Spillman v. RPM Pizza, Inc. et al

Filing 241

FAIRNESS HEARING: RULE 23(e) FINDINGS: The court finds that the proposed TCPA class action settlement in this case is fair, reasonable and adequate, and in the best interest of the class. The court will issue a final order and judgment approving the settlement. The issue of attorneys fees and costs, and the incentive payment to the class representative, will be addressed in a separate ruling. Signed by Magistrate Judge Stephen C. Riedlinger on 5/23/2013. (LLH)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

TONI SPILLMAN
CIVIL ACTION
VERSUS
NUMBER 10-349-BAJ-SCR
RPM PIZZA, LLC, ET AL
FAIRNESS HEARING: RULE 23(e) FINDINGS
This matter came before the court on March 12, 2013 for a
fairness hearing pursuant to Rule 23(e), Fed.R.Civ.P. to determine
whether the class action settlement preliminarily approved on
November 9, 2012 is fair, reasonable, adequate and in the best
interest of the class.

Based on the entire record of this

proceeding, including the presentation of counsel and the evidence
filed in the record at the time of the hearing, the court makes the
following findings and approves the settlement.
Class Action Fairness Act
This is a class action settlement of litigation that began
with the filing of a Class Action Complaint on May 20, 2010 by
plaintiff Toni Spillman against defendants RPM Pizza, Inc. and
Domino’s Pizza, LLC. The complaint alleged the defendants violated
the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227.1
1

At the time the complaint was filed jurisdiction was alleged
under both federal law and the Class Action Fairness Act (“CAFA”).
In 2012, after this complaint was filed, the Supreme Court in Mims
v. Arrow Financial Services, LLC, ____ U.S. ____, 132 S.Ct. 740
(continued...)

After several amendments to the complaint, the class is now
composed of persons who received automated telephone calls (“robocalls”) to their cellular phone numbers made by or on behalf of RPM
or one of its Domino’s franchise stores from May 20, 2006 to May
20, 2010.

The Settlement Agreement2 creates a common fund totaling

$9,750,000.

Therefore, the settlement is subject to CAFA, and a

CAFA settlement must comply with 28 U.S.C. § 1714 and § 1715.
Under § 1714 the proposed settlement does not provide for the
payment of greater sums to some class members than to others,
solely on the basis that the class members to whom the greater sums
are to be paid are located in closer geographic proximity to the
court.

The

members

of

the

largest

sub-class,

which

is

the

Merchandise Voucher sub-Class will receive a fully transferrable,
single-use voucher for a large one-topping pizza which can only be
redeemed for in-store pick-up at an RPM-owned Domino’s store in the
states of Louisiana, Alabama and Mississippi.3
for

geographic

limitation

has

nothing

to

However, the basis
do

with

geographic

1

(...continued)
(2012), held that federal and state courts have concurrent
jurisdiction under the TCPA. Therefore, federal district courts
have federal question jurisdiction over TCPA claims. This case
overruled the Fifth Circuit decision in Chair King, Inc. v. Houston
Cellular Corp., 131 F.3d 507 (5th Cir. 1997), which was controlling
at the time the complaint was filed.
2

Record document
Approval, Exhibit A.

number

222-3,

3

Motion

for

Preliminary

Id., Settlement Agreement, § 1.12, definitions of Monetary
sub-class and Merchandise Voucher sub-class.
2

proximity to the

court.

This provision is a result of the fact

that settling defendant RPM operates in these three states, and the
vast majority of the class members have phone numbers with area
codes originating from Louisiana, Alabama and Mississippi.4
The testimony and exhibits also establish that notice of the
proposed

settlement,

along

with

the

appropriate

settlement

documents, has been given to the Attorney General in Washington
D.C., and the Attorneys General in all 50 states and the District
of Columbia.

Notice of Compliance with § 1715 has been filed into

the record.

The 90-day period required by § 1715(d) has expired

and no officials have filed objections to the settlement.5

The

court finds that the proposed settlement complies with the CAFA
requirements of 28 U.S.C. §§ 1714 and 1715.
Notice
No objections to the settlement have been filed.

No putative

class member sent notice that he or she planned to appear at the

4

According to the testimony of notice expert Shannon
Wheatman, approximately 93% of the phone numbers in the database of
phone numbers called have area codes from these three states.
Wheatman also testified that in drafting the language contained in
the notices, the language used was drafted with the knowledge that
it was a nationwide class, and care was taken to use language that
would not discourage anyone from a particular state from filing a
claim.
5

Kim R. Schmidt, senior vice-president of Rust Consulting,
Inc., is responsible for overall claims administration in this
case. Schmidt stated that in response to the notice she was only
contacted by the Texas Attorney General.
As of this date no
Attorney General has filed an objection in the record.
3

fairness hearing, and no class member appeared at the hearing.

