E. GRADY JOLLY, Circuit Judge:
This case comes to us as a Rule 23(f) interlocutory appeal from an order certifying a class of plaintiffs who allege violations of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, specifically unsolicited advertisements sent from one fax machine to another. Two questions are before the court. The first question, raised for the first time on appeal, is whether the district court had subject-matter jurisdiction over this case. We hold that the district court had subject-matter jurisdiction under provisions of the Class Action Fairness Act of 2005 ("CAFA"), Pub.L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.). The second question is whether the district court abused its discretion by certifying the class. We hold that the district court abused its discretion by
The TCPA prohibits, inter alia, the sending of an "unsolicited advertisement" via a fax machine to another fax machine. 47 U.S.C. § 227(b)(1)(C).
The recipient of an unsolicited fax advertisement may bring an action to enjoin future violations of the TCPA and/or to recover the greater of his actual damages or $500 for each such violation. § 227(b)(3). The monetary award may be trebled if the court finds that a violation was willful or knowing. Id.
Between 2001 and 2005, Defendant-Appellant BioPay, through a third-party contractor, sent over 4,000 fax messages advertising its services to potential clients in Louisiana. One of BioPay's faxes was sent to Gene & Gene, LLC ("Gene"). Gene filed a class-action suit against BioPay in federal court, alleging that BioPay violated the TCPA by sending unsolicited fax advertisements to Gene and to an unidentified
The distinction between consenting and non-consenting recipients was the primary issue before the district court in the class-certification dispute.
BioPay argued that determining whether the recipient of each fax had consented to its transmission would require a series of individual factual determinations, or mini-trials, which made class certification improper. This argument was of course premised on the facts as they were developed in the case. BioPay has admitted that it purchased databases that included the contact information of potential customers, and BioPay also has admitted that it culled fax numbers from these databases. BioPay, however, has produced evidence that it also periodically culled fax numbers from other sources—from information submitted by merchants through BioPay's website, from information submitted at trade shows BioPay attended, and also from lists of companies with which BioPay or its affiliates had an established business relationship. BioPay thus contends that a significant number of the faxes it sent were consented to by the recipients. Further, BioPay has produced records of all the faxes that were successfully sent. BioPay also has produced testimony, however, that its database entries do not consistently or accurately reflect whether a given recipient had consented to receive fax advertisements, and this is because BioPay did not begin to record this information until May of 2004, and then only with sporadic and therefore unreliable consistency. BioPay thus contends that there is no class-wide basis by which to distinguish those fax recipients who had consented to receiving faxes from those who had not consented, which suggests that the determination of consent, or the lack thereof, would require hundreds of mini-trials.
Gene argued that class certification was proper because BioPay sent its fax advertisements as part of a common course of conduct. Gene argued that it is irrelevant that BioPay culled fax numbers from a variety of sources, as Biopay, according to Gene, bears the burden of proving consent and has not retained the necessary documents or records to meet this burden.
The district court agreed with Gene, at least in part, and certified the class, determining that the proposed class meets the requirements of Rule 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure. Gene & Gene, LLC v. Biopay, LLC, 240 F.R.D. 239 (M.D.La.2006). BioPay now appeals the district court's certification of the class and, for the first time on appeal, questions whether the district court had subject-matter jurisdiction over this case.
We may consider subject-matter jurisdiction at any point, including for the
The district court had subject-matter jurisdiction over this case pursuant to provisions of CAFA.
We review class-certification decisions for abuse of discretion. See Allison v. Citgo Petroleum Corp., 151 F.3d 402, 408 (5th Cir.1998). "Implicit in this deferential standard is a recognition of the essentially factual basis of the certification inquiry and of the district court's inherent power to manage and control pending litigation." Id. We review de novo, however, whether the district court applied the correct legal standards in determining whether to certify the class. Id.
To obtain class certification, a party must satisfy Rule 23(a)'s four threshold requirements (numerosity, commonality, typicality, and adequacy of representation), as well as the requirements of Rule 23(b)(1), (2), or (3). See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613-14, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997). We emphasize that it is the party seeking certification that bears the burden of establishing that the requirements of Rule 23 have been met. O'Sullivan v. Countrywide Home Loans, Inc., 319 F.3d 732, 737-38 (5th Cir.2003). And we also emphasize that district courts must "conduct a rigorous analysis of the Rule 23 prerequisites before certifying a class." Id. at 738 (internal quotation marks omitted).
As noted above, the district court determined that Gene's proposed class satisfies the requirements of Rule 23(a) and (b)(3).
