In Bridgeview Health Care Center, Ltd. v. Jerry Clark d/b/a Affordable Digital Housing, No. 14-3728 (7th Cir. March 21, 2016), the Seventh Circuit issued a multilayered decision regarding the use of subclasses under Fed. R. Civ. P. 23(c)(5), the adequacy/typicality elements of when a named plaintiff may represent a discrete “group” of class members under Fed. R. Civ. P. 23(a), and vicarious liability under the Junk Fax provisions of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”).
Jerry Run d/b/a Affordable Digital Hearing (“Affordable Digital”) is a small company located in Terra Haute, Indiana. Affordable Digital hired third-party Business to Business Solutions (“B2B Solutions”) to send 100 faxes to local businesses within a 20-mile radius of Affordable Digital. Unbeknownst to Affordable Digital, B2B Solutions actually faxed nearly 5,000 faxes across three different states. Bridgeview Health Care, a serial TCPA plaintiff, was one of the business that received a fax outside of the 20-mile advertising radius approved by Affordable Digital. Bridgeview sued Affordable Digital, seeking to hold it liable for all of the faxes sent by B2B Solutions.
The district court certified the class and granted partial summary judgment in favor of Bridgeview on Affordable Digital’s liability for faxes sent within the approved 20-mile radius, and entered judgment against Affordable Digital in the amount of $16,000. After a bench trial, the district court held that Affordable Digital was not liable for faxes sent beyond the approved 20-mile radius, and entered judgment in favor of Affordable Digital.
This results, however, in a final judgment in which a group of class members obtain recovery even though the defendant is not liable to the class representative. Both parties appealed to the Seventh Circuit—Bridgeview arguing that the district court erred in finding Affordable Digital not liable for faxes send outside of 20-mile radius, and Affordable Digital arguing that the district court abused its discretion in certifying one class rather than two subclasses and in declining to decertify the class when it was found not liable to the class representative.
The Seven Circuit noted that “[w]hen a third party acted on the sender’s behalf, district courts … analyzed the sender’s liability under a combination of agency and direct liability theories,” owing to the fact that a sender under Junk Fax provisions is the person “on whose behalf” a third-party sent a fax. However, the Seventh Circuit held that because a “sender” is the person “on whose behalf” a third-party sent a fax, “agency rules are properly applied to determine whether an action is done ‘on behalf’ of a principal.” Because there was no evidence that Affordable Digital had authorized B2B to send faxes outside of the approved 20-mile radius, the court affirmed that Affordable Digital was not vicariously liable.
The Seventh Circuit also affirmed the district court’s denial of Affordable Digital’s motion to decertify. The court held that creating subclasses of fax recipients inside and outside of the 20-mile radius was not necessary because so long as the class representative could adequately protect the interests of both groups. The court recognized that even though the outcomes “don’t seem to add up,” in that the named plaintiff did not recover while certain class members did, the class representative was in the same position in terms of his advocacy of both groups of class members.