Fishman v. Tiger Natural Gas, Inc.

Filing 250

ORDER RE #177 MOTION FOR CLASS CERTIFICATION by Judge Alsup granting #186 #188 Motions for Extension of Time to File. (whalc1, COURT STAFF) (Filed on 11/20/2018)

1
2
3
4
5

IN THE UNITED STATES DISTRICT COURT

6
FOR THE NORTHERN DISTRICT OF CALIFORNIA
7
8
9

11
For the Northern District of California

United States District Court

10

EMILY FISHMAN, individually and on behalf of
all others similarly situated, and SUSAN FARIA,
individually and on behalf of all others similarly
situated,

12
13
14
15
16

Plaintiffs,

No. C 17-05351 WHA
ORDER RE MOTION FOR
CLASS CERTIFICATION

v.
TIGER NATURAL GAS, INC., an Oklahoma
corporation, COMMUNITY GAS CENTER,
INC., a Colorado corporation, JOHN DYET, an
individual, and DOES 2–100,
Defendants.
/

17
18

INTRODUCTION

19

In this putative class action for fraudulent telemarketing, plaintiffs move for class

20

certification and for relief from failing to meet their filing deadline. For the reasons below, the

21

motion for relief from plaintiffs’ late filing is GRANTED. The motion for class certification is

22

GRANTED IN PART AND DENIED IN PART.

23
24

STATEMENT
This order incorporates by reference the statement set forth in the order granting in part

25

and denying in part plaintiffs’ motion for discovery sanctions (Dkt. No. 249). In brief,

26

defendant John Dyet owned several telemarketing companies, including defendant Community

27

Gas Center, Inc. Beginning in 2014, CGC called PG&E customers to promote Tiger’s capped-

28

rate program, pursuant to which program Tiger’s supply rate for natural gas would be capped at

1

$0.69 per therm. This case stems from alleged misrepresentations made during these phone

2

solicitations to PG&E’s customers.

3

Plaintiffs Emily Fishman and Susan Faria enrolled in Tiger’s capped-rate program in

4

2015 after receiving telemarketing calls from CGC. For enrollees, the call consisted of two

5

parts: (1) a “sales call,” or sales pitch followed by (2) a “third-party verification call” (“TPV”).

6

During the sales pitch, CGC’s telemarketer made several alleged misrepresentations to

7

Fishman, including that (a) the California Public Utilities Commission had processed a request

8

from PG&E to increase its rates, (b) Tiger’s capped-rate, or “price-protection,” program was a

9

“free” program that would protect customers from PG&E’s supply rate increases, and (c)
Tiger’s rate for natural gas would be “a variable rate based on the market price.” All of these

11
For the Northern District of California

United States District Court

10

statements are borne out by a recording of the sales pitch made to Fishman.

12

Plaintiffs further alleged that CGC and Tiger recorded the sales call without their

13

consent, that the telemarketer failed to disclose Tiger’s actual price per therm, and that

14

following plaintiffs’ enrollment in the program Tiger failed to send written terms and conditions

15

that reflected the terms and conditions agreed to during their telephonic enrollment. CGC

16

enrolled over 26,000 customers in Tiger’s capped-rate program during the proposed class period

17

(Dkt. No. 177).

18

Based on the foregoing theories, the operative complaint asserted the following claims:

19

(1) violations of California’s Recording Law (California Penal Code §§ 632 et seq.); (2) breach

20

of oral contract; (3) violations of PG&E Gas Rule 23; (4) breach of third-party beneficiary

21

contract; (5) violations of California’s Consumers Legal Remedies Act; (6) fraud; (7) negligent

22

misrepresentation; (8) violations of the Regulations on Core Transport Agents (California

23

Public Utilities Code §§ 980–989.5); (9) violations of California’s False Advertising Law; and

24

(10) violations of California’s Unfair Competition Law (Dkt. No. 101). Plaintiffs seek to certify

25

the following classes:

26
27
28
2

1

1.

Tiger/PG&E Customer Class: All California consumers and businesses that

2

were customers of PG&E at the time they enrolled in Tiger’s capped-rate price

3

protection program after receiving a telemarketing call advertising the program

4

between August 18, 2013, and the present.

