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Kolinek v. Walgreen Co.

United States District Court, N.D. Illinois, Eastern Division

November 23, 2015

ROBERT KOLINEK, et al., Plaintiff,
WALGREEN CO., Defendant

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          For Robert Kolinek, individually and on behalf of all others similarly situated, Plaintiff: Benjamin Harris Richman, Edelson P.C., Chicago, IL; Stefan Louis Coleman, Law Offices of Stefan Coleman, LLC, Miami, Fl; Christopher Lillard Dore, Edelson PC, Chicago, IL.

         For Walgreen Co., an Illinois corporation, Defendant: Bradley Joseph Andreozzi, LEAD ATTORNEY, Justin O'Neill Kay, Drinker Biddle & Reath LLP, Chicago, IL.

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         MATTHEW F. KENNELLY, United States District Judge.

         In July 2013, Robert Kolinek filed suit against Walgreen Co. (Walgreens) on behalf of a class of similarly situated Walgreens customers. Kolinek alleged that Walgreens had made unsolicited calls to him and other current and former customers on their cellular telephones in violation of the Telephone Consumer Protection Act of 1991 (TCPA), 47 U.S.C. § 227(b)(1)(A)(iii). After a period of contested litigation, the parties engaged in mediation, conducted by the Honorable Wayne R. Andersen, a highly respected retired judge of this court. The parties agreed to a class-wide settlement of Kolinek's claims that would provide both injunctive and monetary relief to members of Kolinek's putative class. The Court preliminarily approved the settlement in April 2015 and also approved a program of individual notice to potential class members, combined with publication notice.

         Kolinek has moved for final approval of the proposed class settlement. Kolinek has also requested an incentive award, and his counsel have petitioned for an award of attorney's fees and costs. A number of class members have submitted objections challenging the settlement, the proposed fee award, and the incentive award. One of those objectors, Todd Spann, has also moved for attorney's fees for his counsel. For the reasons stated below, the Court grants final approval of the settlement agreement and grants Kolinek's petition for fees, costs, and an incentive award. The Court also denies objector Spann's motion for attorney's fees.


         A. History of the litigation

         As indicated above, Kolinek filed this suit in July 2013. According to his complaint, Kolinek first filled a prescription at a Walgreens store sometime between early 2002 and 2012. At the time, the Walgreens pharmacist told Kolinek that his phone number " was needed for verification purposes ( i.e., if another customer named Robert Kolinek attempted to fill a prescription at the same Walgreens, the pharmacist would be able to confirm the correct person using the phone number on record)." Compl. ¶ 18. In early 2012, Kolinek began receiving prerecorded calls from Walgreens on his cellular telephone reminding him to fill his prescriptions at a Walgreens pharmacy. Kolinek alleged that Walgreens made these " refill reminder" calls as a means to increase its share of the pharmacy market, contacting millions of customers who had previously filled prescriptions at Walgreens stores to encourage them to do so again in the future. Kolinek claimed that Walgreens had not obtained those customers' prior express consent to make those calls. Accordingly, Kolinek alleged that Walgreens had violated the TCPA, which provides:

It shall be unlawful for any person within the United States . . . to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using . . . an artificial or prerecorded voice . . . to any telephone number assigned to . . . a cellular telephone service . . . .

47 U.S.C. § 227(b)(1)(A)(iii). Each violation of the TCPA carries with it $500 in statutory damages, and willful violations carry $1500 in statutory damages.

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          Walgreens moved to dismiss Kolinek's complaint for failure to state a claim. In its motion, Walgreens argued that Kolinek and his putative class of similarly situated individuals consented to receive prescription reminder calls by providing their cellular telephone numbers to Walgreens. Alternatively, Walgreens argued that even without prior express consent, the calls were " made for emergency purposes," 47 U.S.C. § 227(b)(1)(A), and therefore did not violate the TCPA. Following full briefing of these issues, the Court granted Walgreens's motion to dismiss. The Court observed that the TCPA does not define " prior express consent" but that pursuant to the Administrative Orders Review Act (more commonly known as the Hobbs Act), the Federal Communications Commission's (FCC) interpretation of the prior express consent defense is binding on federal district courts. Citing the FCC's statement that " persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary," In re Rules & Regs. Implementing Tel. Consumer Prot. Act of 1991, 7 FCC Rcd. 8752, 8769 ¶ 31 (Oct. 16, 1992) (" 1992 Order" ), the Court held that Kolinek had given Walgreens " prior express consent" and his claim was therefore barred. The Court dismissed Kolinek's complaint with prejudice. See Kolinek v. Walgreen Co., No. 13 C 4806, 2014 WL 518174 (N.D. Ill. Feb. 10, 2014) ( Kolinek 1 ).

