A district court recently decertified a class of plaintiffs seeking damages after the judge ruled that recent changes in the Telephone Consumer Protection Act (the “TCPA”) warranted decertification.  In particular, the court ruled that under the “Solicited Fax Rule,” the question of consent required individualized analysis, and rejected the plaintiff’s argument that solicited faxes require the specific opt-out language required by TCPA regulations.

Plaintiff Lawrence S. Brodsky, an insurance wholesaler, filed a lawsuit against HumanaDental Insurance Company (“HumanaDental”) following the receipt of two identical one-page fax messages sent by Humana Specialty Benefits.  Plaintiff has “market agreements” with numerous insurance companies in which he sells those companies’ products through various insurance agents and independent contractors.  Plaintiff entered one such contract with Humana Insurance Co. “and all of their affiliates,” which stipulated that Plaintiff agreed that Humana Insurance Co. and all of its affiliates “may choose to communicate with [Plaintiff] through the use of . . . facsimile to the . . . facsimile numbers of” Plaintiff.  In connection with this agreement, Plaintiff provided Humana Insurance Co. with his facsimile number.

Following the denial of HumanaDental’s motion for summary judgment, the court granted HumanaDental’s motion for class certification in part and certified a class of entities who received one or more faxes between May 2007 and September 2008 that named Humana Specialty Benefits or HumanaDental on the bottom of the fax and, among other items, contained an “opt out” notice that stated “If you don’t want us to contact you by fax, please call 1-800-U-CAN-ASK,” or “If you don’t want us to contact you by fax, please call 1-888-4-ASSIST.”  Plaintiff argued that these faxes violated the TCPA because they did not contain the proper “opt out” language.

The Solicited Fax Rule

The TCPA prohibits sending “unsolicited advertisements” via fax, and a fax is “unsolicited” if the recipient has not given its prior expression invitation or permission to receive the fax.  The TCPA provides select exceptions to the ban on unsolicited faxes if, among other things, the fax contains an “opt-out notice” that meets various statutory requirements.  In 2006, the Federal Communications Commission (the “FCC”), pursuant to its authority to prescribe regulations to implement the requirements of the TCPA, promulgated the “Solicited Fax Rule,” which required both solicited and unsolicited faxes to include the opt-out notice described in the TCPA.  In other words, the FCC’s 2006 rule mandated that senders of solicited faxes comply with a statutory requirement that applied only to senders of unsolicited faxes.

In October 2014, the FCC granted certain non-party petitioners retroactive waivers of the Solicited Fax Rule in light of inconsistencies between the Solicited Fax Rule and other FCC guidance (the “2014 Order”).  The FCC also explicitly invited “similarly situated” parties to apply for other retroactive waivers.  (Prior discussion on this blog regarding the Solicited Fax Rule waivers can be found on this blog here.)

HumanaDental applied for and received such a waiver.  The waiver explicitly excused HumanaDental for any failure “to comply with the opt-out notice requirement for fax advertisements sent with the prior express invitation or permission of the recipient prior to April 30, 2015.”

Following the 2014 Order, several fax senders filed petitions for review of the FCC’s decision in multiple circuit courts.  These petitions were consolidated into an action pending in the District of Columbia Circuit.  In March 2017, a split panel of the D.C. Circuit struck down the Solicited Fax Rule in Bais Yaakov v. FCC, No. 14-1234 (D.C. Cir. Mar. 31, 2017) holding it “unlawful to the extent that it requires opt-out notices on solicited faxes.”  The majority found that the TCPA only applies to unsolicited fax advertisements, such that the FCC lacked the authority to promulgate a rule governing solicited faxes.

HumanaDental’s Motion to Decertify Class

Following HumanaDental’s receipt of a waiver from the FCC and the D.C. Circuit’s decision in Bais Yaakov, HumanaDental moved to decertify the class, arguing that individual questions defeat the superiority and predominance requirements of Rule 23, such that the class must be decertified.  The court agreed that the presence of the FCC waiver led to the conclusion that issues of individualized consent predominated, finding that: (1) a substantial portion of the certified class were not a parties to the same contract that Plaintiff entered into with Humana Insurance Co.; (2) select members of the class may have revoked their consent even after entering into such a contract; and (3) the “scope” of a particular consent in the contract might not extend to other “affiliated” class members offering insurance at the same location.  The court noted by way of example that while Plaintiff was a party to the contract, at least seven other individuals had his permission to use his fax machine during the time period at issue; questions regarding whether those other individuals had consented to receiving faxes from HumanaDental would “consume[] and overwhelm[]” trial.

In so holding, the court rejected Plaintiff’s argument that the waiver, while insulating HumanaDental from an administrative enforcement action with the FCC, had no effect in a private TCPA action.  Plaintiff relied on a single authority for its position, but the Court rejected that decision’s analysis and noted that the case had been “called into question by a number of authorities cited by Defendant” and sided with the caselaw cited by Defendant.

With regard to the application of Bais Yaakov, the Court also declined to adopt Plaintiff’s argument that the case was inconsistent with the Seventh Circuit’s decision in Holtzman v. Turza.  Specifically, the court found that, at best, dicta from that decision could be read to expand the TCPA’s requirements relating to opt out notices to cover solicited as well as unsolicited faxes, but declined to afford Turza “a reading that would improperly expand the TCPA.”

The Court concluded that the waiver and Bais Yaakov bring the question of consent back into the picture.  This decision provides defendants with a stronger argument for defense against motions to certify classes in instances where the communications in question include solicited communications.

Plaintiff has appealed this decision to the Seventh Circuit.