1 2 3 6 7 TRUE HEALTH CHIROPRACTIC INC, et Case No. 13-cv-02219-HSG al., 8 ORDER DECERTIFYING CLASS Plaintiffs, 9 Re: Dkt. No. 476 v. 10 MCKESSON CORPORATION, et al., 11 Defendants. 12 13 On September 29, 2021, the Court ordered Plaintiffs to show cause why the class should 14 not be decertified. See Dkt. No. 476 (“Order to Show Cause” or “OSC”). In the OSC, the Court 15 told the parties that they should cite any relevant legal authority supporting their respective 16 positions. Id. at 7. The Court incorporates the legal standards and analysis set forth in the Order 17 to Show Cause, and adds the analysis below based on the parties’ responses to the OSC. 18 Plaintiffs filed their Response to the Order to Show Cause on October 4, 2021. See Dkt. 19 No. 480 (“Plaintiffs’ Response”). Defendants submitted a Response to Plaintiffs’ Response on 20 October 6, 2021. See Dkt. No. 482 (“Defendants’ Response”). On October 8, 2021, the Court 21 heard oral argument regarding the OSC. Dkt. No. 485. 22 As explained in the Order to Show Cause, an FCC decision issued after the class’s initial 23 certification changed the requirements for TCPA liability. There is now no liability under the 24 TCPA for faxes received via an online fax service. In the Matter of Amerifactors Fin. Grp., LLC 25 Petition for Expedited Declaratory Ruling Rules & Regulations Implementing the Tel. Consumer 26 Prot. Act of 1991 Junk Fax Prot. Act of 2005, CG Dkt. Nos. 02-278, 05-338, 2019 WL 6712128, ¶ 27 3 (Dec. 9, 2019) (“Amerifactors”). While Defendants sought decertification of the class after the 1 class-wide proof sufficient to show how class members received the faxes at issue, see Dkt. No. 2 393. Plaintiffs returned with over 100 telephone carrier declarations, which Defendants 3 supplemented with two additional telephone carrier declarations. See Dkt. Nos. 460, 465, 468, 4 469, 470, 471.1 Telephone carriers who provided service to over 60% of the class members 5 affirmatively say they have no way of knowing if the class member received faxes via a stand- 6 alone fax machine or via an online fax service. Defendants’ Response at 4; see Dkt. Nos. 460, 7 465, 468, 469, 470, 471; see, e.g., Dkt. No. 460, Exhibit A Part 5 at 63 (“Comcast has no 8 mechanism to determine whether its subscribers received faxes on a standalone fax machine or via 9 online fax service.”). Plaintiffs attempt to fill this evidentiary gap with a proffered expert who 10 opines on general trends in online fax service usage, from which Plaintiffs then make assertions 11 about the likelihood of particular individual consumer choices. 2 After reviewing the Plaintiffs’ 12 Offer of Proof, Dkt. No. 455, and the telephone carrier declarations, the Court became concerned 13 that the class does not satisfy Federal Rule of Civil Procedure Rule 23(b)(3), which requires that 14 “questions of law or fact common to class members predominate over any questions affecting only 15 individual members.” Fed. R. Civ. P. 23(b)(3); see OSC at 1. Plaintiffs have not rebutted the 16 concerns the Court identified.3 17 1 A significant number of Plaintiffs’ subpoenas resulted in no reply. In their offer of proof, 18 Plaintiffs said they issued 246 subpoenas. Dkt. No. 455 at 1. Defendants, in their latest response, contend that Plaintiffs subpoenaed 231 phone carriers, 110 of which have not responded. 19 Defendants’ Response at 11. According to Defendants, Plaintiffs have no data from telephone carriers servicing at least 17% of the class members. See id. 20 2 According to Plaintiffs’ expert, in the “absence of data” it can be assumed that the class member used a stand-alone fax machine. Even though it has been clear since December 2019 that 21 Amerifactors represented a significant change in the law relevant to this case, Plaintiffs only disclosed this theory for the first time on September 10, 2021, approximately one month before 22 trial, in response to the Court’s OSC. See Dkt. No. 455, Exhibit B at Part IV. Then mere weeks before trial, Plaintiffs came up with new theories supporting their assertion that class members 23 must have used a stand-alone fax machine, contending for the first time, for example, that call forwarding was not a realistic option due to quality degradation of the fax. See Dkt. No. 480 at 5 24 (citing nothing in Plaintiffs’ expert’s declaration disclosing opinions to which counsel asserted he “will testify”). While the Court agrees with Defendants that these theories plainly were not timely 25 disclosed under Rule 26, see Defendants’ Response at 12 n.30, the Court considers them on their merits, and finds that they fail to meet Plaintiffs’ burden under Rule 23 in any event. 