Winters v. Loan Depot LLC

• Court: District Court, D. Arizona
• Decided: March 17, 2022
• Docket: 2:20-cv-01290
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8

Richard Winters, Jr., ) No. CV-20-01290-PHX-SPL ) 9 ) 10 Plaintiff, ) ORDER vs. ) ) 11 ) Loan Depot LLC, ) 12 ) 13 Defendant. ) ) 14 )

15 Before the Court are Defendant loanDepot.com, LLC’s1 Motion to Dismiss the 16 Second Amended Complaint or, in the Alternative, to Stay Pending the Ninth Circuit’s 17 Review of Chennette, No. 20-35962 (Doc. 45) and Motion to Strike Class Allegations or, 18 Alternatively, to Strike Non-Arizona Class Members’ Claims (Doc. 43). For the reasons 19 that follow, the Motion to Dismiss or, in the Alternative to Stay will be denied, and the 20 Motion to Strike will be granted with leave to amend. 21 I. BACKGROUND 22 On June 30, 2020, Plaintiff Richard Winters, Jr. filed this putative class action, 23 alleging that Defendant violated the Telephone Consumer Protection Act (“TCPA”), 47 24 U.S.C. § 227 et seq. (Doc. 1). On May 5, 2021, Plaintiff filed a Second Amended Complaint 25 (“SAC”), which is now the operative complaint, alleging both negligent and willful 26 violations of the TCPA by Defendant in the four years before the lawsuit was filed. (Doc.

27 1 Plaintiff names Defendant as “Loan Depot, LLC,” while Defendant refers to itself 28 as “loanDepot.com, LLC.” The Court will use Defendant’s self-identification. 1 27). Plaintiff alleges that Defendant “us[ed] an artificial or prerecorded voice to place 2 telemarketing calls” without consent—in other words, that Defendant made illegal 3 robocalls. (Doc. 27 ¶¶ 25, 29). 4 This case has been stayed twice. First, on October 29, 2020, the Court granted 5 Defendant’s Motion to Stay (Doc. 10) and stayed the case pending the United States 6 Supreme Court’s resolution of Facebook, Inc. v. Duguid, No. 19-511. (Doc. 23). After the 7 Supreme Court issued its decision, on April 14, 2021, this Court lifted the stay and allowed 8 Plaintiff time to file an amended complaint based on the Supreme Court’s holding. (Doc. 9 26). 10 Second, on July 1, 2021, the Court granted another Motion to Stay filed by 11 Defendant (Doc. 28) and stayed the case pending the Ninth Circuit’s resolution of Perez v. 12 Rash Curtis & Associates, No. 20-15946. (Doc. 40). On November 17, 2021, the parties 13 notified that court that the Ninth Circuit dismissed Perez pursuant to a stipulation without 14 resolving the case on the merits (Doc. 41), and the Court lifted the stay (Doc. 42). 15 On November 22, 2021, Defendant filed the Motions that are now before the Court. 16 (Docs. 43 & 45). On December 7, 2021, Defendant filed a Notice of Constitutional 17 Challenge to the TCPA pursuant to Federal Rule of Civil Procedure (“Rule”) 5.1(a). (Doc. 18 48). On January 12, 2022, the Court certified the constitutional challenge to the United 19 States Attorney General (Doc. 55) and gave the United States until March 9, 2022 to 20 intervene (Doc. 56). On March 8, 2022, the United States filed a Notice of Intervention and 21 Memorandum in Support of the Constitutionality of the TCPA. (Doc. 60). 22 The Court now addresses the pending Motions, which have been fully briefed. 23 (Docs. 43, 45, 47, 50, 52, 53, 62). 24 II. DISCUSSION 25 The Court will first address the Motion to Dismiss or, in the Alternative to Stay 26 (Doc. 45). The Court will then address the Motion to Strike (Doc. 43). 