Court Clarifies Free Offers and Dual Purpose Calls

A recent decision from the Southern District of Alabama provides more clarity as to the treatment of “dual purpose” telephone calls to wireless numbers that offer free goods and services. The Federal Communications Commission already has explained that “offers for free goods and services that are part of an overall marketing campaign to sell property, goods, or services” are advertisements under the TCPA and FCC regulations. The FCC also has explained that informational calls that are motivated in part by the intent to sell property, goods, or services are “in most instances” advertisements under the TCPA. This is true whether call recipients are encouraged to purchase, rent, or invest in property, goods, or services during the call or in the future (“such as in response to a message that provides a toll-free number”). Report and Order, In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 FCC Rcd. 14014, ¶¶ 139-142 (2003).

The recent decision in Bennett v. Boyd Biloxi, LLC, No. 14-0330-WS-M, 2015 U.S. Dist. LEXIS 59632, at *1-2 (S.D. Ala. May 6, 2015), clarifies that the treatment of offers for free goods and services is the same whether the call is made to a wireless number or a residential number and illustrates how a call offering free goods or services can become a “dual purpose” call. The plaintiff in Bennett alleged that he had received a number of prerecorded messages from the defendant, a casino operator, on his cell phone offering him free concert tickets. The messages did not explicitly describe or attempt to sell other goods or services, but invited the plaintiff to visit the defendant’s website “to view all of your offers.”   The defendant’s website allegedly offered discounts on room reservations and food.

The court denied the defendant’s motion to dismiss, ruling that the prerecorded message constituted both advertising and telemarketing and rejecting the defendant’s argument that the FCC’s prohibition of dual purpose calls does not extend to cellular phones. The court reasoned that the FCC has confirmed its belief that “wireless subscribers should be afforded the same protections as wireline subscribers.” Id. at *12. “The defendant’s calls patently encouraged the plaintiff to visit [defendant’s] site and see what goods and services the defendant had for sale.” Id. at *7-8. Thus, as with a call to a landline, “any customer service or informational aspect to the defendant’s notification that the plaintiff was entitled to free show tickets does not insulate the defendant from liability for any advertisement or telemarketing contained elsewhere in the same message.”  Id. at *8.

Federal Court Denies Certification, Declines To Infer A Lack of Consent From A Lack Of Documentary Evidence Of Consent

The Middle District of Florida recently denied class certification because the plaintiff failed to prove that consent (or more to the point, an alleged lack of consent) could be established on a classwide basis. In doing so, it confirmed that class action plaintiffs have the burden of proving that issues are susceptible to classwide proof even though a defendant may bear the burden of proving or disproving some of those issues at trial. See Shamblin v. Obama for Am., No. 13-2428, 2015 U.S. Dist. LEXIS 54849 (M.D. Fla. Apr. 27, 2015).

Lori Shamblin alleged that Obama for America, DNC Services Corporation and New Partners Consulting, Inc. made “auto-dialed and prerecorded calls urging the recipients to vote for Barack Obama….” Id. at *4. Shamblin alleged that “two unsolicited auto-dialed calls to her cellular telephone” violated the TCPA because she did not give the Defendants her cell phone number, let alone “her express consent to call her cell phone.” Id. at *3, *5. She filed suit on behalf of not only herself but also a putative class consisting of “[a]ll persons in Florida who received one or more non-emergency telephone calls from Defendants in September through November 2012 in support of President Obama’s re-election to a cellular telephone through the use of an automatic-telephone-dialing system of an artificial or pre-recorded voice, and for whom Defendants’ records do not show prior express consent for those calls.” Id. at *11.

The Middle District of Florida recently denied certification of that class. It began by noting that “[t]he burden of proof to establish the propriety of class certification rests with the advocate of the class, and failure to establish any one of the four Rule 23(a) factors and at least one of the alternative requirements of Rule 23(b) precludes class certification.” Id. at *12 (citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613-14 (1997)). It then found that Shamblin had not satisfied her burden for three reasons.

