Finding that the question of consent in a Telephone Consumer Protection Act (TCPA) class action requires an individualized inquiry and without a list of recipients the class cannot be ascertained, the U.S. Court of Appeals, Sixth Circuit declined to certify a class of tens of thousands of plaintiffs in a junk fax case.

In 2007, ASD Specialty Healthcare purchased from a third-party data provider contact information consisting of a list of 53,502 physicians’ names. The distributor of pharmaceuticals and medical products hired a fax broadcaster to send a one-page fax advertising the drug Prolia. Invoice records confirmed that only 40,343 faxes (or 75 percent of the total list) were successfully transmitted. A fax log of the distribution was later destroyed pursuant to ASD’s 18-month document retention policy.

Almost three years after it claims to have received the Prolia fax, serial-plaintiff medical practice Sandusky Wellness Center sued ASD, alleging the fax ran afoul of the TCPA with a noncompliant opt-out notice. After discovery, the plaintiff sought certification of a putative class comprising all 40,343 fax recipients.

The district court denied the motion for class certification, relying in part on a liability waiver from the Solicited Fax Rule granted to ASD by the Federal Communications Commission. Sandusky appealed. In the interim, the U.S. Court of Appeals, D.C. Circuit struck down the Rule.

Both because of the waiver exempting ASD from liability and the D.C. Circuit ruling invalidating the Solicited Fax Rule, questions of consent presented individualized issues counseling against class certification, the Sixth Circuit held, affirming denial of the plaintiff’s motion.

If Sandusky’s 40,343-member class were certified, the district court would face the task of filtering out those individuals who solicited the Prolia fax, to whom ASD was not liable. “Regardless of other questions that may be common to the class, identifying which individuals consented would undoubtedly be the driver of the litigation,” the panel wrote, precluding certification under Federal Rule of Civil Procedure 23(b)(3).

The undertaking would be individualized because ASD produced evidence that “several thousand” names on the Prolia list were current or former customers, in the form of more than 450,000 pages of various forms where customers had provided ASD with their fax numbers. The district court reviewed a sample of the documents and concluded that many forms would demonstrate that the customers had given the requisite consent to receive the Prolia fax and thus would not have claims against the defendant.

“But identifying these individuals ‘would require manually cross-checking 450,000 potential consent forms against the 53,502 potential class members,’” the court said. “Identifying solicited fax recipients through a form-by-form inquiry is sufficiently individualized to preclude class certification.”

In addition to issues of consent, an inability to identify class members also stood in the way of certifying a class, the Sixth Circuit said. Both parties agreed that 25 percent of the Prolia list did not receive the fax based upon the distribution list, which was no longer in existence.

“In the absence of fax logs listing the status of each attempted transmission, the district court resolved that ‘each potential class member would have to submit an affidavit certifying receipt of the Prolia fax,’” the court wrote, finding several problems with this exercise. The fax was sent in 2010, meaning recollections would be suspect and affidavits self-serving.

Although the panel acknowledged that courts have been “inconsistent” in how they have accounted for difficulties in identifying class members, especially in the context of the TCPA, it held fast to the position that the class device was not superior to other available methods in this case.

“[I]t is possible that all 53,502 intended recipients might submit affidavits claiming receipt of the Prolia fax and their entitlement to $500 in damages,” the panel wrote. “Finding out which quarter of these individuals were being untruthful would require scrutinizing each affidavit and would undoubtedly be a difficult undertaking. In fact, it may not even be possible, in which case the district court would be tasked with fashioning some type of reduced equitable relief for all recipients. Practical concerns such as these highlight the difficulties the district court would have in managing Sandusky’s proposed class and further underscore the inappropriateness of class certification.”

Class certification under the TCPA is not automatic, the Sixth Circuit said, noting that it was unaware of any court that has mandated certification where fax logs did not exist—and declining to be the first.

“Perhaps if Sandusky had brought suit earlier, fax logs would have existed, and their absence would not pose an independent barrier to class certification,” the panel wrote. “Or, Sandusky could have filed an individual claim against [ASD] and presented a copy of the Prolia fax as evidence of receipt. Instead, Sandusky did neither of these things. By choosing to file a class action when it did, Sandusky shouldered the burden of proving that its proposed class satisfied Rule 23. It simply did not meet that burden here.”

To read the opinion in Sandusky Wellness Center, LLC v. ASD Specialty Healthcare, Inc., click here. Link: I sent PDF

Why it matters: The Sixth Circuit’s practical application of Rule 23 foreclosed class certification in the lawsuit. With the death of the Solicited Fax Rule, consent is becoming a key issue in many TCPA fax cases, particularly where the faxes are sent to current or former customers. The Sixth Circuit recognized that consent is an individualized issue that impedes class certification. Moreover, without fax logs to establish the actual recipients of the Prolia fax, the class would not be ascertainable. Thus, these two aspects made the case not conducive to the class action device. This is a significant victory for a defendant facing the potential of over $20 million in liability (at a minimum of $500 potentially owed to each of the proposed 40,343 class members). “While class certification may be ‘normal’ under the TCPA, that does not mean it is automatic,” the court wrote. “While there may be several benefits to affording TCPA cases class treatment—for example, as a way to hold businesses accountable when smaller recovery values provide fewer incentives for solo claims—those benefits do not always outweigh the difficulties of managing a proposed class.”