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Compressor Engineering Corp. v. Thomas

United States District Court, E.D. Michigan, Southern Division

December 29, 2016

CHARLES J. THOMAS, JR., Defendant.



         Before the Court is Plaintiff Compressor Engineering Corp.'s Motion to Certify a Class pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(3). (ECF No. 82.) Defendant Charles J. Thomas, Jr. (“Thomas”) filed its response and Plaintiff thereafter filed a reply. (ECF Nos. 85 & 90).

         Thereafter, Plaintiff filed an unopposed motion for leave to file recent Sixth Circuit case authority (ECF No. 92), a second Motion for Leave to file supplemental authority (ECF No. 99), and a third Motion for leave to file Supplemental Authority (ECF No. 110). Defendant Thomas filed a Supplemental Legal Memorandum (ECF No. 96) to which Plaintiff filed a response (ECF No. 97) and Defendant Thomas thereafter filed a reply (ECF No. 98). A hearing on these matters was held on May 28, 2015.

         Thereafter, on July 1, 2015, Defendant filed a motion to stay the proceedings (ECF No. 111.) On October 12, 2015, Defendant filed a Motion to Dismiss pursuant to 12(b)(1) or in the Alterative Stay the Proceedings. (ECF No. 116.) On February 3, 2016, this Court denied Defendant's initial motion to stay, and denied Defendant's motion to dismiss, but granted Defendant's request to stay this action pending the Supreme Court's decision in Robins v. Spokeo, Inc., 742 F.3d 409 (9th Cir. 2014), cert. granted, 135 S.Ct. 1892 (2015). More recently, on October 27, 2016, the Court lifted the stay in this action and granted Defendant's motion for leave to file a second supplemental memorandum in opposition to Plaintiff's Motion for Class Certification. (ECF No. 127.) Defendant filed his Supplemental brief on October 27, 2016 and Plaintiff's filed its Supplemental Response on November 17, 2016. (ECF No. 129.)

         For the reasons set forth below, the Court will GRANT Plaintiff's motion for class certification, grant Plaintiff's motions to file supplemental case authority, and deny Defendant's motion for leave to file a supplemental legal memorandum.

         I. BACKGROUND

         A. Procedural History

         This Court addressed the procedural history of this case in an earlier Opinion an Order and incorporates it here:

On January 6, 2010, Plaintiff filed the instant class action complaint under the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227 as amended by the Junk Fax Prevention Act of 2005[1] against Defendants Chicken Shack, Inc., Chicken Shack Depot, Inc., and Charles Thomas, Jr. (ECF No. 1). On February 5, 2010, Defendant Thomas filed a motion to dismiss arguing the Court lacked subject matter jurisdiction over Plaintiff's TPCA claims. (ECF No. 5). Plaintiff then filed a Motion for Leave to File Amended Complaint. (ECF No. 8). On May 21, 2010, Magistrate Judge Virginia Morgan denied Plaintiff's motion to amend finding it was futile because the Court lacked subject matter jurisdiction. (ECF No. 14). On July 19, 2010, this Court dismissed the complaint holding that the Court lacked subject matter jurisdiction over the TCPA claims. (ECF No. 18). Plaintiff filed a notice of appeal on July 22, 2010. (ECF No. 21).
On May 17, 2011, the United States Court of Appeals for the Sixth Circuit entered an Order remanding this case for reconsideration in light of its recent decision, Charvat v. EchoStar Satellite, LLC, 630 F.3d 459 (6th Cir. 2010). (ECF No. 23). EchoStar held that federal district courts do have subject matter jurisdiction over TCPA claims.
Thereafter, on June 22, 2012, the Court entered an Opinion and Order that reopened this action in light of EchoStar and also ordered Plaintiff to show cause why Defendants Chicken Shack, Inc. and Chicken Shack Depot, Inc. should not be dismissed for lack of prosecution. (ECF No. 24.) The Order also required the parties file supplemental briefing on Defendant Thomas's motion to dismiss and Plaintiff's motion to amend. (Id.).
On August 15, 2013, this Court denied Defendant Thomas's motion to dismiss, granted Plaintiff's motion to correct the class description and denied Plaintiff's request to add certain parties as defendants. The Court also dismissed Chicken Shack, Inc. and Chicken Shack Depot, Inc. without prejudice leaving Defendant Thomas as the sole defendant. (ECF No. 43.) On September 5, 2013, Plaintiff filed its Amended Complaint. (ECF No. 46.)
Defendant Thomas sought certification of the Court's order denying his motion to dismiss and to stay the case pending appeal pursuant to Federal Rules of Civil Procedure 54(b) and 28 U.S.C. 1292(b). (ECF No. 50.) The Court affirmed the Magistrate Judge's order denying that motion on September 30, 2014. (ECF No. 105.) Defendant Thomas also sought to reassign this action alleging it was a companion to other cases before Judge Sean Cox in this District. That request was denied by the Court on September 25, 2014. (ECF No. 104.)

