Well here’s something you don’t see every day. A TCPA settlement that resulted in so much money for the class that the Court ordered some of it to be given away to the government. Plaintiff’s TCPA class counsel had advocated for a second distribution as to any unclaimed settlement funds, and Defendants opposed it in Physicians Healthsource v. A-S Medication Solutions, Case No. 12 C 5105, 2020 U.S. Dist. LEXIS 99778 (N.D. Ill. June 8, 2020). The judge found a new path to resolve this point. As background, the court had entered a judgment for $5.7 million, and then denied the Defendants’ motion to amend the judgement. The Defendants appealed, but the Seventh Circuit affirmed the judgment. This judgment entitled class members to receive approximately $500 each.
The court then directed the parties to file papers detailing how the judgment distribution ought to be carried out. The Plaintiff proposed a second distribution in the event of leftover unclaimed funds. Unsurprisingly the Defendants took the position that a second distribution would be inappropriate. They contended that it would result in class members obtaining more money than the $500 statutory maximum each were entitled to (Plaintiff’s counsel denied this was a possibility). On the same note, the Defendants took the position that the court did not need to distribute the funds in a cy pres manner, as it would be inappropriately punitive and unconstitutional. Consequently, the Defendants argued any unclaimed funds should be returned to them.
The Court ordered an approach that neither party had considered. The Court set the tone by noting the case was not resolved by way of a settlement, so there was no basis to return any funds to the Defendants who instead had a judgment imposed on them after extensive litigation. The Court did agree with the Defendants’ contention that a second distribution could result in an excessive, and thus inappropriate recovery above the $500 maximum statutory fine for class members. The Court illustrated there were two options left on the table – a cy pres award, or have any excess funds escheat to the government. It chose the latter in a first of its kind in TCPAWorld. We will watch this for developments as the schedule for distribution unfolds.