27 /// 28 /// 1 A. MOTION TO DISMISS OR, IN THE ALTERNATIVE, TO STAY 2 Defendant’s Motion to Dismiss or, in the Alternative, to Stay Pending the Ninth 3 Circuit’s Review of Chennette (Doc. 45) arises in part from the United States Supreme 4 Court’s decision in Barr v. American Association of Political Consultants, Inc., 140 S. Ct. 5 2335 (2020). There, the Supreme Court held that an exception to the robocall provision of 6 the TCPA for the collection of government debt was a content-based exception in violation 7 of the First Amendment. Id. at 2347. Still, rather than invalidating the entire robocall 8 provision, the Supreme Court held that the government-debt exception was severable and 9 left the rest of the robocall provision in effect. Id. at 2355. Further, footnote 12 of the 10 plurality opinion in Barr stated in part that “our decision today does not negate the liability 11 of parties who made robocalls covered by the robocall restriction” from the time the 12 government-debt exception was enacted in 2015 to when it was severed in 2020. Id. at 13 2355 n.12. Defendant contends, however, that footnote 12 is nonbinding dicta and that it 14 remains an open question whether a defendant can be held liable for robocalls made while 15 the unconstitutional government-debt exception was affixed to the statute. Defendant 16 argues that the question should be answered in the negative and that the SAC should be 17 dismissed on that basis, or alternatively, that the Court should stay this case until the Ninth 18 Circuit has the opportunity to resolve the question in Chennette v. Porch.com, Inc., No. 20- 19 35962. 20 i. Motion to Stay Pending the Ninth Circuit’s Review of Chennette 21 Having previously stayed the case rather than deciding a motion to dismiss on 22 similar grounds, the court first addresses Defendant’s Motion in the Alternative to Stay. 23 1. Legal Standard 24 A stay is “an exercise of judicial discretion, and the propriety of its issue is 25 dependent upon the circumstances of the particular case.” Nken v. Holder, 556 U.S. 418, 26 433 (2009) (internal quotation marks and alteration omitted). When determining whether 27 to issue a stay pending resolution of another case, the Court must consider competing 28 interests including “the possible damage which may result from the granting of a stay, the 1 hardship or inequity which a party may suffer in being required to go forward, and the 2 orderly course of justice measured in terms of the simplifying or complicating of issues, 3 proof, and questions of law which could be expected to result from a stay.” Lockyer v. 4 Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005) (internal quotation marks omitted); see 5 Kuang v. U.S. Dep’t of Def., No. 18-CV-03698-JST, 2019 WL 1597495, at *2–3 (N.D. 6 Cal. Apr. 15, 2019). 7 2. Discussion 8 Although the Court has previously stayed this case twice pending other proceedings, 9 the Court declines to do so at this time. A crucial consideration is that—while this Court 10 will certainly not speculate as to how the Ninth Circuit will decide Chennette—it is not at 11 all clear that the case will resolve the pertinent question of whether a defendant can be held 12 liable under the robocall provision while the unconstitutional government-debt exception 13 was affixed to it. See Zabriskie v. Fed. Nat’l Mortg. Ass’n, No. CV-13-02260-PHX-SRB, 14 2015 WL 3712072, at *2 (D. Ariz. Mar. 30, 2015) (“The Court also cannot conclude that 15 a stay of the proceedings . . . would necessarily promote judicial economy because it is too 16 speculative to determine how, or on what grounds, the Ninth Circuit will rule.”). The issue 17 was first raised in Chennette in the appellees’ answering brief as one of several possible 18 alternative grounds for affirmance. See Answering Brief at 52–54, Chennette (9th Cir. May 19 5, 2021), ECF No. 24. Neither the underlying motion filed in the district court nor the 20 district court’s order that is the subject of the appeal addressed the issue. See Defendants’ 21 Motion to Dismiss, Chennette, No. 1:20-cv-00201-SRB (D. Idaho July 15, 2020), ECF No. 22 18; Order, Chennette, No. 1:20-cv-00201-SRB (D. Idaho Sept. 2, 2020), ECF No. 24. And 23 the Ninth Circuit ordered the parties to be prepared to focus on a different issue at oral 24 argument, which took place October 4, 2021. See Order, Chennette, No. 20-35962 (9th Cir. 25 Sept. 30, 2021), ECF No. 47. Thus, it would be speculative at best to believe that Chennette 26 will actually resolve the issue in question here. 27 That