In an effort to to avoid facing a class action lawsuit, Allstate attempted to offer a settlement to the named plaintiffs of the case Chen, et al., v. Allstate Ins. Co. To do this they set aside $20,000 dollars in an escrow account and offered a judgment on their part to Richard Chen and Florencio Pacleb, the two who are named for in lawsuit which alleges that Allstate violated consumer rights by sending texts and calls that were unsolicited. The two are seeking $500 in damages for each violation of the Telephone Consumer Protection Act that Allstate committed to go to all those affected by Allstate’s practices.
Allstate’s move is an answer to a Supreme Court case known as Campbell-Ewald v. Gomez, where it was decided that a defendant cannot simply pay off named plaintiffs to avoid a class action lawsuit. There was however a gray area open where it was possible for a defendant to place the monetary settlement in an escrow fund for the named plaintiffs and then enter their own judgment so as to try and avoid the class action portion, and this is what Allstate was attempting to use.
However, the Ninth Circuit Court that presided over this action that Allstate took has decided that the case still remains a class action lawsuit and that the plaintiffs, for the time being at least, can still move ahead with their case. The decision was rendered on April 16th 2016.
Allstate will most likely appeal the judgment all the way to the Supreme Court if they have to, according to the attorneys representing the plaintiffs in the case.
Whereas there had been question before about the hypothetical effect that Campbell-Ewald v. Gomez would have on cases like this, it seems there is a real world example that tests just what the decision means for large entities and those who would bring class action lawsuits against them. Going forward Chen, et al. v. Allstate Ins. Co., looks to define the legacy of the earlier Supreme Court ruling.