Brodsky v. HumanaDental Insurance Company
Filing
402
MEMORANDUM Opinion and Order Signed by the Honorable John Robert Blakey on 8/28/2017. Mailed notice(gel, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
LAWRENCE S. BRODSKY,
individually and as the
representative of a class of
similarly-situated persons,
Plaintiff,
Case No. 10-cv-03233
v.
Judge John Robert Blakey
HUMANADENTAL INSURANCE
COMPANY d/b/a
HUMANA SPECIALITY BENEFITS,
Defendant.
MEMORANDUM OPINION AND ORDER
Plaintiff Lawrence Brodsky (Plaintiff or Brodsky) claims that Defendant
HumanaDental Insurance Company (Defendant or HDIC) improperly sent him two
faxes in violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. §
227 et seq. This Court previously certified a class of similarly-situated recipients in
September 2016. [349] at 28.
Currently pending before the Court are Defendant’s Motion to Decertify the
Class and To Stay [365] and Plaintiff’s Motion For Order Approving Class Notice
and Setting A Date For Opt Outs. [371] at 1-4. As explained below, Defendant’s
motion is granted, and Plaintiff’s motion is denied as moot.
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I.
Background
A brief overview of the TCPA, the facts, and this case’s procedural posture is
provided below. This discussion is not exhaustive, and this Court incorporates by
reference as needed, and presumes familiarity with, both Judge Thomas Durkin’s
opinion regarding HDIC’s previous motion for summary judgment [189] and this
Court’s opinion regarding class certification. See generally [349].
A.
The Solicited Fax Rule
The TCPA provides that a “person or entity” may bring an “action based on a
violation of this [statute] or the regulations prescribed under” the same. 47 U.S.C.
§ 227(b)(3).
The statute itself generally prohibits sending an “unsolicited
advertisement” via fax. Id. § 227(b)(1)(C). A fax is “unsolicited” if the recipient has
not given its “prior express invitation or permission” to receive the fax.
Id. §
227(a)(5).
The statute also provides select exceptions to this general ban by permitting
the sending of unsolicited faxes if, among other things, the fax contains an “opt-out
notice” meeting various statutory requirements. Id. § 227(b)(1)(C)(i)-(iii). To be
clear, the TCPA only imposes an opt-out notice requirement for “unsolicited” fax
advertisements; it does not address solicited fax advertisements.
The Federal Communications Commission (FCC), pursuant to its authority to
“prescribe regulations to implement the requirements of” the TCPA, id. § 227(b)(2),
altered this landscape in 2006 by promulgating the “Solicited Fax Rule,” codified at
47 C.F.R. § 64.1200(a)(4)(iv). Under the Solicited Fax Rule, both unsolicited and
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solicited faxes must include the opt-out notice described in the TCPA. See id. (“A
facsimile advertisement that is sent to a recipient that has provided prior express
invitation or permission to the sender must include an opt-out notice that complies
with the requirements in paragraph (a)(4)(iii) of this section.”); see also Bais Yaakov
of Spring Valley, et al. v. FCC, et al., 852 F.3d 1078, 1083 (D.C. Cir. 2017) (“The
Solicited Fax Rule requires a sender of a fax advertisement to include an opt-out
notice on the advertisement, even when the advertisement is sent to a recipient
from whom the sender obtained permission. In other words, the FCC’s new rule
mandates that senders of solicited faxes comply with a statutory requirement that
applies only to senders of unsolicited faxes.”) (internal citation omitted); Nack v.
Walburg, 715 F.3d 680, 685 (8th Cir. 2013) (“Setting aside any concerns regarding
the validity of [the Solicited Fax Rule] or the scope of the private right of action, we
believe that the regulation as written requires the senders of fax advertisements to
employ the above-described opt-out language even if the sender received prior
express permission to send the fax.”).
B.
Factual Context 1
Plaintiff Brodsky is a “wholesaler of insurance” who does business as a sole
proprietorship known as the Lawrence S. Brodsky Agency, Inc. (LSB Agency).
