Campbell Ewald Can't Shake Suit Over Text Ads

Campbell-Ewald must face a potential class-action lawsuit for allegedly sending unsolicited text messages as part of an ad campaign for the Navy, the Supreme Court ruled today.

The agency attempted to end the litigation by to pay $1,500 to Jose Gomez -- the consumer who brought the case and hoped to serve as class representative. The most that Gomez could have obtained as an individual was $1,500. But a class-action against Campbell-Ewald could potentially cost the company millions.

Campbell-Ewald said its settlement offer rendered Gomez's claim moot.

The Supreme Court rejected the agency's argument in a 6-3 decision. "We hold that Gomez’s complaint was not effaced by Campbell’s unaccepted offer to satisfy his individual claim," Justice Ruth Bader Ginsburg wrote for the majority.

The dispute dates to 2010, when Gomez sued Campbell-Ewald for allegedly violating the Telephone Consumer Protection Act with an allegedly "bungled" texting initiative. That law prohibits companies from using autodialers to send text ads to consumers without their written consent. The statute provides for damages of $500-$1,500 per violation.

Gomez says in court papers that he received a text ad sent by Campbell-Ewald "even though he had never consented to receive it and was nearly 40 years old at the time -- far above the Navy-approved age range." Gomez also says Campbell-Ewald didn't verify that its list of recipients had consented to receive text messages.

The dispute drew the interest of the White House as well as numerous business groups, including the U.S. Chamber of Commerce. The Obama administration sided with Gomez. U.S. Solicitor General Donald Verilli argues in a friend-of-the-court brief that Gomez was entitled to pursue a class-action, although he was offered the maximum amount of damages he could receive as an individual.

But the Chamber of Commerce said consumers shouldn't be allowed to proceed with class actions when defendants offer to settle by paying the maximum amount of statutory damages. "Allowing such class actions to proliferate harms defendants and the judicial system alike, because it encourages lawsuits and discourages settlements," the Chamber argued in a friend-of-the-court brief.

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