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Toney v. Quality Resources, Inc.

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

February 12, 2018

SARAH TONEY, Plaintiff,
QUALITY RESOURCES, INC., et al., Defendants.


          Ruben Castillo Chief Judge United States District Court.

         Plaintiff Sarah Toney ("Toney") moves for class certification pursuant to Federal Rule of Civil Procedure 23 in her action alleging that Quality Resources, Inc. ("Quality") and its sole owner, Cheryl Mercuris ("Mercuris"), [1] (collectively, the "Defendants") violated the Telephone Consumer Protection Act (the "TCPA"), 47 U.S.C. § 227. (R. 313, Fourth Am. Compl.; R. 372, Nov. 17, 2017, Mot. for Class Certification.) For the reasons stated below, Toney's motion is granted as set forth herein, RELEVANT FACTS[2]

         On December 8, 2012, Toney purchased slippers online from Infomercials, Inc., d/b/a "Stompeez." (R. 373-4, Quality's Resp. to Pl's First Disc. Reqs. at 4.) The online order form on Stompeez's website required a Stompeez costumer to submit his or her phone number "for questions about [the] order." (R. 329, Answer to Fourth Am. Compl. ¶ 37.) Toney completed the online form and submitted her phone number. (Id.)

         Stompeez's website also had a privacy policy, which provided that "the information we collect is used to communicate with you about your product orders and shared with other organizations to help them contact consumers by e-mail and/or telephone for marketing purposes." (R. 149, Pl's Resp. to Defs.' Statement of Material Facts ¶ 2-3 (internal alterations and emphasis omitted).) The policy also stated that "by using any of the Websites, you signify that you have read, understand and agree to be bound by this Privacy Policy." (Id. at 3 (internal alteration omitted).)

         On December 10 and 11, 2012, Quality called Toney through an automated dialer as part of its telemarketing business. (R. 373-4, Quality's Resp. to Pl's First Disc. Reqs. at 4-5, 7-9; R. 329, Answer to Fourth Am. Compl. ¶¶ 51-52, 54; R. 251-3, Quality 30(b)(6) Dep. Tr. at 140-41.) During those calls, Quality offered Toney a product by the name of "Budget Savers, " which is a product sold by Sempris, LLC that offers discounts on entertainment, dining, travel, and other purchases for a monthly fee. (R. 373-4, Quality's Resp. to Pl's First Disc. Reqs. at 4-5; R, 251-3, Quality 30(b)(6) Dep. Tr. at 11-12, 141-42.)

         Stompeez sold its customers' telephone information to Quality for $1.50 per customer. (R. 251-3, Quality 30(b)(6) Dep. Tr. at 81.) Quality, in turn, had a contract with Sempris, under which Quality would call Stompeez customers to market Sempris' products, such as Budget Savers. (R. 329, Answer to Fourth Am. Compl. ¶¶ 57-61, 64-65; R. 251-3, Quality 30(b)(6) Dep. Tr. at 11-12, 136-40.) Quality placed marketing calls through a computerized program called "VICI Dial, " which automatically dials telephone numbers inputted into the program, and, once a person answers a call, the call is routed to a Quality employee or representative. (R. 373-4, Quality's Resp. to Pl's First Disc. Reqs. at 7-8, 12; 251-3, Quality 30(b)(6) Dep. Tr. at 22-23.)

         Quality developed a script to market Budget Savers that it adhered to on its telemarketing calls. (251-3, Quality 30(b)(6) Dep. Tr. at 72-74; R. 373-1, Telemarketing Script.) Quality would first verify a Stompeez costumer's online purchase, then market Budget Savers, and then market a second product if the customer accepted Quality's offer for Budget Savers. (R. 251-3, Quality 30(b)(6) Dep. Tr. at 97-98.) Quality placed thousands of automated calls, and its telemarketing operation resulted in at least 500 complaints from 2008 to 2013, which Quality tracked internally. (R. 373-3, Quality "Complaint Chart"; R. 373-4, Quality's Resp. to Pl's First Disc. Reqs. at 8-9.)

         Quality produced its outgoing call data to Toney, which Toney provided to her expert, Jeffery Hansen. (R. 372-5, Hansen Report at 23-24.) From this data, Hansen opines that Quality called 35, 191 unique cell phone numbers. (Id.) Toney offers, as a "class list, " a list of 35, 191 unique cell phone numbers that Quality called. (R. 372, Nov. 17, 2017, Mot. for Class Certification at 13, 15.)


