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Aranda v. Caribbean Cruise Line, Inc.

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

July 31, 2019

GERARDO ARANDA, GRANT BIRCHMEIER, STEPHEN PARKES, and REGINA STONE, on behalf of themselves and classes of others similarly situated, Plaintiffs,



         Plaintiffs 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.


         The 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 Berkley.

         The 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.

         The 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.

         Claimants 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.

         The 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.


         Rule 53 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)).

         In this 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).).

         A. Objections based on Option 1 challenges

         As 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").

         The 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.

         First, 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.

         Second, 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.

         The 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.

         The 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.

         The 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, ΒΆ 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 ...

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