Summary
denying motion to strike class claims
Summary of this case from Rodriguez v. Life Time Fitness, Inc.Opinion
Robert E. DeRose, II, Barkan Meizlish Handelman Goodin DeRose Wentz, LLP, Columbus, OH, Brian J. Wanca, Pro Hac Vice, Ross M. Good, Pro Hac Vice, Ryan M. Kelly, Pro Hac Vice, Anderson + Wanca, Rolling Meadows, IL, for Plaintiff.
David B. Shaver, Jeffrey Charles Turner, Surdyk, Dowd & Turner Co., L.P.A., Dayton, OH, David M. Schultz, Pro Hac Vice, John Paul Ryan, Pro Hac Vice, Hinshaw & Culbertson, Chicago, IL, for Defendants.
ORDER GRANTING IN PART AND DEYING IN PART DEFENDANT QUINN MEDICAL INC.’S MOTION TO STRIKE
Algenon L. Marbley, UNITED STATES DISTRICT JUDGE
This matter is before the Court on Defendant Quinn Medical Inc.’s (Quinn) Motion to Strike. (ECF No. 20). For the reasons that follow, the Motion is GRANTED IN PART AND DENIED IN PART.
I. BACKGROUND
The Telephone Consumer Protection Act (TCPA) seeks, among other things, to protect Americans from the nuisance of receiving unsolicited advertisements on their fax machines. See 47 U.S.C. 227(b)(1)(C). Plaintiff Progressive Health and Rehab Corporation (Progressive) alleges that Defendant Quinn Medical, Inc. (Quinn) violated the Act by mass-faxing two advertisements for " spinal compression braces" under the brand name " Sleeq" in September 2014. (Compl., ECF Nos. 1, 1-4).
Other parties have been since terminated from the litigation. (See ECF Nos. 22, 44, 45).
In January 2017, Progressive filed a class action lawsuit seeking to vindicate its own rights and the rights of those similarly situated under the TCPA. Specifically, Progressive identifies the following categories of individuals as putative class members:
All persons who (1) on or after four years prior to the filing of this action, (2) were sent telephone facsimile messages of material advertising the commercial availability or quality of any property, goods, or services by or on behalf of Defendants, (3) from whom Defendants did not obtain " prior express invitation or permission" to send fax advertisements, and (4) with whom Defendants did not have an established business relationship, and/or (5) which did not display a proper opt-out notice.
(ECF No. 1, ¶ 12).
Quinn now seeks to strike Progressive’s class allegations, arguing that the proposed class fails to meet federal class action requirements because it is a " fail-safe" class, that the proposed class fails to meet requirements under Rule 23(b)(2), and that Progressive’s claims are not typical to the proposed class. (ECF No. 20). For good cause shown, the Court strikes allegations under Rule 23(b)(2), but permits discovery to proceed on all other class allegations.
II. STANDARD OF REVIEW
Federal class actions are governed by Rule 23 of the Federal Rules of Civil Procedure. To obtain class certification, Plaintiffs must first demonstrate that the putative class meets the requirements of Rule 23(a) by showing 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.
FED. R. CIV. P. 23(a); see also Pilgrim v. Universal Health Card, LLC, 660 F.3d 943, 945 (6th Cir. 2011). Plaintiffs must also show that the class action falls into at least one of the three categories set forth by Rule 23(b). Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 345, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011). Here, Plaintiff alleges that the action falls into all three categories. (ECF No. 1, ¶ 18). A court may only certify a class after conducting a " rigorous analysis" to determine that the putative class meets these prerequisites. Dukes at 350-51, 131 S.Ct. 2541.