         This action began on January 3, 2013, when Toney filed her first class action complaint alleging violations of the TCP A. (R. 1, Compl.) Toney then amended her complaint several times, (R. 26, Am. Compl.; R. 60, Second Am. Compl.; R. 133, Third Am. Compl.), filed motions for class certification, (R. 4, Jan. 3, 2013, Mot. for Class Certification; R. 63, Refiled Mot. for Class Certification), and District Judge John F. Grady subsequently stayed the action pending mediation, (R. 128, Min. Entry). In the middle of 2014, the stay was lifted and the case was then reassigned to District Judge Amy St. Eve. (R. 132, Min. Entry (lifting the stay); compare R. 129, Tr. (indicating that Judge Grady presided over the case in the Spring of 2014), with R. 138, Min. Entry, and R. 147, Min. Entiy (indicating that Judge St. Eve presided over the case in the Summer of 2014).)

         On August 21, 2014, Quality moved to dismiss and for summary judgment on the claims in the operative complaint at the time, the Third Amended Complaint. (R. 140, Mot. to Dismiss.) On December 1, 2014, Judge St. Eve denied Quality's motion. (R. 168, Mem. Op. at 1.)

         In a memorandum opinion, Judge St. Eve rejected Quality's argument that Toney failed to state a claim for TCP A violations, and found that Toney sufficiently put each defendant on notice of her TCPA claims. (R. 168, Mem. Op. at 6-7.) Quality also argued that Toney indisputably consented to its telephone calls, which merited dismissal or summary judgment against Toney on her claims. (Id. at 7-15.) Judge St. Eve disagreed, ruling that Toney sufficiently alleged that the scope of her consent to Quality's calls was limited to questions about an online order and did not include consent to receive a telemarketing call for another party's product. (Id. at 15.) Judge St. Eve also rejected Quality's argument that it procured Toney's consent to telemarketing calls through the privacy policy on Stompeez's website, reasoning that Quality failed to submit any evidence indicating that Toney saw the privacy policy or agreed to it. (Id. at 15-17.) Judge St. Eve also reasoned that the privacy policy did not clearly provide that Toney could be contacted for marketing by third parties. (Id.) Therefore, Judge St. Eve concluded that dismissal or summary judgment was not appropriate at the pleadings stage. (Id. at 15.) Two weeks after this opinion, on December 15, 2014, this case was reassigned to yet another judge, District Judge Milton Shadur. (R. 170, Executive Committee Order (reassigning case to Judge Shadur).)

         On October 28, 2015-almost a year after the decision on Quality's motion to dismiss and for summary judgment-Toney again moved for class certification. (R. 213, Mot.) On November 13, 2015, Judge Shadur denied that motion without prejudice, and, on December 1, 2015, subsequently stayed the case pending the U.S. Supreme Court's rulings related to Article III standing in Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016), as revised (May 24, 2016) and Campbett-Ewald Co. v. Gomez, 136 S.Ct. 663 (2016), as revised (Feb. 9, 2016), which Judge Shadur reasoned could potentially affect Toney's standing. (R. 224, Min. Entry; R. 225, Mot. to Stay; R. 230, Min. Entry (granting motion to stay); R. 231, Tr. at 6-8.) The case then largely remained inactive until July 5, 2016, at which time Toney filed a motion seeking preliminary approval of a class action settlement between Toney and the class on the one hand, and then-Defendant Sempris on the other. (R. 241, Mot. for Prelim. Approval of Class Action Settlement.) That motion also sought certification of the settlement class, which Toney defined as:

All persons who are or were the subscribers and/or customary users of the telephone numbers on the Class List, and to whom, from January 3, 2009 through the date of preliminary approval, Quality Resources, Inc., made a call or calls in connection with Stompeez Kids Slippers purchases. The following persons are excluded from the Settlement Class: Sempris, any parent, subsidiary, or affiliate of Sempris, the officers, directors, agents, servants, or employees of any of the foregoing as of the entry of the Preliminary Approval Order, Class Counsel, the Settlement Administrator, the Mediator, and any judge presiding over the Action.

