COA Reverses Business Court's Denial Of Class Certification In TCPA Case
Generally, the TCPA (47 U.S.C. § 227) makes it unlawful to send unsolicited advertisements to a fax machine. "Unsolicited advertisement" means an advertisement "transmitted to any person without that person's prior express invitation or permission." (The TCPA allows statutory damages; in this case, the plaintiffs are seeking statutory damages of $500 for each unsolicited fax advertisement sent by the defendant to any member of the proposed class.) In light of the intalicized phrase, TCPA defendants oppose class certification by arguing that individualized issues will predominate over common issues--individualized issues concerning whether faxes were unsolicited or without the recipient's consent. Courts around the country have split on this predominance issue
In today's case, the COA rejected a bright-line approach to class certification under the TCPA: "We hold that claims brought pursuant to the TCPA are not per se inappropriate for class actions." Instead the COA adopted a fact-based approach to determining whether certification is proper, an approach under which "plaintiffs must advance a viable theory employing generalized proof to establish liability with respect to the class involved." As an example, the COA suggested that generalized proof could exist in a case alleging that the defendant had obtained all of the fax recipients' fax numbers from a single purveyor (i.e., buying a list). In such a case, the COA suggested, the manner in which the defendant identified the recipients may not require individualized inquiry, and the the question of consent may be a common question.
The COA said that the fact that some class members eventually may be found to have consented to the receipt of the defendant's fax transmissions doesn't preclude certification of a class of those who received unsolicited faxes: "The possibility that some proposed class members will later be removed should not automatically defeat class certification. Plaintiff should present the trial court with some reasonable means of ensuring there will not be an inordinate number of proposed class members who do not belong in the class, and further show that he has, through thorough discovery and investigation, presented the trial court with as tailored a proposed class as practicable."
The COA held that the record didn't establish whether the plaintiff proceeded at the class certification stage with a theory of generalized proof that the faxes were without invitation or permission. Because the trial court applied a per se rule against certification of TCPA claims, the COA reversed and remanded for reconsideration of the plaintiff's motion for class certification.
Separately, on the issue of "superiority" (under N.C. law, when the elements of class certification are met, the trial court retains the discretion to determine if a class action is superior to other available methods for the adjudication of the controversy), the COA rejected the trial court's conclusion that small claims court is a superior forum in which to deal with TCPA violations, because small claims court doesn't have authority to grant injunctions, and injunctive relief is an important TCPA remedy. Another knock against small claims court, the COA said, is that, depending on the number of allegedly unsolicited fax advertisements sent to any one person, the amount in controversy could easily exceed the $5,000 small claims court jurisdictional limit. Thus, the COA held that small claims court cannot represent a superior forum to a class action in all instances involving TCPA claims.
Today's decision could be significant in cases in which consent is a defense (or lack of consent is an element) of a claim. Also significant is the "superiority" holding: to suggest that the unavailability of injunctive relief in small claims court is a problem is to suggest that the class action mechanism is superior in cases seeking injunctive relief. Many claims with low damages also seek injunctive relief.