CVS Pharmacy has agreed to pay $15 million to settle long-running claims asserted by a nationwide class of consumers who allegedly received unsolicited flu shot reminder calls. The parties filed a motion for preliminary approval of the class settlement this week in the United States District Court for the Northern District of Illinois.
The underlying complaint was filed in 2014 by named plaintiffs Carl Lowe and Kearby Kaiser. The plaintiffs claimed that CVS made hundreds of thousands of robocalls to remind prior patients to get their flu shots and to entice them with other promotional offers. The complaint alleges that CVS and its in-store MinuteClinic service violated the Telephone Consumer Protection Act by autodialing cellphone numbers using prerecorded messages. The complaint further alleges that the defendant violated the Illinois Automatic Telephone Dialers Act by blocking its number from caller ID and making the calls without the recipients’ consent.
The complaint asserted at least three theories of potential liability. First, the plaintiffs asserted that CVS failed to obtain prior express consent from any consumer before making the automated calls. Second, the plaintiffs claimed, in the instance where it may have obtained consent from a consumer, that CVS made calls after the cellphone number was reassigned to another person who had not provided consent. Third, they alleged that even if a consumer had consented to the health-related communications, the consent would not have included promotional offers also included in the prerecorded messages.
Likewise, CVS asserted multiple defenses. The pharmacy alleged that the inclusion of a flu shot reminder in its calls equated to an emergency sufficient to fall under the TCPA’s emergency-purpose exception. CVS also asserted that calls to reassigned numbers were lawful as long as CVS was attempting to reach its customers.
After more than five years of contentious litigation, including two failed day-long mediations and multiple rounds of motions practice, the parties were able to reach a proposed class-wide settlement, which now must be approved by the Court. As part of this agreement, the parties have asked the Court to certify the class for purposes of the settlement. The settlement class would consist of up to 233,079 individuals and would include all persons in the United States whom CVS called in MinuteClinic’s 2013 flu shot reminder campaign using an unattended message that offered a CVS Pharmacy retail coupon, where: (1) the call was made to a cell phone number, or (2) the person was an Illinois resident.
The settlement requires CVS to deposit $15 million into a non-reversionary settlement fund, which would pay out approximately $35 to each class member, which is based on a pro-rata share of the claims made. In addition to the settlement payments for class members, the settlement fund would be used to pay the notice and administration costs, the court-approved incentive award for the named plaintiff, and the court-approved attorneys’ fees and costs. Specifically, the motion states that plaintiffs will seek approval for a $15,000 incentive award to be paid to the named plaintiff and $5 million—or one third of the settlement fund—to be paid for attorneys’ fees. Any remaining funds not claimed or deposited will be sent to the Illinois Bar Foundation as a cy pres recipient.
This settlement is a reminder that the TCPA remains a potent weapon and that substantial settlements may be required to resolve matters, even where companies have viable defenses. For example, this case involved both liability and class certification defenses, centered around the issues of prior consent and whether the calls were subject to the emergency-purpose exception. However, issues of consent may not be as clear cut when dealing with communications that involve two components, such as the promotional message sent to the class members in this case. Companies are also facing substantial uncertainty in the current law relating to liability in cases of reassigned numbers, where a former cellphone subscriber did consent to receive calls but the number was transferred to a different consumer who did not provide prior express consent. These issues have been heavily litigated over the last several years and the law is continuously changing in light of court decisions and pending regulatory action.