Opinion
13-cv-02219-HSG
10-15-2021
TRUE HEALTH CHIROPRACTIC INC, et al., Plaintiffs, v. MCKESSON CORPORATION, et al., Defendants.
ORDER DECERTIFYING CLASS Re: Dkt. No. 476
HAYWOOD S. GILLIAM, JR. United States District Judge
On September 29, 2021, the Court ordered Plaintiffs to show cause why the class should not be decertified. See Dkt. No. 476 (“Order to Show Cause” or “OSC”). In the OSC, the Court told the parties that they should cite any relevant legal authority supporting their respective positions. Id. at 7. The Court incorporates the legal standards and analysis set forth in the Order to Show Cause, and adds the analysis below based on the parties' responses to the OSC.
Plaintiffs filed their Response to the Order to Show Cause on October 4, 2021. See Dkt. No. 480 (“Plaintiffs' Response”). Defendants submitted a Response to Plaintiffs' Response on October 6, 2021. See Dkt. No. 482 (“Defendants' Response”). On October 8, 2021, the Court heard oral argument regarding the OSC. Dkt. No. 485.
As explained in the Order to Show Cause, an FCC decision issued after the class's initial certification changed the requirements for TCPA liability. There is now no liability under the TCPA for faxes received via an online fax service. In the Matter of Amerifactors Fin. Grp., LLC Petition for Expedited Declaratory Ruling Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991 Junk Fax Prot. Act of 2005, CG Dkt. Nos. 02-278, 05-338, 2019 WL 6712128, ¶ 3 (Dec. 9, 2019) (“Amerifactors”). While Defendants sought decertification of the class after the Amerifactors ruling issued, see Dkt. No. 362, the Court gave Plaintiffs the opportunity to obtain 1 class-wide proof sufficient to show how class members received the faxes at issue, see Dkt. No. 393. Plaintiffs returned with over 100 telephone carrier declarations, which Defendants supplemented with two additional telephone carrier declarations. See Dkt. Nos. 460, 465, 468, 469, 470, 471. Telephone carriers who provided service to over 60% of the class members affirmatively say they have no way of knowing if the class member received faxes via a standalone fax machine or via an online fax service. Defendants' Response at 4; see Dkt. Nos. 460, 465, 468, 469, 470, 471; see, e.g., Dkt. No. 460, Exhibit A Part 5 at 63 (“Comcast has no mechanism to determine whether its subscribers received faxes on a standalone fax machine or via online fax service.”). Plaintiffs attempt to fill this evidentiary gap with a proffered expert who opines on general trends in online fax service usage, from which Plaintiffs then make assertions about the likelihood of particular individual consumer choices. After reviewing the Plaintiffs' Offer of Proof, Dkt. No. 455, and the telephone carrier declarations, the Court became concerned that the class does not satisfy Federal Rule of Civil Procedure Rule 23(b)(3), which requires that “questions of law or fact common to class members predominate over any questions affecting only individual members.” Fed.R.Civ.P. 23(b)(3); see OSC at 1. Plaintiffs have not rebutted the concerns the Court identified. 2
A significant number of Plaintiffs' subpoenas resulted in no reply. In their offer of proof, Plaintiffs said they issued 246 subpoenas. Dkt. No. 455 at 1. Defendants, in their latest response, contend that Plaintiffs subpoenaed 231 phone carriers, 110 of which have not responded. Defendants' Response at 11. According to Defendants, Plaintiffs have no data from telephone carriers servicing at least 17% of the class members. See id.
According to Plaintiffs' expert, in the “absence of data” it can be assumed that the class member used a stand-alone fax machine. Even though it has been clear since December 2019 that Amerifactors represented a significant change in the law relevant to this case, Plaintiffs only disclosed this theory for the first time on September 10, 2021, approximately one month before trial, in response to the Court's OSC. See Dkt. No. 455, Exhibit B at Part IV. Then mere weeks before trial, Plaintiffs came up with new theories supporting their assertion that class members must have used a stand-alone fax machine, contending for the first time, for example, that call forwarding was not a realistic option due to quality degradation of the fax. See Dkt. No. 480 at 5 (citing nothing in Plaintiffs' expert's declaration disclosing opinions to which counsel asserted he “will testify”). While the Court agrees with Defendants that these theories plainly were not timely disclosed under Rule 26, see Defendants' Response at 12 n.30, the Court considers them on their merits, and finds that they fail to meet Plaintiffs' burden under Rule 23 in any event.
