Fax machines in veterinary hospitals around the country hummed and whirred last month as they churned out one more official-looking but unsolicited document. Some recipients, leery of scams and spam, didn't trust that the "Notice of a class action settlement" was authentic. One of them took to a message board of the Veterinary Information Network, an online community for the profession and parent of the VIN News Service, asking if it was legitimate.
The settlement is the result of a lawsuit brought by a pair of hospitals in Illinois against Roadrunner Pharmacy Inc. and Covetrus Inc. for sending unsolicited advertisements by facsimile "without prior express invitation or permission, or without the required opt-out notice, in violation of the Telephone Consumer Protection Act." Known as the TCPA, the 1991 law restricts telephone and fax solicitations.
Covetrus is an international animal health company providing product distribution, practice management software and online pharmacy services for veterinarians. It owns Roadrunner Pharmacy, which sells compounded veterinary medications.
Notices of the class action settlement were faxed — an irony remarked on by some recipients — to anyone who'd received at least one fax from Roadrunner Pharmacy or Covetrus on any of 30 specified days between Dec. 13, 2016, and Nov. 14, 2019. (See notices and claim forms in the Preliminary Approval Order.) Recipients, known as the "settlement class," were identified based on fax transmission logs from defendants' customer database.
The settlement doesn't identify how many practices were affected; however, it does say that the calculation of the settlement amount was based on 50,366 transmissions.
Covetrus and Roadrunner deny liability, according to the settlement. They argue that they were entitled to send the faxes to individuals with whom they had an established business relationship.
"Notwithstanding their disagreements," the parties have proposed a settlement to resolve claims, the notice says. The defendants said they settled, in part, due to the additional expense of continued litigation, according to court documents.
Without admitting any fault or liability, and in exchange for releasing all claims in the lawsuit, Covetrus and Roadrunner have agreed to make up to $9,065,880 available to pay settlement class claims, incentive awards to the hospitals that served as plaintiffs, plaintiffs' attorney fees and administrative costs.
Each person who submits a signed and approved claim form by the Dec. 8 deadline will be mailed a check for $180 times the number of faxes received.
The practices that brought the claim — Ambassador and Oak Park animal hospitals — will be paid $15,000 each as incentive awards. The plaintiff's attorneys, Bock, Hatch and Oppenheim, will be paid more than $2.8 million.
The Chicago-based law firm is representing the Ambassador Animal Hospital in two other junk fax lawsuits, against Hill's Pet Nutrition Inc. and Elanco Animal Health Inc. In the Hill's case, parties are in settlement discussions, with a report to the court due in December. Motions are still being filed in the Elanco case.
VIN News was unable to obtain a comment from the plaintiff hospitals in the Roadrunner case. Lead attorney Philip Bock declined to answer VIN News questions.
The court has preliminarily approved the settlement, which is subject to a fairness hearing on Dec. 15 in the Circuit Court of Lake County, Waukegan, Illinois.
The fairness hearing is the last step, according to Raphael Moore, VIN general counsel. "This is the court's final chance to decide if the proposed settlement is fair," he explained. "[T]he court can also decide the settlement isn't fair, or there could be objections or comments from class members. Since the settlement is essentially an agreement by everyone other than the injured parties, the judge is the only one who can protect them, so this isn't just a formality. That being said, it is not common for the settlement to not be approved."
Assuming there are no issues, payouts could begin immediately after the hearing, assuming systems are in place for sending out funds, Moore added.
Veterinarians: questions, cheers, jeers
Veterinarians' attitudes about junk fax litigation and settlement payments run the gamut, judging from conversations on VIN message boards. In 2018, when Heska Corp., a business dealing in veterinary diagnostic equipment and supplies, agreed to pay $6.75 million to settle a lawsuit brought by another Illinois veterinarian, Dr. Shaun Fauley, reactions ranged from celebrating the unexpected dividends; to feeling that the small payments weren't worth the effort; to questioning the merits of the lawsuits and the lawyers who bring them.
Dr. Paul Gustafson, who owns an animal hospital in Newport News, Virginia, reflected the views of many when he wrote: "[J]unk fax suits are well worth joining, takes a few seconds to respond, and every once in a while I get a nice surprise." At the time, Gustafson said he'd recently reaped almost $2,000 in fax lawsuit payouts in a five-week period.
Others suggested that supposed "free money" comes with a price. Dr. Peter Jackson, who owns a small animal hospital in Western Michigan, asked, "[W]ho is going to pay for this? I'm guessing it's us as customers who will be charged more [for] the products and services we purchase from HESKA."
He continued, "Maybe it's me, but I don't think my time is so valuable that I want to sue a company for a fax coming over my machine. I guess there are people out there that have nothing better to do with their time and effort. As for me, I'll spend my extra time furthering my education by catching up on cardiology or GI disease vs. suing some company for faxes."
Some veterinarians took exception to what they considered to be opportunistic lawyers bringing the lawsuits. Others were put off by the large payouts to attorneys. In the Heska settlement, attorneys' fees ran to $2.25 million.
Dr. Debbie Sprong, a relief veterinarian in northeast Maryland, wrote on VIN that large rewards for attorneys in contingency cases are critical to the class action process.
"The attorneys put in huge amounts of time for class action suits for which they aren't paid if they don't win," she said. "Going against huge companies is no small undertaking. Were it not for the potential large payment for the case if won, class action suits would go nowhere. The large companies would then never be held accountable for their actions. If the consumers had to pay for the class action suit, it would not happen."
There are some indications lawsuits are having a corrective impact. Moore pointed out that TCPA litigation has decreased in recent years. One analysis shows that such complaints were down 31% in 2020 compared with a peak in 2016 of 4,770 cases. "Generally, that is credited to the expense in TCPA litigation and resulting compliance by companies," Moore said. In other words, companies stung by the cost of settlements in this area are doing a better job of complying with federal rules.