5

2.

Tiger/PG&E Consumer Sub-Class: All California consumers that were

6

customers of PG&E at the time they enrolled in Tiger’s capped-rate price

7

protection program after receiving a telemarketing call advertising the program

8

between August 18, 2013, and the present.1

9

This order follows full briefing and oral argument. Tiger is the only defendant to have
opposed plaintiffs’ motion for class certification. Following oral argument, at the Court’s

11
For the Northern District of California

United States District Court

10

request, plaintiffs submitted a proposed trial plan which narrowed the issues plaintiffs sought to

12

certify for class treatment. Plaintiffs now seek certification of the following claims only: (1)

13

violations of California’s Recording Law; (2) violations of California’s Consumers Legal

14

Remedies Act; and (3) violations of California’s Unfair Competition Law (Dkt. No. 243).2

15

ANALYSIS

16

Pursuant to FRCP 23(a), for a named plaintiff to obtain class certification, the court

17

must find: (1) numerosity; (2) common questions of law or fact; (3) typicality; and (4)

18

adequacy of the class representatives and counsel. The proposed class must also be

19

ascertainable. In addition to satisfying FRCP 23(a)’s prerequisites, the party seeking class

20

certification must show that the action is maintainable under FRCP 23(b)(1), (2), or (3).

21

Amchem Products, Inc. v. Windsor, 521 U.S. 591, 613–14 (1997). Plaintiffs seek certification

22

under FRCP 23(b)(3), which further requires predominance and superiority. This order first

23

addresses plaintiffs’ claim under California’s Recording Law before turning to their claims

24

under California’s Consumer Legal Remedies Act and California’s Unfair Competition Law.

25
1

26
27

In a supplemental filing, plaintiffs proposed adding a third sub-class consisting of California
customers of YEP Energy who enrolled in Tiger’s program (Dkt. No. 243 at 2). For the reasons discussed
below, certification of such a sub-class is unnecessary.
2

28

Plaintiffs have made a habit of violating Local Rule 3-4(c), which states that text of the parties’
papers must be “double-spaced with no more than 28 lines per page.” Plaintiffs shall please ensure their
compliance with this rule going forward.

3

1

1.

2

CALIFORNIA’S RECORDING LAW.
A.

Numerosity.

3

Numerosity is satisfied by showing that “the class is so numerous that joinder of all

4

members is impracticable.” FRCP 23(a)(1). The numerosity requirement is not tied to any

5

fixed numerical threshold, but courts generally find the numerosity requirement satisfied when a

6

class includes at least forty members. Rannis v. Recchia, 380 Fed. Appx. 646, 651 (9th Cir.

7

2010). Tiger’s records show that it has enrolled 26,637 customers (25,813 residential customers

8

and 824 businesses) through third-party telemarketing companies during the class period (Dkt.

9

No. 176-12).
Tiger argues that these figures include not only PG&E customers who signed up for

11
For the Northern District of California

United States District Court

10

Tiger’s price-protection program but also those who switched to Tiger from another CTA

12

(including YEP Energy). Plaintiffs do not dispute that they cannot distinguish between

13

customers who switched from PG&E and those who switched from YEP Energy or other CTAs.

14

Nevertheless, had Tiger maintained recordings of the sales pitches made to putative class

15

members (as required by Gas Rule 23), those recordings would have allowed plaintiffs to make

16

this determination. Tiger may not defeat class certification through its own failure to maintain

17

records. Accordingly, for the same reasons contained in the accompanying order regarding

18

plaintiffs’ motion for discovery sanctions, this order presumes that all customers Tiger enrolled

19

through CGC’s telemarketing during the class period were PG&E customers. Going forward,

20

Tiger bears the burden of demonstrating that any particular class member does not fit within the

21

class definition because she switched to Tiger’s program from another CTA. Numerosity is

22

demonstrated with respect to the class.

23

B.

Typicality.