Defendant HDIC is a Wisconsin corporation that insures certain dental plans,
including the HumanaDental Prevention Plus plan, the HumanaDental PPO, and
Traditional Preferred Plans. “Humana Specialty Benefits,” a group within Humana
Unless otherwise indicated, these facts are taken from Judge Durkin’s earlier ruling. See generally
[189].
1
3
Inc., markets “specialty products,” including dental, vision, life insurance and
disability products.
Brodsky and the LSB Agency have “market agreements” with numerous
insurance companies.
Brodsky then sells those insurance companies’ products
through various insurance agents/independent contractors.
One of Brodsky’s
market agreements was with “Humana Insurance Company, Humana Health Plan,
Inc., and all of their affiliates.” That agreement is known as a “Group Producing
Agent or Agency Contract.” This Agency Contract stipulated that Brodsky and the
LSB Agency agreed that Humana Insurance Co. and all of its affiliates “may choose
to communicate with [Brodsky and/or the LSB Agency] through the use of . . .
facsimile to the . . . facsimile numbers of” Brodsky and the LSB Agency.
In
connection with his Agency Contract, Brodsky provided Humana Insurance Co.
with the facsimile number of (847) 991-0152.
On May 14, 2008, Brodsky’s fax machine assigned to the number of (847) 9910152 received two identical one-page fax messages (the Subject Faxes). The bottom
of the Subject Faxes indicated that they were sent by “Humana Specialty Benefits.”
There is no dispute that the Subject Faxes were created by the Marketing
Department of Humana Inc., and received the internal designation GN-Fax 4/08.
The Subject Faxes do not identify the individual or entity to which they were
specifically sent.
At least seven of Brodsky’s insurance agents/independent
contractors had permission to use (and did in fact use) Brodsky’s office space and
fax machine during the time period at issue. The parties have stipulated that faxes
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identical to the Subject Faxes (similarly designated GN-Fax 4/08) were successfully
transmitted 19,931 times. [285] Ex. 21, ¶ 20.
C.
Procedural Posture
In its first motion for summary judgment, HDIC argued that it did not “send”
the Subject Faxes, the Subject Faxes were not “sent” to Plaintiff, the Subject Faxes
were not “advertisements,” and Plaintiff had consented to delivery of the Subject
Faxes. [118] at 1-5. Defendant’s motion for summary judgment was denied as to
Plaintiff’s TCPA claim. [189] at 12-23. HDIC moved for reconsideration of that
ruling [199], which was also denied. [212] at 3-9. In the course of ruling on both
HDIC’s motion for summary judgment and motion for reconsideration, Judge
Durkin ultimately determined, among other things, that:
(1) Whether the Subject Faxes were “advertisements” within the
meaning of the TCPA is a disputed factual question, [189] at 16-18;
(2) Whether HDIC was a “sender” of the Subject Faxes within the
meaning of the TCPA is a disputed factual question, id. at 13-16;
(3) The opt-out notices on the Subject Faxes were deficient as a matter
of law under the Solicited Fax Rule, thereby precluding Defendant
from raising defenses sounding in solicitation or “established business
relationship,” id. at 21-23 (citing Nack, 715 F.3d at 685); and
(4) Brodsky had standing to pursue a TCPA claim based upon the
Subject Faxes, even if they were intended for independent contractors
with whom he associated, as “it makes no difference to whom the
[Subject Faxes were] sent,” [212] at 9, “since the issue of consent is
removed from the equation” by the Solicited Fax Rule.
In September 2016, this Court also granted in part and denied in part
Plaintiff’s Motion for Class Certification.
certified the following class:
5
[290] at 1-3.
The Court ultimately
All persons or entities who were successfully sent one or
more faxes during the period from May 2007 through
September 2008 that: (1) named “Humana Specialty
Benefits” or “HumanaDental” on the bottom of the fax; (2)
referred to, referenced, or discussed “HumanaDental”
dental plans; (3) contained the following designation- GNFax 4/08; and (4) contained an “opt out” notice stating, “If
you don’t want us to contact you by fax, please call 1-800U-CAN-ASK,” or “If you don’t want us to contact you by
fax, please call 1-888-4-ASSIST.”
[349] at 28.
D.
Recent Developments
In the wake of Judge Durkin’s decision on summary judgment and this
Court’s certification of the instant class [349], the Solicited Fax Rule has been
narrowed on multiple fronts.
