In a decision handed down this week, a federal court in New Jersey did little to stem the tide of litigation under the Telephone Consumer Protection Act (“TCPA”). Declining to follow New Jersey state court precedent, the district court held that claims based on the faxing of identical commercial advertisements met the requirements of Rule 23, including that class litigation is the superior mode of adjudication for such claims. A & L Industries, Inc. d/b/a ACE Powder Coating v. P. Cipollini, Inc., No. 12-07598 (SRC) (D.N.J. Oct. 2, 2013).
Plaintiff A & L Industries brought suit against P. Cipollini, Inc. for sending a commercial advertisement by fax in violation of the federal TCPA and its state counterpart, the New Jersey Junk Fax Statute. Plaintiff sent the same fax, which advertised roofing services, to more than 4,500 recipients in September 2006.
Plaintiff moved for class certification only two days after filing suit, but the court held that it was premature, and denied the motion without prejudice. (Slip Op. at 1.) About seven months later, after discovery, Plaintiff moved once again to certify the class – this time successfully.
The District Court Opinion
In opposing class certification, Defendant argued only that a class action was not the superior manner in which to adjudicate a TCPA lawsuit. Nevertheless, Judge Chesler acknowledged that the Court is obligated to independently consider whether the requirements of Rule 23 were met, and walked through each accordingly. (Id. at 2.)
The Court easily dispensed of the numerosity requirement given the 4,500 recipients of the fax, and, like other courts to have addressed the issue, found that claims based on receipt of the identical advertisement faxed by the same entity around the same time will meet the commonality and typicality requirements of Rule 23(a). (Id. at 4-6). In considering predominance, the Court noted that since recipients of the fax were all gleaned from a list purchased from a third-party provider, there were not the same individualized issues regarding prior consent and pre-existing relationships that have played a role in other TCPA suits. (Id. at 7-8.)
After making these findings, the Court considered Defendant’s sole argument – which it called the “nub” of the motion – that TCPA suits are best litigated individually rather than on a class basis. (Id. at 8.) Defendant argued that TCPA allows for relatively large statutory damages of $500 to $1500 per violation, and therefore litigation on a classwide basis was inferior to individual litigation in small claims court. For support, Defendant relied on New Jersey state court decision Local Baking Products v. Kosher Bagel Munch, Inc., 23 A.3d 469 (N.J. App. Div. 2011), which held that TCPA suits are categorically inappropriate for class certification. A key assumption in that case was that the $500 statutory damages award considerably exceeds any real damages suffered and therefore provides sufficient incentive for would-be plaintiffs to prosecute their claim in small claims court. (Id. at 8-9.)
Judge Chesler disagreed, stating that the Court “is skeptical that the possibility of numerous individual suits deters TCPA violations as effectively as an aggregated class action.” (Id. at 11.) Judge Chesler relied on dictum from a Third Circuit holding in reaching this finding, stating that the Third Circuit found “that there is little reason to believe individual small claims court actions are actually more efficient than suits brought elsewhere – ‘plaintiffs can still face protracted litigation when they sue individually.’” (Id. at 10.) The Court also expressly noted that a number of federal courts had questioned the rationale of Local Baking, and the Court was obligated to follow federal precedent in interpreting a federal rule. (Id. at 9.)
If would-be plaintiffs were previously hesitant in filing TCPA class action suits in New Jersey given the holding in Local Baking, this decision should remove any hesitation. Plaintiffs can rely on Judge Chesler’s analysis in arguing that a collective action is the superior mode of adjudicating such claims even in the face of relatively high statutory damages.