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.’”
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.
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).
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.
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.
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.
In Gomez v. Oxford Law, 3:14-cv-00477, 2015 U.S. Dist. LEXIS 345, * 3 (M.D. Pa. Jan. 5, 2014), Ninouska Gomez filed suit under the Fair Debt Collection Practices Act (the “FDCPA”) after receiving a message from Oxford Law, which used an autodialer to leave the message. In their statement of undisputed facts, Gomez and Oxford Law agree that Gomez heard the following message: “… please hang up or disconnect. If you are Gomez, Vinouish please continue to listen to this message. There will now be a three second pause in this message.” The message was designed to comply with 15 U.S.C. § 1692c(b), the portion of the FDCPA that prohibits debt collectors from revealing information about a debtor to third parties.
In Mey v. Frontier Communs. Corp., No. 3:13-1191-MPS, 2014 U.S. Dist. LEXIS 161675 (D. Conn. Nov. 18, 2014), Plaintiff Diana Mey alleged that she received two calls to her cell phone from Frontier’s automatic telephone dialing system. Id. at *2-3. Mey filed a complaint against Frontier and simultaneously moved for class certification. Id. at *4-5. Two months later, Frontier wrote to Mey and offered to settle her claims with a payment of $6,400 plus taxable costs and entry of prospective injunctive relief. Mey declined. Id. Frontier then moved to dismiss, arguing that the court lacked subject matter jurisdiction because Frontier’s offer had “mooted Ms. Mey’s individual claim and all potential class claims.” Id.
As 2015 begins, we thought that providing a roundup of and the links to pending FCC TCPA petitions might be useful. The list includes most pending petitions filed since the FCC’s revised TCPA rules came into effect, with the exclusion of the many “blast fax” petitions for retroactive relief. We have grouped the petitions by primary subject matter (consent, ATDS definition, or other). We will update this list periodically.