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Alpha Tech Pet Inc. v. LaGasse, LLC

United States District Court, N.D. Illinois, Eastern Division

November 3, 2017

Alpha Tech Pet Inc., et al., Plaintiffs,
LaGasse, LLC, et al., Defendants.


          Thomas M. Durkin United States District Judge

         Plaintiff Alpha Tech Pet, Inc. alleges that defendants LaGasse LLC, Essendant Management Services LLC, Essendant Co., and United Stationers, Inc. (“defendants”) sent Alpha Tech eight unsolicited fax advertisements in violation of the Telephone Consumer Protection Act of 1991 (“TCPA”), as amended by the Junk Fax Protection Act of 2005. R. 1. Alpha Tech also makes class allegations on behalf of others similarly situated. In December 2016, the Court consolidated Alpha Tech's case with another case pending in this district for pre-trial proceedings. R. 45. The other case, Craftwood II, Inc. et al. v. Essendant, Inc., No. 16-cv-4321, asserts the same claims against Essendant and effectively seeks to represent the same class.[1]

         The Alpha Tech and Craftwood plaintiffs (“plaintiffs”) seek to certify classes of all persons and entities to whom Essendant sent fax transmissions from May 1, 2011 to May 1, 2015, which would implicate approximately 1.5 million faxes in 725 separate transmissions to nearly 24, 000 unique fax numbers. R. 71-2 ¶ 35; R. 71-3 ¶ 5. Plaintiffs propose dividing the class into three categories based on the content of the faxes. R. 96 at 4-5. Discovery closed a number of months ago, and on August 23, 2017, this Court adopted Magistrate Judge Valdez's August 1, 2017 ruling denying plaintiffs' motion to reopen discovery. R. 93.

         Currently before the Court are two motions by defendants: (1) a motion to deny class certification (R. 70); and (2) a motion for judgment on the pleadings on portions of plaintiffs' individual claims (R. 67). The central basis of both motions is a recent change in the law. In March 2017, a split panel of the D.C. Circuit struck down a rule from the Federal Communications Commission (“FCC”) rule requiring both unsolicited and solicited faxes to include opt-out notices with certain language. The D.C. Circuit held this rule, known as the “Solicited Fax Rule, ” “unlawful to the extent that it requires opt-out notices on solicited faxes.” Bais Yaakov of Spring Valley v. FCC, 852 F.3d 1078, 1083 (D.C. Cir. 2017). It found that the TCPA's clear statutory text reached only unsolicited fax advertisements, meaning that the FCC did not have the authority to promulgate a rule regarding solicited faxes. Id. at 1082 (“Congress drew a line in the text of the statute between unsolicited fax advertisements and solicited fax advertisements.”).

         Since Bais Yaakov was decided earlier this year, several courts have found class certification inappropriate in TCPA cases where, “to determine whether any putative member of the proposed class had a TCPA claim, the Court would first be required to determine whether that proposed class member ‘solicited' the faxes it received.” Brodsky v. HumanaDental Ins. Co., 2017 WL 3704824, at *10 (N.D. Ill. Aug. 28, 2017) (Blakey, J.); accord Sandusky Wellness Ctr., LLC v. ASD Specialty Healthcare, Inc., 863 F.3d 460, 467-74 (6th Cir. 2017), as corrected on denial of reh'g en banc (Sept. 1, 2017). This Court likewise finds Bais Yaakov binding and the individualized consent issues created by Bais Yaakov dispositive of plaintiffs' class certification claims. The Court therefore grants defendants' motion to deny class certification.

         Because motions for judgment on the pleadings are technically improper when they pertain only to parts of claims, the Court denies defendants' motion for judgment on the pleadings. But the legal principles set forth in this opinion regarding the impact of Bais Yaakov apply equally to plaintiffs' remaining, individual claims.


