Eleventh Circuit Holds That Court Abuses Its Discretion Certifying a TCPA Case Containing Uninjured Class Members

For those of you that hate hearing me talk about being right all the time, probably stop reading this one now.

One of the messiest splits of authority in the law is whether a class may be certified where unnamed Plaintiffs lack standing. The Second Circuit has held directly that such a class cannot be certified. The Third Circuit has held that such a class can be certified do long as the named Plaintiff has standing. The rest of the circuits fall into one of these two camps with the Ninth Circuit actually issuing rulings falling into both camps.

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As I have often argued, however, even in jurisdictions where a class can be certified with unnamed class members lacking valid claims it should not be because common issues will not predominate in such cases—only injured class members can ultimately recover so a class member by class member review will be necessary ahead of the judgment. In the context of the TCPA—where whether or not a call is wanted forms a basic predicate for harm—recovery will turn on a purely subjective determination that should almost always thwart class certification. (Indeed, I wrote an article at my former firm laying all of this out the day Spokeo was handed down.)

Over three years after Spokeo was decided, the Eleventh Circuit Court of Appeal has finally adopted this inevitable rationale and proven me right.  In Cordoba v. DIRECTV, LLC, No. 18-12077, 2019 U.S. App. LEXIS 34146 (11th Cir. Nov. 15, 2019) the Court reversed a certification ruling issued in favor of a class in a TCPA case against DirectTV. An interlocutory appeal was granted following certification of a class of individuals that received telemarketing calls in the absence of an internal DNC policy. The class included individuals who have not asked for calls to stop. The Court of Appeal concluded that these individuals had not suffered Article III harm and could not be included in a class. And this determination had a very important impact on whether the class could be certified. As the Eleventh Circuit panel wrote:

At some point before it may order any form of relief to the putative class members, the court will have to sort out those plaintiffs who were actually injured from those who were not. Determining whether each class member asked [Defendant] to stop calling requires an individualized inquiry, and the district court did not consider this problem at all when it determined that issues common to the class predominated over issues individual to each class member. We, therefore, conclude that the district court abused its discretion in certifying the class as it is currently defined…

Wow.

So let’s break this down a bit.

The case involves a lesser-known (but very important) TCPA regulation requiring the adoption of an internal DNC policy/training/list by all telemarketers. The main regulation provides that “[n]o person or entity shall initiate any call for telemarketing purposes to a resid\ential telephone subscriber” without “institut[ing] procedures for maintaining a list of persons who request not to receive telemarketing calls made by or on behalf of that person or entity.” Id. § 64.1200(d). The adoption of such a policy is a standalone requirement of the regulation, meaning that every call made without the policy in place is—theoretically at least—illegal. Yikes.

Class counsel have been on to the regulation for some time now and the Cordoba certification at the district court level was the first in a series of rulings suggesting that every solicitation call made by a telemarketer without a policy might be actionable even if the call was made with consent. And that’s the big issue. Many, perhaps most, of the class members in Cordoba had consented to received calls and had not asked for calls to stop. Yet Plaintiff sought to recover for every single one of these consented calls.

On appeal, the Eleventh Circuit first analyzed whether unnamed class members who consented to receive calls and did not opt-out had suffered any Article III harm from the phone calls. Notably, the Court held the burden was on the Plaintiff to demonstrate that harm. The Court first determined that unwanted phone calls do cause harm—and distinguished Salcedo as a text message case (uh oh). But when looking at whether the injury suffered is fairly traceable to the failure to maintain a DNC policy—the second factor of the so-called Lujan standing test— the Court found the answer to be “no.” As the Court views it:

If an individual not on the National Do Not Call Registry was called by [Defendant] and never asked [Defendant] not to call them again, it doesn’t make any difference that [Defendant]  hadn’t maintained an internal do-not-call list… There’s no remotely plausible causal chain linking the failure to maintain an internal do-not-call list to the phone calls received by class members who never said to [Defendant[l they didn’t want to be called

Booyah.

But the analysis is only half over. The Court notes that the impact of Spokeo standing on the certification issue is the “more difficult question.” The Court finds, however, that the absence of standing to recover damages plays a critical role on the issue of predominance.  (Apparently, Dish’s counsel did not pick up on this argument despite my highlighting it for years and the Court had to salvage it for them—take a look at footnote 4. TCPAWorld.com guys, come on.) Individualized issues will necessarily arise here because at some point before it can award any relief, the district court will have to determine whether each member of the class has standing: “That is an individualized issue, and it is one that the district court did not account for or consider in any way in deciding whether issues common to the class actually predominated over issues that were individualized to each class member.”

But more work will be necessary below. The class still might be certifiable if most members of the class clearly asked to opt-out and there is a “plausible straightforward method to sort them out at the back end of the case.”  On the other hand, if few made these requests, or if it will be extraordinarily difficult to identify those who did, then the class would be overbroad and these individualized determinations might overwhelm issues common to the class.”

In the end, the Court squarely holds: “the district court must consider under Rule 23(b)(3) before certification whether the individualized issue of standing will predominate over the common issues in the case when it appears that a large portion of the class does not have standing…”

Although the Court cushioned that assessment with some blunting language suggesting that TCPA class actions might not yet be dead in the Eleventh Circuit, they are. I have yet to litigate a TCPA class action where some large portion of the class did not suffer actionable harm. The problem is in defining the class properly—as Cordoba points out. Not only should Cordoba make certifying TCPA classes in the Eleventh Circuit more difficult, therefore, it should also empower courts to root through class definitions at the pleadings stage and strike improper definitions right from the start.

It’s a good day to be in TCPAWorld.

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