Supreme Court: Companies Cannot Cut Class Actions by Paying Off Individual Plaintiffs

Defendant corporations have an incentive to quickly settle class actions, especially when facing a significant financial judgment against them. What happens when a company makes an offer to settle with an individual plaintiff to end the entire class action? The Supreme Court has ruled in Campbell-Ewald, Co. v. Gomez that a lawsuit can proceed even if a business offers the primary plaintiff the maximum amount of individual recovery in a case.

Can a defendant-company buy out a single plaintiff?
Defendant corporations have an incentive to quickly settle class actions, especially when facing a significant financial judgment against them. What happens when a company makes an offer to settle with an individual plaintiff to end the entire class action? The Supreme Court has ruled in Campbell-Ewald, Co. v. Gomez that a lawsuit can proceed even if a business offers the primary plaintiff the maximum amount of individual recovery in a case.

Plaintiffs have a right to recovery for unwanted text messages
An advertising company, Campbell-Ewald, a division of Interpublic Group of Cos., had a Navy recruiting contract to send text messages to approximately 100,000 people of enlisted age. Rather than text those who had opted-in to the advertising messages, the company texted individuals who had not consented to receive the communications. The Telephone Consumer Protection Act prohibits using an auto-dialer to call or text unless the recipient gave prior consent. A 40-year-old California man received an unwanted recruitment text and sued the advertising company on behalf of all individuals who were on the receiving end of similar messages.

Telephone Consumer Protection Act and maximum damages
Companies have used this strategy to effectively fend-off class action lawsuits under federal laws, like the Telephone Consumer Protection Act, which caps awards for individual plaintiffs who cannot prove economic harm. In this case, Campbell-Ewald offered the plaintiff maximum damages ($1500.00) for receiving unwanted text messages. After the plaintiff declined the offer, the company moved to dismiss the suit arguing that there was no dispute since the plaintiff was offered the maximum he could recover through litigation.

Supreme Court rules that companies cannot end class actions with an individual settlement offer
In a 6-3 decision, the Supreme Court agreed with a federal appeals court in San Francisco, allowing the lawsuit to proceed. Justice Ruth Bader Ginsburg wrote the opinion, which acknowledged that the company was seeking to “avoid a potentially adverse decision, one that could expose it to damages a thousand-fold larger,” than the settlement offer. The case is a win for consumers and prevents future defendant-companies from attempting to buy out a single plaintiff to end a class action lawsuit.

Rights for individual consumers in Minnesota
Many consumers in Minnesota and nationwide do not realize that they are protected by federal law against unwanted telemarking calls and text messages. Individuals who are targeted by telemarketing companies have the right to take legal action, including a class action, to represent those who were subject to unwanted communications. If you have received one or more unwanted text message or call, you may have the right to financial recovery.

Wanta Thome Jozwiak & Wanta LLP is currently investigating cases involving unwanted communication, including calls and text messages. We are prepared to investigate your claim, assess personal and financial damages, and aggressively pursue the full compensation you are entitled to. For more information, please call 612-252-3570.