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Family Medicine Pharmacy, LLC v. Trxade Group, Inc.

United States District Court, S.D. Alabama, Southern Division

March 17, 2017

FAMILY MEDICINE PHARMACY, LLC, Plaintiff,
v.
TRXADE GROUP, INC. and WESTMINSTER PHARMACEUTICALS, LLC, [1]Defendants.

          FINAL JUDGMENT AND ORDER APPROVING CLASS SETTLEMENT

          KRISTI K. DuBOSE CHIEF UNITED STATES DISTRICT JUDGE.

         This action is before the Court on the Joint Motion for Final Approval of Settlement and Entry of Final Judgment (doc. 34), Plaintiff Family Medicine Pharmacy, LLC's Amended Memorandum in support (doc. 36), the Notice of Compliance filed by the Claims Administrator JND Legal Administration, d/b/a as JND Class Action Administration (doc. 33), the Affidavit in support (doc. 33-1), Plaintiff and Class Counsel's Motion and Memorandum for Award of Attorney's Fees, Expenses, and Incentive Payment for Class Representative (doc. 31), the Affidavits in support (docs. 31-1, 31-2), and the Response filed by Defendants Trxade Group, Inc., and Westminster, LLC (doc. 32). Upon consideration of the Motions, briefs, and supporting evidentiary submissions, the parties' respective positions as presented at the fairness hearing held February 21, 2017, and for the reasons set forth herein, the Motions are GRANTED. Accordingly, the Court enters this Final Judgment and Order Approving Class Settlement.

         I. Background

         On November 18, 2015, Plaintiff filed this class action complaint alleging that Defendants violated the Telephone Consumer Protection Act of 1991, 47 U.S.C. § 221, as amended by the Junk Fax Prevention Act of 2005 (the TCPA). Specifically, Plaintiff alleged that Defendants violated the Act by sending or “fax blasting” thousands of unsolicited faxed advertisements to Plaintiff and the putative class members to generate sales leads and advertise the commercial availability of Defendants' pharmaceutical products. Plaintiff also alleged that even with consent to receive faxed advertisements, the TCPA requires a notice on the advertisement that provides a cost-free mechanism to opt out of receipt, but Defendants violated the TCPA by omitting that notice.

         In May 2016, Plaintiff notified the Court that the action was scheduled for mediation facilitated by the Honorable John L. Carroll to be held on June 6, 2016 (doc. 24). The mediation was successful and the parties reached a settlement as memorialized in the Class Settlement Agreement (doc. 26-1). According to the terms of the Class Settlement Agreement, a Settlement Fund of $200, 000.00 was created.

         In August 2016, Plaintiff filed an unopposed Motion for Preliminary Approval of Class Action Settlement and Certification of Settlement Class with supporting documents (doc. 25, doc. 26, docs. 26-1 through 26-9). In the Class Settlement Agreement, the parties agreed to a Class Period defined as “January 2012 to the date of the Court's Preliminary Approval of this Class Action Settlement”, November 4, 2016, and a Settlement Class definition as follows:

Any and all individuals and/or entities located in any state, district, or territory of the United States that received one or more advertisements or solicitations via facsimile from Defendants during the Class Period.

(Doc. 26-1, p. 2). However, at the hearing on the Motion for Preliminary Approval, the Court and the parties discussed amending the definition to account for an exception to the operation of the TCPA that exists where the unsolicited advertisement is sent “from a sender with an established business relationship with the recipient” 42 U.S.C. § 227(b)(1)(C)(i). The Class Settlement Agreement was deemed modified by agreement to include the following definition of the proposed Settlement Class:

All individuals and/or entities, who did not have an established business relationship with Trxade Group, Inc. and Westminster Pharmacy, LLC, located in any state, district, or territory of the United States that received one or more unsolicited advertisements or solicitations via facsimile from Defendants during the Class Period.

(Doc. 30).

         Among other terms and conditions, the parties agreed to the creation of a Settlement Fund of $200, 000.00 for payment of the Claims Administrator's expenses (estimated at $15, 900.00), attorney's fees of 25% of the Settlement Fund plus costs and expenses (approximately $50, 400.00), and the Class Representative's Incentive Award ($3, 500.00) subject to Court approval, with the balance of approximately $130, 200.00 to fund a Common Fund for pro rata payment of the claims by the Class Members, but not to exceed $1, 000.00 per claimant (doc. 26-1, Class Settlement Agreement, doc. 33-1, Affidavit). The parties also agreed that in addition to the cash payments, Class Members with valid claims would receive a 5% discount on their next purchase from Defendant Westminster (doc. 26-1). The parties also agreed that no funds would revert to the Defendants and that unallocated funds would be distributed as a Cy Pres award to the University of South Florida College of Pharmacy, with certain conditions (Id.).

