Pivotal Payments, Inc., a Texas-based payment processor, will pay $9 million to resolve a class action brought by Abante Rooter and Plumbing Inc. The settlement agreement ends the lawsuit accusing Pivotal Payments of violated the Telephone Consumer Protection Act by using a pre-recorded message and autodialing millions of cellphones without having received prior consent.
Abante Rooter and Plumbing filed their claim in September 2016. The class action lawsuit alleged that Pivotal Payments willfully violated the Telephone Consumer Protection Act (TCPA). The suit sought $1,500 for each illegal call.
In November of 2016, Pivotal attempted to have the court toss the class action, claiming the plaintiff did not have standing. However, during the discovery phase it was revealed that from September 2012 to 2016, over 11.6 million autodialed calls with a pre-recorded message had been made. Of those calls, 1.9 million were to cell phone numbers.
EPLJ Enterprises LLC was the third-party marketing company hired by Pivotal Payments to make calls on their behalf. The marketer allegedly called cell phone numbers without first obtaining the recipients’ prior expressed consent. Contractually, Pivotal thought they had protected themselves from potential lawsuits by including provisions in their contract that mandated TCPA compliance by the third-party marketer.
Unfortunately, Pivotal did not have a monitoring process in place to verify that EPLJ Enterprises was in fact complying with the TCPA. This case is an important reminder that compliance is the responsibility of the hiring party. Employing a third-party to conduct marketing on your behalf makes the marketer an extension of your business. Such arrangements can be profitable when managed properly, but if left unchecked, they can increase your exposure to potential regulatory violations.
Third-party relationships require special attention, beyond promises, if you don’t want to be involved in an unexpected lawsuit. Pivotal’s contract did not transfer their legal responsivity of maintaining regulatory compliance.
After more than a year of discovery, on November 1, Pivotal Payments agreed to a $9 million settlement. Once approved, it will end the class action brought by California based Abante Rooter and Plumbing Inc. It should also be pointed out that Abante has filed several similar TCPA class action lawsuits. On the surface, it appears they have discovered a new income stream that doesn’t include plumbing.
According to the agreement submitted to the court, the plaintiff’s attorneys will receive 25% of the settlement, or $2.25 million, along with expenses. Abante will receive a $25,000 award. The claims administrator will receive $1.2 million. Members of the class will receive between $20 and $60 as determined by the number of claims filed.
Once again, is this a victory for consumers or the attorneys?
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