If the Court determines that the Complaint does not allege facts that would satisfy the demands of Rule 23, it may strike class action allegations prior to any motion for class certification. Geary v. Green Tree Servicing, LLC, No. 2:14-CV-00522, 2015 WL 1286347, at *15-16 (S.D. Ohio Mar. 20, 2015) (citing Pilgrim v. Univ. Health Card, LLC, 660 F.3d 943, 949 (6th Cir. 2011); Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 941-44 (9th Cir. 2009)). This Court has repeatedly held, however, that " courts should exercise caution when striking class action allegations based solely on the pleadings, because class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff’s cause of action." Id. at *6 (quoting Sauter v. CVS Pharmacy, Inc., No. 2:13-CV-846, 2014 WL 1814076, at *2 (S.D.Ohio May 7, 2014)). See also Mazzola v. Roomster Corp., 849 F.Supp.2d 395, 410 (S.D.N.Y.2012) (" [A] motion to strike class actions ... is even more disfavored because it requires a reviewing court to preemptively terminate the class aspects of ... litigation, solely on the basis of what is alleged in the complaint, and before plaintiffs are permitted to complete the discovery to which they would otherwise be entitled on questions relevant to class certification" ).
Where a party files a motion to strike class action allegations, the plaintiff bears the burden of proving that Rule 23 has been satisfied. See id. (citing In re Am. Med. Sys., Inc., 75 F.3d 1069, 1079 (6th Cir. 1996).
III. ANALYSIS
A. The Fail-Safe Argument Is Premature
First, Defendants argue that Plaintiff’s class allegations should be stricken because the proposed class constitutes a " fail-safe" class. (ECF No. 20 at 4). As a threshold matter, some background principles: in order for a district court to certify a class, the proposed class 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." Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 537-38 (6th Cir. 2012) (quoting 5 James W. Moore et al., Moore’s Federal Practice § 23.21[1] (Matthew Bender 3d ed. 1997) (" Although the text of Rule 23(a) is silent on the matter, a class must not only exist, the class must be susceptible of precise definition. There can be no class action if the proposed class is ‘amorphous’ or ‘imprecise.’ " )). One safeguard some federal courts have developed to ensure that a proposed class is sufficiently definite is the prohibition on " fail-safe" classes— that is, classes which include only those who are entitled to relief, thus " shield[ing] the putative class members from receiving an adverse judgment." Randleman v. Fid. Nat. Title Ins. Co., 646 F.3d 347, 352 (6th Cir. 2011). In other words, in a forbidden fail-safe class, " [e]ither the class members win or, by virtue of losing, they are not in the class and, therefore, are not bound by the judgment." Id. (citing Genenbacher v. CenturyTel Fiber Co. II, LLC, 244 F.R.D. 485, 488 (C.D.Ill. 2007); Campbell v. First Am. Title Ins. Co., 269 F.R.D. 68, 73-74 (D.Me.2010); Slapikas v. First Am. Title Ins. Co., 250 F.R.D. 232, 250-51 (W.D.Pa.2008)); see also Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 538 (6th Cir. 2012)).
Defendants note that the United States District Court for the Southern District of Ohio had the opportunity to consider a nearly identical proposed class in Swetlic Chiropractic & Rehab. Ctr., Inc. v. Foot Levelers, Inc., 235 F.Supp.3d 882, 891 (S.D. Ohio 2017). The Swetlic court held that the class was an improper fail-safe class because it included only " persons who either did not give permission [for Defendant to contact them] or received a fax which did not contain a proper opt-out notice." Id. (citing Sauter v. CVS Pharmacy, Inc., No. 2:13-CV-846, 2014 WL 1814076, at *9 (S.D. Ohio May 7, 2014)). The court therefore allowed the plaintiff fourteen days to file an amended complaint with a class definition that would cure the fail-safe issue.
The class definition in the Swetlic Complaint was as follows:
Plaintiff responds that Defendant assumes too much— the class definition in the Complaint was never intended to be the class definition submitted to the Court at the class certification stage. Instead, plaintiff alleges, " the usual process in TCPA cases is to allege a broad class definition in the complaint, conduct discovery into the defendant’s faxing activity during the class period, and then move to certify a more focused class definition referencing common content of the faxes." (ECF No. 27 at 5-6 (citing Chapman v. Wagener Equities, Inc., No. 09-C-07299, 2014 WL 540250, at *1 (N.D.Ill. Feb. 11, 2014))). This order of operations is necessary, Plaintiff argues, because a certain amount of discovery is necessary prior to class certification in TCPA cases to determine if there is language common to the offending faxes. Id. at 6.
