A recent $40 million TCPA class action settlement of a case filed in Florida state court is noteworthy not only for its unusually high dollar settlement, but also for who benefitted from the $40 million windfall. Before diving into those details, it is necessary to understand what class actions are, and the logic behind them.
Class Action Primer
As most readers of this article may already know, a class action is a type of lawsuit where the plaintiff is suing on behalf of a large group or class of people who were harmed in the same way by the same defendant.
The theoretical purpose behind consumer class actions is to serve justice. As an example of this, consider this scenario drawn from an actual consumer class action case brought against the manufacturer of a powdered guacamole mix that included a picture of an avocado on the box, but which did not, in fact, contain any avocados, which most consumers understand to be a traditional ingredient in guacamole.
The product was distributed to grocery chains throughout the country and was purchased by a large number of consumers for about $2.00, some of whom may have bought it under the mistaken impression that its contents included avocado, in light of the photo on the package. At least one of those people was upset enough about being misled by the photo to take legal action.
Naturally, no one in their right mind is going to file a lawsuit for $2.00. The harm suffered by a single individual is far too small to justify such an action, which means the party responsible for causing this tiny amount of harm will go unpunished.
This is why class actions were developed. If a million consumers purchased a $2.00 product under false pretenses, one of them can file class action for $2 million against the manufacturer of that product. If the case is settled, each of the purchasers are theoretically entitled to a percentage of the recovery.
That’s the theory- but in practice, class members are rarely reimbursed in full, and often never receive a penny. With that background in mind, let us turn to the case at hand.
Deshay v. Keller Williams
In June of 2022, Beverly Deshay filed a class action against the real estate franchisor Keller Williams, which she alleged made several unsolicited prerecorded telemarketing calls at her DNC-listed number.
Of course, because the case was filed as a class action, in theory the plaintiff was not suing on behalf of herself alone, but on behalf of the thousands of other consumers who received the same type of call from the defendant to their DNC-listed number. Following some initial litigation, which included at least three mediations, Keller Williams agreed to settle the claim for $40 million.
The Terms of Settlement
Under the terms of the settlement, the representative plaintiff Beverly Deshay is to receive $5,000. As for the other two million class members, those who submit claims will receive up to $20 apiece, while the plaintiff’s attorneys will receive a whopping $10.2 million.
Keep in mind that the TCPA includes a statutory damages provision that allows consumers to collect up to $1,500 for each call. Yet, thanks to Ms.Deshay’s attorneys, the most each one can collect will be a paltry $20, which isn’t even enough to take a family to the movies, and most of them won’t even get that much.
Meanwhile, the plaintiff’s attorneys pocket a cool $10 million. If that doesn’t sound like justice to you, you are not mistaken.
In addition, under the terms of the settlement, Keller Williams is required to allocate $7.8 million to refine its dialing practices, which includes forming a TCPA task force to oversee compliance on the part of its franchisees, and providing them with compliance resources and guidance - essentially, what The Blacklist Alliance offers its members at a fraction of the cost.
The manner in which the parties agreed to distribute the $40 million settlement clearly demonstrates who benefits from TCPA class action litigation, and it’s definitely not consumers.