Authored by: Julian Perlman
Editor’s Note: This post is a joint submission with BakerHostetler’s Class Action Lawsuit Defense blog.
In a significant decision for companies that engage in electronic marketing, a New Jersey federal judge certified a 23(b)(3) class claiming violations of the Telephone Consumer Protection Act (“TCPA”; 47 U.S.C. § 227(b)(1)(C)).
In A&L Industries Inc. v. P. Cipollini Inc., case no. 2:12-cv-07598 in the U.S. District Court for the District of New Jersey, Plaintiff brought suit on behalf of itself and others similarly situated, alleging violations of the TCPA, as well as violations of New Jersey’s Junk Fax statute and Consumer Fraud Act. The claims stem from Defendant’s sending a one-page fax advertisement for its roofing business through a third-party marketing company to 4,573 different fax numbers over the course of two days in September 2006.
The Defendant opposed class certification on superiority grounds, arguing that because the TCPA authorizes statutory damages of $500-$1,500 per violation, class action adjudication is inferior because individual plaintiffs had incentive to bring individual small claims lawsuits to recover statutory damages. Judge Stanley R. Chesler rejected Defendant’s argument that adjudication on a class-wide basis was an inferior method of litigating the claims, finding that the superiority requirement of Federal Rule of Civil Procedure 23(b)(3) was met. The question was apparently one of first impression in the District of New Jersey and the Third Circuit, although a New Jersey state appellate court had held in 2011 that TCPA lawsuits were categorically inappropriate for class certification (slip op. at 8, citing Local Baking Products v. Kosher Bagel Munch, Inc., 23 A.3d 469. 476 (N.J. App. Div. 2011)). Local Baking had held that the availability of statutory damages under the TCPA was sufficient to motivate individuals to assert their claims, because the amount of statutory damages almost certainly exceeded a consumer’s actual damages from receiving an unsolicited fax advertisement. The A&L Industries court criticized this analysis, finding that the “difference between actual and statutory damages, however, is of no moment when the statutory recovery is, in absolute terms, still minimal.” Judge Chesler found that the class vehicle was superior because “[i]n the absence of class treatment, duplicate evidence of Defendant’s alleged TCPA violation would have to be provided in hundreds if not thousands of individual lawsuits. Determining Defendant’s liability in one proceeding results in substantial efficiency gains for the parties and the court system.”
Plaintiffs lawyers are likely to seize upon the reasoning set forth in A&L Industries, potentially engendering more class actions for violations of the TCPA’s junk fax provisions, which prohibit the use of a fax machine or other device to send an unsolicited advertisement. This is particularly so in cases such as this where the faxes were sent through a third-party marketing company. In such situations, it is unlikely that exceptions to the application of the TCPA, including where there is a preexisting business relationship between the sender of the fax and the recipient, would apply. Furthermore, no longer faced with a case of first impression, New Jersey plaintiff’s lawyers now have a decision to rely on when arguing that class treatment of TCPA actions is a superior method of adjudicating them.