JWD Automotive, Inc. v. DJM Advisory Group LLC et al
Filing
54
OPINION AND ORDER denying 28 30 Defendants' Motions seeking to dismiss 1 Plaintiff's Complaint and, alternatively, requesting to strike Plaintiff's proposed class. Signed by Judge John E. Steele on 11/21/2016. (KP)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
JWD
AUTOMOTIVE,
INC.,
a
Florida
corporation,
individually
and
as
the
representative of a class of
similarly situated persons
d/b/a NAPA Auto Care of Cape
Coral,
Plaintiff,
v.
Case No: 2:15-cv-793-FtM-29MRM
DJM
ADVISORY
GROUP
LLC,
BANNER
LIFE
INSURANCE
COMPANY, WILLIAM PENN LIFE
INSURANCE COMPANY OF NEW
YORK, and JOHN DOES 1-10,
Defendants.
OPINION AND ORDER
This matter comes before the Court on Defendants’ Motions to
Dismiss Plaintiff’s Complaint (Docs. ## 28, 30) filed on April 5,
2016 and April 6, 2016 and Plaintiff’s Response in Opposition (Doc.
#35) filed on April 19, 2016.
For the reasons set forth below,
Defendants’ Motions are denied.
I.
This is a junk fax case.
On December 21, 2015, Plaintiff JWD
Automotive, Inc. filed a class-action complaint (Doc. #1) against
DJM Advisory Group LLC (DJM Advisory), Banner Life Insurance
Company (Banner), William Penn Life Insurance Company of New York
(William Penn) and John Does 1-10 (collectively, Defendants).
The
one-count Complaint alleges that Defendants violated the Telephone
Consumer Protection Act of 1991 (TCPA), as amended by the Junk Fax
Protection
Act
(JFPA)
of
2005,
47
U.S.C.
§
227,
by
sending
Plaintiff (and others) unsolicited commercial advertisements by
facsimile machine (i.e. “junk faxes”).
The junk fax Plaintiff
received
monthly
(the
Fax)
(Doc.
#1-1)
lists
life
insurance
premiums and invites recipients to submit their information to
receive a complimentary, personalized quote for a DJM Advisory
life insurance policy underwritten by Banner or William Penn.
Plaintiff alleges that, by sending these junk faxes, Defendants:
i) caused Plaintiff and others to lose paper and toner; ii)
occupied their telephone lines and fax machines; iii) wasted their
time; and iv) violated their privacy interests.
(Doc. #1, ¶ 36.)
Defendants have moved to dismiss Plaintiff’s Complaint under
Federal
Rule
of
Civil
Procedure
12(b)(1)
Plaintiff lacks constitutional standing. 1
on
the
ground
that
Defendants Banner and
William Penn (the Underwriter Defendants) also seek dismissal of
Plaintiff’s claims against them under Rule 12(b)(6), since the
Complaint “fails to include more than conclusory and formulaic
allegations about [their] alleged responsibility for the fax.”
Should the Court deny the dismissal requests, Defendants move in
the
alternative
definition.
to
strike
the
Complaint’s
“fail-safe”
class
The Court will address each argument in turn.
1
The Motions also request the now-moot alternative relief of a
stay pending the Supreme Court’s decision in Spokeo, Inc. v.
Robins, 136 S. Ct. 1540, as revised (May 24, 2016).
- 2 -
II.
A.
Plaintiff’s Article III Standing to Maintain this Action
Defendants argue that because the injuries alleged in the
Complaint are “less than de minimis,” Plaintiff does not have
standing under Article III and the Complaint should be dismissed
with prejudice under Rule 12(b)(1).
“[T]he core component of
standing is an essential and unchanging part of the case-orcontroversy
requirement
of
Article
III.”
Wildlife, 504 U.S. 555, 560 (1992).
Lujan
v.
Defs.
of
Constitutional standing
sufficient to maintain an action in federal court requires, inter
alia, that a plaintiff have “suffered an injury in fact.”
Inc. v. Robins, 136 S. Ct. at 1547.
Spokeo,
“To establish injury in fact,
a plaintiff must show that he or she suffered ‘an invasion of a
legally protected interest’ that is ‘concrete and particularized’
and ‘actual or imminent, not conjectural or hypothetical.’”
Id.
at 1548 (quoting Lujan, 504 U.S. at 560).
Defendants’ contention that a junk fax transmission results
in de minimis harm insufficient to confer standing under Article
III has already been considered - and rejected - by the Eleventh
Circuit.
