Sandusky Wellness Center, LLC v. Medtox Scientific, Inc. et al
Filing
188
ORDER denying 162 Motion to Certify Class; granting in part 178 Motion to Dismiss(Written Opinion). Signed by Senior Judge David S. Doty on 8/5/2014. (PJM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 12-2066(DSD/SER)
Sandusky Wellness Center LLC,
a Ohio limited liability company,
individually and as the
representative of a class of
similarly-situated persons,
Plaintiff,
ORDER
v.
Medtox Scientific, Inc.,
Medtox Laboratories, Inc. and
John Does 1-10,
Defendants.
George Lang, Esq. and Anderson + Wanca, 3701 Algonquin
Road, Suite 760, Rolling Meadows, IL 60008; Brant D.
Penney and Reinhardt, Wendorf & Blanchfield, 332
Minnesota Street, Suite E-1250, St. Paul, MN 55101,
counsel for plaintiff.
Jeffrey R. Mulder, Esq. and Bassford Remele, PA, 33 South
Sixth Street, Suite 3800, Minneapolis, MN 55402 and
Geoffrey W. Castello, Esq., Robert I. Steiner, Esq. and
Kelley, Drye & Warren LLP, 101 Park Avenue, New York, NY
10178, counsel for defendants.
This matter is before the court upon the motion for class
certification by plaintiff Sandusky Wellness Center, LLC (Sandusky)
and the motion to dismiss by defendants Medtox Scientific, Inc. and
Medtox Laboratories, Inc. (collectively, Medtox).
Based on a
review of the file, record and proceedings herein, and for the
following
reasons,
the
court
denies
the
motion
certification and grants the motion to dismiss.
for
class
BACKGROUND
This
Protection
putative
Act
class
(TCPA)
action
arises
under
from
an
the
Telephone
unsolicited
Consumer
facsimile
advertisement sent to Sandusky by Medtox on February 21, 2012
(Exhibit A).
See Am. Compl. ¶ 11; id. Ex. A.
Sandusky is a
chiropractic clinic owned by Gregg Winnestaffer and his wife.
Winnestaffer Dep. 39:21-40:6.
Medtox is a clinical and forensic
toxicology laboratory that sells a lead screening product.
Decl. ¶¶ 4-5.
Huffer
Because lead is especially harmful to children,
Medtox markets its product to pediatricians, family practitioners,
health departments and other organizations that work with children.
Id. ¶ 6.
Medtox uses health insurance provider directories to
identify potential customers.
Id. ¶ 7.
In February 2012, Medtox
compiled a contact list of pediatricians and family practitioners
from a directory provided by CareSource Ohio.
Id. ¶¶ 8-10.
On
February 21, 2012, Medtox sent Exhibit A, which promotes its lead
testing product, to the providers on the contact list.1
16; Am. Compl. ¶ 11.
a family practitioner.
Id. ¶¶ 13,
One such provider was Dr. Bruce Montgomery,
Huffer Decl. ¶ 15; Montgomery Dep. 7:7-10.
The fax did not have a cover sheet and did not identify Dr.
Montgomery as the intended recipient.
See Am. Compl. Ex. A.
Sandusky was not named on the contact list.
1
Huffer Decl. ¶ 14.
The fax was successfully transmitted to 3,256 of the 4,210
fax numbers on the contact list. Huffer Decl. ¶¶ 12, 17, 19.
2
In 2012, Dr. Montgomery saw patients at Sandusky’s offices one
day a week.2
Montgomery Dep. 21:24-22:10.
Dr. Montgomery provided
Sandusky’s fax number to CareSource for use in the directory.
at 43:13-44:13; Huffer Decl. ¶ 15.
Id.
Winnestaffer reviews every fax
received in Sandusky’s office, even if it is addressed to someone
else.
Winnestaffer Dep. 76:12-14, 78:8-80:10, 81:17-21, 127:5-11.
Winnestaffer does not specifically recall receiving Exhibit A or
what product was advertised in Exhibit A.
Id. at 74:16-75:12.
Winnestaffer mails all faxes unrelated to his practice to his
lawyer in Cincinnati, who in turn sends them to Sandusky’s counsel
in this case, Anderson + Wanca.
Id. at 128:11-129:2.
As a result
of this practice, Sandusky has served as a named plaintiff in nine
TCPA class actions.
41:12-42:10.
