City Select Auto Sales, Inc. v. David/Randall Associates, Inc.

District Court, D. New Jersey
2015 WL 1421539, 96 F.Supp.3d 403, 2015 U.S. Dist. LEXIS 39216 (2015)

ELI5:

Rule of Law:

Under the Telephone Consumer Protection Act (TCPA), a sender, including an entity whose goods or services are advertised by a third party, is strictly liable for transmitting unsolicited facsimile advertisements that lack compliant opt-out notices. A class certification order may be modified only upon a showing of a material change in circumstances, not merely newly presented evidence that was discoverable earlier.

Facts:

Raymond Miley, III was President, Shareholder, Officer, and Director of David/Randall Associates, Inc., a commercial roofing company organized under the laws of Pennsylvania.
Caroline Abraham and Joel Abraham operated 'Business to Business Solutions' (B2B), an unincorporated advertising business that disseminated facsimile advertisements on behalf of its clients to a list of U.S. companies.
Mr. Miley, who directed David/Randall’s marketing and advertising campaigns, became aware of B2B’s services after B2B solicited David/Randall’s business.
Mr. Miley directed his administrative assistant, April T. Clemmer, to contact B2B to inquire into the pricing and distribution details of B2B’s fax marketing services.
On March 26, 2006, Ms. Clemmer faxed an approved advertisement for David/Randall's roofing services to B2B, along with a list of zip codes to be solicited, including areas in Eastern PA, NJ, and Mid-State DE.
The approved advertisement stated 'ROOF LEAKS? ? ? REPAIRS AVAILABLE', provided David/Randall’s contact information, claimed recipients supplied their fax number and permission, and included a 'toll free Remove number'.
On March 28, 2006, David/Randall paid B2B $422.00 for a campaign of 12,000 faxes to be sent the following morning.
Despite receiving multiple complaints concerning the unsolicited nature of the advertisements and the ineffectiveness of the remove hotline, David/Randall authorized three more fax campaigns with B2B between March 31 and May 12, 2006, targeting similar geographic areas.

Procedural Posture:

On May 4, 2009, G. Winter’s Sailing Center, Inc. filed a putative class action against David/Randall Associates, Inc. in the Superior Court of New Jersey, alleging violations of the TCPA.
The state court denied class certification due to untimeliness and ruled the case would proceed only with respect to the claims of the single plaintiff.
The parties reached a settlement, and the state court closed the case on April 27, 2011.
On May 10, 2011, Plaintiff City Select Auto Sales, Inc. filed this federal class action against David/Randall Associates, Inc. and Raymond Miley, III in the U.S. District Court for the District of New Jersey, alleging TCPA violations.
Defendants moved to dismiss Plaintiff's Complaint, primarily on the grounds that the applicable limitations period barred Plaintiff's claims.
On February 7, 2012, the U.S. District Court for the District of New Jersey denied Defendants' motion to dismiss, concluding that the pendency of the state court putative class action tolled the limitations period for federal class members.
Defendants answered Plaintiff's Complaint and filed a third-party Complaint against the operators of B2B, Caroline Abraham and Joel Abraham.
On December 17, 2012, the U.S. District Court for the District of New Jersey entered default against the Abrahams due to their failure to respond to the third-party complaint.
On December 20, 2013, the U.S. District Court for the District of New Jersey granted Plaintiff's motion for class certification under Federal Rule of Civil Procedure 23(b)(3).
On March 20, 2014, the Third Circuit Court of Appeals denied Defendants' petition for leave to appeal the class certification order.
On September 24, 2014, the U.S. District Court for the District of New Jersey denied Defendants' motion for summary judgment with respect to Plaintiff's TCPA, state law conversion, and individual liability claims.
Plaintiff subsequently filed a motion for class-wide summary judgment, while Defendants filed a motion to decertify the class.
On February 25, 2015, the U.S. District Court for the District of New Jersey conducted oral argument on the pending motions.

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Issue:

Does the Telephone Consumer Protection Act (TCPA) allow for class-wide summary judgment against an entity that hired a third party to send unsolicited fax advertisements lacking statutory opt-out notices, and should such a class be decertified due to the inclusion of non-resident members or claims of prior business relationships?

Opinions:

Majority - Simandle, Chief Judge

No, the class should not be decertified, and yes, class-wide summary judgment is granted for David/Randall Associates, Inc. but denied for Raymond Miley, III. The inclusion of non-New Jersey residents in the class does not warrant decertification because this fact was known or discoverable much earlier, and New Jersey state courts can certify multistate classes for federal law claims. David/Randall Associates, Inc. is liable under the TCPA for unsolicited faxes as the 'sender' whose services were advertised by a third party, and the faxes lacked statutorily compliant opt-out notices. However, genuine issues of fact preclude summary judgment on Mr. Miley's individual liability. The court denied Defendants' motion to decertify the class. The presence of non-New Jersey residents was not 'new evidence' under Federal Rule of Civil Procedure 23(c)(1)(C) because Defendants were aware of or could have discovered the multi-state scope of the class through Mr. Miley's testimony, the advertisements themselves, and the B2B hard drive examination in 2010-2011. New Jersey law does not prohibit multi-state class actions, particularly when a single federal law like the TCPA is at issue, and this federal court has jurisdiction over such a class. The court noted that a party seeking class modification must demonstrate an intervening change in law, new evidence, or a need to correct clear error. Summary judgment was granted in favor of the class against David/Randall Associates, Inc. The transmissions constituted 'facsimile advertisements' under 47 U.S.C. § 227(a)(4) because they advertised David/Randall’s commercial roofing services. The faxes were 'unsolicited' because David/Randall conceded they did not obtain recipients’ express consent. The court reiterated that merely publishing a fax number online does not constitute consent to receive fax advertisements, nor did Defendants demonstrate an overlap between class members with established business relationships and those who publicized their fax numbers. Crucially, the advertisements failed to include a statutorily compliant opt-out notice, lacking a statement that failure to comply with removal requests within 30 days violates the law and failing to provide a cost-free domestic facsimile number for opt-out requests. David/Randall was deemed a 'sender' under 47 C.F.R. § 64.1200(f)(10) because B2B transmitted the advertisements on David/Randall’s behalf, promoting their services, and an entity cannot exculpate itself from TCPA liability by hiring an independent contractor. The court accepted the reliability of expert Neil L. Biggerstaff’s reports, which calculated 44,810 violations, leading to statutory damages of $22,405,000. Summary judgment was denied with respect to Raymond Miley, III’s individual liability. While Mr. Miley was President and directed marketing, factual disputes remain regarding his direct, personal participation in or authorization of the specific conduct violating the TCPA. His deposition testimony indicated a lack of specific recall, and his absence from direct correspondence with B2B or direct authorization of payments created a genuine issue of material fact for trial.

Analysis:

This case significantly reinforces the strict liability framework of the TCPA, particularly for businesses that utilize third-party fax broadcasters for advertising. It clarifies that merely making a fax number publicly available does not equate to consent for unsolicited faxes, and it emphasizes the precise requirements for compliant opt-out notices to avoid liability. Furthermore, the decision sets a high bar for decertifying a class, requiring truly 'new' evidence or a compelling legal change, rather than facts that were discoverable earlier, thereby strengthening class actions as a mechanism for enforcing consumer protection laws. This outcome limits avenues for defendants to evade TCPA liability through delegation or technical defenses related to class composition.

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