1.
The November 2016 Waiver
On October 30, 2014, the FCC granted certain non-party petitioners
retroactive waivers of the Solicited Fax Rule, in light of inconsistencies between the
Solicited Fax Rule and other FCC guidance. See Order, 29 FCC Rcd. 13,998 ¶¶ 2228 (Oct. 30, 2014) (the October 2014 Order).
The FCC also explicitly invited
“similarly situated” parties to apply for other retroactive waivers. Id. at ¶ 2. HDIC
took up the FCC’s invitation and applied for a retroactive waiver, which was
pending at the time the Court considered Plaintiff’s motion for class certification.
[349] at 20-21.
In its briefing on class certification Defendant argued that the existence of
the pending waiver application meant that class questions did not “predominate” in
this case. [319] at 29 (“If HDIC’s pending petition with the FCC is granted and
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HDIC is extended a waiver from the requirement of specific opt-out language on
faxes sent with the permission of the recipient, then whether or not the recipient
consented to the fax will become a highly relevant issue in this litigation. In that
event, for every fax transmitted, a determination will need to be made as to whether
the recipient claims to have revoked the permission he extended in his agency
contract with Humana companies.”).
The Court rejected this argument as
premature, noting that Defendant had simply filed a waiver application, and, if the
waiver was actually granted, the Court could address Defendant’s “hypothetical
concerns” as part of “the case management process.” [349] at 21.
Later, in November 2016, HDIC received a retroactive waiver from the FCC.
See [366-2], Order, 31 FCC Rcd. 11,943 ¶¶ 1-25 (Nov. 2, 2016) (November 2016
Waiver). The November 2016 Waiver explicitly excused Defendant for any failure
“to comply with the opt-out notice requirement for fax advertisements sent with the
prior express invitation or permission of the recipient prior to April 30, 2015.” Id.
2.
Bais Yaakov
After the October 2014 Order was issued, several non-party fax senders filed
petitions for review of the FCC’s decision in multiple circuit courts. The United
States Judicial Panel on Multidistrict Litigation consolidated these petitions in the
District of Columbia Circuit. See Bais Yaakov v. FCC, No. 12-1234, Dkt. Entry 124
(D.C. Cir. Nov. 13, 2014).
In March 2017, a split panel of the D.C. Circuit struck down the Solicited
Fax Rule, holding it “unlawful to the extent that it requires opt-out notices on
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solicited faxes.” Bais Yaakov v. FCC, 852 F.3d at 1083. The majority found that the
TCPA’s text reached only unsolicited fax advertisements, such that the FCC lacked
the authority to promulgate a rule governing solicited faxes. Id.
II.
Legal Standard
Under Federal Rule of Civil Procedure 23(c)(1)(C), an “order that grants or
denies class certification may be altered or amended before final judgment.” Even
“after a certification order is entered, the judge remains free to modify it in the light
of subsequent developments in the litigation.” Gen. Tel. Co. of Sw. v. Falcon, 457
U.S. 147, 160 (1982). That said, “in the absence of materially changed or clarified
circumstances, or the occurrence of a condition on which the initial class ruling was
expressly contingent, courts should not condone a series of rearguments on the class
issues by the opponent of the class.” Parish v. Sheriff of Cook Cty., No. 07 C 4369,
2016 WL 1270400, at *1 (N.D. Ill. Mar. 31, 2016) (internal quotation marks
omitted); see also Pope v. Harvard Bancshares, Inc. 240 F.R.D. 383, 387 (N.D. Ill.
2006) (“Even if the court grants a motion for class certification, that ruling is
inherently tentative, and the court retains the freedom to modify it in light of
subsequent developments in the litigation.”).
III.
Analysis
Defendant contends that both the November 2016 Waiver and the Bais
Yaakov decision implicate additional individual questions that defeat superiority
and predominance, such that the present class must be decertified. See [349] at 18
(explaining that to certify a class under Rule 23(b)(3), Plaintiff must show, among
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other things: (1) that issues common to the class members predominate over
questions affecting only individual members; and (2) that a class action is superior
to other available adjudication methods). The Court addresses the November 2016
Waiver first, for reasons that will become apparent.
