The procedural history in True Health Chiropractic Inc. v. McKesson Corp., No. 13-cv-02219-HSG, 2020 U.S. Dist. LEXIS 242297 (N.D. Cal. Dec. 24, 2020) is a handful, but sets the stage for Judge Gilliam’s ruling.
Defendants were ordered to identify “each type of act that Defendants believe demonstrates a recipient’s express permission to receive faxes (e.g. completing a software registration), (2) explain how that act qualifies as express permission, and (3) identif[y] each recipient allegedly giving that type of permission by name and contact information (including, at a minimum, fax and phone number).” Dkt. No. 178 at 12. In response, Defendants identified three groups of consent defenses that it argued relieved it of TCPA liability and produced three exhibits—Exhibits A, B, and C—corresponding to the consent-defense groups. See Dkt. No. 305-1 Ex. A, at 1-2. Fax recipients identified in Exhibit A purportedly gave consent by (1) providing fax numbers when registering a product purchased from a subdivision of McKesson; and (2) entering into software-licensing agreements, or End User License Agreements (“EULA”). Id. Fax recipients identified in Exhibit B purportedly gave consent by (1) checking a box during their software registration “that indicated express permission to be sent faxes as a preferred method of communication to receive promotional information;” (2) completing a written consent form “whereby they further provided their express permission to receive faxes;” or (3) confirming on phone calls “that they would like to continue to receive faxes and/or would like to change their communication method preferences.” Id. at 2. Fax recipients identified in Exhibit C purportedly gave Defendants consent through individual communications and personal relationships. Id. Plaintiffs later moved to certify a single class of all putative class members. Dkt. No. 209. The Court denied certification on the basis that Plaintiffs failed to satisfy Rule 23(b)(3)’s predominance requirement. Dkt. No. 260. Because the Court denied certification for failure to satisfy predominance, its order did not address other requirements for class certification. On appeal, the Ninth Circuit affirmed in part, reversed in part, and remanded. See True Health Chiropractic, Inc. v. McKesson Corp., 896 F.3d 923 (9th Cir. 2018) (“True Health”). The Ninth Circuit ruled that this Court should have considered the certification of subclasses tracking Defendants’ consent-defense groups identified in Exhibits A, B, and C. Id. at 930-31. The Ninth Circuit then (1) held that putative class members only in Exhibit A satisfy Rule 23(b)(3)’s predominance requirement; (2) held that putative class members in Exhibit C do not satisfy Rule 23(b)(3)’s predominance requirement; and (3) remanded to this Court to determine whether putative class members in Exhibit B satisfy Rule 23(b)(3)’s predominance requirement. Id. at 933. As to Exhibit B alone, the Ninth Circuit added: Given the somewhat unclear state of the record, and given that the district court has not had an opportunity to address class certification in light of our intervening decision in Van Patten, we view these and other issues related to Exhibit B as best addressed in the first instance by the district court on remand. Id.; see also Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037 (9th Cir. 2017). The Ninth Circuit left it to this Court, “in its discretion, to allow supplementation of the record in light of Van Patten and [its] opinion.” Id. Following remand, the Court reopened fact discovery for the limited purpose of supplementing the record in light of Van Patten, and only as to putative class members identified in Exhibit B. See Dkt. No. 285; see also Dkt. No. 309 (rejecting Defendants’ attempt to reopen fact discovery wholesale). After supplemental discovery, Plaintiffs submitted a renewed motion for class certification. See Dkt. No. 292. Plaintiffs sought certification limited to the Exhibit A-only Class. Id. at 2. And only Plaintiff McLaughlin sought appointment as a class representative. Id. at 3. At the hearing on the renewed motion for class certification, the Court advised the parties that it was inclined to permit narrow summary judgment briefing before ruling on that motion. See Dkt. No. 315. Specifically, the Court expressed interest in resolving whether the provision of fax numbers through the Medisoft product registration and EULA—in other words, Exhibit A consent defenses—constituted prior express invitation or permission to receive the disputed faxes, which is a matter of law that all parties agreed would resolve the case as to the named Plaintiff’s claim. Id. at 7. The Court then permitted summary judgment briefing on the limited issue of “whether voluntarily providing a fax number on product registration and/or agreeing to the [EULA] constitutes express permission.” Dkt. No. 322. On August 31, 2019, the Court denied Defendant’s motion for summary judgment, finding that Defendants failed to carry their burden to show Plaintiffs gave prior express invitation or permission for faxed advertisements through either the provision of their fax numbers in the Medisoft product registration form or agreeing to the EULA. Dkt. No. 331. The Court additionally granted Plaintiffs’ renewed motion for class certification, finding that the Exhibit A-only Class satisfied Rule 23(a)’s and Rule 23(b)(3)’s requirements. Id. After the Court set a new case schedule, the parties were required to submit dispositive motions by March 5, 2020. See Dkt. No. 344, 356. Now pending before the Court are Defendants’ motion to decertify class and the parties’ cross-motions for partial summary judgment. See Dkt. Nos. 360, 362, 363. At the hearing on the pending motions on May 21, 2020, the parties disputed whether the Court was bound by an FCC ruling which, if applicable, could impact several aspects of the case. Accordingly, the Court ordered the parties to submit supplemental briefs addressing the United States Supreme Court’s opinion in PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., 139 S. Ct. 2051, 2055, 204 L. Ed. 2d 433 (2019). See Dkt. Nos. 384, 385-388.
Judge Gilliam found merit in the Defendant’s argument, but narrowed the class definition rather than decertifying the class.
