United States District Court, N.D. Illinois, Eastern Division
PHYSICIANS HEALTHSOURCE, INC., an Ohio corporation, individually and as the representative of a class of similarly-situated persons, Plaintiff,
ALMA LASERS, INC. and JOHN DOES 1-10, Defendants.
CHARLES P. KOCORAS, District Judge.
This matter comes before the Court on Plaintiff Physicians Healthsource, Inc.'s ("Physicians") motion for class certification pursuant to Federal Rule of Civil Procedure ("Rule 23"). For the following reasons, the Court denies Physicians' motion for class certification.
Defendant Alma Lasers, Inc. ("Alma") is an Illinois corporation with its principal place of business in Buffalo Grove, Illinois. Alma is a global developer and manufacturer of laser devices for aesthetic and medical applications. Medical practitioners use Alma's products for noninvasive, aesthetic procedures such as hair removal and leg vein treatment. To promote its products, Alma schedules seminars throughout the country targeted to medical professionals to highlight the benefits of using its technology. To ensure attendance at its seminars, Alma utilizes direct mail, emails, and faxes. To generate potential clients, Alma purchased contact lists of medical professionals from a third party, BrightPath Marketing Services, LLC ("BrightPath"). Alma would receive the contact information generated by BrightPath and put the contact information into their general customer list. When faxes were utilized to send out seminar advertisements, Alma contracted with WestFax, Inc. ("WestFax") to send its flyers to medical professionals. Alma would not send the contact lists generated from BrightPath directly to Westfax, so there was never a specific list purchased or used for the sole purpose of contacting customers by fax. Alma does not have a practice of maintaining records of the fax numbers which are used for a particular seminar. The invoices sent from WestFax to Alma reflect aggregate data, listing the total amount of faxes sent out over a particular time period, and do not identify any particular numbers to which faxes were sent.
Physicians, an Ohio corporation, is a healthcare provider engaged in chiropractic services. Physicians alleges that on July 22nd, August 5th, and 19th, of 2008 they received three identical faxes announcing an October 17, 2008 seminar in Columbus, Ohio, hosted by Alma. The header information for the faxes contained Alma's phone number and the recipient's name, M. Raza Kahn, M.D. Physicians formerly employed Dr. Mohammad Raza Khan ("Dr. Khan") as a pain management specialist. However, Dr. Khan left the practice in 2007, before the receipt of any faxes in 2008. The three faxes also have a manual date stamp on the front of the faxes because Physicians' employees routinely stamp the date on faxes it received. Despite a manual date stamp on the front of the faxes, Physicians does not have any record of an incoming fax being sent from Alma or WestFax. Likewise, Alma does not have any contact information for Physicians or Dr. Khan in any of its marketing databases or other records. Additionally, the three faxes do not contain Physicians' name or fax number associated with its business.
On March 18, 2012, Physicians filed a two-count class action complaint in the Circuit Court of the Nineteenth Judicial District in Lake County, Illinois. Physicians Healthsource, Inc. v. Alma Lasers, Inc., Case No. 12-CH-2492. Physicians asserts both an individual claim and claims on behalf of a putative class, alleging that Alma's faxes violated the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, and that it is liable for conversion for Alma's use of Physicians' fax machine, paper, ink toner, and employees' time. Alma removed the suit to this Court pursuant to 28 U.S.C. §1331. On November 11, 2014, this Court granted Alma's motion to strike Physicians' expert reports that were un-timely produced. On April 17, 2014, Physicians moved for class certification.
The requirements for class certification are embodied in Rule 23. A district court "may certify a case for class-action treatment only if it satisfies the four requirements of Federal Rule of Civil Procedure 23(a)-numerosity, commonality, typicality, and adequacy of representation-and one of the conditions of Rule 23(b)." Jamie S. v. Milwaukee Pub. Schs., 668 F.3d 481, 493 (7th Cir. 2012). On top of the Rule 23 requirements, class certification also requires, as a threshold matter, that the plaintiff prove that the class-and, by implication, the class definition-is "sufficiently definite that its members are ascertainable." Id. (citing Oshana v. Coca-Cola Co., 472 F.3d 506, 513 (7th Cir. 2006)).
"Rule 23 does not set forth a mere pleading standard, " however. Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551 (2011); Messner v. Northshore Univ. HealthSys., 669 F.3d 802, 811 (7th Cir. 2012) ("On issues affecting class certification, ... a court may not simply assume the truth of the matters asserted by the plaintiff. If there are material factual disputes, the court must receive evidence... and resolve the disputes before deciding whether to certify the class.'") (quoting Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 676 (7th Cir. 2001)). Thus, a party who seeks to certify a class under Rule 23 "must affirmatively demonstrate his compliance with [Rule 23] that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc." Dukes, 131 S.Ct. at 2551. Accordingly, the plaintiff must prove each disputed requirement by a preponderance of the evidence. Messner, 669 F.3d at 811.
