Johnson v. NPAS Solutions, LLC

• Decision Date: 03 August 2022
• Docket Number: 18-12344
• Citation: 43 F.4th 1138 (Mem)
• Parties: Charles T. JOHNSON, on behalf of himself and others similarly situated, Plaintiff-Appellee, Jenna Dickenson, Interested Party-Appellant, v. NPAS SOLUTIONS, LLC, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

43 F.4th 1138 (Mem)

Charles T. JOHNSON, on behalf of himself and others similarly situated, Plaintiff-Appellee,

Jenna Dickenson, Interested Party-Appellant,

v.NPAS SOLUTIONS, LLC, Defendant-Appellee.

No. 18-12344

United States Court of Appeals, Eleventh Circuit.

Filed: August 3, 2022

John W. Davis, Law Office of John Davis, Tampa, FL, Eric Alan Isaacson, Law Office of Eric Alan Isaacson, La Jolla, CA, Charles Benjamin Nutley, C. Benjamin Nutley, Attorney at Law, Kailua Kona, HI, for Interested Party-Appellant.

Michael L. Greenwald, Greenwald Davidson Radbil, PLLC, Boca Raton, FL, Ashley Conrad Keller, Keller Postman, LLC, Chicago, IL, Warren David Postman, Keller Postman, LLC, WASHINGTON, DC, for Plaintiff-Appellee.

Michael L. Ehren, Martin Barry Goldberg, Alan D. Lash, Lash & Goldberg, LLP, Miami, FL, Maura K. Monaghan, Jacob W. Stahl, Debevoise & Plimpton, LLP, New York, NY, for Defendant-Appellee.

Jonathan D. Selbin, Lieff Cabraser Heimann & Bernstein, LLP, San Francisco, CA, for Amicus Curiae Brian T. Fitzpatrick.

David Sidney Shaffer Nahmias, Lindsay Nako, Impact Fund, Berkeley, CA, for Amicus Curiae Impact Fund.

Ellen L. Noble, Public Justice, PC, Washington, DC, Emily Villano, Law Office of Emily Villano, University City, MO, for Amicus Curiae Public Justice, PC.

Charles N. Nauen, Lockridge Grindal Nauen, PLLP, Minneapolis, MN, for Amicus Curiae The Committee To Support the Antitrust Laws.

Cecily Jordan, Tousley Brain Stephens, PLLC, Seattle, WA, for Amicus Curiae The Main Street Alliance.

Before William Pryor, Chief Judge, Wilson, Jordan, Rosenbaum, Jill Pryor, Newsom, Branch, Grant, Luck, Lagoa, and Brasher, Circuit Judges.

BY THE COURT:

A petition for rehearing having been filed and a member of this Court in active service having requested a poll on whether this case should be reheard by the Court sitting en banc, and a majority of the judges in active service on this Court having voted against granting rehearing en banc, it is ORDERED that this case will not be reheard en banc.

Newsom, Circuit Judge, concurring in the denial of rehearing en banc:

It has become customary for the author of a panel opinion to file a "concurral" defending his or her handiwork against a colleague's "dissental" when the full Court declines to rehear a case en banc. Ordinarily, I'd be inclined to do just that. (Perhaps it's a character flaw, but giving others the last word isn't always my strong suit. See, e.g. , Keohane v. Florida Dep't of Corr. Sec'y , 981 F.3d 994, 996–1003 (11th Cir. 2020).) This case, though, has been pending too long already. The panel issued its decision in September 2020—almost two full years ago now. The parties and the bar are entitled to closure. Given the circumstances, I'm content to let the panel opinion speak for itself.

Jill Pryor, Circuit Judge, joined by Wilson, Jordan, and Rosenbaum, Circuit Judges, dissenting from the denial of rehearing en banc:

In the panel decision in this case, the majority held that two Supreme Court cases decided in the 1880s prohibit district courts from approving, under any circumstances, incentive or service awards for class representatives in class action settlement agreements. See Johnson v. NPAS Sols., LLC , 975 F.3d 1244, 1255 (11th Cir. 2020). According to the majority opinion, these two cases dictate that such awards—despite the parties having agreed to them and district courts having approved them as reasonable and fair to the entire class under Federal Rule of Civil Procedure 23 —are simply barred. See Trustees v. Greenough , 105 U.S. 527, 26 L.Ed. 1157 (1881) ; Cent. R.R. & Banking Co. v. Pettus , 113 U.S. 116, 5 S.Ct. 387, 28 L.Ed. 915 (1885).