26 3 While the Ninth Circuit has not affirmatively articulated the burden of proof for decertification, in Marlo v. United Parcel Service, Inc., the panel held that the district court, in its order 27 decertifying the class, “properly placed the burden on [the plaintiff] to demonstrate that Rule 23’s 1 First, Plaintiffs’ proposed methodology does not amount to class-wide proof. Instead, it is 2 essentially an effort to aggregate, through an expert and Plaintiffs’ counsel’s own assumptions, 3 individualized data based on over a hundred different declarations concerning thousands of 4 discrete phone numbers to which faxes were sent. The declarations Plaintiffs submit, on their 5 face, simply do not speak directly to the central question at issue: how can it be shown via class- 6 wide, common proof that each purported class member received the faxes at issue via a means 7 other than an “online fax service”? Simply asking whether various phone carriers themselves 8 provided online fax services does not provide uniform class-wide proof that each class member 9 received the faxes at issue in the manner necessary to give rise to TCPA liability, as Defendants 10 note.4 Instead, Plaintiffs have only managed to advance “evidence that varies from member to 11 member.” Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045 (2016) (citation omitted) 12 (“Tyson”). 13 Plaintiffs argue that they have proffered class-wide proof because a jury could find by a 14 preponderance of the evidence that each class member received the faxes on a stand-alone fax 15 machine. See Plaintiffs’ Response at 6. Plaintiffs rely almost entirely on a single case: Tyson, a 16 class action in which plaintiffs alleged they were improperly denied overtime compensation. See 17 Plaintiffs’ Response at 6. However, Tyson simply does not support Plaintiffs’ predominance claim 18 here. See Tyson at 459 (“Whether a representative sample may be used to establish classwide 19 liability will depend on the purpose for which the sample is being introduced and on the 20 underlying cause of action.”). 21 In Tyson, the plaintiffs “sought to introduce a representative sample to fill an evidentiary 22 gap created by the employer’s failure to keep adequate records.” Id. at 456. Without the 23 representative sample, each individual plaintiff would have had no alternative means to establish 24 their hours worked. Id. at 457. The Tyson plaintiffs were similarly situated because they worked 25 in the same facility, did similar work, and were paid under the same policy. Id. at 459. Therefore, 26 27 4 For example, the class members still could have received the faxes at issue through an online fax 1 the “experience of a subset of employees [could] be probative as to the experiences of all of 2 them.” Id. The Supreme Court allowed the plaintiffs to rely on a representative sample to 3 establish hours worked because “the sample could have sustained a reasonable jury finding as to 4 hours worked in each employee’s individual action.” Tyson at 455.
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1 2 3 6 7 TRUE HEALTH CHIROPRACTIC INC, et Case No. 13-cv-02219-HSG al., 8 ORDER DECERTIFYING CLASS Plaintiffs, 9 Re: Dkt. No. 476 v. 10 MCKESSON CORPORATION, et al., 11 Defendants. 12 13 On September 29, 2021, the Court ordered Plaintiffs to show cause why the class should 14 not be decertified. See Dkt. No. 476 (“Order to Show Cause” or “OSC”). In the OSC, the Court 15 told the parties that they should cite any relevant legal authority supporting their respective 16 positions. Id. at 7. The Court incorporates the legal standards and analysis set forth in the Order 17 to Show Cause, and adds the analysis below based on the parties’ responses to the OSC. 18 Plaintiffs filed their Response to the Order to Show Cause on October 4, 2021. See Dkt. 19 No. 480 (“Plaintiffs’ Response”). Defendants submitted a Response to Plaintiffs’ Response on 20 October 6, 2021. See Dkt. No. 482 (“Defendants’ Response”). On October 8, 2021, the Court 21 heard oral argument regarding the OSC. Dkt. No. 485. 