America's Health & Resource Center, Ltd. v. Promologics, Inc. et al
Filing
114
AMENDED MEMORANDUM Opinion and Order: For the reasons stated herein, Defendants' Motion to Strike Class Allegations is granted in part and denied in part, and their Motion to Bifurcate Discovery is granted. Signed by the Honorable Harry D. Leinenweber on 7/19/2018: Mailed notice(maf)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
AMERICA’S HEALTH AND
RESOURCE CENTER, LTD.;
AFFILIATED HEALTH GROUP,
LTD.,
Case No. 16 C 9281
Plaintiffs,
Judge Harry D. Leinenweber
v.
PROMOLOGICS, INC.; JANSSEN
PHARMACEUTICALS, INC.,
Defendants.
AMENDED MEMORANDUM OPINION AND ORDER
Defendant
Janssen
moves
to
strike
the
class
allegations
asserted by Plaintiffs America’s Health & Resource Center, Ltd.
and Affiliated Health Group, Ltd., and to bifurcate discovery.
(Dkts. 75, 78.) Defendant Promologics has joined in those Motions.
(Dkts. 87, 89.)
in
part
and
For the reasons stated herein, the Court grants
denies
in
part
the
Motion
to
Strike
the
class
allegations and grants the Motion to Bifurcate.
I.
BACKGROUND
The Court has previously summarized the facts of this case in
an earlier ruling.
See, Am.’s Health & Res. Ctr., Ltd. v.
Promologics, Inc., No. 16 CV 9281, 2017 WL 5001284, at *1 (N.D.
Ill. Nov. 2, 2017). All that is relevant for now is that Plaintiffs
allege Defendants sent them, and each member of their proposed
class, a fax in violation of the Telephone Consumer Protection
Act, 47 U.S.C. § 227.
(Am. Compl. ¶¶ 1-10, Dkt. 21.)
Defendants
contend that this class action is incurably defective, however,
and so they move to strike those allegations.
Beyond that,
Defendants take issue with what they see as a shortage of proof to
back up the viability of the named Plaintiffs’ individual claims.
Defendants accordingly move to bifurcate discovery so they and the
Court
can
first
ascertain
whether
the
named
Plaintiffs
have
individual claims before contending, if still necessary, with the
proposed class allegations.
II.
A.
ANALYSIS
Motion to Strike Class Allegations
According to Defendants, the Court should strike the class
allegations in part or in whole for three reasons: (1) Under the
Supreme Court’s decision in Bristol-Myers Squibb Co. v. Superior
Court of California, 137 S. Ct. 1773, 1783-84 (2017), this Court
lacks personal jurisdiction over the Defendants as to the claims
of the non-Illinois-resident class members; (2) due to an imprecise
class definition, the named Plaintiffs’ claims are not typical of
the claims of the other class members; and (3) individualized
issues of consent predominate over common questions of law or fact,
so the class fails to clear Federal Rule of Civil Procedure
- 2 -
23(b)(3), as required here.
The Court finds only the first of
these arguments convincing.
1.
Personal Jurisdiction under Bristol-Myers Squibb
Personal
jurisdiction
may
be
“general”
or
“specific.”
General jurisdiction lies only where the defendant has “continuous
and systematic” contacts with the forum state.
See, Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16 (1984).
In all but the most exceptional cases, general jurisdiction over
a corporation is limited to its place of incorporation and/or
principal place of business.
Leibovitch v. Islamic Republic of
Iran, 188 F. Supp. 3d 734, 746 (N.D. Ill. 2016) (citing Daimler AG
v. Bauman, 134 S Ct. 746, 761 n.19 (2014)), aff’d, 852 F.3d 687
(7th Cir. 2017).
In contrast, “[s]pecific personal jurisdiction
is appropriate where (1) the defendant has purposefully directed
his activities at the forum state or purposefully availed himself
of the privilege of conducting business in that state, and (2) the
alleged
injury
arises
out
of
the
defendant’s
forum-related
activities.” Tamburo v. Dworkin, 601 F.3d 693, 702 (7th Cir. 2010)
(citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)).
