Jay Edelson

A federal judge has signed off on an $11 million settlement offered by Walgreen Co. to end a class action lawsuit over the company’s practice of sending prescription reminders to customers’ cell phones - even though more than a third of the settlement award will go to the plaintiffs’ attorneys.

On Nov. 23, U.S. District Judge Matthew F. Kennelly approved the settlement between the Deerfield-based retail drug store giant and a class of millions of its customers, represented in the action by named plaintiff Robert Kolinek.

The settlement, which was reached in October 2014 following a mediation session presided over by retired federal judge Wayne Andersen, called for Walgreen to set aside $11 million to be divided among more than 9 million class members, Kolinek as the class representative and attorneys from the firm of Edelson PC, of Chicago, who served as class counsel in the case.

According to court documents, the settlement would include $5,000 to Kolinek, $3.15 million to cover the costs of notification to class members and “settlement administration” and more than $2.8 million in attorney fees – or about 36 percent of the total settlement amount - payable to Edelson.

“The mere fact that this case settled before the parties engaged in full-scale formal discovery and summary judgment motion practice does not detract from class counsel's significant participation in this litigation and the effort they put in to secure a victory for the class,” Kennelly wrote in brushing aside objections to the attorney fee award. “Class counsel did not join this case at the eleventh hour; rather, they saw this case through from start (the filing of the suit) to finish (negotiating a valuable settlement), and they did so with the care and skill commensurate with their significant experience as lead counsel in other major class action litigations.”

Kolinek and Edelson launched the class action in 2013, alleging Walgreen violated federal telecommunications law by sending “prerecorded calls” to customers’ cell phones to remind them to refill their prescriptions.

While customers like Kolinek had willingly provided their cell phone numbers to Walgreen, the plaintiffs argued the customers had never expressly given Walgreen consent to use those numbers to deliver such prerecorded messages, allegedly helping the pharmacy retailer to increase its market share and, thus, running afoul of the federal Telephone Consumer Protection Act (TCPA.)

Violating the TCPA could result in statutory damages of $500-$1,500 per violation.

According to the court documents, the potential class of people who had received the unwanted prerecorded refill reminder calls on their mobile phones numbered around 10 million.

Walgreen had initially persuaded the court to dismiss Kolinek’s class action, arguing class members had voluntarily supplied the retailer with their cell numbers, and so consented to be contacted by Walgreen.

However, the plaintiffs persuaded the court to reconsider, arguing the court had incorrectly interpreted federal rules when it dismissed the case. The judge agreed, and certified the class. Settlement talks then followed.

The court preliminarily approved the settlement in April 2015.

In the months that followed, only about 20 people objected to the settlement, court documents said, out of a potential class of 9.2 million people.

The judge said this indicated little dissatisfaction with the settlement as proposed.

He said the settlement represented a fair conclusion for both the plaintiffs and Walgreen, when compared to taking the case to trial, as plaintiffs could face the risk of receiving nothing, should a jury find for Walgreen or the case again be dismissed, and Walgreen could, based on statutory damages, face a payout of around $4.6 billion.

The judge also discounted concerns over the actual payout to class members. While arithmetic might lead some to conclude the typical class member might receive just $1.20 from the settlement, Kennelly estimated there might be only about 230,000 valid eligible claims, producing an award of about $30 per class member.

And the judge said he believed the attorney fees awarded to Edelson represent a fair market rate for the services rendered by the plaintiffs’ lawyers, saying fee awards of 30 percent are “not unusual in the Seventh Circuit” in analogous cases.

Federal court records indicated Kolinek was also represented in the action by attorney Stefan L. Coleman, of Miama, Fla.

Walgreen was represented in the action by the firm of Drinker, Biddle & Reath, of Chicago.

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Drinker Biddle & Reath LLP Edelson PC

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