Opinion
3:18-cv-00990-YY
10-12-2023
ERIK MATTSON, Plaintiff, v. NEW PENN FINANCIAL, LLC, Defendant.
FINDINGS AND RECOMMENDATIONS
YOULEE YIM YOU, UNITED STATES MAGISTRATE JUDGE
FINDINGS
Currently pending is defendant New Penn Financial, LLC's Motion to Deny Class Certification (ECF 74). This court's previous Order (ECF 98) granting that motion was vacated and the case was remanded from the Ninth Circuit to consider in the first instance a recent decision from the Ninth Circuit that may bear on the analysis of defendant's motion. See Memorandum (March 23, 2003) 2, ECF 105 (citing Chennette v. Porch.com, 50 F.4th 1217 (9th Cir. 2022)). As explained below, defendant's motion to deny class certification should be granted because individualized issues regarding plaintiff's mixed-use telephone number will predominate this litigation, and the Ninth Circuit's recent decision in Chennette does not change that conclusion.
Plaintiff filed this class action suit alleging that defendant made telephone solicitations in violation of the Telephone Consumer Protection Act of 1991, 47 U.S.C. § 227 (“TCPA”). As the proposed class representative, plaintiff asserts defendant made calls to a cellular telephone number ending in -1930 (the “subject number”) in September 2017 and October 2017 in violation of the Federal Communication Commission regulations set forth in 47 C.F.R. § 64.1200(c) because the subject number was on the national do-not-call registry. Compl. ¶¶ 8488, ECF 1.
On October 25, 2020, this court denied defendant's Motion for Summary Judgment (ECF 46), finding there was a genuine issue of material fact regarding whether the subject number was a residential or business phone number. Order (Oct. 25, 2020) 3-4, ECF 71. Defendant then filed a Motion to Deny Class Certification (ECF 74), and the court granted the motion on the basis that plaintiff could not “meet the typicality and commonality requirements of [Federal Rule of Civil Procedure] 23 because individual questions concerning whether he is a residential subscriber subject to the TCPA's protections will predominate the litigation.” Order (July 9, 2021) 3, ECF 98 (citing Koos v. First Nat. Bank of Peoria, 496 F.2d 1162, 1164 (7th Cir. 1974)).
See Order 2, ECF 71 (“The TCPA does not apply to business telephone numbers.”) (citing 47 C.F.R. § 64.1200(c)(2)) (“No person or entity shall initiate any telephone solicitation to . . . [a] residential telephone subscriber who has registered his or her telephone number” on the do-not-call registry).
Defendant points out an apparent discrepancy between Judge Hernandez's order denying class certification, which relied on “typicality and commonality,” and the Findings and Recommendations, which relied on “typicality and adequacy.” Def. Supp. Br. 3 n.3, ECF 112. The distinction between these requirements under Rule 23 is not always well-defined, and in practice, the analysis between commonality, typicality, and adequacy tend to merge. See WalMart Stores, Inc. v. Dukes, 564 U.S. 338, 350 n.5 (2011) (“We have previously stated in this context that ‘[t]he commonality and typicality requirements of Rule 23(a) tend to merge. Both serve as guideposts for determining whether under the particular circumstances maintenance of a class action is economical and whether the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence. Those requirements therefore also tend to merge with the adequacy-of-representation requirement, although the latter requirement also raises concerns about the competency of class counsel and conflicts of interest.' ”) (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157158, n.13 (1982)).
Plaintiff sought and was granted permission to appeal the order denying class certification. See Order (Sept. 22, 2021) 1, ECF 101 (citing Fed.R.Civ.P. 23(f)) (additional citations omitted). While this case was pending on appeal, the Ninth Circuit issued its decision in Chennette, 50 F.4th at 1217, which “touched on issues relevant to this litigation.” Memorandum (March 2, 2023) 2, ECF 105. The Ninth Circuit “decline[d] to apply the new legal standard” from Chennette “in the first instance,” and instead “vacate[d] and remand[ed]” the matter “for further proceedings in light of Chennette.” Id. at 3. After the case was remanded, this court held a hearing and then ordered the parties to submit supplemental briefing addressing Chennette and its effect, if any, on the court's previous order denying class certification. See ECF 109, 112, 113, 114.
The plaintiffs in Chennette were home improvement contractors who sued the defendants for sending unsolicited text messages to cell phone numbers that were registered on the TCPA's do-not-call registry. 50 F.4th at 1220. The district court granted the defendants' motion to dismiss because the plaintiffs used their phones for both residential and business purposes and thus did not have statutory standing under the TCPA. Id. at 1221. The Ninth Circuit reversed and held that at the motion to dismiss stage, the “plaintiffs' registered cell phones that are used for both personal and business purposes are presumptively ‘residential' within the meaning of § 227(c),” and thus the plaintiffs' complaint contained allegations sufficient to establish statutory standing and overcome a motion to dismiss on that basis. Id. at 1225-26.
