In a significant decision for companies that engage in
electronic marketing, a New Jersey federal judge certified a
23(b)(3) class claiming violations of the Telephone Consumer
Protection Act ("TCPA"; 47 U.S.C. §
In A&L Industries Inc. v. P. Cipollini Inc.,
case no. 2:12-cv-07598 in the U.S. District Court for the District
of New Jersey, Plaintiff brought suit on behalf of itself and
others similarly situated, alleging violations of the TCPA, as well
as violations of New Jersey's Junk Fax statute and Consumer
Fraud Act. The claims stem from Defendant's sending a
one-page fax advertisement for its roofing business through a
third-party marketing company to 4,573 different fax numbers over
the course of two days in September 2006.
The Defendant opposed class certification on superiority
grounds, arguing that because the TCPA authorizes statutory damages
of $500-$1,500 per violation, class action adjudication is inferior
because individual plaintiffs had incentive to bring individual
small claims lawsuits to recover statutory damages. Judge
Stanley R. Chesler rejected Defendant's argument that
adjudication on a class-wide basis was an inferior method of
litigating the claims, finding that the superiority requirement of
Federal Rule of Civil Procedure 23(b)(3) was met. The
question was apparently one of first impression in the District of
New Jersey and the Third Circuit, although a New Jersey state
appellate court had held in 2011 that TCPA lawsuits were
categorically inappropriate for class certification (slip op. at 8,
citing Local Baking Products v. Kosher Bagel Munch, Inc., 23 A.3d
469. 476 (N.J. App. Div. 2011)). Local Baking had held that
the availability of statutory damages under the TCPA was sufficient
to motivate individuals to assert their claims, because the amount
of statutory damages almost certainly exceeded a consumer's
actual damages from receiving an unsolicited fax
advertisement. The A&L Industries court criticized this
analysis, finding that the "difference between actual and
statutory damages, however, is of no moment when the statutory
recovery is, in absolute terms, still minimal." Judge
Chesler found that the class vehicle was superior because
"[i]n the absence of class treatment, duplicate evidence of
Defendant's alleged TCPA violation would have to be provided in
hundreds if not thousands of individual lawsuits. Determining
Defendant's liability in one proceeding results in substantial
efficiency gains for the parties and the court system."
Plaintiffs lawyers are likely to seize upon the reasoning set
forth in A&L Industries, potentially engendering more class
actions for violations of the TCPA's junk fax provisions, which
prohibit the use of a fax machine or other device to send an
unsolicited advertisement. This is particularly so in cases
such as this where the faxes were sent through a third-party
marketing company. In such situations, it is unlikely that
exceptions to the application of the TCPA, including where there is
a preexisting business relationship between the sender of the fax
and the recipient, would apply. Furthermore, no longer faced
with a case of first impression, New Jersey plaintiff's lawyers
now have a decision to rely on when arguing that class treatment of
TCPA actions is a superior method of adjudicating them.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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An increasingly important responsibility of the general counsel is to advise the corporation, and its officers and directors, on the application and extent of insurance/advancement and indemnification protections.
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