District Court (Ohio) Says Blast-Fax TCPA Class Action is a “Fail-Safe” Class, But Striking the Class Allegations Is Premature

Defendants argue that Plaintiff’s class allegations should be stricken because the proposed class constitutes a “fail-safe” class. (ECF No. 20 at 4). As a threshold matter, some background principles: in order for a district court to certify a class, the proposed class must be “sufficiently definite so that it is administratively feasible for the court to determine whether a particular individual is a member of the proposed class.” Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 537–38 (6th Cir. 2012) (quoting 5 James W. Moore et al., Moore’s Federal Practice § 23.21[1] (Matthew Bender 3d ed. 1997) (“Although the text of Rule 23(a) is silent on the matter, a class must not only exist, the class must be susceptible of precise definition. There can be no class action if the proposed class is ‘amorphous’ or ‘imprecise.’ ”)). One safeguard some federal courts have developed to ensure that a proposed class is sufficiently definite is the prohibition on “fail-safe” classes—that is, classes which include only those who are entitled to relief, thus “shield[ing] the putative class members from receiving an adverse judgment.” Randleman v. Fid. Nat. Title Ins. Co., 646 F.3d 347, 352 (6th Cir. 2011). In other words, in a forbidden fail-safe class, “[e]ither the class members win or, by virtue of losing, they are not in the class and, therefore, are not bound by the judgment.” Id. . . .Plaintiff responds that Defendant assumes too much—the class definition in the Complaint was never intended to be the class definition submitted to the Court at the class certification stage. Instead, plaintiff alleges, “the usual process in TCPA cases is to allege a broad class definition in the complaint, conduct discovery into the defendant’s faxing activity during the class period, and then move to certify a more focused class definition referencing common content of the faxes.” (ECF No. 27 at 5–6 (citing Chapman v. Wagener Equities, Inc., No. 09–C–07299, 2014 WL 540250, at *1 (N.D. Ill. Feb. 11, 2014))). This order of operations is necessary, Plaintiff argues, because a certain amount of discovery is necessary prior to class certification in TCPA cases to determine if there is language common to the offending faxes. Id. at 6.  In sum: the parties agree that the current class definition is an impermissible fail-safe class. The question is whether the Court should strike the class allegations on that basis, or allow the Plaintiff to proceed with limited discovery so Plaintiff may determine whether there is an objective basis upon which the class may be defined, such as language common to the alleged offending faxes.  This Court respectfully disagrees with the Swetlic court, and reiterates that “courts should exercise caution when striking class action allegations based solely on the pleadings, because class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff’s cause of action.” Geary v. Green Tree Servicing, LLC, No. 2:14–CV–00522, 2015 WL 1286347, at *16 (S.D. Ohio Mar. 20, 2015) (quoting Sauter v. CVS Pharmacy, Inc., No. 2:13–CV–846, 2014 WL 1814076, at *2 (S.D. Ohio May 7, 2014)). Defendant’s request that this Court resolve the class-certification question “does not free [the Court] from the duty of engaging in a ‘rigorous analysis’ of the question, and ‘sometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question.’ ” Pilgrim v. Universal Health Card, LLC, 660 F.3d 943, 949 (6th Cir. 2011) (quoting Gen. Tel. Co. v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982)). In light of this cautionary posture, rather than striking the class allegations or requiring Plaintiff to modify the class definition at this stage, the Court will permit controlled discovery so Plaintiff may ascertain whether a class definition exists that would not run afoul of the fail-safe problem.  This ruling is consistent with the requirements of Rule 23, which provides that “[a]t an early practicable time … [a] court must determine by order whether to certify the action as a class action.” Fed. R. Civ. P. 23(c)(1)(A). The commentary to Rule 23 sheds further light on what constitutes an “early practicable time” under the Rule:  Time may be needed to gather information necessary to make the certification decision. Although an evaluation of the probable outcome on the merits is not properly part of the certification decision, discovery in aid of the certification decision often includes information required to identify the nature of the issues that actually will be presented at trial. In this sense it is appropriate to conduct controlled discovery into the ‘merits,’ limited to those aspects relevant to making the certification decision on an informed basis. . . .To require a TCPA plaintiff to advance a class definition before it has access to the language of the potentially-offensive faxes would therefore unnecessarily stymie—and may unjustly prevent—plaintiffs’ efforts to ultimately craft a class definition by reference to objective criteria. It is therefore not practicable to determine the class certification question prior to a period of controlled discovery.  Nor would permitting limited discovery implicate either of the policy rationales courts have advanced when forbidding fail-safe classes. First, courts have expressed concern that “liability-begging definitions are administratively infeasible, as the inquiry into class membership would require holding countless hearings resembling ‘mini-trials.’ ” 1 Newberg on Class Actions § 3:6 (5th ed.). Second, “some courts dislike fail-safe classes because they appear to have a ‘head[s] I win, tails you lose’ aspect; in the words of the Sixth Circuit, such classes ‘allow putative class members to seek a remedy but not be bound by an adverse judgment—either those class members win or, by virtue of losing, they are not in the class and are not bound.” 1 Newberg on Class Actions § 3:6 (5th ed.) (quoting Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 538 (6th Cir. 2012)). But both of these potential complications would arise at the class certification stage, not, as here, prior to it. The Court therefore disagrees with those courts that have granted motions to strike TCPA classes at an early stage of the litigation because of the administrative infeasibility of providing notice to the putative class without conducting extensive individualized fact-finding that class actions seek to avoid. See Zarichny v. Complete Payment Recovery Servs., Inc., 80 F.Supp.3d 610, 625–26 (E.D. Pa. 2015); Taylor v. Universal Auto Grp. I, Inc., No. 3:13–CV–05245–KLS, 2014 WL 6654270, at *22 (W.D. Wash. Nov. 24, 2014). Such infeasibility will either be cured through a discovery period that reveals objective criteria upon which the class will be defined, or it will ultimately be fatal to Plaintiff’s claims at class certification. Either way, to strike the class allegations at this juncture would be inconsistent with the type of “rigorous analysis” that this Court would endeavor to undertake in deciding whether to ultimately certify a class. Cf. Wal–Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011); see also Wolfkiel v. Intersections Ins. Servs. Inc., 303 F.R.D. 287, 294 (N.D. Ill. 2014) (holding that the fail-safe problem is not a basis on which to strike a TCPA plaintiff’s class allegations prior to class certification).  In sum, Defendant’s argument that the class definition in the Complaint is an impermissible fail-safe class is correct, but premature. The Court will permit Plaintiff to continue discovery, but notes that Plaintiff’s discovery should be aimed toward refining the class definition such that the Court may determine the certification question as soon as is practicable.