Resolution of class-based claims based on liability under the Telephone Consumer Protection Act (TCPA) often presents a complicated variety of factors, including publicity, court approval requirements, notice to government regulators, and potential for future liability. With statutory damages under the TCPA ranging between $500-$1,500 per violation, just one noncompliant marketing campaign can result in hundreds of millions of dollars in liability. Because of the high stakes involved, businesses may find that seeking resolution through mediation rather than litigation is their smartest option because it permits a controlled and known result.
When negotiating class-wide resolution of TCPA claims, the neutrals, lawyers, and disputing parties should be mindful of these seven best practices to maximize the benefit of an agreed settlement for all parties involved.
1. Select the right Neutral.
Selection of the Neutral, or Mediator, that is best suited for the parties’ particular dispute is critical, and the parties and their lawyers should work together to choose this individual. Important considerations include the background of the Neutral and their subject matter knowledge about the TCPA and the underlying dispute. An understanding of the law, as well as current trends in enforcement and relevant court rulings, allows the Neutral to effectively assist the parties with risk evaluation and to discuss details associated with a class action settlement, including class administration, notice, addressing opt-outs and objectors, and the court approval process.
2. Preparation, preparation, preparation.
By engaging in fulsome pre-mediation preparation, the lawyers and Mediator gain trust from the parties. Pre-mediation preparation should include a pre-mediation meet and confer call with the Neutral and the lawyers to discuss details for the format of the mediation (including any technical considerations for virtual mediations). The parties should discuss with the Mediator whether any information should be exchanged between the parties prior to the mediation, such as confirmatory discovery or class data, and any confidentiality restrictions on the exchange of information.
Prior to the mediation, the parties and Neutral are typically best served by the submission of Mediation Position Statements and/or pre-mediation settlement offers and demands. Thorough preparation will help the Mediator to start opening negotiations at the outset of the mediation so that the process can focus on negotiating a resolution, rather than explaining each party’s position.
3. Identify all “big picture” issues and contemplate impasse points.
As early in the process as possible, the Mediator should determine the key decision-makers and if any other entities are implicated, such as vendors or entities who are not “at the table” but who may need to be considered. For example, working with vendors often introduces some legal indemnification issues which should be addressed and may need to be resolved as part of a negotiated resolution. Sometimes, TCPA cases contemplate notice of a class action settlement to persons who may be customers of a named defendant. Issues such as determining what rate of opt-outs will impede the settlement could be involved. These issues should be vetted out prior to the mediation if possible. Usually, Mediators will request the parties to complete a pre-mediation term sheet explaining their respective positions on these points. It is a best practice to identify all issues – including non-economic ones – which could impede negotiations or cause an impasse.
4. Set expectations for the parties prior to mediation.
The attorneys and Mediator should discuss each side’s expectations prior to the Mediation. This includes confidentiality requirements and timing expectations. The attorneys should consult with their clients prior to the mediation to explain the Mediator’s role, what to expect, the length of time anticipated to complete the mediation process, and an explanation about the strict confidentiality requirements associated with mediation. It will serve the parties well to be prepared for what to expect – particularly for parties who have not mediated before.
5. Do not underestimate emotions.
Often, Mediators approach the process as one without emotion, targeted simply to reach a negotiated business deal. While this is the ultimate goal of mediation, the underlying emotions of the parties will certainly play a role in impacting the outcome and should be heard and understood. If a disputing party feels that their emotions do not matter to the Mediator, a sense of distrust may taint the latter’s evaluations and recommendations. If there are strong underlying emotions present in the case, the best practice is to discuss those candidly with the Mediator prior to the process in order to identify strategies to overcome emotions, without ignoring them.
6. Be prepared to draft a Settlement Agreement or Memorandum of Understanding before the mediation concludes.
If mediation results in an agreement in principle, the attorneys should be prepared to draft a settlement agreement or settlement term sheet for the parties to sign before the mediation concludes. This provides peace of mind to the parties with a degree of finality. This is also the best practice to avoid a settlement subsequently failing due to some disagreement about a term that was not previously included or documented.
7. Advise the parties that a full mediation may advance negotiations but could require ongoing conversation to complete the settlement.
Often, the mediation process presents a long and tiring day for the parties involved. The parties may significantly bridge some differences early on but become more steadfast in their positions as the day draws to a close. The attorneys and the Mediator should always advise the parties that, if this happens, to be open-minded to continuing conversations in the following days in an attempt to resolve impasse issues. Most Mediators and attorneys can recount many instances where a settlement could not be reached during the mediation but was achieved within just a day or two through ongoing discussions by the disputing parties, their lawyers, and the Mediator. Often the momentum gained by negotiating during a mediation can continue so that the parties ultimately reach a resolution after the mediation in just a matter of days. Therefore, I always recommend encouraging the parties to keep the conversation open – even if it is for a limited amount of time following the mediation.
TCPA compliance and its enforcement are nuanced and complex, and class action claims are flourishing. Your resolution strategy should be targeted to your situation’s specific needs. Working with an experienced and skilled team can help lead the way to a successful resolution that will keep your business moving forward.
Still have questions about the TCPA or the mediation process? We can help. Contact us.
Lisa is a Partner and the Litigation Director at M&S. She defends highly regulated businesses in class actions, complex commercial litigation, and government enforcement actions brought by state and federal agencies. Lisa also provides mediation and arbitration services, serving as a skilled neutral in helping disputing parties achieve resolution outside of the courtroom.