United States District Court, N.D. Illinois, Eastern Division
GERARDO ARANDA, GRANT BIRCHMEIER, STEPHEN PARKES, and REGINA STONE, on behalf of themselves and classes of others similarly situated, Plaintiffs,
CARIBBEAN CRUISE LINE, INC., ECONOMIC STRATEGY GROUP, ECONOMIC STRATEGY GROUP, INC., ECONOMIC STRATEGY, LLC, THE BERKLEY GROUP, INC., and VACATION OWNERSHIP MARKETING TOURS, INC., Defendants.
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, DISTRICT JUDGE.
filed suit on behalf of themselves and those similarly
situated against Caribbean Cruise Line, Inc. (CCL), Vacation
Ownership Marketing Tours, Inc. (VOMT), The Berkley Group,
Inc., and Economic Strategy Group and its affiliated entities
(collectively ESG). They alleged that the defendants violated
the Telephone Consumer Protection Act (TCPA), 47 U.S.C.
§ 227, by using an autodialer and an artificial or
prerecorded voice to call plaintiffs' cellular and
landline telephones. With the assistance of a mediator,
retired United States District Judge Wayne Anderson, the
parties reached a settlement, which the Court approved in
March 2017. See Aranda v. Caribbean Cruise Line,
Inc. (Settlement Approval Decision), No. 12 C
4069, 2017 WL 818854 (N.D. Ill. Mar. 2, 2017). As part of the
settlement, Judge Anderson was appointed as special master
for settlement administration. In that role, he oversaw the
work of the designated claims administrator, Kurtzman Carson
Consultants (KCC), and reviewed challenges to claims brought
by the parties. Judge Anderson issued his award decision on
May 17, 2019. See Special Master's Award of
Calls, dkt. no. 768. The parties each object to several of
Judge Anderson's determinations. For the reasons stated
below, the Court sustains one of plaintiffs' objections
and part of one of defendants' objections and overrules
all of the others.
Court assumes familiarity with the facts of this case, which
the Court has described extensively in previous written
decisions. See, e.g., Settlement Approval Decision,
2017 WL 818854, at *1-6; Aranda v. Caribbean Cruise Line,
Inc. (Summary Judgment Order), 179 F.Supp.3d
817, 820-22 (N.D. Ill. 2016). In short, the plaintiffs
allege-and the defendants acknowledge-that the defendants
(through ESG) placed tens of millions of calls to consumers
without their consent. According to plaintiffs, ESG's
true purpose in placing these calls was to sell vacation
products at the direction and on behalf of CCL, VOMT, and
parties engaged in contested litigation for roughly four
years before reaching the settlement agreement noted above.
Over that time, the Court denied defendants' motion to
dismiss, granted plaintiffs' motion for class
certification over defendants' objection, denied
defendants' motions for summary judgment, granted in part
plaintiffs' motion for summary judgment, and denied
defendants' additional motion for summary judgment and
class decertification. Then, on the eve of trial, the parties
reached a settlement brokered by Judge Anderson. The Court
approved that settlement in March 2017.
settlement agreement defines the settlement class the same
way the class certification order did. That is, the Court
certified two classes-one for individuals who received
cellular phone calls and one for those who received landline
calls-and defined each class as those persons in the United
States who received the calls at issue between August 2011
and August 2012.
had two options for recovering under the settlement. Option 1
enabled claimants whose telephone numbers appeared in the
defendants' admittedly incomplete records to claim a
presumptive three calls. Option 2 allowed claimants to claim
more than three calls, subject to a declaration under penalty
of perjury and further proof by other evidence and/or an
additional affidavit, "if necessary to describe the
content of the call." See Settlement Agreement,
dkt. no. 502, ¶ 1.36. Under the settlement, claimants
are eligible for $500 per unlawful call they received,
subject to pro rata adjustment up or down depending on the
total number of claims approved. The total payout will be no
less than $56 million and no greater than $76 million.
settlement also permitted the parties to challenge the number
of calls claimed by a class member where they could show a
"factual basis" for that challenge. See
Id. ¶ 5.3. And challenge they did. The defendants
contested 43, 158 (just over 94%) of the 45, 850 Option 1
claims approved by KCC, the claim administrator. The
defendants also challenged 1, 136 of the approximately 12,
000 Option 2 claims. The plaintiffs, for their part, disputed
the basis for the defendants' Option 1 challenges and
challenged KCC's Option 2 screening decisions. The
special master adjudicated those challenges, and the parties
have now asserted their objections to his conclusions.
of the Federal Rules of Civil Procedure governs review of
decisions made by a special master. See Kanter v.
