Autodialing Suit Against Discover Settles for $8M

(CN) - Discover will pay $8.7 million to settle a federal class action over its autodialing system that allegedly called consumers without permission.

Andrew Steinfeld and Walter Bradley are lead plaintiffs in the amended complaint filed against Discover Financial Services and Discover Bank in May 2013 after having reached a settlement of their individual class actions.

Their complaint noted that the Federal Communications Commission had cited Discover in June 2007 for violations of the Communications Act and FCC rules governing telephone solicitations and unsolicited advertisements.

That citation warned Discover that future violations of that nature could lead to "monetary forfeitures not to exceed $11,000 for each such violation or each day of a continuing violation."

U.S. District Judge Jeffrey White in San Francisco last week granted final approval to the parties' settlement, which includes a provision that effectively prevents Discover from using the autodialing system in the future.

"The settlement agreement provides for 'prospective practice changes,' by which settlement class members can submit a revocation request to end all automated or auto-dialed telephone calls from defendants," White wrote.

More than 8 million prospective class members received notice of the $8.7 million deal.

Distribution of that fund depends on how many people submit claims. In addition to covering settlement cots, a possible cy pres feature would distribute unclaimed settlement funds among organizations most likely to benefit class members.

Gary Sibley had been one of several class members to unsuccessfully challenge the settlement, which he claimed provided "inadequate" relief.

"The court finds that the class definition is sufficiently definite and readily ascertainable, and it overrules the objections," White wrote. "The court finds that the settlement agreement is fair, reasonable and adequate."

In a separate order, White awarded more than $2.1 million in attorneys' fees and $2,000 in incentive awards for each named plaintiff.

Attorneys for the plaintiffs, at Lieff, Cabraser, Heimann & Bernstein, did not return a request for comment.

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