A.
The November 2016 Waiver
Defendant’s
argument
regarding
the
November
2016
Waiver
is
straightforward. HDIC essentially contends that: (1) the requirement that solicited
faxes include an opt-out notice is imposed by the Solicited Fax Rule (not the TCPA
itself); (2) the November 2016 Waiver suspended the Solicited Fax Rule with respect
to the faxes at issue here; (3) absent the Solicited Fax Rule, the faxes at issue did
not need to include an opt-out notice, so long as they were solicited; and (4) to
ascertain liability therefore, this Court must now determine whether each
individual recipient “solicited” the faxes they received, such that individual
questions overwhelm the common issues previously identified by the Court. See
generally [366]. Plaintiff raises several objections to this analysis, which the Court
will address in turn.
a)
The Effect of the Agency Contract
Plaintiff first claims that “[e]ven if” the November 2016 Waiver “has the
effect” Defendant claims, the question of whether the faxes at issue were “solicited”
is a common question of law subject to class-wide resolution. [375] at 4. Plaintiff’
essentially contends that since Defendant’s ostensible permission to send the
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Subject Faxes came in the form of standard Agency Contracts, the Court can decide,
on a class-wide basis, whether the operative language of the Agency Contracts
actually rendered the faxes “solicited” for the purposes of the TCPA. Id.
Courts
“determine
whether
issues
of
individualized
consent
defeat
commonality and predominance” in TCPA cases “on a case-by-case basis after
evaluating the specific evidence available to prove consent.”
Physicians
Healthsource, Inc. v. A-S Medication Sols., LLC, No. 12-cv-5105, 2016 WL 5390952,
at *8 (N.D. Ill. Sept. 26, 2016).
Where Defendants set forth “specific evidence
showing that a significant percentage of the putative class consented” to the
communication at issue, “courts have found that issues of individualized consent
predominate [over] any common questions of law or fact.” Id. at *10. Critically, the
FCC has also cautioned that the “scope of consent must be determined upon the
facts of each situation.” Order, 30 FCC Rcd. 7961 ¶ 49 (July 10, 2015).
Given the “specific evidence available to prove consent” adduced by
Defendant, the Court concludes that “issues of individualized consent” predominate
here. Plaintiff’s suggestion that the Court could determine whether consent was
granted on a class-wide basis by simply reading the Agency Contracts is
inconsistent with both the record and governing precedent. As a doctrinal matter,
consent is “dependent on the context in which it is given.” Kolinek v. Walgreen Co.,
No. 13 C 4806, 2014 WL 3056813, at *3 (N.D. Ill. July 7, 2014). Indeed, the facts of
this case underscore why context is so important. For example: (1) a substantial
portion of the certified class was never party to an Agency Contract; (2) select class
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members may have revoked their consent, even after entering into an Agency
Contract; and (3) the “scope” of a particular consent in an Agency Contract might
not extend to other “affiliated” class members offering insurance at the same
location.
This last difficulty is especially thorny, as illustrated by Brodsky’s own
situation. He was party to an Agency Contract, but at least seven other individuals
had his permission to use his fax machine during the time period at issue. Were
these individuals Brodsky’s employees or independent contractors? If they were
independent contractors, was the putative consent in Brodsky’s Agency Contract
effective as to them? If the consent in the Agency Contract was effective as to these
individuals, was it ever revoked? These outstanding questions suggest that “the
trial in this case will be consumed and overwhelmed by testimony from each
individual class member,” in an effort “to determine whether the class member
consented to receive the [messages] in question.”
Legg & Lozano v. PTZ Ins.