consideration, along with the passage of an additional eight months of time, 28 changes the calculus of the Court’s analysis from its previous issuances of stays. (See Docs. 1 23 & 40). It remains true that Plaintiff is unlikely to suffer significant damage from the 2 granting of a stay. Likewise, it remains true that Defendant will incur litigation costs if it 3 is required to go forward. But see Lockyer, 398 F.3d at 1112 (“[B]eing required to defend 4 a suit, without more, does not constitute a ‘clear case of hardship or inequity’ . . . .”). But 5 as to the third factor, the orderly course of justice, it is speculative, if not unlikely, that the 6 Ninth Circuit’s proceedings in Chennette will “decide, or . . . contribute to the decision of, 7 the factual and legal issues” before this Court.2 Id. at 1113. Moreover, this case has been 8 stagnant for most of the nearly two years since it was filed. Thus, in the interests of efficient 9 docket management and expeditious resolution of litigation, this case must proceed at this 10 time. See id. at 1112–13; Zabriskie, 2015 WL 3712072, at *2. The Motion to Stay will be 11 denied. 12 ii. Motion to Dismiss the SAC 13 Defendant moves to dismiss the SAC for lack of subject matter jurisdiction pursuant 14 to Rule 12(b)(1) and for failure to state a claim pursuant to Rule 12(b)(6) on the grounds 15 that the TCPA was unconstitutional at the time of the events giving rise to this case. 16 1. Legal Standard 17 Rule 12(b)(1) “allows litigants to seek the dismissal of an action from federal court 18 for lack of subject matter jurisdiction.” Kinlichee v. United States, 929 F. Supp. 2d 951, 19 954 (D. Ariz. 2013) (internal quotation marks omitted). Federal courts “are courts of 20 limited jurisdiction, possessing only that power authorized by Constitution and statute.” 21 K2 Am. Corp. v. Roland Oil & Gas, LLC, 653 F.3d 1024, 1027 (9th Cir. 2011). As a result, 22 “federal courts lack jurisdiction over claims based upon unconstitutional statutes.” Stoutt 23 v. Travis Credit Union, 512 F. Supp. 3d 1048, 1052 (E.D. Cal. 2021) (citing Ex parte 24 Siebold, 100 U.S. 371, 377 (1879)). 25 In addition, to survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain 26 sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its

27 2 Of course, if the Ninth Circuit issues a ruling in Chennette that is contrary to this 28 Order, Defendant may seek reconsideration of this Order under Local Rule 7.2(g). 1 face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 2 550 U.S. 544, 570 (2007)). A claim is facially plausible when it contains “factual content 3 that allows the court to draw the reasonable inference” that the moving party is liable. Id. 4 Factual allegations in the complaint should be assumed true, and a court should then 5 “determine whether they plausibly give rise to an entitlement to relief.” Id. at 679. Facts 6 should be viewed “in the light most favorable to the non-moving party.” Faulkner v. ADT 7 Sec. Servs., Inc., 706 F.3d 1017, 1019 (9th Cir. 2013). 8 2. Discussion 9 Defendant argues that the entire robocall provision of the TCPA was 10 unconstitutional—and thus does not give rise to a cause of action or subject matter 11 jurisdiction—from the time the government-debt exception was enacted in 2015 to the time 12 it was severed in 2020. (Doc. 45 at 5–9). Defendant further argues that the robocall 13 provision remains unconstitutional due to other exceptions still in effect that Defendant 14 asserts are improperly content based. (Doc. 45 at 9–12). 15 In Canady v. Bridgecrest Acceptance Corp., a case in this District, the defendant 16 made the same arguments—in large part word-for-word—in a Motion for Judgment on the 17 Pleadings as the arguments raised here.3 See Motion for Judgment on the Pleadings, 18 Canady v. Bridgecrest Acceptance Corp., No. 19-04738-PHX-DWL (D. Ariz. Sept. 1, 19 2021), ECF No. 62. In a thorough, well-reasoned order, Judge Lanza rejected each of the 20 defendant’s arguments. Canady v. Bridgecrest Acceptance Corp., No. CV-19-04738-PHX- 21 DWL, 2022 WL 194526 (D. Ariz. Jan. 21, 2022). The Court find’s Judge Lanza’s analysis 22 in Canady highly persuasive and reaches the same conclusions. 