In Palm Beach Golf Center-Boca, Inc. v. John G. Sarris,
D.D.S., P.A., the Circuit Court concluded that the plaintiff had
“Article III standing sufficient to satisfy the injury requirement
because it ha[d] suffered a concrete and personalized injury in
the form of the occupation of its fax machine for the period of
time required for the electronic transmission of the data” – even
though the transmission took only one minute, and irrespective of
- 3 -
whether the plaintiff had printed or reviewed the fax.
1245, 1251-53 (11th Cir. 2015).
781 F.3d
In other words, in this Circuit,
the successful transmission of even a single unsolicited fax causes
an
injury
sufficiently
concrete
and
particularized
to
confer
standing under Article III to assert a TCPA claim. 2
The Supreme Court’s recent Spokeo decision does not compel a
different result.
That case involved a class-action claim under
the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq.,
asserted against an online “people search engine” operator accused
of creating inaccurate consumer reports.
136 S. Ct. at 1544.
Before the case reached the Supreme Court, the Ninth Circuit had
reversed the District Court’s finding that the plaintiff lacked
standing to assert the FCRA claim, instead holding that because
the plaintiff alleged a violation of his “statutory rights,” he
had adequately pled Article III’s injury-in-fact requirement.
2
The
Defendants also seek dismissal under Rule 12(b)(1) on the basis
that the Complaint does not allege that the Fax was transmitted to
Plaintiff’s fax machine. According to Defendants, the Fax could
have been transmitted to Plaintiff’s email inbox, which would have
resulted in no concrete harm. Despite not containing the specific
phrase “the Fax was transmitted to Plaintiff’s fax machine,” the
Complaint alleges that “Defendants’ faxes used the Plaintiff’s and
the other class members’ telephone lines and fax machine[s],” and
that “[r]eceiving the Defendants’ junk faxes caused the recipients
to lose paper and toner consumed in the printing.” (Doc. #1, ¶
36.)
From these allegations, the Court draws the more-thanreasonable inference that the Fax was indeed transmitted to
Plaintiff’s fax machine.
Stephens v. Dep’t of Health & Human
Servs., 901 F.2d 1571, 1573 (11th Cir. 1990) (“On a motion to
dismiss, the facts stated in [the] complaint and all reasonable
inferences therefrom are taken as true.” (citation omitted)). It
is thus unnecessary for the Court to address whether a fax
transmitted to an email inbox causes concrete harm sufficient to
confer standing under Article III.
- 4 -
Supreme Court vacated that decision, concluding that the Ninth
Circuit had performed an incomplete injury-in-fact analysis by
considering only whether the plaintiff alleged a particularized
harm, not whether he also alleged a concrete one.
Spokeo, 136 S.
Ct. at 1545; see also id. at 1548 (“We have made it clear time and
time again that an injury in fact must be both concrete and
particularized.”).
In remanding to the Ninth Circuit to consider
“whether the particular procedural violations alleged in th[e]
case [were] . . . sufficient to meet the concreteness requirement,”
id. at 1550, the Supreme Court observed that “Congress’ role in
identifying and elevating intangible harms does not mean that a
plaintiff automatically satisfies the injury-in-fact requirement
whenever a statute grants a person a statutory right and purports
to authorize that person to sue to vindicate that right.”
1549.
Id. at
To the contrary: Article III standing requires a “de facto”
injury, that is, one that is “real, and not abstract.” 3
Id. at
1548 (citations omitted).
Spokeo’s
limitation
on
Article
III
standing
for
claims
arising out of statutory violations is inapplicable to the instant
case for at least two reasons.
First, Spokeo involved allegations
of intangible harm resulting from statutory violations.
Id.; cf.
Nicklaw v. Citimortgage, Inc., --- F.3d ---, 2016 WL 5845682, at
*3 (11th Cir. Oct. 6, 2016) (applying Spokeo to reject the argument
3
The Spokeo court cited an agency’s dissemination of a wrong
consumer zip code as an example of a statutory violation for which
the FCRA purports to provide redress, but which likely causes harm
too “abstract” to confer standing. 136 S. Ct. at 1550.
- 5 -
that “the intangible harm that occurs when the discharge of a
mortgage is not timely recorded constitutes a concrete injury”
(emphasis added)).
At least some of the particularized harm
alleged in Plaintiff’s Complaint - loss of toner and paper and the
unwanted
temporary
occupation
of
Plaintiff’s
telephone line – is tangible in nature.
fax
machine
and
Such tangible harm, as
Palm Beach leaves clear, is sufficient for standing purposes, even
if de minimis.
See Prindle v. Carrington Mortg. Servs., LLC, No.