In either case, the plaintiff must also demonstrate that the
exercise of jurisdiction comports with traditional notions of fair
play and substantial justice.
Int’l Shoe Co. v. Washington, 326
U.S. 310, 320 (1945).
- 3 -
Despite contending in their Complaint that Defendant Janssen
is subject to this Court’s general jurisdiction (Am. Compl. ¶ 18,
Dkt. 21), Plaintiffs make no general jurisdiction arguments in
their present briefing as to either Defendant, both of which are
incorporated
and
maintain
outside of Illinois.
their
principal
places
of
business
See, Daimler, 134 S. Ct. at 761 n.19.
such, the remaining jurisdictional inquiry is specific.
As
Here,
that inquiry depends on the Supreme Court’s ruling in BristolMyers Squibb.
tort
action
137 S. Ct. at 1783-84.
in
California
state
That case began as a mass
court
involving
hundreds
of
individual plaintiffs, most of whom were not California residents.
Id.
at
1777.
On
review,
the
Supreme
Court
considered
the
compatibility of the state court’s exercise of jurisdiction with
the Fourteenth Amendment’s due process clause and concluded that
the state court lacked specific jurisdiction over the defendant as
to the claims of the nonresident plaintiffs.
84.
Id. at 1779, 1783-
In so holding, the Court clearly limited its ruling to state
court jurisdiction, thus “leav[ing] open the question whether the
Fifth Amendment imposes the same restrictions on the exercise of
personal jurisdiction by a federal court.”
omitted).
Id. at 1784 (citation
That limitation is no barrier to the rule’s application
here, however, where this Court sits in diversity jurisdiction and
accordingly looks to Illinois state law.
See, LDGP, LLC v.
Cynosure, Inc., No. 15 CV 50148, 2018 WL 439122, at *2 (N.D. Ill.
- 4 -
Jan. 16, 2018) (applying Bristol-Myers Squibb holding in case of
diversity jurisdiction); McDonnell v. Nature’s Way Prods., LLC,
No. 16 CV 5011, 2017 WL 4864910, at *4 n.7 (N.D. Ill. Oct. 26,
2017) (same).
But that is not the only possible barrier to Bristol-Myers
Squibb’s application to this case.
What remains is whether that
case applies with equal force to class actions as to mass torts
and,
if
so,
whether
the
Defendants’
personal-jurisdiction
objection predicated on that case is either timely or, if untimely,
excusable.
The precise membership of the proposed class is still
unclear, but the allegations suggest that the proposed nationwide
class contains members who neither reside, nor were harmed in,
Illinois.
It is this group of plaintiffs whose claims Defendants
seek to shear from the case, and if the Court answers the questions
presented
above
in
the
affirmative,
Defendants’
efforts
will
prevail.
As for the first question: Bristol-Myers Squibb left open
whether
its
context.
jurisdictional
rule
applies
in
the
class
action
See 137 S. Ct. at 1789 n.4 (Sotomayor, J., dissenting)
(“The Court today does not confront the question whether its
opinion here would also apply to a class action in which a
plaintiff
injured
in
the
forum
State
seeks
to
represent
a
nationwide class of plaintiffs, not all of whom were injured
there.”).
District court rulings have begun to fill that vacuum,
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though with contradictory results.
Compare Casso’s Wellness Store
& Gym, LLC v. Spectrum Lab. Prods., Inc., No. 17 CV 2161, 2018 WL
1377608 (E.D. La. Mar. 19, 2018); In re Morning Song Bird Food
Litig., No. 12 CV 01592, 2018 WL 1382746, at *5 (S.D. Cal. Mar.
19, 2018); Sanchez v. Launch Tech. Workforce Sols., LLC, 297 F.