23 a. Constitutionality of the TCPA from 2015–2020 24 Defendant first argues that the robocall provision of the TCPA was unconstitutional 25 from the time the government-debt exception was added in 2015 until it was severed by 26 27 3 The legal standard for a motion for judgment on the pleadings is the same as the legal standard for a motion to dismiss for failure to state a claim under Rule 12(b)(6). See 28 Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989). 1 Barr in July 2020. Defendant asserts that severance of an unconstitutional provision of a 2 statute is only applicable prospectively (Doc. 45 at 6–7); that retroactive severance 3 perpetuates content-based discrimination (Doc. 45 at 8–9); and that footnote 12 of Barr is 4 nonbinding dicta endorsed by a mere plurality of the Justices (Doc. 45 at 8). 5 Plaintiff counters that Barr found only the government-debt exception, and not the 6 entire robocall provision, unconstitutional (Doc. 52 at 6–8); that under severability 7 principles, the Supreme Court’s interpretation of the TCPA in Barr should be applied 8 retroactively (Doc. 52 at 12–14); and that footnote 12 of Barr is not dicta and that seven 9 Justices agreed to it (Doc. 52 at 8–12). The United States adds that the Supreme Court has 10 held that an unconstitutional amendment to a statute is a nullity and therefore has no effect 11 on the original statute (Doc. 60 at 9–11); that to the extent retroactive severance perpetuates 12 content-based discrimination, it is based on fair-notice principles rather than the 13 unconstitutional government-debt exemption itself (Doc. 60 at 16–17); and that at least 14 forty district courts,4 in addition to the Sixth Circuit,5 have rejected the view advanced by 15 Defendant, while just four district court decisions have accepted it, only two of which 16 remain good law6 (Doc. 60 at 11–12). 17 This Court agrees with Plaintiff, the United States, and the vast weight of 18 authority—including all of the authority from this District and from other district courts in

19 4 See, e.g., Canady, 2022 WL 194526; Whittaker v. WinRed Tech. Servs. LLC, No. 20 CV-20-08150-PCT-JJT, 2021 WL 1102297 (D. Ariz. Mar. 23, 2021); Buell v. Credit.com, Inc., No. 4:21-cv-01055-KAW, 2021 WL 3271127 (N.D. Cal. July 30, 2021); Tuso v. Nat’l 21 Health Agents, LLC, No. 2:20-cv-02130-JAM-CKD, 2021 WL 2534220 (E.D. Cal. June 21, 2021); Valdes v. Nationwide Real Est. Execs., Inc., No. SA CV 20-01734-DOC-(JDEx), 22 2021 WL 2134159 (C.D. Cal. Apr. 22, 2021). 23 5 See Lindenbaum v. Realgy, LLC, 13 F.4th 524 (6th Cir. 2021). 24 6 See Creasy v. Charter Commc’ns, 489 F. Supp. 3d 499 (E.D. La. 2020); Cunningham v. Matrix Fin. Servs., 531 F. Supp. 3d 1164 (E.D. Tex. 2021); Lindenbaum v. 25 Realgy, LLC, 497 F. Supp. 3d 290 (N.D. Ohio 2020), reversed by 13 F.4th 524 (6th Cir. 2021); Hussain v. Sullivan Buick-Cadillac-GMC Truck, Inc., 506 F. Supp. 3d 1242 (M.D. 26 Fla. 2020). But see Boisvert v. Carnival Corp., No. 8:20-cv-02076-JSM-SPF, 2021 WL 1329079, at *2 (M.D. Fla. 2020) (“Upon further reflection, the Court departs from its 27 earlier opinion because, since the Court’s Order in Hussain, every court faced with this same issue has concluded that a plaintiff may continue to bring § 227(b) claims post- 28 AAPC.”). 1 the Ninth Circuit—and rejects the proposition that the entirety of the TCPA’s robocall 2 provision was unconstitutional and unenforceable between 2015 and July 2020. The Court 3 need not repeat the same analysis that has now been performed myriad times to reject a 4 position that Defendant admits “has come to be a minority view.” (Doc. 62 at 6); see 5 Canady, 2022 WL 194526, at *9 (adopting the analysis and reasoning of the “[d]ozens of 6 district courts and at least one Circuit court” that have rejected the contention that nobody 7 can be held liable for robocalls placed between 2015 and July 2020). Plaintiff’s claims will 8 not be dismissed on this basis. 