First, the Court determined that “there can never be common answers to the questions of whether (1) the telephone number dialed was assigned to a cellular telephone at the time of the call and (2) whether the subscriber consented to be called.” Id. at *17. Judge Covington held that simply “list[ing] some common questions does not satisfy commonality” because there was an absence of “classwide proof on these outcome-determinative issues,” meaning that “individualized proof will be required for each and every plaintiff, which defeats the purpose of class certification.” Id. at *17, *18 (quoting Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2556 (2011)). Shamblin had tried to put the rabbit in the hat by defining a class that included called parties “for whom Defendants’ record do not show prior express consent,” the implication being that the burden of proof at the class certification stage should shift to the Defendant. See Shamblin, 2015 U.S. Dist. LEXIS 54849, at *11. The Court rejected her request to infer a lack of consent from a lack of documentary evidence of consent, reasoning that she was “not entitled to a presumption that all class members failed to consent” and that “Defendants have a constitutional right to a jury determination as to whether any person consented to receiving calls to their cellular telephone.” Shamblin, 2015 U.S. Dist. LEXIS 54849, at *18 (citing Rink v. Cheminova, Inc., 203 F.R.D. 648, 652 (M.D. Fla. 2001)).

Second, the Court held that even if there were a common answer to a crucial question, individualized inquiries would still predominate. Rule 23(b)(3) is satisfied when “‘the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members [predominance], and that a class action is superior to other available methods for fairly and efficiently adjudicating the whole controversy [superiority].’” Id. at *24. Defendants argued that prior express consent was obtained in a multitude of ways (e.g., signups, campaign contribution, petitions) and that “short of calling each class member to testify on the issue on consent, there is no way to determine whether the TCPA was in fact violated with each call.” Id. at *26-27. The Court agreed and held that, because the “TCPA ‘allows consent to be given orally, in writing, electronically, or by any other means, as long as the consent is expressly given to the particular entity making the call,’ …. [i]ndividualized inquiries into consent (including where, how, and when) will predominate.” Id. at *28-29 (quoting Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242, 1255 (11th Cir. 2014)). In support of its decision, the Court cited several TCPA decisions denying certification due to the existence of individualized inquiries into consent. Id. at *29-31.

After determining that Shamblin had not established predominance, the Court also found that “class wide resolution of the dispute [was] not superior to other methods of adjudication.” Shamblin, 2015 U.S. Dist. LEXIS 54849, at *31. Defendants asserted that a class action was not the superior method of adjudication because individual issues predominated, alternative methods to adjudicate individual TCPA claims were both available and commonly used, and the potential for substantial aggregated damages for statutory damages that are grossly disproportionate to actual damages raised due process issues. The Court examined the superiority factors enumerated in 23(b)(3), agreed that a class action was not the superior method to adjudicate Shamblin’s claims, and placed particular emphasis on the predominance of individualized issues. Id. at *31-32 (“‘the predominance analysis … has a tremendous impact on the superiority analysis … for the simple reason that, the more common issues predominate over individual uses, the more desirable a class action lawsuit will be ….’”).

Third, the Court concluded that Shamblin’s attempt to certify a “hybrid class for injunctive and declaratory relief under Rule 23(b)(2) and monetary damages under Rule 23(b)(3)” was unsustainable because Shamblin failed to “set forth sufficient evidence to demonstrate that the monetary relief requested [did] not predominate over the injunctive and declaratory relief requested.” Id. at *24-25. Defendants argued that injunctive and declaratory relief under 23(b)(2) were categorically unavailable and the “predominant relief requested [was] monetary.” Id. at *23. Judge Covington agreed that Shamblin could not seek injunctive relief against the campaign organization since the President is constitutionally barred from running for a third consecutive term, “certification under 23(b)(2) would be improper because Obama for America cannot be enjoined from an activity that will not take place in the future.” Id. at *23.

Judge Covington’s Opinion confirms that plaintiffs have the burden of proving that critical questions can be proven on a classwide basis, even if defendants happen to bear the ultimate burden of proof on some of those issues, and that a class action is not the appropriate vehicle to navigate through a TCPA dispute when individual determinations on consent exist.


