

David O. Klein

David O. Klein

David Klein is one of the most recognized attorneys in the telemarketing, technology, Internet marketing, sweepstakes and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

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