Whether a TCPA class settlement can pay the named plaintiff a few thousand dollars extra depends on the circuit. The Eleventh Circuit held in 2020 that these incentive awards are barred, and the First Circuit held two years later that they’re allowed if they fit Rule 23(e). For the defendant, the award is a small line item that can still sink or delay approval, and how the settlement treats it decides whether an objector’s appeal unwinds the whole deal or only the award.
What is an incentive award?
A payment to the named plaintiff on top of that person’s share of the class recovery. Courts also call it a service award. The Ninth Circuit described the usual purposes in Rodriguez v. West Publishing Corp., 563 F.3d 948 (9th Cir. 2009), writing that “Incentive awards are fairly typical in class action cases” and that they compensate the representative for work done for the class and for the risk of bringing the suit.
In TCPA cases the gap between the award and the class payout can be wide. Statutory damages are up to $500 per call or text, and a court may increase that to up to three times the amount if it finds the violation was willful or knowing, but a class settlement divides a fixed fund among thousands of claimants. A named plaintiff asking for $5,000 while class members get $40 each is a familiar fact pattern, and it’s the one objectors target.
Which courts prohibit incentive awards?
The Eleventh Circuit, which includes Florida and Georgia. In Johnson v. NPAS Solutions, LLC, 975 F.3d 1244 (11th Cir. 2020), a TCPA case over debt collection calls, the named plaintiff sought a $6,000 award and one class member objected. The court wrote that “Supreme Court precedent prohibits incentive awards like the one earmarked for Johnson here,” relying on two nineteenth-century decisions about common funds, Trustees v. Greenough and Central Railroad & Banking Co. v. Pettus.
The panel saw the award as more than pay for time. The opinion says that “Incentive awards are intended not only to compensate class representatives for their time (i.e., as a salary), but also to promote litigation by providing a prize to be won (i.e., as a bounty).” The full court declined to rehear the case in an August 2022 order, over dissents, so Johnson remains the rule in that circuit. Expense reimbursement for the named plaintiff is a different item, and Johnson treats it differently.
Which courts allow them?
Several others, including the First and Ninth Circuits. The First Circuit’s decision came out of a TCPA case. In Murray v. Grocery Delivery E-Services USA Inc., 55 F.4th 340 (1st Cir. 2022), the plaintiffs alleged that HelloFresh’s win-back telemarketing campaign violated the TCPA, and an objector attacked both the settlement’s allocation and the awards to the named plaintiffs. The court held that “incentive payments to named class representatives are not prohibited as long as they fit within the bounds of Rule 23(e).”
Murray isn’t a clean win for settling parties, though. The same opinion vacated the approval, because the class contained groups with claims of different value and no separate counsel spoke for each group. The court found that made it too hard to tell whether the settlement treated class members equitably. A defendant that reads Murray only for the incentive-award holding misses the part that actually unwound the deal.
In the Ninth Circuit, which covers California, Rodriguez allows awards but polices how they’re arranged. Class counsel there had promised the named plaintiffs, at the start of the case, to seek awards that rose with the size of the recovery. The court held that those agreements “put class counsel and the contracting class representatives into a conflict position from day one,” and it disapproved of them.
| Court | Rule on incentive awards | What it means for a TCPA settlement |
|---|---|---|
| Eleventh Circuit (Johnson, 2020) | Prohibited in common-fund settlements | Leave the award out, and limit any payment to litigation expenses |
| First Circuit (Murray, 2022) | Allowed within Rule 23(e) | Approval also requires equitable treatment of each group in the class |
| Ninth Circuit (Rodriguez, 2009) | Allowed, reviewed for conflicts | No award promised at the outset or tied to the size of the recovery |
| Second and Seventh Circuits (cited in Murray) | No blanket ban | Courts review the amount for reasonableness |
Why should a defendant care about the plaintiff’s award?
Because the defendant’s real goal is a final, approved release, and an objection to the award delays finality just as much as an objection to the fund. The award is usually paid out of money the defendant has already agreed to pay. The defendant gains nothing from a larger one and loses a lot if an appeal over it holds the release open for two years.