While the Ninth Circuit has not affirmatively articulated the burden of proof for decertification, in Marlo v. United Parcel Service, Inc., the panel held that the district court, in its order decertifying the class, “properly placed the burden on [the plaintiff] to demonstrate that Rule 23's class-certification requirements had been met.” 639 F.3d 942, 947-48 (9th Cir. 2011). In any event, the Court's conclusion would not change based on who holds the burden.
First, Plaintiffs' proposed methodology does not amount to class-wide proof. Instead, it is essentially an effort to aggregate, through an expert and Plaintiffs' counsel's own assumptions, individualized data based on over a hundred different declarations concerning thousands of discrete phone numbers to which faxes were sent. The declarations Plaintiffs submit, on their face, simply do not speak directly to the central question at issue: how can it be shown via class-wide, common proof that each purported class member received the faxes at issue via a means other than an “online fax service”? Simply asking whether various phone carriers themselves provided online fax services does not provide uniform class-wide proof that each class member received the faxes at issue in the manner necessary to give rise to TCPA liability, as Defendants note. Instead, Plaintiffs have only managed to advance “evidence that varies from member to member.” Tyson Foods, Inc. v. Bouaphakeo, 136 S.Ct. 1036, 1045 (2016) (citation omitted) (“Tyson”).
For example, the class members still could have received the faxes at issue through an online fax service by using a third party online fax service or call forwarding. See Dkt. No. 455, Exhibit B at 4; Defendants' Response at 12.
Plaintiffs argue that they have proffered class-wide proof because a jury could find by a preponderance of the evidence that each class member received the faxes on a stand-alone fax machine. See Plaintiffs' Response at 6. Plaintiffs rely almost entirely on a single case: Tyson, a class action in which plaintiffs alleged they were improperly denied overtime compensation. See Plaintiffs' Response at 6. However, Tyson simply does not support Plaintiffs' predominance claim here. See Tyson at 459 (“Whether a representative sample may be used to establish classwide liability will depend on the purpose for which the sample is being introduced and on the underlying cause of action.”).
In Tyson, the plaintiffs “sought to introduce a representative sample to fill an evidentiary gap created by the employer's failure to keep adequate records.” Id. at 456. Without the representative sample, each individual plaintiff would have had no alternative means to establish their hours worked. Id. at 457. The Tyson plaintiffs were similarly situated because they worked in the same facility, did similar work, and were paid under the same policy. Id. at 459. Therefore, 3 the “experience of a subset of employees [could] be probative as to the experiences of all of them.” Id. The Supreme Court allowed the plaintiffs to rely on a representative sample to establish hours worked because “the sample could have sustained a reasonable jury finding as to hours worked in each employee's individual action.” Tyson at 455. The Supreme Court recognized that not all class actions could properly rely on representative samples, comparing the plaintiffs in Tyson with the plaintiffs in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (reversing class certification based on plaintiffs' failure to prove that the class shared common questions of law or fact). In Wal-Mart, “the employees were not similarly situated” and so “none of them could have prevailed in an individual suit by relying on depositions detailing the ways in which other employees were discriminated against by their particular store managers.” Tyson at 458.
Tyson does not support the Plaintiffs' proposed method of so-called class-wide proof. The Plaintiffs and other class members in this case, unlike the plaintiffs in Tyson, have a clear alternative means to establish TCPA liability: each person can testify as to whether they received the faxes at issue on a stand-alone fax machine. Moreover, whether one class member received the faxes at issue on a stand-alone fax machine is not in any way probative of whether any other individual class member received his or her faxes on a stand-alone fax machine. Despite this, Plaintiffs propose using over 100 non-standardized telephone carrier declarations and an expert's testimony about the rate of use of online fax services to make assumptions about how more than 6, 000 individual class members actually received the faxes at issue in this case. See Dkt. No. 455 at 1, Exhibit B at Part IV. Far from presenting class-wide proof that would also be acceptable to prove an individual claim, Plaintiffs seek to transform the absence of uniform proof, cobbled together from a large number of disparate declarations, into a generalization they claim applies to each class member. But in an individual action, a plaintiff clearly would not be able to prove her case by saying, “Even though I personally received this fax via an online fax service, most people didn't, according to Plaintiffs' expert in the True Health case.” The issues and evidence in this 4 case are fundamentally different than those in Tyson. The idea that Plaintiffs' expert's opinions about probability can constitute the required class-wide proof is not supported by Tyson or any other authority the Court has found.