24

Typicality is satisfied if “the claims or defenses of the representative parties are typical

25

of the claims or defenses of the class.” FRCP 23(a)(3). “The test of typicality is whether other

26

members have the same or similar injury, whether the action is based on conduct which is not

27

unique to the named plaintiffs, and whether other class members have been injured by the same

28

course of conduct.” Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1175 (9th Cir.
4

1

2010) (citation and quotation marks omitted). “Under the rule’s permissive standards,

2

representative claims are ‘typical’ if they are reasonably co-extensive with those of absent class

3

members; they need not be substantially identical.” Hanlon v. Chrysler Corp., 150 F.3d 1011,

4

1020 (9th Cir. 1998). With respect to plaintiffs’ Recording Law claim, Tiger raises only one

5

typicality concern.

6

Tiger argues that Faria’s Recording Law claim is not typical because Faria testified

call — namely her address and PG&E account number — to be confidential. This order

9

disagrees. Section 632(c) of the California Penal Code defines a “confidential communication”

10

as “any communication carried on in circumstances as may reasonably indicate that any party to

11
For the Northern District of California

during her deposition that she did not personally consider certain information disclosed on the

8

United States District Court

7

the communication desires it to be confined to the parties thereto. . . .” This test is an objective

12

one. Flanagan v. Flanagan, 27 Cal. 4th 766, 776–77 (2002). While “the privacy interest most

13

persons have with regard to” the type of information disclosed is relevant to determining

14

whether or not Faria had a reasonable expectation of privacy in her call with CGC, Kearney v.

15

Salomon Smith Barney, Inc., 39 Cal. 4th 95, 118 n.10 (2006), Tiger cites no authority

16

suggesting that Faria’s personal views regarding the confidentiality of her home address or

17

PG&E account number is determinative of her claim. Faria’s Recording Law claim is typical.

18
19

C.

Adequacy.

FRCP 23(a)(4) requires that “the representative parties will fairly and adequately protect

20

the interests of the class.” This prerequisite has two parts: (1) that the proposed representative

21

plaintiff and her counsel do not have any conflicts of interest with the proposed class; and (2)

22

that they will prosecute this action vigorously on behalf of the class. Hanlon, 150 F.3d at 1020.

23

On the current record, no evidence has been presented to indicate that plaintiffs have any

24

conflicts with other putative class members or that they or their counsel will not act vigorously

25

on behalf of the class. This requirement is satisfied.

26
27
28

D.

Commonality and Predominance.

The predominance inquiry “focuses on the relationship between the common and
individual issues.” Local Joint Executive Bd. of Culinary/Bartender Trust Fund v. Las Vegas
5

sufficient to satisfy the requirements of FRCP 23(a)(2) is not by itself sufficient to show that

3

those common issues predominate. Hanlon, 150 F.3d at 1022. The predominance inquiry

4

focuses on whether the proposed class is “sufficiently cohesive to warrant adjudication by

5

representative.” Culinary/Bartender Trust Fund, 244 F.3d at 1162. Among the considerations

6

that are central to this inquiry is “the notion that the adjudication of common issues will help

7

achieve judicial economy.” Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1189 (9th

8

Cir. 2001). Plaintiffs must show that common issues can be resolved through common proof.

9

Section 632(a) of the California Penal Code provides, in relevant part, that “[a] person

10

who, intentionally and without the consent of all parties to a confidential communication, uses

11
For the Northern District of California

Sands, Inc., 244 F.3d 1152, 1162 (9th Cir. 2001). The presence of common issues of fact or law

2

United States District Court

1

an electronic amplifying or recording device to eavesdrop upon or record the confidential

12

communication” violates the statute. Confidentiality requires “the existence of a reasonable

13

expectation by one of the parties that no one is ‘listening in’ or overhearing the conversation.”

14

Flanagan, 27 Cal. 4th at 772–73. As discussed above, because this test is an objective one, a

15

plaintiff’s subjective expectations of privacy do not control. Id. at 776–77. In light of the

16

rulings in the accompanying order on plaintiffs’ motion for discovery sanctions, the questions

17

of whether or not CGC’s sales calls to class members were “confidential communications,”

18

whether or not such calls were recorded by CGC without consent, and whether or not Tiger can

19

be held vicariously liable for CGC or Dyet’s conduct are common issues which will

20

predominate. Finally, because Section 637.2 provides for statutory damages per violation, there

21

is no concern that damages cannot be determined on a classwide basis.

