BROWN v. RITA'S WATER ICE FRANCHISE COMPANY LLC
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE TIMOTHY J. SAVAGE ON 9/14/2017. 9/15/2017 ENTERED AND COPIES E-MAILED.(sg, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
SHERRY BROWN and ERICKA NEWBY, :
on their own behalf and on behalf of
all others similarly situated
RITA’S WATER ICE FRANCHISE
September 14, 2017
Class representatives Sherry Brown and Ericka Newby move for approval
authorizing the Settlement Administrator to disperse payments to eligible class
members. They make the request because there are 18,359 fewer valid claim forms
than the Settlement Administrator and plaintiffs’ counsel had originally represented at
the final approval hearing. The Settlement Administrator has since determined that
there are only 10,164 valid and non-duplicative claim forms rather than 28,523.
Plaintiffs have filed the motion to “apprise the Court of this development and obtain final
approval for payment of properly submitted, and verified, claims to the actual class
members in this case.”
Because the class members eligible for a payout will receive larger awards than
had been contemplated, we shall grant the motion and supplement the Findings of Fact
in this class action settlement to reflect the correct number of eligible class members.
In this Telephone Consumer Protection Act class action, the complaint alleged
that Rita’s knowingly or willfully sent class members unauthorized, automated text
messages known as “Cool Alerts,” which announced when certain flavors of products
such as water ice, custard, and ice cream became available in the recipient’s local
The plaintiffs claimed that Rita’s generated the messages using a list or
database of telephone numbers of persons who had not provided them to the
defendant, continued to send Cool Alerts to customers even after they had texted
“STOP” in response to the texts’ instructions, and used outdated and insufficient
consent language on its Cool Alerts webpage.
The parties reached a settlement agreement, which was preliminarily approved
on March 23, 2016. The settlement agreement required Rita’s to create a three-milliondollar Settlement Fund, out of which notice and administration costs, class
representative incentive awards, and attorneys’ fees and expenses were to be paid.
The remainder was the Net Settlement Fund, from which class members who submitted
a valid and timely claim form were to receive a pro rata share, the amount depending on
whether they received just one Cool Alert text message or also received at least one
other Cool Alert after responding “STOP” to a previous text. The settlement agreement
allowed Class Counsel to seek attorneys’ fees and expenses up to one million dollars.
At the preliminary approval hearing, Class Counsel informed the court that based
on the number of telephone numbers they had, there were approximately 138,000
potential class members. Culling this initial list, the Settlement Administrator, A.B. Data,
Ltd., found that there were approximately 132,140 unique telephone numbers.
those, there were 110,328 unique names and addresses, who were sent class notice by
mail. Decl. of Christine Peters-Stasiewicz (Doc. No. 50-4) (“Peters-Stasiewicz Decl.”),
¶¶ 9-10. As of July 14, 2016, six days after the claim form filing deadline and twelve
days before the final approval hearing, the Settlement Administrator submitted a
declaration stating that class notices were mailed successfully to 106,493 persons, and
that 30,636 timely claim forms had been submitted. Id. ¶¶ 16, 19. After conducting a
“preliminary review” of the timely submitted claim forms, the Settlement Administrator
determined that 28,523 claim forms were non-duplicative. Id. ¶ 19. Of that group,
28,137 received one Cool Alert text message and 386 received at least one additional
Cool Alert after responding “STOP” to a previous text.
Id. ¶ 20.
Administrator also represented that the 28,523 claim forms were “undergoing additional
reviews,” and that it would “coordinate to provide the parties with updates to mailing,
claims and correspondence statistics following the complete claims and auditing
processing once all claims received/postmarked by the July 8, 2016 deadline are fully
reviewed.” Id. ¶¶ 19, 23 (emphasis added).
Based on the representation by A.B. Data that 28,523 valid claim forms had been
submitted, Class Counsel boasted an “outstanding” claims rate of 20.6% of the class, 1
much higher than their expected five to six percent response rate.
Mot. for Final
Approval of Class Action Settlement (Doc. No. 50-3) at 2, 8, 12-13 (“Each of these
claims represents an affirmative vote in favor of the Settlement, and . . . [w]hen
considered against the total number of notices sent, the claims rate in this case (20.6%)
This figure was based on 138,000 class members. The rate increases to almost 26% if based
on the 110,328 unique names and addresses identified by the fund administrator after preliminary
approval. See Peters-Stasiewicz Decl. ¶ 10.
is far above the rates seen in typical consumer class action settlements” of 2-8%); Mot.
for Preliminary Approval (Doc. No. 43-2) at 25; Oral Arg. Tr. at 26:25-27:1-19. Indeed,
at the final approval hearing, counsel stated:
I'm willing to wager that there is no [TCPA] settlement
out there . . . with a higher claims rate than ours. . . .
