CLE Provider To Pay $3M To Settle Class Suit Over Alleged Junk Faxing

CLE Provider To Pay $3M To Settle Class Suit Over Alleged Junk Faxing

A New Jersey continuing legal education provider will pay dearly for a marketing campaign that may have flouted anti-junk-faxing laws.

Gann Law Books of Newark agreed to pay $3 million in cash and in trade to settle a class-action suit in behalf of thousands of recipients of unsolicited faxes it sent to promote CLE seminars.

The plaintiffs alleged the transmissions violated the federal Telephone Consumer Protection Act and the New Jersey Anti-Fax Statute.

U.S. District Judge Kevin McNulty gave preliminary approval to the settlement on April 24 and set a final approval hearing date of Oct. 16.

The suit, filed by Jersey City bankruptcy lawyer Nicholas Fitzgerald, names as defendants Gann, its president Michael Protzel and its nonprofit arm, Gann Legal Education Foundation.

Gann, founded in 1936, publishes legal treatises focusing on New Jersey law and more recently expanded into e-books and continuing legal education.

The class conditionally certified is comprised of owners of fax numbers to which Gann sent more than 17,000 faxes between July 26, 2007 and July 26, 2011, advertising CLE seminars, such as “Hot Topics in New Jersey Appellate Practice,” “Autumn 2009 Seminars,” and “Damages in Personal Injury Actions-How Big is Your Case?”

The faxes included opt-out notices saying, “to avoid receiving notices such as this one in the future, send an e-mail to optout@gannlaw.com.” Please include your name and fax number.”

The suit alleges the notices are not compliant with state and federal law because they don’t provide a domestic phone and fax number that recipients can use to send an opt-out request.

They also don’t say state that failure to comply with an opt-out request is unlawful or that a request will be effective only if the person making it does not subsequently provide express invitation or permission to send such faxes.

The settlement was reached after mediation with former Superior Court Judge Marina Corodemus, now with Corodemus & Corodemus in Iselin.

The settlement pays $175 for each fax received if the class member retained an actual copy of the document, up to $875, and also provides $125 to class members who did not retain the fax but submits an affidavit stating that the document was sent to a number owned by the class member.

Each member will also receive two online ethics seminars, one worth 4.5 credits and valued at $140, and the other worth 2.5 credits and valued at $90.

The final breakdown is $1.1 million in cash, $1.9 million in free CLE courses and $1 million in legal fees.

During settlement negotiations, Gann produced financial statements “indicating that they could not contribute any cash in addition to what their insurers were willing to offer,” according to Fitzgerald’s court papers.

“Had plaintiff held out for a larger settlement, defendants may have filed for bankruptcy and/or plaintiff would have had to engage in a protracted lawsuit with defendant’s insurer with an uncertain result.”

Fitzgerald initially filed suit in Hudson County in May 2011 but withdrew it after the Appellate Division ruled, in Local Baking Products v. Kosher Bagel Munch, 421 N.J. Super 268 (2011), that claims under the Telephone Consumer Protection Act cannot be brought as class actions in New Jersey courts.

Fitzgerald then refiled it in federal court in Newark, where it survived Gann’s motion to dismiss. McNulty ruled that the U.S. Supreme Court’s ruling in Mims v. Arrow Financial Services, and the Third Circuit’s decision in Landsman & Funk v. Skinder-Strauss Associates, both decided in 2012, establish that in federal court, Rule 23 of the Federal Rules of Civil Procedure, not state law, determines whether a TCPA case may proceed as a class action.

Class counsel Aytan Bellin, a solo in White Plains, N.Y., says that ruling was pivotal in encouraging the parties to settle. “After we got the decision regarding federal law applying, we felt very good about the case,” he says.

Any money left over from the $1.1 million settlement fund after payments are made to those who submit claims will be paid out to parties who have not submitted claims but whose fax numbers were dialed by Gann, Bellin says.

The lawyer for Gann, Allyn Lite of Lite DePalma Greenberg, did not respond to phone or e-mail messages.

Contact the reporter at ctoutant@alm.com.

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