Machesney v. Lar-Bev of Howell, Inc. et al
Filing
101
OPINION and ORDER Granting 85 MOTION to Vacate the Judgment Entered Pursuant to Defendants' Offer of Judgment MOTION for Reconsideration. Signed by District Judge Sean F. Cox. (JMcC)
UNITED STATED DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Shari Machesney,
Plaintiff,
v.
Case No. 10-10085
Lar-Bev of Howell, Inc., et al.,
Sean F. Cox
United States District Court Judge
Defendants.
_____________________________________/
OPINION & ORDER
GRANTING PLAINTIFF’S MOTION TO VACATE JUDGMENT AND
RECONSIDERING CLASS CERTIFICATION
This matter is currently before the Court on Plaintiff’s motion asking this Court to vacate
the judgment issued in this case and then reconsider class certification, based upon Sixth Circuit
TCPA cases that were issued after this Court had denied class certification. As explained below,
although this Court followed binding Sixth Circuit precedent when it issued a judgment on
Plaintiff’s individual claims based upon an unaccepted offer of judgment that gave the named
plaintiff all the relief she could obtain in this action if she were to prevail, the United States
Supreme Court very recently rejected the mootness-by-unaccepted-offer-of-judgment theory in
Campbell-Ewald v. Gomez, 577 U.S. __ (2016). As such, this Court concludes that it should
now vacate the judgment in this action that was issued based upon that theory. The Court also
concludes that, under the rather unusual circumstances presented here, it is appropriate for the
Court to reconsider its prior ruling on class certification in this case. Having done so, the Court
now concludes that this action should be certified as a class action.
BACKGROUND
Three separate, but very similar, putative class actions were assigned to this Court at or
around the same date. All three cases were filed by the same plaintiff’s counsel and assert claims
under the Telephone Consumer Protection Act, 47 U.S.C. § 227 (the “TCPA”).
A.
Summary Of The Three Cases
The three TCPA that were assigned to this Court at about the same time are: 1)
Machesney v. Lar-Bev of Howell, Inc., et al. (Case No. 10-10085) (“Machesney”); 2) APB
Associates, Inc. v. Bronco’s Saloon, Inc., et al. (Case No. 09-14959) (“APB Associates”); and 3)
Compressors Engineering Corp. v. Manufacturers Financial Corp. et al. (Case No. 09-14444)
(“Compressors Engineering”).
1.
Machesney
There is one named Plaintiff in this action, Shari Machesney, an individual. (D.E. No. 1).
There are five named Defendants,1 which are corporate entities: 1) Lar-Bev of Howell, Inc.; 2)
Larbev, Inc.; 3) LarBev-Fenton, Inc., 4) Larbev-Union Lake, Inc.; and 5) Larbev-Waterford, Inc.
The Complaint alleges that on or about “February 14, 2006, Defendants sent by telephone
facsimile machine an unsolicited advertisement to Plaintiff’s facsimile machine. A copy of the
facsimile is attached hereto and marked as Exhibit A.” (Id. at 3). Plaintiff alleges that
Defendants did not have Plaintiff’s prior express invitation or permission to send advertisements
to Plaintiff’s fax machine and that, upon information and belief, “Defendants have sent similar
unsolicited facsimile advertisements to at least 39 other recipients.” (Id.).
1
Plaintiff’s complaint named ten unidentified “John Doe” Defendants, but Plaintiff later
agreed those unidentified Defendants should be dismissed. (See 3/14/13 Hrg. Tr.).
2
Plaintiff’s Motion for Class Certification states that Defendants either owned or oversaw
Kentucky Fried Chicken (“KFC”) franchises. Plaintiff claims that Defendants hired Caroline
Abraham (aka Business to Business Solutions) to send faxes out on their behalf. Plaintiff’s
Motion for Class Certification states that Defendants’ advertisements are form documents that
were sent to 9,497 unique fax numbers. (D.E. No. 48 at 13). Plaintiff asks the Court to certify
the following class:
All persons who were sent one or more faxes on November 28, 2005, November
30, 2005, February 14, 2006, or February 15, 2006, offering “KFC Catering
Prices,” including “200 HOT WINGS” for $79.99 and a variety of “KFC’s
FAMOUS SIDE DISHES,” and identifying and [sic] a “Complaint Hotline”
number of (718) 645-2021 Ext. 232 or (718) 360-1330 ext. 232.
(D.E. No. 48 at 1).
2.
APB Associates
There is one named Plaintiff in this action, APB Associates, Inc., a corporate entity.
(D.E. No. 1). There are five Defendants: 1) Bronco’s Saloon, Inc.; 2) Bronco’s Entertainment,
Ltd., 3) T&R Enterprises, Inc.; 4) River Entertainment, LLC; and 5) 31650 West Eight Mile, Inc.
The Complaint alleges that on or about “February 27 2006, Defendants sent by telephone
facsimile machine an unsolicited advertisement to Plaintiff’s facsimile machine. A copy of the
facsimile is attached hereto and marked as Exhibit A.” (Id. at 3). The fax ad at issue advertised
four different businesses: 1) the Pony Express Saloon, located at 31650 W. Eight Mile Road; 2)
the Mustang Inn; 3) Chix on Dix; and 4) the Bronco Saloon. (Id.). Plaintiff’s December 22,
2009, Complaint alleges that Defendants “are Michigan corporations that operate bar restaurants
under the names Bronco Saloon, Pony Express Saloon, and Mustang Inn.” (Compl. at ¶ 9).
3
Plaintiff alleges that Defendants did not have Plaintiff’s prior express invitation or permission to
send advertisements to Plaintiff’s fax machine and that, upon information and belief,
“Defendants have sent similar unsolicited facsimle advertisements to at least 39 other recipients.”
(Id.).
Plaintiff’s Motion for Class Certification asked the Court to certify the following class:
“All persons who were sent faxes on February 27, 2006, that listed “Bronco Saloon,” “Pony
Express Saloon,” “Mustang Inn,” “Chix on Dix,” and a “Complaint Hotline” number of (718)
360-1330, ext 232. Plaintiff claims that Defendants hired Caroline Abraham (aka Business to
Business Solutions) to send faxes out on their behalf. Plaintiff asserts that the “Defendants’
advertisement is a form document that was sent to 4,088 unique fax numbers.” (D.E. 34 at 10).
3.
Compressors Engineering
There is one named Plaintiff in this action, Compressor Engineering Corporation, Inc., a
corporate entity. (D.E. No. 1). There are three Defendants: 1) Manufacturers Financial
Corporation, 2) Charity Marketing, LLC; and 3) Richard K. Stephens.
The Complaint alleges that on or about November 30, 2005, “Defendants sent by
telephone facsimile machine an unsolicited advertisement to Plaintiff’s facsimile machine. A
copy of the facsimile is attached hereto and marked as Exhibit A.” (Id. at 3). The fax ad at issue
advertised “Great Residential and Commercial Lending” and instructed to call “(800) 264-3898,
Ext 340” for details, but does not appear to the state the names of any businesses.
Plaintiff alleges that Defendants did not have Plaintiff’s prior express invitation or
permission to send advertisements to Plaintiff’s fax machine and that, upon information and
belief, “Defendants have sent similar unsolicited facsimile advertisements to at least 39 other
4
recipients.” (Id.).
