Monthly Archives: May 2017

Follow Up – Dish Network Denied New Trial and Slapped with Trebled Damages of $61 Million

View Amanda Pickens’ Complete Bio at robinsonbradshaw.com Today we provide you with an update on a previous blog post addressing Dish Network’s plea for a new trial after a jury awarded damages of $20.5 Million in a telemarketing class action lawsuit. After a five-day trial in January, a jury awarded damages by assigning $400.00 to each of the 51,119 distinct phone calls made in violation of the Telephone Consumer Protection Act (the “TCPA”).

Although Dish hoped for a new trial, Judge Eagles issued a text order denying Dish’s Motion for Judgment as a Matter of Law and Motion for a New Trial on May 16, 2017.

After the jury verdict, both parties submitted written closing arguments to the Court on whether Dish willfully violated the TCPA. Dish argued the Plaintiffs should not be entitled to treble damages because Dish complied with TCPA, had a business interest in preventing unwanted telemarketing calls, believed Satellite Systems Network (“SSN,” Dish’s terminated marketing retailer) complied with the TCPA, instructed SSN to scrub its call list against the National Do-Not-Call Registry and not to call the named plaintiff, received almost no complaints during the class period, and had no actual knowledge that SSN was not adhering to the applicable telemarketing laws during the class period.

In an order issued yesterday, Judge Eagles rejected Dish’s arguments and awarded treble damages, stating Dish “did nothing to monitor, much less enforce” SSN’s compliance with telemarketing laws, and it “repeatedly looked the other way” when it learned of SSN’s noncompliance.

Specifically, Judge Eagles found that Dish’s contracts with SSN gave it “virtually unlimited rights” to monitor and control SSN’s telemarketing efforts. And, although Dish was committed to monitoring SSN’s compliance on paper, in reality, it ignored SSN’s violations of telemarketing laws. When SSN received a customer complaint, it would send the complaint to Dish and wait for instruction. Dish disclaimed responsibility for any customer complaint and shifted blame to SSN, while making no effort to determine whether SSN was actually complying with the TCPA. According to the opinion, Dish also ignored several customer complaints about SSN between 2004 and 2010, and it was aware of three lawsuits against the telemarketer resulting in injunctive relief and monetary damages. Despite having actual knowledge of customer complaints and lawsuits, Dish continued its relationship with SSN, allowing SSN to market and sell Dish’s products. Dish did not restrict SSN’s authority to act on its behalf, and it never conducted an investigation to determine if SSN had solved its compliance problems.

The Court held Dish responsible for any willful or knowing violations of the TCPA by SSN because the jury found (and the Court agreed) that SSN was acting within the scope of its authority from Dish. The Court further held that even if Dish were not responsible for SSN’s violations, the result would be the same, because Dish willfully violated the TCPA. According to the opinion, Dish knew SSN had committed many TCPA violations, but it did nothing. Dish received numerous customer complaints about SSN, and it knew of three lawsuits alleging violations of the TCPA. Dish knew SSN was not scrubbing its call list against the Do-Not-Call Registry, yet Dish made no effort to monitor SSN’s compliance with telemarketing laws. Ultimately, the Court held Dish “simply did not care whether SSN complied with the law or not.”

Judge Eagles concluded treble damages were appropriate in this case to deter Dish from future violations and to give appropriate weight to the scope of the TCPA violations. The Court trebled the jury’s award of $400.00 per call to $1,200 per call, totaling approximately $61 Million in damages.

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Is a Class Representative Adequate if He Waives Viable Claims in Order to Preserve Commonality?

View David Wright's Complete Bio at robinsonbradshaw.comClass actions don’t work if the class representative has a conflict with the class he or she purportedly represents. As the United States Supreme Court noted over 70 years ago, “a selection of representatives for purposes of litigation, whose substantial interests are not necessarily or even probably the same as those whom they are deemed to represent, does not afford that protection to absent parties which due process requires.” Hansberry v. Lee, 311 U.S. 32, 45 (1940). A decision this week from Judge Higginson out of the Fifth Circuit provides an interesting commentary on this subject in the context of a consumer class action.