While a district court "should not turn the class certification proceedings into a dress rehearsal for the trial on the merits, " granting class certification is appropriate "only if, after a rigorous analysis, ' the trial court is satisfied that the requirements of Rule 23 have been met." Jamie S., 668 F.3d at 493 (quoting Dukes, 131 S.Ct. at 2551); Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 156 (1982) (recognizing that "sometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question"). Inevitably, that "rigorous analysis" will sometimes involve delving into the merits of the plaintiff's case. See Dukes, 131 S.Ct. at 2551 ("Frequently, that rigorous analysis' will entail some overlap with the merits of the plaintiff's underlying claim. That cannot be helped."). A court may probe beyond the pleadings to make whatever factual or legal inquiries are necessary to determine whether class treatment is appropriate. Szabo, 249 F.3d at 677. In the end, the court has "broad discretion to determine whether certification of a class action lawsuit is appropriate." Ervin v. OS Restaurant Servs., Inc., 632 F.3d 971, 976 (7th Cir. 2011).
Alma contends that Physicians' TCPA claim is subject to a unique or peculiar defense and, therefore, it cannot represent the putative class. CE Design Ltd. v. King Architectural Metals, 637 F.3d 721, 723 (7th Cir. 2011). Alma asserts that Physicians lacks standing to pursue its TCPA claim because the record is devoid of any evidence indicating that Alma sent Physicians any faxes, therefore negating the injury requirement of standing. Physicians counters that the evidence produced during class discovery is sufficient to establish an injury under the TCPA, conferring standing to pursue their claim. In the alternative, Alma contends if the Court does conclude that Physicians has standing to pursue its TCPA claims, that Physicians also cannot meet the threshold requirement of the putative class being ascertainable under Rule 23.
Alma's contention that Physicians is subject to a unique defense is actually an Article III standing argument posed as a bar to contest Physicians adequacy in representing the putative class. There has been ample debate concerning the propriety of a district court determining Article III standing of a class representative when faced with a class certification motion. In Payton v. County of Kane, 308 F.3d 673 (7th Cir. 2002), the Seventh Circuit invoked two U.S. Supreme Court cases in acknowledging the propriety, in certain circumstances, of addressing class certification before Article III standing and treating the class as a whole as the relevant entity for standing purposes. See Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997). In Payton, six named plaintiffs filed a class action against nineteen Illinois counties that had assessed arrestees a "bond fee" as a condition of their release, a practice allowed by Illinois statute. Even though the named plaintiffs resided in only two of the nineteen counties, the Seventh Circuit concluded that the district court erred in refusing to consider "whether these named plaintiffs may represent a class that includes people from the other [seventeen] named counties." Payton, 308 F.3d at 680. The question of class certification could precede an analysis of standing, the court observed, and then, "once a class is properly certified, statutory and Article III standing requirements must be assessed with reference to the class as a whole, not simply with reference to the individual named plaintiffs." Id. In ruling that a class action might well be appropriate, despite the apparent standing concerns, the court pointed out that the seventeen other counties "are following a common [state] statute (and this common factor assures that the representative has the same legal claim as the unnamed parties....)[.]" Id. at 681. The court concluded by emphasizing that the named plaintiff arrestees were not asserting standing to seek redress for an injury they did not share: "[t]hese putative representatives were personally injured by the operation of the very same [Illinois] statute that caused the injuries to all other members of the proposed class." Id. at 682 (emphasis added).
The basis for Physicians' claim differs significantly from the plaintiffs in Payton, due to Physicians eliciting the TCPA for redress as opposed to the plaintiffs in Payton challenging the validity of a state statute which they were injured by. Id. Many district courts have not delayed in determining whether an Article III case or controversy was properly before them before addressing class certification issues. In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig., 09 C 3690, 2013 WL 4506000, at *6 (N.D. Ill. Aug. 23, 2013); See also In re Potash Antitrust Litig., 667 F.Supp.2d 907, 923 (N.D. Ill. 2009), vacated and remanded on other grounds sub. nom., Minn-Chem, Inc. v. Agrium Inc., 657 F.3d 650 (7th Cir. 2011) (dismissing antitrust claims related to mineral price fixing asserted in jurisdictions where the named plaintiffs had not suffered an injury; the court concluded that Ortiz "does not compel a district court to delay reviewing Article III standing issues until after class certification" but instead requires an "appellate court simultaneously ...