Plaintiff’s Motion for Class Certification asked the Court to certify the following class:
“All persons who were sent one or more faxes on November 29, 2005, or November 30, 2005,
that contained a ‘Remove’ Hotline number of (718) 645-2018, Ext 2234 and a ‘Complaint’
Hotline number of (718) 645-2021, Ext 232. and offered either a ‘Limited Release Refinance
Program’ with a toll free number of (800) 264-3898 or a ‘Fast Track Approval for Licensed
Brokers! [sic] that included contact information for Julia Kahn.’” (D.E. No. 57 at 1).
Plaintiff claims that Defendants hired Caroline Abraham (aka B2B) to send faxes out on
their behalf. Plaintiff asserts that during a two-day period in November of 2005, “Defendants
caused advertisements to be sent by fax to 14,137 persons in Michigan and Florida without first
obtaining their express consent.” (Id. at 1-2).
B.
There Was A Delay From An Appeal Regarding Subject Matter Jurisdiction
This Court initially dismissed each of these cases for lack of subject matter jurisdiction
because, at the time, there was an unpublished Sixth Circuit decision that held that “state courts’
maintenance of exclusive jurisdiction over private rights of action under the TCPA and federal
courts’ concomitant lack of jurisdiction to hear such private claims are well-settled.” Dun-Rite
Constr., Inc. v. Amazing Tickets, Inc., 2004 WL 3239533 (6th Cir. 2004).
Plaintiffs appealed in all three cases. All three of these cases incurred a delay due to the
resolution of the issue of whether federal-question jurisdiction exists over TCPA cases,
ultimately ruled upon by the United States Supreme Court, which ruled that federal-question
5
jurisdiction does exist.2
Upon remand, each of these three cases proceeded to discovery, proceeding along similar
scheduling orders.
C.
This Court Denied Plaintiffs’ Motions for Class Certification, When There Was A
Lack Of Sixth Circuit Authority On The TCPA.
In April of 2013, this Court denied Motions for Class Certifications in all three cases and
issued essentially the same opinion in each case. At that time, there was a lack of Sixth Circuit
authority on the TCPA.
In terms of the adequacy of class counsel, the Court concluded that it would not be
appropriate to deny class certification based upon alleged ethical violations by Wanca and
Anderson, one of the firms seeking to be class counsel. The Court noted that other proposed
lawyers, who were not involved in the alleged unethical conduct, could be appointed as class
counsel.
The Court noted two potential problems with the named plaintiffs. First, it noted that the
proposed classes was confined to “persons” who were sent faxes but that two of the named
plaintiffs were actually corporate entities. The Court noted that problem could be fixed rather
easily by changing the definitions to include “persons or entities.” Second, the Court expressed
that it was somewhat troubled by the fact that the named plaintiffs had agreed, in their retainer
agreements, not to contest a one-third contingency fee that counsel would request.
The main reason for the denial of class certification was the Court’s conclusion that there
2
See Charvet v. EchoStar Satellite, LLC, 630 F.3d 459, 463 (6th Cir. 2010) and Mims v.
Arrow Fin. Srvs., LLC, 132 S.Ct. 740 (2012).
6
was not an ascertainable class because only persons or entities who owned the fax machine had
statutory standing to bring a claim. In discussing statutory standing, the Court addressed an
uncertainty that some other courts had addressed in terms of who can bring a TCPA claim after
an unsolicited fax is sent. That is, the Court expressed that it is unclear what is meant by a
person “who was sent” a fax advertisement (i.e., does that include the person who owns the fax
machine, the person who opened the account or paid the bill for the telephone line the fax
machine used to receive signals, a person to whom the fax advertisement was addressed, persons
who happened to pick up the fax, or all of the above). After examining the legislative history,
this Court concluded only the owners of the fax machine had statutory standing to assert a claim
under the TCPA. The Court also concluded that determining the owners would require an
individualized determination.
Finally, the Court concluded that the claims are inherently individualized because of the
statutory defense that only “unsolicited” faxes give rise to a claim. The Court noted that there
was caselaw going both ways on this issue and ultimately followed Judge Zatkoff’s approach on
this issue.
D.
The Sixth Circuit Declined To Review This Court’s Denials Of Class Certification
On An Interlocutory Basis.
After this Court denied the motions for class certification, Plaintiffs filed petitions for
leave to appeal this Court’s orders denying their Motions for Class Certification. The Sixth
Circuit denied those motions, stating in pertinent part, “Upon consideration, we conclude that the
relevant factors do not weigh in favor of granting an interlocutory appeal.” (10/23/13 Order from
Sixth Circuit). Thus, the Sixth Circuit did not allow an interlocutory appeal in any of the three
7
cases.
E.
The Three Cases Then Proceeded On The Named Plaintiff’s Individual Claims And
This Court Entered Judgment In Favor Of Plaintiffs Based Upon The Mootness-ByUnaccepted-Offer-Of-Judgment Theory.
Because this Court had denied the Motions for Class Certification, each of the three cases
proceeded with respect to the named Plaintiff’s individual claims.
The Defendants in each of the three cases filed motions, asking this Court to dismiss the
case as moot because Defendants had made an offer of judgment that provided each of the named
Plaintiffs with all the relief that they could potentially obtain if they prevailed at trial. This Court
ultimately granted those motions, and on or about July 14, 2014, the Court issued Opinion &
Orders granting the motions that explained: “Defendants’ Rule 68 Offer of Judgment in [each of
the cases] provides [the named plaintiff] with all relief that it sought, and all the relief that it
could potentially obtain in this action. Accordingly, under O’Brien [ v. Ed Donnelly Enters. Inc.,
575 F.3d 567, 574 (6th Cir. 2009)], this Court will enter judgment in [the named plaintiff’s]
favor, in accordance with the Rule 68 offers of judgment and dismiss the cases as moot. This
Court then issued judgments in favor of each of the named Plaintiff’s in each of the three cases.
F.
Plaintiffs Appealed This Court’s Rulings In These Cases.
The named plaintiffs each filed a Notice of Appeal, appealing this Court’s class
certification ruling and its ruling granting the Defendants’ Motions for Entry of Judgment under
the unaccepted-offer-of-judgment theory.
G.
After This Court Closed These Cases, The Sixth Circuit Ruled On Relevant TCPA
Issues.
That same month, Sixth Circuit then issued American Copper & Brass, Inc. v. Lake City
8
Industrial Prods., Inc., 757 F.3d 540 (6th Cir. 2014), wherein it affirmed a district court’s order
granting a motion for class certification in a TCPA case. The defendant in that action had
challenged certification by citing to this Court’s opinions wherein it concluded that only the
owners of fax machines had standing to assert a claim under the TCPA. The Sixth Circuit stated
that this Court should not have considered the legislative history of the TCPA because its
language is clear as to who can bring a claim. It also concluded that this Court was too narrow in
concluding that a person or entity had to own the fax machine at issue in order to have statutory
standing:
True, Congress was generally concerned with the costs associated with unsolicited
fax advertisements. See id. at 426-27 (discussing the legislative history of the
TCPA). But unsolicited fax advertisements impose costs on all recipients,
irrespective of ownership and the cost of paper and ink, because such
advertisements waste the recipients’ time and impede the free flow of commerce.
American Copper & Brass, supra, at 544 (emphasis added).
In affirming the district court’s order certifying the class, the Sixth Circuit also rejected,
as forfeited, the Defendant’s argument that the class is not objectively ascertainable. But it
nevertheless went on to state that “the record in fact demonstrates that the fax numbers are
objective data satisfying the ascertainability requirement.” Id. at 545.
H.
Plaintiffs File Motions Asking This Court To Vacate The Judgments And
Reconsider Class Certification.
