Citgo Wants Tech Firms to Pay $8M Text-Message Settlement

MILWAUKEE (CN) – Citgo Petroleum Corp. claims two technology companies are liable for an $8 million settlement it reached this summer in a federal class action accusing it of sending text messages to contest participants without permission.

Matthew Gottlieb filed the class action a year ago on behalf of himself and others who received text messages from the gas giant without permission during the months of August, October or November 2016.

The case stems from Citgo’s text-to-win sweepstakes contests that launched in 2015 and took place at concert venues, amusement parks and gas stations.

According to a lawsuit Citgo filed Monday in Milwaukee County Circuit Court, the oil and gas company contracted with Wisconsin vendor MTI Connect LLC dba Black Canyon, which worked with Georgia tech firm mGage LLC to use its proprietary text-messaging service to implement the contests.

Documents obtained during discovery reportedly show that Gottlieb and about 30,000 other sweepstakes entrants did not receive an opt-in text that Citgo says it authorized and approved for Black Canyon to use in the system.

The program was designed to employ a “double opt-in protocol” where contestants could “Reply ‘Y’” to a confirmation text that asked for their consent to receive up to four texts a month from Citgo, according to this week’s 20-page lawsuit penned by attorney Gregory Heinen with Foley & Lardner in Milwaukee.

“Tens of thousands of contest entrants, including Gottlieb, did not receive the ‘Reply Y message’ mandated by the double opt-in protocol,” the complaint states. “These failures were caused by the actions of Black Canyon, problems with the mGage text-messaging service, or a combination of those factors.”

Citgo agreed in July to settle Gottlieb’s Telephone Consumer Protection Act class action for $8 million. The deal has been preliminarily approved by a federal judge in Florida.

The gas giant now wants a Wisconsin judge to declare that Black Canyon and mGage are responsible for the $8 million payment and up to $300,000 in settlement administration costs.

“While Citgo denied that its text messages violated the TCPA, Black Canyon and/or mGage’s failure to send the confirmatory ‘Reply ‘Y’’ text to Gottlieb and a large number of other members of his purported class provided a non-frivolous basis on which Gottlieb could sue Citgo, forced Citgo to incur substantial costs and fees to defend against Gottlieb’s claim, and created a risk that the court would reject Citgo’s position and find it liable for TCPA violations and for statutory damages that could total $300 million,” the lawsuit states.

Citgo asserts claims of contractual indemnification, breach of contract, negligence and misrepresentation.

Black Canyon and mGage LLC did not immediately respond Tuesday to email requests for comment.

Citgo also did not respond to an email seeking comment.

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