22
23

E.

Superiority.

Class certification under FRCP 23(b)(3) is appropriate only if class resolution “is

24

superior to other available methods for fairly and efficiently adjudicating the controversy.”

25

Tiger does not contest superiority and this order finds the superiority element satisfied. Given

26

the relatively low recovery at issue, class members will not have an interest in individually

27

controlling the prosecution of separate actions. Neither party identifies any pending litigation

28
6

1

regarding plaintiffs’ Recording Law claim. A class action is accordingly a superior method of

2

resolving this claim.
CALIFORNIA’S CONSUMER PROTECTION STATUTES.

3

2.

4

Plaintiffs also seek to certify claims under California’s Unfair Competition Law,

Legal Remedies Act, California Business and Professions Code Section 1750 et seq. These

7

claims are primarily based on plaintiffs’ allegations that defendants made fraudulent or

8

misleading statements during telemarketing calls to putative class members. The dispositive

9

issue is whether these claims may be certified under FRCP 23(b)(3) and accordingly this order

10

need only address whether individual questions predominate. In light of Tiger’s stipulation that

11
For the Northern District of California

California Business and Professions Code Section 17200 et seq., and California’s Consumer

6

United States District Court

5

Fishman’s TPV call was substantially the same as those made to other putative class members

12

(Dkt. No. 157), the parallel order granting in part plaintiffs’ motion for discovery sanctions

13

substantially aided plaintiffs in showing a common course of conduct with respect to the class.

14

Nevertheless, because plaintiffs have failed to show that injury can be established on a

15

classwide basis, they have not met their burden of demonstrating that FRCP 23(b)(3)’s

16

requirements are met.

17

To be sure, “the presence of individualized damages cannot, by itself, defeat class

18

certification under Rule 23(b)(3).” Leyva v. Medline Indus. Inc., 716 F.3d 510, 514 (9th Cir.

19

2013). But plaintiffs still bear the burden of providing a damages model which shows that

20

“damages are susceptible of measurement across the entire class for purposes of Rule 23(b)(3).”

21

Comcast Corp. v. Behrend, 569 U.S. 27, 35 (2013). This damages model “must measure only

22

those damages attributable to” plaintiffs’ theory of liability. Ibid. Here, the problem is not

23

individualized questions regarding the amount of damages but rather plaintiffs’ failure to show

24

that a classwide method of proving the fact of injury is even possible.

25

Plaintiffs claim they can show the existence of damages on an aggregate, classwide

26

basis using PG&E’s data. Specifically, after plaintiffs signed up for Tiger’s program, their

27

respective PG&E bills listed their gas costs as charged by Tiger as well as PG&E’s “gas

28

procurement costs” (Dkt. Nos. 178, 179). Tiger’s records show putative class members’ gas
7

1

usage and the total amount charged by Tiger (for both the price of gas and additional fees), but

2

all agree plaintiffs need additional records from PG&E in order to determine how much a

3

putative class member would have paid had she stayed with PG&E as her gas provider.

4

According to the declaration of Kenneth Bohn, Tiger’s consultant who worked for

subject to certain variables such as credits, surcharges, and local and states charges.” Bohn

7

further explains that he is familiar with PG&E’s billing system, but is not aware that PG&E

8

maintains the total amount a CTA’s customer would have paid for gas had that customer

9

remained PG&E’s customer for gas supply. Moreover, to Bohn’s knowledge, “PG&E does not

10

have a report that subtracts, on a per-customer basis, the amount of the CTA’s charges from the

11
For the Northern District of California

PG&E for nearly twenty years, PG&E charges customers for gas based on “a market rate

6

United States District Court

5

amount PG&E would have charged for the commodity” (Dkt. No. 203-2 Exh. C ¶¶ 5, 11).