Supp. 3d 1360, 1365-66 (N.D. Ga. 2018); In re Chinese-Manufactured
Drywall Prod. Liab. Litig., No. MDL 09-2047, 2017 WL 5971622, at
*12 (E.D. La. Nov. 30, 2017) (cases finding Bristol-Myers Squibb
inapplicable to class actions), with Maclin v. Reliable Reports of
Tex., Inc., No. 17 CV 2612, 2018 WL 1468821, at *4 (N.D. Ohio Mar.
26, 2018); Wenokur v. AXA Equitable Life Ins. Co., No. 17 CV 00165,
2017 WL 4357916, at *4 n.4 (D. Ariz. Oct. 2, 2017); In re Dental
Supplies Antitrust Litig., No. 16 CV 696, 2017 WL 4217115, at *9
(E.D.N.Y. Sept. 20, 2017) (finding the opposite).
This Court has
also weighed in and agreed with those courts finding Bristol-Myers
Squibb applicable to class actions. See, DeBernadis v. NBTY, Inc.,
No. 17 CV 6125, 2018 WL 461228, at *2 (N.D. Ill. Jan. 18, 2018).
That ruling comports with the position taken by the other courts
in
this
District
which
have
answered
this
question.
See,
McDonnell, 2017 WL 4864910, at *4; Greene v. Mizuho Bank, Ltd.,
289 F. Supp. 3d 870, 874 (N.D. Ill. 2017).
Those decisions finding Bristol-Myers Squibb applicable to
class
actions
have
generally
observed
that
due
process
requirements do not differ between class and non-class actions.
- 6 -
In either event, as the Supreme Court articulated, due process
requires “a connection between the forum and the specific claims
at issue.”
Bristol-Myers Squibb, 137 S. Ct. at 1781; see, Greene,
289 F. Supp. 3d at 874 (stating same); Maclin, 2018 WL 1468821, at
*4 (remarking that the respective due process protections of the
Fifth and Fourteenth Amendments engender the same effects as far
as personal jurisdiction are concerned); In re Dental Supplies
Antitrust Litig., 2017 WL 4217115, at *9 (“The constitutional
requirements
of
due
process
do[]
not
wax
and
wane
complaint is individual or on behalf of a class.”).
when
the
This Court
agrees with that observation and now endorses it once again,
reflecting this Court’s belief that Bristol-Myers Squibb applies
in equal measure to class actions.
But answering this first question in the affirmative does not
yet give Defendants a victory in their quest to cut down the
proposed
class.
There
is
also
the
question
of
timeliness.
Plaintiffs contend that even if this Court believes Bristol-Myers
Squibb applies with equal force to class actions, Defendants’
Motion still fails because, by challenging this Court’s personal
jurisdiction, Defendants’ filing is nothing more than a 12(b)(2)
motion in disguise.
And as such, it is susceptible to the same
timeliness requirements—and the attendant waiver penalties for
tardiness—as any other challenge to personal jurisdiction.
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Ordinarily,
defendants
must
assert
personal
jurisdiction
challenges in their first responsive pleading, or else waive them.
FED. R. CIV. P. 12(b)(2), (h)(1); see, Ins. Corp. of Ir., Ltd. v.
Compagnie
des
Bauxites
de
Guinee,
456
U.S.
694,
705
(1982)
(explaining failure to object timely to personal jurisdiction
constitutes waiver of said objection).
Defendants suggest they
should not be held to that standard here, however, where they moved
to dismiss the Amended Complaint on May 25, 2017—roughly one month
before the Supreme Court issued Bristol-Myers Squibb.
According
to Defendants, that opinion signified an intervening change in the
law, and so they cannot be held to account for having failed, preBristol-Myers,
to
available to them.
First,
the
raise
the
new
defense
that
decision
made
This Court is not convinced.
Supreme
Court
admonished
that
the
result
in
Bristol-Myers Squibb represented a “straightforward application”
of “settled principles regarding specific jurisdiction.”