The Ninth Circuit further explained, though, that a defendant “may rebut the presumption and show that the cell phone is a business line.” Id at 1225. To rebut the presumption, the Ninth Circuit adopted a multi-factor test that many district courts, including this one, had used to evaluate whether “a phone used for both personal and business purposes can still be regarded as residential within the meaning of § 227(c)[.]” Id. at 1224 (citing Mattson v. New Penn Fin., LLC, No. 3:18-cv-00990-YY, 2020 WL 6270907, at *2 (D. Or. Oct. 25, 2020) (“Although [the plaintiff's] use of a phone line for personal calls does not automatically transform it into a residential line for purposes of the TCPA, neither does his use of a personal line for business calls automatically transform it into a business line.”)) (additional citations omitted). “Consistent with the decisions of most district courts to have addressed” whether a particular mixed-use number was actually a residential number, the Ninth Circuit provided the following factors to consider in determining whether the “residential” presumption is rebutted:
(1) how plaintiffs hold their phone numbers out to the public; (2) whether plaintiffs' phones are registered with the telephone company as residential or business lines; (3) how much plaintiffs use their phones for business or employment; (4) who pays for the phone bills; and (5) other factors bearing on how a reasonable observer would view the phone line.Id. at 1225. The Ninth Circuit found that the complaint adequately alleged that the plaintiffs had “placed their ‘residential' cell phone numbers on the national do-not-call registry” and thus established statutory standing because the “plaintiffs' phones [were] presumptively residential for purposes of § 227(c).” Id. The court remanded the case to allow the parties to conduct discovery, after which the defendants could “argue that they have rebutted the presumption by showing that [the] plaintiffs' cell phones are used to such an extent and in such a manner as to be properly regarded as business rather than ‘residential' lines.” Id. at 1226.
Chennette does not have any impact on this court's previous order that plaintiff cannot meet the typicality and commonality requirement under Rule 23. For one, Chennette was not a class action and therefore the analysis there did not touch on any issues related to the requirements under Rule 23 for class certification. See Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (“[T]o obtain class certification, the court must find: (1) numerosity of plaintiffs; (2) common questions of law or fact predominate; (3) the named plaintiff's claims and defenses are typical; and (4) the named plaintiff can adequately protect the interests of the class.”) (citing Fed.R.Civ.P. 23(a)). The primary take-away from Chennette is that, at the pleading stage, a number listed on the do-not-call registry is presumptively residential, and the Ninth Circuit held that presumption was sufficient to establish statutory standing on behalf of a plaintiff with a mixed-use number and overcome a motion to dismiss on statutory standing grounds. 50 F.4th at 1225. The Chennette court made clear that a defendant could then rebut the presumption after conducting discovery, and that the subsequent analysis of whether a mixed-use number was actually residential must consider the totality of the facts and circumstances about how the plaintiff actually used the number. Id. This court's previous analysis on summary judgment regarding the nature of plaintiff's mixed-use number conforms to Chennette's direction, and was, in fact, one of the decisions the Chennette court cited to in establishing the multi-factor test for evaluating the facts and circumstances for mixed-use numbers under the TCPA as the law of this circuit moving forward. See 50 F.4th at 1224 (citing Mattson, 2020 WL 6270907 at *2) (additional citations omitted).
As previously explained, the question whether plaintiff's number is a residential or business phone number is “not only fact-intensive but also hotly contested, as the briefing on summary judgment illustrates.” Findings and Recommendations 10, ECF 85; see also Stevens- Bratton v. TruGreen, Inc., 437 F.Supp.3d 648, 658 (W.D. Tenn. 2020) (“The determination about whether any particular wireless subscriber is a residential subscriber is fact-intensive.”) (simplified). The court granted defendant's motion to deny class certification because “individual questions concerning whether he is a residential subscriber subject to the TCPA's protections will predominate the litigation.” Order (July 9, 2021) 3, ECF 98; (citing Koos, 496 F.2d at 1164). That analysis has not changed after Chennette. Plaintiff still bears the burden of establishing that he meets adequacy, typicality, and commonality requirements under Rule 23. Zinser v. AccufixRsch. Inst., Inc., 253 F.3d 1180, 1186 (9th Cir. 2001) (“[T]he party seeking class certification . . . bears the burden of demonstrating that she has met each of the four requirements of Rule 23(a) and at least one of the requirements of Rule 23(b).”). The yet-to-be-determined issue of whether plaintiff's mixed-use number is actually a residential number still risks becoming a focus of this litigation after Chennette, and thus class certification is still inappropriate. See Hanon, 976 F.2d at 508 (“[C]lass certification is inappropriate where a putative class representative is subject to unique defenses which threaten to become the focus of the litigation.”).
