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Federal Court Grants Motion to Strike Class Allegations in TCPA Case

Posted in Ascertainability, Class Certification, Motions Practice

We’re big fans of filing an early motion to strike class allegations when it’s apparent from the pleadings that the class definition is fatally flawed. Why should a defendant be forced to submit to the wringer of class discovery before taking a swing at defeating class certification? A recent case involving Office Depot illustrates the successful use of that strategy.

In Lindsay Transmission LLC v. Office Depot Inc. (pdf) (E.D. Mo.), the plaintiff alleged that an Office Depot store had faxed him an advertisement in violation of the Telephone Consumer Protection Act (“TCPA”). The complaint demanded statutory damages on behalf of a putative nationwide class of fax recipients. Once the case entered the discovery phase, the plaintiff (predictably) sought broad discovery. Among other things, the plaintiff requested information regarding every advertising fax any Office Depot employee had sent since 2006, including the contents of each fax, the sending and receiving telephone numbers, and the make and serial number of the sending device. Office Depot calculated that interviewing store managers to compile the information would take at least 2,000 hours. And that was just one of the plaintiffs’ discovery requests.

As the parties fought over the discovery, Office Depot moved to strike the class allegations, arguing that the class defined in the complaint was an improper “fail-safe” class. A “fail-safe” class is one in which a person’s membership in the putative class turns on the merits of that person’s underlying claim. (These classes are called “fail-safe” because if a person’s claim fails on the merits, he or she no longer satisfies the class definition and thus is excluded from the class and not bound by the adverse judgment—a no-lose proposition. For more on fail-safe classes, please see our article (pdf) on how to remove such class actions to federal court.) The putative class excluded fax recipients who had consented to receiving the fax or who had an established business relationship with Office Depot—circumstances that would be defenses to a TCPA claim.

In response, the plaintiff argued that the motion was premature and that the propriety of class certification should await the conclusion of class discovery and the plaintiff’s motion to certify the class. And the plaintiff also noted that some courts had certified similarly defined classes in other TCPA cases.

The court rejected both arguments. It first noted that Rule 23 authorizes pre-discovery motions to strike class allegations by specifying that courts should “determine by order whether to certify the class as a class action” “at an early practicable time.” And the court agreed that the class defined in the complaint was a fail-safe class. The court recognized the existence of earlier cases certifying seemingly similar classes, but explained that they involved situations in which the challenged faxes or telephone calls had been sent by a third party who didn’t get consent from or have relationships with any of the recipients. In those cases, it would be possible to identify class members without evaluating the merits of the claims by simply looking at the caller’s or sender’s records of calls or faxes. By contrast, in this case, the challenged faxes allegedly were sent by Office Depot—which would have received consent from at least some putative class members or have an existing relationship with them—and thus individualized inquiries into each fax would be needed to determine class membership. The court therefore struck the class allegations—thus mooting the class discovery propounded by the plaintiff.

Lindsay is a reminder that an early motion to strike class allegations can be highly effective. Much of the pain that defendants face in class actions—and thus much of the corresponding settlement leverage that plaintiffs often have—comes from expensive class and pre-trial discovery. Even if the motion to strike ultimately is denied, the defendant might be able to narrow the class or at least send an early message that the class is flawed and should be closely scrutinized at the class-certification stage.