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Bais Yaakov of Spring Valley v. ACT, Inc.

United States District Court, D. Massachusetts

October 24, 2018

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

          ORDER AND MEMORANDUM ON MOTION TO CERTIFY CLASS (DOCKET NO. 84)

          TIMOTHY S. HILLMAN, DISTRICT JUDGE

         Bais Yaakov of Spring Valley (“Plaintiff”) brought this putative class action against ACT, Inc. (“Defendant”) alleging violation of the Telephone Consumer Protection Act (“TCPA”) for faxing unsolicited advertisements without an opt-out provision. See 47 U.S.C. § 227. Plaintiff now moves to certify two classes comprised of schools that received similar faxes from Defendant. For the reasons set forth below, Plaintiff's motion (Docket No. 84) is denied.

         Background

          Defendant is a company that provides student assessment services. Among these services, Defendant administers the ACT test, a college admissions exam. Approximately 1.9 million high school students in the graduating class of 2015 took the ACT test, from all 50 states. The test was administered at approximately 7, 000 high schools during the 2015-2016 testing cycle. More than 29, 000 high schools in the United States had at least one student register for the ACT during the 2014-2015 cycle. (Docket No. 133 at 2).

         As part of its business strategy, each year Defendant set “volume goals” to increase sales and visibility of the ACT. Rich Dep. 14:7-18. One of the marketing techniques used by Defendant was fax advertising. Id. at 35:7-36:7. Defendant administers the ACT six times per year and in the weeks leading up to each test, Defendant would send high schools throughout the east coast faxes advertising the ACT registration deadline. Twiggs Dep. 35:15-36:10; 38:4-39:11. Plaintiff alleges that Defendant obtained the fax numbers from a directory of school districts and high schools that Defendant purchased each year called the MDR. Id. at 41:14-43:14.

         Plaintiff received fax advertisements from Defendant on March 5, 2012, April 22, 2012, and May 13, 2012. Sussman Decl. ¶ 3. Plaintiff contends that it never provided Defendant express invitation or permission to send these fax advertisements and that none contained an opt-out provision. Id. Further, Defendant admits that it sent more than 10, 000 faxes that are the same or substantially similar to the advertisements sent to Plaintiff. Def.'s Interrog. Answers at 16-17. According to Plaintiff, Defendant's telephone records suggest that from June 30, 2008 through June 30, 2012, Defendant sent out more than 28, 355 fax advertisements. See Bellin Decl. Ex. L.

         Defendant argues that it has active, ongoing relationships with high schools around the country. See McCullough Decl. ¶¶ 6-26. In fact, “[t]housands of high schools have provided their facsimile numbers to ACT when requesting information” from Defendant and its “records include a fax number for more than 7, 000 high schools that have served as ACT test centers and/or have provided their fact number to ACT in other contexts.” Id. ¶ 15. Defendant notes that schools request and receive information from Defendant in numerous ways, including by fax, mail, telephone, and email. McCullough Decl. ¶¶ 25-26; Rich Dep. 15:3-15:10. These communications are further described in declarations from school officials attached to Defendant's memorandum. See Hrasky Decl. Ex. 1. School officials assert, for instance, that they “periodically request information from ACT . . . . This is true now, and it has been true throughout my employment at the School. Our School has requested and accepted information from ACT by regular mail, by facsimile to our School's fax machine and/or by electronic mail.” Id. at 2. Further, the school officials note that their schools have “ongoing relationships . . . with ACT [and that] . . . [t]he information we solicit and receive from ACT puts us in a position to properly advise our students.” Id. at 4. Finally, the school officials said that throughout their employment, “ACT would have had permission from me or other School personnel to send these types of informational communications using any available type of communication, including facsimile.” Id. at 15.