No

opt outs have been filed.6
At the fairness hearing notice expert Wheatman gave extensive
testimony about the design and drafting of the notice plan and its
implementation, the primary goal of which was to satisfy due
process under the applicable legal standards.7

The feasibility of

giving class members direct notice was explored first, using the
“reverse appends” method.8

However, after consultation with the

claims administrator it was determined that this method would be
very costly and would not result in enough reliable, accurate and
useable data to provide adequate direct notice to class members; a
notice by publication plan would still be needed.

According to

Wheatman and Kim R. Schmidt, the representative of the claims
administrator, the only reliable, consistent information for notice
purposes was the area codes of the cell phone numbers in the
database.9

6

The objection and opt out deadlines were February 10 and
February 22, 2013.
7

See, In re Katrina Canal Breaches Litigation, 628 F.3d 185,
197 (5th Cir. 2010).
8

According to Wheatman, this would essentially involve using
the phone numbers in the database to try to obtain the names and
addresses of the individual who is associated with that particular
phone number.
9

In making this determination, they also considered census
and mobility data and other studies. This information shows, for
example, that ten percent of people have cell phone area codes that
(continued...)
4

The

essential

components

of

the

notice

plan

ultimately

developed and implemented were print publication, internet, the
settlement website and press releases.10 The geographic composition
of the class and the relative costs were considered in determining
the national print and internet outlets to use in order to provide
the best notice practicable to the class as a whole. Wheatman, who
has

extensive

instructions,

experience

class

action

developing
notices

plain-language

and

rules

of

jury

procedure,

testified that the notice was composed at a ninth grade reading
level because many adults read below a high school level.
Some of the highlights demonstrating the effectiveness of the
notice plan are shown by: (1) the estimation that the internet
banner ads on Facebook and the 24/7 Network appeared over 66
million times; (2) 369 national media outlets picked up the press
release

on

the

settlement

and

205

of

those

were

outside

of

Louisiana, Mississippi and Alabama; (3) payment for seeding key
words in major search engines ensured internet search results
related to the case were among the first five to appear; (4) the
settlement website received tens of thousands of “hits” coming from
all over the country, which shows the internet ads were effective;
and, (5) the percentage effectiveness of the reach of the notice

9

(...continued)
are different from the area codes in the state where they reside.
10

Record document numbers 238 and 240, hearing Exhibits W-3
through W-13.
5

plan in the three-state area was 80% and for the overall class was
74-76%, which shows that the notice complied with Federal Judicial
Center (“FJC”) checklist/requirements.11
According to Schmidt, at the time of the hearing approximately
770 claims had been filed on the settlement website, and there were
approximately 80 requests from individuals for claim forms.

This

is less than one percent of the total class, but the claims process
is still going on, and this rate of filing is consistent with
other TCPA class action settlements awarding similar relief.
also

She

explained that while some actions had higher claim filing

rates, those cases did not have the pre-screening feature of the
settlement website for this case.

That feature allows a person to

enter a phone number to find out if the person is in the class,
thereby reducing the number of claims made by cz
persons who are not class members.
Therefore, the testimony and the exhibits demonstrate that:
(1) the notice directed to all class members who would be bound by
the settlement complies with this court’s orders and Rule 23(e);
and, (2) the content and form of the notices provided have been
reasonable and sufficient to apprise all interested parties and
class members of their right to object or opt out.

The court finds

that the requirements of due process and notice under Rule 23 are
satisfied.
11

Based on the FJC checklist, 70 to 95 percent is considered
notice that is high-reaching.
6

Requirements of Rule 23(a) and (b)(3)
The class is so numerous that joinder of all members is
impracticable.

Based on the number of phone numbers the record

shows that the class is composed of more than 1,400,000 class
members.12
With regard to commonality, the record demonstrates that all
the

class

messages

members

received

advertising

pre-recorded

promotions

Domino’s franchise pizza stores.

for

robo-call

pizza

cell

purchases

at

phone
RPM’s

Each member of the class asserts

claims against the same defendants for violation of the TCPA liability which the defendants deny - and seeks the same relief.
The relief sought is actual damages in the form of monetary losses
associated with the cost of the receipt of the calls, usage of
cellular phone minutes and plan allowances, inconvenience, and
invasion

of

privacy,

or

alternatively

statutory

damages

and

injunctive relief to stop the defendants from placing any more prerecorded calls in violation of the TCPA.
questions

of

law

and

fact

common

to

Therefore, there are
the

class,

and

these

predominate over any individual questions that affect only an
individual class member.

