The U.S. Court of Appeals for the Third Circuit has vacated a ruling denying class certification to businesses complaining about junk faxes sent allegedly from the financing arm of BMW.
Class certification had been denied by the district court in City Select Auto Sales v. BMW Bank of North America based on a finding that no reliable means existed for identifying whether potential class members fell within the proposed class definition. But the appeals court said in Wednesday’s ruling that the district judge misapplied the Third Circuit’s heightened standard for ascertainability.
The appeals court took no position on whether the class met the ascertainability standard, but said the review of that issue was deficient.
“The determination whether there is a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition must be tailored to the facts of the particular case,” Judge Anthony Scirica wrote for the court. “The amount of over-inclusiveness, if any, of the proposed records is a critical consideration.”
The Third Circuit has historically required only that a class be defined with objective criteria. But in 2012, the appeals court added a second requirement that a plaintiff must show a reliable, administratively feasible mechanism to identify class members.
One member of the three-judge panel wrote separately to say the enhanced standard adopted in 2012, which other circuits have declined to adopt, should be eliminated.
City Select, a used-car dealership, said the class membership could be determined based on affidavits from potential class members, along with a database of customer names that was the basis of the fax campaign. U.S. District Judge Noel Hillman denied certification, ruling that the plaintiff failed to provide a method for screening out parties that were listed with a fax number in the database but did not receive a fax.
City Select has filed other junk fax suits in the District of New Jersey, including one against a roofing company that allegedly sent it advertisements by fax. Statutory damages under the Telephone Consumer Protection Act start at $500 per unwelcome fax.
Scirica and Judges Cheryl Ann Krause and Julio Fuentes remanded the case, finding that affidavits from potential class members, in combination with the database, are not categorically precluded from Third Circuit ascertainability precedents. In addition, because the database in question was not produced in discovery, the plaintiffs were denied an opportunity to demonstrate whether the class could be ascertained with the use of the database, the appeals court ruled.
The suit claims Burlington’s City Select received an unsolicited fax advertising the services of defendants BMW Bank, BMW Financial and Creditsmarts Corp. BMW Financial contracted with Creditsmarts to market an auto financing program called up2drive. That company, in turn, retained a broadcast fax company called Westfax, which sent roughly 20,000 faxes on behalf of BMW Financial. The suit brings claims for common-law conversion and violation of the Telephone Consumer Protection Act. The suit is brought on behalf of a class of auto dealerships that were in Creditsmarts database on or before Dec. 27, 2012.
The appeals court took no position on whether the case met the ascertainability standard, citing a limited record.
“The determination whether there is a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition must be tailored to the facts of the particular case,” Scirica wrote for the court. “The amount of over-inclusiveness, if any, of the proposed records is a critical consideration.”
The appeals court took issue with Hillman’s conclusion that there is no evidence that the BMW fax was sent to every customer who had a fax number in the database. No conclusion can be made about the database if it’s not produced, the court said.
Fuentes, in a concurring opinion, agreed that City Select should have been given an opportunity to demonstrate that the database provides a reliable and administratively feasible means of determining whether potential class members meet the class definition. However, he said, the case “highlights the unnecessary burden on low-value consumer class actions created by our circuit’s adoption of a second ascertainability requirement.
The circuit added the second requirement for ascertainability in a 2012 decision, Marcus v. BMW of North America. Fuentes noted that the Second, Sixth, Seventh and Ninth circuits have all expressly rejected it. He cited a 2015 concurring decision in Byrd v. Aaron’s, by Judge Marjorie Rendell, who wrote, “the lengths to which the majority goes in its attempt to clarify what our requirement of ascertainability means, and to explain how this implicit requirement fits in the class certification calculus, indicate that the time has come to do away with this newly created aspect of Rule 23 in the Third Circuit. Our heightened ascertainability requirement defies clarification. Additionally, it narrows the availability of class actions in a way that the drafters of Rule 23 could not have intended.”
Fuentes said the added ascertainability requirement “undermines the very core of cases that the class action device was designed to bring to court: cases where many consumers have been injured, but none have suffered enough to make individual actions possible.
The lawyer for Creditsmarts, William Hayes III of Denver, declined to comment on the ruling. Julia Strickland of Stroock & Stroock & Lavan in Los Angeles, who represented BMW Bank and BMW Financial Services, and Phillip Bock of Bock, Hatch, Lewis & Oppenheim in Chicago, who represents the plaintiffs, did not immediately return calls seeking comment.