Failsafe Failure – Lindsay Transmission v. Office Depot, Inc., 2013 WL 275568 (E.D. Mo, Jan. 24, 2013)

In an interesting order, Judge Jackson granted defendant Office Depot’s motion to dismiss the class allegations in a putative class action brought under the TCPA, 42 U.S.C. § 227, alleging the transmission of unsolicited faxes. Judge Jackson shrugged aside Plaintiff Lindsay Transmission’s protest that the motion to dismiss prior to class discovery was premature, citing Rule 23(c)(1)(A)’s directive to determine the propriety of class certification “at an early practicable time.” This is of course consistent with the increasing number of courts that have expressed a willingness to dismiss class allegations at an early stage, and the Court may well have been influenced by Office Depot’s affidavit explaining that Lindsay Transmission’s initial nationwide discovery requests would have required more than 2,000 manager hours to interview 1,132 store managers in 1,111 retail stores, a truly expensive fishing expedition.

Instead, the District Court mooted the onerous discovery requests by striking the class allegations because they sought certification of the following “failsafe class”, ie, “one that is defined so that whether a person qualifies as a member depends on whether the person has a valid claim”:

All persons who (1) on or after four years prior to the filing of this action, (2) were sent telephone facsimile messages of material advertising the commercial availability of any property, goods, or services by or on behalf of Defendant (3) with respect to whom Defendant cannot provide evidence of prior express permission or invitation for the sending of such faxes, (4) with whom Defendant does not have an established business relationship and (5) which did not display a proper opt out notice.

This is, of course, one of the oldest tricks in the book, in which a plaintiff will define the class so as to frontload all the difficult merits issues or defenses so that they can argue that there really are no individualized trial issues, because they will all have been resolved once the class has been properly defined. This is obviously just frontloading the individualized issues and class certification challenges from the trial stage to the class definitional and notice stage, which was not lost on the District Court. While observing that some courts call this a failure of commonality, some call it a failure of typicality, some call it a failure of predominance, and others call it a failure of ascertainability, the District Court found the failsafe class definition a fatal failure nonetheless. By frontloading of critical fact issues of consent and prior business relationship into the class definition, the District Court noticed that in effect the class definition “consists solely of persons who can establish that defendant violated the TCPA.

The District Court went on to explain that such a failsafe class definition would necessarily require both fact-intensive mini-hearings and a merits evaluation in order to determine who was in the class. The District Court did indicate that such a failsafe definition might not be fatal in cases like CE Designs, Ltd. v. Cy’s Crabhouse North, Inc., 259 F.R.D. 135 (N.D. Ill. 2009), where the evidence indicated that these individualized defenses were likely precluded because the defendant had used a “blast fax” to reach recipients who could not possibly have consented and who could not possibly have had a prior business relation with the sender. But in this case the District Court but relied on an affidavit from Office Depot to distinguish those cases on the basis that there was no evidence Office Depot had engaged in such indiscriminate faxing. Because the record as established by Office Depot’s affidavit demonstrated that these defenses were valid issues in this case, the District Court did not hesitate to strike the class allegations.

In terms of practical guidance, the message appears to be that a failsafe class definition is more fail than safe, but only where the defendant can demonstrate that the issues plaintiffs attempt to sidestep by artfully defining the class are actually legitimate issues in that particular case.