         Telephone Consumer Protection Act

          Plaintiff alleges that Defendant's conduct violated the TCPA. The TCPA prohibits certain unsolicited advertisements sent via phone or facsimile. 47 U.S.C. § 227(b)(1). Unsolicited advertisements are “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission, in writing or otherwise.” Id. § 227(a)(5). Unsolicited advertisements, however, may be sent if (1) the sender and recipient have “an established business relationship, ” (2) the recipient voluntarily provided his fax number to the sender either directly or indirectly through “a directory, advertisement, or site on the Internet, ” and (3) the “unsolicited advertisement contains” an opt-out notice meeting the requirements promulgated by the statute. Id. § 227(b)(1)(C)(i)-(iii).

         Plaintiff argues, however, that under the FCC's Solicited Fax Rule, 47 C.F.R. § 64.1200(a)(4)(iv), both solicited and unsolicited faxes are subject to the “opt-out” notice requirement of 47 U.S.C. § 227(b)(1)(C)(iii). Therefore, Plaintiff argues that whether or not recipients gave consent is irrelevant to this Court's inquiry.[1] Plaintiff argues that all faxes sent by Defendant without an opt-out notice violate the statute.

         The Solicited Fax Rule, however, has been invalidated by the D.C. Circuit. In 2006, the FCC promulgated the Solicited Fax Rule. Thereafter, businesses and courts questioned whether the FCC had the authority to promulgate the rule since the TCPA seemed to contemplate only unsolicited faxes. See, e.g., Ameriguard, Inc. v. Univ. of Kansas Med. Center Res. Inst., 222 Fed.Appx. 530, 531 (8th Cir. 2007) (affirming dismissal because the fax did “not constitute an ‘unsolicited advertisement.'”). As a result, many businesses petitioned the FCC for a declaratory ruling requesting the agency to concede that it overreached. In 2014, however, the FCC stood by the Solicited Fax Rule. See Order, Petitions for Declaratory Ruling, Waiver, and/or Rulemaking Regarding the Commision's Opt-Out Requirements for Faxes Sent with the Recipient's Prior Express Permission, 29 F.C.C.R. 13, 998 (2014). In Bais Yaakov of Spring Valley v. FCC, the D.C. Circuit vacated the 2014 Order and held the Solicited Fax Rule invalid. 852 F.3d 1078, 1083 (D.C. Cir. 2017) (“We hold that the FCC's 2006 Solicited Fax Rule is unlawful to the extent that it requires opt-out notices on solicited faxes.”).

         In Bais Yaakov, the D.C. Circuit resolved many petitions for review that were consolidated and transferred by the Judicial Panel on Multidistrict Litigation. See Sandusky Wellness Ctr. V. ASD Specialty Healthcare, 863 F.3d 460, 467 (6th Cir. 2017) (describing the procedural history of Bais Yaakov). When the Multidistrict Litigation Panel consolidated the challenges to the FCC's regulation and transferred them to the D.C. Circuit, that court became “the sole forum for addressing . . . the validity of the FCC's rule[ ].” Peck v. Cingular Wireless, LLC, 535 F.3d 1053, 1057 (9th Cir. 2008) (quoting MCI Telecomms. Corp. v. U.S. West Comms., 204 F.3d 1262, 1267 (9th Cir. 2000)). As a result, the decision of that court is binding precedent on all circuits. True Health Chiropractic Inc. v. McKesson Corp., 896 F.3d 923, 930 (9th Cir. 2018). Thus, this Court is bound by the D.C. Circuit's holding and Defendant is only liable under the TCPA insofar as it send unsolicited faxes without an opt-out provision.

         Standard of Review

          Plaintiff seeks to certify two classes. Class A comprises “[a]ll persons in the United States from July 30, 2008 through July 30, 2012 to whom Defendant sent or caused to be sent an unsolicited facsimile advertisement, advertising the commercial availability or quality of any property, goods, or services, which contained no opt-out notice.” (Docket No. 87 at 6). Class B includes “[a]ll persons in the United States from July 30, 2008 through July 30, 2012 to whom Defendant sent or caused to be sent a facsimile ...


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