Sunday, January 31, 2016

FYI: 9th Cir Affirms Denial of Class Cert in TCPA Action on Ascertainability and Predominance Grounds

The U.S. Court of Appeals for the Ninth Circuit recently affirmed a district court's order denying class certification in a lawsuit alleging violation of the federal Telephone Consumer Protection Act, 47 U.S.C. 227, et seq. ("TCPA"), holding that the "the district court did not abuse its discretion by finding the requirements of Rule 23(b)(3) unsatisfied," and that the "district court appropriately determined that it would be extremely difficult to ascertain the identities of the individuals who had not consented to receive the messages."

A copy of the Ninth Circuit's opinion is available at:  Link to Opinion.  A copy of the district court's order is available at: Link to Opinion

The defendants operate a pay-per-call "phone sex" and "sex text" service.  When calls arrive, the defendants disclose that continuing the call serves as consent to receiving special offers via text messages.  After making this disclosure, the defendants then instruct callers on how to opt-out of any future communications.  A potential customer who fails to opt-out receives a text message from the defendants' automated system within one week of the initial call.  Recipients who fail to opt-out or respond to the first text message receive a second text message approximately one week later.

The plaintiff alleged that he called the defendants' service by accident, and immediately hung up after realizing his mistake.  He also alleged that the defendants sent a text message to his phone approximately three weeks later. Because the plaintiff did not opt-out, he subsequently received a second text message from the defendants.

Filing suit under the TCPA, the plaintiff moved to certify a nationwide class consisting of all consumers that received one or more "unauthorized" text messages from the defendants.  The district court denied the plaintiff's motion, holding that the plaintiff's "proposed class is unascertainable and unidentifiable" and that the plaintiff also failed "to demonstrate that common questions predominate and that class action is the superior method of adjudication under Rule 23(b)(3)."

On appeal, the Ninth Circuit held that district court correctly determined that the plaintiff failed to meet the predominance and superiority requirements under Rule 23(b)(3).  

Under Rule 23(b)(3), a class can only be certified where "questions of law or fact common to class members predominate over any questions affecting only individual class members." Fed. R. Civ. P. 23(b)(3). These common questions must be a "significant aspect of the case" that can be determined for each class member in a single adjudication. See Berger v. Home Depot U.S.A., 741 F.3d 1061, 1068 (9th Cir. 2014).  In addition, a putative class plaintiff must demonstrate that "a class action is superior to other available methods for fairly and efficiently adjudicating the controversy."  Fed. R. Civ. P. 23(b)(3).

The Ninth Circuit explained that the "central issue" involved was whether each putative class member received unauthorized text messages. As the district court found, however, reaching this determination would require myriad individual inquiries into whether each class member: (1) called into the defendants' service purposefully or by accident;  (2) saw any advertisements disclosing the defendants' text messaging practices;  (3) heard the disclosure about the defendants' text messaging practices during the initial phone call; and  (4) attempted to opt-out of receiving text messages from the defendants.

Faced with these significant uncommon questions, the Ninth Circuit held that the district court did not abuse its discretion in finding that the plaintiff failed to demonstrate that common questions predominate, as required under Rule 23(b)(3).

For similar reasons, the Ninth Circuit agreed with the district court's finding that it would be "extremely difficult" to ascertain the identity of potential class members.

The district court explained that, although not explicitly referenced in Rule 23(a), a proposed class definition must provide an "administratively feasible" means of identifying class members without delving into the merits of the case.

The plaintiff's proposed class definition, however, consisted only of those who received "unauthorized" text messages. In light of the defendants' disclosure and opt-out procedures, the district court would necessarily have to conduct individual inquiries as to whether each potential class member consented to receiving the text messages at issue.  This would "render the proposed class not ascertainable or identifiable, because significant inquiry as to each individual class member would be required, as well as inquiry into the merits of the claim."  Stated differently, the trial court "would have to hold 'mini-trials' to determine who received unauthorized text messages and thus, who is a class member," in a process that be unmanageable. 

As a result, the Ninth Circuit held that the district court did not abuse its discretion in holding that the proposed class members were not "readily ascertainable."

Accordingly, the Ninth Circuit affirmed the district court's order denying the plaintiff's motion for class certification.

Eric Tsai
Maurice Wutscher LLP

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