$9.25 Million TCPA Class Action Settlement by American Express Preliminarily Approved in Illinois Federal Court

On July 6, 2016 a federal judge in Illinois gave initial approval to a $9.25 million settlement between American Express Co., American Express Centurion Bank (together AmEx), and consumers who said the company made illegal debt collection calls and telemarketing calls to their cell phones. The case is Ossola v. Am. Express Co., (Northern District of Illinois, No. 13-CV-04836).

The case has two separate settlement agreements:

1. In the first, The Honorable John Z. Lee gave preliminary approval to a $8.25 million Settlement Agreement (Telemarketing Settlement) covering 798,000 class members who alleged that they had received automated telemarketing calls from AmEx and/or a third party (Alorica) hired by Amex in violation of the Telephone Consumer Protection Act (TCPA).
2. In the second, Judge Zee approved a $1 million Settlement Agreement involving 3,200 class members who had alleged that AmEx violated the TCPA by having a third party (West Asset Management, Inc.) make automated debt collection calls to their cell phones.

The Telemarketing Settlement

The Telemarketing Settlement indicates the parties reached this settlement “after several years of hard-fought litigation and a robust mediation before the Honorable Morton Denlow (Ret.) of JAMS and subsequent settlement discussions.”

Amex had argued:

1. AmEx had consent for any calls placed to the named Plaintiffs and the putative class
2. The Federal Communications Commission (FCC) rulings as to the definition of an “automatic telephone dialing system” (“ATDS”) under the TCPA would not be upheld by the D.C. Circuit
3. The claims of certain Telemarketing Class Members were subject to arbitration agreements that American Express maintains would extinguish Telemarketing Class Members’ ability to pursue their TCPA claims outside of the arbitration process
4. A class could not be certified because of inherently individual issues among Telemarketing Settlement Class Members

The Telemarketing Settlement Class is defined as follows:

All persons nationwide within the United States who, on or after July 3, 2009 through March 15, 2016, received a telemarketing call from Alorica Inc. (or its agents or affiliates) on behalf of American Express, in connection with the marketing of American Express small business charge and/or credit cards to potential customers, to a cellular telephone number through the use of an automatic telephone dialing system, predictive dialer and/or artificial or prerecorded voice.

Class Counsel has learned through informal confirmatory discovery that the Telemarketing Settlement Class is comprised of approximately 798,626 people, based on unique cellular telephone numbers throughout the United States.

The Telemarketing Settlement requires American Express to create a non-reversionary Telemarketing Settlement Fund of $8,250,000. While it is not possible to predict the precise amount of each Award until all claims have been submitted, Class Counsel, based on their experience in similar TCPA class actions, estimate awards of $130 assuming a five percent claim rate after deductions for Court-approved attorneys’ fees and costs, any Court-approved incentive award to the Plaintiff, and costs of notice and claims administration.

The Telemarketing Settlement Agreement provides that Plaintiff may petition the Court for a Class Representative service award, and AmEx has agreed not to object so long as the award sought does not exceed $10,000.

Prior to the Final Approval hearing, Class Counsel will apply to the Court for an award of attorneys’ fees and costs. Class Counsel will seek 33% of the class benefit. The Parties have not agreed on an amount of fees and AmEx has reserved its right to oppose Class Counsel’s motion and the amount requested.

The Debt Collection Settlement

This Settlement agreement contained the same language as the Telemarketing Settlement regarding “several years of hard-fought litigation and a robust mediation before the Honorable Morton Denlow (Ret.) of JAMS and subsequent settlement discussions.”

AmEx raised the same four arguments noted above in defense of this portion of the case.

The Debt Collection Settlement Class is defined as follows:

All persons nationwide within the United States who, on or after July 3, 2009 through December 31, 2013, received a call from West Asset Management, Inc. (or its agent or affiliate) in reference to a debt owed to American Express, to any of the 3,219 cellular telephone numbers on the Class List through the use of equipment alleged to be an automatic telephone dialing system, a predictive dialer and/or an artificial or prerecorded voice, where (i) the call was made in connection with the account of a “deceased customer” and/or (ii) the person called did not have a contractual relationship with American Express.

Class Counsel has learned through both formal discovery and additional informal confirmatory discovery that the Debt Collection Settlement Class is comprised of approximately 3,219 people, based on unique cellular telephone numbers throughout the United States.

The Debt Collection Settlement requires American Express to create a non-reversionary Debt Collection Settlement Fund of $1,000,000. While it is not possible to predict the precise amount of each Award until all claims have been submitted, Class Counsel, based on their experience in similar TCPA class actions, estimate awards of at least $500 for each claimant assuming a twenty percent claim rate after deductions for Court-approved attorneys’ fees and costs, any Court-approved incentive award to the Plaintiff, and costs of notice and claims administration.

The Debt Collection Settlement Agreement provides that Plaintiff may petition the Court for a service award, and AmEx has agreed not to object so long as the award sought does not exceed $5,000 each.

Prior to the Final Approval hearing, Class Counsel will apply to the Court for an award of attorneys’ fees and costs. Class Counsel will seek 33% of the class benefit. The Parties have not agreed on an amount of fees and AmEx has reserved its right to oppose Class Counsel’s motion and the amount requested.

insideARM Perspective

This case is the third significant TCPA class action settlement insideARM has reported on in the last 10 days. See:

• Citizens Bank to Pay Over $4.5 Million to Settle TCPA Suit
• Wells Fargo Will Pay $16.3 Million to End TCPA Suit

AmEx had filed a Motion to Stay these cases pending the outcome of an appeal of the Federal Communication Commission’s July 2015 Declaratory Ruling and Order. That case, ACA International v. FCC (No. 15-cv-01211), is now before the U.S. Court of Appeals for the District of Columbia. That motion was denied.

It appears that the uncertainty surrounding that case, together with the other defenses raised by AmEx, led to this settlement.