Ct. at 1782-83.
137 S.
This was an odd characterization for the Court to
deploy if it intended its decision to be interpreted as a change
in controlling law.
Second, it is not clear that pre-Bristol-
Myers authority precluded Defendants from raising their personal
jurisdiction challenge when they filed their first responsive
pleadings in May 2017, meaning Defendants should not be excused
for failing to do so.
Cf. Hawknet, Ltd. v. Overseas Shipping
Agencies, 590 F.3d 87, 92 (2d Cir. 2009) (remarking that personal
- 8 -
jurisdiction defense is not waived where, prior to the time it was
raised, it would have been “contrary to controlling precedent”).
The First Circuit has explained that a party may be excused for
failing to raise a then-unavailable defense, i.e., a defense that,
“if asserted, would have been futile under binding precedent.”
Bennett v. City of Holyoke, 362 F.3d 1, 7 (1st Cir. 2004); accord
Practice Mgmt. Support Servs., Inc. v. Cirque du Soleil, Inc., 301
F. Supp. 3d 840, 862 (N.D. Ill. 2018) (quoting and applying same).
The problem for Defendants, who filed their first responsive
pleadings over a year ago (Dkts. 44, 46), is that this Court is
not aware of any pre-Bristol-Myers, Seventh-Circuit authority that
would have rendered futile a challenge to personal jurisdiction as
to the non-resident, proposed class members.
Accord Greene, 289
F. Supp. 3d at 876 (reciting that pre-Bristol-Myers Seventh Circuit
precedent
“did
not
foreclose
[defendants]
from
pressing
Bristol-Myers] theory” as an affirmative defense).
[the
Without an
intervening change in the law and without an earlier, controlling
authority blockading such efforts, the Defendants’ failure to
mount a timely challenge to personal jurisdiction constitutes
forfeiture of that challenge.
However, though the Defendants forfeited their personaljurisdiction challenge by failing to raise it earlier, the Court
will excuse the forfeiture.
In a similar ruling, Judge Gary
Feinerman remarked that under Supreme Court guidance, lower courts
- 9 -
“‘retain [] the independent power to identify and apply the proper
construction of governing law,’ even where the parties ‘fail[] to
advert’ to the applicable rule in their own briefing.”
Greene,
289 F. Supp. 3d at 877 (quoting Kamen v. Kemper Fin. Servs., Inc.,
500 U.S. 90, 99 (1991)) (excusing forfeiture of Bristol-Myers
jurisdiction challenge); see also, ISI Int’l, Inc. v. Borden Ladner
Gervais LLP, 256 F.3d 548, 551 (7th Cir. 2001) (excusing forfeiture
and remarking that “[f]ederal courts are entitled to apply the
right body of law, whether the parties name it or not”), as amended
(July 2, 2001).
The Supreme Court made clear in Bristol-Myers
what standard to apply in scrutinizing personal jurisdiction as to
the claims of nonresident plaintiffs, and this Court will follow
that direction.
See, Practice Mgmt., 301 F. Supp. 3d at 864
(endorsing Greene’s forfeiture reasoning).
In this class action, the Bristol Myers opinion is applicable
and its import clear: The Court lacks
jurisdiction over the
Defendants as to the claims of the nonresident, proposed class
members.
As such, the Defendants’ Motion is granted in relevant
part, and those class members who are not Illinois residents and
who allegedly received the fax outside of this state’s borders may
not be part of this case.
To the extent that the proposed class
allegations
such
stricken.
comprise
any
unnamed
plaintiffs,
they
are
Subtracting those proposed class members shrinks the
class but might not destroy it; the Complaint is unclear as to how
- 10 -
many of the proposed plaintiffs are Illinois residents, so the
Court cannot yet say whether the remaining balance is sufficiently
numerous to satisfy Rule 23.
Given that uncertainty, the Court
will address the rest of Defendants’ Motion-to-Strike arguments
lest any of them succeeds in further reducing the proposed class.