Supreme Court Grants Certiorari To Resolve Circuit Split As Second Circuit Holds That Offer Of Judgment Can Moot Named Plaintiffs’ Claims If Trial Court Enters Judgment

As we noted a few months ago, several pending Circuit appeals and a pending petition for certiorari to the United States Supreme Court foreshadowed that clarity might be coming to the question whether an offer of complete relief to a named plaintiff in a putative class action can moot the named plaintiff’s claim, and the related issue of whether named plaintiffs can continue to pursue claims on behalf of a putative class after their individual claims become moot. Last week the Second Circuit has provided a partial answer, and today the Supreme Court granted certiorari, which hopefully will put the issue to rest once and for all.

In Tanasi v. New Alliance Bank, No. 14-1389, 2015 WL 2251472 (2d Cir. May 14, 2015), the Second Circuit held that an unaccepted Rule 68 offer of judgment that provides complete relief does not, by itself, moot the claims of the named plaintiff. Instead, the named plaintiff’s claims become moot for purposes of Article III’s case or controversy requirement when the court enters judgment in the named plaintiff’s favor in accordance with the offer.

Here’s the wrinkle. In Tanasi, the Second Circuit did not hold that district courts are required to enter judgment in favor of the named plaintiff who refuses to accept an offer of complete relief. Rather, the Court suggested that district courts have discretion to do so. And the Court did not provide extensive guidance on the exercise of such discretion, other than noting that the purpose of Rule 68 is “to encourage settlement and avoid litigation,” and that entry of judgment is appropriate if the parties so agree, or if “a defendant “unconditionally surrenders” and “only the plaintiff’s obstinacy or madness prevents her from accepting total victory.” The Court did not suggest that this was an exhaustive list of scenarios in which a district court should enter judgment, nor did it overrule prior case law addressing this issue.

Because the district court in Tanasi never entered judgment in favor of the named plaintiff, the Second Circuit concluded that his “individual claims were not rendered moot ‘in the constitutional sense’ by the unaccepted Rule 68 offer,” and affirmed, albeit on alternate grounds, the district court’s decision that it had subject matter jurisdiction over the case. In a separate case involving a similar issue, the Second Circuit — relying on Tanasi — summarily vacated an order dismissing a class action as moot because the district court did not enter judgment in favor of the named plaintiff in accordance with the defendant’s offer of judgment. See Franco v. Allied Interstate, LLC, 14-1464 (2d Cir. May 18, 2015).

The Tanasi Court expressly left for another day the question of what happens to the putative class claims after a named plaintiff’s individual claims are rendered moot. That day likely is coming soon. Today, the United State Supreme Court granted certiorari in a TCPA class action that involves the issue of whether the entire case is rendered moot for purposes of Article III when the named plaintiff receives an offer of complete relief. Gomez v. Campbell-Ewald Co., 768 F.3d 871 (9th Cir. 2014), cert. granted sub nom. Campbell-Ewald Co. v. Gomez, 2015 WL 246885 (U.S. May 18, 2015) (No. 14-857). Our prior post about the Ninth Circuit’s decision in Campbell-Ewald is available here. Stay tuned for further developments.

What’s the Purpose of the Emergency Purpose Statutory Exemption?

As we’ve noted in the past, there are a number of TPCA petitions for declaratory ruling or requests for interpretation of the TCPA statute or FCC rules on a range of issues relating to the definition of an autodialer, seeking a range of common sense rules or processes for dealing with recycled number issues, among others. A recently filed Petition, by Blackboard, Inc. (“Blackboard”), represents a new wrinkle in the fabric of interesting technological and practical challenges under the TCPA that can adversely affect the delivery of important and timely information to parties interested in receiving it.   Blackboard is an educational services platform provider seeking clarification from the FCC that the TCPA does not apply to “informational, non-commercial, non-advertising, and non-telemarketing autodialed and prerecorded messages sent by Blackboard’s educational institution customers because those calls are made for ‘emergency purposes.’”

