Krakauer Saga Continues: District Court Makes Interesting Rulings on Parties’ Objections As It Slogs through Claims Administration Process

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Well, TCPAWorld, here is a brief update on the Krakauer case, on which the Czar recently reported, wherein the Fourth Circuit deemed the TCPA’s DNC provisions a “Model of Clarity.” However, the developments at issue here result from the district court’s efforts to wade through the litany of claims related to that multi-million dollar judgment. See Krakauer v. Dish Network LLC, 2019 U.S. Dist. LEXIS 114313 (M.D.N.C. July 10, 2019).

A quick bit of background: in Krakauer, the Fourth Circuit affirmed a $61mm jury verdict against Dish related to 51,119 calls to 18,066 individuals on the DNC Registry. This affirmance left the district court with the arduous task of allocating out that verdict to the aggrieved class – 11,000 of whom had easily identifiable claims and were paid out. However, the district court appointed a claims administrator and special master to resolve the approximately 7,000 remaining class member claims through a claims verification process. The claims administrator processed all the claims, consistent with the court-mandated claims procedure, and the special master heard objections from both sides and made a recommendation to the district court that (1) class counsel’s objections be denied, and (2) that Dish’s objections be denied-in-part and granted-in-part. Procedurally boring, yes; but the meat is in the objections, which are a bit fascinating.

First, class counsel sought to validate 26 claims which were postmarked after the claim filing deadline, arguing there would be no prejudice to Dish. The district court, however, saw through this objection – indeed, why wouldn’t untimely-filed claims prejudice Dish when all class members were (1) duly notified of the applicable claims deadline, and (2) the district court, for its part, had already extended the claims deadline so that all class members would have a reasonable opportunity to submit their claims? Objection overruled.

Second came Dish’s three objections. Dish primarily took issue with the special master’s validity determinations for three small groups of claims. With respect to 135 claims, Dish believed neither the claims administrator nor the special master had sufficient nor “persuasive enough” evidence to approve these 135 claims as valid. Specifically, Dish argued there was no corroborating evidence supporting these claims (i.e., to connect the claimant with a called DNC number), and that the Five9 data (which derived from a cloud-based calling software) was unreliable when used to identify many of the claimants.

The district court rejected this first objection for two primary reasons. First, the district court concluded that its “Claims Procedures” order did not require the claims administrator to consider corroborating evidence, rather its order “stated that supporting documentation would be ‘helpful, but [it is] not required[.]’” Second, the court determined that Dish’s objection that the Five9 data was unreliable was meritless because, according to the court, the data was reliable enough that Dish used it to make the calls in the first place, so it was now sufficiently reliable for purposes of determining claim validity – ouch. According to the court, to prevail on its objection, Dish must show “credible indicia of fraud.” Absent that showing, “[a] claim form in which a claimant attests he is entitled to relief . . . is strong evidence that this person is a proper claimant . . . .” Objection denied.

In Dish’s second objection were a group of 9 claims that Dish contended were similarly situated to 37 other invalidated claims, and thus, Dish argued, all 46 of those claims should be invalidated together. Specifically, Dish argued that the 9 claims should have been ruled invalid alongside the other 37 claims because the names of the claimants were different from the names of the individuals associated with the phone numbers in the data sources. Again, however, the court refrained to its fraud standard, finding that “Dish has not identified any indication of fraud;” rather, the data showed that either only one individual was associated with each phone number, or if another individual was identified, that individual had the “same or a similar address as the claimant, tending to show individuals in the same household.” Because “each claim had unique characteristics,” Dish’s objection was overruled.

Lastly, and most interestingly, the district court confronted Dish’s third objection, which was somewhat novel. Dish argued that “TCPA claims abate upon death” and claims filed on behalf of an estate for a deceased claimant should be denied on that basis. However, the court noted that “[u]nder federal common law, ‘[i]t is well-settled that remedial actions survive the death of the plaintiff, while penal actions do not.’” Krakauer, 2019 U.S. Dist. LEXIS 114313, at *15 (citing Case of One 1985 Nissan, 300ZX, VIN: JN1C214SFX069854, 889 F.2d 1317, 1319 (4th Cir. 1989)). Moreover, the court noted that, while the Fourth Circuit has not considered “whether TCPA claims abate at death,” “the Sixth Circuit has recently held that TCPA claims are remedial and survive a plaintiff’s death under federal law.” Id. (citing Parchman v. SLM Corp., 896 F.3d 728, 738-41 (6th Cir. 2018)). Because “the Fourth Circuit[] [has] repeated[ly] characterize[ed] the TCPA as a remedial statute,” the district court denied Dish’s objection on this issue as well.

In its final analysis of the abatement-at-death objection, however, the district court included an interesting footnote, footnote 5, where the court described Dish’s violations as “undeniably widespread, [and] including ‘over 50,000 connected calls to over 18,000 private individuals[,]’” but noting that such a “widespread” violation does not amount to a general harm to the community at large – meaning, that while Dish’s calls caused a “harm [that] is widely shared[, that] does not mean it is a general public wrong. [Instead], [t]hese are harms felt by identifiable individuals, as individuals. They are not harms felt by the general public, as a community.” Krakauer, 2019 U.S. Dist. LEXIS 114313, at *17 n.5 (citing Parchman, 896 F.3d at 739).

As is often the case, the devil is sometimes in the footnotes. The court’s observation that TCPA violations “are not harms felt by the general public” may lend support to arguments that the injunctive remedies provided under the TCPA are not “public” in nature, but rather “private,” and are therefore not subject to the California Supreme Court’s decision in McGill v. Citibank, N.A., 393 P.3d 85 (2017) and the Ninth Circuit’s recent decision in Blair v. Rent-A-Center, Inc., 2019 U.S. App. LEXIS 19476 (9th Cir. June 28, 2019), which hold that, as a matter of California public policy, corporations cannot require consumers to waive their right to seek public injunctive relief in arbitration agreements.

Interesting stuff. More to come.

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