Here, the Court finds that Amerifactors is a final, binding order for purposes of the Hobbs Act. The Bureau acted “pursuant to delegated authority” to issue a declaratory ruling and the ruling became effective “upon release.” See 47 C.F.R. § 1.2; 47 CFR § 1.102 (b)(1). The pending petition for reconsideration before the FCC does not affect the order’s finality as it applies to Defendants’ potential liability under the TCPA. See 47 C.F.R. §1.102 (b)(2); Comm. to Save WEAM v. Fed. Commc’ns Comm’n, 808 F.2d 113, 119, 257 U.S. App. D.C. 218 (D.C. Cir. 1986) (holding that an application for FCC review could not preclude an order from taking effect unless the FCC decided to stay its effectiveness). And because Amerifactors establishes that those who received faxes via an online fax service have different legal rights than those who received faxes on a telephone facsimile machine, it clearly “determines rights and gives rights to legal consequences.” See Hamilton, 224 F.3d at 1055. Moreover, Plaintiffs’ request [*19] that the Court diverge from Amerifactors’ fundamental holding, that online fax services do not fall under the TCPA, would “raise the same issues…as the declaratory ruling” and is thus precluded by Ninth Circuit precedent. See Wilson, 87 F.3d at 399.7 Accordingly, in light of Amerifactors, the Court modifies the class definition to include a Stand-Alone Fax Machine Class and an Online Fax Services Class: All persons or entities who received faxes from “McKesson” via a “stand-alone” fax machine from September 2, 2009, to May 11, 2010, offering “Medisoft,” “Lytec,” “Practice Partner,” or “Revenue Management Advanced” software or “BillFlash Patient Statement Service,” where the faxes do not inform the recipient of the right to “opt out” of future faxes, and whose fax numbers are listed in Exhibit A to McKesson’s Supplemental Response to Interrogatory Regarding Prior Express Invitation or Permission, but not in Exhibit B or Exhibit C to McKesson’s Response to Interrogatory Regarding Prior Express Invitation or Permission. All persons or entities who received faxes from “McKesson” via an “online fax service” from September 2, 2009, to May 11, 2010, offering “Medisoft,” “Lytec,” “Practice Partner,” or “Revenue Management Advanced” software or “BillFlash Patient Statement Service,” where the faxes do not inform the recipient of the right to “opt out” of future faxes, and whose fax numbers are listed in Exhibit A to McKesson’s Supplemental Response to Interrogatory Regarding Prior Express Invitation or Permission, but not in Exhibit B or Exhibit C to McKesson’s Response to Interrogatory Regarding Prior Express Invitation or Permission. Defendants argue that “the Court lacks jurisdiction over any claims of the proposed ‘Online Fax Service Class.'” See Reply at 5. While the Court is aware of the language in Wilson that could be read in isolation to suggest as much, the reality is that in cases similar to this one, including TCPA cases, the Ninth Circuit has not appeared to view Wilson as divesting district courts of jurisdiction altogether. In Fober v. Management and Technology Consultants, LLC, 886 F.3d 789, 795 (9th Cir. 2018), for example, the Ninth Circuit found that the district court correctly granted summary judgment in favor of the defendant on the ground that plaintiff gave “prior express consent” as a matter of law. The court of appeals “presume[d] the validity of the relevant FCC rules and regulations,” id. at 792 n.2, and considered those rules and [*21] regulations as part of its analysis in affirming the district court’s summary judgment ruling, id. at 792-95. Significantly, the Ninth Circuit did not in any way suggest that the district court lacked jurisdiction to consider the case in the first place. Similarly, in Van Patten v. Vertical Fitness Group, LLC, 847 F.3d 1037 (9th Cir. 2017), the Ninth Circuit affirmed the post-class-certification grant of summary judgment against a TCPA plaintiff on the ground that he gave prior express consent to receive text messages and did not effectively revoke that consent. The court of appeals confirmed that it “[did] not question, in this appeal from an order of the district court, the validity of the FCC’s interpretation of ‘prior express consent,'” instead “read[ing] the 1992 [FCC] Order in a way that harmonizes with the TCPA’s text and purpose, as well as the FCC’s other orders and rulings.” Id. at 1044. Again, nowhere in its analysis did the Van Patten court suggest that the district court should have dismissed the case for lack of jurisdiction. Consistent with the Ninth Circuit’s approach in Fober and Van Patten, the Court acknowledges (as it must under controlling precedent) that Amerifactors is authoritative and establishes that those who received faxes via an online fax service have different legal rights than those who received faxes via a traditional physical fax machine. Accordingly, in modifying the class definition, the Court simply adheres to the FCC’s interpretation and enables a process for identifying those who received faxes via an online fax service. So rather than posing a threshold “jurisdictional” issue as Defendants assert, the question of whether the Online Fax Service subclass has a claim under the TCPA is simply a common merits question whose answer will be the same for all members of that subclass. Defendants further argue that Plaintiffs'”failure to fully describe . . . a common proof methodology and to show class-wide liability defeats predominance.” Reply at 7. But the Court is satisfied with Plaintiffs’ proposed three-step subpoena process to distinguish members of these subclasses based on Plaintiffs’ counsel’s experience in another TCPA case. See id. at 12 (citing Physicians Healthsource, Inc. v. Stryker Sales Corp., 2014 U.S. Dist. LEXIS 186368, 2014 WL 11429029, at *1 (W.D. Mich. Feb. 20, 2014)). Accordingly, the Court DENIES Defendants’ motion to decertify the class.