22 As explained in the Order to Show Cause, an FCC decision issued after the class’s initial 23 certification changed the requirements for TCPA liability. There is now no liability under the 24 TCPA for faxes received via an online fax service. In the Matter of Amerifactors Fin. Grp., LLC 25 Petition for Expedited Declaratory Ruling Rules & Regulations Implementing the Tel. Consumer 26 Prot. Act of 1991 Junk Fax Prot. Act of 2005, CG Dkt. Nos. 02-278, 05-338, 2019 WL 6712128, ¶ 27 3 (Dec. 9, 2019) (“Amerifactors”). While Defendants sought decertification of the class after the 1 class-wide proof sufficient to show how class members received the faxes at issue, see Dkt. No. 2 393. Plaintiffs returned with over 100 telephone carrier declarations, which Defendants 3 supplemented with two additional telephone carrier declarations. See Dkt. Nos. 460, 465, 468, 4 469, 470, 471.1 Telephone carriers who provided service to over 60% of the class members 5 affirmatively say they have no way of knowing if the class member received faxes via a stand- 6 alone fax machine or via an online fax service. Defendants’ Response at 4; see Dkt. Nos. 460, 7 465, 468, 469, 470, 471; see, e.g., Dkt. No. 460, Exhibit A Part 5 at 63 (“Comcast has no 8 mechanism to determine whether its subscribers received faxes on a standalone fax machine or via 9 online fax service.”). Plaintiffs attempt to fill this evidentiary gap with a proffered expert who 10 opines on general trends in online fax service usage, from which Plaintiffs then make assertions 11 about the likelihood of particular individual consumer choices. 2 After reviewing the Plaintiffs’ 12 Offer of Proof, Dkt. No. 455, and the telephone carrier declarations, the Court became concerned 13 that the class does not satisfy Federal Rule of Civil Procedure Rule 23(b)(3), which requires that 14 “questions of law or fact common to class members predominate over any questions affecting only 15 individual members.” Fed. R. Civ. P. 23(b)(3); see OSC at 1. Plaintiffs have not rebutted the 16 concerns the Court identified.3 17 1 A significant number of Plaintiffs’ subpoenas resulted in no reply. In their offer of proof, 18 Plaintiffs said they issued 246 subpoenas. Dkt. No. 455 at 1. Defendants, in their latest response, contend that Plaintiffs subpoenaed 231 phone carriers, 110 of which have not responded. 19 Defendants’ Response at 11. According to Defendants, Plaintiffs have no data from telephone carriers servicing at least 17% of the class members. See id. 20 2 According to Plaintiffs’ expert, in the “absence of data” it can be assumed that the class member used a stand-alone fax machine. Even though it has been clear since December 2019 that 21 Amerifactors represented a significant change in the law relevant to this case, Plaintiffs only disclosed this theory for the first time on September 10, 2021, approximately one month before 22 trial, in response to the Court’s OSC. See Dkt. No. 455, Exhibit B at Part IV. Then mere weeks before trial, Plaintiffs came up with new theories supporting their assertion that class members 23 must have used a stand-alone fax machine, contending for the first time, for example, that call forwarding was not a realistic option due to quality degradation of the fax. See Dkt. No. 480 at 5 24 (citing nothing in Plaintiffs’ expert’s declaration disclosing opinions to which counsel asserted he “will testify”). While the Court agrees with Defendants that these theories plainly were not timely 25 disclosed under Rule 26, see Defendants’ Response at 12 n.30, the Court considers them on their merits, and finds that they fail to meet Plaintiffs’ burden under Rule 23 in any event. 26 3 While the Ninth Circuit has not affirmatively articulated the burden of proof for decertification, in Marlo v. United Parcel Service, Inc., the panel held that the district court, in its order 27 decertifying the class, “properly placed the burden on [the plaintiff] to demonstrate that Rule 23’s 1 First, Plaintiffs’ proposed methodology does not amount to class-wide proof. Instead, it is 2 essentially an effort to aggregate, through an expert and Plaintiffs’ counsel’s own assumptions, 3 individualized data based on over a hundred different declarations concerning thousands of 4 discrete phone numbers to which faxes were sent. The declarations Plaintiffs submit, on their 5 face, simply do not speak directly to the central question at issue: how can it be shown via class- 6 wide, common proof that each purported class member received the faxes at issue via a means 7 other than an “online fax service”? Simply asking whether various phone carriers themselves 8 provided online fax services does not provide uniform class-wide proof that each class member 9 received the faxes at issue in the manner necessary to give rise to TCPA liability, as Defendants 10 note.4 Instead, Plaintiffs have only managed to advance “evidence that varies from member to 11 member.” Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045 (2016) (citation omitted) 12 (“Tyson”). 13 Plaintiffs argue that they have proffered class-wide proof because a jury could find by a 14 preponderance of the evidence that each class member received the faxes on a stand-alone fax 15 machine. See Plaintiffs’ Response at 6. Plaintiffs rely almost entirely on a single case: Tyson, a 16 class action in which plaintiffs alleged they were improperly denied overtime compensation. See 17 Plaintiffs’ Response at 6. However, Tyson simply does not support Plaintiffs’ predominance claim 18 here. See Tyson at 459 (“Whether a representative sample may be used to establish classwide 19 liability will depend on the purpose for which the sample is being introduced and on the 20 underlying cause of action.”). 21 In Tyson, the plaintiffs “sought to introduce a representative sample to fill an evidentiary 22 gap created by the employer’s failure to keep adequate records.” Id. at 456. Without the 23 representative sample, each individual plaintiff would have had no alternative means to establish 24 their hours worked. Id. at 457. The Tyson plaintiffs were similarly situated because they worked 25 in the same facility, did similar work, and were paid under the same policy. Id. at 459. Therefore, 26 27 4 For example, the class members still could have received the faxes at issue through an online fax 1 the “experience of a subset of employees [could] be probative as to the experiences of all of 2 them.” Id. The Supreme Court allowed the plaintiffs to rely on a representative sample to 3 establish hours worked because “the sample could have sustained a reasonable jury finding as to 4 hours worked in each employee’s individual action.” Tyson at 455. The Supreme Court 5 recognized that not all class actions could properly rely on representative samples, comparing the 6 plaintiffs in Tyson with the plaintiffs in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) 7 (reversing class certification based on plaintiffs’ failure to prove that the class shared common 8 questions of law or fact). In Wal-Mart, “the employees were not similarly situated” and so “none 9 of them could have prevailed in an individual suit by relying on depositions detailing the ways in 10 which other employees were discriminated against by their particular store managers.” Tyson at 11 458. 12 Tyson does not support the Plaintiffs’ proposed method of so-called class-wide proof. The 13 Plaintiffs and other class members in this case, unlike the plaintiffs in Tyson, have a clear 14 alternative means to establish TCPA liability: each person can testify as to whether they received 15 the faxes at issue on a stand-alone fax machine. Moreover, whether one class member received 16 the faxes at issue on a stand-alone fax machine is not in any way probative of whether any other 17 individual class member received his or her faxes on a stand-alone fax machine. Despite this, 18 Plaintiffs propose using over 100 non-standardized telephone carrier declarations and an expert’s 19 testimony about the rate of use of online fax services to make assumptions about how more than 20 6,000 individual class members actually received the faxes at issue in this case. See Dkt. No. 455 21 at 1, Exhibit B at Part IV. Far from presenting class-wide proof that would also be acceptable to 22 prove an individual claim, Plaintiffs seek to transform the absence of uniform proof, cobbled 23 together from a large number of disparate declarations, into a generalization they claim applies to 24 each class member. But in an individual action, a plaintiff clearly would not be able to prove her 25 case by saying, “Even though I personally received this fax via an online fax service, most people 26 didn’t, according to Plaintiffs’ expert in the True Health case.”5 The issues and evidence in this 27 1 case are fundamentally different than those in Tyson. The idea that Plaintiffs’ expert’s opinions 2 about probability can constitute the required class-wide proof is not supported by Tyson or any 3 other authority the Court has found. 