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Bais Yaakov of Spring Valley v. ACT, Inc.

United States District Court, D. Massachusetts

May 10, 2016

BAIS YAAKOV OF SPRING VALLEY, Plaintiff,
v.
ACT, INC., Defendant.

MEMORANDUM AND ORDER ON DEFENDANT’S MOTION TO DEPOSIT FUNDS (DOCKET NO. 82) AND DEFENDANT’S MOTION TO DISMISS (DOCKET NO. 102)

TIMOTHY S. HILLMAN DISTRICT JUDGE

This decision concerns the most recent attempt by ACT, Inc. (Defendant) to satisfy the individual claims of Bais Yaakov of Spring Valley (Plaintiff), in order to make the case moot and prevent the instigation of a class action. In furtherance of that goal, Defendant moves to deposit $4, 800 with the court and to dismiss the case for lack of subject matter jurisdiction. Because the parties dispute whether $4, 800 would fully satisfy Plaintiff’s requested relief, I reject these attempts. As explained below, Defendant’s motions to deposit funds (Docket No. 82) and to dismiss (Docket No. 102) are denied.

Background

Plaintiff is a religious corporation located in New York. In March, April, and May of 2012, Plaintiff alleges that it received unsolicited faxes from Defendant, which did not contain opt-out notices, in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA) and a similar New York law, N.Y. General Business Law § 396-aa (section 396-aa). Plaintiff further alleges that from July 30, 2008 through July 30, 2012 Defendant either negligently or knowingly sent thousands of unsolicited or solicited faxes without opt-out notices to fax machines belonging to people throughout the United States, and from July 30, 2009 through July 30, 2012 either negligently or knowingly sent thousands of unsolicited or solicited faxes without opt-out notices to fax machines belonging to people throughout New York. Plaintiff claims that each of these faxes violated the TCPA, or both the TCPA and section 396-aa. As a result, on July 30, 2012, Plaintiff brought suit against Defendant on its own behalf and seeking to represent three classes of people.[1]

Defendant’s Offer of Judgment and Motion to Dismiss

On August 2, 2013, before Plaintiff had filed a motion for class certification, Defendant made an offer of judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure.[2] Plaintiff did not accept this offer within fourteen days after it was made, and it expired. On August 6, 2013, Plaintiff moved for class certification. On September 4, 2013, approximately one month after making its offer of judgment, Defendant moved to dismiss for lack of subject matter jurisdiction, arguing that its unaccepted offer of judgment rendered the case moot by negating the existence of a case or controversy. In response, Plaintiff argued that its claims had not been satisfied because it had not accepted the offer. In the face of a circuit split and no applicable First Circuit precedent, I denied Defendant’s motion to dismiss on December 16, 2013, finding that the offer of judgment did not moot Plaintiff’s claims. I assumed, for the purposes of my discussion of the issue of whether the offer of judgment mooted the case, that the offer would have fully satisfied Plaintiff’s individual claims. (Docket No. 47 at 4 n.2.)

On December 23, 2013, Defendant moved this Court to certify an interlocutory appeal of the decision denying the motion to dismiss. On December 24, 2013, Plaintiff filed an amended motion for class certification. On January 22, 2014, I certified an interlocutory appeal of my decision on Defendant’s motion to dismiss. Although the parties agreed that the proposed question for certification presented an unsettled issue of law, Plaintiff argued that the remaining elements for interlocutory certification were not satisfied, because it had put forth three additional arguments in defense against Defendant’s motion to dismiss, which I had not reached in my written decision denying the motion. Accordingly, I addressed each of these arguments in the certification order, as explained below.

First, Plaintiff had argued that the court retained subject matter jurisdiction because Defendant’s offer of judgment left the amount of relief to be determined. I rejected this argument, finding that:

[T]he actual amount of damages is not left to the Court. Plaintiff seeks defined statutory damages for a specific number of faxes it received. Defendant has offered the full amount recoverable under the applicable statutes for each of the three faxes Plaintiff received. Plaintiff has elected to recover statutory damages rather than actual damages; it would not be entitled to both, so no calculation of actual[] damages regarding the faxes would be required.

(Docket No. 63 at 3.) I further found that, although the offer left to the court the determination of attorneys’ fees, the court could make this determination even if the case were moot.

Second, Plaintiff had argued that Defendant’s offer of judgment did not offer all of the relief to which Plaintiff was entitled. Defendant offered statutory damage per fax, whereas Plaintiff claimed an entitlement to damages per violation, with each fax containing multiple violations. I rejected Plaintiff’s argument, finding that statutory damages under the TCPA are properly calculated per offending fax. In support of the finding that “individuals may seek damages for faxes sent in violation of the TCPA, but not for individual violations within a single fax, ” I cited to decisions from the Southern District of New York, the District of Columbia, and the Fifth Circuit. (Docket No. 63 at 4.) I found the same to be true under section 396-aa. Thus, I concluded that “Defendant’s offer to pay the maximum in statutory damages per fax received by Plaintiff therefore full[y] satisfies Plaintiff’s demands for damages.” (Docket No. 63 at 5.)[3]

Third, Plaintiff had argued that even if its individual claims were moot, the case should not have been dismissed because it had an interest in representing the class and an economic stake in shifting attorneys’ fees and costs to class members and obtaining an incentive award. I rejected this argument on the basis of the First Circuit’s decision in Cruz v. Farquharson, in which the court held that a class acquires legal status independent of the interest asserted by the named plaintiffs only after the class has been certified. 252 F.3d 530, 534 (1st Cir. 2001). The Plaintiff relied on Deposit Guar. Nat. Bank, Jackson, Miss. v. Roper, in which the Supreme Court held that plaintiffs who had applied for and were denied class certification could appeal that ruling after full satisfaction of their individual claims, due to their personal economic interest in shifting the burden of attorneys’ fees and expenses to putative class members. 445 U.S. 326, 332-34 & n.6 (1980). I found the instant facts to be distinguishable because Plaintiff applied for class certification after Defendant moved to dismiss.

After rejecting Plaintiff’s three alternative arguments, I certified the following question for interlocutory review: “Whether an unaccepted offer of judgment under Rule 68 in a putative class action, when the offer is made before the Plaintiff files a motion to certify class, moots the Plaintiff’s entire action and thereby deprives a court of federal subject matter jurisdiction.” (Docket No. 63 at 7.) I also stayed the case pending appeal, and denied ...


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