Steiner Decl. ¶ 4; see also Winnestaffer Dep.
Through settlements in those cases, Winnestaffer has
received $24,000
in
incentive
fees
and
Anderson +
Wanca
has
collected millions of dollars in attorney’s fees and expenses. See
Winnestaffer
Dep.
57:2-11;
see
also,
e.g.,
Sandusky
Wellness
Center, LLC v. Heel, Inc., Civ. No. 3:12-1470 (N.D. Ohio Apr. 25,
2014) (approving class settlement and awarding Anderson + Wanca $2
million in attorney’s fees in order).
2
The parties dispute whether Dr. Montgomery was a Sandusky
employee at the time Medtox sent the fax at issue, but that
question is immaterial to the instant motions and need not be
resolved.
3
Medtox also sent a nearly identical fax - save the telephone
number contained in the text - to other recipients between February
18 and February 26, 2012 (Exhibit B).
see Huffer Decl. ¶¶ 21-24.
received Exhibit B.
Am. Compl. ¶ 11; id. Ex. B;
Sandusky does not allege that it
See Am. Comp. ¶ 11.
Neither Sandusky nor Dr.
Montgomery was on the contact list for Exhibit B.
See Huffer Decl.
¶ 22.
On August 23, 2012, Sandusky filed a putative class action
complaint, alleging a violation of the TCPA.
Sandusky filed a motion for class certification.
One day later,
On October 15,
2012, Medtox moved to dismiss the class-action complaint, arguing
that the case is not suitable for class treatment.
The court
denied the motions, concluding that it was premature to determine
whether the case could proceed on a class-wide basis.
ECF No. 25.
On May 8, 2013, Medtox made a Rule 68 offer of judgment to
Sandusky in the amount of $3,500 - an amount higher than the
applicable statutory damages. Medtox then filed a second motion to
dismiss,
arguing
that
the
case
was
moot
because
the
offer
extinguished Sandusky’s personal stake in the litigation.
The
court denied the motion because Medtox’s offer of judgment failed
to provide class-wide relief.
The
parties
thereafter
ECF No. 59, at 6.
engaged
in
contentious
class-
certification discovery and extensive motion practice. See ECF No.
142, at 2-6 (cataloging discovery motions).
4
On February 10, 2014,
Magistrate
Judge
Steven
E.
Rau
recused
himself
from
further
involvement in the case, citing the “incredibly litigious nature of
the case” despite its relative simplicity.
ECF No. 148, at 2.
Sandusky filed its first amended complaint on May 21, 2014, and
again moves for class certification.
Medtox moves to dismiss the
complaint for lack of standing.
DISCUSSION
I.
Class Certification
Congress
enacted
advertisements
“in
the
order
TCPA
to
to
restrict
prevent
the
unsolicited
cost
shifting
fax
and
interference such unwanted advertising places on the recipient.”
Missouri ex rel. Nixon v. Am. Blast Fax, Inc., 323 F.3d 649, 655
(8th Cir. 2003).
sending
To that end, the TCPA prohibits any person from
unsolicited
fax
advertisements.
See
47
U.S.C.
§ 227(b)(1)(C). The TCPA requires that fax advertisements, even if
solicited, contain an opt-out notice informing the recipient how to
avoid such future faxes.
§§ 64.1200(a)(4)(iii)-(iv).
See id. § 227(b)(2)(D); 47 C.F.R.
An individual may bring a private
cause of action under the TCPA to recover $500 per violation or
treble damages if the violation was willful and knowing. 47 U.S.C.
§ 227(b)(3).
It is undisputed that the faxes at issue were
advertisements within the meaning of the TCPA and that they did not
contain an opt-out notice.
5
A.
Standard of Review
“A district court has broad discretion in determining whether
to certify a class[.]”
Gilbert v. City of Little Rock, Ark., 722
F.2d 1390, 1399 (8th Cir. 1983) (citation omitted).
The plaintiff
bears the burden to show that the class should be certified.
Coleman v. Watt, 40 F.3d 255, 258 (8th Cir. 1994).
The court “must
undertake a rigorous analysis to ensure that the requirements of
Rule 23[] are met.”
Bennett v. Nucor Corp., 656 F.3d 802, 814 (8th
Cir. 2011) (citation and internal quotation marks omitted).