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Court Grants Summary Judgment to Plaintiff Class in Blast Fax Case, Awards More Than $22 Million in Statutory Damages

In September, we reported that a court in the District ofNew Jersey denied the defendants’ motion for summary judgment in a “fax blast” class action, concluding that the defendants could be directly liable under the TCPA for fax advertisements they did not actually send, but rather that were sent by a third-party marketing firm to promote the defendants’ goods or services. See City Select Auto Sales, Inc. v. David Randall Associates, Inc., No. 11-2658, 2014 WL 4755487 (D.N.J. Sept. 24, 2014) (“City Select I”).

Six months later, relying heavily on that earlier ruling, the court has entered summary judgment on behalf of the plaintiff class and awarded it statutory damages of $22,405,000. City Select Auto Sales, Inc. v. David Randall Associates, Inc., et al., No. 11-2658, 2015 WL 1421539 (D. N.J. Mar. 27, 2015) (“City Select II”).

The court noted that its September decision adopted the reasoning of an amicus letter brief from the FCC submitted in Palm Beach Golf Center-Boca, Inc. v. Sarris, No. 13-14013 (11th Cir.), in which “the FCC emphasized that the junk-fax provisions of the TCPA clearly allow[] a plaintiff to recover damages [under a theory of direct liability] from a defendant who [transmitted] no facsimile to the plaintiff, but whose independent contractor did, provided that the transmitted fax constitutes an unsolicited facsimile advertisement promoting the defendant’s goods or services in accordance with the binding regulatory definition of ‘seller’ set forth in 47 C.F.R. §64.1200(f)(1).” Id. at *12 n.11 (internal citation and quotation marks omitted). The court also acknowledged that the Eleventh Circuit subsequently adopted the FCC’s position in Sarris. See Palm Beach Golf Center-Boca, Inc. v. Sarris, — F.3d –, No. 13-14013, 2015 WL 1004234 (11th Cir. Mar. 9, 2015).

Because the court had already ruled that there was no dispute that the third-party vendor sent the faxes on behalf of the defendants, it found that the defendants constituted “senders” of the faxes under the TCPA and that the plaintiffs were entitled to statutory damages.

As we noted in September, the FCC’s position stands in marked contrast to its decision in In re Joint Petition Filed by Dish Network, LLC, 28 F.C.C. Rcd. 6574 (2013) (“Dish Network”), where the FCC had limited direct liability to only “telemarketers” that “initiate” calls, and otherwise applied agency principles to determine whether “sellers” might be vicariously liable for calls made on their behalf. Both the City Select I and Sarris opinions accepted the FCC’s position that Dish Network does not apply to faxes.

The distinction between faxes and calls has no support in the language of the TCPA and remains difficult to justify as a policy matter. With courts adopting this approach, however, more defendants may end up facing claims related to faxes involving third-party vendors.

Failure to Identify Fax Recipients Shows Putative Class Is Not Ascertainable

A court in the Northern District of Illinois recently denied class certification in a “fax blast” case because the plaintiff failed to meet its burden of proof in showing that the putative class was ascertainable where there was no evidence identifying the recipients of the faxes. Physicians Healthsource, Inc. v. Alma Lasers, Inc., et al., No. 12-4978, 2015 U.S. Dist. LEXIS 41339 (N.D. Ill. Mar. 31, 2015).

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Take Care When Crafting an Offer of Judgment

In Compressor Eng’g Corp. v. Thomas, Case No. 10-10059, 2015 U.S. Dist. LEXIS 20079 (E.D. Mich. Feb. 19, 2015), Defendant Charles Thomas Jr. sought to moot the claim of Plaintiff Compressor Engineering Corporation (“Compressor”) by making an offer of judgment for $1,500, the maximum statutory award for a single violation of the TCPA.

Compressor filed suit after receiving an allegedly unsolicited fax and sought to certify a class of “[a]ll persons that are holders of telephone numbers to which a facsimile transmission was sent on behalf of Defendant advertising the goods or services of Defendant at any time from August 13, 2005 to present….” Id. at 4. In addition to seeking monetary damages, Compressor also sought injunctive relief.