This is [a] 20.6% claims rate. There is nothing out
there like this. . . . This is [an] outstanding settlement.
. . . This is the gold standard of TCPA settlements . . .
because we have over 20% claims rate, 28,523
claims. Getting 28,000 people to do anything, that
actually requires them to write or fill something out is
moving a glacier and we did it here. . . .
Oral Arg. Tr. at 9:8-13, 17-23 (July 26, 2016). Emphasizing the 20.6% claims rate,
Class Counsel requested approval of an award of attorneys’ fees and expenses in the
amount of one million dollars, which was one-third of the settlement fund and the
maximum amount allowed under the settlement agreement. See Pls.’ Suppl. Br. in
Supp. of Pls.’ Mot. for Reasonable Att’ys’ Fees & Costs (Doc. No. 55) (“Suppl. Br.”) at 2
(“The 20.6% claims rate reflects the excellent efforts of Class Counsel (in negotiating a
strong result and developing an effective notice plan) and the overwhelming approval of
The amount each class member would recover depended on the number and
type of claimants. 2 Consequently, at the final approval hearing, we questioned Class
Counsel extensively about the claims rate and the amount they were expecting each
class member to recover when they negotiated the three-million-dollar settlement, and
how that compared to the actual claims and recovery rate of the 28,523 claimants
Additionally, the Net Settlement Fund, which constituted the total amount available to the class
as a whole, would be affected by the size of the attorney fee award and administration costs.
entitled to a cash payment. Oral Arg. Tr. at 11:1-12, 24-25–12:1-14; 27:2-25 - 28:1-5,
On March 16, 2017, we granted final approval of the class action settlement,
where we: (1) awarded Class Counsel a total of $691,074.00 in attorneys’ fees and
expenses; (2) allowed the Settlement Administrator $144,000.00 to cover class
administration costs; (3) awarded $66.54 to each of the 28,197 class members who
received just one Cool Alert; and (4) awarded $731.99 to each of the 386 class
members who received a Cool Alert after texting “STOP.” See Final Approval Order
(Doc. No. 59) ¶¶ 5(a), 6; Findings of Fact and Conclusions of Law (Doc. No. 58) ¶ 32;
Doc. No. 57, ¶¶ 1-2; Attorneys’ Fees Op’n (Doc. No. 56) at 6 n.27.
Now, four months after the court approved the class action settlement, and more
than one year after the Settlement Administrator promised to “update” the parties with
the results of its “full review” of the claims received and postmarked by the July 8, 2016
deadline, A.B. Data reports a significant reduction in the number of valid claim forms
despite receiving 1,364 additional claim forms 3 since submitting its earlier declaration on
July 14, 2016. See Decl. of Eric Schachter (“Schachter Decl.”) (Doc. No. 60-1) ¶¶ 2, 5.
Specifically, A.B. Data reports that after completing a full review of all claim forms
received, 4 it has determined that it has received only 10,164 valid and non-duplicative
Although A.B. Data fails to state the number of newly submitted claim forms or whether they
were timely submitted by being postmarked or received by the claim-filing deadline of July 8, 2016, we
arrive at this number based on its statements in its recent declaration that it continued to receive claim
forms after the earlier declaration was filed and that a total of “approximately 32,000 claim forms [were]
received,” Schachter Decl. ¶¶ 4, 6, and its statement in the July 14, 2016 declaration that 30,636 claim
forms were timely submitted. Peters-Stasiewicz Decl. ¶ 19.
The method A.B. Data employed to determine which claim forms were non-duplicative and
eligible for a class payment was to compare the name, mailing address and phone number on each claim
form to the names and mailing addresses that were sent class notice and to the list of telephone numbers
sent a Cool Alert text. Schachter Decl. ¶¶ 4, 5.
claim forms, 5 which is 18,359 fewer than the 28,523 number A.B. Data had reported as
valid in July 2016. Of the valid claim forms, 9,684 class members received one Cool
Alert text message and 480 received at least one additional Cool Alert after responding
“STOP” to a previous text. Schachter Decl. ¶ 7.
Based on the reduced number of valid claim forms, the total number of award
units is 14,964. Schachter Decl. ¶ 7. 6 The value of each award unit is $144.00, 7 which
means that 9,684 class members are each entitled to receive an award of $144.00 and
480 class members, $1,584.00. The award amounts applied in the Findings of Facts
were $66.54 to 28,137 class members and $731.99 to 386. (Doc. No. 58) ¶ 32(f).