(ECF No. 108, at *1-3.)

         In February 2015, the Court denied Defendant's Motion to Dismiss based on a lack of jurisdiction, finding that Defendant's previous Offer of Judgment did not moot this action. (ECF No. 108.) As noted above, this Court also denied Defendant's second Motion to Dismiss based upon a second offer of judgment (ECF No. 119).

         B. Factual Background Regarding Junk Fax Cases

         This is one of the numerous “junk fax” cases that have been filed by Plaintiff's attorneys in courts around the country involving facsimiles sent by the company “B2B.” Indeed, Judge Gerald Rosen set forth a succinct version of the common background facts in these cases which is relevant to this action:

Anderson Wanca and Bock & Hatch are two Chicago area firms that specialize in representing plaintiffs in case action lawsuits under the Telephone Consumer Protection Act as amended by the Junk Fax Prevention Act of 2005 (the “TCPA”). The TCPA authorizes $500.00 in statutory damages for faxing an unsolicited advertisement, and each transmission is a separate violation. And the award triples upon a showing of wilfulness. Because plaintiffs may enforce the statute via class action and because a single advertisement is often faxed to hundreds - if not thousands- of phone numbers, suits under the Act present lucrative opportunities for plaintiffs' firms.
A woman named Caroline Abraham functioned as a modern-day “typhoid [M]ary” in the small business communities in which she operated. As the Seventh Circuit explained [in Reliable Money Order, Inc. v. McKnight Sales Co., 704 F.3d 489 (7th Cir. 2013)], Abraham and her company, Business-to-Business Solutions (“B2B”) sit at the center of this lawsuit and scores of others: B2B contracted with businesses to send advertisements via facsimile. Advertisers would pay a fee, and B2B would send the ad to hundreds of fax numbers purchased from InfoUSA, Inc. (a practice known as “fax-blasting”). Abraham, B2B's sole employee, never obtained from the fax recipients['] permission to send them the advertisements.
Anderson Wanca came across B2B and Abraham while they were investigating four putative class actions in Illinois. They learned that the defendants in those four cases had contracted with B2B to fax the offending advertisements. Unsurprisingly, Caroline Abraham's B2B records became the focus of discovery. Abraham ultimately produced spreadsheets in discovery that listed only the recipients of the advertisements at issue in the four cases.
Flush with success, Anderson Wanca recognized that the B2B hard drives and fax lists likely contained a treasure trove of potential clients for putative class action lawsuits. So, despite having all information necessary to certify the classes in the [original] Four Cases, Anderson Wanca continued pushing Caroline Abraham to disclose all B2B fax transmission data. Ryan Kelly, an attorney at Anderson Wanca, met with Caroline Abraham and asked her for the actual backup disks and hard drive. He told her that “nobody would look at anything on these media not related” to the Four Cases. Indeed, Kelly even emailed Ms. Abraham a copy of the protective order filed in one of the Four Cases, explaining that it “will prevent [Kelly] from disclosing any of the back-up disks or hard-drive to any third-party.” To receive those protections, however, the producing party had to stamp documents confidential or notify plaintiff's counsel of their confidential nature at the time of production. Ms. Abraham continued to resist.
Ultimately, plaintiff's counsel subpoenaed Joel Abraham to testify at a deposition. The subpoena also ordered Mr. Abraham to produce, at the time of his deposition, the back-up disks and hard drive. Appearing at the deposition with attorney Eric Ruben, Joel Abraham produced the materials. Neither he nor Ruben, who had read the protective order, asserted confidentiality. Even so, Anderson Wanca later instructed defense counsel to “treat the DVD produced by Joel Abraham as confidential pursuant to the protective order[.]”
The back-up disks and hard drive revealed not only the recipients of fax advertisements sent by the defendants in the Four Cases but the names of other B2B clients as well.
Then, armed with data from B2B's electronic files, Plaintiff's counsel filed scores of putative class actions under the TCPA. The B2B files provided a treasure trove of potential new clients for Anderson Wanca, revealing the names of other potential defendants who contracted with B2B to send unsolicited fax advertising and listing the recipients of that advertising .... Anderson Wanca attorneys have filed over one hundred putative class actions under the Act, all rooted in data recovered from the B2B disks and hard drive.

