JP Morgan Chase to Pay $3.75 Million to Settle TCPA Suit on Calls to Reassigned Phone Numbers

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Pursuant to a motion filed in Florida federal court last Friday, JPMorgan Chase Bank NA (Chase) has agreed to pay $3.75 million to resolve a proposed class action in alleging the bank autodialed cellphone numbers that were reassigned from former customers to new users who hadn’t agreed to receive calls.

The case, James v. JPMorgan Chase Bank, NA (U.S. District Court, Middle District of Florida, Case No. 8:15-cv-02424) involved autodialed calls made by Chase intended for its own customers, regarding Chase deposit accounts, but that reached parties different than those Chase was trying to call.

Plaintiffs had filed suit in October of 2015 alleging that Chase violated the Telephone Consumer Protection Act (TCPA) by placing autodialed calls to cellular telephone numbers that were reassigned from Chase customers to new cell phone subscribers or customary users and as a result the company did not have the call recipients’ prior express consent to make such calls. Chase denied any liability or that its practices violate the TCPA.

On February 12, 2016 the court ordered the parties to utilize mediation in an attempt to resolve the matter. The parties engaged in a full-day mediation session on April 11, 2016. While the parties did not settle the case at that session, they made significant progress and ultimately agreed to the settlement outlined herein.

On April 26, 2016 the parties filed a notice that the case had been settled in principle and indicated that details of the settlement would be forthcoming.

Discovery showed that Chase called up to 675,000 unique cellular telephone numbers associated with its deposit accounts business line from January 1, 2014 through March 22, 2016, where Chase’s records contain a notation indicating that they called a wrong or reassigned number. (Of note, once Chase placed a notation on an account indicating that its customer’s phone number was incorrect, it was Chase’s policy to immediately cease future calls to that phone number.)

As noted above, Chase had vehemently disputed that it violated the TCPA. To that end, Chase raised a host of defenses to Plaintiffs’ claims, including:

  • At the time of this settlement, the Supreme Court had yet to issue a ruling in Spokeo v. Robins, No. 13-1339, on the question of whether the alleged violation of a federal statute, without anything more, confers Article III standing. A broad, adverse ruling by the Supreme Court could have eliminated Plaintiffs’ claims, and those of the class, in their entirety.
  • Also at the time of the settlement, the D.C. Circuit Court of Appeals was weighing a consolidated appeal of the Federal Communications Commission’s July 10, 2015 Declaratory Ruling and Order (“2015 FCC Order”). Adverse action by the D.C. Circuit could have profoundly negative consequences for Plaintiffs’ claims.
  • The 2015 FCC Order, while favorable for consumers, included a one-call safe harbor for calls made to reassigned cellular telephone numbers, like those at issue here. Because of this safe harbor, Chase may have a viable defense to many of the calls it made to absent class members.
  • Plaintiffs also faced significant risk that at least some of their claims would be dismissed under the “emergency purposes” exemption of the TCPA. In enacting the TCPA, Congress provided an express exemption for calls “made for emergency purposes.” Discovery in this case indicates that some of the calls to class members (and those of the class representatives) were made for the purpose of notifying consumers of potential fraudulent activity on their bank accounts. Had this case proceeded to summary judgment, Chase would vigorously argue that these calls are exempt from any liability, even when made to a person other than a Chase customer.
  • Chase also contended that it maintained robust safeguards to ensure compliance with the TCPA. While Chase vehemently disputes any liability, to the extent any violations did occur, Chase would argue that any violation of the TCPA was unintentional and would not support increased statutory damages.
  • Plaintiffs faced significant risks in obtaining class certification. In particular, because Chase necessarily does not have the name and address of each person it called at the wrong number (but does have the cellular telephone numbers it dialed), Chase would argue that the class is not ascertainable. Chase also would argue that individualized issues predominate (such as whether a call was made for an emergency purpose, whether class members suffered “concrete” harm to confer Article III standing, and whether a call truly reached a wrong number), and that a litigation class should not be certified for a host of additional reasons. Indeed, several courts in this Circuit have refused to certify TCPA class actions, making the likelihood of certification uncertain.

The settlement resolves this litigation on a nationwide basis. The settlement provides for a non-reversionary common fund of $3.75 million and direct mail notice to all known class members.

The Agreement defines the class as follows: All persons in the United States who received calls from Chase between January 1, 2014 and March 22, 2016 that (a) were directed to a phone number assigned to a cellular telephone service, (b) were wrong number calls – in that the subscriber or customary user of the phone number called was different from the party that Chase was trying to reach, (c) were placed using an automatic telephone dialing system, and (d) were directed to a phone number associated with a Chase deposit account according to Chase’s records.

Participating class members will receive a pro-rata share of the $3.75 million settlement fund, after expenses are deducted. Thus, the common fund equates to more than $5.55 for each potential class member. And, while the exact per-class-member recovery will not be known until class members are provided with an opportunity to submit claims, given historical claims rates in TCPA cases (approximately 4-6%), each participating class member is likely to receive between $45 and $75, after deducting notice and administration costs, attorneys’ fees and expenses, and incentive awards for the class representatives.

Subject to Court approval, the costs of notice and administration, an award of attorneys’ fees and expenses, and incentive awards for the class representatives also will be deducted from the $3.75 million fund. Chase agrees not to oppose incentive awards to the class representatives of $5,000 each. Plaintiffs also will seek the reimbursement of class counsel’s expenses not to exceed $15,000, and an award of attorneys’ fees not to exceed 30 percent of the common fund. Chase has not agreed to these attorneys’ fees and expenses and may oppose the requested attorneys’ fees and expenses in whole or in part. Moreover, the Court’s approval of such fees and expenses is not a condition of the settlement.

insideARM Perspective

This is an interesting settlement of TCPA claims where the alleged violations are simply calls to reassigned numbers. Depending on your perspective, there are a number of ways to look at this result.

First, Chase was attempting to call phone numbers for its clients that were subsequently reassigned. The record is not perfectly clear on whether the clients provided all of the numbers, or whether Chase had obtained the numbers through public databases.  It is also not clear from the record whether Chase had prior express consent to call those numbers. The issue of calls to re-assigned numbers is very challenging.

Second, the potential class was substantial. Exposure was great.

Third, the defenses raised by Chase were thorough, relevant, and timely.

It appears that the settlement was probably a good compromise for all parties.

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Posted in Credit Grantors, Dialers, Featured Post, TCPA .

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