C.I.R., 590 F.3d 410, 416 (7th Cir. 2009). Under that
rule, "the district court's review of matters that
are the subject of an objection is de novo unless the parties
have stipulated (with the court's approval) that review
will be for clear error." Id.; see
also Fed. R. Civ. P. 53(f)(3). The parties here timely
objected to the special master's award of calls and agree
that there was no stipulation to clear-error review. This
Court's review of the objections is therefore de novo.
See Westefer v. Snyder, No. 00-162-GPM, 2013 WL
1286971, at *3 (S.D. Ill. Mar. 27, 2013) (citing Salve
Regina Coll. v. Russell, 499 U.S. 225, 238 (1991)).
case, the objections rest principally on disagreements about
how to interpret the settlement agreement. "Issues
regarding the formation, construction, and enforceability of
a settlement agreement are governed by local contract
law." Am. Homeland Title Agency, Inc. v.
Robertson, No. 18-3293, 2019 WL 3071742, at *2 (July 15,
2019) (internal quotation marks and alteration omitted);
see also K4 Enters., Inc. v. Grater, Inc., 394
Ill.App.3d 307, 313, 914 N.E.2d 617, 624 (2009) ("A
settlement agreement is in the nature of a contract and is
governed by principles of contract law."). The Court is
intimately familiar with the disputed terms given that it
previously reviewed and approved the agreement. See
Settlement Approval Decision, 2017 WL 818854, at *1;
cf. In re Res. Tech. Corp., 624 F.3d 376, 386 (7th
Cir. 2010) ("A court that has issued an order is in the
best position to interpret it." (internal quotation
marks and alteration omitted).).
Objections based on Option 1 challenges
noted, the defendants challenged nearly all of the Option 1
claims. The "factual basis" on which the defendants
premised these challenges was that the claimants' phone
numbers appeared fewer than three times in the class list-the
list of call recipients reconstructed from the
defendants' admittedly incomplete records. The plaintiffs
argued to the special master that the class list was not a
sufficient factual basis on which to challenge Option 1's
presumption of three calls. They also submitted additional
evidence from which KCC could cross-check the Option 1
claims. This additional evidence consisted of (1) a list of
phone numbers employed by the defendants during their call
campaign that was used by the Court in its class
certification decision (the "List of 57"); (2) a
list of phone numbers constructed from online reports of
illicit vacation product sales calls (the "List of
97"); and (3) data from an entity called Contact Center
Compliance (the "CCC List").
special master allowed the defendants' challenges over
the plaintiffs' objection but permitted KCC to
cross-check the challenged claims against the List of 57 and
the List of 97. He did not allow use of the CCC List because
the data it contained were too attenuated from the illicit
sales calls. Both parties object to the special master's
handling of this issue.
the defendants object that the special master erred by
allowing KCC to cross-check the challenged Option 1 claims
against any additional evidence. They rely on a provision in
the settlement agreement stating that "[i]f the
challenged Settlement Class Member does not timely submit . .
. supplemental documentation or testify before the Special
Master, the Special Master shall sustain the Defendants'
challenge and the Settlement Class Member will have an
Approved Claim for one (1) call." Id. ¶
5.5. In the defendants' view, the more-than 39, 000
Option 1 claimants who did not personally respond when their
claims were challenged were each therefore entitled to
recover for only a single call. The plaintiffs disagree,
noting that class counsel responded on behalf of those class
members by providing the various lists described above to the
claim administrator and special master.
the plaintiffs object that the defendants' challenge to
Option 1 claims was improper in the first place because it
effectively allowed the defendants to rebut Option 1's
three-call presumption based only on the undisputedly
incomplete class list. In the plaintiffs' view, the
"factual basis" language of the settlement
agreement required the defendants to produce some sort of
affirmative evidence to rebut the presumption. They contend
that "[t]he whole point of the three-call presumption,
as the Special Master acknowledged, was to account for the
fact that the Class List . . . is vastly incomplete."
