In Reyes v. Educational Credit Management Corporation, Case No. 17-56930, the Ninth Circuit reversed a decision certifying a class action in which the plaintiffs allege violations of California’s Invasion of Privacy Act (“CIPA”) (Cal. Penal Code § 630 et. seq.). In doing so, it held that the district court had failed to determine whether the named plaintiff is actually a member of the class he seeks to represent. Now, rather than going forward as a class action, the case has been remanded and faces possible dismissal.
The underlying case, which is pending in the Southern District of California, involves telephone calls made in connection with student loan debt collection. The defendant, Educational Credit Management Corporation (“ECMC”), is a guaranty agency in the Federal Family Education Loan Program that helps to administer student loans on behalf of the United States Department of Education. This includes collecting on loans that have gone into default. ECMC has a policy of recording all calls that reach one of its customer service representatives. In general, when ECMC receives an incoming call, its system will provide a warning at the outset, letting the caller know that the call is being recorded.
The named plaintiff, AJ Reyes, alleges that during the eight months from August 2014 to March 2015, several of the telephone lines ECMC used were programed incorrectly. Because of this error, no warning would play in situations where there was a live agent available to take an incoming call. Reyes contends that when he called ECMC, the warning message did not play and he was not notified that his conversation would be recorded. He asserts a claim on behalf of himself and a class of similarly situated callers for a violation of the CIPA, which makes it unlawful to intentionally record a communication with a cellular telephone without the consent of all parties to the call.
In an order issued on September 20, 2017, the district court granted Reyes’s motion to certify the class. In reversing this decision, however, the Ninth Circuit held that courts have an obligation to ensure that a named plaintiff is actually a member of the class he seeks to represent. The class the district court certified consisted of callers who were recorded by ECMC without their consent. However, the district court did not make any finding as to whether Reyes had actually heard a warning stating that his call to ECMC was being recorded. The Ninth Circuit held that, if Reyes had heard such a warning, he would be deemed to have consented to the recording of the conversation under California law and could not be a member of the class. As a result, it vacated the certification order and remanded the case for a determination as to whether Reyes has met his burden of establishing that he did not hear the warning. Because a class action cannot go forward without a named plaintiff, the Ninth Circuit ordered the case to be dismissed in its entirety if Reyes cannot meet this burden.
This case serves to emphasize an important point when defending an action brought on behalf of a purported class: the named plaintiff must establish that he is actually a member of the class he claims to represent. If the defendant can show that the plaintiff does not fall within the class definition, the case should be dismissed.