Following the Sixth Circuit’s issuance of American Copper & Brass, the named plaintiffs
in these three cases each filed a motion asking this Court to vacate the judgment issued by the
Court and reconsider class certification, given the ruling by the Sixth Circuit. The parties have
extensively briefed those motions.
9
The Sixth Circuit is holding the appeals in abeyance until this Court rules on these
motions.
I.
Meanwhile, The Sixth Circuit Issues Another Published Decision On Relevant
TCPA Issues.
On July 7, 2015, the Sixth Circuit issued a published decision in Imhoff Investment, LLC
v. Alfoccino, Inc.,792 F.3d 627 (6th Cir. 2015). In that case, the district court had granted
summary judgment in favor of defendants, ruling that the named plaintiffs lacked Article III
standing. The Sixth Circuit reversed the district court’s summary judgment ruling and remanded
for further proceedings. In doing so, the Sixth Circuit referred to American Copper & Brass. It
concluded that the named Plaintiff in Imhoff, “as the recipient of [the defendant’s] unsolicited
advertising faxes” had Article III standing to pursue a claim under the TCPA. Id. at 631
(emphasis added). It also stated:
Though the TCPA does not expressly state who has a cause of action to sue under
its provisions, its description of the conduct it prohibits repeatedly refer to the
“recipient” of the unsolicited fax, 47 U.S.C. § 227(b)(1)(C),(b)(2)(D), and in
enacting the TCPA, Congress noted that such fax advertising “is problematic”
because it “shifts some of the costs of advertising from the sender to the recipient”
and “occupies the recipient’s facsimile machine so that it is unavailable for
legitimate business messages while processing and printing the junk fax.” H.R.
Rep. 102-317 at 10 (1991).3
Id. Later in the opinion, the Sixth Circuit stated that the TCPA “gives recipients of unsolicited
fax advertising the legal right to recover damages and obtain injunctive relief from the senders of
those faxes.” Id. at 633.
The Sixth Circuit also stated that “Biggerstaff’s report is adequate to establish that [the
3
In American Copper, the Sixth Circuit stated there was no need to look at legislative
history because the language of the Act itself is clear. Nevertheless, in Imhoff, the Sixth Circuit
looked at legislative history.
10
named plaintiff] was a recipient of [the defendant’s] two unsolicited faxed advertisements.” Id.
at 634. Notably, Biggerstaff is the same expert that Plaintiffs hired and used in these three cases.
J.
The Parties Agreed That This Court Should Take The Motions Under Advisement
Until The Supreme Court’s Ruling On The Mootness-By-Unaccepted-Offer-OfJudgment Theory.
This Court held a hearing on the pending motions in these cases on September 17, 2015.
At that hearing, counsel for the parties agreed that, given that the United States Supreme Court
was scheduled to hear a case that would resolve a circuit split on the viability of the mootnessby-unaccepted-offer-of-judgment theory in October of 2015, it would be best for the Court to
take the motions under advisement until there was a ruling in that case.
On January 20, 2016, the Supreme Court issued its decision in Campbell-Ewald v. Gomez
on January 20, 2016, ruling that an unaccepted offer of judgment does not moot a plaintiff’s case.
Campbell-Ewald v. Gomez, 577 U.S. __ (2016).
ANALYSIS
In the motions pending before the Court, Plaintiffs ask this Court to vacate the judgments
it entered in these three cases pursuant to Fed. R. Civ. P. 59(e) and/or Fed. R. Civ. P. 60(b) and
then reconsider its rulings as to class certification.
I.
Should This Court Vacate The Judgments It Entered In These Three Cases?
Fed. R. Civ. P. 59(e) governs motions to alter or amend a judgment and provides that a
“motion to alter or amend a judgment must be filed not later than 28 days after the entry of the
judgment.” The motions here were timely filed.
The Sixth Circuit has held that the “purpose of Rule 59(e) is to allow the district court to
correct its own errors, sparing the parties and appellate courts the burden of unnecessary
11
appellate proceedings.” Howard v. United States, 533 F.3d 472, 475 (6th Cir. 2008) (citing York
v. Tate, 858 F.2d 322, 326 (6th Cir. 1988)). Under Rule 59, a court may alter the judgment based
on: 1) a clear error of law; 2) newly discovered evidence; 3) an intervening change in controlling
law; or 4) a need to prevent manifest injustice. Leisure Caviar, LLC v. U.S. Fish and Wildlife
Srv., 616 F.3d 612, 615 (6th Cir. 2010); Clark v. United States, 764 F.3d 653, 661 (6th Cir.
2014). A district court, generally speaking, has “considerable discretion” in deciding whether to
grant such a motion. Id.
A district court should grant relief from operation of a judgment under Fed. R. Civ. P.
60(b)(6) when it determines, in its sound discretion, that substantial justice would be served.
Cincinnati Ins. Co. v. Byers, 151 F.3d 574, 578 (6th Cir. 1998).
In their motions asking the Court to vacate the judgments and reconsider class
certification, Plaintiffs note that at the time this Court decided the class certification motions,
there was no Sixth Circuit authority addressing the standing issue. That changed, however, when
the Sixth Circuit decided American Copper & Brass. Plaintiffs assert that because the Sixth
Circuit has abrogated the primary reason why this Court denied class certification, the Court
should vacate the judgments issued in these cases and reconsider class certification.
Plaintiffs note that American Copper’s facts and circumstances are indistinguishable from
these cases:
American Copper’s facts are indistinguishable from this case. American Copper
was also a junk faxing class action involving defendants that hired B2B to blast
fax their advertisement to a list B2B compiled from an infoUSA database it
purchased years earlier. In Compressor, Machesney, and APB, the plaintiffs all
relied on B2B’s fax logs and their expert Biggerstaff’s analyses of those logs to
sue the defendants for violating the TCPA for all of the faxes B2B’s business
12
records showed were “successfully sent.”
(D.E. No. 98 at 12-13). And they note that the Sixth Circuit affirmed the certification of a class
action in that case that was indistinguishable from these three cases.
In response to Plaintiffs’ motions, Defendants make several arguments as to why this
Court should not vacate the judgments it entered in these matters. Those arguments are
addressed below.
A.
Judgment Was Properly Entered / It Would Be Procedurally Improper Or
Untimely To Consider The Motions
In opposing Plaintiffs’ motions, Defendants contend that there was no error in the Court
entering judgments in favor of Plaintiffs when it did so (i.e., after denying the motions for class
certification and after the close of discovery on the individual claims) and they argue that is
especially so “since the denial of class certification in these cases has already been considered
and upheld by the Sixth Circuit.” (101 at 5).
As explained below in Section B., however, the Sixth Circuit did not affirm this Court’s
denial of class certification in these cases. Thus, Plaintiffs can and did file notices of appeal
challenging this Court’s class certification rulings, and its rulings regarding the unaccepted offers
of judgment, in these cases. Those appeals are currently in abeyance pending this Court’s
resolution of these motions.
And while it is true that this Court followed existing Sixth Circuit authority in entering
judgment in favor of the named Plaintiffs when it did so, the Court did so over the named
Plaintiff’s objections. This Court followed O’Brien v. Ed Donnelly Enters. Inc., 575 F.3d 567,
574 (6th Cir. 2009), entered judgment in favor of the named Plaintiffs, and dismissed these cases
13
as moot.
The Supreme Court, however, issued a decision in Campbell-Ewald v. Gomez on January
20, 2016, ruling that an unaccepted offer of judgment does not moot a plaintiff’s case.
Campbell-Ewald v. Gomez, 577 U.S. __ (2016).4
This Court finds that the Gomez ruling provides a compelling basis for this Court to
reverse the judgments that it issued in these three cases.
