This story is reprinted with permission from FC&&S Legal, the industry's only comprehensive digital resource designed for insurance coverage law professionals. Visit the website to subscribe.
A federal district court in Florida has preliminarily approved settlement of a class action lawsuit asserting that about 2.5 million cell phones were sent text messages in violation of law. Once the court gives final approval to the settlement, the focus will turn to whether the plaintiffs' claims are covered by insurance — the only potential source of recovery for the plaintiffs and their attorneys.
|The case
After Jacob Horn and Robert Vetter sued iCan Benefit Group, LLC, the defendant passed the class action over to its insurer, Liberty International Underwriters, Inc., seeking coverage under its insurance policy, which had a $2 million liability limit.
Liberty denied the claim.
The plaintiffs and iCan then agreed to settle the action. iCan, however, didn't have the financial means to satisfy a judgment or to fund a reasonable class-wide settlement.
The parties decided to focus on a potential alternative funding source. They identified an estimated 2,517,213 unique telephone numbers to which iCan or a third party on its behalf had sent text messages in violation of law. Then, as part of the proposed settlement, iCan assigned its rights under the Liberty policy to the plaintiffs and the class members pursuant to an assignment of rights.
The plaintiffs asked the federal district court to preliminarily approve the class settlement.
Related: Surprise! Your company may have insurance coverage for a consumer class action
|The court's decision
The court granted the motion, preliminarily approving the settlement agreement subject to a final hearing.
In its preliminary approval order, the court found that the settlement agreement was “fair, reasonable, and adequate,” that it had been entered into “in good faith,” and that it was “free of collusion” to the detriment of the settlement class. The court ordered notice of the litigation and the proposed settlement sent to the settlement class and scheduled a full hearing on the proposed settlement.
The court also preliminarily certified a class of “[a]ll persons in the United States who from a date of four years prior to the filing of the initial Complaint to the present: (1) iCan (or a third person acting on behalf of iCan) sent text messages; (2) to the person's cellular telephone or number assigned to a VOiP line which was, as to the VOiP line, ultimately delivered to either the person's cellular telephone or some other medium which captures and records a text message and for which the person is charged a fee; (3) for the purpose of selling iCan's products and/or services.” The court ordered the typical exclusions from the class, including iCan's affiliates and counsel.
Related: Yahoo loses bid for insurance coverage: Unsolicited text messages
|What's next?
After the court finally approves the settlement, the plaintiffs and the class will bring a coverage action against Liberty. If they are successful, they will ask the court to approve a distribution to the class members.
What if the plaintiffs and the class are not successful in their coverage action against Liberty?
The court's preliminary approval order answered that question quite clearly:
If [the p]laintiffs and the [c]lass are not successful in their coverage action against Liberty, this matter shall be closed without any monetary distributions to [c]lass [m]embers, without any awards to the [c]lass [r]epresentatives, and without any award of attorneys' fees and costs.
The case is Horn v. iCan Benefit Group, LLC.
Steven A. Meyerowitz, Esq., is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. Email him at [email protected].
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].
