Heartland Automotive Services, the largest Jiffy Lube franchisee in the United States, is prepared to pay out millions in services and/or cash to settle class action suits brought against the company for what plaintiffs argue was an illegal wireless spam campaign Heartland initiated in April 2011. A hearing has been set later this month to get court approval of the proposed settlement.
According to a court filing dated Aug. 1 by plaintiffs in support of the proposed resolution, more than 2.3 million customers received on April 21, 2011 a commercial text message promoting 45 percent off a “signature service oil change” by enrolling in an “EClub.” The message was sent by a third party, TextMarks Inc., on behalf of Heartland.
According to the plaintiffs, Heartland and TextMarks uploaded a list of more than 2.3 million former Jiffy Lube customers and transmitted text messages en masse to them without the customers’ express consent to receive such text messages. The plaintiffs — who represent the recipients of these text messages — argue that Heartland and TextMarks violated the Telephone Consumer Protection Act (TCPA).
The defendants disagree, arguing (among other things) that Heartland cannot be held liable for the alleged conduct of TextMarks, or vice versa; that the text messages were not sent using an automatic telephone dialing system (a key point under the TCPA); and that the former Jiffy Lube customers had provided their prior express consent to receive text messages.
Class action suits in multiple jurisdictions were filed against the defendants. The cases were eventually consolidated into a single proceeding before the U.S. District Court of California – San Diego division. Heartland sought to compel arbitration and to dismiss the consolidated suit. The court denied both of Heartland’s motions. Mediation of the case began in April 2012. In time, a deal was struck.
Heartland has agreed to provide each member of the class a certificate that can be redeemed in one of two ways:
• The certificate can be exchanged for a number of Jiffy Lube services, such as an antifreeze top-off service, or approximately $17.29 off any service Jiffy Lube offers; or
• After the period for use of Jiffy Lube services expires, class members can redeem the certificate for as much as $12.97 in cash.
The services and cash value of the certificates being made available to the class is roughly $46.84 million and $35.13 million, respectively. Additionally, the settlement provides for an injunction requiring Heartland and TextMarks to ensure that informed written consent be obtained by affirmative action on the part of the customer through a clear written statement regarding the receipt of text message advertisements. And, the defendants would be required to retain proof of all consumer consent to receive text message ads.
If the proposed settlement is not approved by the court, the defendants are prepared to litigate the case through summary judgment and trial, and Heartland would pursue an appeal on its motion to compel arbitration.
A representative of Heartland did not respond to our request for comment on the proposed settlement.