3:13-CV-1349-J-34PDB, 2016 WL 4369424, at *9 n.11 (M.D. Fla. Aug.
16, 2016) (“Through the TCPA, Congress elevated a tangible, albeit
de minimis, injury [of the unauthorized occupation of one’s fax
machine] to the status of a legally cognizable injury.”); see also
Fauley v. Drug Depot, Inc., No. 15 C 10735, --- F. Supp. 3d ---,
2016 WL 4591831, at *3 (N.D. Ill. Aug. 31, 2016) (observing that
“de
minim[i]s harm
arguments
do
not
undermine
Article
III
standing” and concluding that the loss of toner and paper is
“sufficiently ‘real’ to meet the concreteness requirement under
Spokeo”).
Second, the injuries alleged in Plaintiff’s Complaint are not
mere “procedural” statutory violations; rather, they are precisely
the kinds of harm the TCPA aims to prevent.
See Palm Beach, 781
F.3d at 1252 (observing that the occupation of one’s “fax machine
is among the injuries intended to be prevented by the [TCPA]”);
see also H.R. REP. 102-317, 10 (“[Fax] telemarketing is problematic
for two reasons. First, it shifts some of the costs of advertising
from
the
sender
to
the
recipient.
- 6 -
Second,
it
occupies
the
recipient’s
facsimile
machine
so
that
it
is
unavailable
for
legitimate business messages while processing and printing the
junk fax.”).
The violation of a statutorily-protected substantive
right, in turn, causes “real” harm, as opposed to harm that is
“hypothetical” or “uncertain.” 4
Church v. Accretive Health, Inc.,
No. 15-15708, --- F. App’x ---, 2016 WL 3611543, at *3 & n.3 (11th
Cir. July 6, 2016) (per curiam) (not receiving information to which
one is statutorily entitled is a “concrete” injury); cf. Guarisma
v. Microsoft Corp., No. 15-24326-CIV, --- F. 3d ---, 2016 WL
4017196, at *4 (S.D. Fla. July 26, 2016) (plaintiff whose sales
receipt showed more than last five credit-card digits alleged a
concrete harm under the Fair and Accurate Credit Transactions Act
(FACTA)
since,
“in
enacting
the
FACTA,
Congress
created
a
substantive right for consumers to have their personal credit card
information
truncated
“procedural
requirement
on
printed
for
credit
4
receipts,”
card-using
not
merely
companies
a
to
The two post-Spokeo cases cited in Defendants’ Notice of
Supplemental Authority (Doc. #42) are inapposite.
In Smith v.
Aitima Medical Equipment, Inc., the district court held that the
injury, if any, caused by the transmission of one unsolicited phone
call was de minimis and thus insufficient to confer Article III
standing to assert a TCPA claim. No. ED CV 16-00339-AB (DTBx),
2016 WL 4618780, at *4 (C.D. Cal. July 29, 2016). In so holding,
the court did not rely on Spokeo, but on three district court cases
and one Ninth Circuit case.
Id. at *4.
Because Palm Beach
rejected the claim that a de minimis injury cannot confer Article
III standing under the TCPA, Smith is not persuasive here. As for
Sartin v. EKF Diagnostics, Inc., that court’s decision to grant a
defendant’s motion to dismiss a junk fax claim on standing grounds
was based on the plaintiff’s failure to allege any concrete harm
resulting from the receipt of a single fax, not on the plaintiff’s
inability to do so. No. CV 16-1816, 2016 WL 3598297, at *4 (E.D.
La. July 5, 2016). Here, Plaintiff has alleged particularized and
concrete harm under the TCPA and thus has standing.
- 7 -
follow”).
Accordingly,
dismissal
of
Plaintiff’s
Complaint
on
standing grounds is not warranted.
B.
Whether the Complaint Adequately
Banner and William Penn
States
a
Claim
Against
The Underwriter Defendants alternatively seek dismissal of
Plaintiff’s suit against them pursuant to Rule 12(b)(6), arguing
that the Complaint lacks sufficient factual allegations tying them
directly or vicariously to the Fax’s creation or dissemination.
The TCPA makes it “unlawful for any person . . . to use any
telephone facsimile machine, computer, or other device to send, to
a
telephone
facsimile
machine,
an
unsolicited
advertisement”
unless there exists an “established business relationship” between
the “sender” and the recipient meeting certain criteria.
