District Court (Cal.) Says, At the Pleadings Stage, TCPA Class is Not a Prohibited “Fail Safe” Class

In Panacci v. A1 Solar Power, Inc., 2015 WL 3750112, at *3 (N.D.Cal., 2015), Magistrate Judge Spero refused to strike TCPA class action allegations at the pleadings stage under Defendant’s argument that Plaintiff had pleaded an impermissible “fail-safe” class.

Defendants claim that Plaintiff’s class definitions create fail-safe classes. . . .Plaintiff argues that its class definitions are not fail-safe because (1) membership can be readily determined by objective criteria, without deciding the merits of each claim; (2) none of the criteria of class membership, combined or individually, including registration on the National DNC Registry, is dispositive of liability; and (3) unlike the cases cited by Defendants, Plaintiff’s class definitions do not incorporate a critical element of the claim or an affirmative defense, such as consent, as a requirement for class membership. . . .A class is fail-safe if it is “defined in a way that precludes membership unless the liability of the defendant is established.” Kamar v. RadioShack Corp., 375 F. App’x 734, 736 (9th Cir.2010). In other words, once it is determined that a person–a potential class member–cannot prevail against the defendant, the person “drops out of the class.” Id.; see Onley v. Job.com, Inc., No. 1:12–CV–01724–LJO, 2013 WL 5476813, at *11 (E.D.Cal. Sept. 30, 2013) (a fail-safe class consists of only people who would prevail on the liability issue). A class definition that is fail-safe requires the court to reach a legal conclusion on the validity of a person’s claim in order to determine whether the person is in the class. See Brazil v. Dell Inc., 585 F.Supp.2d 1158, 1167 (N.D.Cal.2008); Velasquez v. HSBC Fin. Corp., No. 08–4592 SC, 2009 WL 112919, at *4 (N.D.Cal. Jan. 16, 2009) (“fail-safe classes are defined by the merits of their legal claims, and are therefore unascertainable prior to a finding of liability in the plaintiffs’ favor”). A court may strike a class definition, even at the pleading stage, on the basis that the class definition creates a fail-safe class. See Brazil v. Dell, Inc., No. 07–1700, 2008 WL 2693629, at *7 (N.D.Cal. July 7, 2008) (striking the class definition in a claim under the California False Advertising Law, where the class was in part defined as all persons who purchased products from Dell that Dell “falsely advertised as discounted”). Plaintiff’s class definitions are not fail-safe. Membership in both of Plaintiff’s proposed classes can be determined without reaching any legal conclusions: to determine whether someone is in the class, one simply needs to answer questions such as whether the person is on a DNC registry or whether the person received a certain number of phone calls from Defendants within a certain timeframe. See Brazil, 585 F.Supp.2d at 1167. None of these questions involve legal analysis. Membership can be determined by objective criteria. See Onley, 2013 WL 5476813, at *11 (finding that class definition is not fail-safe in part because “membership in this class can be readily determined by objective criteria”). Furthermore, the classes would not consist of only people who would prevail on the merits: for example, National DNC Class members would not prevail if a court found that NREC’s calls were not telephone solicitations or that NREC obtained prior consent before placing their calls. See id. (finding that a class defined as all persons who received calls from defendant during a given timeframe through the use of an ATDS was not fail-safe, where the class definition did not impose additional requirements that would have created a class consisting of only people “who would prevail on this liability issue”). Likewise, Company DNC Class members would not prevail if a court found that NREC’s calls were not telephone solicitations (it is less clear if a person registered on the Company DNC Registry can subsequently give consent, e.g. six months later, and the effect of that consent on the person’s status in the Company DNC Registry). Cf. Ott v. Mortgage Investors Corp. of Ohio, No. 3:14–CV–00645–ST, 2014 WL 6851964, at *15 (D. Or. Dec. 3, 2014) (finding that people who request to be placed on an internal DNC registry can subsequently consent to receiving calls under 47 C.F.R. § 64.1200(d)(5)); 47 C.F.R. § 64.1200(d)(6) (“A do-not-call request must be honored for 5 years from the time the request is made”). In addition, the proposed class definitions