Agency, Ltd., et al., No. 14-cv-10043, 2017 WL 3531564, at *5 (N.D. Ill. Aug. 15,
2017).
b)
The FCC’s Authority
Plaintiff next argues that, while the November 2016 Waiver may insulate
Defendant from an administrative enforcement action with the FCC, it “has no
effect in a private TCPA action” in federal court. [375] at 7. In support of this
contention, Plaintiff invokes Physicians Healthsource, Inc. v. Stryker Sales Corp., 65
F. Supp. 3d 482 (W.D. Mich. 2014).
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Plaintiff’s reliance upon Stryker is misplaced. For one thing, no waiver had
actually been issued to the defendant in Stryker, so its specific discussion of the
issue constitutes dicta. Id. at 498. This Court is also not convinced that Stryker’s
analysis of the waiver issue is doctrinally sound. For example, Stryker summarily
concludes that, even if a waiver had been issued, the Solicited Fax Rule would
remain “in effect just as it was originally promulgated.” Id. Not exactly. When the
Solicited Fax Rule was “originally promulgated,” it extended the TCPA’s opt-out
notice requirement to solicited faxes, including the Subject Faxes here. See supra at
2-3. The FCC subsequently issued the November 2016 Waiver, which narrowed the
Solicited Fax Rule by, among other things, rendering it inapplicable to the Subject
Faxes.
Id. at 4.
Thus, it is inaccurate to say that the Solicited Fax Rule
“remain[ed] in effect just as it was originally promulgated” after the November 2016
Waiver. Stryker, 65 F. Supp. 3d at 498. The Solicited Fax Rule “remained in effect”
after the November 2016 Waiver, but the former was now subject to the latter’s
interpretative contraction.
And make no mistake, the November 2016 Waiver is interpretative in nature.
In the FCC’s own words, by granting the November 2016 Waiver, the Commission
was “interpreting and implementing a statute, the TCPA, over which Congress
provided the Commission authority as the expert agency.” November 2016 Waiver
¶ 12.
Stryker also rejects this proposition, suggesting that, to the extent the FCC’s
potential waiver is couched as a matter of regulatory interpretation, the waiver
12
represents a “fundamental violation of the separation of powers.” Stryker, 65 F.
Supp. 3d at 498. Such a concern is misplaced here. On the contrary, the November
2016 Waiver is a product of the reciprocal give-and-take at the heart of our
constitutional framework: Congress enacted the TCPA, which created a private
right for violations of “regulations prescribed under” the same, 47 U.S.C. §
227(b)(3); the FCC, in the November 2016 Waiver, narrowed the scope of one such
regulation; and this Court’s analysis is now informed by that Commission’s
interpretative guidance, consistent with Congress’s delegation in § 227(b)(3).
Stryker is also called into question by a number of authorities cited by
Defendant. See generally [366] (citing Town & Country Jewelers, LLC v.
Meadowbrook Ins. Group, Inc., No. 15-cv-2519, 2016 WL 3647321, at *2 (D.N.J.
July 6, 2016); Bais Yaakov of Spring Valley v. Graduation Source, LLC, 14-cv-3232,
2016 WL 1271693 (S.D.N.Y. Mar. 29, 2016); and Simon v. Healthways, Inc., No. 14cv-08022, 2015 WL 10015953 (C.D. Cal. Dec. 17, 2015)).
Of these, Simon is
particularly instructive. Defendants in Simon also received a retroactive waiver
from the FCC, which excused “Defendants from following the opt-out notice
requirement for facsimile advertisements sent with prior express permission.” 2015
WL 10015953, at *7. The plaintiff in Simon contended that the FCC’s waiver was
not controlling in light of Stryker, but this argument failed. The court determined
that, contrary to “the ‘separation of powers’ argument raised in Stryker,” the “FCC
has the authority to grant such a retroactive waiver.” Id.
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Simon’s conclusion adheres to the text of the TCPA itself. The statute: (1)
provides that the “Commission shall prescribe regulations” necessary to implement
its requirements, 47 U.S.C. § 227(b)(2); and (2) creates a private right of action for
violations of those same regulations. Id. § 227(b)(3). It would make little sense to
vest the FCC with these responsibilities and simultaneously declare that the
Commission was somehow precluded from narrowing its own earlier regulation. See
NCTA v. Brand X, 545 U.S. 967, 983-84 (2005) (“[W]hether Congress has delegated
to an agency the authority to interpret a statute does not depend on the order in
which the judicial and administrative constructions occur . . . Instead, the agency
may . . . choose a different construction [than the court], since the agency remains
the authoritative interpreter (within the limits of reason) of such statutes.”); see
also 47 C.F.R. § 1.3 (“Any provision of the rules may be waived by the Commission
on its own motion or on petition if good cause therefor is shown.”).
