District Court (Cal.) Certifies TCPA Class in Single-Source Context; Finds Rule 68 Offer Did Not Moot Class Action under 9th Circuit’s Pitts Decision

In Knutson v. Schwan’s Home Service, Inc., 2013 WL 4774763 (S.D.Cal. 2013), Judge Curiel certified a TCPA class action in what appears to be the first TCPA class certified within the 9th Circuit outside of the “single source” context.

Schwan’s is in the business of delivering frozen foods to residential customers. From November 2008 through November 13, 2011, Schwan’s contracted with non-party NutriSystem, Inc. (“NutriSystem”) to deliver weight-loss food to NutriSystem customers on Schwan’s routes. Pursuant to this arrangement, NutriSystem gave Schwan’s the telephone numbers, addresses, and other information that NutriSystem customers provided to NutriSystem in connection with their orders for NutriSystem products. During the course of their relationship, NutriSystem provided Schwan’s with approximately 195,000 phone numbers—some of which were cell phone numbers. ¶  Schwan’s delivery routes are on fixed schedules. When Schwan’s is unable to make a delivery, Schwan’s attempts to notify its customers that their delivery must be rescheduled. Because NutriSystem customers were placed on Schwan’s ordinary delivery routes, NutriSystem customers would receive rescheduling calls as if they were regular Schwan’s customers.  ¶  Before November 2009, Schwan’s placed these calls from its own customer service center. Beginning in November 2009, Schwan’s outsourced these calls to Customer Elation. Pursuant to its arrangement with Customer Elation, Schwan’s electronically notifies Customer Elation when a call must go out, and a Schwan’s computer system generates a listing of telephone numbers associated with customers on the affected routes. Customer Elation then calls the customers to inform them their routes have been re-scheduled using an automatic telephone dialing sys-tem (“ATDS”) and a prerecorded message. ¶  Schwan’s estimates that, from April 2008 through November 2009, it made approximately 3.9 million autodialed/prerecorded calls to customers throughout the nation—some of which were made to Nutrisystem customers. Schwan’s records show whether a call was completed, and Customer Elation has records for all calls made since November 2009.  ¶  Before and after the arrangement between Schwan’s and Nutrisystem ended on November 13, 2011, some NutriSystem customers, including Plain-tiffs, received rescheduling calls from Defendants on their cell phones.  ¶  Plaintiffs allege, in their currently operative Second Amended Complaint (“SAC”), that, on or about August 16, 2012, Lemieux received a call on his cell phone from Schwan’s, through Customer Elation, using “an artificial or prerecorded voice” in violation of § 227(b)(1)(A).

Judge Curiel declined to certify an FRCP 23(b)(2) class, because Plaintiff’s primary interest was money.

Defendants again base their opposition on the premise that Defendants made calls to class members during Schwan’s relationship with NutriSystem, ar-guing the “differences between Plaintiffs’ circum-stances and those of many of the class members demonstrate that Defendants’ conduct cannot be declared unlawful ‘as to all of the class members or as to none of them.’ ” Defendants further argue that, because it is undisputed that Defendants no longer call NutriSystem customers, Plaintiffs lack standing to seek injunctive relief.  The Court agrees certification under Rule 23(b)(2) is inappropriate in this case because Plaintiffs are primarily interested in monetary damages. Plaintiffs seek an award of statutory damages for each violation of the TCPA. And, as noted above, the number of allegedly illegal calls each class member received is unclear, making this class more appropriate for certification under Rule 23(b)(3). Further, as Defendants note, it is undisputed that Defendants have ceased calling NutriSystem customers; thus, it cannot be said that Plaintiffs are primarily interested in injunctive relief. Accordingly, the Court denies Plaintiffs’ request to certify a Rule 23(b)(2) class.

Judge Curiel believed, however, that certification of a FRCP 23(b)(3) class was the superior method of adjudicating the claim.

Under the superiority requirement, the plaintiff must demonstrate that class resolution is “superior to other available methods for the fair and efficient adjudication of the controversy.” Fed.R.Civ.P. 23(b)(3). “The superiority inquiry … requires determination of whether the objectives of the particular class action procedure will be achieved in the particular case. [Citation.] This determination necessarily involves a comparative evaluation of alternative mechanisms of dispute resolution.” Hanlon, 150 F.3d at 1023. ¶  Defendants assert that, “based upon the possibility that the merits of Plaintiff’s individual claims will be fully litigated before the time comes to determine liability on a class-wide basis, a class action is not superior to other available methods for fairly and efficiently adjudicating this controversy.” ¶  It is not clear that Defendants’ argument pertains to the superiority of a class action. Moreover, Defendants do not proffer any alternative that is superior to a class action. The Court finds Plaintiffs’ objective in bringing a class action is to halt unwanted calls to class members’ cell phones. Given the relatively minimal amount of damages that an individual may recover in suing for violation of the TCPA, see 47 U.S.C. § 227(b)(3), the Court finds a class action would achieve Plaintiffs’ objective better than if class members were required to bring individual actions. See Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc., 244 F.3d 1152, 1163 (9th Cir.2001) (“If plaintiffs cannot proceed as a class, some—perhaps most—will be unable to proceed as individuals because of the disparity between their litigation costs and what they hope to recover.”) Accordingly, the Court finds Plaintiffs have satisfied the superiority requirement.

Finally, Judge Curiel declined to find that a pre-certification FRCP 68 offer mooted Plaintiff’s claim, finding, on the facts, that the 9th Circuit’s Pitts case controlled versus the Supreme Court’s recent Genesis Healthcare decision.

Defendants assert they tendered offers of judgment affording Plaintiffs complete relief, which Plaintiffs have not accepted. Relying on Genesis Healthcare Corp. v. Symczyk, ––– U.S. ––––, –––– – ––––, 133 S.Ct. 1523, 1529–32, 185 L.Ed.2d 636 (2013), Defendants assert their unaccepted offers of judgment moot this lawsuit, depriving this Court of subject-matter jurisdiction and rendering class certi-fication unnecessary. Genesis, however, involved a collective action under the Fair Labor Standards Act, which the Supreme Court recognized is fundamentally different from Rule 23 class actions. Id. at 1528–30. Thus, the Court does not apply Genesis to these facts. Instead, the Court applies the holding of Pitts v. Terrible Herbst, Inc., which provides that “an unaccepted offer of judgment that fully satisfies a named plain-tiff’s individual claim before the named plaintiff files a motion for class certification … does not moot the case so long as the named plaintiff may still file a timely motion for class certification.” 653 F.3d 1081, 1096 (9th Cir.2011).