Rule 23(e)(2) lets a court approve a class settlement only after finding it fair and adequate under several factors that include whether “the proposal treats class members equitably relative to each other.” An oversized award is the easiest way for an objector to argue that one class member got better treatment than the rest. Rule 23(e)(3) adds a disclosure duty: “The parties seeking approval must file a statement identifying any agreement made in connection with the proposal.”
The practical fix is drafting. A settlement agreement should say that the court’s ruling on any incentive award doesn’t affect the rest of the deal, and that a reduced or denied award won’t let either side walk away. The defendant should usually take no position on the amount beyond agreeing not to oppose a request up to a stated cap. Then an objector who appeals the award can win or lose that point without disturbing the class release.
What to pull before negotiating a class settlement
- Put a litigation hold on the call and text logs for the class period, the platform and dialer data, and the consent records that define who is in the class.
- Export the opt-out and internal do-not-call history with dates, since those records often split the class into groups with claims of different value.
- Pull the Registry scrub records and the version dates for any Do Not Call subclass.
- Collect the vendor and lead-source contracts and scripts, along with any indemnity provisions that affect who funds the settlement.
- Have a lawyer review the file and the proposed terms before agreeing to any incentive award, fund allocation, or payment to the named plaintiff.
The allocation question in step two is where Murray went wrong, and it’s the one most defendants leave to plaintiffs’ counsel. A class that mixes Registry claims, internal-list claims, and dialing claims may need separate counsel or a defensible allocation formula, and TCPA settlement defense lawyers will want to see how the call data divides the class before signing a term sheet. The earlier posts on CAFA notice for TCPA class settlements and cy pres terms cover two other approval issues that come up in the same motion.
Questions about incentive awards in TCPA settlements
Does Johnson apply to individual TCPA settlements?
No. Johnson addressed awards paid from a class settlement fund under Rule 23. A company that settles a single plaintiff’s claim before class certification can pay whatever the parties agree, because no court approval is required and no absent class members share the money. The earlier post on individual settlement release terms covers that situation.
Can a TCPA settlement in the Eleventh Circuit reimburse the named plaintiff’s expenses?
Johnson drew a line between personal compensation, which it barred, and the expenses of carrying on the suit, which Greenough allowed. Reimbursing documented litigation costs is a different request from an award for time and effort, and settling parties in that circuit should keep the two separate in the agreement and the motion.
Does the defendant have to agree to an incentive award?
No. The award is a negotiated term, and the court decides it on the plaintiff’s motion. Many defendants agree not to oppose a request up to a cap because it costs them nothing out of the fund. A defendant can decline, and in the Eleventh Circuit it should, since an award the court can’t approve only invites an objection.
What happens if the court cuts the award?
That depends on the agreement. If the settlement makes the award a condition of the deal, a reduced award can give the plaintiff a reason to back out or appeal. If the agreement makes the award severable, the court’s ruling on it leaves the release and the class payments intact.
If your company is negotiating a TCPA class settlement
If your company is settling a TCPA class action, the allocation among groups in the class and the terms of any payment to the named plaintiff usually decide whether the settlement survives objectors. Rosenberger + Kawabata represents businesses defending TCPA lawsuits and class actions through its business litigation practice, including class settlements that face objections over incentive awards. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The statute is the Telephone Consumer Protection Act, 47 U.S.C. § 227. The settlement-approval rule is Federal Rule of Civil Procedure 23.
The decisions discussed are Johnson v. NPAS Solutions, LLC, 975 F.3d 1244 (11th Cir. 2020), rehearing en banc denied, 43 F.4th 1138 (11th Cir. 2022); Murray v. Grocery Delivery E-Services USA Inc., 55 F.4th 340 (1st Cir. 2022); and Rodriguez v. West Publishing Corp., 563 F.3d 948 (9th Cir. 2009).
This post is general information about the Telephone Consumer Protection Act and related laws as of July 13, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Courts and the FCC change the rules in this area often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.