Rule 23 of the Federal Rules of Civil Procedure sets forth a
two-part analysis to determine whether class certification is
appropriate.
of
Rule
Plaintiffs must first satisfy all four requirements
23(a),
showing
that:
(1)
joinder
of
all
members
is
impractical because the class is too numerous, (2) there are
questions of fact or law that are common to the class, (3) the
claims or defenses raised by the representative parties are typical
of those of the class, and (4) the representative parties will
protect the interests of the class fairly and adequately. Donaldson
v. Pillsbury Co., 554 F.2d 825, 829 (8th Cir. 1977).
If all four
elements are met, the court must then determine if at least one of
the three subdivisions of Rule 23(b) is also met.
Avritt v.
Reliastar Life Ins. Co., 615 F.3d 1023, 1029 (8th Cir. 2010).
6
B.
Class Definition
Before considering the explicit requirements set forth in Rule
23, however, the court must be satisfied that the proposed class is
ascertainable.
Brown v. Wells Fargo & Co., 284 F.R.D. 432, 444 (D.
Minn. 2012); see also Powell v. Nat’l Football League, 711 F. Supp.
959, 966 (D. Minn. 1989) (“For implicit requirements of Rule 23(a),
the Court must find ... the existence of a precisely defined class
....”).
Specifically, the plaintiff “must establish that the
class, as proposed, is objectively ascertainable and a precise
definition of the class must be given.”
Gardner v. Equifax Info.
Servs., LLC, No. 06–3102, 2007 WL 2261688, at *3 (D. Minn. Aug. 6,
2007). “[A] class definition should be based on objective criteria
so that class members may be identified without individualized fact
finding.”
In re OnStar Contract Litig., 278 F.R.D. 352, 373 (E.D.
Mich. 2011); see also Young v. Nationwide Mut. Ins. Co., 693 F.3d
532, 537–38 (6th Cir. 2012) (holding that the class definition must
be “sufficiently definite so that it is administratively feasible
for the court to determine whether a particular individual is a
member of the proposed class”).
Sandusky moves to certify the following class under the TCPA:
All persons who (1) on or after four years
prior to the filing of this action, (2) were
sent telephone facsimile messages regarding
lead testing services by or on behalf of
Medtox, and (3) which did not display a proper
opt out notice.
7
ECF No. 165, at 8.
Medtox argues that the class definition is
imprecise, and the class not ascertainable, because it does not
objectively establish who is included in the class.
The court
agrees.
The proposed class definition centers on those people who
“were sent” faxes from Medtox.
That terminology is problematic in
this context because, as Sandusky acknowledges, the recipient of
each fax is not readily apparent.3
See ECF No. 183, at 9 (“[W]hen
a ‘junk fax’ is sent to a line owned by one person and a machine
owned by another, both have an injury in fact and standing under
the TCPA.”).
Indeed, Medtox sent Exhibit A to Dr. Montgomery, but
it was actually received by Sandusky, which owned and operated the
fax machine.
Under
the
class
definition,
Sandusky - or both - may be class members.
Dr.
Montgomery or
Sandusky argues that
the possibility of multiple recoveries for each fax should not
preclude class certification because Congress contemplated that
more than one person or entity may have standing to sue for each
3
Sandusky does not define class members as “recipients”
because it argues that a person need not receive a fax in order to
have standing.
See 47 U.S.C. ¶ 227(b)(1)(C) (prohibiting the
sending of unsolicited fax advertisements). The court disagrees.
A recipient is plainly contemplated under the TCPA, especially in
a private action in which statutory damages must be awarded to
someone. Further, Sandusky’s proposed language - persons who “were
sent” faxes - is simply the passive equivalent of “recipient.” As
such, the court does not draw a distinction between those terms for
purposes of this motion.
8
violation.
Even if that characterization of congressional intent
is correct, Sandusky’s argument misses the point and, in fact,
underscores the court’s concerns.
In order to determine to whom each fax was sent - and thus,
who was injured - the parties and the court would need to delve
into the unique circumstances of each fax transmission. The answer
may come more readily in some instances – for example if the person
to whom the fax was sent is the sole owner and user of the fax
machine - but that information is not ascertainable absent an
individualized inquiry.
Sandusky argues that the fax numbers used by Medtox will
readily identify the class members.
But, as noted, the fax number
is just the starting point of the analysis.
Once relevant fax
numbers are identified, the parties will need to explore who owned,
operated and used the fax machine associated with the fax number,
just as they did with Sandusky.
