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holding that the Court loses removal jurisdiction under CAFA upon denial of class certification
Summary of this case from Genenbacher v. Centurytel Fiber Co. II, LLCOpinion
05 Civ. 7069 (HB).
January 4, 2007
OPINION AND ORDER
Plaintiff Lawrence McGaughey ("Plaintiff" or "McGaughey") has brought this putative class action against Defendant Richard Treistman ("Defendant" or "Treistman") pursuant to the federal Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227 et. seq., that provides for statutory damages against those who send unsolicited "junk" faxes. Plaintiff has moved for class certification. Defendant has cross-moved for summary judgment.
Because Plaintiff does not meet the requirements of Fed.R.Civ.P. 23(a) for class certification, I am denying Plaintiff's motion for class certification. Because denial of class certification leaves this Court without subject matter jurisdiction, it is unnecessary to decide Defendant's motion for summary judgment and dismissal for lack of subject matter jurisdiction is mandated.
I. BACKGROUND
A. Factual Background
The following facts are taken from Defendant's Statement of Undisputed Material Facts pursuant to Local Rule 56.1, except where otherwise noted. Because Plaintiff never responded to Defendant's Local Rule 56.1 submission, Defendant's Statement of Undisputed Material Facts will be deemed admitted as uncontroverted for the purpose of both motions. See Dunkin' Donuts Inc. v. Barr Donut, LLC, 242 F. Supp. 2d 296, 298 (S.D.N.Y. 2003) (Baer, J.).
Essex Temporary Services ("NY Essex") is a temporary staffing agency based in New York. Defendant's Statement of Material Facts, ¶ 3 ("Def. Facts"). Defendant Treistman, a New Jersey resident, is the President and CEO of NY Essex. Def. Facts ¶ 8, Plaintiff Lawrence McGaughey is an attorney residing and practicing in New York. Plaintiff's Amended Class Action Complaint, ¶ 6 ("Pl. Complaint").
Shortly before August 27, 2004, Plaintiff placed a "help wanted" advertisement in the New York Law Journal requesting resumes to be faxed to him. Declaration of Lawrence H. McGaughey, November 20, 2006, ¶ 3 ("McGaughey Decl.") Plaintiff now avers that he does not possess a copy of the original advertisement Plaintiff faxed, nor does Defendant. Def. Facts, ¶ 15.
In response to Plaintiff's job advertisement, on August 27, 2004, NY Essex sent a two-page fax to Plaintiff's home fax number. Def. Facts, ¶ 2, 3; McGaughey Decl., ¶ 4. The first page, entitled "Re: Advertisement," contained a general letter explaining NY Essex's hiring practices. The second page contained three "mini-resumes" for available temporary workers and their qualifications. Def. Facts, ¶ 17, 18; Declaration of Todd C. Bank, November 20, 2006, Exhibit B. This fax is the only fax by NY Essex to Plaintiff that Plaintiff has produced. Def. Facts, ¶ 2.
Plaintiff avers that he did not provide his home fax number to Defendant in the "help wanted" advertisement. McGaughey Decl., ¶ 4.
Defendant Treistman has stated that he had no direct involvement with the fax at issue, nor any faxes sent by NY Essex. Def. Facts, ¶ 19-24. Treistman did approve NY Essex's fax policy in general. That policy was that faxes should only be sent to a third party where a third party invited a fax in response to a help wanted advertisement, where a third party authorized a fax during a telephone conversation, or where there existed a prior business relationship with a third party. Def. Facts, ¶ 25.
B. Procedural History
On August 9, 2005, Plaintiff originally filed a complaint against Essex Temporary Services of New Jersey ("New Jersey Essex"), a corporation also owned by Treistman. New Jersey Essex filed a motion to dismiss, and limited jurisdictional discovery ensued. After taking Treistman's deposition on March 20, 2006, Plaintiff amended his complaint the next day, on March 21, 2006, to substitute Treistman individually for New Jersey Essex.
Defendant Treistman, on May 12, 2006, then filed a motion to dismiss for failure to join an indispensable party (i.e. NY Essex). I held oral argument on that motion on July 13, 2006, and denied the motion from the bench. I ordered that discovery conclude by October 1, 2006, and that any motions (including motions for class certification) be fully briefed by November 27, 2006. At Plaintiff's request, I subsequently extended discovery through the fully briefed motion deadline of November 27.
