Papa John’s (PZZA) Target of $250 Million Illegal Text Message Lawsuit; Stock Falls

By on December 7, 2012
Papa Johns PZZA stock class action lawsuit

U.S. pizza restaurant chain Papa John’s (NASDAQ: PZZA) is the target of a $250 million class action lawsuit for allegedly sending unsolicited text messages to potential customers.   On November 14, several media outlets reported that a federal judge certified the spam text message case, allowing the nationwide action to proceed.

Shares of Papa John’s fell more than 5% following the judge’s decision to certify the class.

Sending unsolicited text messages is a violation of the Telephone Consumer Protection Act of 1991 (TCPA), which prohibits companies from distributing advertisements through text messages without a consumer’s prior consent or opt-in into the service.

The lawsuit alleges that Papa John’s restaurants sent 500,000 unsolicited spam messages in 2010, in an effort to acquire new customers.  The text messages offered discounts for pizza, and a number of patrons said that they had been receiving 15 or 16 consecutive texts, the lawsuit said.

Papa John’s launched the email blasts with the help of text messaging marketing provider, OnTime4U, which is also a defendant in the action.  After the pizza chain was first sued in April 2010, the company allegedly severed their partnership with OnTime4U.

The class action lawsuit is seeking $500 per text message with some awards reaching $1,500 if a jury decides that Papa John’s willfully violated the law.

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