True Health Chiropractic Inc v. McKesson Corporation

Background

True Health Chiropractic, Inc. filed this putative class action in 2013, alleging that McKesson Corporation and McKesson Technologies, Inc. violated the Telephone Consumer Protection Act by sending unsolicited advertisements by fax. Plaintiffs alleged that they had not invited or permitted the faxes and that, even if permission or an established business relationship existed, the faxes lacked the required notice explaining how recipients could opt out of future faxes.

After earlier class-certification proceedings and an appeal, the court certified a class in August 2019. The Federal Communications Commission later ruled that an online fax service is not a “telephone facsimile machine” under the Telephone Consumer Protection Act, meaning that the statute does not impose liability for sending a fax to an online fax service. The court treated that ruling as binding and divided the certified class into a Stand-Alone Fax Machine Class and an Online Fax Services Class. After notice to class members, the court entered summary judgment against the Online Fax Services Class.

Remaining Class and Evidence

For the Stand-Alone Fax Machine Class, plaintiffs served 246 subpoenas on class members’ telephone carriers. Plaintiffs represented that the subpoena process would provide class-wide evidence showing whether recipients received the faxes on stand-alone fax machines rather than through online fax services. Plaintiffs also offered an expert’s proposed testimony that devices capable of receiving the fax transmission format would have the capacity to print the transmissions. The opinion states that the Federal Communications Commission had considered and rejected that capabilities-based argument.

Several carrier declarations stated that the carriers could not determine whether their customers received faxes through stand-alone machines or online fax services. Comcast said it had no mechanism to make that determination. Yelcot Telephone Company stated that a telephone line with an appropriate internet connection could be used with a third-party online fax service. AT&T and Frontier likewise stated that they could not identify how subscribers used their services. The court also questioned plaintiffs’ assumption that a carrier’s failure to provide an online fax service meant that the customer had not used a separate online fax service.

Legal Standard

Federal Rule of Civil Procedure 23 allows a court to alter or amend a class certification order before final judgment, including by decertifying the class. A class must meet Rule 23(a)’s requirements—numerosity, commonality, typicality, and adequate representation—and must also satisfy one of Rule 23(b)’s provisions. Plaintiffs had relied on Rule 23(b)(3), which requires that common legal or factual questions predominate over individual questions and that a class action be superior to other available methods of resolving the dispute.

The predominance requirement asks whether the class is cohesive enough to be resolved through representative evidence. An individual question requires evidence that varies from member to member; a common question can be answered with the same evidence for the class or through generalized class-wide proof.

Court’s Action and Reasoning

The court said the Stand-Alone Fax Machine Class had been certified based on plaintiffs’ representation that the subpoena process would produce class-wide proof about how the faxes were received. After reviewing plaintiffs’ offer of proof, the carrier declarations, and defendants’ response and declarations, the court expressed substantial concern that the process could not determine on a class-wide basis which recipients used stand-alone fax machines.

The court explained that the way each recipient received the fax had become a critical element of liability under the federal communications agency’s ruling. Without class-wide proof on that issue, each class member might need to provide individual evidence. The court stated that it then believed common questions did not predominate and that the requirements of Rule 23(b)(3) were not met.

The court did not decertify the Stand-Alone Fax Machine Class in this order. Instead, it ordered plaintiffs to show cause by October 4, 2021, why the class should not be decertified, and directed plaintiffs to cite authority supporting their position that the subpoena process produced adequate class-wide proof. Defendants were permitted to respond by October 6, 2021, with relevant authority concerning the predominance requirement.