2.
Typicality Challenge
Beyond their jurisdictional assault, Defendants also attack
the proposed class under Federal Rule of Civil Procedure 23.
To
do so, Defendants cite to this Court’s reasoning in another TCPA
case, A Custom Heating & Air Conditioning, Inc. v. Kabbage, Inc.,
No. 16 CV 2513, 2018 WL 488257, at *4 (N.D. Ill. Jan. 18, 2018).
There, the Court found that because the proposed class definition
failed
to
distinguish
between
those
members
who
received
unsolicited faxes and those members who received solicited faxes,
the claims of the named plaintiffs—who allegedly received only the
former variety—were not typical of the claims of the class.
Id.
at *4 (remarking upon absence of congruence between those claims
given that the class members who received only solicited faxes
would not have a valid TCPA claim at all).
However, the Kabbage
opinion did not take into account that this typicality critique
cannot hold if the solution is to add a consent requirement to the
class definition.
If the instant class were defined by a legal
parameter such as consent of the recipient class member, the result
would be an impermissible “fail-safe” class in which “a class
- 11 -
member either wins or, by virtue of losing, is defined out of the
class and is therefore not bound by the judgment.”
Mullins v.
Direct Digital, LLC, 795 F.3d 654, 660 (7th Cir. 2015) (citation
omitted).
Such
classes
are
non-ascertainable
and
cannot
be
certified.
See, e.g., G.M. Sign Inc. v. Stealth Sec. Sys., Inc.,
No. 14 CV 09249, 2017 WL 3581160, at *3 (N.D. Ill. Aug. 18, 2017)
(citing Mullins, 795 F.3d at 660).
Accordingly, Defendants’
typicality objection carries no weight.
There is one other aspect of the Kabbage case that bears on
the instant litigation, however.
Kabbage detailed the history of
the now-defunct Solicited Fax Rule, which once mandated that under
the TCPA, all faxes, whether solicited or not, were required to
include an opt-out notice.
Id. at *2.
A consolidated Hobbs Act
appeal decided by the D.C. Circuit invalidated that rule in a
decision which is binding on this Court.
See, id. (citing Bais
Yaakov of Spring Valley v. FCC, 852 F.3d 1078, 1083 (D.C. Cir.
2017), cert. denied, 138 S. Ct. 1043 (2018)). The Defendants point
out that the Amended Complaint, which predates Yaakov, frames the
proposed class in terms of the Solicited Fax Rule’s opt-out
requirement which Yaakov invalidated.
The proposed class is:
Each person that was sent one or more facsimiles from
[Defendants] inviting them to participate in a
promotional educational program that did not state on
its first page that the fax recipient may request that
the sender not send any future fax and that the failure
- 12 -
to comply with such a request within 30 days would be
unlawful.
(Am. Compl. ¶ 50 (emphasis added).)
Because this class definition
rests upon abrogated authority, it does not properly describe a
class of TCPA plaintiffs. The Court accordingly grants Defendants’
Motion to Strike this definition, but allows Plaintiffs leave to
amend.
3.
As
their
Predominance Challenge
final
argument,
Defendants
charge
that
individualized issues of consent predominate over common questions
of law or fact and thus confound class certification.
P. 23(b)(3).
FED. R. CIV.
But “where the defendant’s objection to class
certification fails to set forth specific evidence ‘and instead
only makes vague assertions about consent,’ individualized issues
regarding consent will not predominate over common questions of
law or fact.”
Karpilovsky v. All Web Leads, Inc., No. 17 CV 1307,
2018 WL 3108884, at *5 (N.D. Ill. June 25, 2018) (quoting Toney v.
Quality Res., Inc., 323 F.R.D. 567, 587 (N.D. Ill. 2018) (citation
omitted)).
