Legal Featured Article
November 14, 2012
Spam-Related Lawsuit Against Pizza Chain Papa John's May Lead to Damages that Top $250M
By Ed Silverstein, TMCnet Contributor
A class-action lawsuit was filed against pizza chain Papa John’s after the company sent some half-million unwanted texts to customers’ mobile phones in 2010.
The plaintiffs are looking to get paid damages of up to $250 million, with them asking for $500 for each text message received. The amount per message could increase to $1,500 depending on whether laws were violated in the process. For the higher amount, the jury would have to conclude that Papa John’s “knowingly” broke the law, VentureBeat said.
Some customers even received 15 or 16 text messages in a row about the company – with some of them sent during the middle of the night, according to a report from Technorati. Often, the messages featured pizza specials.
"After I ordered from Papa John's, my telephone started beeping with text messages advertising pizza specials," Erin Chutich, a plaintiff in the lawsuit, said in a statement quoted by the news media. "Papa John's never asked permission to send me text message advertisements."
“Our lawsuit is about keeping spam from spreading from our email to our cell phones,” Chutich added.
Also named in the suit is a text message delivery service, OnTime4U, which was used by Papa John’s.
The U.S. Telephone Consumer Protection Act of 1991 prevents businesses from sending text message ads without customers’ permission, Technorati said.
But Caroline Oyler, Papa John's head of legal affairs, rejected the grounds for the lawsuit and issued a statement that said, "We don't agree with it and will continue to aggressively defend it. We'll continue to litigate the case and defend the lawsuit and move to have it dismissed."
Papa John’s also claims the texts were sent “by third-party vendors and a small number of franchisees,” VentureBeat reported.
Earlier this month, U.S. District Court Judge John C. Coughenour certified the nationwide class action case against Papa John's.
“The ruling paves the way for what could be one of the largest damages awards ever recovered under the federal Telephone Consumer Protection Act,” according to a statement from lawyers who brought the lawsuit.
"Many customers complained to Papa John's that they wanted the text messages to stop, and yet thousands of spam text messages were sent week after week," Attorney Donald W. Heyrich, who is representing the customers, said in the statement carried by TMCnet. "This should be a wakeup call to advertisers. Consumers do not want spam on their cell phones. If you do not have permission from your customers, do not send them text messages. It's as simple as that."
In other recent news about the company, Q3 2012 revenue was $325.5 million, a 6.5 percent increase from Q3 2011 revenue of $305.7 million. Also, Q3 2012 net income was $13.2 million compared to Q3 2011 net income of $11.1 million.
"During the third quarter, we achieved a significant milestone with the opening of our 4,000th restaurant," Papa John's CEO John Schnatter said in a statement. "Consumers and franchisees continue to put a premium on quality and that's where Papa John's wins. This translates into both strong global development and solid comparable sales results."
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Edited by Brooke Neuman
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