(Id. at 4.) On August 16, 2016, Judge Shadur granted preliminary approval of the settlement, accepting Toney's proposed class definition for settlement purposes. (R. 267, Prelim. Approval Order at 2-3 .)[3]

         On September 22, 2016, Toney filed her fourth amended complaint, which is currently the operative complaint in this case. (R. 291 and R. 313, Fourth Am. Compl.) It alleges that Defendants and Sempris violated the TCPA by making unsolicited telemarketing calls to phone numbers on the national "Do Not Call Registry, " and that they also violated the TCPA by using an automated dialer to call cell phones as part of a telemarketing campaign. (Id. ¶¶ 95-128, 182-215.) Toney also claims that Defendants orchestrated fraudulent transfers of Quality's assets to Mercuris, rendering Quality unable to satisfy a potential judgment in this case. (Id. ¶¶ 129-45.) Finally, Toney claims that Mercuris is personally liable for Quality's conduct, and that Defendants are in breach of an indemnity agreement with Sempris that allegedly requires Quality to pay for Sempris' attorney's fees and provide funds to satisfy any amounts owed to Toney and the settlement class as a result of Sempris' settlement in this case. (Id. ¶¶ 146-81.)

         On December 1, 2016, Judge Shadur issued an order granting final approval of the Sempris settlement. (R. 312, Final Approval Order.) Judge Shadur ruled that the Sempris settlement was fair, reasonable, and in the best interest of the settlement class, and Judge Shadur entered final judgment dismissing Sempris from the case with prejudice. (Id. at 2-5.) Judge Shadur also ruled in the same order that the settlement class satisfied Rule 23's class certification requirements. (Id. at 3.) Following Sempris' dismissal, the only Defendants remaining in this case are Quality and Mercuris.[4] (See R. 313, Fourth Am. Compl.)

         After Judge Shadur's approval of the Sempris settlement, Toney moved again for class certification on January 6, 2017. (R. 318, Jan. 6, 2017, Mot. for Class Certification.) On August 15, 2017, Judge Shadur, contemplating retirement, granted Toney's motion for class certification in a short, two-page order, so as not to "shift the responsibility for the class certification decision to an assignee judge who would be required to start from scratch[.]" (R. 363, Order at 2.)

         This Court expressly commends Judge Shadur's attempt to manage this difficult litigation while battling medical issues that ultimately took his life on January 15, 2018. Judge Shadur was the longest serving senior judge on this Court. As a senior judge, he essentially worked as a pro bono judge.

         The case was reassigned to this Court on August 28, 2017, and, on October 12, 2017, the U.S. Court of Appeals for the Seventh Circuit reversed and remanded Judge Shadur's August 15 order granting class certification. (R. 364, Executive Committee Order; R. 369, Seventh Circuit Order.) The Seventh Circuit observed that "[i]nstead of engaging in analysis under Federal Rule of Civil Procedure 23, the district court granted class certification based on 'the reasons advanced by Toney in her original motion and in her reply' concluding that 'there is really no need to repeat here the arguments powerfully presented in both those submissions.' " (Id. at 2.) The Seventh Circuit rejected Judge Shadur's heavy reliance on his prior order granting class certification for the Sempris settlement, reasoning that the proposed classes for the Sempris settlement and in Toney's motion for class certification "are not described exactly the same way, however, and so the exact parameters of the class remain unclear." (Id.) Thus, the Seventh Circuit ordered this Court to "explicitly define the class and provide a fuller discussion of its analysis under Federal Rule of Civil Procedure 23." (Id.)

         On November 17, 2017, Toney then filed the motion for class certification that is now before this Court. (R. 372, Nov. 17, 2017, Mot. for Class Certification.) Therein, Toney seeks certification of the following class pursuant to Rule 23(b)(3):

All persons who are or were the subscribers of the telephone numbers on the Class List, and to whom, from January 3, 2009 through the date of preliminary approval, [5] Quality Resources, Inc., made a call or calls through its Vicidial calling system on their cellular telephones promoting Sempris goods, and where the cell phone number was obtained as a result of a transaction at the website The following persons are excluded from the Class: Quality, any parent, subsidiary, or affiliate of Quality, Ms, Mercuris and the officers, directors, agents, servants or employees of Quality as of the entry of the Preliminary Approval Order, Class Counsel, and any judge presiding over the Action.