         After hearing the Motion for Preliminary Approval, the Court granted the unopposed Motion and preliminarily approved the proposed Class Settlement Agreement and conditionally and preliminarily certified the Settlement Class (doc. 30). The Court also designated Plaintiff's counsel James H. McFerrin and Diandra S. Debrosse Zimmerman as Settlement Class Counsel, designated Plaintiff as Class Representative, and designated JND Legal Administration d/b/a JND Class Action Administration as the Claims Administrator.

         Pursuant to the Court's Order, Defendants provided a Notice List of the Class Members. Notice was given to the Class Members as set forth in the Declaration of the Claims Administrator's Senior Analyst (doc. 33-1). Notice was provided as discussed herein in Section II. As of January 24, 2017, and as of the date of the fairness hearing, February 21, 2017, the Claims Administrator had not received any objections and no Class Member had filed a request for exclusion from the Class Settlement (doc. 33-1). Overall, a total of 430 claims were approved and the Claims Administrator estimates a payment of damages of approximately $302.79 for each of the approved claims (doc. 33-1, p. 4).

         On February 21, 2017, the Court held the final fairness hearing and heard the parties on the Joint Motion for Final Approval. The parties represented to the Court that the Settlement was fair, reasonable and adequate, and due to be approved. The Court also heard Class Counsel's Motion for Award of Attorney's Fees, Expenses, and Incentive Payment. No one appeared and objected to the Settlement.

         II. Notice to the Class and the Claims Procedure

          In the Order granting preliminary approval, the Court found that the forms of class notice proposed by the parties would provide reasonable, adequate and sufficient notice to the Class Members and met the requirements of due process (doc. 30). The Court also preliminarily found that the proposed Plan for distribution of the Class Notice was the best practicable under the circumstances and was reasonably calculated to provide notice to all Class Members who were identified by the Defendants (doc. 30).

         Before the fairness hearing, Plaintiff provided the Court with a Notice of Compliance and an affidavit from the Claims Administrator's Senior Analyst, which outlined the steps taken to comply with the notice provisions that the Court had approved (docs. 30, 33, 33-1). According to the Affidavit, after receipt of a Notice List from the Defendants, the Claims Administrator updated the address information and ascertained a mailing address for 29, 846 potential Settlement Class Members of which 29, 110 also had email addresses. In late November 2016, the Claims Administrator sent notice by electronic mail or U.S. Mail post card to each Settlement Class Member identified on the Notice List and for whom a valid email address or mailing address could be ascertained.[2] Notice was further disseminated by way of a press release to newspapers, websites, trade publications and similar sources. In addition, the Claims Administrator established and maintained a settlement-specific website where claim forms could be electronically filed, along with a toll free telephone number to be used by Class Members to obtain additional information (doc. 33-1).

         The Notices informed the Class Members that to receive a cash payment they must submit a claim form, postmarked or submitted online on or before January 17, 2017, to the Claims Administrator. The Notices also informed the Class Members that the final hearing would be held at the United States District Court for the Southern District of Alabama on February 21, 2107 and that more information could be obtained on the website (doc. 33-1). The Notices contained a summary of the Class Action Settlement and Class Settlement Agreement and directed the recipient to the website, the toll free number, or an address for the Claims Administrator, to obtain a copy of the Class Settlement Agreement (doc. 33-1). At the website, a longer and more detailed form of the Notice warned the recipient to “Please read” the notice “carefully as your rights may be impacted even if you do nothing at all” and when discussing the various options - “Do Nothing”, “Submit a Claim Form…”, etc., explains again: “Your legal rights are affected whether you act or not, and you have a choice to make now” and contains a section captioned “Your Rights and Options” which gives information in a question and answer form (doc. 26-5).

         As of January 24, 2017, there had been 67, 687 views of the website and 33 calls to the toll-free number. Also, as of January 24, 2017, the Claims Administrator had received 6, 027 claims. Of those submitted, 5, 528 were denied because they were from individuals that were not found on the Notice, 17 were denied because they were postmarked after the deadline, and 52 were denied as duplicates. A total of 430 claims were approved (doc. 33-1).