Simon was also grounded in a recognition of the unique regulatory context at
issue. The court noted that “the retroactive waiver is directly related to the FCC’s
regulation regarding solicited advertisements [the Solicited Fax Rule]; the plain
language of the TCPA only requires opt-out notice on unsolicited advertisements.”
Simon, 2015 WL 10015953, at *7. Here again, the FCC, as the promulgator of the
Solicited Fax Rule, was well within its rights to retroactively narrow that same
regulation.
On balance, the Court is convinced that Simon and its progeny chart the
proper path in this area.
See also Town & Country Jewelers, LLC, 2016 WL
14
3647321, at *2 (“Meadowbrook’s petition seeking a retroactive waiver was granted
by the FCC on August 28, 2015; therefore, only unsolicited faxes would be
prohibited in this action.”); Bais Yaakov v. Graduation Source, 2016 WL 1271693, at
*5 (The “Court is persuaded by the analysis undertaken in Simon. The Waiver does
not, as Plaintiff contends, retroactively release Defendants from statutory liability.
As stated previously, on its face the TCPA only prohibits the sending of unsolicited
faxes. It is the FCC’s regulation interpreting the TCPA that extends the protections
of the statute to solicited faxes. Thus, it is within the FCC’s authority to determine
when and how to apply this regulation, and to waive it for good cause.”).
The FCC was empowered to issue the November 2016 Waiver, and that
document means what it says: Defendant is excused for any “failure to comply with
the opt-out notice requirement for fax advertisements sent with the prior express
invitation or permission of the recipient prior to April 30, 2015.”
c)
Decertification Is Appropriate Here
Now that “the issue of consent” is back in “the equation” by virtue of the
November 2016 Waiver, [212] at 9, the present class must be decertified. Here
again, Simon applies. There, the court determined that because “the FCC has the
authority to grant such a retroactive waiver,” and the waiver only applied to
“solicited advertisements,” whether “the retroactive waiver applies to this case
therefore necessarily depends upon whether Defendants transmitted the faxes with
or without that person’s prior express invitation or permission.” Simon, 2015 WL
10015953, at *7.
The court refused to “engage in hundreds of mini-trials to
15
determine whether a putative class member provided Defendants his or her or its
prior express permission,” and denied plaintiff’s motion for class certification. Id.;
see also M. Sign, Inc. v. Brink’s Mfg. Co., No. 09 C 5528, 2011 WL 248511, at *9
(N.D. Ill. Jan. 25, 2011) (“[T]he Court would have to conduct a series of mini-trials
to determine the facts of prior business relationships and consent. It would have to
do so both to establish the population of the class, and to determine liability. Given
the evidence put forward by Plaintiff, the Court cannot conclude that the proposed
class meets the predominance condition.”).
The risk of lengthy mini-trials regarding consent is similarly acute here. As
discussed supra, any collective proceeding in this case would need to resolve
complicated individualized questions. These inquiries would also be protracted by
virtue of the different relationships between and among the various recipients, as
illustrated by Brodsky’s own arrangement with his seven employees and/or
independent contractors. These idiosyncratic consent issues defeat superiority and
predominance, such that decertification is appropriate.
2.
Bais Yaakov
As mentioned supra, the D.C. Circuit’s decision in Bais Yaakov purported to
strike down the Solicited Fax Rule wholesale, holding it “unlawful to the extent that
it requires opt-out notices on solicited faxes.” Bais Yaakov v. FCC, 852 F.3d at
1083. The parties disagree as to Bais Yaakov’s import for this case.
Defendant suggests that, like the November 2016 Waiver, Bais Yaakov
invalidates the Solicited Fax Rule, meaning that the faxes here were only unlawful
16
if they were unsolicited, which in turn implicates myriad individual issues that
defeat certification. Plaintiff predictably disagrees, arguing, among other things,
that Bais Yaakov is inconsistent with the Seventh Circuit’s guidance in Ira
Holtzman, C.P.A. v. Turza, 728 F.3d 682, 683 (7th Cir. 2013).