(Id. at 1-2.) Toney argues that the legal and factual issues common to all class members are: whether the automated dialer used by Quality to call Toney and others similarly situated was prohibited by the TCP A, and whether providing one's telephone number as part of an online transaction for "questions about the order" can constitute consent to receive marketing calls unrelated to the order from a third party. (Id. at 2.) Thus, Toney contends that this case satisfies all of the requirements under Rule 23(a) for class certification: numerosity, commonality, typicality, and adequacy. (Id. at 3.) She also argues that this case satisfies the requirements of 23(b)(3) because common questions of law and fact predominate among the class members and because a class action is the best way to efficiently adjudicate this case. (Id. at 19-24.) Toney submits that the Court should certify the proposed class because it is almost the same as the Sempris settlement class that Judge Shadur previously certified. (Id. at 1 n.l, 3, 12-14, 18, 23.)

         In response, Defendants argue that the class is not ascertainable because Toney's expert has failed to employ a reliable methodology to identify the exact persons that Quality called. (R. 382, Resp. at 11-15.[6]) Defendants also maintain that the issue of whether persons in the class consented to Quality's telephone calls, by way of Stompeez's online privacy policy or other means, is a highly individualized issue, incapable of being resolved as a class action. (Id. at 15-27, 32-33.) Defendants contend that there are other individualized issues that cannot be resolved on a class-wide basis, such as whether Defendants acted "knowingly" or "willfully" and whether Mercuris can be held personally liable for Quality's conduct. (Id. at 27.) Finally, Defendants argue that Toney's motion must fail because she provides no evidence that Quality's automated dialer satisfies the TCPA's definition of an "automated telephone dialing system" ("ATDS"). (Id. at 27-29.)


         In order to grant class certification under Rule 23, the Com! must be "satisfied, after a rigorous analysis" that the Rule's requirements are met. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350-51 (2011) (citation omitted). "Failure to meet any of the Rule's requirements precludes class certification." Harper v. Sheriff of Cook Cty., 581 F.3d 511, 513 (7th Cir. 2009) (citation omitted). Satisfaction of these requirements, on the other hand, categorically entitles a plaintiff to pursue her claim as a class action. See Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins., 559 U.S. 393, 398-99 (2009).

         Toney bears the burden of proving each disputed requirement by a preponderance of the evidence. Bell v. PNC Bank, Nat. Ass'n, 800 F.3d 360, 373 (7th Cir. 2015); see also Chapman v. Wagener Equities, Inc., No. 09 C 07299, 2014 WL 540250, at *4 (N.D. Ill. Feb. 11, 2014) (observing that plaintiffs "need not make" their class certification showing "to a degree of absolute certainty"). As such, "[o]n issues affecting class certification ... a court may not simply assume the truth of the matters as asserted by the plaintiff." Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 811 (7th Cir. 2012). "If there are material factual disputes, the court must receive evidence and resolve the disputes before deciding whether to certify the class." Id. (citation and internal quotation marks omitted). A court must therefore "make whatever factual and legal inquiries are necessary to ensure that requirements for class certification are satisfied before deciding whether a class should be certified, even if those considerations overlap the merits of the case." Am. Honda Motor Co. v. Allen, 600 F.3d 813, 815 (7th Cir. 2010); see also Wal-Mart, 564 U.S. at 350 ("A party seeking class certification must affirmatively demonstrate his compliance with the Rule-that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc."). District courts have broad discretion in determining whether a plaintiff has satisfied her burden of establishing the requirements for class certification. See Reiter v. Sonotone Corp., 442 U.S. 330, 345 (1979); Messner, 669F.3dat811.


         To prevail on a motion for class certification, a plaintiff must demonstrate first, pursuant to Rule 23(a), that:

(1) the class is so numerous that joinder of all members is impracticable (numerosity);
(2) there are questions of law or fact common to the class (commonality);
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class (typicality); and
(4) the representative parties will fairly and adequately protect the interests of the class (adequacy of representation).

Bell, 800 F.3d at 373 (citation omitted); see also Fed. R. Civ. P. 23(a).