In sum: the parties agree that the current class definition is an impermissible fail-safe class. The question is whether the Court should strike the class allegations on that basis, or allow the Plaintiff to proceed with limited discovery so Plaintiff may determine whether there is an objective basis upon which the class may be defined, such as language common to the alleged offending faxes.
This Court respectfully disagrees with the Swetlic court, and reiterates that " courts should exercise caution when striking class action allegations based solely on the pleadings, because class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff’s cause of action." Geary v. Green Tree Servicing, LLC, No. 2:14-CV-00522, 2015 WL 1286347, at *16 (S.D. Ohio Mar. 20, 2015) (quoting Sauter v. CVS Pharmacy, Inc., No. 2:13-CV-846, 2014 WL 1814076, at *2 (S.D. Ohio May 7, 2014)). Defendant’s request that this Court resolve the class-certification question " does not free [the Court] from the duty of engaging in a ‘rigorous analysis’ of the question, and ‘sometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question.’ " Pilgrim v. Universal Health Card, LLC, 660 F.3d 943, 949 (6th Cir. 2011) (quoting Gen. Tel. Co. v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982)). In light of this cautionary posture, rather than striking the class allegations or requiring Plaintiff to modify the class definition at this stage, the Court will permit controlled discovery so Plaintiff may ascertain whether a class definition exists that would not run afoul of the fail-safe problem.
This ruling is consistent with the requirements of Rule 23, which provides that " [a]t an early practicable time ... [a] court must determine by order whether to certify the action as a class action." Fed.R.Civ.P. 23(c)(1)(A). The commentary to Rule 23 sheds further light on what constitutes an " early practicable time" under the Rule:
Time may be needed to gather information necessary to make the certification decision. Although an evaluation of the probable outcome on the merits is not properly part of the certification decision, discovery in aid of the certification decision often includes information required to identify the nature of the issues that actually will be presented at trial. In this sense it is appropriate to conduct controlled discovery into the ‘merits,’ limited to those aspects relevant to making the certification decision on an informed basis.
...
Although many circumstances may justify deferring the certification decision, active management may be necessary to ensure that the certification decision is not unjustifiably delayed.
Advisory Committee Notes to Fed.R.Civ.P. 23, 2003 Amendment. In other words, Rule 23 empowers a Court to permit controlled discovery in aid of the certification decision until an " early practicable time" at which the Court must determine the certification question. Fed.R.Civ.P. 23 (emphasis added).
In TCPA class actions based on blast faxes, plaintiffs virtually always define the class by reference to specific language contained in the transmissions. See, e.g., Bridging Communities Inc. v. Top Flite Fin. Inc., 843 F.3d 1119, 1123 (6th Cir. 2016) (class defined as " All persons sent one or more faxes in March 2006 from " Top Flite Financial" offering " 0 Down, 0 Closing Costs" for " Mortgages" on " Purchases / ReFinancing," and identifying (718) 360-0971 as a " Remove Hotline" telephone number." ); Am. Copper & Brass, Inc. v. Lake City Indus. Prod., Inc., 757 F.3d 540, 542-43 (6th Cir. 2014) (class defined as " All persons who were successfully sent a facsimile on February 20, 2006, February 21, 2006 or February 22, 2006 from ‘Lake City Industrial Products, Inc.’; inquiring, ‘Sick And Tired of Thin, Low Quality Import Pipe Thread Sealing Tapes?’; stating ‘End the problems now with high quality, MADE IN U.S.A. 100% virgin ptfe pipe thread sealing *543 tapes!’; and offering ‘Free! Private label on every roll for first time orders.’ " ). To require a TCPA plaintiff to advance a class definition before it has access to the language of the potentially-offensive faxes would therefore unnecessarily stymie— and may unjustly prevent— plaintiffs’ efforts to ultimately craft a class definition by reference to objective criteria. It is therefore not practicable to determine the class certification question prior to a period of controlled discovery.