9 b. Continuing Constitutionality of the TCPA 10 Defendant also argues that the TCPA remains unconstitutional post-Barr due to 11 seven other content-based exceptions in the robocall restriction—one of which is in the 12 statute and six of which are found in Federal Communications Commission (“FCC”) 13 regulations. (Doc. 45 at 9–10). Defendant argues that these content-based distinctions do 14 not survive strict scrutiny and cannot be severed. (Doc. 45 at 10–12). 15 In response, Plaintiff argues that even if the remaining distinctions are 16 unconstitutional, they can be severed just as the government-debt exception was in Barr.7 17 (Doc. 52 at 15). Separately, the United States contends that this Court lacks jurisdiction to 18 consider the validity of FCC regulations but regardless, FCC regulations under the TCPA 19 don’t affect the constitutionality of the TCPA itself. (Doc. 60 at 6–8). The United States 20 further argues that the statutory emergency-purposes exception is content-neutral and that 21 even if it was not, it survives strict scrutiny. (Doc. 60 at 8–9). 22 Taking the statutory emergency-purposes exception first, this Court agrees with 23 Canady and other district court decisions8 that the exception does not violate that First 24 25 7 Plaintiff also argued that Defendant failed to timely file a notice of constitutional question pursuant to Rule 5.1 (Doc. 42 at 14–15), but that failure has since been cured and 26 caused no prejudice. 27 8 See, e.g., Brickman v. Facebook, Inc., 230 F. Supp. 3d 1036 (N.D. Cal. 2017); Greenley v. Laborers’ Int’l Union of N. Am., 271 F. Supp. 3d 1128, 1148–49 (D. Minn. 28 2017); Rosenberg v. LoanDepot.com LLC, 435 F. Supp. 3d 308, 318, 321 (D. Mass. 2020). 1 Amendment—specifically that even if it is a content-based restriction, it satisfies strict 2 scrutiny. To satisfy strict scrutiny, a law must be “narrowly tailored to serve compelling 3 state interests.” Reed v. Town of Gilbert, 576 U.S. 155, 163 (2015). Protecting the health, 4 safety, and welfare of citizens during an emergency is undoubtedly a compelling interest, 5 see Rubin v. Coors Brewing Co., 514 U.S. 476, 485 (1995); Am. Ass’n of Pol. Consultants, 6 Inc. v. Fed. Commc’ns Comm’n, 923 F.3d 159, 170 (4th Cir. 2019) (“[E]mergency calls 7 serve the vital purpose of protecting the safety and welfare of Americans . . . .”), as is 8 protecting consumer privacy, see Barr, 140 S. Ct. at 2348. The TCPA’s robocall restriction, 9 with the emergency exception, is narrowly tailored to those ends. See Brickman v. 10 Facebook, Inc., 230 F. Supp. 3d 1036, 1047 (N.D. Cal. 2017) (“Congress carefully 11 balanced the interests in the health and safety of consumers with the interests in protecting 12 privacy and determined the emergency call exception was carefully tailored to address both 13 interests.”). The Court will not find the TCPA’s robocall restriction unconstitutional based 14 on the emergency exception.9 15 Turning to the FCC regulatory exceptions, the court in Canady conducted a 16 thorough analysis of the Hobbs Act, 28 U.S.C. § 2342(1)—which provides that “[t]he court 17 of appeals . . . has exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), 18 or to determine the validity of . . . all final orders of the FCC”—and the related law. 19 Canady, 2022 WL 194526, at *4–7. The court there determined that to hold the TCPA’s 20 robocall provision unconstitutional based on FCC regulations would necessarily require 21 consideration of the validity of the regulations, even if the end result Defendant seeks is 22 the invalidation of the TCPA rather than the regulations. Id. at *5. This Court agrees in full 23 with Canady’s analysis and thus shares in the conclusion that Defendant’s “arguments 24 regarding the FCC-created exceptions fall outside this Court’s jurisdiction.”10 Id. at *7.

