On October 28, the parties to a Telephone Consumer Protection Act class action lawsuit pending in the Southern District of Florida reached a $6 million settlement. The settlement agreement resolves the lawsuit filed by Brian Keim against Pizza Hut, LLC and multiple franchisees in which Keim alleged that he and a class of individuals received unsolicited promotional text messages from the defendants between November 2010 and January 2013. While Pizza Hut is named in the lawsuit, the settlement will be funded by the franchisee defendants.
The text messages at issue were sent to the class members due to third parties providing the class members’ numbers to the defendants as part of a “friend-forwarder” campaign.
The settlement provides each of the approximately 13,000 class members with the opportunity to file a claim to recover up to $400. Keim indicated to the Court in his motion for preliminary approval that based on the average claims rate, it is expected each participating class member will receive the full $400.
This settlement comes after seven years of litigation and after the Court certified a class in December 2018. Keim filed the purported class action in 2012 against the franchisee defendants and subsequently amended the complaint in 2015 to add Pizza Hut as a defendant. Pizza Hut filed a motion for summary judgment, arguing it should be dismissed because it was not involved in the text messaging campaign and it could not be held vicariously liable. The motion was not ruled on prior to the settlement. The case also involved two appeals to the Eleventh Circuit – one of which was pending at the time of settlement.
The settlement agreement indicates that Keim’s counsel is seeking fees of up to one-third of the settlement fund or $2 million. Keim is seeking $10,000 for his work in representing the class.
This settlement highlights the potential for significant exposure companies must consider when conducting promotional text messaging campaigns. The case also demonstrates the risk franchisors like Pizza Hut face as the result of conduct by franchisees.