Avio, Inc. v. Alfoccino, Inc., 18 F.Supp.3d 882, 884-85 (E.D. Mich. 2014), rev'd on other grounds, 792 F.3d 627 (6th Cir. 2015), (quoting APB Assoc., Inc. v. Bronco's Saloon, Inc., 297 F.R.D. 302, 304-06 (E.D. Mich. 2013)[2] (which in turn relied upon Reliable Money Order, Inc. v. McKnight Sales Co., 704 F.3d 489 (7th Cir. 2013)); see also American Copper & Brass, Co. v. Lake City Ind. Prods., 757 F.3d 540, 542 (6th Cir. 2014) (relying upon McKnight for background and description of the “practice of fax-blasting and noting that B2B was a notorious fax-blasting company.”).

         C. Pertinent Facts Regarding the Instant Action

         In this particular fax-blasting action, Defendant hired a man, who was referred to him by another business owner to promote his restaurant businesses by fax advertisement. (ECF No. 82, Pl.'s Mot. to Certify, Ex. A, Thomas Dep. at 27-28, 31.) Defendant was eventually charged $338.00 by B2B for 10, 000 fax advertisements. (Id. at 32-33, 70-72; see Ex. C, Lewis Decl. Ex. 2, B2B000004-05). Defendant also worked with B2B to create the advertisement. (Thomas Dep. at 51-56; Lewis Decl. Ex. 2, B2B000020-26.) Defendant was never provided a list of numbers or names and addresses of the persons to whom the faxes were going to be sent. (Id. at 37.) It is appears undisputed that B2B “created the target list [of business persons in Michigan] by culling relevant targets from a third-party database B2B had purchased from InfoUSA years earlier.” (ECF No. 82, at *1-2; Ex. B, Abraham Decl. at ¶ 7.) Defendant did not recall asking any fax recipient for their permission or consent to send the fax advertisements. (Thomas Dep. at 41-42.) Indeed, Abraham stated that B2B did not obtain prior express permission or consent from the targeted companies before it would send the faxes. (Abraham Decl. ¶¶ 6-7.)

         Plaintiff alleges in its Amended Complaint that it received a single unsolicited fax advertisement on its facsimile machine on approximately November 6, 2005. (Am. Compl. ¶ 12.) James Berwick, the president and owner of Plaintiff, testified that he did not recall receiving the fax that was sent on behalf of Defendant. (ECF No. 85, Def.'s Resp., Ex. D, Berwick Dep. at 11, 56.) Berwick also testified that he did not keep the original fax, does not have the transmission log from his fax machine that allegedly received the fax at issue, and no longer has the fax machine either. (Id. at 11-12, 56, 71.)