Since the thresholds for commonality and typicality under Rule 23(a) are not high, see James v. City of Dallas, 254 F.3d 551, 571 (5th Cir.2001), we will assume that Rule 23(a) is satisfied and turn to evaluate the parties' arguments against the more exacting demands of Rule 23(b)(3). A party seeking class certification under Rule 23(b)(3), as Gene does here, must demonstrate both "that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently
The predominance inquiry requires a court to consider "how a trial on the merits would be conducted if a class were certified." Bell Atl. Corp. v. AT&T Corp., 339 F.3d 294, 302 (5th Cir.2003) (quotation marks and citation omitted). This, in turn, "entails identifying the substantive issues that will control the outcome, assessing which issues will predominate, and then determining whether the issues are common to the class, a process that ultimately prevents the class from degenerating into a series of individual trials." Id. (quotation marks and citation omitted). The predominance requirement of Rule 23(b)(3), though redolent of the commonality requirement of Rule 23(a), is "far more demanding" because it "tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation." Amchem Prods., 521 U.S. at 623-24, 117 S.Ct. 2231.
The district court determined that the predominance requirement was satisfied based on a "common course of conduct, fax blasting." The district court did not, however, identify the substantive issues that will control the outcome of the case, assess which of these issues will predominate, or determine whether these issues are common throughout the proposed class. We are most concerned, however, that the district court failed to address the broader consideration of the predominance requirement: The district court did not explain how the common course of conduct it described would affect a trial on the merits. Thus, the district court's assertion that this case would not degenerate into a series of individual trials is largely unsupported and is, in our opinion, mistaken.
The district court referenced Mullen v. Treasure Chest Casino, LLC, 186 F.3d 620 (5th Cir.1999), to support its determination that BioPay's common course of conduct, as described by Gene, i.e., the transmission of identical faxes via the same procedure, satisfies the predominance inquiry. The district court noted that in Mullen "the putative class members [were] symptomatic [of occupational respiratory illness] by definition and claim[ed] injury from the same defective ventilation system over the same general period of time." Id. at 627. The district court, however, mistakes the force of the quoted language. That the putative class members in Mullen suffered the same injury from the same source over the same general period of time was relevant because these facts allowed for a class-wide basis for deciding two "pivotal" issues—seaworthiness and negligent breach of duty. Id. at 626-27. Mullen, then, indicates only that commonalities among class members will sometimes, but not necessarily always, allow for a classwide basis for deciding predominant issues. Here, the district court simply noted a common course of conduct, fax blasting, but did not determine, as we did in Mullen, whether the common course of conduct provided a class-wide basis for deciding the predominant class issues of fact and law.
To decide whether there is a class-wide basis for deciding the predominant issues, we must first ascertain which are the predominant issues that must be decided on a class basis. Gene attempts to frame several substantive issues and asserts that these issues, as framed, are common to the
As a threshold matter, the parties first engage an issue irrelevant to our analysis: Gene argues that BioPay must establish consent as an affirmative defense; BioPay argues that consent is an element of the cause of action. The district court did not decide this issue, and we do not concern ourselves with it either. An affirmative defense is not per se irrelevant to the predominance inquiry, as the parties seem to believe. We have noted that the "predominance of individual issues necessary to decide an affirmative defense may preclude class certification." In re Monumental Life Ins. Co., 365 F.3d 408, 420 (5th Cir.2004) (citing Castano v. Am. Tobacco Co., 84 F.3d 734, 744 (5th Cir. 1996) (explaining that "a court must understand the claims, defenses, relevant facts, and applicable substantive law in order to make a meaningful determination of certification issues")). Further, this case is an exemplar of why affirmative defenses are not per se irrelevant to the predominance inquiry. Whether established by BioPay as an affirmative defense or by Gene as an element of the cause of action, the issue of consent will entirely determine how the proposed class-action trial will be conducted on the merits.
As to how consent, vel non, will be established, we note first that several federal district courts have addressed this issue. We find their efforts instructive. In Forman v. Data Transfer, Inc., Forman moved for the certification of a class composed of "all residents and businesses who... received unsolicited facsimile advertisements" within a given period. 164 F.R.D. 400, 402 (E.D.Pa.1995). The Forman court, in denying class certification, noted that the gravamen of Forman's complaint was not a "common course of conduct" by Data Transfer but "a series of individual transmissions under individual circumstances, each of which is an alleged violation of the statute." Id. at 404. The Forman court consequently determined that the predominance requirement was not satisfied. Id.; see also Kenro, Inc. v. Fax Daily, Inc., 962 F.Supp. 1162, 1169-70 (S.D.Ind.1997) (denying class certification because consent would have to be proven via individual inquiries as to each class member); Levitt v. Fax.com, 2007 WL 3169078, at *4-7 (D.Md. May 25, 2007) (same).