The large discrepancy between A.B. Data’s initial determination that 28,523 valid
claim forms were received and its updated determination that there were only 10,164,
means each claimant will recover more than double the amount previously ordered. To
account for this mistake, the plaintiffs have filed a motion requesting the court to
approve dispersal of funds based on the new data and values.
Six days after the claim form filing deadline and twelve days before the final
approval hearing, A.B. Data, the Settlement Administrator, submitted a declaration
stating that it was “conducting additional reviews of” 28,523 non-duplicative claim forms
Of the 32,000 claim forms received, 25,995 were submitted online. Of those online
submissions, 20,250 were determined to be either duplicative of other valid claim forms or invalid
because they were not class members (their information did not match the class data). Schachter Decl. ¶
The award units are calculated as follows: 9,684 x 1 = 9,684 and 480 x 11 = 5,280; 9,684 +
5,280 = 14,964.
The value of each award unit is calculated as follows: $2,154,926.03 (Net Settlement Fund) ÷
14,964 = $144.00.
that had been submitted, and would “coordinate to provide the parties with updates to
mailing, claims and correspondence statistics following the complete claims and
auditing processing once all claims received/postmarked by the July 8, 2016 deadline
are fully reviewed.” Id. ¶¶ 19, 23. This declaration would turn out to be misleading.
A.B. Data did not “fully review” the claim forms until after the settlement was approved.
Both the court and Class Counsel relied on A.B. Data’s statements in its July 14,
Based upon those representations, Class Counsel boasted an
“outstanding” claims rate of 20.6% of the class.
This information provided in the
declaration was used to calculate the award amounts to eligible class claimants. The
amount each class member can recover depends on the total number and type of actual
claimants who will receive proportionate shares of the Net Settlement Fund.
Consequently, a decrease in the number of valid claimants from 28,523 to 10,164, a
decrease of sixty-five percent (65%), will significantly increase the amounts of the
awards to the class members.
Plaintiffs contend that the Settlement Administrator “identified an unusually high
number of false claims submitted through the online claim portal.” Pls.’ Mot. to Approve
Class Disbursement ¶ 1. Although there were a large number of claims submitted
online that were ultimately determined to be invalid, 8 neither Class Counsel nor the
Settlement Administrator has provided the court with any data showing that it is unusual
The Settlement Administrator found that 20,250 of 25,995 claims submitted online (77.9%)
were either duplicative of other valid claim forms or invalid because their information did not match the
class data. Schachter Decl. ¶ 6.
to have a large number of invalid claims submitted online in these types of class
Even if it were unusual to have so many invalid online claims, as Class Counsel
suggests, A.B. Data should have conducted its full review of the valid claim forms
immediately. If it knew or suspected that it would not be able to complete its full review
before the final approval hearing, it should have notified the court. In that event, the
calculation of the award amounts and the ruling on the counsel fees petition could have
The plaintiffs note that Class Counsels’ fee was reduced, in part, because each
claimant was going to receive less than counsel anticipated due to the number of
claimants exceeding counsel’s estimates. Mot. to Approve Class Disbursement, ¶ 11.
Class Counsel had initially projected a five-to-six percent (5-6%) claims rate, and
estimated a payout of approximately $150.00 for the one award unit group members
and $1100.00 for the 11 award unit group members. Oral Arg. Tr. at 27:2-25 - 28:1-2.
With these new figures, the claims rate is 7.3%, 10 and the awards to the different group
members are $144.00 and $1,584.00, respectively. Plaintiffs point out that these rates
and award amounts are much closer to those originally predicted by counsel.
Plaintiffs are correct that if we apply the new number of valid claim forms,
counsel’s initial projections of claims rate and payout amounts to eligible claimants will
be closer to the new award amounts. Class Counsel boasted that the claims rate of
20.6% was the highest in any TCPA case, an “outstanding” settlement and the “gold
Additionally, the Settlement Administrator did not state that they were “false” claims. It stated
that they were either duplicative of other valid claim forms or contained a name, address or phone
number that did not match the class list. These are not necessarily “false” claims.
10,164 ÷ 138,000 = 7.3%.
standard” of TCPA settlements, and how having gotten 28,000 people to submit a claim
was akin to “moving a glacier.” We now know, as Class Counsel should have known
then, that the settlement was not as remarkable as Class Counsel had bragged.
The Settlement Administrator should have conducted the full review of the claim
forms as soon as the claim filing deadline passed instead of waiting for the final
approval order to be issued. However, because the eligible class members will receive
a greater benefit, we shall grant the motion and supplement the Findings of Fact to
reflect the correct number of valid claim forms submitted.
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