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Courts Confirm Importance Of Human Intervention

A critical issue under the TCPA is the extent to which the statute applies to mobile text messaging platforms. As evident from its title, Congress intended that the TCPA would protect consumers from unsolicited telephone calls, as placed through automated telephone dialing systems (“ATDS”). As early as 2003, the FCC decided that text messages are “calls” under the TCPA, but has not yet addressed the corollary issue of when and whether a text messaging platform might be considered an ATDS.

Two recent decisions from the Northern District of California have now provided at least a partial answer. Remarkably, both decisions follow the FCC’s 2003 and 2012 orders expanding the definition of ATDS to include equipment that “autodials” numbers without human intervention from customer calling lists. See In the Matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 27 F.C.C. Rcd. 15391, 15392 n.5 (2012), citing In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 18 F.C.C. Rec’d 14014, 14091-92 (2003). The two recent court decisions affirm the converse position: that is, when a text messaging platform requires human intervention to initiate text messages, the platform is not an ATDS.

In the first decision, McKenna v. WhisperText, No. 5:14-CV-00424-PSG, 2015 WL 428728 (N.D. Cal. Jan. 30, 2015), plaintiff alleged that WhisperText violated the TCPA by sending him an unsolicited text invite for its Whisper app. According to plaintiff, the Whisper app automatically solicited new users to send such text invites to contact numbers stored in the user’s smartphone. Upon the user’s consent, the app would upload those numbers to a database, and a third party would automatically disseminate text invites.

WhisperText moved to dismiss, arguing that the Whisper app was not an ATDS because sending texts through the app required “human intervention” – specifically, the user’s election to send text invites. The district court agreed. While accepting the prior FCC orders in this area, the district court found the claim could not meet the requirements under those orders that the texts be sent without human intervention.   The dispositive allegation, the court reasoned, was that defendants’ app “sends SMS invitations only at the user’s affirmative direction.” Defendants accordingly did not use an ATDS to send the text at issue.

The second decision reached a similar conclusion on a motion for summary judgment. In Glauser v. GroupMe, Inc., No. C 11-2584 PJH, 2015 WL 475111 (N.D. Cal. Feb. 4, 2015), plaintiff claimed that he received unsolicited welcome texts from defendants’ GroupMe app in violation of the TCPA. The application allowed users to create a “group” whose members would automatically receive pre-programmed welcome texts. GroupMe moved for summary judgment, arguing in part that the app was not an ATDS, because the app sent messages only in response to user requests.

While the district court again accepted the FCC’s orders on the scope of an ATDS, it also found that the app was not an ATDS, because it required human intervention in form of the user adding mobile numbers to form the group. The court rejected as insufficient plaintiff’s argument that the welcome texts were sent automatically by the app, once the user provided mobile numbers of group members. The district court reasoned that the user’s provision of mobile numbers amounted to “human intervention,” sufficient to place the app outside the scope of the TCPA.

For companies innovating in the area of mobile text platforms, these decisions may prove a much-needed bright line for determining whether a mobile messaging platform might amount to an ATDS so as to come within the requirements of the TCPA. As we have otherwise explained, district courts have taken different views as to whether text platforms might ever fall within the definition of an autodialer. Multiple petitions on the scope of the ATDS definition under the TCPA are pending before the FCC.   On the horizon are expected appellate decisions and further FCC rulings on these topics.

In the meantime, however, the requirement of human intervention may provide a useful marker for identifying how a company might engage with mobile messaging platforms while staying outside of the scope of the TCPA’s restrictions.

2015 Promises to Bring Further Clarity to Whether Defendants Can Moot Class Actions by Mooting the Claims of Named Plaintiffs

The new year is off to a busy start, and it appears 2015 will bring additional Circuit-level clarity to an issue the Supreme Court left open in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013): whether an offer of complete relief to a named plaintiff in a putative class action moots the named plaintiff’s claim. The resolution of that issue, and the related question whether named plaintiffs can continue to pursue claims on behalf of a putative class after their individual claims become moot, will have a major impact on class action litigation, particularly in cases that seek statutory damages such as those available under the TCPA.