25 9 Moreover, as was the case in Canady, Defendant makes no argument that the 26 emergency exception alone cannot be severed from the TCPA, forfeiting any such argument. See Canady, 2022 WL 194526, at *8. 27 10 Defendant argues that the Hobbs Act does not and cannot strip the Court of 28 jurisdiction over constitutional claims. (Doc. 62 at 4–5). However, the Court in Canady 1 In its Response to the United States’s Memorandum, Defendant argues that 2 Canady’s analysis on the Hobbs Act issue was incorrect. (Doc. 62 at 4). It first states that 3 “[t]he issue is not whether the FCC’s exemptions and carve-outs are appropriate in a 4 vacuum, but whether in light of those unseverable exemptions, the TCPA’s restrictions on 5 speech remain constitutional.” (Doc. 62 at 4). Even the latter issue is squarely addressed 6 by Canady, however, where the court wrote: 7 To get where [the defendant] wants it to go, the Court would need to make the following determinations: (1) the TCPA 8 qualifies as a content-based restriction on speech due to the 9 presence of the FCC-promulgated exceptions; (2) those exceptions collectively and individually fail strict scrutiny; and 10 (3) those exceptions cannot be severed to save the statute. It is 11 difficult to understand how the second step of this analysis could be viewed as anything other than determining the 12 validity of the FCC-promulgated exceptions . . . . 13 Canady, 2022 WL 194526, at *5 (internal citations and quotation marks omitted). Though 14 Defendant attempts to circumvent the second step by urging that the Court need only 15 consider the mere existence of the FCC regulations, its argument would require the Court 16 to consider whether the statute and the regulations collectively violate the First 17 Amendment. The Hobbs Act bars this Court from making such a determination. 18 Defendant goes on to make another argument: that “[t]he unevenness created by the 19 exemptions reveals the primary issue in the TCPA: its unthinking application to lawful 20 communications that pose no risk to the privacy concerns that animated the statute’s 21 creation.” (Doc. 62 at 4). As an initial matter, this is distinct from the argument made in 22 Defendant’s Motion—that the TCPA is facially unconstitutional because it contains 23 content-specific exceptions that do not survive strict scrutiny and cannot be severed (Doc. 24 45 at 9–12)—so the argument was waived. Even as to the merits, however, in Barr, the 25 Supreme Court declined to hold the entire robocall restriction unconstitutional due to the

26 considered a similar concern. Although the argument “[gave] the Court . . . pause,” the Canady court ultimately found it unpersuasive because “it is possible for a regulated entity 27 that fears TCPA liability to raise a timely affirmative challenge to an FCC-created exception by seeking review in the court [of] appeals pursuant to 28 U.S.C. §§ 2342(1) and 28 2344.” Canady, 2022 WL 194526, at *6. 1 presence of exceptions, finding that it “proscribes tens of millions of would-be robocalls 2 that would otherwise occur every day” which “amply demonstrates Congress’s continuing 3 interest in consumer privacy.” Barr, 140 S. Ct. at 2348. And to the extent Defendant argues 4 that the TCPA’s robocall restriction has been overbroad and unconstitutional from the time 5 it was enacted in 1991, no court has agreed, and the Ninth Circuit long ago held it to be 6 constitutional. See Moser v. Fed. Commc’ns Comm’n, 46 F.3d 970, 975 (9th Cir. 1995); 7 see also Barr, 140 S. Ct. 2353. This Court likewise cannot conclude that the TCPA’s 8 robocall restriction is unconstitutional. The Motion to Dismiss the SAC will be denied. 9 B. MOTION TO STRIKE CLASS ALLEGATIONS OR, IN THE ALTERNATIVE, TO STRIKE NON-ARIZONA CLASS MEMBERS’ 10 CLAIMS 11 Defendant separately filed a Motion to Strike (Doc. 43). Defendant moves to strike 12 the class allegations from the SAC because the class cannot satisfy the requirements of 13 Rule 23, or alternatively, to strike the claims of non-Arizona class members for lack of 14 personal jurisdiction. The SAC defines the proposed class as follows: 15 All persons within the United States who received any 16 solicitation/telemarketing telephone calls from Defendant to said person’s telephone made using an artificial or prerecorded 17 voice and such person had not previously consented to 18 receiving such calls within the four years prior to the filing of this Complaint. 19 (Doc. 27 ¶ 13). Because the Court will strike the class allegations, the Court does not reach 20 the motion in the alternative to strike the claims of non-Arizona class members. 