         Kolinek then filed a motion to reconsider, which Walgreens opposed. Kolinek argued that the Court had misunderstood the FCC's 1992 Order and its other orders interpreting the prior express consent defense. In particular, Kolinek directed the Court's attention to FCC orders issued in 2008, 2012, and 2014, the last one issue shortly after the Court dismissed the case. Those orders together indicated to the Court " that the FCC considers the scope of a consumer's consent to receive calls to be dependent on the context in which it is given--contrary to what the Court had seen in the 1992 Order as a general rule that consent for one purpose means consent for all purposes." Kolinek v. Walgreen Co., No. 13 C 4806, 2014 WL 3056813, at *3 (N.D. Ill. July 7, 2014) ( Kolinek 2 ). The Court held that if discovery proved true Kolinek's allegation that he gave his number only when asked to provide it for verification purposes (an allegation that the Court at that juncture was required to take as true, see Rooni v. Biser, 742 F.3d 737, 738 (7th Cir. 2014)), Walgreens would be unable to prevail on a prior express consent defense. Kolinek 2, 2014 WL 3056813, at *4. The Court also noted that further factual development might reveal that Kolinek and other members of the putative class gave their cell phone numbers to Walgreens in a manner that would constitute prior express consent, but that this could not be demonstrated before undertaking discovery. Id.

         Due to the time that had passed since the initial briefing on Walgreens's motion to dismiss, the Court asked the parties to present their arguments on Walgreens's alternative basis for dismissal--that the prescription reminder calls fell under the TCPA's emergency purposes exception--via oral argument. Both parties participated in oral argument before the Court in July 2014. In August 2014, the Court issued a written order rejecting Walgreens's emergency purposes argument, explaining:

If the agency charged with interpreting the TCPA--namely, the Federal Communications Commission--had read the exception as covering any call to a customer about prescriptions, prescription refills, or anything of the sort, that interpretation would not only bind the Court but would also dictate the conclusion in this case. See CE Design, Ltd. v. Prism Bus. Media, Inc., 606 F.3d 443, 449-50 (7th Cir. 2010). But in fact there is no such interpretation of the TCPA by the FCC. The allegations in the complaint do not say enough about the nature or contents of the call to make it appropriate to dismiss the complaint at this stage of the case based on this particular affirmative defense. As with the express consent defense, further factual development is necessary.

Kolinek v. Walgreen Co., No. 13 C 4806, dkt. no. 66, at 2 (N.D. Ill. Aug. 11, 2014) ( Kolinek 3 ). The Court therefore denied Walgreens's motion to dismiss, whereupon Walgreens answered

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Kolinek's complaint, denying any and all liability and asserting numerous affirmative defenses. See Def.'s Answer, dkt. no. 68.

         After Walgreens answered the complaint, the parties began to discuss the possibility of settlement. Informal discovery transpired, and the parties had teleconferences throughout August and September 2014, when they agreed to participate in private mediation. They engaged in a day-long mediation session with retired Judge Wayne Andersen on October 15, 2014, at the close of which Kolinek made a settlement proposal. Walgreens counteroffered a week later, and on October 24, 2014, the parties came to an agreement in principle to resolve the case and avoid protracted litigation, subject to additional confirmatory discovery.