Plaintiffs' position boils down to the assertion that because most fax recipients in 2009-2010 purportedly used stand-alone fax machines, every single individual class member must have received the faxes at issue here via a stand-alone fax machine. See Plaintiffs' Response at 5 (“Based on this evidence, the jury could reasonably find, by a simple preponderance of the evidence, that each of these class members did not receive the subject faxes via an online fax service.”). This assertion, which as Defendants note is not supported by any cited empirical evidence whatsoever, see Defendants' Response at 15-16, is not the sort of evidence that can satisfy the “rigorous” and “demanding” analysis required under Rule 23. Comcast Corp. v. Behrend, 569 U.S. 27, 34-35 (2013).
Second, the individualized question of whether each class member received the faxes at issue on a stand-alone fax machine predominates over common questions. Plaintiffs argue that the predominance inquiry does not require that every possible issue in the case be capable of resolution via class-wide proof. See Plaintiffs' Response at 1-5. Plaintiffs miss the point. There can be no TCPA liability at all if the fax was received via an online fax service. Amerifactors at ¶ 8. Plaintiffs themselves proposed splitting the class into two subgroups: those that received the subject faxes “via a ‘stand-alone' fax machine” and those that received the subject faxes “via an ‘online fax service'.” See Dkt. No. 372 at 10. As reflected by the class definitions, how the fax was received is a threshold requirement for TCPA liability. It is the central issue in this case. Where, as here, individual inquiries are required to prove a core element of liability, courts have found that individual questions predominate over common questions. See Andrews v. Plains All American Pipeline, L.P., 777 Fed.Appx. 889, 892 (9th Cir. 2019) (“These individualized inquiries go to key elements of the class's claims, and the district court abused its discretion by concluding that this disparity would affect only damage calculations.”); Sandusky Wellness Ctr., LLC v. ASD Specialty Healthcare, Inc., 863 F.3d 460, 468 (6th Cir. 2017) (no predominance where “the district court would be tasked with filtering out those members to whom [defendant] was not liable”); Williams v. Apple, Inc., No. 19-CV-04700-LHK, 2021 WL 2186223, at *11 (N.D. Cal. May 28, 2021) (denying class certification where the plaintiff lacked common proof of “essential elements” of the claim, including causation and injury); Hamm v. Mercedes-Benz USA, LLC, No. 5 16-CV-03370, 2021 WL 1238304, at *12 (N.D. Cal. April 2, 2021) (denying class certification where proof of reliance, a requirement to prevail on a California Consumer Legal Remedies Act claim, would vary from consumer to consumer, defeating the predominance requirement under Rule 23(b)(3)). Accordingly, the predominance requirement of Rule 23(b)(3) is not met.
As an unpublished Ninth Circuit decision, Andrews is not precedent, but may be considered for its persuasive value. See Fed. R. App. P. 32.1; CTA9 Rule 36-3.
For similar reasons, Rule 23(b)(3)'s superiority requirement also is not met. The superiority requirement tests whether “a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3). Where “the complexities of a class action treatment outweigh the benefits of considering common issues in one trial, class action treatment is not the ‘superior' method of adjudication.” Zinser v. Accufix Research Institute, Inc., 253 F.3d 1180, 1192 (9th Cir. 2001) (citations omitted). As explained above, the core fact establishing TCPA liability is only determinable through individualized inquiries. Given the individual inquiries required to establish the proposed class members' claims, class action treatment is not the superior method of adjudication.
The Court understands the desire of Plaintiffs (and their counsel) to resolve these claims via a class action lawsuit. However, Amerifactors changed the landscape for TCPA litigation, and under Ninth Circuit precedent, this Court must follow the FCC's interpretation. See Wilson v. A.H. Belo Corp., 87 F.3d 393, 400 (9th Cir. 1996); Dkt. No. 393 at 9-11. In the Court's view, whether Amerifactors in fact controls here is determinative of the viability of this case as a class action. Plaintiffs can and no doubt will argue on appeal that Amerifactors is not binding, and the Court and the parties will get critical guidance from any ruling by the Ninth Circuit on that issue.
After carefully considering the entire record in this case, the Court orders the “Stand-Alone Fax Machine Class” DECERTIFIED
IT IS SO ORDERED. 6