True Health Chiropractic Inc v. McKesson Corporation

Background

True Health Chiropractic Inc. filed a putative class action alleging that McKesson Corporation sent unsolicited fax advertisements in violation of the Telephone Consumer Protection Act. The operative complaint later added McLaughlin Chiropractic Associates, Inc. as a plaintiff and McKesson Technologies, Inc. as a defendant. Plaintiffs alleged that they did not invite or permit the faxes and that the faxes lacked the required notice explaining how recipients could stop future faxes.

The case involved three groups of potential consent defenses. The group relevant to this order included recipients who allegedly consented by providing fax numbers during product registration or by entering software-licensing agreements. The court had previously denied class certification, but the Ninth Circuit directed the court to consider subclasses corresponding to the consent-defense groups. After further proceedings, the court certified a class limited to the first group and later denied a defense summary-judgment motion concerning whether product registration or the licensing agreement established permission to receive the faxes.

Motion to Decertify

Defendants moved to decertify the class, meaning to withdraw the earlier class certification. They argued that a new consumer survey showed substantial differences in how recipients understood the licensing agreement and that a Federal Communications Commission ruling required individualized inquiries about whether recipients received faxes through online fax services or traditional fax machines.

The court rejected the survey argument. It relied on the Ninth Circuit’s determination that consent based on the licensing agreement and product-registration form could be decided by examining those documents. The court also relied on its earlier ruling that the licensing agreement did not, as a matter of law, provide prior express permission to receive the faxes. The court was likewise unpersuaded that other evidence of consent required decertification.

The court held that the FCC Bureau’s ruling in Amerifactors was a final and binding order for purposes of the Hobbs Act. The Hobbs Act generally assigns review of FCC final orders to the federal courts of appeals. Amerifactors held that an online fax service that receives faxes as digital files over the internet, without the ability to print the fax itself, is not a “telephone facsimile machine” covered by the TCPA’s prohibition on unsolicited advertisements.

Based on that ruling and Ninth Circuit precedent, the court modified the class definition to create two classes: a Stand-Alone Fax Machine Class and an Online Fax Services Class. Both classes covered persons or entities whose fax numbers appeared in the specified Exhibit A, who received the specified McKesson faxes during the stated period, and whose faxes lacked an opt-out notice. The court rejected Defendants’ argument that the online-fax issue eliminated the court’s jurisdiction, explaining that whether the online-fax subclass had a TCPA claim was a common merits question for the subclass.

The court then denied Defendants’ motion to decertify the class.

Cross-Motions for Summary Judgment

Plaintiffs moved for summary judgment on TCPA liability and requested statutory and treble damages. Defendants moved for partial summary judgment limited to treble damages. The court deferred ruling on both motions because it had modified the class definition. The court stated that, under Amerifactors, the Online Fax Services Class appeared to have no cause of action as a matter of law and might be subject to summary judgment, but it did not enter that judgment in this order.

The court was inclined to allow updated notice explaining that the class had been divided into subclasses with different legal rights and to provide another opportunity to opt out. It directed each party to submit a separate statement, no longer than two pages, by January 19, 2021, stating whether it agreed with or objected to that proposal. The court denied the motion for class decertification and deferred ruling on the cross-motions for summary judgment.