         Second, "the proposed class must satisfy at least one of the three requirements listed in Rule 23(b)." Wal-Mart, 564 U.S. at 345; see also Fed. R. Civ. P. 23(b). Out of these three requirements, Toney argues that class certification is appropriate under Rule 23(b)(3). (R. 372, Nov. 17, 2017, Mot. for Class Certification at 3.) A court may certify a Rule 23(b)(3) class where "questions of law and fact common to members of the class predominate over any questions affecting only individual members, and ... a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed.R.Civ.P. 23(b)(3).

         Separate and apart from the above requirements in Rule 23(a) and (b)(3), "a class must be sufficiently definite that its members are ascertainable." Jamie S. v. Milwaukee Pub. Sck, 668 F.3d 481, 493 (7th Cir. 2012); Oshana v. Coca-Cola Co., 472 F.3d 506, 513 (7tb Cir. 2006) ("The plaintiff must also show ... that the class is indeed identifiable as a class."). Defendants argue that the proposed class cannot be ascertained, and that Toney fails to satisfy Rule 23's requirements. (R. 382, Resp. at 1-3.) The Court first addresses the threshold issue of whether the class is ascertainable, and then addresses whether Toney satisfies the requirements for class certification under Rule 23(a) and (b)(3).

         I. Whether the Class is Ascertainable

         A. Hansen's Report

         As a preliminary matter, Defendants argue that Toney's proposed class is not ascertainable because her expert, Jeffery Hansen, fails to reliably identify the persons subscribed to the unique cell phone numbers that Quality called. (R. 382, Resp. at 11-15.) Defendants, therefore, contend that Hansen's report is inadmissible under the Federal Rules of Evidence as construed by the U.S. Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc. 509 U.S. 579 (1993). (Id. at 15.) "When an expert's report or testimony is critical to class certification, [the Seventh Circuit has] held that a district court must make a conclusive ruling on any challenge to that expert's qualifications or submissions before it may rule on a motion for class certification." Messner, 669 F.3d at 812 (citation and internal quotation marks omitted). Even when "a district court has doubts about whether an expert's opinions may be critical for a class certification decision, the court should make an explicit Daubert ruling." Id. Thus, before reaching the merits of whether Toney's proposed class is ascertainable, the Court first considers whether Hansen's report is admissible.

         The admissibility of expert testimony is governed by Federal Rule of Evidence 702 and the Supreme Court's decision in Daubert. C. W. ex rel Wood v. Textron, Inc., 807 F.3d 827, 834 (7th Cir. 2015). "In performing its gatekeeper role under Rule 702 and Daubert, the district court must engage in a three-step analysis before admitting expert testimony." Gopalratnam v. Hewlett-Packard Co., 877 F.3d 771, 779 (7th Cir. 2017) (citation and internal quotation marks omitted). "[T]he district court must evaluate: (1) the proffered expert's qualifications; (2) the reliability of the expert's methodology; and (3) the relevance of the expert's testimony. Steps one and three are not at issue" Id. (emphasis in original).

         "A Daubert inquiry is not designed to have the district judge take the place of the jury to decide ultimate issues of credibility and accuracy." Lapsley v. Xtek, Inc., 689 F.3d 802, 805 (7th Cir. 2012). "If the proposed expert testimony meets the Daubert threshold of relevance and reliability, the accuracy of the actual evidence is to be tested before the jury with the familiar tools of vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof " Id. (quoting Daubert, 509 U.S. at 596). The Court is given "wide latitude in performing its gatekeeping function and determining both how to measure the reliability of expert testimony and whether the testimony itself is reliable." Id. (citation omitted); see also C.W., 807 F.3d at 834-35 (ruling that the "district court is the gatekeeper of expert testimony" and that an expert's "reliability is determined on a case-by-case basis"). "The proponent of the expert bears the burden of demonstrating that the expert's testimony would satisfy the Daubert standard." Lewis v. CITGO Petroleum Corp., 561 F.3d 698, 705 (7th Cir. 2009). "[R]ejection of expert testimony is the exception rather than the rule." Fed.R.Evid. 702, advisory committee notes (2000 Amendments).

         1. Hansen's Qualifications

         Defendants do not attack Hansen's qualifications as an expert witness, but instead argue that he has not employed a reliable methodology to support his findings regarding the unique cell phone numbers Quality called through its telemarketing campaign. (R. 382, Resp. at 1, 12-15.) ...

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