The class representative received pre-

12

The total number of class members as identified by the
defendants’ records for both sub-classes is 1,466,848, comprised of
314,231 in the Monetary sub-class, and 1,152,617 in the Merchandise
Voucher sub-class. Record document number 230-1, Memorandum in
Support of Motion for Final Approval of Class Action Settlement, p.
7; record document numbers 238 and 240, Exhibit S-4.
7

recorded robo-calls advertising pizza specials on her cell phone
from the defendants during the time period May 20, 2006 through May
20, 2010, and she claims the same type of TCPA violations and
relief as the other members of the class.13

Therefore, her claims

are also typical of the other class members.
Nothing in the record indicates that there are any conflicts
of interest between the class representative and the proposed
class. The fact that Spillman’s claims are typical, along with the
history of this litigation and her involvement in the litigation
and

the

settlement

process,14

establishes

that

the

class

representative has fairly and adequately represented and protected
the interests of the class.

Based on the record in this case, the

court’s involvement at every step of this litigation, and counsel’s
many years of experience in similar class action settlements, the
court also finds that class counsel are qualified and competent,
and able to fairly and adequately protect the interest of the
class.
A class action settlement of this litigation is also superior
to

any

other

available

methods

adjudicating this controversy.

for

fairly

and

efficiently

The small potential recovery in an

13

Record document number 57, Second Supplemental and Amending
Class Action Complaint, ¶¶ 7, 15-31, 42-47.
14

The court’s review of the time records for class counsel
Christopher K. Jones shows there was regular and consistent
communication between counsel and the class representative on
matters relevant to the litigation and settlement.
8

individual action, and the provision for statutory damages, makes
it unlikely that an individual plaintiff would have an incentive or
interest to bring or prosecute a separate action.

The enormous

size of the class, and the high degree of commonality with regard
to the questions of law and fact in this case, easily make a class
action settlement the most efficient and least costly way to
resolve the controversy and to fairly compensate all the class
members.
Reed Factors15
The history of this litigation shows that it has been long,
hard fought, complex and expensive for both sides, and each side is
also facing substantial obstacles to success if there is no
settlement and the litigation continues.16

The following facts

support this conclusion.
This case has been on-going for three years.

The written and

oral discovery conducted has been substantial and expensive, as
shown

by

the

production

and

review

of

tens

of

thousands

of

15

The Reed factors are: (1) the existence of fraud or
collusion behind the settlement; (2) the complexity, expense and
likely duration of the litigation; (3) the state of the proceedings
and the amount of discovery completed; (4) the probability of the
plaintiffs’ success on the merits; (5) the range of possible
recovery; and, (6) the opinions of the class counsel, class
representatives, and absent class members. Reed v. General Motors
Corp., 703 F.2d 170, 172 (5th Cir. 1983).
16

The first four Reed factors and the information relevant to
these factors will be addressed as a whole.
9

documents and the discovery motions filed during the past two
years.17

Evidence that the litigation thus far has been complex,

expensive and hard fought, and that the settlement came as a result
of arms length negotiations, is also demonstrated by the fact that
the parties did not achieve a settlement until they engaged in two
unsuccessful mediation sessions with an experienced, independent
mediator,

returned

to

litigating,

and

then

after

additional

negotiations finally reached an agreement in November 2012.
The benefits to the class from the settlement are demonstrated
by the following terms: (1) the 314,231 members of the Monetary
sub-class will receive up to a $15 cash payment, which is funded by
a

$4,000,000

creating

deposit

by

Argonaut

Insurance

Company

and

RPM,

a total common fund amount of $9,750,000; (2) the

Merchandise Voucher sub-class, the largest sub-class composed of
1,152,617 members, will receive a fully transferrable voucher worth
from $6.71 to $11.99,18 and without the settlement they would have
received no benefit at all because their claims were dismissed in

17

See e.g., record document numbers 121, 129, 145, 146, 192,
196, 203.
The current stage of the proceedings in terms of
discovery and motions also shows that the parties have sufficient
information to evaluate the merits of their competing positions.
18

Record document number 230-2, Exhibit 1, Affidavit of Glenn
A. Mueller, Jr., Chief Financial Officer of RPM Pizza, LLC.
Class counsel and counsel for RPM jointly informed the court
that the vouchers received by the members of this sub-class will be
redeemable for up to 18 months from the date the voucher is issued.
10

February 2011;19 (3) defendant RPM has changed its behavior as a
result of the suit - since May 2010 it has not made the types of
robo-calls alleged in the complaint, the settlement agreement
contains a provision for injunctive relief with RPM agreeing to
comply

with

the

TCPA

statutory

and

regulatory

requirements

applicable to pre-recorded phone messages, and the expert report
submitted estimates the value of this injunctive relief at $16.2
million

dollars.

