Court Certifies TCPA Class Action and Subjects Defendant to Aggregate Liability After Discounting Contrary Authority

Despite a readily available forum for individual suits and the disproportionate and the potentially ruinous liability a TCPA class action presents, a New Jersey District Court nonetheless deemed a class action the superior mechanism for resolving a TCPA suit In A & L Indus., Inc. v. P. Cipollini, Inc., No. 12-7598, 2013 WL 5503303, at *5 (D.N.J. Oct. 2, 2013).  The defendant then sought reconsideration, which the District Court recently denied.

The lawsuit arose from a fax advertisement that a marketing company sent to more than 4,000 recipients on behalf of defendant Cipollini, Inc., a roofing company.  Id. at *1.  Neither Cipollini nor the marketer had obtained prior express consent from these recipients.  One of them, plaintiff A & L Industries, Inc., brought a class action alleging violations of the TCPA and other claims.  Id.

In opposing certification, Cipollini argued that the case does not satisfy Rule 23(b)’s superiority requirement.  Specifically, it argued that individual actions are superior because the TCPA’s statutory damages create adequate incentive to pursue individual claims, and that aggregate actions are inferior because, when aggregated, the TCPA’s statutory damages far exceed any alleged actual damages.   In support of its arguments it cited Local Baking Products v. Kosher Bagel Munch, Inc., 23 A.3d 469 (N.J. App. Div. 2011), a New Jersey state court decision that had concluded that “a class action suit is not a superior means of adjudicating a TCPA suit.”  Id. at 476.

The District Court disagreed, concluding that a “class action is simply a better available method to fairly and efficiently resolve the claims of potential class members in this case.”  Cipollini, 2013 WL 5503303, at *5.  It offered two principal reasons for declining to follow Local Bakery.  First, although it acknowledged that the procedural rules were “essentially similar,” it found that it was not obliged to follow a state court decision on a procedural matter.  Cipollini, 2013 WL 5503303, at *4.

Second, the District Court rejected Local Baking’s conclusion that consumers have incentive to pursue individual claims because the TCPA’s statutory damages far exceed any actual damages.  Instead, it held that the TCPA’s individual statutory damages are minimal even if they do exceed actual damages, making a multiplicity of individual actions an unlikely and therefore inferior method for adjudication.  Id.  But whether the TCPA’s statutory damages adequately incent individual actions is a point on which other courts—and presumably Congress—disagree.  See Cellco P’ship v. Wilcrest Health Care Mgmt. Inc., No. 09-3534, 2012 WL 1638056, at *9 (D.N.J. May 8, 2012) (noting that TCPA’s damages provisions suggest congressional intent for adjudication in small claims court); Goodrich Mgmt. Corp. v. Afgo Mech. Servs., Inc., No. 09-0043, 2009 WL 2602200, at *5 (D.N.J. Aug. 24, 2009) (noting that TCPA’s damages provisions encourage small claims adjudication that promises speedy recovery and little, if any, legal costs) vacated sub nom. Landsman & Funk PC v. Skinder-Strauss Assocs., 640 F.3d 72 (3d Cir. 2011) opinion reinstated in part, 09-3105, 2012 WL 2052685 (3d Cir. Apr. 17, 2012).

Finally, the District Court pointed to possible skepticism about categorically exempting TCPA suits from certification, citing dicta from the Third Circuit.  Cipollini, Inc., 2013 WL 5503303, at *5 (citing Landsman, 640 F.3d at 94-95).  But there is other authority for the proposition that aggregate statutory damages awards makes class treatment of TCPA claims inappropriate.  For example, in Forman v. Data Transfer, Inc., 164 F.R.D. 400 (E.D. Pa. 1995), the court denied class certification because a TCPA “class action would be inconsistent with the specific and personal remedy provided by Congress to address the minor nuisance of unsolicited facsimile advertisements.”  Id. at 405 (citing Ratner v. Chem. Bank N.Y. Trust Co., 54 F.R.D. 412, 416 (S.D.N.Y. 1972) (denying class certification where the Truth in Lending Act’s minimum award of $100 each for some 130,000 class members would be a “horrendous, possibly annihilating punishment, unrelated to any damage to the purported class or to any benefit to defendant”)).  Indeed, several courts have cited the TCPA’s large statutory damages as evidence that Congress intended for suits to proceed as individual actions, perhaps in small claims court, not as class actions.  See, e.g., W. Concord 5-10-1.00 Store, Inc. v. Interstate Mat Corp., No. 10-0356, 2013 WL 988621, at *8 (Mass. Super. Ct. Mar. 5, 2013) (finding class action inconsistent with TCPA because “Congress . . . creat[ed] a specific personal remedy . . . easily . . . obtained in a local court and . . . [a sufficient] incentive for those aggrieved . . ., but . . . proportional to the harm caused.”); Kim v. Sussman, 03 CH 07663, 2004 WL 3135348, at *3 (Ill. Cir. Ct. Oct. 19, 2004) (“Congress believed that allowing an individual to file an action in small claims court to redress the nuisance of unsolicited faxes and to recover a minimum of $500 in damages was an adequate incentive to address what is at most, a minor intrusion into an individual’s daily life.”).

In short, other opponents of class certification—and Cipollini, should it pursue these issues on appeal—have ample ammunition against the District Court’s opinion and the authority it cited.

A copy of the original decision granting class certification is available here.

Michael P. Daly

About the Author: Michael P. Daly

Mike Daly has spent two decades defending, counseling and championing clients that interact with consumers. His practice focuses on defending class actions, handling critical motions and appeals, and maximizing the defensibility of marketing and enforceability of contracts. Clients large and small have trusted him to protect their businesses, budgets and brands in complex cases across the country.

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