The Court declines to venture too far into this dispute, given the
determination above that decertification is warranted in light of the November 2016
Waiver. Nevertheless, since Plaintiff’s argument regarding Turza seemingly has
ramifications for that analysis, the Court will address the dispute in part here.
Turza was an unremarkable case—the “only question on the merits” was
“whether the faxes [at issue] contained ads.” 728 F.3d at 685. To resolve that issue,
the Seventh Circuit looked to the faxes themselves and guidance promulgated by
the FCC. See id. at 687 (citing 47 C.F.R. § 64.1200(f)(1)). The Seventh Circuit
ultimately affirmed the district court’s finding on the merits, but remanded the
matter for additional case management proceedings. Id. at 690.
Making the most of a fairly limited opinion, Plaintiff’s employs Turza in
several ways. In certain briefs, Plaintiff contends that under Turza, the Solicited
Fax Rule remains in effect in the Seventh Circuit, such that individual consent
issues are irrelevant. [397] at 4 (“Plaintiff is relying on the FCC regulation, [the
Solicited Fax Rule], which was issued in the 2006 Order, along with the Seventh
Circuit’s decision in Turza.”). To the extent this is Plaintiff’s argument, this Court
disagrees. Turza did not feature a retroactive waiver from the FCC that narrowed
17
the Solicited Fax Rule, so even assuming for the sake of argument that it remains
good law after Bais Yaakov, it has limited import here.
At other points, Plaintiff seems to suggest that under Turza, the TCPA itself
extends the opt-out notice requirement to solicited faxes, irrespective of the
Solicited Fax Rule. See [397] at 2 (The “law in this Circuit under [Turza] is that
compliant opt-out notice is required for all fax advertisements, regardless whether
sent pursuant to an [established business relationship] or with prior express
permission.”); [387] at 2 (In Turza, “also a TCPA junk fax case, the Seventh Circuit
held that opt-out notice is required for faxes sent . . . with permission.”). This broad
reading of Turza is not the law.
It is true that Turza cites the TCPA, rather than the Solicited Fax Rule, in
support of the proposition that opt-out notices are required on solicited faxes. 728
F.3d at 683 (“Even when the Act permits fax ads—as it does to persons who have
consented to receive them, or to those who have established business relations with
the sender—the fax must tell the recipient how to stop receiving future messages.”)
(citing 47 U.S.C. § 227(b)(1)(C)(iii), (2)(D)). The absence of a specific cite to the
Solicited Fax Rule itself cannot be read out of context. The portions of the TCPA
cited at this point in Turza never mention solicited messages at all; instead, they
refer to the FCC’s ability to promulgate additional rules regarding opt-out notices
(such as the Solicited Fax Rule).
See 47 U.S.C. § 227(b)(1)(C)(iii) (“It shall be
unlawful for any person within the United States, or any person outside the United
States if the recipient is within the United States to use any telephone facsimile
18
machine, computer, or other device to send, to a telephone facsimile machine, an
unsolicited advertisement, unless the unsolicited advertisement contains a notice
meeting the requirements under paragraph (2)(D).”) (emphasis added); id.
§ 227(2)(D) (“The Commission shall prescribe regulations to implement the
requirements of this subsection.
In implementing the requirements of this
subsection, the Commission shall provide that a notice contained in an unsolicited
advertisement complies with the requirements under this subparagraph only if—
the notice is clear . . . .”) (emphasis added).
Moreover, the selection from Turza that Plaintiff invokes was not necessary
to the Seventh Circuit’s decision, nor does that selection explain the court’s
rationale. Thus, even if this Court were to adopt Plaintiff’s interpretation of Turza
(which it does not), the portion relied upon constitutes nonbinding dicta. See U.S. v.
Crawley, 837 F.2d 291, 292 (7th Cir. 1988) (“[D]ictum is not authoritative. It is the
part of an opinion that a later court, even if it is an inferior court, is free to reject.);
see also Michael C. Dorf, Dicta and Article III, 142 U. Pa. L. Rev. 1997, 2000-01
(1994) (“Dicta are less carefully considered than holdings, and, therefore, less likely
to be accurate statements of law. [Additionally] dicta have no precedential effect
because courts have legitimate authority only to decide cases, not to make law in
the abstract.”).