Pls.' Br. in Supp. of Pls.' Objs., dkt. no. 774, at
11. Plaintiffs say that "[i]f the presence of a
telephone number on the class list a single time creates a
presumption of three calls, but the fact that the number
appears only a single time is sufficient to rebut that
presumption, then there is no presumption." Id.
Such an outcome would, they contend, frustrate the settlement
agreement, particularly because all but fifty of the more
than 43, 000 Option 1 claims challenged by the defendants
received notice and were entitled to the presumption
because the claimant's phone number appeared on
the class list.
defendants oppose the plaintiffs' objection and their
analysis supporting it. The defendants argue that the
settlement agreement expressly provides that the presumption
of three calls "can be rebutted by Defendants'
challenges," Settlement Agreement, dkt. no. 502, ¶
5.4, and they say that that is precisely what they did. By
the terms of the agreement, defendants contend, those
challenges can be made on any "factual basis."
Id. at ¶ 5.3. They say that the factual basis
for the challenges at issue was that the relevant Option 1
claimants' phone numbers appeared fewer than three times
on the class list. They also adopt the special master's
reasoning that because the class list was used by this Court
for class certification and notice purposes, it should be
permitted as a factual basis to challenge Option 1 claims.
Moreover, the defendants contend that the plaintiffs
acknowledged (and purportedly accepted) the basis for the
defendants' challenges earlier in this litigation. That
is, according to the defendants, the plaintiffs forfeited
their protests to the basis of these challenges (1) when they
agreed to certain language for notices sent to Option 1
claimants after their claims were challenged and (2) by
acknowledging, during settlement negotiations, that such
challenges may occur.
Court concludes that the plaintiffs' objection must be
sustained and the defendants' objection overruled. The
context of the agreement's use of the term "factual
basis" demonstrates that it should not be interpreted as
broadly as the defendants propose. See Bock v. Comput.
Assocs. Int'l, Inc., 257 F.3d 700, 707 (7th Cir.
2001) (describing circumstances in which it is appropriate to
consider objective extrinsic evidence in interpreting a
contract "in spite of [a] merger clause").
Specifically, the plaintiffs and defendants negotiated and
agreed to the three-call presumption for class members who
filed Option 1 claims-as this Court and the special master
have repeatedly noted-in large part because the
defendants' records did not even approach a complete
accounting of consumers who received unlawful calls. As the
Court wrote at class certification, limiting recovery to
those claimants whose calls were detailed in the
defendants' incomplete records "would . . . leave
out individuals who actually received the calls in
question" and "would create an incentive for a
person to violate the TCPA on a mass scale and keep no
records of its activity, knowing that it could avoid legal
responsibility for the full scope of its illegal
conduct." Birchmeier v. Caribbean Cruise Line,
Inc. (Class Certification Order), 302 F.R.D.
240, 250 (N.D. Ill. 2014). Based at least partly on this
concern, the parties negotiated and the Court approved a
settlement that included the three-call presumption.
contract itself also undermines the defendants' reading.
"[B]ecause words derive their meaning from the context
in which they are used, a contract must be construed as a
whole, viewing each part in light of the others."
Gallagher v. Lenart, 226 Ill.2d 208, 233, 874 N.E.2d
43, 58 (2007). The defendants are correct that paragraph 5.4
of the settlement agreement provides that the three-call
presumption may be rebutted by an appropriate challenge. But
the very next sentence suggests that that challenge must meet
some minimum standard before the presumption is rebutted.
Specifically, it provides that "[a]ll other Settlement
Class Members"-that is, other than Option 1
claimants-"will have the ultimate burden if their Claim
Form is challenged to demonstrate the number of calls"
they received. Settlement Agreement, dkt. no. 502, ¶
5.4. Given this context, it would be odd to conclude that the
Option 1 presumption could be rebutted based only on the
evidence that the ...