In 1991, Congress enacted the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C.A. § 227. In pertinent part, the TCPA bans the sending of unsolicited advertisements to recipients via facsimile, and it establishes several remedies, including a private right of action whereby the plaintiff can recover $500 or actual damages – whichever is greater – for each violation. In a case of first impression in New Jersey, the Appellate Division held that the plaintiff could not maintain a class action to enforce the TCPA’s private cause of action. Local Baking Products, Inc. v. Kosher Bagel Munch, Inc., ___ N.J. Super. ___ (App. Div. 2011).
On May 19, 2006, the plaintiff received an unsolicited one-page fax from the defendant – a local restaurant – that highlighted its services. The defendant had hired a company to send out a “blast fax” advertising its services; that blast was received by approximately 4,649 fax machines. The plaintiff filed a complaint pursuant to the TCPA on its behalf as well as a specified class that had also received unsolicited faxes from the defendant. The trial court dismissed the plaintiff’s complaint, ruling that a class action could not be maintained under the TCPA. The Appellate Division affirmed.
The Appellate Division started its analysis by focusing on the TCPA’s prohibition on the sending of any unsolicited advertisements via facsimile and the statute’s three exceptions to that ban. After recounting the statutory definition of an unsolicited advertisement, the court identified the three means of relief provided by the TCPA: 1) court and regulatory action by the Federal Communications Commission for a violation of the regulations established under the TCPA; 2) civil action by a state’s Attorney General or designated official; and 3) a private action brought by a private person or entity if permitted by local state law in a state court for injunctive relief and a monetary recovery.
The private cause of action was enacted to allow a consumer the chance to appear in small claims court without an attorney to recover monetary damages. The Congressional drafters assumed that for most violations the $500 award would be the amount of recovery, thereby “motivat[ing] private redress of a consumer’s grievance through a relatively simple claims court proceeding, without an attorney.”
Turning to the plaintiff’s class action allegations, the Appellate Division reviewed Rule 4:32-1, which governs class action certification. After reviewing those requirements, the court explained that the issues in this lawsuit “are whether the proposed class raises ‘questions of law or fact common to the members of the class [that] predominate over any questions affecting only individual members [(commonality and predomination)], and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy [(superiority)].” After discussing the standards that governed its analysis of the class action issues, the Appellate Division rejected the plaintiff’s argument that the trial court’s ruling was inconsistent with United Consumer Financial Services Co. v. Carbo, 410 N.J. Super. 280 (App. Div. 2010), which considered a class action under the Truth-in-Consumer Contract, Warranty and Notice Act.
Acknowledging that no published New Jersey decision had resolved the issue of class actions under the TCPA, the Appellate Division surveyed decisions from other states and federal courts, finding that there was a “lack of uniformity as to approach and result.” Expressing its doubt that the plaintiff could satisfy the commonality and typicality requirements of Rule 4:32-1, the Appellate Division ultimately concluded that the plaintiff could not satisfy the predominance and superiority criteria. Specifically, the court declared that “a class action suit is not a superior means of adjudicating a TCPA suit.” The court stressed that by providing consumers with a statutory award of $500, Congress had offered aggrieved parties with an adequate incentive to pursue their claims without having to resort to a class action in order to aggregate many small claims.
Furthermore, the Appellate Division pointed out that “[t]he combination of the TCPA’s design and New Jersey’s procedures suggests that the benefit of a class action has been conferred on a litigant by the very nature of the procedures employed and relief obtained. The cost of litigating for an individual is significantly less than the potential recovery.” Lastly, the court reasoned that the facts that were necessary to succeed on an individual claim would be identical to the facts needed simply to be identified as a class member. Consequently, the Appellate Division opined that “[w]e discern no superiority in such a situation. In sum, the class action cannot meet the superiority test and is inappropriate here."