21 i. Legal Standard 22 Rule 12(f) allows the Court to “strike from a pleading . . . any redundant, immaterial, 23 impertinent, or scandalous matter.” The purpose of a motion to strike is “to avoid the 24 expenditure of time and money that must arise from litigating spurious issues by dispensing 25 with those issues prior to trial.” Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 26 (9th Cir. 2010) (internal quotation marks omitted). A motion to strike should only be 27 granted when “the law is clear beyond reasonable dispute” and “the relevant claim or 28 1 defense could not succeed under any set of circumstances.” Cheatham v. ADT Corp., 161 2 F. Supp. 3d 815, 834 (D. Ariz. 2016). A motion to strike should not be used “for the 3 determination of disputed and substantial questions of law.” Id. The Court must “accept 4 the non-moving party’s well-pleaded facts as true” and “draw all reasonable inferences in 5 favor of that party.” Id. 6 “Motions to strike class allegations are particularly disfavored because it is rarely 7 easy to determine before discovery whether the allegations are meritorious.” Id. Still, “class 8 allegations may be stricken when it is clear from the face of the complaint that no class can 9 be certified.” Id. The plaintiff “bear[s] the burden of advancing a prima facie showing that 10 the class action requirements in Rule 23 are satisfied or that discovery is likely to produce 11 substantiation of the class allegations.” Tomaszewski v. Circle K Stores Inc., No. CV-20- 12 01569-PHX-SMB, 2021 WL 2661190, at *2 (D. Ariz. Jan. 12, 2021). 13 ii. Discussion 14 Defendant argues that Plaintiff’s proposed class is facially uncertifiable because it 15 is (1) an improper fail-safe class, and (2) uncertifiable under Rule 23(b)(1) and 23(b)(2). 16 1. Fail-Safe Class 17 A fail-safe class is one that “limit[s] membership to plaintiffs described by their 18 theory of liability in the class definition such that the definition presupposes success on the 19 merits.” Melgar v. CSK Auto, Inc., 681 F. App’x 605, 607 (9th Cir. 2017); see also Kamar 20 v. RadioShack Corp., 375 F. App’x 734, 736 (9th Cir. 2010) (“The fail-safe appellation is 21 simply a way of labeling the obvious problems that exist when the class itself is defined in 22 a way that precludes membership unless the liability of the defendant is established.”). A 23 court may strike a class definition that is fail-safe. See Panacci v. A1 Solar Power, Inc., 24 No. 15-cv-00532-JCS, 2015 WL 3750112, at *8 (N.D. Cal. June 15, 2015). 25 The class definition proposed by Plaintiff in this case is almost identical to the one 26 proposed by the plaintiff in Dixon v. Monterey Financial Services, Inc., No. 15-cv-03298- 27 28 1 MMC, 2016 WL 3456680 (N.D. Cal. June 24, 2016).11 In Dixon, the court held that the 2 proposed class was fail-safe because “defining a TCPA class to include anyone who 3 received a call without prior express consent means that only those potential members who 4 would prevail on this liability issue would be members of the class.” Id. at *4 (internal 5 quotation marks and alterations omitted). Likewise, here, Plaintiff’s proposed class 6 includes only those who “had not previously consented to receiving such calls,” meaning 7 it requires a legal conclusion to determine class membership. (Doc. 27 ¶ 13). Accordingly, 8 Plaintiff’s proposed class definition is fail-safe and will be stricken. See also Tomaszewski, 9 2021 WL 2661190, at *3 (striking class allegations because they “incorporate the 10 affirmative defense of consent”); cf. Panacci, 2015 WL 3750112, at *8 (denying a motion 11 to strike because “the class definitions here do not weed out all members who will not 12 succeed on the merits by asking the court to make findings on legal issues, such as prior 13 consent, in determining class membership”). 14 Plaintiff’s primary argument against the Motion to Strike is that the proposed class 15 definition is based on objective criteria. In support of this assertion, Plaintiff cites to Olney 16 v. Job.com, Inc., No. 1:12-CV-01724-LJO-SKO, 2013 WL 5476813 (E.D. Cal. Sept. 30, 17 2013). But even in that case, the Court found that the plaintiff’s original proposed class 18 definition—which was essentially identical to the one proposed by Plaintiff here12—was 19 impermissibly fail-safe because it incorporated the consent issue. Id. at *10–11. Instead, 20 the Olney court approved of a different proposed class definition that excluded any mention