         Prior to mediation, the parties informally exchanged information regarding the prescription refill reminder program, including the ways in which Walgreens obtained telephone numbers, how it obtained consent, how the calls were made, and how Walgreens kept its records. Kolinek also served formal written discovery requests, and his counsel took the deposition of Walgreens's Rule 30(b)(6) witness, Christopher Helzerman, in January 2015. Kolinek learned through discovery that Walgreens typically collected customers' phone numbers when they provided personal information in the course of filling or refilling prescriptions. Walgreens would ask customers to identify whether the phone numbers provided were cell phones or landlines. Although Walgreens allegedly determined that it would make prescription refill reminder calls only to landlines, numerous customers ultimately received calls on their cellular phones. Kolinek also learned that Walgreens provided call recipients an easy way to opt out of receiving future calls (by simply pressing " 8" on their dial pads), but over the life of the program only 1.5% of all recipients opted out. Meanwhile, many customers appreciated the calls, and customers often used the system to refill their prescriptions at Walgreens.

         On March 26, 2015, Kolinek moved for preliminary approval of a class-wide settlement. The Court instructed class counsel to make certain changes to the proposed claim form. Once the claim form was revised to comply with the Court's instructions, the Court granted preliminary approval of the settlement on April 3, 2015.

         B. The settlement agreement and proposed fee awards

         Walgreens provided Kolinek and Kurtzman Carson Consultants (KCC), a third party administrator, with records that identified the phone numbers to which it had placed prescription refill reminder calls. KCC analyzed the data and determined that roughly 9.2 million of the numbers dialed were cell phones. The proposed settlement defines the settlement class as including all individuals in the United States to whom Walgreens placed a prerecorded prescription refill reminder call to their cellular phone. These individuals, if they did not opt out of the settlement, would agree to release any and all claims against Walgreens based on its making of prerecorded prescription refill reminder calls in exchange for both prospective and retrospective relief from Walgreens.

         Prospectively, the settlement requires Walgreens to implement new safeguards to ensure that it knows whether the phone numbers in its database belong to cellular telephones, including expert analysis, third-party data, and improved customer confirmation practices. Walgreens also agrees to provide customers with the option to elect to receive or stop receiving prescription reminder calls. Walgreens has promised to implement this prospective relief within a year of the effective date of the settlement.

         Retrospectively, the settlement requires Walgreens to establish a settlement fund of $11 million, from which will be drawn all claim awards, administrative costs, and any incentive and attorney's fee awards. Each class member who submitted a valid claim no later than fourteen days before the Court's final approval hearing will be entitled to a pro rata share of the money remaining in the settlement fund after those settlement administration expenses, incentive awards, and attorney's fee awards have been deducted. The settlement also provides that uncashed checks issued to claiming class members and other unclaimed money remaining in the settlement

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fund after payment of all approved claims, expenses, and awards will be distributed to settlement class members with approved claims unless doing so is impracticable, in which case the Court will direct the parties as to what to do with the funds. If so many settlement class members submit approved claims that the pro rata share of the fund available to each claimant will be less than fifteen dollars,

each claiming Settlement Class Member will have a second opportunity to exclude himself or herself from the Settlement (the " downstream opt-out" ), provided that he or she exercises such option within forty-five (45) days after the Settlement Administrator has posted notice of the amount of the payment per Approved Claim on the settlement website. In such instance, Walgreens may choose in its discretion to pay such Settlement Class Members who have submitted Approved Claims the difference between the amount they received under the Settlement and fifteen dollars ($15), thereby mooting the downstream opt-out.

Class Action Settlement Agreement, dkt. no. 98-1 ¶ 2.1(f).

         As indicated above, the settlement agreement contemplates that the settlement fund will provide reimbursement of expenses, an attorney's fee award for Kolinek's counsel, and an incentive award for Kolinek. In his motion for approval of attorney's fees, expenses, and incentive award, Kolinek seeks roughly $3.15 million to cover the costs of notice and settlement administration; $2,824,200 in attorney's fees (representing 36% of the settlement fund after deducting from the total amount the costs of notice and administration pursuant to Pearson v. NBTY, Inc., 772 F.3d 778, 781 (7th Cir. 2014), and Redman v. RadioShack Corp., 768 F.3d 622, 630 (7th Cir. 2014), and the value of an incentive award for Kolinek); and a $5,000 incentive award for Kolinek.