Defendant Treistman has tendered two Offers of Judgment to Plaintiff, on September 28, 2006 and October 10, 2006. Def. Facts ¶ 43, 49; see Fed.R.Civ.P. 68. The second Rule 68 Offer offered $1,750, costs and disbursements, reasonable attorney's fees, and injunctive relief. Def. Facts ¶ 50. Plaintiff accepted neither offer. Id. at ¶ 44, 51.
The maximum statutory penalty for a violation under the TCPA is $500, which can be trebled in cases of willfulness. See 47 U.S.C. § 227(b)(3) (2006).
II. STANDARD OF REVIEW
"Fed.R.Civ.P. 23 permits certification of a class action only if the following four prerequisites have been met: (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class." See, e.g., Weiss v. Fein, Such, Kahn Shepard, P.C., 2002 U.S. Dist. LEXIS 4783, at *4-5 (S.D.N.Y. 2002) ("Weiss"), citing Fed.R.Civ.P. 23(a); see also In re Initial Pub. Offering Sec. Litig., 2006 U.S. App. LEXIS 29859, at *23 (2d Cir. Dec. 5, 2006). Once these criteria have been satisfied, a class will be certified if it meets one of the following additional conditions imposed by Fed.R.Civ.P. 23(b).Weiss, 2002 U.S. Dist. LEXIS 4783, at *5, citing Marisol A. v. Giuliani, 126 F.3d 372, 375 (2d Cir. 1997). A plaintiff proposing to be a class representative bears the burden of showing that class treatment is appropriate. Id., citing General Tel. Co. v. Falcon, 457 U.S. 147, 160 (1982).
III. DISCUSSION
A. Motion for Class Certification
Plaintiff's motion for class certification fails because Plaintiff has not met the numerosity requirement of Rule 23(a). Plaintiff asserts in his complaint that Defendant has "willfully and knowingly authorized and approved the transmission of more than 10,000 unsolicited advertisements through facsimile." Pl. Complaint, ¶ 11. Following the Second Circuit's recent clarification of the standards to be employed in determining Rule 23 motions, I must make individualized determinations for each Rule 23 category, and I may look beyond the pleadings in doing so. See In re Initial Pub. Offering Sec. Litig., 2006 U.S. App. LEXIS 29859, at *52 ("[T]he district judge must receive enough evidence, by affidavits, documents, or testimony, to be satisfied that each Rule 23 requirement is met.).
However, on the pleadings or otherwise, Plaintiff here appears to be a potential class of one. Although Plaintiff has been given the opportunity to conduct discovery regarding class certification — as well as an extension of discovery on that issue, at Plaintiff's request — Plaintiff has provided no evidence that either Defendant or NY Essex has ever sent more than one fax arguably in violation of the TCPA, and that one to this Plaintiff. See Weiss v. Fein, Such, Kahn Shepard, P.C., 2002 U.S. Dist. LEXIS 4783, at *5-6 (S.D.N.Y. 2002) (denying class certification on grounds of numerosity, stating, "there is nothing in the record to indicate that anyone besides plaintiff received a letter from defendants containing the allegedly violative language."). Plaintiff has failed to even submit a Statement of Facts pursuant to Local Rule 56.1 rebutting Defendant's assertion that one, and only one, fax to one and only one plaintiff is at issue in this litigation.
Weiss is particularly apposite. In Weiss, plaintiff received one debt collection letter from Defendant and sued for class action relief pursuant to the Fair Debt Collection Practices Act.Weiss, 2002 U.S. Dist. LEXIS 4783, at *1. The Court similarly denied class certification under F.R.C.P. 23 for lack of numerosity. Plaintiff argued that "upon information and belief, Defendants have mailed hundreds of letters similar to the letter sent Plaintiff." Id. The Court responded, "These arguments amount to little more than bare speculation. Plaintiff appears to have no factual basis for his assertion that 'hundreds' of people received letters similar to the one he received . . .") Id.
Plaintiff has failed to meet his burden to satisfy the Rule 23(a) requirement of numerosity. Because Plaintiff has failed to meet this burden, it is unnecessary for me to consider the remaining Rule 23 requirements.