Again, the “purpose of Rule 59(e) is to allow the district court to correct its own errors,
sparing the parties and appellate courts the burden of unnecessary appellate proceedings.” Given
the Supreme Court’s ruling, this Court vacating the judgments it issued in these three cases will
save the parties the time and expense of an appeal and reversal on that issue.
This Court also concludes that, if the Sixth Circuit were to hear the appeals in these three
cases, based on the TCPA cases the Sixth Circuit has decided after this Court’s rulings, it would
also reverse and remand as to this Court’s class certification rulings.
As a result, under the rather unusual circumstances presented here, the Court shall vacate
the judgments in each of these three cases and reconsider its class certification rulings, in light of
the Sixth Circuit authority that now exists as to TCPA cases.
4
The Court notes, but rejects, the supplemental arguments made by Defendants based
upon dicta in Gomez. (D.E. No. 113 in Case No. 09-14959 and D.E. No. 97 in Case No. 1010085). This Court does not read Gomez as supporting Defendants’ argument that Plaintiff’s
claim was mooted because Defendants tendered a check to plaintiff in the amount of the
judgment. See Gomez, 577 U.S. ___ at * 11-12 (“In sum, an unaccepted settlement offer or offer
of judgment does not moot a plaintiff’s case, so the District Court retained jurisdiction to
adjudicate Gomez’s complaint. That ruling suffices to decide this case. We need not, and do
not, now decide whether the result would be different if a defendant deposits the full amount of
the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters
judgment for the plaintiff in that amount. That question is appropriately reserved for a case in
which it is not a hypothetical.”).
14
B.
The Sixth Circuit’s Denial Of Interlocutory Appeal
Defendants also take the position that this Court should not vacate the judgment in this
action or reconsider its decisions on the Class Certification Motions in these cases because “the
denial of class certification in these cases has already been considered and upheld by the Sixth
Circuit on a Rule 23(f) interlocutory appeal.” (D.E. No. 101 at 5 in Case No. 09-14959; see also
Id. at 13, asserting that “the Sixth Circuit specifically found that this Court had followed the
proper legal framework and had not abused its discretion in denying class certification.”)
(emphasis added).
The Court rejects this argument. Pursuant to Fed. R. Civ. P. 23(f), a “court of appeals
may permit an appeal from an order granting or denying class-action certification” if a petition is
timely filed. As explained by the Third Circuit:
A Rule 23(f) appeal is a specific type of interlocutory appeal, and the courts of
appeals have very broad discretion in deciding whether to grant permission to
pursue a Rule 23(f) appeal. See Fed.R.Civ.P. 23(f) advisory committee's note.
According to the Advisory Committee’s Note, which was appended to Rule 23
following the 1998 adoption of Rule 23(f), “[t]he court of appeals is given
unfettered discretion whether to permit the appeal, akin to the discretion exercised
by the Supreme Court in acting on a petition for certiorari.” Id. As the Note
further states, “[p]ermission to appeal may be granted or denied on the basis of
any consideration that the court of appeals finds persuasive.” Id.
Gutierrez v. Johnson & Johnson, 523 F.3d 187, 192 (3rd Cir. 2008).
Moreover, where an appellate court denies a Rule 23(f) petition for interlocutory appeal
of a district court’s class certification decision, the plaintiff can still appeal the denial of class
certification following the entry of a final judgment. See, e.g., Jenkins v. BellSouth Corp., 491
F.3d 1288, 1292 (11th Cir. 2007).
15
Here, in its October 23, 2013 Orders, the Sixth Circuit denied Defendants’ petitions for
interlocutory review of this Court’s orders denying class certification. While the panel that
reviewed those petitions may have denied the petitions for interlocutory review because it did not
perceive any obvious errors, the fact remains that the only ruling made by the Court of Appeals in
those orders was its ruling denying an interlocutory appeal. Thus, the Sixth Circuit did not
“uphold” or affirm this Court’s orders denying class certification. The appellate court merely
declined to review the orders on an interlocutory basis.
C.
Who Can File Claims
Defendants also argue that “the decision in American Copper, rejecting the idea that only
a fax machine owner has standing to sue under the TCPA, actually supports the denial of class
treatment” in these three cases. (D.E. No. 101 at 9 in Case No. 09-14959). Defendants argue:
Indeed, American Copper does not exclude the owner of the fax machine from its
list of possible claimants. Rather, this panel of the Sixth Circuit held that there
may be others still. Specifically, the Court identifies “all recipients” of any
unsolicited advertisement as well as the owners of the “paper and ink” used in the
facsimile machine. American Copper, supra at 544. Other possibilities to add to
this list might also include persons who share office space and equipment, persons
who pay for the use of the phone line that is dedicated to the facsimile machine, a
person who rents the use of the facsimile machine, etc. The point of all of this,
however, is that American Copper only advances the holding in Machesney that
too much individualized inquiry is necessary to ascertain any group of class
members (which group of potential different claimants has grown under American
Copper) for the case to be properly maintained as a class action under Rule 23.
Accordingly, American Copper presents no real difficulty to upholding this
Court’s decision denying class certification.
(Id. at 10-11).
The Court rejects this argument. The Court fails to see how American Copper can be
16
seen as supporting a denial of class certification in these cases. American Copper – like each of
the three cases before this Court – involves nearly identical facts and circumstances. In each
case, the named plaintiff, along with thousands of others, was sent an unsolicited fax from
Caroline Abraham’s B2B “fax-blasting” company that advertised the defendant’s products or
services. In American Copper, the Sixth Circuit rejected the notion that only the fax machine
owner had standing to bring claim under the TCPA under the circumstances presented and held
that “all recipients” could bring a claim. Although its dicta, the Court further indicated its belief
that the list of telephone numbers to whom the faxes were sent constituted “objective data
satisfying the ascertainability requirement.”
Thus, this Court fails to see how American Copper could be viewed as supporting the
proposition that “too much individualized inquiry” is necessary to determine the class members.
D.
Defendants Remaining Arguments Address Certification Issues
Defendants remaining arguments are that this Court should not reconsider its class
certification rulings because the Court’s denial was not just based on standing, it was also based
on other considerations. Defendants contend that the Court properly denied certification because
there are individualized issues concerning the statutory defense that only unsolicited faxes give
rise to claim. Plaintiffs, on the other hand, contend that it is not an issue because Defendants
cannot avail themselves of that defense in any event, because they failed to include a proper optout notice in the faxes at issue. Because these arguments go to whether or not the Court should
certify these actions, the Court will address these argument in Section II.
17
II.
Should This Court Reconsider Class Certification And Certify These Three Cases
As Class Actions, Based Upon Recent Sixth Circuit Decisions?
Because the Court is vacating the judgments in these actions, it is free to reconsider class
certification in these three cases, based on intervening changes in the law. The Court will now
consider whether it should reconsider class certification in these cases.
Plaintiffs sought class certification of the following proposed classes in these three TCPA
cases:
Machesney:
“All persons who were sent one or more faxes on November 28,
2005, November 30, 2005, February 14, 2006, or February 15,
2006, offering “KFC Catering Prices,” including “200 HOT
WINGS” for $79.99 and a variety of “KFC’s FAMOUS SIDE
DISHES,” and identifying and [sic] a “Complaint Hotline” number
of (718) 645-2021 Ext. 232 or (718) 360-1330 ext. 232.”
APB Associates:
“All persons who were sent faxes on February 27, 2006, that listed
“Bronco Saloon,” “Pony Express Saloon,” “Mustang Inn,” “Chix
on Dix,” and a “Complaint Hotline” number of (718) 360-1330,
ext 232.”