Not

including

the

estimated

value

of

the

injunctive relief, the total potential value of the cash and
voucher components of the settlement is more than $20,000,000.
The

certain

beneficial

results

of

the

settlement

are

contrasted with the uncertain results if the case proceeds for
several more years. The uncertainty for both the class members and

19

Record document numbers 83 and 115.
Following the Mims
decision and a decision form the Eastern District of Louisiana in
Bailey v. Domino’s Pizza, LLC, Civil Action No. 11-04, a Motion for
Reconsideration was filed by the plaintiff on April 25, 2012.
Record document number 144. Although the plaintiff’s Motion for
Reconsideration and numerous other then-pending motion were later
dismissed while the parties negotiated the settlement, the
dismissal was without prejudice to being re-noticed if the parties
settlement negotiations were unsuccessful. Record document number
212. The dismissal of these motions was clearly a case management
device and not a determination of the merits of any motion. For
the purpose of determining whether to approve the class action
settlement, these motions are considered as still pending when the
parties agreed to the settlement.
The settling parties then
consented to proceed before a U.S. Magistrate Judge pursuant to 28
U.S.C. § 636 for the purpose of the settlement. Record document
number 214, Limited Consent to Reference of Class Settlement
Approval Proceedings to Magistrate Judge. The dismissed motions,
considered herein as still pending before the district judge, will
be moot as a consequence of the approval of the settlement.
11

the defendants is evident from the record.

There is currently

pending a Motion for Reconsideration of the dismissal of the claims
of the Merchandise Voucher sub-class and a motion for summary
judgment on liability by defendant Domino’s.

Furthermore, the

defendants have disputes with liability insurers Argonaut Great
Central Insurance Company and Liberty Mutual.20

Both are denying

coverage under their respective policies, and motions and coverage
issues are still pending. Nevertheless, Argonaut has agreed to pay
its policy limits to help create the settlement fund.
The analysis above establishes that there is no evidence or
suggestion of fraud or collusion behind this settlement.

Without

the settlement the litigation will likely last several more years,
and the result of the litigation is clearly uncertain at this time.
Continuing the litigation will result in increasing costs, will not
likely bring any greater benefits to the class members, and also
carries with it the risk that some or all of the claims of the
class members will be dismissed or reduced. Thus, consideration of
the first four Reed factors supports the conclusion that the
settlement should be approved because it is fair and reasonable,
and in the best interest of the class.
The settlement reached is also within the range of possible
recoveries and court approvals when compared to other TCPA cases

20

See, RPM Pizza, LLC d/b/a Domino’s Pizza v. Liberty
Insurance Underwriters, Inc., CA 10-684-BAJ-SCR (M.D. La.).
12

which have had settlements approved by the courts in this and other
districts.21
Finally,

the

opinions

of

class

counsel,

the

class

representative, and any absent class members must be considered.
The opinion of class counsel, as expressed at the fairness hearing
and in an affidavit of counsel Christopher K. Jones have been
considered.

For all the reasons explained in connection with the

other Reed factors, as well as the law firm’s and his ten-plus
years of experience in litigating TCPA class action suits, counsel
attests that the settlement reached is fair and reasonable and in
the best interest of the class. Class representative Toni Spillman
also submitted an affidavit in support of the settlement.22 Support
for the settlement is also indicated by the fact that after a
notice

plan

which

satisfies

due

process

was

implemented,

no

objections or opt outs were received or filed.
Therefore, considering the entire record in light of the
relevant factors, the court finds that the proposed TCPA class
action settlement in this case is fair, reasonable and adequate,
and in the best interest of the class.

The court will issue a

final order and judgment approving the settlement.
The issue of attorneys’ fees and costs, and the incentive

21

See, record document number 230-1, pp. 24-25.

22

Record document number 222-4, Exhibit B, Spillman affidavit.
13

payment to the class representative, will be addressed in a
separate ruling.
Baton Rouge, Louisiana, May 23, 2013.

STEPHEN C. RIEDLINGER
UNITED STATES MAGISTRATE JUDGE

14