Nor would permitting limited discovery implicate either of the policy rationales courts have advanced when forbidding fail-safe classes. First, courts have expressed concern that " liability-begging definitions are administratively infeasible, as the inquiry into class membership would require holding countless hearings resembling ‘mini-trials.’ " 1 Newberg on Class Actions § 3:6 (5th ed.). Second, " some courts dislike fail-safe classes because they appear to have a ‘head[s] I win, tails you lose’ aspect; in the words of the Sixth Circuit, such classes ‘allow putative class members to seek a remedy but not be bound by an adverse judgment— either those class members win or, by virtue of losing, they are not in the class and are not bound." 1 Newberg on Class Actions § 3:6 (5th ed.) (quoting Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 538 (6th Cir. 2012)). But both of these potential complications would arise at the class certification stage, not, as here, prior to it. The Court therefore disagrees with those courts that have granted motions to strike TCPA classes at an early stage of the litigation because of the administrative infeasibility of providing notice to the putative class without conducting extensive individualized fact-finding that class actions seek to avoid. See Zarichny v. Complete Payment Recovery Servs., Inc., 80 F.Supp.3d 610, 625-26 (E.D. Pa. 2015); Taylor v. Universal Auto Grp. I, Inc., No. 3:13-CV-05245-KLS, 2014 WL 6654270, at *22 (W.D. Wash. Nov. 24, 2014). Such infeasibility will either be cured through a discovery period that reveals objective criteria upon which the class will be defined, or it will ultimately be fatal to Plaintiff’s claims at class certification. Either way, to strike the class allegations at this juncture would be inconsistent with the type of " rigorous analysis" that this Court would endeavor to undertake in deciding whether to ultimately certify a class. Cf. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011); see also Wolfkiel v. Intersections Ins. Servs. Inc., 303 F.R.D. 287, 294 (N.D.Ill. 2014) (holding that the fail-safe problem is not a basis on which to strike a TCPA plaintiff’s class allegations prior to class certification).
In sum, Defendant’s argument that the class definition in the Complaint is an impermissible fail-safe class is correct, but premature. The Court will permit Plaintiff to continue discovery, but notes that Plaintiff’s discovery should be aimed toward refining the class definition such that the Court may determine the certification question as soon as is practicable.
B. The Class Does Not Meet Rule 23(B)(2) Requirements
Next, Defendant argues that the Court should strike Plaintiff’s class allegations because they cannot be certified under Federal Rule of Civil Procedure 23(b)(2). Rule 23(b)(2) permits the maintenance of a class action where " the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole." The Supreme Court held in Wal-Mart Stores, Inc. v. Dukes that the provision " applies only when a single injunction or declaratory judgment would provide relief to each member of the class. It does not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant. Similarly, it does not authorize class certification when each class member would be entitled to an individualized award of monetary damages." 564 U.S. 338, 360-61, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011). Here, the TCPA authorizes damages for each violation of the Act. 47 U.S.C. 227(b)(3)(B). Furthermore, Plaintiff seeks an individualized award of monetary damages— Plaintiffs seek " actual monetary loss" from violations of the TCPA or " five hundred dollars ($500.00) for each violation, whichever is greater." (ECF No. 1 at 13). Contrary to Plaintiff’s argument, no amount of discovery will show that these monetary damages are incidental to Plaintiff’s injunctive claim. If Plaintiffs are ultimately successful, relief would require precisely the type of individualized award of monetary damages that the Dukes Court identified as unauthorized under Rule 23(b)(2).