In Slade v. Progressive Insurance Co., No. 15-30010 (5th Cir. May 9, 2017), plaintiffs claimed that Progressive Insurance shorted its insureds when paying for vehicle losses. Progressive used something called “WorkCenter Total Loss” to calculate the base value of total loss vehicles. Plaintiffs said that “lawful sources” – such as the NADA Guidebook or the Kelly Blue Book – had higher values and therefore resulted in plaintiffs “receiving lower payouts on their insurance claims.”

The Fifth Circuit treated with dispatch a couple of aspects of the district court’s class certification decision. First, the Court held that the damages theory was in fact “class wide,” and therefore consistent with Comcast v. Behrend, 133 S. Ct. 1426 (2013). Second, the district court had inexplicably certified a fraud class. As the Court of Appeals observed, “[t]his court has held consistently that a ‘fraud class action cannot be certified when individual reliance will be an issue.’”

But the bulk of Judge Higginson’s opinion discusses a more complicated issue. The insurance company used two basic factors to determine a vehicle’s value. First, it used a “base value” based on the WorkCenter Total Loss calculation. Second, it used a “condition adjustment,” recognizing that the value of the automobile in question might have either a higher or lower value based on its particular condition. The former sounds like a class-wide issue, but the latter looks to be quite individualistic.

Recognizing this dilemma, the named plaintiffs decided not to challenge the “condition adjustment.” As the Court of Appeals observed, “Plaintiffs’ class certification motion may have run into predominance problems because condition adjustments appear to be highly individualized.” But this waiver, the Fifth Circuit noted, comes with a potential cost. Although the plaintiffs’ waiver solved the predominance problems, it raised questions about the adequacy of the class representatives. “When the class representative proposes waiving some of the class’s claims, the decision risks creating an irreconcilable conflict with the class.” As the Court observed, citing a Seventh Circuit opinion, “A representative can’t throw away what would be a major component of the class’s recovery.”

But simply because a class plaintiff decides, as a strategic matter, to waive a claim does not necessarily mean she is inadequate. The court must inquire into, at least, “(1) the risk that unnamed class members will forfeit their right to pursue the waived claim in future litigation”; (2) the value of the waived claim; and (3) the strategic value of the waiver, which can include the value of proceeding as a class (if the waiver is key to certification).” In its opinion, the Fifth Circuit directed the district court to undertaken this analysis on remand. A central aspect of this inquiry is the res judicata effect of the waiver, which the Fifth Circuit said was “uncertain here.” Indeed, the Court observed that “courts have inconsistently applied claim preclusion to class actions.”

The Court of Appeals provided a bit of a road-map to the district court, identifying – as possible options on remand –

  • declining to certify the class because of preclusion risks
  • certifying the class, but tailoring the notice and opt-out procedure to alert the class to the risk of preclusion
  • concluding that the benefits of proceeding as a class outweigh any preclusion risks or
  • defining the class in a way to exclude individuals who have a quarrel with the condition adjustment.

Stay tuned, and consider carefully how class representatives and courts resolve the tension between waiving the claims of absent class members and strategically limiting the class to claims that can actually be certified.

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Recent Filings – April Digest

View Amanda Pickens’ Complete Bio at robinsonbradshaw.comNot every class action court filing in North and South Carolina becomes a full-length post on our blog. Here is a recap of April’s filings:

Sanda, et al. v. Samsung Electronics America, Inc., et al., No. 6:17-cv-00988 (D.S.C. April 17, 2017) (putative class action brought under federal and various state consumer protection laws alleging defendants manufactured defective home washing machines that caused damage during normal usage and additionally had a flawed recall of this product.)

Krebs, et al. v. Charlotte School of Law, LLC, et al., (originally filed in M.D.N.C. on December 22, 2016 – Case No. 1:16-cv-1437 and transferred to W.D.N.C. on April 10, 2017 – Case No. 3:17-cv-190) (putative class action brought by law students alleging the school misrepresented its compliance with ABA requirements and seeking refund/reimbursement of tuition and loan discharge.)

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