The recent decision in Cholly v. Uptain Group, No. 15 C 5030, 2017 WL 449176 (N.D. Ill. Feb. 1, 2017), drives home the point—as we’ve discussed on the blog before—that sometimes the pleadings alone reveal that the requirements for class certification cannot possibly be met. In Cholly, the plaintiff alleged the defendant debt collector violated the Telephone Consumer Protection Act (“TCPA”) by calling her mobile phone using an automatic telephone dialing system (“ATDS”) after she had told the defendant to stop calling. The plaintiff sought to represent (i) a class of persons who received calls from the defendant where it did not have consent, and (ii) a subclass of persons who received calls after they revoked consent. But the district court struck all of the plaintiff’s class allegations under Federal Rule of Civil Procedure 12(f)—at the pleading stage and before discovery—and ordered that the case proceed on an individual basis.

At the outset, the court recognized that Rule 23(c)(1)(a) requires that it “determine whether to certify an action as a class action ‘[a]t an early practicable time’” and that a motion to strike class allegations under Rule 12(f) is an appropriate device to determine if the case will proceed as a class action. The court concluded that the plaintiff couldn’t satisfy the “typicality” requirement under Rule 23(a)(3) because she originally consented to the defendant’s calls and, thus, “cannot represent a class of persons who received calls from [the defendant] where [it] did not have express consent.”

The court held the plaintiff couldn’t represent the subclass either because she couldn’t meet the predominance requirement under Rule 23(b)(3). In particular, the court found that individual inquiries as to whether the putative class members revoked consent would predominate over any common questions of fact:

In order to determine whether each potential class member did in fact revoke his or her prior consent at the pertinent time, the [c]ourt would have to conduct class-members specific inquiries for each individual. The class members would not be able to present the same evidence that will suffice for each member to make a prima facie showing at the recipients of defendants’ telemarketing calls had validly revoked his or her prior consents.

The plaintiff has filed a petition for leave to appeal under Rule 23(f), and the Seventh Circuit directed the defendant to respond. We’ll report on any major developments.

The spate of class actions under the Telephone Consumer Protection Act (TCPA) isn’t ending anytime soon. And the risks to businesses have just increased in the Third Circuit, thanks to that court’s recent ruling that the TCPA permits consumers to retract consent to receiving calls on their cell phones placed by automatic telephone dialing systems.

The TCPA prohibits making any call to a cell phone “using any automatic telephone dialing system or an artificial or prerecorded voice” unless (among various exceptions) the call is made with the “prior express consent of the called party.” 47 U.S.C. § 227(b)(1)(A)(iii). Courts have upheld various ways of demonstrating “express consent,” including:

  • verbally, such as when the consumer orally provides a cell phone number as a contact number (Greene v. DirecTV, Inc., 2010 WL 4628734 (N.D. Ill. Nov. 8, 2010)); 
  • in writing, such as when a contract authorizes cell phone calls (Moore v. Firstsource Advantage, LLC, 2011 WL 4345703 (W.D.N.Y. Sept. 15, 2011)); and 
  • through a third party, such as when a spouse authorizes cell phone calls (Gutierrez v. Barclays Bank Group, 2011 WL 579238 (S.D. Cal. Feb. 9, 2011)).

But once consumers have consented to receiving these calls, can they rescind their consent? The TCPA’s text is silent on the subject. And although the FCC’s 1992 TCPA Order indicates that consumers who provide their cell phone number can give “instructions” that they don’t agree to receive autodialer calls, the order doesn’t address whether the consumer can give those instructions long after initially providing the cell phone contact number.

