Rack Room Racks Up $26M Deal in TCPA Suit

TCPA Connect

Continuing the run of multimillion-dollar settlements in Telephone Consumer Protection Act (TCPA) class actions, a Florida federal court granted preliminary approval for a $26 million deal over text messages.

Maxwell Goldschmidt claimed that he received multiple text messages promoting Rack Room Shoes and its rewards program despite never having provided the company with prior express written consent. The Florida-based company owns and operates more than 400 retail footwear stores across 24 states.

After about a year of litigation, the retailer agreed to a deal that provides a settlement fund of up to $25.97 million that will pay both $5 cash and a $10 rewards voucher to the approximately 5,193,992 class members, defined to include all United States residents who enrolled in the Rack Room Rewards Program or the Off Broadway Rewards Program at the point of sale by giving their cellphone number verbally to the cashier and who received a text message on or after April 2, 2014.

In addition, the fund will provide payment of counsel fees (up to 15.79 percent of the fund) and a $10,000 incentive award for Goldschmidt.

Rack Room also promised to institute policies and procedures to ensure compliance with the TCPA going forward.

In support of preliminary approval of the deal, the plaintiff told the court the agreement provides relief for class members where “their recovery, if any, would otherwise be uncertain, especially given [the defendant’s] ability and willingness to continue its vigorous defense of the case and unique financial circumstances.”

To read the motion in support of approval of the settlement in Goldschmidt v. Rack Room Shoes, Inc., click here.

Why it matters: Considering the maxim that it is cheaper to settle than to go to trial, this latest multimillion-dollar TCPA settlement is yet another reminder of the massive exposure facing TCPA defendants.