Compressors Engineering:
“All persons who were sent one or more faxes on November 29,
2005, or November 30, 2005, that contained a ‘Remove’ Hotline
number of (718) 645-2018, Ext 2234 and a ‘Complaint’ Hotline
number of (718) 645-2021, Ext 232. and offered either a “Limited
Release Refinance Program” with a toll free number of (800) 2643898 or a “Fast Track Approval for Licensed Brokers! [sic] that
included contact information for “Julia Kahn.”
(D.E. No. 48 at 1 in Machesney; D.E. No. 34 at 1 in APB Associates; D.E. No. 57 at 1 in
Compressors Engineering).
As explained below, the Court shall reconsider class certification because after this
18
Court’s denial of class certification in these cases, the Sixth Circuit has issued several decisions
that indicate the Sixth Circuit would reject this Court’s stated reasons for denying class
certification of these actions.
The main reason for the denial of class certification was this Court’s conclusion that there
was not an ascertainable class because only persons or entities who owned the fax machine had
statutory standing to bring a claim. In discussing statutory standing, the Court addressed an
uncertainty that some other courts had addressed in terms of who can bring a TCPA claim after
an unsolicited fax is sent. That is, the Court expressed that it is unclear what is meant by a
person “who was sent” a fax advertisement (i.e., does that include the person who owns the fax
machine, the person who opened the account or paid the bill for the telephone line the fax
machine used to receive signals, a person to whom the fax advertisement was addressed, persons
who happened to pick up the fax, or all of the above). After examining the legislative history,
this Court concluded only the owners of the fax machine had statutory standing to assert a claim
under the TCPA.
This Court also concluded that the claims are inherently individualized because of the
statutory defense that only “unsolicited” faxes give rise to a claim. The Court noted that there
was caselaw going both ways on this issue and ultimately followed Judge Zatkoff’s approach on
this issue.
But in a series of subsequent TCPA opinions, some which involve the very same facts
and circumstances we have here, the Sixth Circuit has concluded otherwise.
In American Copper & Brass, Inc. v. Lake City Industrial Prods., Inc., 757 F.3d 540 (6th
Cir. 2014), the Sixth Circuit affirmed a district court’s order granting a motion for class
19
certification in a TCPA case. The defendant in that action had challenged certification by citing
to this Court’ opinions wherein it concluded that only the owners of fax machines had standing to
assert a claim under the TCPA. The Sixth Circuit stated that this Court should not have
considered the legislative history of the TCPA because its language is clear as to who can bring a
claim. It also concluded that this Court was too narrow in concluding that a person or entity had
to own the fax machine at issue in order to have statutory standing:
True, Congress was generally concerned with the costs associated with unsolicited
fax advertisements. See id. at 426-27 (discussing the legislative history of the
TCPA). But unsolicited fax advertisements impose costs on all recipients,
irrespective of ownership and the cost of paper and ink, because such
advertisements waste the recipients’ time and impede the free flow of commerce.
American Copper & Brass, supra, at 544.
In affirming the district court’s order certifying the class, the Sixth Circuit also rejected,
as forfeited, the Defendant’s argument that the class is not objectively ascertainable. But it
nevertheless went on to state that “the record in fact demonstrates that the fax numbers are
objective data satisfying the ascertainability requirement.” Id. at 545.
On July 7, 2015, the Sixth Circuit issued a published decision in Imhoff Investment, LLC
v. Alfoccino, Inc., 792 F.3d 627 (6th Cir. 2015). The district court had granted summary
judgment in favor of defendants, ruling that the named plaintiffs lacked Article III standing. The
Sixth Circuit reversed the district court’s summary judgment ruling and remanded for further
proceedings. In doing so, the Sixth Circuit referred to American Copper & Brass. It concluded
that the named Plaintiff in Imhoff, “as the recipient of [the defendant’s] unsolicited advertising
faxes” had Article III standing to pursue a claim under the TCPA. Id. at 631. It also stated:
20
Though the TCPA does not expressly state who has a cause of action to sue under
its provisions, its description of the conduct it prohibits repeatedly refer to the
“recipient” of the unsolicited fac, 47 U.S.C. § 227(b)(1)(C),(b)(2)(D), and in
enacting the TCPA, Congress noted that such fax advertising “is problematic”
because it “shifts some of the costs of advertising from the sender to the recipient”
and “occupies the recipient’s facsimile machine so that it is unavailable for
legitimate business messages while processing and printing the junk fax.” H.R.
Rep. 102-317 at 10 (1991).
Id. Later in the opinion, the Sixth Circuit states that the TCPA “gives recipients of unsolicited
fax advertising the legal right to recover damages and obtain injunctive relief from the senders of
those faxes.” Id. at 633.
The Sixth Circuit also stated that “Biggerstaff’s report is adequate to establish that [the
named plaintiff] was a recipient of [the defendant’s] two unsolicited faxed advertisements.” Id.
at 634. Notably, Biggerstaff is the same expert that Plaintiff’s hired and used in these three
cases.
In addition, in addressing a petition for interlocutory review of a district court’s decision
denying class certification in another one of these TCPA cases, the Sixth Circuit gave guidance
regarding the analyzing the EBR defense and the related opt-out notice requirement and how it
may impact certification. Sandusky Wellness Center, LLC, 570 F. App’x 437 (6th Cir. 2014). In
that case, the Sixth Circuit stated:
The sole basis of the district court’s decision denying class certification was that
there were no “questions of law or fact common to the class.” See Fed. R. Civ. P.
23(a)(2). The district court, however, failed to consider whether the facsimiles
transmitted by the defendants contained opt-out notices or whether those opt-out
notices were adequate. If the notices were absent or inadequate, commonality
might be present.
Id. (citing, with approval, Ira Holtzman, C.P.A. v. Turza, 728 F.3d 682, 684 (7th Cir. 2013)).
21
The court further stated that the “district court’s failure to address the impact of an absent or
inadequate opt-out notice is critical to the continued viability of the underlying suit.” Id.
The Sixth Circuit declined to actually conduct a formal review of the denial of class certification
but, nevertheless, granted the petitions “insofar as the district court failed to analyze all of the
relevant arguments concerning commonality” and vacated and remanded to the district court for
further proceedings consistent with its order.
Accordingly, based on the above decisions, this Court concludes that the Sixth Circuit
would reverse or vacate this Court’s class certification rulings denying class certification. That
is, the Sixth Circuit has issued a published opinion rejecting both statutory standing and Article
III standing impediments to class certification and has indicated that any “recipient” of an
unsolicited fax advertisement has standing to assert a TCPA claim. Thus, the Sixth Circuit
would find appropriate a class definition that “all recipients” of the fax advertisements at issue in
these cases.
In addition, the Sixth Circuit has indicated its belief that such classes are “objectively
ascertainable” by virtue of the lists of fax numbers to which the faxes were transmitted by B2B.
Finally, as to the Court’s alternative ground for denying class certification, individualized
inquiries as to the EBR defense, the Sixth Circuit would very likely remand for this Court to
reconsider its analysis by examining whether commonality is present by virtue of the absence or
inadequacy of opt-out notices in the fax advertisements. In re: Sandusky Wellness Center, LLC,
supra.
This Court will therefore reconsider it class certification rulings in these cases.
22
III.
This Court’s Reconsideration Of Class Certification
Having determined that is appropriate to do so under the circumstances presented here,
the Court will now reconsider whether these three cases should be certified as class actions.