         Before final approval of a class settlement, “[t]he court must direct notice in a reasonable manner to all class members who would be bound by the” proposed class settlement. Fed.R.Civ.P. 23(e)(1). The Court has now reviewed the Notice of Compliance, the Affidavit, the copies of the Notice attached to the Affidavit (doc. 33-1), and heard from counsel at the final fairness hearing. The Court finds that the Notice and the claims procedures as actually implemented satisfy due process, meet the Rule 23(e)(1) requirements, and that the Notice constitutes the best notice practicable under the circumstances as required by Fed.R.Civ.P. 23(c)(2)(B) for class actions certified under Rule 23(b)(3).[3]

III. Certification of the Class Action

         “Under Rule 23, certification is proper where the proposed [class satisfies] an implicit ascertainability requirement, the four requirements listed in Rule 23(a), and the requirements listed in any of Rule 23(b)(1), (2), or (3).” Karhu v. Vital Pharms, Inc., 621 Fed.Appx. 945, 946 (11th Cir. 2015) (citing Little v. T-Mobile USA, Inc., 691 F.3d 1302, 1304 (11th Cir. 2012)). Also, “[f]or a district court to certify a class action, the named plaintiffs must have standing[.]” Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1268 (11th Cir. 2009) (quoting Klay v. Humana, Inc., 382 F.3d 1241, 1250 (11th Cir. 2004)).

         As to the ascertainability requirement, “Rule 23 implicitly requires that the “proposed class is adequately defined and clearly ascertainable.” Karhu, 621 Fed.Appx. at 946 (citing Little, 691 F.3d at 1304 (internal quotation marks omitted). The Eleventh Circuit requires that the class definition “contain[ ] objective criteria that allow for class members to be identified in an administratively feasible way.” Id. There is no dispute that the class definition refers to objective criteria. As to the second requirement, “[i]n order to establish ascertainability, the plaintiff must propose an administratively feasible method by which class members can be identified” Id. at 947. “Identifying class members is administratively feasible when it is a ‘manageable process that does not require much, if any, individual inquiry.' ” Id. at 946 (quoting Bussey v. Macon Cty. Greyhound Park, Inc., 562 Fed.Appx. 782, 787 (11th Cir.2014)).

         Plaintiff proposed using the Defendants' records for the fax numbers to which the faxed advertisements were sent. However, Plaintiff “must also establish the records are in fact useful for identification purposes, and that identification will be administratively feasible.” Id. In that regard, Plaintiff asserts that the Defendants produced to the Claims Administrator the email and facsimile records of the Settlement Class, which records were sufficient to identify Class Members and transmit notice to the Settlement Class. Since Defendants waived for purpose of settlement any defense that certain Class Members may have consented to receive the facsimiles, there was no need for the Claims Administrator to attempt to extract certain fax numbers from the Defendants' records. In other words, this process of the Claims Administrator using the Defendants' list of all persons or entities to which it had sent a facsimile during the Class Period resulted in an administratively feasible method of identifying the Class Members. Cf. Karhu, 621 Fed.Appx. at 949 (affirming the district court's decision to reject a proposal to identify class members using sales data, which lacked explanation as to how the sales data would aid in class-member identification where it primarily identified third-party retailers and not class members). Therefore, the Court finds that the ascertainability requirement has been met.

         As to the remaining requirements, the Court adopts and incorporates its prior findings that Plaintiff had standing to bring this class action and that the requirements of Fed.R.Civ.P. 23(a)[4] and Fed.R.Civ.P. 23(b)(3)[5] for certification of class actions were met (doc. 30, p. 6-13). Having determined that the requirements for final certification are met, the Class Action is finally certified. See Little, 691 F.3d at 1303-1304 (providing a summary of the law governing class certification).

         Accordingly, the Court finally certifies the Settlement Class, as defined in the Class Settlement Agreement, as amended, which consists of the following:

All individuals and/or entities, who did not have an established business relationship with Trxade Group, Inc. and Westminster Pharmacy, LLC, located in any state, district, or territory of the United States that received one or more unsolicited advertisements or solicitations via facsimile from Defendants during the Class Period.

(Doc. 30, p. 5).