By holding that incentive awards are unlawful per se , the majority opinion broke with decisions from this and every other circuit allowing these awards when properly approved under the strictures of Rule 23. Indeed, the majority opinion adopted a position that had never been embraced by any court. Of course, the mere fact that an argument has never been accepted before does not mean it is wrong. One circuit has expressly rejected the novel Greenough - Pettus argument, however,¹ and since the majority opinion in this case issued, every court outside this circuit to have considered it has declined to follow it.² And no wonder. In Greenough and Pettus , decided long before modern class actions were born, the Supreme Court applied equitable trust principles in the absence of any authority for compensating creditors who through litigation benefitted a common fund. Operating in that now-superseded legal landscape, the Court rejected compensation for a creditor's expenses that were—as the panel majority opinion candidly acknowledged—only "roughly analogous" to today's incentive awards approved under Rule 23. Johnson , 975 F.3d at 1257. So it seems to me more than a stretch to hold that these cases prohibit incentive awards in all cases, no matter that the parties and the district court agree the awards are fair and appropriate.

I agree with Judge Martin's well-reasoned dissent to the panel opinion that the majority was wrong. The fairness-based standard for evaluating disparate settlement distributions between representative plaintiffs and class members set forth in Holmes v. Continental Can Company , 706 F.2d 1144 (11th Cir. 1983), which panels of this court have continually applied in reviewing class action settlements, does not conflict with Supreme Court precedent and should continue to govern our analysis of incentive awards authorized by class action settlement agreements. See Johnson , 975 F.3d at 1264 (Martin, J., concurring in part and dissenting in part).

The stakes are high. If the panel majority opinion was wrong that Greenough and Pettus compel its holding, then it far overreached by banning all incentive awards in class actions. As it stands, the panel majority's opinion threatens the very viability of class actions in this circuit. This is particularly so in small-dollar-value class actions, where incentive awards help to encourage potential plaintiffs to serve as class representatives despite having to take on significant additional responsibilities while receiving the same modest recovery as other class members. I respectfully dissent from the denial of rehearing en banc to correct the panel majority opinion's grave error.

I. BACKGROUND

NPAS Solutions, a company that collects medical debts, repeatedly robocalled³ Charles Johnson on his cell phone, trying to collect a debt. Unfortunately, NPAS was trying to collect the debt from a person Mr. Johnson did not know. Again and again, Mr. Johnson informed NPAS that it was calling the wrong number and asked it to stop calling. Yet NPAS persisted with its collection calls.

Fed up, Mr. Johnson took the initiative to sue the company, on behalf of himself and a putative class of similarly situated individuals, alleging violations of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227. Mr. Johnson hired legal counsel with significant experience in TCPA class action litigation to investigate his and the other class members’ claims. No one disputes that after initiating the suit, Mr. Johnson was "actively involved in [the] case throughout the proceedings." Doc. 44-1 at 14.⁴ For example, he spoke frequently with his attorneys, read and approved documents before his attorneys filed them, and supplied information in response to NPAS's discovery requests.

NPAS agreed to settle the claims with Mr. Johnson and the putative class. The settlement agreement required NPAS to pay $1.432 million into a settlement fund to compensate participating class members. Under the terms of the agreement, Mr. Johnson would receive $6,000 from the fund for serving as class representative. The remainder of the fund—the other 99.58 percent—minus the plaintiffs’ attorney's fees and costs, would be distributed equally among the participating class members. The parties submitted the proposed settlement agreement to the district court for preliminary approval under Rule 23, and the court gave its approval. At the same time, the district court set a deadline for any class member to file a claim for recovery or object to the settlement agreement.

More than 9,500 class members submitted claims for recovery, resulting in an estimated recovery of approximately $80 per class member. No class member opted out. Only one class member, Jenna Dickenson, objected to the settlement agreement. Among other objections, she argued that the Supreme Court's decisions in Greenough and Pettus established binding precedent that prohibited the district court from approving the agreed-upon incentive award to Mr. Johnson. The district court overruled the objections and approved the settlement, concluding that it was "in all respects fundamentally fair, reasonable, adequate, and in the best interest of the class members."⁵ Doc. 53 at 4. Ms. Dickenson then appealed.

On appeal, the panel majority opinion reversed the incentive award portion of the district court's order approving the settlement. Despite acknowledging that incentive awards were "commonplace" in modern class action litigation, the panel majority opinion concluded that the district court lacked the power to approve the $6,000 award to Mr. Johnson in the settlement agreement. Johnson , 975 F.3d at 1255–61. The panel majority opinion agreed with Ms. Dickenson that Greenough and Pettus prohibit incentive awards included in class action settlement agreements. Id. at 1260. According to the panel majority opinion, for class representatives to receive incentive awards, either the Supreme Court must overrule its decisions in Greenough and Pettus or else the "Rules Committee or Congress" would need to "amend Rule 23 or to provide for incentive awards by statute." Id. at 1260.

II. DISCUSSION

The panel majority opinion misread Greenough and Pettus to impose a categorical bar on incentive awards for class representatives in class actions. Given the holding's significance to the...