District courts remain split on the issue; indeed, disagreement continues even among courts within the same Circuit. Compare Lary v. Rexall Sundown, Inc., Civil No. 13-5769, 2015 WL 590301 (E.D.N.Y. Feb. 10, 2015) (dismissing putative class claims as moot and entering judgment in favor of named plaintiff individually in accordance with unaccepted offer of judgment that provided named plaintinff with complete relief) with Mey v. Frontier Communications Corp., Civil No. 13-1191, 2014 WL 6977746 (D. Conn. Dec. 9, 2014) (declining to dismiss case as moot where unaccepted offer of judgment provided named plaintiff all the relief she sought on her own behalf and finding that putative class claims still present live controversy).

Near the end of 2014, the Eleventh Circuit adopted Justice Kagan’s dissent in Genesis Healthcare, and concluded that an unaccepted offer of judgment to a named plaintiff in a putative class action is a legal nullity that did not moot the named plaintiff’s claim. Stein v. Buccaneers, L.P., No. 13-15417 (11th Cir. Dec. 1, 2014). A copy of the decision is available here. Although it could have stopped there, the court went further and suggested that, even if the named plaintiff’s individual claim was moot, he still could pursue claims on behalf of the putative class, including claims for statutory damages under the TCPA, pursuant to the “relation back” exception to the mootness doctrine. Under that exception, an “inherently transitory” class action claim that is “capable of repetition, yet evading review” is not necessarily moot upon the expiration of the named plaintiff’s claim, and the court suggested that a defendant’s ability to moot a named plaintiff’s claim for damages through an offer of complete relief is sufficient to render a case inherently transitory. Interestingly, the court acknowledged the “tension” between its analysis on this point and the Supreme Court’s decision in Genesis Healthcare.

In late January 2015, the Fifth Circuit rejected an attempt to expand the “relation back” exception to mootness, and in so doing called into question the Eleventh Circuit’s analysis. In Fontenot v. McCraw, No. 13-20611, 2015 WL 304151 (5th Cir. Jan. 23, 2015), the plaintiffs sued government officials in a putative class action, seeking injunctive relief to correct their driving records. While the case was pending the defendants corrected the named plaintiffs’ records, which the court held rendered their individual claims moot. In analyzing whether the plaintiffs could continue pursuing claims on behalf of the putative class, the court observed that, in Genesis Healthcare, the Supreme Court clarified that the basis for the relation back exception “is focused not on the defendant’s litigation strategy, but on the substance of the plaintiff’s claim,” and undermined the argument that the strategy of “picking off” a named plaintiff in a class action seeking money damages could render a case inherently transitory. Ultimately, the court concluded that because class certification had not been granted and plaintiffs had not even filed a motion for class certification at the time their claims became moot, none of the pre-existing exceptions to the mootness doctrine applied, and held that once the named plaintiffs’ “individual records correction claims became moot, so did the class action case.” A copy of the decision is available here.

Other appeals involving these issues currently are pending in other Circuits and likely will be decided in 2015. See, e.g., Bais Yaakov of Spring Valley v. ACT, Inc., No. 14-1789 (1st Cir.); Tanasi v. New Alliance Bank, 14-1389 (2d Cir.).

Of course, only the Supreme Court can put any doubt to rest once and for all. Notably, a petition for certiorari was filed on January 16, 2015, squarely raising these issues in a TCPA class action. Petition for Writ of Certiorari, Campbell-Ewald v. Gomez, No. 14-857 (U.S.). A copy of the petition is available here. Whether the Court will accept the case remains to be seen. One thing is for certain though: both the plaintiff’s and defense bar will be watching closely.

Fail-Safe Class Fails in the Eastern District of Pennsylvania

In Zarichny v. Complete Payment Recovery Servs., Civ. No. 14-3197, 2015 U.S. Dist. LEXIS 6556 (Jan. 21, 2015), Plaintiff Sandra Zarichny attempted to bring a class action on behalf of two classes against defendants Fidelity National Information Services (“FIS”) and Complete Payment Recovery Services (“CPRS”). Id. at *1-2. Zarichny alleges that the defendants called her eleven times because they incorrectly believed that she owed a debt based on her alleged failure to return textbooks that she rented. Id. at 7-8. In her complaint, Zarichny alleged that the Defendants deliberately harassed her by calling at inconvenient times. Id. at 9. Zarichny alleged that both corporations violated the TCPA and the Fair Debt Collections Practices Act (the “FDCPA”).

