A Texas-based payment processor agreed on November 1 to pay $9 million to settle a putative class action brought under the Telephone Consumer Protection Act in the United States District Court for the Northern District of California.  According to the plaintiffs, Pivotal Payments, Inc. failed to ensure that a third party it hired to make marketing calls on its behalf complied with the TCPA, which prohibits telemarketing calls to cellular telephone numbers without call recipients’ prior express written consent.

Pivotal Payments allegedly included a provision in its contract with the marketing firm that mandated TCPA compliance.  However, the marketing firm allegedly violated the contract by calling cell phone numbers without first obtaining the recipients’ prior express consent.  Although Pivotal Payments initially filed a third-party complaint against the marketing firm seeking indemnification, it voluntarily dismissed such claims less than a month later.

After more than a year of discovery, Pivotal Payments and the putative class agreed to settlement terms for a class of over 1.9 million members.  Pivotal Payments agreed to pay $9 million to settle the TCPA claims.  Class members are each expected to receive between $20 and $60.  The settlement fund will also pay for an incentive award to the named plaintiff ($25,000), settlement administration costs (approximately $50,000), and class-action attorneys’ fees and costs (approximately $2.25 million).

It is also important to note that the District of Columbia Circuit Court of Appeals has the potential in the near future to upend litigation under the TCPA, one of the nation’s most frequently litigated statutes, as it considers the legality of the FCC’s 2015 Declaratory Ruling and Order that greatly expanded the statute’s purview. With oral argument completed in October 2016, a decision is likely imminent.

Troutman Sanders LLP has unique industry-leading expertise with TCPA compliance, with experience gained trying TCPA cases to verdict and advising Fortune 50 companies regarding their compliance strategies.  We will continue to monitor regulatory and judicial interpretation of the TCPA to identify and advise on potential risks.