U.S.C. § 227(b)(1)(C).
what
it
means
to
47
Although the Act does not further define
“send”
a
fax,
the
Federal
Communications
Commission’s (FCC) 2006 regulations regarding the restrictions on
facsimile advertising (the 2006 Regulations) define the “sender”
of a fax as any “person or entity on whose behalf a facsimile
unsolicited advertisement is sent or whose goods or services are
advertised or promoted in the unsolicited advertisement.” 5
C.F.R. § 64.1200(f)(10) (emphasis added).
47
In other words, the
FCC’s current view is that one whose goods or services are promoted
in the unsolicited fax may be held strictly liable under the TCPA
for its transmission, even absent a showing that the fax was sent
5
The FCC is the entity tasked with “prescrib[ing] regulations to
implement” the TCPA. Murphy v. DCI Biologicals Orlando, LLC, 797
F.3d 1302, 1305 (11th Cir. 2015) (quoting 47 U.S.C. § 227(b)(2)).
- 8 -
on its behalf.
Siding & Insulation Co. v. Alco Vending, Inc., 822
F.3d 886, 892-95 (6th Cir. 2016).
The fax at issue here advertises “life insurance products
[that] are underwritten by Banner Life Insurance Company . . . and
William Penn Life Insurance Company.”
(Doc. #1-1.)
Accordingly,
at least pursuant to the 2006 Regulations, the Complaint adequately
alleges that the Underwriter Defendants “sent” the Fax, so as to
state a claim of strict direct-sender liability under the TCPA
against each.
See Supply Pro Sorbents, LLC v. Ringcentral, Inc.,
No. C 16-02113 JSW, 2016 WL 5870111, at *4 (N.D. Cal. Oct. 7, 2016)
(inclusion of defendant’s name and website at the bottom of a fax
promoted defendant’s services and thus was “sufficient to permit
Defendant to fall with[in] the statutory definition of sender”). 6
The Underwriter Defendants nevertheless argue that, since the
Complaint
does
not
allege
facts
supporting
the
conclusory
assertion that the Fax was sent on their behalf, Palm Beach
requires dismissal Plaintiff’s claims against them.
While Palm Beach did apply an “on behalf of” theory of directsender liability, that case involved a fax transmitted in 2005,
prior to the promulgation of the FCC’s 2006 Regulations.
3d at 1254 n.9, 1257-58.
781 F.
It is, therefore, fair to read Palm
Beach as refusing retroactive application of the 2006 Regulations,
not as rejecting the FCC’s current “strict” view of direct-sender
6
“A district court can generally consider exhibits attached to a
complaint in ruling on a motion to dismiss . . . .” Hoefling v.
City of Miami, 811 F.3d 1271, 1277 (11th Cir. 2016).
- 9 -
liability under the TCPA for faxes sent after the 2006 Regulations
took effect. 7
See Arkin v. Innocutis Holdings, LLC, No. 8:16-CV-
0321-T-27TBM, --- F. Supp. 3d ---, 2016 WL 3042483, at *5 (M.D.
Fla. May 26, 2016) (defendant’s reliance on Palm Beach to determine
whether the complaint properly alleged direct-sender liability for
a fax sent in 2015 was “misplaced”).
Because the Eleventh Circuit has not expressly rejected the
strict definition of “sender” articulated in the 2006 Regulations,
and because the junk fax Plaintiff received was allegedly sent
sometime between October 2014 and January 2015 (Doc. #1, ¶ 13),
this Court will apply that definition.
To refuse to do so would
likely violate the Hobbs Act, 28 U.S.C. § 2342, which grants the
circuit courts of appeals exclusive jurisdiction over challenges
to administrative agencies’ interpretation of statutory language.
Sliwa v. Bright House Networks, LLC, No. 2:16-CV-235-FTM-29MRM,
2016 WL 3901378, at *4 (M.D. Fla. July 19, 2016) (“[T]his court,
like all district courts, ‘lacks jurisdiction under the Hobbs Act
to consider the argument that the FCC incorrectly interpreted [the
TCPA].” (internal alterations omitted) (quoting Murphy, 797 F.3d
at 1305)); see also Imhoff Inv., L.L.C. v. Alfoccino, Inc., 792
F.3d 627, 637 (6th Cir. 2015) (observing that a direct challenge
at the district court level to “the legitimacy of the FCC’s
definition of sender in [Section] 64.1200(f)(10) [is un]likely to
7
In Alco Vending, the Sixth Circuit concluded that because the
2006 Regulations “expanded the scope of liability under the TCPA,”
they should not be applied retroactively. 822 F.3d at 894.
- 10 -
be viable because the Hobbs Act confers jurisdiction on Courts of
Appeal to review FCC regulations only by direct appeal from the
FCC”); Chhetri v. United States, 823 F.3d 577, 586–87 (11th Cir.