“Class certification is governed by Federal Rule of Civil Procedure 23.” Wal-Mart
Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2548 (2011). A “trial court has broad discretion in
deciding whether to certify a class, but that discretion must be exercised within the framework of
Rule 23.” In re American Medical Sys., Inc., 75 F.3d 1069, 1079 (6th Cir. 1996); see also
Pilgrim v. Universal Health Card, LLC, 660 F.3d 943, 946 (6th Cir. 2011).
“Rule 23 does not set forth a mere pleading standard. A party seeking class certification
must affirmatively demonstrate his compliance with the Rule – that is, he must be prepared to
prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc.”
Wal-Mart Stores, Inc., 131 S.Ct. at 2551. The Sixth Circuit has explained that “[m]ere repetition
of the language of Rule 23(a) is not sufficient. There must be an adequate statement of the basic
facts to indicate that each requirement of the rule is fulfilled. Maintainability may be determined
by the court on the basis of the pleadings, if sufficient facts are set forth, but ordinarily the
determination should be predicated on more information than the pleadings will provide . . . The
parties should be afforded an opportunity to present evidence on the maintainability of the class
action.” In re American Medical Sys., Inc., 75 F.3d at 1079 (quoting Weathers v. Peters Realty
Corp., 499 F.2d 1197, 1200 (6th Cir. 1974)).
The Supreme Court has recognized that sometimes it is necessary for the court to “probe
behind the pleadings before coming to rest on the certification question,” and that certification is
proper only if the trial court is satisfied, after a “rigorous analysis,” that the prerequisites of Rule
23
23(a) have been satisfied. Wal-Mart Stores, Inc., 131 S.Ct at 2552 (emphasis added).
“Frequently that ‘rigorous analysis’ will entail some overlap with the merits of the plaintiff’s
underlying claim. That cannot be helped.” Id. Going beyond the pleadings is necessary because
a court must understand the claims, defenses, relevant facts, and applicable substantive law in
order to make a meaningful determination of the certification issues. Madison v. Chalmette
Refining, LLC, 637 F.3d 551, 555 (5th Cir. 2011); Reeb v. Ohio Dept. of Rehabilitation and
Correction, 435 F.3d 639, 644-45 (6th Cir. 2006).
“To obtain class certification, a claimant must satisfy two sets of requirements: (1) each
of the four prerequisites under Rule 23(a), and (2) the prerequisites of one of the three types of
class actions provided for by Rule 23(b). A failure on either front dooms the class.” Pilgrim, 60
F.3d at 946.
A.
Rule 23(a) Requirements
Under Rule 23(a), the party seeking certification must demonstrate, first, that: 1) the
class is so numerous that joinder of all members is impracticable; 2) there are questions of law or
fact common to the class; 3) the claims or defenses of the representative parties are typical of the
claims or defenses of the class, and 4) the representative parties will fairly and adequately protect
the interests of the class.
If the party seeking certification demonstrates that the requirements of Rule 23(a) are met,
then the Court must consider whether one of the three requirements in Rule 23(b) has been met.
Here, Plaintiffs assert that the requirements of Rule 23(b)(3) have been met.
1.
Numerosity
There is no dispute, and never has been, that the numerosity requirement is satisfied in
24
each of these three cases. Each case has thousands of class members.
2.
Commonality and Typicality
“To demonstrate commonality, plaintiffs must show that class members have suffered the
same injury. Dukes, 131 S.Ct. at 2551. ‘Their claims must depend upon a common contention ...
of such a nature that it is capable of classwide resolution—which means that determination of its
truth or falsity will resolve an issue that is central to the validity of each one of the claims in one
stroke.’ Id. This inquiry focuses on whether a class action will generate common answers that are
likely to drive resolution of the lawsuit. Id.” In re Whirlpool Corp. Front-Loading Washer
Prods. Liab. Litig., 722 F.3d 838, 853 (6th Cir. 2013). There need be only one common question
in order to certify a class. Id.
“The premise of typicality is simply stated: as goes the claim of the named plaintiff, so go
the claims of the class.” Sprague v. General Motors Corp., 133 F.3d 388, 399 (6th Cir. 1998).
“These two concepts of commonality and typicality ‘tend to merge’ in practice because
both of them ‘serve as guideposts for determining whether under the particular circumstances
maintenance of a class action is economical and whether the named plaintiff’s claim and the class
claims are so interrelated that the interests of the class members will be fairly and adequately
protected in their absence.’” In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig.,
722 F.3d 838, 853 (6th Cir. 2013).
The Court finds that commonality and typicality are both satisfied in these three cases.
The Defendants in these cases are alleged to have engaged in the very same conduct – hiring
Caroline Abraham and/or B2B to send unsolicited “fax blasts” advertising their products or
services to thousands of fax numbers. The class members in each case are alleged to have
25
received the very same fax advertisement. As such, with respect to each of these three cases,
there are multiple common legal questions, such as: 1) whether the one-page fax in each case
constitutes an “advertisement” under the TCPA; 2) whether the faxes were sent without the
statutorily-required opt-out notice; and 3) whether Defendants’ actions were “willful” or
“knowing” under the TCPA, thereby authorizing treble damages. And, as equally important,
those common questions will have common answers. Under the circumstances of these three
cases, the claims of the named Plaintiffs are typical of the claims of the class members.
3.
Class Counsel and Named Plaintiffs
In order to certify a class, the Court must find the named class representatives adequate.
Fed. R. Civ. P. 23(a)(4). In addition, if the Court certifies a class it must appoint class counsel.
Fed. R. Civ. P. 23(g)(1). It is therefore appropriate to look at whether the proposed class counsel,
and the named Plaintiffs, are adequate.
In opposing class certification, Defendants all argued that the Court should deny class
certification because of alleged ethical violations by the firm Wanca and Anderson. This Court
addressed that argument but rejected it, concluding that:
[I]t would not be appropriate to deny certification in these cases – based
solely upon ethical concerns with proposed class counsel. While Brian Wanca
and his firm have engaged in conduct that is at least questionable from an ethical
standpoint, there are three different attorneys and firms seeking to be named class
counsel in these actions. And Rule 23 provides that when more than one
applicant seeks appointment, “the court must appoint the applicant best able to
represent the interests of the class.” Fed. R. Civ. P. 23(g)(2) (emphasis added).
Thus, if this Court were to certify any of these actions, it could appoint Jason
Thompson of Sommers Schwartz as class counsel, as it is undisputed that he
played no role in the alleged unethical conduct.
26
Marchesney, 292 F.R.D. 412, 424 (E.D. Mich. 2013).
The Court concludes that there is still not a problem as to class counsel because Jason
Thompson of Sommers Schwartz and Phillip Bock of Bock & Hatch were not involved in the
alleged unethical conduct and are suitable and experienced counsel in TCPA cases. The Court
shall appoint them both as class counsel.5 Thompson is local and Bock has a wealth of
experience in TCPA cases.
In its prior opinions, this Court noted there were two potential problems with the named
plaintiffs, but did not find that either concern was an obstacle to certification. Marchesney,
supra, at 424-25. First, the Court noted that while the class definitions proposed by counsel were
limited to “persons,” two of the named plaintiffs in these cases were corporate entities. The
Court noted that problem could be easily corrected by changing “persons” to “persons or entities”
in the class definitions. The Court also expressed concern that the named plaintiffs had agreed
not to contest a one-third continency attorney fee. But that too, the Court concludes, should not
disqualify them from serving as class counsel. Other persons in the class can oppose requested
attorney fees they deem excessive, and this Court will also have a role6 in terms of approving
requested attorney fees.