21 11 Specifically, the class proposed in Dixon was: 22 All persons within the United States who received any 23 collection telephone calls from defendant to said person’s cellular telephone made through the use of any automatic 24 telephone dialing system or an artificial or prerecorded voice and such person had not previously consented to receiving such 25 calls within the four years prior to the filing of this Complaint. 26 Dixon, 2016 WL 3456680, at *4 (alteration omitted). 27 12 The class definition that was rejected in Olney was identical to the one proposed in Dixon except for the omission of the word “collection.” Olney, 2013 WL 5476813, at 28 *10. 1 of consent as “readily determined by objective criteria.” Id. at *11. 2 Defendant argues that leave to amend should be denied because Plaintiff has already 3 amended his Complaint twice and has not shown that the deficiency can be cured. (Doc. 4 50 at 7). Plaintiff’s previous amendments, however, addressed different issues; this is the 5 first time the Court has found that Plaintiff’s proposed class definition is fail-safe. 6 Moreover, the deficiency may be curable. See Olney, 2013 WL 5476813, at *10–11. Thus, 7 Plaintiff will be given leave to amend. 8 2. Rule 23(b) 9 To maintain a class action, the class must satisfy at least one of Rule 23(b)’s three 10 prongs. Defendant argues that Plaintiff’s proposed class is uncertifiable under two of those 11 prongs, Rule 23(b)(1) and (2), but does not argue that the class is uncertifiable under Rule 12 23(b)(3).13 (See Doc. 43 at 2 (“[T]he Court should also strike Plaintiff’s class allegations 13 given that the proposed class as defined cannot be certified under either Rule 23(b)(1) or 14 (2) because Plaintiff predominately seeks monetary relief.”)). Having waived any argument 15 that the class is facially uncertifiable under Rule 23(b)(3), Defendant fails to show that the 16 class allegations “could not succeed under any set of circumstances” with respect to Rule 17 23(b). Cheatham, 161 F. Supp. 3d at 834. The Court need not address the merits of 18 Defendant’s Rule 23(b)(1) and (2) arguments, then, because the waiver of any argument as 19 to Rule 23(b)(3) is a sufficient basis to reject them at this early stage.14 20 /// 21 ///

22 13 Perhaps Defendant intended to argue on this issue that the Court should strike 23 only injunctive allegations for a class under Rule 23(b)(1) or (2), rather than the class allegations as a whole. Regardless, Defendant cites no authority to suggest that the Court 24 should parse the class allegations in such a manner at the pleading stage. Instead, as Plaintiff highlights, Defendant relies on cases in which the court was deciding whether to 25 certify a class. (Doc. 47 at 7–8). Issues regarding whether Plaintiff can satisfy the specific requirements of Rule 23(b) will be decided at the class certification stage. See Canady v. 26 Bridgecrest Acceptance Corp., No. CV-19-04738-PHX-DWL, 2022 WL 279576, at *3 (D. Ariz. Jan. 31, 2022). 27 14 In any event, at minimum, the SAC makes a prima facie showing that Rule 28 23(b)(3) is satisfied. (See Doc. 27 ¶¶ 18, 21). 1| Of. CONCLUSION 2 Having considered the pending Motions, the Court finds that the TCPA’s robocall 3| restriction was not and is not unconstitutional and thus that the SAC states a claim over 4} which this Court has subject matter jurisdiction. The Court further finds that it is the interest | of the orderly course of justice for this case to proceed at this time. Nevertheless, the Court 6 | finds that the SAC proposes an improper fail-safe class and thus will strike the class 7 | allegations with leave to amend. 8 IT IS THEREFORE ORDERED: 9 1. That Defendant’s Motion to Dismiss the Second Amended Complaint or, in the 10 Alternative, to Stay Pending the Ninth Circuit’s Review of Chennette (Doc. 45) 11 is denied; 12 2. That Defendant’s Motion to Strike Class Allegations or, Alternatively, to Strike 13 Non-Arizona Class Members’ Claims (Doc. 43) is granted; 14 3. That the class allegations in Plaintiff's Second Amended Complaint (Doc. 27) 15 are stricken; 16 4. That Plaintiff may file a Third Amended Complaint for the purpose of amending 17 the class allegations no later than March 31, 2022; and 18 5. That Defendant shall file a responsive pleading pursuant to Rule 12 no later than 19 two weeks after Plaintiff files a Third Amended Complaint or, if plaintiff does 20 not file a Third Amended Complaint, by April 14, 2022. 21 Dated this 17th day of March, 2022. 22

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