Jeffrey Katz Chiropratic, Inc. v. Diamond Respiratory Care, Inc.

Background

Diamond Respiratory Care, Inc. sold medical devices and had hand sanitizer available for sale in April 2020. It used a third-party fax service to send a hand-sanitizer advertisement to 17,219 fax numbers from a list of 19,985 numbers. Diamond believed that the people associated with those numbers had agreed during its sales process to receive fax communications.

Jeffrey Katz Chiropratic, Inc. received one of the faxes and sued Diamond under the Telephone Consumer Protection Act, which prohibits certain unsolicited advertisements sent to fax machines. Katz asked the court to certify a class consisting of people who received similar faxes from Diamond between June 22, 2016, and the date class notice would be sent, where Diamond supposedly obtained permission through its general sales process.

Katz also moved to strike declarations submitted by Diamond from putative class members who said they had consented to receive the fax. The court concluded that any discovery-related failure concerning those declarations was harmless and denied the motion to strike.

Class-certification standards

Under Federal Rule of Civil Procedure 23, a proposed class must meet requirements including numerosity, commonality, typicality, and adequacy of representation. It must also satisfy at least one part of Rule 23(b). Rule 23(b)(2) concerns class-wide injunctive or declaratory relief. Rule 23(b)(3) requires common questions to predominate over individual questions and requires a class action to be superior to other methods of resolving the dispute.

Rule 23(b)(2)

The court denied certification under Rule 23(b)(2) because Katz lacked Article III standing to seek final injunctive or declaratory relief. Katz had received one fax 18 months earlier and had no evidence that Diamond had sent another fax. The court therefore found no real and immediate threat that Katz would receive another fax. Because the named plaintiff lacked standing for the requested relief, the court concluded that there could be no class for that relief.

The court also noted that Rule 23(b)(2) would be inappropriate even if Katz or another plaintiff had standing, because Diamond had not acted or refused to act on grounds that applied generally to the proposed class.

Rule 23(b)(3)

The court denied certification under Rule 23(b)(3) because common questions did not predominate and a class action was not superior to other available methods of resolving the dispute.

First, the court found that determining whether each recipient had given prior express permission to receive the fax required individualized factual inquiries. Diamond obtained contact information and purported consent through varied telephone calls, facility visits, product discussions, and other individualized communications. The record showed that Diamond sometimes did not specifically ask whether it could send marketing faxes, while other sales discussions indicated that customers had given permission. Because consent could vary from recipient to recipient, the court found that a class proceeding would not generate common answers that would resolve liability. The court also stated that meritorious individual claims could be handled in small-claims court, making a class action an inferior method for resolving them.

Second, the court found an independent predominance problem concerning the type of fax technology used by each recipient. The court explained that only recipients who received the fax on a standalone fax machine had a cognizable claim under the Telephone Consumer Protection Act, while an online fax service was not a telephone facsimile machine under a Federal Communications Commission ruling discussed in the opinion. Determining how each recipient received the fax was an individualized factual question. Relying in part on another Northern District of California case involving similar issues, the court concluded that this question could not be resolved on a class-wide basis and also made a class action an inferior method of adjudication.

Disposition

The court denied class certification under both Rule 23(b)(2) and Rule 23(b)(3). It also denied Katz’s motion to strike the declarations. The opinion did not decide whether Diamond violated the Telephone Consumer Protection Act or whether any individual recipient had a valid claim. Judge Charles R. Breyer signed the order.