November 15, 2017
A recent Law 360 story by Diana Novak Jones, “Class Attys Fight Fee Cut at 7th Circ. In Pharmacy TCPA Row,” reports that counsel for a class of pharmacies asked the Seventh Circuit to allow them to collect what a pharmaceutical distribution company agreed to pay after a federal judge slashed attorneys’ fees and the plaintiffs’ incentive awards negotiated as part of a settlement in a Telephone Consumer Protection Act (TCPA) class action.
Counsel for the class of pharmacies that say they received unsolicited faxes from Cochran Wholesale Pharmaceutical Inc. told the appellate court the district court’s decision to reduce their fees and the named plaintiffs’ incentive awards unfairly allowed Cochran to dodge the full amount it said it would pay to exit the suit.
Class counsel Phillip Andrew Bock of Bock Hatch Lewis & Oppenheim LLC told the courtmthat U.S. District Judge Staci Yandle’s decision to base the fees on the amount class members actually claimed and not the amount Cochran agreed to pay put money back in Cochran’s pocket. Cochran agreed to pay $233,333 in attorneys’ fees and $15,000 to each named plaintiff, but Judge Yandle reduced the fees to just more than $73,000 and the incentives to $1,000 each.
The incentive award in this case is “actually a disincentive,” Bock told the Seventh Circuit, “because the amount is actually less than the person could get [if they sued] as an individual.” The 2016 suit accused Cochran, a Georgia-based pharmaceutical distribution company, of sending unsolicited faxes advertising its services to pharmacies in violation of the TCPA.
The parties went to mediation not long after the suit was filed, and some discovery revealed that the company may have sent the advertisements to 16,846 different fax numbers between April 19, 2012, and Nov. 1, 2016. A settlement was reached, and Cochran agreed to pay up to $700,000. That cash would cover $125 per claim from each class member, $233,333 in attorneys’ fees and $15,000 to each named plaintiff, according to the settlement agreement.
Judge Yandle granted the deal preliminary approval, and notice was sent to the more than 16,000 class members. Of those, 1,765 submitted claim forms, resulting in $220,625 in payments.
In April, Judge Yandle granted the settlement final approval but reduced the fees and incentives. She used the amount paid out to class members to calculate the one-third portion going to attorneys, resulting in a fee award of $73,468, and cut the plaintiffs’ incentives down to $1,000 because the case didn’t require much of their input.
Sitting on the panel, Circuit Judge Diane Sykes told Bock she thought the court’s holding in another TCPA junk fax case made it so class counsel couldn’t collect on the full $700,000 Cochran agreed to pay. The ruling found that TCPA cases create discrete injuries, so calculating attorneys’ fees based on a common fund doesn’t work here, she said.
The case is Camp Drug Store, Incorporated v. Cochran Wholesale Pharmaceutical Inc., case number 17-2086, in the Seventh Circuit Court of Appeals.