Fidelity and CPRS brought a motion to dismiss Zarichny’s complaint and a motion to strike her class allegations, which the court granted in part and denied in part.

First, the Court dismissed FIS after finding that Zarichny failed to allege that FIS made any phone calls and after finding that the circumstances did not warrant holding it liable as a parent corporation. Id. at *15-16. The Court denied CPRS’s motion to dismiss Zarichny’s TCPA claim after finding that CPRS had the burden of proving that Zarichny consented to receiving the calls at issue. Id. at *18. The Court allowed Zarichny to proceed on one FDCPA claim after finding that she had pled sufficient facts to show that CPRS may have violated the written notice provision of the FDCPA. Id. at *26 .

The Court then turned to Defendants’ motion to strike Zarichny’s class allegations. Id. at *26-27. Zarichny sought to bring an action on behalf of two classes; those “‘who received one or more telephone calls from [d]efendants to whom [d]efendants did not send a written notice pursuant to 15 U.S.C. § 1692g,’” and those “‘who received one or more telephone calls from [d]efendants on the individual’s cellular telephone that was initiated using an automatic telephone dialing system.’” Id. at *27. Defendants’ argued that these were “fail-safe” classes because qualification would be based on whether an individual had a valid claim. Id. Zarichny in turn argued that any ruling on class certification would be premature because she had not moved for class certification and that the class definitions could be revised through discovery. Id. at *28.

The Court struck the class allegations due the existence of a fail-safe class. Id. at *29 (“Because plaintiff’s class definitions create impermissible fail-safe classes, we need not consider defendants’ second ground for striking her class allegations…”). While Judge Dalzell acknowledged the existence of a circuit split regarding the permissibility of fail-safe classes, he noted the initial need to consider two criteria before looking to the four requirements of class certification. Id. at *30 (“[O]ur Court of Appeals obliges us to establish two preliminary criteria. We must (1) clearly define the perimeter of the class and the claims to be given class treatment pursuant to Rule 23(c)(1)(B), and (2) determine whether the class is objectively ascertainable.”).

Next, Judge Dalzell then looked to the Third Circuit’s holding in Marcus v. BMW of North America LLC, 687 F.3d 583 (3d Cir. 2012), to determine whether Zarichny’s proposed class was ascertainable. After noting the factors the Third Circuit considered in Marcus, Judge Dalzell noted that “[i]f such ascertainability is not met based on objective criteria the class definition must fail.” Id. at 31-32. Here, Judge Dalzell recognized that the classes were not ascertainable:

A similar problem faces us here. As one commentator explained, “[F]ail-safe classes [are] one category of classes failing to satisfy the ascertainability requirement.” Both classes Zarichny defined are fail-safe classes….Since we are at the outset of this litigation, there is no way to provide notice to that putative class without the sort of extensive fact finding that class actions should avoid. Similarly, at the conclusion the litigation should CPRS prevail against Zarichny, any other putative class recipient would be free to litigate the same claim against CPRS.

Id. at *32-33.

The ultimate problem with a fail-safe class is that its members of a fail-safe class would not be bound by an adverse judgment. Two outcomes exist. First, their claims could be proven on the merits (in which case they are members of the class and enjoy the benefits of the judgment) or they could be disproven (in which case they are not members of the class and are not bound by the judgment). In either case, fail-safe classes are a no-win proposition for defendants that violate the 1966 amendments to Rule 23, which rejected the practice of “one-way intervention” and required that judgments be binding “[w]hether or not favorable to the class.” Fed. R. Civ. P. 23(c)(3); Fed. R. Civ. P. 23(c)(3) 1966 Advisory Committee Notes, Subdivision (c)(3). Judge Dalzell’s opinion recognizes the flawed and unjust results that could emerge from fail-safe classes.