Neither this court's previous orders nor Chennette conclusively establish, as plaintiff seems to assert, that plaintiff's mixed-use number was actually a residential number. Pl. Supp. Resp. 6, ECF 113 (“Although the presumption of residential subscriber status can be rebutted, [defendant] had that opportunity and failed to rebut the presumption, as even [defendant] acknowledges.”); see also id. at 18 (“The only disputed issue was the residential subscriber status and that issue has been resolved.”). Quite the contrary-this court found “that a genuine issue of material fact remains concerning whether the subject number was a residential or business phone number.” Order (Oct. 25, 2020) 3-4, ECF 71. To the extent Chennette established a presumption that applies at the pleading stage to determine whether a plaintiff has stated a claim, the case plainly does not stand for the proposition that the presumption carries through the case as an established fact, or somehow subsumes Rule 23‘s typicality, adequacy, or commonality requirements. See 50 F.4th at 1225-26 (“At the motion to dismiss stage and based on the particular allegations in the plaintiffs' complaint, plaintiffs' phones are presumptively residential for purposes of § 227(c)....After discovery, defendants may seek to argue that they have rebutted the presumption by showing that plaintiffs' cell phones are used to such an extent and in such a manner as to be properly regarded as business rather than ‘residential' lines.”). If anything, Chennette further supports the conclusion that analyzing whether plaintiff's mixed-use phone was a residential or business line is an individualized determination based on the totality of the circumstances that prevents plaintiff from establishing the typicality and commonality requirements under Rule 23.
None of the authorities plaintiff cites relieve his burden to establish adequacy, typicality, or commonality under Rule 23. See Pl. Supp. Br. 8-9, ECF 113 (citing Halliburton Co. v. EricaP. John Fund, Inc., 573 U.S. 258, 275 (2014); In re Mersho, 6 F.4th 891, 901 (9th Cir. 2021)). The presumption at issue in Haliburton applied to the “predominance requirement of Rule 23(b)(3).” 573 U.S. at 276 (explaining effect of presumption established by Basic Inc. v.Levinson, 485 U.S. 224 (1988)). The mere fact that a pleading presumption applies here does not, as plaintiff suggests, inevitably mean that the suit is appropriate to certify as a class action. See Pl. Supp. Br. 8-11. ECF 113; see also Falcon, 457 U.S. at 160 (“Sometimes the issues are plain enough from the pleadings to determine whether the interests of the absent parties are fairly encompassed within the named plaintiff's claim, and sometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question.... [A]ctual, not presumed, conformance with Rule 23(a) remains . . . indispensable.”). Moreover, the Ninth Circuit has previously found that class certification was not appropriate in a case where the class representative relied on the same rebuttable presumption underlying Halliburton because the plaintiff's “unique situation” made it “predictable that a major focus of the litigation will be on a defense unique to him.” Hanon, 976 F.2d at 509; see also id. at 507 (citing Basic, 485 U.S. at 248-49).
The Ninth Circuit's decision in Mersho is even less apt; that case involved the appointment of a lead plaintiff in a securities class action, “which is governed by the three-step process set out in the Private Securities Litigation Reform Act (PSLRA), 15 U.S.C. § 78u-4.” 6 F.4th at 896. That statute directs the district court to “identify the presumptive lead plaintiff, who is the movant with the largest financial interest and who has made a prima facie showing of adequacy and typicality.” Id. Nothing about that “lead plaintiff presumption” has any effect on Rule 23's adequacy and typicality requirements; the presumptive lead plaintiff still must make a prima facie showing of those requirements, and the statute specifically allows “competing movants [to] rebut the presumption by showing that the presumptive lead plaintiff will not fairly or adequately represent the class.” Id. (citing 15 U.S.C. ¶ 78u-4(a)(3)(B)(iii)(II)(aa)); see also Inre Cavanaugh, 306 F.3d 726, 730 (9th Cir. 2002) (explaining that the “presumptive lead plaintiff” still must “otherwise satisf[y] the requirements of Rule 23”).
Finally, plaintiff has not adequately explained why class discovery is necessary before determining class certification. See Pl. Supp. Br. 23-24, ECF 113. The conclusion here depends on the individualized, “hotly contested” fact issues that are unique to plaintiff, and the parties have already conducted the discovery relevant to that analysis. See generally Mot. Summ. J., ECF 46; Resp., ECF 57. No further investigation is warranted as to other members of the purported class at this juncture. See Banarji v. Wilshire Consumer Cap., LLC, No. 3:14-cv- 02967-BEN-KSC, 2016 WL 595323, at *2 (S.D. Cal. Feb. 12, 2016) (denying request for classwide discovery because the evidence the plaintiff sought to discover would “not affect the uniqueness of [the plaintiff's] case”).
RECOMMENDATIONS
Defendant's Motion to Deny Class Certification [74] should be granted.
SCHEDULING ORDER
These Findings and Recommendations will be referred to a district judge. Objections, if any, are due Thursday, October 26, 2023. If no objections are filed, then the Findings and Recommendations will go under advisement on that date.
If objections are filed, then a response is due within 14 days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendations will go under advisement.
NOTICE
These Findings and Recommendations are not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any Notice of Appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of a judgment.