         Plaintiff relies upon its expert, Robert Biggerstaff, to show that the archived computer data (mined from Abraham's hard drive and disks) evidences that Defendant's advertisement was successfully faxed 6, 142 times to 6, 138 persons. (ECF No. 82, Ex. D, Jan. 19, 2010 Biggerstaff Report, at ¶ 15). Specifically, B2B's “directory fax1” “log file... shows that 1, 954 transmissions were successful and error-free transmissions of a 1-page fax” and B2B's “fax2” “log file ... shows that 4, 188 transmissions were successful and error-free transmissions of a 1-page fax.” (Id. at ¶¶ 13, 14). Plaintiff received a “successful error-free fax transmission to its fax machine at 313-491-2766 on November 6, 2005.” (Id. at Ex. 4, page 48, line 2229, Ex. 5, page 6, line 1279).

         Plaintiff now seeks to certify a class with following description: “All persons who were sent one or more faxes on November 6, 2005 advertising ‘Chicken Shack' restaurant as offering ‘Michigan's Best Chicken and Ribs.'”[3] (Pl.'s Mot. to Certify, at 11). Defendant argues that the Motion for Class Certification must be denied because Plaintiff has failed to meet the prerequisites under Federal Rule of Civil Procedure 23, including inter alia: 1) Plaintiff and putative class claims are barred by the statute of limitations; 2) the proposed class counsel does not meet the requirements regarding the adequacy of class counsel; 3) Plaintiff fails to meet the adequacy requirements for class representative; 4) individual issues predominate over common issues of fact and law; 5) the proposed class definition is flawed because it includes persons who lack standing to assert a TCPA claim; and 6) that a class action is not a superior method for adjudicating these claims.


         “A district court has broad discretion to decide whether to certify a class.” In re Whirlpool Corp. Front-Loading Washer Products Liability Litigation, 722 F.3d 838, 850 (6th Cir. 2013) (citation omitted); see also In re Am. Medical Sys., Inc., 75 F.3d 1069, 1079 (6th Cir. 1996). Yet, it bears repeating that “[t]he class action is ‘an exception to the usual rule that litigation is conducted by an on behalf of the individual named parties only.'” Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 537 (6th Cir. 2012) (quoting Wal-Mart v. Dukes, ___U.S. ___, 131 S.Ct. 2541, 2550 (2011)). Moreover, “Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule - that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc..” Wal-Mart, 131 S.Ct. at 2551 (emphasis in original); In re Am. Med. Sys., 75 F.3d at 1079 (noting the party seeking certification bears the burden in showing all prerequisites under Rule 23 are satisfied).

         To obtain class certification pursuant to Rule 23 “the plaintiffs must show that ‘(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.” In re Whirlpool, 722 F.3d at 850 (quoting Fed.R.Civ.P. 23(a)). “These four requirements - numerosity, commonality, typicality, and adequate representation - serve to limit class claims to those that are fairly encompassed within the claims of the named plaintiffs because class representatives must share the same interests and injury as the class members. Id. at 850-51 (citing Wal-Mart, 131 S.Ct. at 2550). When reviewing a plaintiff's motion for class certification, the district court must conduct a “rigorous analysis” of the Rule 23 requirements. In re Am. Med. Sys., 75 F.3d at 1078-79 (quoting General Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 160).

         In addition to meeting the four prerequisites of Rule 23(a), the proposed class must meet at least one of the three requirements set forth in Rule 23(b). Wal-Mart, 131 S.Ct. at 2548 (2011). In the present action, Plaintiff seeks class certification under Rule 23(b)(3), which requires that the “questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3). Plaintiff bears the burden to show that all of the class certification prerequisites have been met. In re Whirlpool, 722 F.3d at 851 (citation omitted).

         IV. ANALYSIS

         As an initial matter, the Court notes that Plaintiff previously filed three motions to file supplemental case authority (ECF Nos. 92, 99 & 110). Defendant also filed a Motion for Leave to file a Supplemental Legal Memorandum. (ECF No. 96.) As the Court explained on the record during the hearing on this matter, the Court accepts Plaintiff's supplemental case authority providing pertinent case law citations, and denies Defendant's motion to supplement its legal argument. More recently, in its Order lifting the stay in this action, the Court granted ...

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