4 Second, the individualized question of whether each class member received the faxes at 5 issue on a stand-alone fax machine predominates over common questions. Plaintiffs argue that the 6 predominance inquiry does not require that every possible issue in the case be capable of 7 resolution via class-wide proof. See Plaintiffs’ Response at 1-5. Plaintiffs miss the point. There 8 can be no TCPA liability at all if the fax was received via an online fax service. Amerifactors at ¶ 9 8. Plaintiffs themselves proposed splitting the class into two subgroups: those that received the 10 subject faxes “via a ‘stand-alone’ fax machine” and those that received the subject faxes “via an 11 ‘online fax service’.” See Dkt. No. 372 at 10. As reflected by the class definitions, how the fax 12 was received is a threshold requirement for TCPA liability. It is the central issue in this case. 13 Where, as here, individual inquiries are required to prove a core element of liability, courts have 14 found that individual questions predominate over common questions. See Andrews v. Plains All 15 American Pipeline, L.P., 777 Fed. Appx. 889, 892 (9th Cir. 2019) (“These individualized inquiries 16 go to key elements of the class’s claims, and the district court abused its discretion by concluding 17 that this disparity would affect only damage calculations.”)6; Sandusky Wellness Ctr., LLC v. ASD 18 Specialty Healthcare, Inc., 863 F.3d 460, 468 (6th Cir. 2017) (no predominance where “the 19 district court would be tasked with filtering out those members to whom [defendant] was not 20 liable”); Williams v. Apple, Inc., No. 19-CV-04700-LHK, 2021 WL 2186223, at *11 (N.D. Cal. 21 May 28, 2021) (denying class certification where the plaintiff lacked common proof of “essential 22 elements” of the claim, including causation and injury); Hamm v. Mercedes-Benz USA, LLC, No. 23 24 received the faxes at issue here via a stand-alone fax machine. See Plaintiffs’ Response at 5 (“Based on this evidence, the jury could reasonably find, by a simple preponderance of the 25 evidence, that each of these class members did not receive the subject faxes via an online fax service.”). This assertion, which as Defendants note is not supported by any cited empirical 26 evidence whatsoever, see Defendants’ Response at 15-16, is not the sort of evidence that can satisfy the “rigorous” and “demanding” analysis required under Rule 23. Comcast Corp. v. 27 Behrend, 569 U.S. 27, 34-35 (2013). 1 16-CV-03370, 2021 WL 1238304, at *12 (N.D. Cal. April 2, 2021) (denying class certification 2 || where proof of reliance, a requirement to prevail on a California Consumer Legal Remedies Act 3 claim, would vary from consumer to consumer, defeating the predominance requirement under 4 || Rule 23(b)(3)). Accordingly, the predominance requirement of Rule 23(b)(3) is not met. 5 For similar reasons, Rule 23(b)(3)’s superiority requirement also is not met. The 6 || superiority requirement tests whether “a class action is superior to other available methods for 7 fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). Where “the 8 complexities of a class action treatment outweigh the benefits of considering common issues in 9 || one trial, class action treatment is not the ‘superior’ method of adjudication.” Zinser v. Accufix 10 Research Institute, Inc., 253 F.3d 1180, 1192 (9th Cir. 2001) (citations omitted). As explained 11 above, the core fact establishing TCPA liability is only determinable through individualized 12 || inquiries. Given the individual inquiries required to establish the proposed class members’ claims, 5 13 class action treatment is not the superior method of adjudication. 14 The Court understands the desire of Plaintiffs (and their counsel) to resolve these claims 3 15 via a class action lawsuit. However, Amerifactors changed the landscape for TCPA litigation, and a 16 || under Ninth Circuit precedent, this Court must follow the FCC’s interpretation. See Wilson v. 3 17 A.H. Belo Corp., 87 F.3d 393, 400 (9th Cir. 1996); Dkt. No. 393 at 9-11. In the Court’s view, S 18 whether Amerifactors in fact controls here is determinative of the viability of this case as a class 19 action. Plaintiffs can and no doubt will argue on appeal that Amerifactors is not binding, and the 20 || Court and the parties will get critical guidance from any ruling by the Ninth Circuit on that issue. 21 After carefully considering the entire record in this case, the Court orders the “Stand-Alone 22 || Fax Machine Class” DECERTIFIED. 24 || Dated: 10/15/2021 _Abepurd 3 Md). HAYWOOD S. GILLIAM, JR. 26 United States District Judge 27 28