12

Other than the above-listed data points found on the face of plaintiffs’ individual PG&E

13

bills, plaintiffs’ claim that PG&E “clearly has in its database” such information appears to be

14

pure speculation by plaintiffs’ counsel. Plaintiffs never deposed anyone from PG&E on this

15

issue. Moreover, at the time plaintiffs filed their motion for class certification, they had not

16

even subpoenaed PG&E for the relevant records. Plaintiffs instead waited nearly three weeks

17

after filing their motion for class certification (and fourteen months after filing suit) to subpoena

18

PG&E for the records purportedly necessary to determine injury on a classwide basis. On the

19

current record, plaintiffs provide no evidence that such information exists or is otherwise

20

available. Accordingly, plaintiffs have failed to meet their burden of showing that FRCP

21

23(b)(3)’s requirements are met as to their CLRA and Section 17200 claims. These claims will

22

not be certified on the current record. In the event that plaintiffs obtain the necessary proof

23

from PG&E, the Court would consider a supplemental motion for class certification so long as

24

doing so would not otherwise disrupt orderly case management.
REQUESTS FOR JUDICIAL NOTICE AND EVIDENTIARY OBJECTIONS.

25

3.

26

Plaintiffs request judicial notice of ten documents: (1) three articles published by the

27

California Public Utilities Commission; (2) three documents reflecting PG&E’s tariff rates and

28

an application for rate increases; (3) a copy of California Senate Bill No. 656; and (4) three
8

1

articles posted on various websites (Dkt. No. 177-5). Tiger, in turn, requests judicial notice of

2

three documents: (1) a press release published by the United States Department of Justice; (2) a

3

decision by the California Public Utilities Commission regarding the regulation of CTA’s; and

4

(3) a complaint filed in an action captioned North Star Gas Company d/b/a YEP Energy v.

5

Pacific Gas and Electric Company, et al. (Dkt. No. 204). Because reliance on these documents

6

would not change the outcome of this order, both requests for judicial notice are DENIED AS

7

MOOT.

8
9

Because consideration of the objected-to materials does not impact the outcome of this order,
Tiger’s objections are also OVERRULED AS MOOT.3
CONCLUSION

11
For the Northern District of California

United States District Court

10

Tiger also objects to several items of evidence submitted with plaintiffs’ reply brief.

For the foregoing reasons, plaintiffs’ motion for class certification is GRANTED IN PART

12
13

AND DENIED IN PART.

14

1.

The following class is CERTIFIED:

Tiger/PG&E Customer Class: All California consumers and businesses that

15

were customers of PG&E at the time they enrolled in Tiger’s capped-rate price

16

protection program after receiving a telemarketing call advertising the program

17

between August 18, 2013, and the present.

18

The Customer Class is certified only with respect to plaintiffs’ Recording Law claim.

19

Emily Fishman and Susan Faria are hereby APPOINTED as class representatives. Plaintiffs’

20

counsel Kimberly A. Kralowec, Kathleen Styles Rogers, Daniel Balsam, and Jacob Harker are

21

hereby APPOINTED as class counsel. By NOVEMBER 30 AT NOON, the parties shall jointly

22

submit a proposal for class notification with a plan to distribute notice. In crafting their joint

23

proposal, counsel shall please keep in mind the undersigned judge’s guidelines for notice to

24
25
3

26
27
28

Despite obtaining a seven-week extension of time to file their motion for class certification, plaintiffs
failed to meet their filing deadline of September 20 at noon. Instead, plaintiffs completed their filing at 12:52
p.m., about an hour late. On September 26, in a painfully detailed filing spanning thirty pages, plaintiffs
requested a finding of excusable neglect and sought relief from their failure to meet the deadline. On October 1,
plaintiffs followed up with an “amended” motion to excuse the deadline problem (this time spanning twenty-six
pages) although the amended motion failed to explain what, in particular, counsel changed. No defendant has
opposed plaintiffs’ motions for a finding of excusable neglect. The motions are accordingly GRANTED.

9

1

class members in the “Notice and Order Regarding Factors to be Evaluated for Any Proposed

2

Class Settlement” (Dkt. No. 65).

3
4

IT IS SO ORDERED.

5
6

Dated: November 20, 2018.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

7
8
9

11
For the Northern District of California

United States District Court

10

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
10