In contrast, in Kavu v. Omnipak Corp., Kavu moved for the certification of a class composed of "[a]ll persons who received an unsolicited advertisement ... via facsimile from [Omnipak]" within a given period. 246 F.R.D. 642, 645 (W.D.Wash.2007). The Kavu court, in granting class certification, determined that the question of consent was susceptible to common proof. Id. at 647. Importantly, the Kavu court did not disagree with earlier federal district court determinations that individual consent issues could preclude class certification. Id. Rather, the Kavu court determined that in its case the question of consent presented would not require "individual evidence." Id. This was true because Omnipak had obtained all of the fax recipients' fax numbers from a single purveyor of such information and because,
We reference Forman and Kavu in some detail to make a few basic points. First, as these cases illustrate, violations of § 227(b)(1)(C) of the TCPA are not per se unsuitable for class resolution.
Gene asserts that "testimony establishes that BioPay never obtained prior express permission or invitation from any of the class members and that all of the faxes were sent in accordance with the same procedure." From this, Gene urges that "individual determinations are unnecessary."
BioPay, however, strenuously asserts that the evidence shows that some of the fax advertisements it sent were solicited by the recipients, but which ones can only be decided on a case-by-case basis. As noted above, the evidence shows that BioPay culled fax numbers from purchased databases but also periodically culled fax numbers from various other sources—from information submitted by merchants through BioPay's website, from information submitted at trade shows BioPay attended, and also from lists of companies with which BioPay or its affiliates had an established business relationship.
Under the established facts of this case, we think BioPay has the compelling argument. First, Gene's assertion that testimony establishes that BioPay never obtained prior express invitation or permission from any class member is unsupported. BioPay employees testified to the contrary and also testified that there is no class-wide basis for distinguishing which recipients gave consent and which did not. This evidence was not contradicted.
Second, and as we noted above in our discussion of Mullen, that BioPay sent its fax advertisements in accordance with the same procedure is not necessarily determinative of whether class-wide proof is available to establish consent. Moreover, and despite Gene's arguments to the contrary, the common question distinguishing Kavu from Forman is absent here. Unlike the single-source contact list in Kavu, here BioPay culled fax numbers from a variety of sources over a period of time, such that class-wide proof of consent is not possible under the theory advanced in Kavu.
And, finally, and perhaps most importantly, we do not perceive in Gene's arguments any other sensible method of establishing consent or the lack thereof via class-wide proof. To be sure, the burden is on Gene to show that the requirements for class certification are satisfied. Gene has not presented facts or arguments to support that this type of dispute will not exist as to a significant number of class members.
Thus, the determinative question of whether consent can be established via class-wide proof must, given the particular facts of this case, be answered in the negative. Gene has failed to advance a viable theory of generalized proof to identify those persons, if any, to whom BioPay may be liable under the TCPA. Indeed, neither Gene nor the district court explain how the course of conduct they reference would be of particular relevance at trial. This prevents the purported class from having the required cohesiveness and defeats the predominance requirement.
We emphasize again, however, that we do not hold as a matter of law that the consent requirement in the case before us defeats the possibility of class certification. We merely hold that Gene has failed to advance any viable theory employing generalized proof concerning the lack of consent with respect to the class involved in this case; that this leads to the conclusion that myriad mini-trials cannot be avoided; and that, given these conclusions and those we have reached above, the district court abused its discretion in certifying the class.
For the assigned reasons, we reverse the district court's certification of the class and remand this case for further proceedings not inconsistent with this opinion.
REVERSED and REMANDED.
As to standard diversity jurisdiction, here there is no indication that any class member satisfies the $75,000 amount-in-controversy requirement of 28 U.S.C. § 1332(a). As noted, the TCPA allows statutory damages of $500 per offending fax, with up to treble damages for willful or knowing violations of the statute. Even with treble damages for willful or knowing violations of the statute, a single plaintiff would need to receive over fifty faxes to exceed the $75,000 threshold. There is no indication that any one class member received so many faxes and thus no indication that any one class member meets the amount-in-controversy requirement. Gene argues that the class members' claims may be aggregated, but this is incorrect. In Grant v. Chevron Phillips Chem. Co., we reiterated the Supreme Court's fundamental rule that the potential recoveries of class members may not be aggregated to satisfy the § 1332(a) amount-in-controversy requirement. 309 F.3d 864, 873 (5th Cir.2002). The occasional exception to this rule is when multiple plaintiffs assert a "common right." See Snyder v. Harris, 394 U.S. 332, 335, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969). This is not the case with the members of Gene's proposed class.
In relevant part Rule 23(b)(3) states: