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Cullan and Cullan LLC v. M-Qube, Inc.

United States District Court, D. Nebraska

January 30, 2014

CULLAN AND CULLAN LLC, individually and on behalf of all others similarly situated; Plaintiff,
M-QUBE, INC., a Delaware corporation; MOBILE MESSENGER AMERICAS, INC., a Delaware Corporation; CF ENTERPRISES PTY., LTD., an Australian Company; and JOHN DOES 1-200, Defendants.


JOSEPH F. BATAILLON, District Judge.

This matter is before the court on Richard Geier's motion to intervene, Filing No. 38, and on plaintiff Cullan and Cullan, LLC's ("Cullan") unopposed motion for preliminary approval of a proposed class action settlement, Filing No. 29.[1] Richard Geier seeks to intervene for the limited purpose of objecting to the proposed settlement.

This is a putative class action involving an alleged practice known as "cramming, " that is, placing unauthorized, misleading, or deceptive charges on a consumer's cellphone bill.[2] The plaintiff law firm is a consumer who is an alleged victim of this practice. Defendants M-Qube, Inc. and Mobile Messenger Americas, Inc. ("Mobil Messenger") are affiliated companies under common ownership and control. See Filing No. 56, Index of Evid., Ex. 6, Declaration of Darcy Wedd ("Wedd Decl.") at 1 (Filing No. 56-5 at ECF p. 1). Defendant Mobile Messenger and M-Qube are identified in the plaintiff's complaint as mobile aggregators and application providers who act as intermediaries between third-party mobile content providers (who purportedly "market and sell subscriptions to a variety of mobile text message services") and wireless carriers-they facilitate payment transactions between third-party companies, consumers, and wireless carriers Filing No. 1, Complaint at 3 (Filing No. 1 at p. 3). Defendant CF Enterprises, Ltd., owns and operates one such mobile content provider,; and John Does 1-200 are "unknown third party Mobile Content providers" that contract with M-Qube and/or Mobile Messenger for billing of the products allegedly sold by John Does 1-200 to the plaintiff and purported class members. Id. at 2-3.[3]

In its complaint, filed on June 6, 2012, the plaintiff alleges that the defendant deceptively caused and continues to cause "consumers to become subscribed, without consumer's authorization, to so-called mobile content services so that it can impose recurring monthly charges onto consumers' wireless telephone bills." Id. at 4. The plaintiff, a law firm in Omaha, Nebraska, alleges that it was billed for unauthorized subscriptions on its wireless telephone bill. Id. at 5. It asserts a claim for violations of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. ยง 227 et seq., and for tortious interference with a contract and unjust enrichment under state law. Id. at 8-12 (Filing No. 1 at ECF pp. 8-12).

The court held a hearing on various motions on October 29, 2013. The parties were ordered at that time to submit additional briefing. The court has received and reviewed that additional briefing and evidence.


In support of his motion, purported intervenor Richard Geier has shown that he is the named plaintiff in a separate purported class action suit against Mobile Messenger that was filed in the Superior Court for the State of Washington on October 17, 2012, and removed to the United States District Court for the District of Washington on February 26, 2012. Filing No. 40, Affidavit of Toby J. Marshall ("Marshall Aff.") (Filing No. 40 at p. 1; see Geier v. M-Qube, Inc., Case No. 2:13-cv-00354 (W.D. Wash. Feb. 26, 2012) (the "Washington Action"). In that action, Geier, on behalf of a purported class, alleges unfair and deceptive business practices by Mobile Messenger in violation of the Washington Consumer Protection Act, and also asserts claims for conversion and unjust enrichment under state law. Filing No. 40, Marshall Aff. at 2 (Filing No. 40 at ECF p. 2); Filing No. 41, Index of Evid., Exs. 2-5 (Filing No. 41-1, 41-2, 41-3, 41-4, and 41-5)[4]. Geier objects to the proposed settlement in this action, arguing it is unfair, unreasonable, inadequate, and detrimental to the interests of class members. Filing No. 39, Intervenor's Brief at 5-8 (Filing No. 39 at ECF p. 5-8).

The record shows that in the Washington case, the district court denied Mobile Messenger's motion to compel arbitration or dismiss. Filing No. 55, Index of Evid., Ex. M, Transcript of Geier Hearing dated Oct. 17, 2013 (" Geier Hr'g Tr.") at 52-58 (Filing No. 55-14 at ECF pp. 52-58).[5] That action is set for trial on April 6, 2015. Id. at 59. Also, the district court in Geier has indicated that it would enter a stay of that litigation if this court were to preliminarily approve the class action settlement. Id. at 60 (Filing No. 55-14 at ECF p. 60). Court records indicate that M-Qube and Mobile Messenger have appealed the denial of the motion to compel arbitration or dismiss, and a motion for a stay pending that appeal is presently pending. See Geier v. M-Qube, Inc., Case No. 2:13-cv-00354, Filing Nos. 39, Notice of Appeal, 40, Motion for Stay (W.D. Wash. Nov. 15, 2013).

Geier argues that the settlement proposed in this case subsumes his claims, and those of the purported class, in the Washington case. See Filing No. 55, Index of Evid., Ex. L, Transcript of hearing dated Oct. 29, 2013 ("Hr'g Tr.") at 30-32 (Filing No. 55-13 at ECF pp. 30-32);[6] see also Filing No. 55, Index of Evid., Ex. M, Geier Hr'g Tr. at 5-6 (Filing No. 55-14 at pp. 5-6) (statement by Mobile Messenger's counsel that the Washington plaintiffs would be bound by the class action settlement herein). Geier asserts that the alleged potential charges at issue exceed $225 million nationwide, exclusive of the exemplary or punitive damages allowed in jurisdictions such as Washington. Filing No. 39, Intervenor's Brief at 4; see also Filing No. 56, Index of Evid., Ex. 6, Wedd Decl. at 7 (Filing No. 56-5 at ECF p. 7) (noting that the damages sought in the Fields case were $780 million and in the Geier case, $225 million). He contends that his recovery under the settlement herein would be substantially less than he would be entitled to recover under Washington consumer protection laws. Filing No. 39, Brief at 4-5 (Filing No. 39 at ECF pp. 4-5).

The parties have submitted a Stipulation of Settlement ("Settlement" or "Agreement") and seek preliminary approval of that Agreement. Filing No. 30, Brief, Ex. A, Stipulation of Settlement (Filing No. 30-1). The parties seek certification of a class consisting of:

All current and former Wireless Subscribers Nationwide, who, at any time from January 1, 2010 to the Notice Date: (a) incurred any charge, whether paid or not, for Mobile Content associated with any Released Party; (b) received any message from any Premium Short Code or through any Wireless Carrier-billed program offered by or administered through any Released Party; or (c) received any message or incurred any charge, whether paid or not, related to any Premium Short Code or Wireless Carrier billed program offered by or administered through any Released Party.

Filing No. 30, Ex. A, Stipulation of Settlement at 10 (Filing No. 30-1 at ECF p. 11). A "premium short code" is defined in the agreement as "any short code that appeared, or at any time after January 1, 2010, was equipped to appear on a Settlement Class member's mobile phone bill in conjunction with a separate charge." Id. at 8 (Filing No. 30-1 at p. 9). Mobile Messenger agrees to provide a settlement fund of $6 million, from which all approved claims, claims, notice expenses, claims administration expenses, incentive awards, and attorney fees will be paid.[7] Id. at 12 (Filing No. 30-1 at ECF p. 13). In addition, Mobile Messenger agrees to make certain "service improvements and assurances relating to the complained-of conduct, " including a new process for administering premium SMS opt-ins for its Mobile Content provider clients for three years with a requirement that "Mobile Messenger Companies or Wireless Carriers, and not any Third Party Content Provider, must themselves control and be responsible for administering and confirming all Wireless Subscribers opt-ins to Mobile Content charges administered through short codes operating through the Mobile Messenger system" and must maintain records. Id. at 16-19 (Filing No. 30-1 at ECF pp. 17-20); Ex. 2, Notice of Proposed Settlement at 2 (Filing No. 30-1 at ECF p. 47). The Agreement provides for a refund in the amount of $100.00 to settlement class members for each unsolicited text from any premium short code administered through Mobile Messenger. Id. at 19 (Filing No. 30-1 at ECF p. 20). The agreement further provides that if there are funds remaining after paying the claims and expenses, the remaining funds are the property of Mobile Messenger. Id. at 26 (Filing No. 30-1 at ECF p. 25).

The Settlement purports to release and discharge liability for all claims against:

[A]any and all of the following parties, as well as their marketing agents and/or licensors and including and any of their respective predecessors, successors, assigns, parents, subsidiaries, divisions, departments, companies under common ownership and control and any and all of their past, present and future officers, directors, employees, stockholders, partners, agents, servants, successors, attorneys, representatives, subrogees and assigns, those Released Parties including without limitation: (i) Defendants, Mobile Messenger, the Wireless Carriers, and the Third Party Content Providers; (ii) Game Theory, LLC; Edoc Ventures, LLC; Elsie Bay Holdings, LLC; Forest Bay Holdings, LLC; Lovac Ventures, LLC; Mobile Plus, Inc.; True Digit, LLC; Sandy Hill Bay Holdings, LLC; Savanah Bay Holdings, LLC; Social Hour; Viveli, Inc.; Third Wind Productions, LLC; Crow Enterprises, LLC; Little Harbour Holdings, LLC; Windward Point Holdings, LLC; Mobile Sapphire, LLC; Dormart, LLC; and PlayPhone, Inc.; and (iii) Certain parties (John Does 1 through 74), the identities of each of whom are known to Class Counsel and Mobile Messenger's Counsel.

Id. at 9 (Filing No. 30-1 at p. 9). The agreement further provides that the identities of John Does 1 through 74 are "known to Class Counsel and Mobile Messenger's Counsel and will be made available to any Settlement Class member who requests such information and executes a confidentiality agreement, the form of which shall be agreed upon by the Parties prior to the issuance of any notice under the Notice Plan." Id. at 8 (Filing No. 30-1 at ECF p. 9). Further, the agreement excludes numerous other content providers including "any Third Party Content Provider who charged for Mobile Content through Premium Short Codes 23532, 23687, 40339, 76363, 77899, 98411, 22522 or 89474." Id. at 9 (Filing No. 30-1 at ECF p. 10).

The Settlement proposes a notice plan that includes "Direct notice, Internet publication Notice and targeted Internet Advertising, " disseminated via postcard or email. Id. at 26-27 (Filing No. 30-1 at ECF p. 27-28). The parties propose that Ben Barlow and Ralph Phalen be appointed class counsel and submit the resumes of those attorneys. Filing No. 30, Ex. B (Filing No. 30-2 at ECF 1-9). The Settlement Class members must submit claims under penalty of perjury and must provide information including names, addresses, telephone numbers, wireless numbers that received messages, dates, descriptions, and amounts of subscription charges, total amounts of refunds sought, statements that the charges were unauthorized, and statements that the class member has not received a refund from any source for the charges. Id., Ex. 1, Claim Form ...

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