Defendant cites authority suggesting that TCPA class actions generally fail to meet the commonality and typicality requirements of Rule 23, as the court would be required to conduct individual inquiries with regard to each potential class member as to whether he or she had invited or given permission for the faxes at issue to be sent. See Forman v. Data Transfer, Inc., 164 F.R.D. 400, 403-04 (E.D. Pa. 1995); Kenro, Inc. v. Fax Daily, 962 F. Supp. 1162, 1169-70 (S.D. Ind. 1997). Because Plaintiff fails to meet the numerosity requirement of Rule 23, it is unnecessary for me to consider these other Rule 23 requirements here.
B. Subject Matter Jurisdiction
Plaintiff originally asserted that this Court possessed subject matter jurisdiction over this action pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2)(A). Pl. Complaint, ¶ 3. This Court would alternatively possess subject matter over this action pursuant to the general federal diversity statute, 28 U.S.C. § 1332(a). Plaintiff is required to rely on § 1332 for subject matter jurisdiction because the TCPA is the rare federal statute that does not provide federal question jurisdiction. Gottlieb v. Carnival Corp., 436 F.3d 335, 337 (2d. Cir. 2006), citing Foxhall Realty Law Offices, Inc. v. Telecommunications Premium Services, Ltd., 156 F.3d 432 (2d Cir. 1998).
However, Plaintiff's two possible grounds for establishing subject matter jurisdiction over this action no longer exist. Because Plaintiff's motion for class certification must be denied, Plaintiff's action is no longer a class action, and this Court cannot retain subject matter jurisdiction in diversity over Plaintiff's action pursuant to the Class Action Fairness Act. See 28 U.S.C. § 1332(d)(2). Because Plaintiff has failed to put forth a single fact relevant to his remaining individual action against Defendant that meets the $75,000 amount-in-controversy requirement of 28 U.S.C. § 1332(a), this Court loses subject matter jurisdiction over Plaintiff's individual action pursuant to the general federal diversity statute. See Gottlieb v. Carnival Corp., 436 F.3d 335, 343 n. 10 ("In order to meet the amount-in-controversy requirement, a single plaintiff would have to receive either 150 faxes from a single defendant, assuming $500 in statutory damages per fax, or 50 faxes from that defendant, assuming treble damages.").
Some recent authority has held that, pursuant to Erie doctrine, class action plaintiffs in New York cannot invoke federal diversity jurisdiction under CAFA. See Bonime v. Avaya Corp., 2006 U.S. Dist LEXIS 91964 (E.D.N.Y. Dec. 20, 2006), citing Erie Rwy. Co. v. Tompkins, 304 U.S. 64 (1938); N.Y. C.P.L.R. 901(b) (2006). Because I am denying class certification, it is unnecessary to reach this issue.
Plaintiff's action therefore must be dismissed for lack of subject matter jurisdiction.
Defendant, prior to Plaintiff's motion for class certification, had made a Rule 68 offer of judgment to Plaintiff for an amount over and above the maximum possible individual recovery. See Def. Facts ¶ 43, 49, 50; see Fed.R.Civ.P. 68. If Plaintiff were suing under a statute that independently provided subject matter jurisdiction to Plaintiff's action, it would be appropriate for me to now compel Plaintiff's acceptance of the Rule 68 offer, having denied Plaintiff's motion for class certification. See Weiss, 2002 U.S. Dist. LEXIS 4783, at *7-10; see also Morgan v. Account Collection Tech., LLC, 2006 U.S. Dist. LEXIS 64528 (S.D.N.Y. 2006) (collecting Second Circuit caselaw regarding Rule 68 offers made in the context of class actions), citing, e.g.,Abrams v. Interco Inc., 719 F.2d 23, 32 (2d Cir. 1983).
However, unlike Weiss, where plaintiff sued under the Fair Debt Collection Practices Act, the TCPA does not provide for federal question jurisdiction. This Court now lacks subject matter jurisdiction even to compel Plaintiff's acceptance of the Rule 68 offer.
IV. CONCLUSION
Because Plaintiff does not meet the numerosity requirement of Fed.R.Civ.P. 23(a), I must deny Plaintiff's motion for class certification. Because denial of class certification leaves this Court without subject matter jurisdiction, the complaint is dismissed.The Clerk of the Court is instructed to close this matter and remove it from my docket.