It is neither feasible nor
appropriate to undertake such an individualized inquiry as to each
fax sent by Medtox.
Simply put, Sandusky’s class definition is untenable because
it would take individualized discovery to determine the threshold
issue of who was “sent” each of the thousands of faxes at issue.
See Brey Corp. v. LQ Mgmt., No. 11-718, 2014 WL 943445, at *1 (D.
Md. Jan. 30, 2014) (declining to certify TCPA class because “the
members of the putative class have standing to assert a claim
9
against defendant only if they received an unsolicited fax ...
[and] [t]here are no objective criteria that establish that a
putative class member in fact obtained an unsolicited fax”);
Compressor Eng’g Corp. v. Mfrs. Fin. Corp., 292 F.R.D. 433, 450
(E.D.
Mich.
2013)(finding
nearly
identical
class
definition
impermissibly imprecise and amorphous); Forman v. Data Transfer,
Inc., 164 F.R.D. 400, 403 (E.D. Pa. 1995) (rejecting TCPA class
definition because “[d]etermining a membership in the class would
essentially require a mini-hearing on the merits of each case”).
Sandusky has offered alternative class definitions, none of which
alleviates the court’s concerns.
As a result, Sandusky’s motion
for class certification is denied.4
II.
Motion to Dismiss
To survive a motion to dismiss for failure to state a claim,
“‘a complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.’”
Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009)
4
Even if Sandusky could properly define the class, it cannot
meet the commonality requirements of Rule 23(a)(3) and (b)(3),
given the individual issues presented.
Further, the court has
serious reservations about the adequacy of Sandusky as lead
plaintiff and Anderson + Wanca as class counsel. See Fed. R. Civ.
P. 23(a)(4)(requiring plaintiff and counsel to “fairly and
adequately represent the interests of the class”). Winnestaffer is
unfamiliar and uninvolved in the case.
See Winnestaffer Dep.
45:23-25, 74:25-75:5, 130:15-131:18.
And Anderson + Wanca has
engaged in litigious and dilatory conduct - including disregarding
a court order in its favor - which gives the court pause as to
counsel’s commitment to the rights of potential class members.
See, e.g., ECF. Nos. 34, 44, 142, 148, 173.
10
(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
“A claim
has facial plausibility when the plaintiff [has pleaded] factual
content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Iqbal, 556
U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556
(2007)).
Although a complaint need not contain detailed factual
allegations, it must raise a right to relief above the speculative
level.
Twombly, 550 U.S. at 555.
“[L]abels and conclusions or a
formulaic recitation of the elements of a cause of action” are not
sufficient to state a claim.
Iqbal, 556 U.S. at 678 (citation and
internal quotation marks omitted).
The court does not consider matters outside the pleadings
under Rule 12(b)(6).
Fed. R. Civ. P. 12(d).
The court may,
however, consider matters of public record and materials that are
“necessarily embraced by the pleadings.”
Porous Media Corp. v.
Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999) (citation and
internal quotation marks omitted).
Here, the fax at issue was
attached to the complaint and is properly before the court.
Medtox argues that Sandusky does not have standing to raise a
claim relating to Exhibit B because Sandusky does not allege that
it was sent Exhibit B.
The court agrees.
After months of
discovery, Sandusky amended its complaint to allege that “[o]n
information and belief, Defendant also sent an unsolicited fax
advertisement
within
the
class
11
period
which
also
lacked
the
required opt out language.”
Am. Compl. ¶ 11.
Sandusky does not
allege that Medtox sent Exhibit B to Sandusky or that it actually
received Exhibit B, despite making such allegations regarding
Exhibit A.
See id. (“On or about February 21, 2012 Defendants
transmitted by telephone facsimile machine an unsolicited fax
advertisement to Plaintiff.”).
The inability to specifically
allege that Medtox sent Exhibit B to Sandusky, particularly after
the benefit of extensive discovery, is telling and dispositive.
Based on the allegations in the complaint, the court concludes
that Sandusky does not have standing to pursue a claim relating to
Exhibit B.
As a result, dismissal of the claim as it relates to
Exhibit B is warranted.
CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED:
1.
Plaintiff’s motion to certify class [ECF No. 162] is
denied; and
2.
Defendants’ motion to dismiss [ECF No. 178] is granted in
part as set forth above.
Dated:
August 5, 2014
s/David S. Doty
David S. Doty, Judge
United States District Court
12
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