This Court finds, upon reconsideration, that the requirements of Fed. R. Civ. P. 23(a) are
5
The Court declines to appoint Brian Wanca or his firm as class counsel in these actions.
6
As other district courts certifying these kinds of TCPA cases have previously done, this
Court advises class counsel that they “should be aware that any claim for attorney’s fees will be
closely scrutinized for duplication and value of time spent. For example, only one lawyer should
attend court hearings, and requests for fees should not include research already performed in
other cases.” American Copper & Brass, Inc. v. Lake City Indus. Prods., Inc., 2012 WL 3027953
at *8 (W.D. Mich. 2012).
27
satisfied in these cases.
B.
Rule 23(b) Requirements
In addition to fulfilling the Rule 23(a) prerequisites, the proposed class must also meet at
least one of three requirements listed in Rule 23(b). Fed. R. Civ. P. 23.
“Rule 23(b)(3) states that a class may be maintained where ‘questions of law or fact
common to class members predominate over any questions affecting only individual members,’
and a class action would be ‘superior to other available methods for fairly and efficiently
adjudicating the controversy.’” Wal-Mart Stores, Inc.,131 S.Ct at 2549 n.2. “Subdivision (b)(3)
parallels subdivision (a)(2) in that both require that common questions exist, but subdivision
(b)(3) contains the more stringent requirement that common issues ‘predominate’ over individual
issues.” In re American Medical Sys., Inc., 75 F.3d at 1084.
1.
Do Common Issues Predominate Over Individualized Issues?
Although it was not the primary ground for denying class certification, when this Court
previously denied the motions for class certification in these three cases it found that the claims
are inherently individualized because of the statutory defense that only “unsolicited” faxes give
rise to a claim. The Court noted that there was case law going both ways on this issue and
ultimately followed Judge Zatkoff’s approach on this issue, concluding that there would need to
be individual determinations with respect to whether Defendants had an established business
relationship (“EBR”) with the recipients of the faxes.
In the pending motions, Plaintiffs direct the Court to In re: Sandusky Wellness Center,
LLC, 570 F. App’x 437 (6th Cir. 2014), another ruling by the Sixth Circuit in a TCPA case that
occurred after this Court had denied the class certification motions in these three cases. In that
28
case, the Sixth Circuit was faced with a Rule 23(f) petition for interlocutory review of a district
court’s denial of a class certification in another one of the TCPA cases. The Sixth Circuit stated:
The sole basis of the district court’s decision denying class certification was that
there were no “questions of law or fact common to the class.” See Fed. R. Civ. P.
23(a)(2). The district court, however, failed to consider whether the facsimiles
transmitted by the defendants contained opt-out notices or whether those opt-out
notices were adequate. If the notices were absent or inadequate, commonality
might be present.
Id. (citing, with approval, Ira Holtzman, C.P.A. v. Turza, 728 F.3d 682, 684 (7th Cir. 2013))
(emphasis added). The court further stated that the “district court’s failure to address the impact
of an absent or inadequate opt-out notice is critical to the continued viability of the underlying
suit.” Id.
The Sixth Circuit declined to actually conduct a formal review of the denial of class
certification but, nevertheless, granted the petitions “insofar as the district court failed to analyze
all of the relevant arguments concerning commonality” and vacated and remanded to the district
court to analyze the opt-out notice issue.
In the pending motions, Plaintiffs contend that this Court erred in denying class
certification upon individualized inquiries related to whether Defendants had EBRs with the fax
recipients because, even if they did, they did not comply with the opt-out requirements of the act
and therefore cannot avail themselves of the defense.
Defendants respond by: 1) continuing to argue that the claims in this case are inherently
individualized because of the statutory defense that only unsolicited faxes give rise to a claim,
and essentially urge the Court to ignore In re: Sandusky Wellness, LLC; and 2) arguing that the
opt-out regulations implementing the opt-out notice requirements by Plaintiffs do not apply in
29
these cases.
While In re: Sandusky Wellness, LLC is not binding with respect to these cases, it
provides valuable insight as to the EBR defense. As such, this Court shall reconsider its ruling
with respect to the EBR defense – in particular by considering whether the faxes sent in these
cases “contained opt-out notices or whether those opt-out notices were adequate,” In re:
Sandusky Wellness, LLC, supra, and whether such issues are common issues that predominate
over any individualized issues.
The TCPA provides a defense to liability for the sending of fax advertisements under
some circumstances. 47 U.S.C. § 227 (b)(1)(C). Under the Act, there is a
defense to liability for sending an unsolicited fax advertisement if: 1) you have an EBR with the
recipient; and 2) the fax advertisement has an opt-out notice that meets the statutes requirements
under paragraph (2)(D). 47 U.S.C. § 227(b)(1)(C); Ira Holtzman, C.P.A., 728 F.3d at 684.7
Paragraph 2(D) provides, in pertinent part:
(2) Regulations; exemptions and other provisions
The Commission shall prescribe regulations to implement the requirements of this
subsection. In implementing the requirements, the Commission –
....
7
In Ira Holtzman, C.P.A., which has been cited with approval by the Sixth Circuit, the
Seventh Circuit explained: “Even when the [TCPA] 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. 47 U.S.C. §
227(b)(1)(C)(iii, (2)(D). [Defendant’s] faxes did not contain opt-out information, so if they are
properly understood as advertising then they violate the Act whether or not the recipients were
among [Defendant’s] clients.” Id. at 683. In other words, because the sender “omitted opt-out
notices, it does not matter which recipients consented or had an established business
relationship” with the sender. Id. at 684.
30
(D) shall provide that a notice contained in an unsolicited advertisement
complies with the requirements under this subparagraph only if-(i) the notice is clear and conspicuous and on the first page of the
unsolicited advertisement;
(ii) the notice states that the recipient may make a request to the
sender of the unsolicited advertisement not to send any future
unsolicited advertisements to a telephone facsimile machine or
machines and that failure to comply, within the shortest reasonable
time, as determined by the Commission, with such a request
meeting the requirements under subparagraph (E) is unlawful;
(iii) the notice sets forth the requirements for a request under
subparagraph (E);
(iv) the notice includes-(I) a domestic contact telephone and facsimile machine
number for the recipient to transmit such a request to the
sender; and
(II) a cost-free mechanism for a recipient to transmit a
request pursuant to such notice to the sender of the
unsolicited advertisement; the Commission shall by rule
require the sender to provide such a mechanism and may, in
the discretion of the Commission and subject to such
conditions as the Commission may prescribe, exempt
certain classes of small business senders, but only if the
Commission determines that the costs to such class are
unduly burdensome given the revenues generated by such
small businesses;
(v) the telephone and facsimile machine numbers and the
cost-free mechanism set forth pursuant to clause (iv) permit
31
an individual or business to make such a request at any time
on any day of the week; and
(vi) the notice complies with the requirements of subsection
(d) of this section;
47 U.S.C. § 227(2)(D).
Thus, the statute ordered the FCC to prescribe regulations to implement the requirements
concerning the notice.
In order to meet the opt-out notice requirements of the TCPA, a fax advertisement must
contain a notice that contains certain things. Plaintiffs argue that none of the Defendants can
avail themselves of the above statutory defense because it is undisputed that the fax
advertisements at issue in these cases did not have the required opt-out notice.
In response to Plaintiffs’ arguments on the opt-out defense, Defendants make two
arguments. First, they assert that the advertisements in these cases either “substantially
complied” with the notice requirements or did contain the required opt-out notice. Second, they
contend that because FCC regulations concerning some opt-out requirements only became
effective a few months after the faxes at issue in these cases were sent, Plaintiffs cannot rely on
any alleged technical failure to comply with the opt-out requirements.