          I. Motion to Deny Class Certification

         A. Standard

          Although “in most cases involving a proposed class, it is the plaintiffs who move for class certification . . . under Fed.R.Civ.P. 23(c)(1), either party may ask the court to determine whether class certification is appropriate.” Blihovde v. St. Croix Cnty., Wis., 219 F.R.D. 607, 612 (W.D. Wis. 2003) (citing Cook Cnty. College Teachers Union v. Byrd, 456 F.2d 882, 885 (7th Cir. 1972) (“One opposing a class action may move for an order determining that the action may not be maintained as a class suit.”) & 7AA Fed. Prac. & Proc. Civ. § 1785 (3d ed.) (“Either plaintiff or defendant may move for a determination of whether the action may be certified under Rule 23(c)(1).”)).

         To be certified, a putative class must satisfy the four prerequisites of Federal Rule of Civil Procedure 23(a): numerosity, commonality, typicality, and adequacy of representation. Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 811 (7th Cir. 2012). The action also must satisfy at least one of the three subsections of Rule 23(b). Id. Here, plaintiffs seek certification under Rule 23(b)(3), R. 98, which requires a finding that “questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” “Plaintiffs bear the burden of showing that a proposed class satisfies the Rule 23 requirements.” Messner, 669 F.3d at 811. “The Rule does not set forth a mere pleading standard”; rather, the plaintiff must satisfy Rule 23 “through evidentiary proof.” Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013). “Such an analysis will frequently entail ‘overlap with the merits of the plaintiff's underlying claim, '” id. at 33-34 (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351 (2011)), but “[m]erits questions may be considered . . . only to the extent . . . that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied.” Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 568 U.S. 455, 466 (2013).

         District courts have “broad discretion” when determining whether a proposed class satisfies Rule 23. Howland v. First Am. Title Ins. Co., 672 F.3d 525, 528 (7th Cir. 2012); see also Dukes, 564 U.S. at 369 (“[M]ost issues arising under Rule 23 . . . [are] committed in the first instance to the discretion of the district court.”).

         B. Application

         Defendants argue plaintiffs cannot show that their proposed classes meet Rule 23's requirements in light of the individualized consent issues resulting from the D.C. Circuit's decision in Bais Yaakov. Plaintiffs respond that Bais Yaakov is not governing law in this circuit, and in any event, individualized consent issues do not defeat class certification (which they seek further discovery to help show). The Court disagrees on both fronts.

         1. Impact of Bais Yaakov

         Plaintiffs make three arguments as to why Bais Yaakov is not controlling or relevant here. First, plaintiffs claim that Bais Yaakov is binding only in the D.C. Circuit and not in this Circuit. The Sixth Circuit in Sandusky explained why this is not correct. In Bais Yaakov, the Judicial Panel on Multidistrict Litigation (“JPML”) consolidated in the D.C. Circuit several petitions for review originally filed in multiple courts of appeals seeking to set aside the FCC's Solicited Fax Rule. See Sandusky, 863 F.3d at 464, 467. “Once the [JPML] assigned petitions challenging the Solicited Fax Rule to the D.C. Circuit, that court became ‘the sole forum for addressing . . . the validity of the FCC's rule.'” Id. at 467 (quoting Peck v. Cingular Wireless, LLC, 535 F.3d 1053, 1057 (9th Cir. 2008)). “And consequently, its decision striking down the Solicited Fax Rule ‘became binding outside of the [D.C. Circuit].'” Id. (quoting Peck, 535 F.3d at 1057 (holding that Eleventh Circuit's decision challenging FCC order is binding in the Ninth Circuit)).

         As the Sandusky court further explained, “[t]his result makes sense in light of the procedural mechanism Congress has provided for challenging agency rules. See 28 U.S.C. §§ 2112, 2342-43. By requiring petitioners to first bring a direct challenge before the FCC, the statute allows this expert agency to weigh in on its own rules, and by consolidating petitions into a single circuit court, the statute promotes judicial efficiency and ensures uniformity nationwide.” Id.; accord CE Design Ltd. v. Prism Bus. Media, Inc., 606 F.3d 448, 450 (7th Cir. 2010) (consolidation of petitions into a single circuit court “allows uniform, nationwide interpretation” ...

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