Though the Defendants assert in their papers that the
proposed class includes members “who provided consent and/or had
an ongoing business relationship with Defendants,” the Defendants
have
not
assertion.
produced
any
evidence
whatsoever
to
back
up
that
(Mem. in Supp. of Mot. to Strike at 10, Dkt. 76.)
Supposition alone does not create a meritorious consent objection
- 13 -
in this context.
See, Savanna Group, Inc. v. Trynex, Inc., No. 10
CV 7995, 2013 WL 66181, at *3-4 (N.D. Ill. Jan. 4, 2013) (St. Eve,
J.)
(rejecting
defendant’s
consent-inquiry-based
predominance
objection to class definition because defendant failed to offer
specific evidence of consent).
Defendants’ predominance objection
thus fails.
B.
In
their
Defendants’ Motion to Bifurcate
second
Motion,
Defendants
seek
to
bifurcate
discovery and thus exchange, first, information related to the
named Plaintiffs’ individual claims, and thereafter, information
related to the claims of the proposed class as a whole.
According
to Defendants, this will help the parties quickly determine whether
the named Plaintiffs have viable claims.
the
parties
can
entirely
forgo
class-wide
resources and expense on all sides.
Police,
251
F.3d
612,
630
(7th
If they do not, perhaps
discovery,
saving
See, Chavez v. Ill. State
Cir.
2001)
(“[If]
the
court
determines that the named plaintiffs’ claims lack merit, such a
decision ordinarily, though not invariably, disqualifies the named
plaintiffs as proper representatives, thus resolving the issue of
class certification.” (citation and internal quotation omitted)).
Whether to bifurcate discovery is a determination that rests within
the discretion of the trial court.
See, Ocean Atl. Woodland Corp.
v. DRH Cambridge Homes, Inc., No. 02 CV 2523, 2004 WL 609326, at
*2 (N.D. Ill. Mar. 23, 2004) (citations omitted); cf. Sattar v.
- 14 -
Motorola, Inc., 138 F.3d 1164, 1171 (7th Cir. 1998) (“[D]istrict
courts have broad discretion in matters related to discovery.”).
The present litigation is poised to cross the two-year mark,
and yet Plaintiffs have not produced basic, requested discovery
which would prove up their individual claims.
allegedly
unlawful
fax
to
their
Amended
They attached the
Complaint,
but
that
document does not identify the telephone number(s) of the fax
machine(s) that received it nor does it explain in any other way
how Plaintiffs came to obtain it.
date,
Plaintiffs
responses.
have
not
(Copy of Fax, Dkt. 21-1.)
provided
verified
To
interrogatory
After Defendants filed their Motion to Bifurcate,
Plaintiffs made good on one of their promises to supplement their
discovery responses by providing a fax number for the machine that
allegedly received the unlawful communique. (See, Pls.’ Resps. to
Defs.’ First Set of Interrogatories, Dkt. 80-1, -2 (Plaintiffs
responding simply, “will supplement” in response to request for
the telephone number that received the fax).)
this
disclosure
confounds,
rather
than
But as it happens,
clarifies,
matters:
Defendants respond by filing a declaration stating that they have
no record of sending any fax to that number.
(Wurtsbaugh Decl.
¶ 4, Dkt. 103-1.)
Bifurcation is not always warranted in TCPA class actions,
nor
is
it
universally
appropriate
or
helpful.
But
in
the
circumstances presented here, where some limited, first-stage
- 15 -
production could stave off substantial wasted efforts, the Court
believes bifurcation is appropriate. See, FED. R. CIV. P. 1 (stating
that the Federal Rules of Civil Procedure should be administered
“to secure the just, speedy, and inexpensive determination of every
action and proceeding”).
The Motion to Bifurcate Discovery is
granted.
III.
CONCLUSION
For the reasons stated herein, Defendants’ Motion to Strike
Class Allegations is granted in part and denied in part, and their
Motion to Bifurcate Discovery is granted.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
Dated: 7/19/2018
- 16 -
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