here are different from the fail-safe class definitions cited by Defendants because the class definitions here do not weed out all members who will not succeed on the merits by asking the court to make findings on legal issues, such as prior consent, in determining class membership. See Lindsay Transmission, LLC v. Office Depot, Inc., No. 4:12–CV–221 CEJ, 2013 WL 275568, at *4 (E.D.Mo. Jan. 24, 2013) (striking class definition in a TCPA claim under 47 U.S.C. § 227(b)(1)(C) as fail-safe, where class was defined in part as all persons who “were sent telephone facsimile messages of material advertising the commercial availability of any property, goods, or services by or on behalf of Defendant [and] with respect to whom Defendant cannot provide evidence of prior express permission or invitation for the sending of such faxes [and] with whom Defendant does not have an established business relationship”); G.M. Sign, Inc. v. Franklin Bank, S.S.B., No. 06 C 949, 2007 WL 4365359, at *3 (N.D.Ill.Dec. 13, 2007) (striking a class definition in a TCPA claim where class included persons who were sent an “unlawful fax message” and for whom the defendant “cannot provide evidence of … permission or invitation for the fax to be sent”); Sauter v. CVS Pharmacy, Inc., No. 2:13–CV–846, 2014 WL 1814076, at *8 (S.D.Ohio May 7, 2014) (class definitions in TCPA claim were fail-safe because they were restricted to “only those individuals who did not expressly consent to the receipt of the defendant’s phone calls made with the use of n ATDS” and thus consisted “solely of persons who can establish that defendant violated the TCPA”); Onley, 2013 WL 5476813, at *11 (class defined as “anyone who received [a call from defendant to her cellular phone made through the use of an ATDS] without prior express consent” was fail-safe because the class would consist of “only those potential members who would prevail”). Unlike the cases cited by Defendants, Plaintiff’s class definitions do not require the court to legally conclude whether a person gave “prior consent” in order to determine whether that person is in the class. See Brazil, 585 F.Supp.2d at 1167 (finding class definition to be fail-safe because “to determine who should be a member of these classes, it would be necessary for the court to reach a legal determination that [defendant] had falsely advertised”). Defendants also ask the Court to strike the class definition on the basis that “given the scant factual allegations in the Complaint and the vague nature of Plaintiff’s claims, Defendants cannot ascertain the boundaries of the putative class [and that] [s]uch an amorphous class definition could not survive certification, and the litigation of such a case would be costly and unmanageable.” Mot. at 14. Class definitions that are plainly not ascertainable or otherwise deficient may be stricken on the pleadings. See Kamm v. California City Dev. Co., 509 F.2d 205, 207 (9th Cir.1975) (striking class allegations because state action with respect to the same controversy had already commenced and relief had been obtained such that the alleged class action would not meet the superiority requirement); Sanders, 672 F.Supp.2d at 990–91 (N.D.Cal.2009) (striking class allegations because class was not ascertainable in a fraud claim where class definition necessarily included people who lacked standing); John v. Nat’l Sec. Fire & Cas. Co., 501 F.3d 443, 445 (5th Cir.2007) (“Where it is facially apparent from the pleadings that there is no ascertainable class, a district court may dismiss the class allegation on the pleadings”). However, here, it is not facially apparent from the pleadings that the class is unascertainable–the criteria are objective and do not require legal conclusions. Unlike the cases striking class allegations on the pleadings, here there are no obvious deficiencies in Plaintiff’s class definitions to warrant striking them at the pleading stage. See Simpson v. Best W. Int’l, Inc., No. 3:12–CV–04672–JCS, 2012 WL 5499928, at *9 (N.D.Cal. Nov. 13, 2012) (“Although it is not per se improper for a defendant to move to strike class allegations before the motion for class certification … most courts decline to grant such motions because ‘the shape and form of a class action evolves only through the process of discovery’ ”). Given the lack of obvious defects in Plaintiff’s class definitions and the infrequency of striking class allegations prior to motions for class certification, Defendants’ Motion under Rule 12(f) is denied.