         IV. The Class Settlement Agreement

         The Court must now decide whether to give final approval to the parties' Class Settlement Agreement. A class action can be settled “only with the court's approval.” Fed.R.Civ.P. 23(e). Final approval may be given only after class notice and a hearing. Id. Overall, “[s]ettlement is generally favored because it conserves scarce judicial resources.” In re Smith, 926 F.2d 1027, 1029 (11th Cir.1991) (citation omitted).

         To reach its decision, the Court must analyze whether the Class Settlement Agreement is fair, adequate and reasonable and not the result of collusion. Greco v. Ginn Development, Co., LLC, 635 Fed.Appx. 628, 632 (11th Cir. 2015) (quoting Cotton v. Hinton, 559 F.2d 1326, 1330 (5th Cir.1977)); Ault v. Walt Disney World Co., 692 F.3d 1212, 1217 (11th Cir. 2012) (same); Fed.R.Civ.P. 23(e)(2). The Court of Appeals for the Eleventh Circuit has identified six factors for the district courts to consider: “(1) the likelihood of success at trial; (2) the range of possible recovery; (3) the point on or below the range of possible recovery at which a settlement is fair, adequate and reasonable; (4) the complexity, expense and duration of litigation; (5) the substance and amount of opposition to the settlement; and (6) the stage of proceedings at which the settlement was achieved.” Greco, 635 Fed.Appx. at 632 (citing Bennett v. Behring Corp., 737 F.2d 982, 986 (11th Cir. 1984)).

         A. Collusion.

         There is no evidence of collusion. The Class Settlement Agreement is the result of arm's-length settlement negotiations. The eminent jurist Judge Carroll mediated the settlement (doc.26-7, Biography). Skilled and experienced counsel represented all parties. There is no evidence that the parties or their respective counsel engaged in any fraudulent or improper acts during this litigation or the mediation process. To the contrary, the parties appear to have negotiated in good faith to reach a compromise, and settle this action. See Saccoccio v. JPMorgan Chase Bank, N.A., 297 F.R.D. 683, 692 (S.D. Fla. 2014) (“Where the parties have negotiated at arm's length, the Court should find that the settlement is not the product of collusion.”); (citation omitted). Accordingly, the Court finds that this factor weighs in favor of approving the Class Settlement Agreement.

         B. Opinion of counsel.

         “In considering the settlement, the district court may rely upon the judgment of experienced counsel for the parties.” Nelson v. Mead Johnson & Johnson Co., 484 Fed.Appx. .429, 434 (11th Cir. 2012) (citing Cotton, 559 F.2d at 1330. Thus, “[a]bsent fraud, collusion, or the like, the district court ‘should be hesitant to substitute its own judgment for that of counsel.'” Id. Counsel for the parties indicated at the fairness hearing that the Class Settlement Agreement was a fair, reasonable and adequate and that the Court should approve the Agreement. The parties are represented by skilled and experienced counsel. Plaintiff's counsel are class action litigation specialist. Accordingly, the Court finds that this factor weighs in favor of approving the Class Settlement Agreement.

         C. The likelihood of success at trial.

         “Plaintiff's likelihood of success at trial is ‘weighed against the amount and form of relief contained in the settlement.'” Saccoccio v. JP Morgan Chase Bank, N.A., 297 F.R.D. 683, 692 (S.D. Fla. 2014) (citing Lipuma v. Am. Express Co., 406 F.Supp.2d 1298, 1319 (S.D. Fla. 2005)). The Class Settlement Agreement provides approximately $130, 200.00 to fund a Common Fund for payment of the 430 valid claims filed by the Class Members (doc. 26-1, doc.33-1). Thus each Class Member will receive approximately $302.79. The Class Members also receive a 5% discount coupon for their next purchase with Westminster.

         At trial, Plaintiff would need to prove, among other elements, that the unsolicited faxed advertisements did not fall within the exceptions defined in 47 U.S.C. § 227(b)(1)(C), which rely upon consent of the recipient. However, for purpose of settlement, Defendant relinquished any defense that consent was lacking. Should the action have proceeded to trial, Defendants' defense may have increased the difficulty of success and enhanced the expense and uncertainty of the litigation. Thus if the Class Settlement Agreement is not approved, the ability of the Class Members to recover individually would be hindered by the risk that Defendants may prevail on this defense. See Saccoccio, 297 F.R.D. at 692 (addressing defendants ‚Äústrong ...


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