         A. The objections

         The notice sent to the class set a deadline for submission of objections. Timely objections were submitted jointly by Gleith Cozby, Sharon Hughes, Christinna Oldham, and Rendee Bullard, and individually by Melinda Franz, Phyllis Mehl, Betty Morgan, William Mann, Robert Habermann, Rebecca Thomas, Pamela Sweeney, Paige Nash, Lyndy Streight, Gary Sibley, Todd Spann, and Michael Beskine. Hughes, Oldham, and Spann ultimately withdrew their objections to the proposed settlement.

         Several other apparent objections were sent to one or more of the attorneys, including those submitted by Isela Gonzales, Lisa Ray, Ashley McClure, and Dr. Kenneth M. Hoffman, but these did not meet the preliminary approval order's requirements for objections. Neither did objections filed by Jimmy Fuzzell and Rita Hartsell, whose objections were received after the deadline for submitting objections, and those filed by Mehl, Habermann, and Thomas, all of whom failed to provide their telephone numbers as required by the preliminary approval order. The Court has nonetheless considered the points made by all who submitted objections.

         B. Certification of the proposed settlement class

         The proposed settlement class is defined as " all individuals in the United States to whom Walgreens placed a Prerecorded Prescription Call to their cellular telephone," The term Prerecorded Prescription Calls is defined as " any prerecorded voice prescription refill reminder call to a cellular telephone placed by Walgreens and/or any third parties acting on its behalf." Settlement Agreement, dkt. no. 137-1, at 121-22.

         The first question the Court must address is whether the class meets the requirements for class certification set forth in Federal Rule of Civil Procedure 23. A court may certify a class if the party seeking certification meets all the requirements of Rule 23(a) and the requirements of Rule 23(b)(1), (2), or (3). Oshana v. Coca-Cola Co., 472 F.3d 506, 513 (7th Cir. 2006).

         1. Rule 23(a) requirements

          Rule 23(a) requires the party seeking certification to demonstrate that the members of the class are so numerous that

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joinder is impracticable (numerosity); there are questions of law or fact common to the proposed class (commonality); the class representative's claims are typical of the claims of the class (typicality); and the representative will fairly and adequately represent the interests of the class (adequacy of representation). Fed.R.Civ.P. 23(a)(1)--(4). Numerosity is typically satisfied where there are at least forty members of a putative class. See, e.g., Pruitt v. City of Chicago, 472 F.3d 925, 926-27 (7th Cir. 2006). Commonality " requires the plaintiff to demonstrate that the class members 'have suffered the same injury' . . . ." Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 131 S.Ct. 2541, 2551, 180 L.Ed.2d 374 (2011) (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982)). " Their claims must depend on a common contention" that " must be of such a nature that it is capable of classwide resolution--which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." Wal-Mart, 131 S.Ct. at 2551. Typicality is satisfied when a plaintiff's claim " arises from the same event or practice or course of conduct that gives rise to the claims of other class members and his or her claims are based on the same legal theory." De La Fuente v. Stokely--Van Camp, Inc., 713 F.2d 225, 232 (7th Cir. 1983). Lastly, the adequacy of representation requirement involves two inquiries: whether the plaintiff's attorney is qualified, experienced, and capable of conducting this type of litigation, and whether the named plaintiff's interests are not antagonistic to those of the class. See, e.g., Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir. 1992).

         It is undisputed that the proposed class meets the numerosity requirement. Over nine million individuals allegedly received prerecorded prescription refill reminder calls from Walgreens on their cellular telephones.

         A small handful of objectors claim that the settlement class should not be certified because commonality is lacking, Kolinek is not an adequate representative of the class, or his claims are not typical of the class. Citing the Supreme Court's recent grant of certiorari in Spokeo v. Robins, 135 S.Ct. 1892, 191 L.Ed.2d 762 (2015), objector Streight contends that Kolinek is an inadequate representative because he has not sustained an injury-in-fact and thus cannot demonstrate standing to sue in federal court. Objector Sibley argues that Kolinek is an inadequate class representative and his claims are atypical because some class members received numerous prescription refill reminder calls from Walgreens, and those class members' potential damages for Walgreens's violations of the TCPA are therefore much higher than those available to a class representative alleging only one or a few TCPA violations. Objector Nash makes a general claim (without explaining her rationale) that ...

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