United States: TCPA Class Denied Certification Due To Binding Authority Of Yaakov And Proof Of Individualized Issues Of Consent

A recent order from the Northern District of Illinois granted a defendant's motion to deny class certification regarding "unsolicited" fax advertisements allegedly sent in violation of the Telephone Consumer Protection Act (TCPA). The decision is notable in two respects. First, the court held that the D.C. Circuit's recent decision in Bais Yaakov of Spring Valley v. FCC, 852 F.3d 1078 (D.C. Cir. 2017), which struck down the Federal Communications Commission's (FCC) rule requiring opt-out notices on solicited faxes, is binding authority outside the D.C. Circuit. Second, while the issue of "consent" is a powerful defense against class certification of TCPA claims, a defendant must substantiate that defense. The decision is also a reminder that a defendant can move to deny or strike class allegations; it need not wait for a plaintiff to move for class certification.

In Yaakov, the D.C. Circuit addressed the FCC's rule requiring both solicited and unsolicited faxes to include opt-out notices. Relying on the text of the TCPA statute, the D.C. Circuit held the FCC exceeded its authority in requiring solicited faxes to include an opt-out notice. We discussed Yaakov in a previous post, which can be found here.

Seeking to avoid Yaakov, the LaGasse plaintiff argued that it was not binding authority outside the D.C. Circuit. But the court rejected this argument because Yaakov was not a standard appeal; instead, the Judicial Panel on Multidistrict Litigation consolidated several petitions challenging the FCC's rule in the D.C. Circuit. And once those were consolidated, the D.C. Circuit became the "sole forum for addressing the validity of the FCC's rule," and its decision striking down the rule became "binding outside the [D.C. Circuit]."

The plaintiff also argued that a Seventh Circuit decision (Holtzman v. Turza) extended the opt-out notice requirement under the text of the TCPA (not the FCC rule). But LaGasse rejected this argument as a misinterpretation of Turza, which it stated was factually distinguishable, and because the passage in Turza on which the plaintiff relied was "nonbinding dicta." The court also "respectfully disagreed" with district courts within the Seventh Circuit that accepted Turza for the proposition that the plaintiff asserted in LaGasse, and stated that Yaakov is persuasive authority that the court would follow, regardless of whether it was controlling.

The court also determined that individualized issues of consent meant that the plaintiff's class did not meet the predominance and superiority requirements of Rule 23. The plaintiff sought to certify a class of all persons and entities to whom the defendants sent faxes during a four-year period. The crux of the plaintiff's claims was whether the defendants included opt-out notices on their faxes. But because Yaakov applied, opt-out notices were not required on solicited faxes. Thus, to determine whether an individual had a TCPA claim, the court would need to determine whether the individual solicited or consented to any faxes it received.

The court noted that consent is context-specific and can be obtained orally or in writing through various means (e.g., email, fax, the internet). But the court stated these potentially individualized issues are not "automatic." A defendant must identify specific evidence that individualized issues of consent actually predominate over common questions; vague assertions regarding individualized consent are not enough.

Fortunately for the defendants, they met their burden through, for example, identifying fax consent forms, referring to entries in their databases indicating consent was received, citing standard business practices of obtaining consent orally and filing declarations from fax recipients stating they consented. The court held that by these means, "taken together," the defendants identified "concrete evidence of consent," which meant that the court would need to evaluate the evidence and address "numerous individual questions that spell doom" for the proposed classes.

In addition to noting the impact of Yaakov, LaGasse is a reminder that businesses that send faxes that could be considered "advertisements" should make it their standard practice to obtain consent prior to sending a fax, obtain such consent, keep good records of how and when consent is obtained, and be prepared to present evidence regarding consent in the defense of TCPA claims.

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