This Court declines to afford Turza’s non-precedential dicta a reading that
would improperly expand the TCPA.
Indeed, federal courts across the country
agree that, while “the [TCPA] requires an opt-out notice on unsolicited fax
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advertisements, the [TCPA] does not require a similar opt-out notice on solicited fax
advertisements—that is, those fax advertisements sent with the recipient's prior
express invitation or permission.” Bais Yaakov v. FCC, 852 F.3d at 1081; see also
Sandusky Wellness Ctr., LLC v. ASD Specialty Healthcare, Inc., 863 F.3d 460, 464
(6th Cir. 2017) (“Concerned by this specter of crushing liability, businesses (and
courts) began to question whether the FCC possessed the authority to promulgate
the Solicited Fax Rule given that the text of the TCPA appeared to reach only
unsolicited faxes.”); Nack, 715 F.3d at 683 (“The statute itself does not expressly
impose similar limitations or requirements [like the opt-out notice] on the sending
of solicited or consented-to fax advertisements.”); Simon, 2015 WL 10015953, at *7
(“[T]he plain language of the TCPA only requires opt-out notice on unsolicited
advertisements.”); Physicians Healthsource, Inc. v. Purdue Pharma L.P., No. 3:12CV-1208 SRU, 2014 WL 518992, at *1 (D. Conn. Feb. 3, 2014) (“[A]lthough the
TCPA itself appears to apply only to unsolicited fax advertisements, the FCC has
adopted a regulation that appears to expand the TCPA’s opt-out notice requirement
to solicited faxes as well.”) (emphasis and internal quotation marks omitted).
In addition to running contrary to this precedent, Plaintiff’s argument is in
tension with: (1) the TCPA’s plain (and thus controlling) text, see generally 47
U.S.C. § 227 et seq.; and (2) guidance from the FCC, which implicitly presumes that
the opt-out notice requirement is imposed on solicited faxes solely by virtue of the
Solicited Fax Rule—not the TCPA itself. See, e.g., October 2014 Order ¶ 1 (citing to
the Solicited Fax Rule, not the TCPA, in support of the proposition that “senders of
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fax ads must include certain information on the fax that will allow consumers to opt
out, even if they previously agreed to receive fax ads from such senders”).
Clearly, the Seventh Circuit would not effect a sea change of this magnitude
without additional comment. In the Seventh Circuit, as in the rest of the country,
the TCPA itself does not require that opt-out notices be included on solicited faxes—
notwithstanding a missing citation in Turza. 2
IV.
Conclusion
Plaintiff claims that Defendant’s faxes did not comply with the TCPA’s opt-
out notice requirement. The TCPA, however, does not impose an opt-out notice
requirement on “solicited” faxes. That obligation was created by the Solicited Fax
Rule, which is no longer operable here by virtue of the November 2016 Waiver.
Thus, to determine whether any putative member of the proposed class had a TCPA
claim, the Court would first be required to determine whether that proposed class
member “solicited” the faxes it received. In light of controlling precedent (which
explains that this inquiry is context-dependent) and the facts here (which reflect
different relationships among and between various recipients), the Court holds that
individual consent issues defeat predominance and superiority, such that class
treatment is no longer warranted under Rule 23.
Two other courts in this judicial district have cited Turza for the proposition advanced by Plaintiff
here. See Orrington v. Scion Dental, Inc., No. 17-cv-00884, 2017 WL 2880900, at *2 (N.D. Ill. July 6,
2017); Physicians Healthsource, Inc. v. Allscripts Health Sols., Inc., --- F. Supp. 3d ---, 2017 WL
2406143, at *24 (N.D. Ill. June 2, 2017). To the extent these decisions suggest that the TCPA itself
requires senders to include an opt-out notice on solicited fax messages, this Court respectfully
disagrees.
2
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Defendant’s Motion to Decertify the Class and To Stay [365] is accordingly
granted. Plaintiff’s Motion For Order Approving Class Notice and Setting A Date
For Opt Outs [371] is denied as moot.
Date: August 28, 2017
Entered:
____________________________________
John Robert Blakey
United States District Judge
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