Rule 23(B)(2) is therefore not an appropriate vehicle for these claims. And quite unlike the fail-safe question, the Court cannot see how additional discovery could cure this defect. Cf. Pilgrim v. Universal Health Card, LLC, 660 F.3d 943, 949 (6th Cir. 2011) (affirming order striking class allegations because discovery could not " alter the central defect th[e] class claim" ). The Court therefore GRANTS Defendant’s Motion to Strike as it pertains to Plaintiff’s allegations sounding in Rule 23(b)(2).
c. The Rule 23(A)(3) Argument is Premature
Rule 23(a)(3) requires that " claims or defenses of the representative parties [be] typical of the claims or defenses of the class." Defendant argues that Plaintiff’s cannot meet this requirement because other members of the putative class may have received faxes that contained different content than the faxes sent on September 12 and September 18, 2014. (ECF No. 20 at 7). Defendant further avers that because Plaintiff’s claims are atypical, they are necessarily antagonistic to the proposed class because Plaintiff " lacks an incentive to litigate vigorously the interest of the class." (Id. at 8). Plaintiff responds first that its Complaint makes clear that its allegations are not limited to the two September faxes. (ECF No. 27 at 8 (referencing the allegation at ECF No. 1 at ¶ 2 that Plaintiff received advertisements " including, but not limited to, the facsimile transmission of two unsolicited advertisements on or about September 12, 2014 and September 18, 2014" )). But even if the allegations were limited to those two faxes, it argues, the faxes are typical to the class. (ECF No. 27 at 9).
To demonstrate typicality, a plaintiff must show that a " sufficient relationship exists between the injury to the named plaintiff and the conduct affecting the class, so that the court may properly attribute a collective nature to the challenged conduct.... Thus, a plaintiff’s claim is typical if it arises from the same event or practice or course of conduct that gives rise to the claims of other class members, and if his or her claims are based on the same legal theory." In re Am. Med. Sys., Inc., 75 F.3d 1069, 1082 (6th Cir. 1996) (quoting 1 Newberg, supra, § 3-13, at 3-76 (footnote omitted)). A court’s Rule 23(a) inquiry will focus " on the similarity between the named plaintiffs’ legal and remedial theories and the theories of those whom they purport to represent." § 31 Newberg on Class Actions § 3:29 (5th ed.) (quoting James v. Dallas, 254 F.3d 551, 571 (5th Cir. 2001)).
As with Defendant’s allegation that the class is an impermissible fail-safe class, the argument is premature. It is true that courts have declined to certify putative TCPA classes when the faxes plaintiff received do not share the " same essential characteristics" as faxes received by other putative class members. Brodsky v. HumanaDental Ins. Co., No. 1:10-CV-03233, 2016 WL 5476233, at *7 (N.D.Ill. Sept. 29, 2016) (quoting Muro v. Target Corp., 580 F.3d 485, 492 (7th Cir. 2009)). On the other hand, courts have certified classes when plaintiffs have shown that the defendant engaged in a " course of conduct" by faxing substantially similar faxes to— in some cases— the same list of recipients. St. Louis Heart Ctr., Inc. v. Vein Centers For Excellence, Inc., No. 4:12 CV 174 CDP, 2013 WL 6498245, at *9 (E.D. Mo. Dec. 11, 2013). The Court does not yet have evidence to determine whether plaintiff’s claims fall into the former or the latter category— indeed, the parties do not yet have that evidence. That is why justice requires the Court to continue to permit controlled discovery to determine whether class certification is appropriate. Such additional discovery will reveal whether faxes received by other members of the putative class do or do not share essential characteristics with those received by Plaintiff. This is no fishing expedition— it is a surgical strike.
V. CONCLUSION
Quinn’s Motion to Strike Plaintiff’s allegations sounding in Rule 23(b)(2) is GRANTED. As it relates to all other class allegations, the Motion to Strike is DENIED.
IT IS SO ORDERED.
All persons who (1) on or after four years prior to the filing of this action, (2) were sent telephone facsimile messages of material advertising the commercial availability or quality of any property, goods, or services by or on behalf of Defendants, and (3) which Defendants did not have prior express permission or invitation, or (4) which did not display a proper opt-out notice.