By contrast, other privacy statutes—such as the CAN-SPAM Act, the Junk Fax Protection Act, and the Fair Debt Collection Practices Act—have express provisions allowing consumers to opt out of receiving communications at any time. A number of district courts have concluded that the lack of a corresponding express provision in the TCPA means that consumers don’t have the statutory right to retract consent once it has been given. See, e.g., Osorio v. State Farm Bank, F.S.B., 2012 WL 1671780 (S.D. Fla. May 10, 2012); Cunningham v. Credit Mgmt., L.P. (pdf), 2010 WL 3791104 (N.D. Tex. Aug. 30, 2010); Starkey v. Firstsource Advantage, L.L.C. (pdf), 2010 WL 2541756 (W.D.N.Y. Mar. 11, 2010).

But in Gager v. Dell Financial Services, Inc. (pdf), the Third Circuit sided with courts that have taken the opposite view. See Adamcik v. Credit Control Servs., Inc., 832 F. Supp. 2d 744 (W.D. Tex. 2011); Gutierrez, supra.

The Third Circuit gave three reasons for its holding. In my view, each one is questionable.

Continue Reading Third Circuit Rules that TCPA Authorizes Consumers To Retract Consent to Cell Phone Calls

The requirement that the named plaintiff must be an adequate class representative is not often the basis for denying class certification. But a recent decision from the Northern District of Illinois in a false-advertising class action illustrates the importance of taking discovery on facts that are relevant to the adequacy standard.

In Lipton v. Chattem, Inc., the district court denied class certification in a case alleging that purchasers of a weight-loss product, Dexatrim, had been deceived because the label did not disclose that its ingredients included hexavalent chromium, which allegedly can cause serious health problems. The court held that the named plaintiff, Tracy Lipton, was not an adequate class representative because her deposition testimony made her subject to a potential defense not applicable to the class as a whole: she admitted that she had not heard of hexavalent chromium at the time of her purchase and that, even if the label had listed hexavalent chromium as an ingredient, she would have bought Dexatrim anyway. These admissions, the court explained, posed a “serious problem” for Lipton’s claims because a jury could easily find that she had not proved materiality and causation (elements of the fraud and statutory consumer-protection claims), reliance (an element of the fraud claim), or a connection between the alleged detriment to her and the alleged benefit to the defendant (a requirement for the unjust-enrichment claim). Those obstacles to proving a claim presumably would not exist for putative class members who knew what hexavalent chromium was or who would not have bought Dexatrim if it had been listed as an ingredient. The court stressed that it did not need to find that a jury would find against Lipton; it held that Rule 23(a)(4)’s adequacy requirement is not satisfied if a jury might find against the plaintiff on grounds not applicable to the class as a whole—the defense need only be “arguable” to defeat class certification on adequacy grounds. The court went on to note that the same potential defenses meant that common issues did not predominate over individual issues and that a class action was not superior to other methods of adjudicating the controversy. In particular, Lipton had not offered “any practicable way” for the court to efficiently resolve key liability issues “without conducting hundreds or thousands of mini-trials”—the same point the Seventh Circuit made with respect to individual damages issues in the Espenscheid case we recently discussed.

Lipton demonstrates why it is essential to question proposed class representatives carefully in depositions; the facts elicited may well reveal that they are subject to individualized defenses that may not apply to some members of the putative class. And sometimes the allegations of the complaint alone will indicate the same thing. In that instance, a defendant can use one of our favorite devices for defeating class certification without discovery—a motion to strike the class allegations. Finally, Lipton and Espenscheid both highlight that defendants faced with potential individualized issues in the case should emphasize the practical difficulties of resolving those issues in a single proceeding; if even one issue cannot be decided without hundreds of mini-trials for each class member, the case should not be certified in the first place.

Although the class action bar in general is eagerly awaiting the Supreme Court argument in Comcast Corp. v. Behrend (No. 11-864)—which will be argued November 5th—antitrust practitioners in particular have a keen interest in the case. The issue presented is whether a district court may certify a class action without first resolving whether an expert witness’s testimony that the case can be tried on a class-wide basis passes muster under Daubert, the standard for admissibility at trial.
Continue Reading Comcast Corp. v. Behrend: Upcoming Supreme Court Case Is Critical to Antitrust Class Actions