2016) (affirming the district court’s conclusion that it lacked
jurisdiction under the Hobbs Act to review the validity of a
regulation promulgated by a federal agency); CE Design, Ltd. v.
Prism Bus. Media, Inc., 606 F.3d 443, 449 (7th Cir. 2010) (“[T]he
Hobbs Act prevents the district court from reviewing the validity
of FCC regulations.”).
Because the Plaintiff has adequately
alleged a theory of strict liability against the Underwriter
Defendants as “senders” of the Fax, the Court denies their request
for dismissal under Rule 12(b)(6). 8
C.
Plaintiff’s Proposed “Fail-Safe” Class
Finally, Defendants move in the alternative to strike the
Complaint’s class allegations on the ground that Plaintiff has
proposed an impermissible “fail-safe” class.
A fail-safe class
is one whose definition incorporates the elements of a successful
legal claim, such that determining whether an individual or entity
is a member of the class “front-ends a merits determination on
[the defendant’s] liability.”
Alhassid v. Bank of Am., N.A., 307
F.R.D. 684, 694 (S.D. Fla. 2015); see Kamar v. RadioShack Corp.,
375 F. App’x 734, 736 (9th Cir. 2010) (“The fail-safe appellation
is simply a way of labeling the obvious problems that exist when
8
The Court need not, and therefore does not, address herein
whether the Complaint adequately alleges a theory of vicarious
liability against the Underwriter Defendants for the Fax’s
transmission.
- 11 -
the class itself is defined in a way that precludes membership
unless the liability of the defendant is established.”).
Being
granted membership in the class is thus synonymous with a victory
on the underlying claim.
Young v. Nationwide Mut. Ins. Co., 693
F.3d 532, 538 (6th Cir. 2012) (“[A] ‘fail-safe’ class is one that
includes only those who are entitled to relief. . . . [E]ither
those ‘class members win or, by virtue of losing, they are not in
the class’ and are not bound [by the judgment].” (quoting Randleman
v. Fid. Nat. Title Ins. Co., 646 F.3d 347, 352 (6th Cir. 2011))).
The class proposed in Plaintiff’s Complaint consists of:
All persons who (1) on or after four years
prior to the filing of this action, (2) were
sent telephone facsimile messages of material
advertising the commercial availability of any
property, goods, or services by or on behalf
of Defendants, and (3) which Defendants did
not
have
prior
express
permission
or
invitation [to send], or (4) which did not
display a proper opt-out notice.
Excluded
from the Class are the Defendants, their
employees,
agents
and
members
of
the
Judiciary.
(Doc. #1, ¶ 19.)
The Court agrees that, as written, the proposed
class appears “fail-safe.”
Rather than simply requiring, for
example, that an individual or entity have received the same fax
Plaintiff received, the class incorporates the elements of a viable
junk fax claim, including the applicable statute of limitations.
See 47 U.S.C. § 227(b)(1)(C); 28 U.S.C. § 1658(a).
Analyzing
whether a particular individual is a proper member of Plaintiff’s
class will, therefore, result in a merits-based determination on
Defendants’ liability under the TCPA to that individual.
- 12 -
It
is
less
“impermissible.”
clear,
however,
that
such
a
class
is
The Eleventh Circuit has not yet addressed
whether a fail-safe class can nevertheless be certified, and there
is a split of authority among the Circuit Courts that have decided
the issue.
See Zarichny v. Complete Payment Recovery Servs.,
Inc., 80 F. Supp. 3d 610, 624 (E.D. Pa. 2015) (collecting cases).
Notwithstanding, this Court concludes – as have several others that such argument is more appropriately raised at the classcertification stage.
See, e.g., Arkin, 2016 WL 3042483, at *7;
Mauer v. Am. Intercontinental Univ., Inc., No. 16 C 1473, 2016 WL
4698665, at *3 (N.D. Ill. Sept. 8, 2016); Haghayeghi v. Guess?,
Inc., No. 14-CV-00020 JAH-NLS, 2015 WL 1345302, at *6 (S.D. Cal.
Mar.
24,
2015).
Consequently,
the
Court
denies
Defendants’
request to strike Plaintiff’s proposed class at this time.
Accordingly, it is hereby
ORDERED:
Defendants’ Motions to Dismiss Plaintiff’s Complaint (Docs.
# 28, 29) are DENIED.
DONE and ORDERED at Fort Myers, Florida, this 21st day of
November, 2016.
Copies:
Counsel of Record
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