Hacienda Heating & Cooling, Inc. v. United Artists Theatre Circuit, Inc. (In Re United Artists Theatre Co.)

410 B.R. 385, 2009 Bankr. LEXIS 2369, 2009 WL 2632771
United States Bankruptcy Court, D. Delaware·Decided August 26, 2009·No. 19-10244·Published·Cited by 1 cases

Opinion

MEMORANDUM OPINION

PETER J. WALSH, Bankruptcy Judge.

This opinion is with respect to the motion brought by Hacienda Heating and Cooling, Inc. (“Hacienda”), pursuant to Fed.R.Civ.P. 23, to certify a class of certain individuals and entities to which a notice (“Notice”) of the bankruptcy filing of United Artists Theatre Circuit, Inc. (“United Artists”) was or should have been sent. (Adv. Doc. # 34.) This motion was coupled with two motions for partial summary judgment brought by Hacienda regarding the sending and contents of the Notice; I denied both those motions in an opinion issued on June 19, 2009. Hacienda Heating & Cooling, Inc. v. United Artists Theatre Circuit, Inc. (In re United Artists Theatre Co.), 406 B.R. 643 (Bankr. D.Del.2009). For the reasons discussed below, I will certify the class.

BACKGROUND

A lengthy background as to Hacienda’s motions is set forth in this Court’s opinion of June 19, 2009. In brief, on November 18, 1999, ESI Ergonomic Solutions, L.L.C. (“ESI”) filed a class action complaint against United Artists and American Blast Fax, Inc. (“American Blast”) in Arizona state court claiming that United Artists and American Blast violated the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, by sending 90,000 movie-ticket advertisements to fax machines in the metro-Phoenix area without receiving express permission. (Case No. CV99-20649.) ESI sought to represent the class *390 of those individuals and entities who received the advertisement. (Adv. Doc. # 34, p. 3.)

On September 5, 2000, United Artists, along with numerous related entities (“Debtors”), filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. §§ 101 et seq. (Case No. 00-03514.) Pursuant to 11 U.S.C. § 362(a), the state court proceeding was stayed. On November 7, 2000, ESI filed a class proof of claim in the chapter ease. (Doc. # 512, ex. 4.)

In connection with the state court proceeding, American Blast produced a database (“Database”) which contained all of the fax numbers to which the junk fax advertisement originally was sent, plus a few extra fax numbers (“Recipients”). (Adv. Doc. # 34, p. 3.) Relying upon the Database, United Artists sought permission to send Notice of the bankruptcy to the Recipients. (Doc. # 55.) The judge of the United States District Court for the District of Delaware who heard the bankruptcy case ordered this Notice be sent using the Database. (Doc. # 504.)

Further, in connection with the bankruptcy case, on January 22, 2001, ESI obtained an order lifting the automatic stay and allowing the state court litigation to proceed. The order provided that ESI could enforce any settlement, judgment, or other disposition of the underlying claims in the state court litigation only against any of the Debtors insurance policies and proceeds therefrom. (Doc. #854.) The Arizona state court then certified the class as those individuals and entities in the Database who received the initial junk fax. On November 7, 2003, it entered summary judgment in favor of the class for at least 57,600 TCPA violations, 1 resulting in an aggregate statutory damage award against United Artists and American Blast of $28.8 million plus prejudgment interest. (Adv. Doc. # 4, ex. 3.) United Artists filed motions to decertify the class and to vacate or reconsider the grant of partial summary judgment. The Arizona state court denied both motions. (Adv. Doc. # 71, exs. 10 and 11.)

On March 13, 2008, Hacienda filed a class action complaint in the United States District Court for the District of Arizona against United Artists on behalf of itself and all others similarly situated— the class certified in the state action, excluding ESI — to have the discharge granted United Artists declared null and void as to the pursuit and collection of the damage award. 2 (Adv. Doc. #4.) Hacienda argued that the Recipients were denied due process: there was no evidence that the Notice was ever sent, and even if the Notice was sent, that its content failed to adequately inform the Recipients of their claims and rights. (Adv. Doc. ## 35 and 36.) In response, United Artists contended that sufficient notice was sent to the Recipients, thereby arguing that the Recipients are bound to the bankruptcy discharge, orders, and proceedings as a matter of res judicata, and that the proceedings operated to discharge United Artists’ obligation to pay the damages award. (Adv. Doc. # 35, p. *391 5.) In its complaint, Hacienda also asked that the proposed class be certified. (Adv. Doc. # 34.)

On May 12, 2008, United Artists filed a motion to dismiss Hacienda’s complaint for lack of subject matter jurisdiction, or, in the alternate, to transfer venue. On March 31, 2009, the District Court in Arizona ordered that venue be transferred to this Court. (Adv. Doc. #1.) On June 19, 2009, this Court denied Hacienda’s motions for partial summary judgment regarding failure to send the Notice and regarding the inadequate content of the Notice. Thus, only Hacienda’s motion for class certification remains.

DISCUSSION

In order to obtain class certification, a plaintiff must satisfy the two-pronged inquiry of Fed.R.Civ.P. 23, made applicable to this proceeding by Fed. R. Bankr.P. 7023. First, a case may be certified as a class action if:

(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.

Fed.R.Civ.P. 23(a). If these four requirements are satisfied, the class action must further meet one of the requirements outlined in Rule 23(b). See, e.g., Scott v. University of Delaware, 601 F.2d 76, 84 (3d Cir.1979).

The application of Rule 23 requires “rigorous analysis to ensure that class certification is appropriate.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 594 n. 13, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting General Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 161, 102 S.Ct.

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Hacienda Heating & Cooling, Inc. v. United Artists Theatre Circuit, Inc. (In Re United Artists Theatre Co.), 410 B.R. 385, 2009 Bankr. LEXIS 2369, 2009 WL 2632771 (Del. 2009).

410 B.R. 385 (Hacienda Heating & Cooling, Inc. v. United Artists Theatre Circuit, Inc. (In Re United Artists Theatre Co.)) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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