The Court concludes that neither of these arguments militate against class certification in
these cases. First, if the faxes were required to have an opt-out notice that met all of the
requirements, then there can really be no dispute that the opt-out notices on the faxes at issue in
this case were deficient. Second, as at least one other district court has found, this Court need
not decide the effective date of the opt-out notice requirements in connection with class
32
certification because, regardless of how that legal question is answered, the fact that the same
answer will apply to each member of the class shows that the class-wide questions predominate
over individualized issues.
i.
Deficient Opt-Out Notices
The TCPA sets forth the specific requirements for an “opt-out” notice in 47 U.S.C. §
227(b)(2)(D). Rather than detail them all here, the Court will describe just a few that are
relevant.
Among other things, the fax ad must contain a notice that “states that the recipient may
make a request to the sender of the unsolicited advertisement not to send any future unsolicited
advertisements to a telephone facsimile machine or machines and that failure to comply, within
the shortest reasonable time, as determined by the Commission, with such a request . . . is
unlawful.” The statute also requires that the opt-out notice be “clear and conspicuous and on the
first page” of the fax ad. The statute further requires that the opt-out notice include a telephone
number and facsimle machine number where the recipient can make an opt-out request.
The opt-out notices on the faxes at issue in these cases were all very similar in nature and
suffer from the same defects. They are not clear and conspicuous because the opt-out notices are
in small print at the bottom of the pages and they use language that gives the false impression
that these faxes are “charitable faxes.” None of the notices contain a notice stating that “the
recipient may make a request to the sender of the unsolicited advertisement not to send any future
unsolicited advertisements to a telephone facsimile machine or machines and that failure to
comply, within the shortest reasonable time, as determined by the Commission, with such a
request . . . is unlawful.” And none of the notices contain a facsimile number where an opt-out
33
request can be made.
Accordingly, there can be no serious dispute that the faxes at issue in these cases do not
contain opt-out notices that meet the statute’s requirements.
ii.
Dispute Over Operative Date of Opt-Out-Notice
Requirements
The district court in Hawk Valley, Inc. v. Taylor, 301 F.R.D. 169 (E.D. Pa. 2014) was
confronted with the same situation presented here. As is the case here, there was a dispute
between Plaintiffs and Defendants as to the “operative date of the so-called opt-out-notice
requirement added to section 227(b)(1)(C) of the TCPA, see 47 U.S.C. § 227(b)(1)(C)(iii), as
amended by the Junk Fact Prevention Act of 2005” (the “JFPA”). Id. at 188.
There, like factual circumstances in these cases, the “parties do not dispute that the JFPA
was enacted on July 9, 2005 (prior to the June 17, 2006 fax transmission at issue here) or that the
regulation subsequently promulgated by the Federal Communications Commission concerning
the opt-out notice required by section 227(b)(2)(D) – as amended by the JFPA – became effective
on August 1, 2006”, after the faxes at issue had been sent. Id. at 189. The defendants in that
case, like the Defendants in these cases, argued that the opt-out-notice requirements did not
become effective until the implementing regulations became effective on August 1, 2006. The
plaintiff in that case, like the Plaintiffs in the three cases before this Court, argue that the
requirements were effective as soon as the statute was enacted.
The district court noted that neither party had identified “any binding (or highly
persuasive) authority concerning the effective date of the opt-out-notice requirement.” The
district court in Hawk Valley, therefore, declined to resolve the issue in connection with the class
34
certification motions because, regardless of how that legal question would ultimately be resolved,
common question predominate and the class should be certified:
In light of the foregoing, and because the question of whether certain class
members had an existing business relationship with defendants at the time of the
June 17, 2006 fax would not predominate over the common questions presented
here even if defendants are correct and they are not foreclosed from asserting the
established business relationship exception as the result of an insufficient opt-out
notice, see Reliable Money I, 281 F.R.D. at 330, I decline to resolve the dispute at
this time.
For all of the reasons expressed above, I conclude that common questions
predominate in this matter.
Id. at 190.
This Court shall follow the same approach here. The Court concludes that it need not
decide the issue in connection with the class certification motions because, regardless of how that
legal question is answered, that fact that the same answer will apply to each member of the class
shows that the class-wide questions predominate over individualized issues.
2.
Superiority
Under Rule 23(b), the Court must consider whether a class action would be superior to
other methods for adjudicating the claims. As to superiority, Plaintiffs argue that:
Certifying a class is the superior way to adjudicate claims when a “class
action would achieve economies of time, effort, and expense, and
promote...uniformity of decision as to persons similarly situated, without
sacrificing procedural fairness or bringing about other undesirable
results.” Amchem Prods. v. Windsor, 521 U.S. 591, 615 (1997). In
Amchem, the Supreme Court noted that one of the purposes underlying
Rule 23(b)(3) was “vindication of the rights of groups of people who
individually would be without effective strength to bring their opponents
into court at all.” Id. at 617 (internal citations omitted).
(09-14959, DE 34 at 16). They argue that a class action is superior to individual actions for the
TCPA violations alleged in these cases, especially because the maximum recovery is $500 or
35
$1,500 per violation and the TCPA “does not allow for fee shifting.” (Id. at 17).
The Sixth Circuit has expressed agreement with that view:
“[t]he denial of a plaintiff class sometimes defeats the case as a practical matter
because the stakes are too small and the litigations costs are too high for the
individual plaintiff to go forward.” In re Delta Airlines, 310 F.3d at 957. Such is
the case here, where an individual's recovery is limited to a maximum of $1,500.
47 U.S.C. § 227(b)(3).
In re: Sandusky Wellness Ctr., LLC, 570 F. App’x at 437. The Court find that, as to these three
cases, a class action would be superior to requiring plaintiffs to individually pursue their claims.
CONCLUSION & ORDER
For the reasons set forth above, IT IS ORDERED that Plaintiff’s Motion to Vacate the
Judgment entered in this action and Reconsider Class Certification is GRANTED to the extent
that the Court: 1) VACATES the Judgment issued in this case; and 2) finds it appropriate to
reconsider class certification in this action under the circumstances presented here. Having done
so, this Court now concludes that this case should be CERTIFIED as a class action. The Court
certifies the following class:
All persons or entities who were sent one or more faxes on November 28, 2005,
November 30, 2005, February 14, 2006, or February 15, 2006, offering “KFC
Catering Prices,” including “200 HOT WINGS” for $79.99 and a variety of
“KFC’s FAMOUS SIDE DISHES,” and identifying and [sic] a “Complaint
Hotline” number of (718) 645-2021 Ext. 232 or (718) 360-1330 ext. 232.
IT IS FURTHER ORDERED that, pursuant to Fed. R. Civ. P. 23(g), Jason J.
Thompson of Sommers Schwartz, P.C. and Phillip Bock of Bock & Hatch, LLC are
APPOINTED AS CLASS COUNSEL.
IT IS FURTHER ORDERED that, within sixty (60) days of the date of this Opinion &
Order, Class Counsel shall file a proposed class notification form which complies with Fed. R.
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Civ. P. 23(c), together with a statement describing the method by which the notice will be
provided to class members and a list of persons or entities to whom the notice will be sent.
IT IS SO ORDERED.
S/Sean F. Cox
Sean F. Cox
United States District Judge
Dated: April 7, 2016
I hereby certify that a copy of the foregoing document was served upon counsel of record on
April 7, 2016, by electronic and/or ordinary mail.
S/Jennifer McCoy
Case Manager
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