An Illinois federal district judge handed Yahoo a rare defense victory when it decertified the class of plaintiffs in a Telephone Consumer Protection Act (TCPA) lawsuit involving text messages sent from a user messaging platform based on evidence obtained from a phone carrier during the class member identification process.
Plaintiff Rachel Johnson filed suit in the Northern District of Illinois in 2014, alleging that she received two text messages from Yahoo on her cellphone in March 2013. The first was a message to Johnson from a user of Yahoo via Messenger that was converted to text form. The second message was sent in explanation of the first and read: “A Yahoo! User has sent you a message. Reply to that SMS to respond. Reply INFO to this SMS for help or go to yahoo.it/imsms.”
Johnson’s putative class action challenged the second text, a so-called Welcome Message from Yahoo, which she claimed violated the TCPA. She moved to certify a class of all persons in the United States who received a Welcome Message during the month of March 2013 via a cellphone number assigned to Sprint (Johnson’s cellular carrier) that was not associated with a Yahoo user in Sprint’s records.
As we previously reported, U.S. District Judge Manish S. Shah initially granted the plaintiff’s certification motion, and discovery proceeded and closed in the case. In response to a subpoena, however, Sprint produced previously undisclosed information related to the identities of the users and subscribers of the cellphone numbers assigned to Sprint and that received the Welcome Message.
Based on the new information, Yahoo moved to decertify the class due to manageability concerns—i.e., that there was not sufficient commonality as required by the Federal Rules of Civil Procedure. In particular, Yahoo argued that individualized issues related to consent overwhelmed any classwide common questions of law or fact, and presented evidence showing that the court would need to make an individual consent inquiry for a significant percentage of the class—perhaps 20 to 25 percent, or more.
Recalling the warning he made in his certification order that “[i]f plaintiff and her counsel cannot provide a manageable, cost-effective plan for … resolving issues of consent, then decertification may follow,” Judge Shah granted Yahoo’s motion for decertification.
In analyzing the evidence Yahoo provided, Judge Shah recognized that Yahoo’s Universal Terms of Service (uTOS) state: “Yahoo may provide you with notices, including those regarding changes to the [Terms of Service], including by but not limited to email, regular mail, SMS, MMS, text message, postings on the Service, or other reasonable means now known or hereinafter developed.” It was undisputed that if Yahoo sent the Welcome Message to a number that belongs to someone (either a subscriber or user of the number) who accepted the uTOS, then the message was sent with appropriate consent.
Consequently, “[t]he production of records from Sprint after the close of discovery gave defendants the missing evidentiary foundation for their consent-predominance argument,” the court said. “Defendant searched its accountholder database for the names of subscribers and users provided by Sprint. Certain common names matched with thousands of Yahoo user accounts, and even limiting the results to less common names (using a somewhat arbitrary measure), defendant can now show that tens of thousands of potential class members may have consented.”
Indeed, Yahoo found that 47,672 unique names from the Sprint data matched five or fewer Yahoo accounts, which in turn indicated that with further inquiry into Yahoo’s accounts, a more precise match between a Sprint user and uTOS acceptance is possible, the court said. Yahoo also searched its account holder database for the associated telephone numbers provided by Sprint and found that in at least 65,061 cases, a number that received a Welcome Message matched a number that was provided to defendant in registering a Yahoo account. The judge found this to be compelling.
“The association of thousands of potential class members to a Yahoo account (and therefore, in turn, accepted uTOS) is a concrete showing that individualized consent issues will predominate the case moving forward,” Judge Shah wrote. “To drill down on whether these class members accepted the uTOS, and thereby provided consent, the facts surrounding each person associated with a matching number would have to be explored. This could not be done in a single proceeding through records and an expert witness because the requisite identity-match may be dependent on class member testimony.”
Johnson and her attorneys countered that Yahoo’s evidence was inconclusive with regard to consent, but the court explained they overstated defendant’s burden under the Federal Rules. “While it is true that more would need to be done to prove consent, defendant does not need to prove consent to decertify the class,” the court said. “It just needs to show that proving consent requires individualized analysis such that the class does not meet the predominance requirement. It has done that much.”
Judge Shah further acknowledged that the foregoing evidence appeared after the completion of fact discovery, “and perhaps defendant should have conducted and disclosed its analysis sooner.” But excluding the evidence after certification and this late in the game would be too harsh a sanction, the court said, and “the truth-seeking function of litigation would be better served by testing the evidence, not pretending it doesn’t exist.”
Judge Shah also declined to redefine the class, concluding decertification was “the appropriate step in light of defendant’s showing that individualized consent inquiries will predominate.”
To read the opinion and order in Johnson v. Yahoo!, Inc., click here.
Why it matters: Declaring that an individualized inquiry for 20 to 25 percent (and possibly more) of the class constituted “a significant percentage,” the court decertified the class in the case, sending a message to TCPA defendants that a certification order can be reversed. Moreover, while it does happen, class decertification is exceedingly rare, particularly in TCPA cases, where certification will usually lead to either a substantial settlement or trial. Finally, this case serves as a lesson to engage in precertification discovery, particularly if certification seems likely, which may have avoided a protracted litigation here.