In Career Counseling, Inc. v. Amerifactors Financial Group, LLC, the U.S. Court of Appeals for the Fourth Circuit upheld a district court’s decision denying class certification in a Telephone Consumer Protection Act (TCPA) case on the basis that the plaintiff failed to satisfy Rule 23’s “implicit further requirement of ascertainability.” The Fourth Circuit also upheld summary judgment against the defendant as to the individual claim finding the defendant was indeed the “sender” of the fax at issue. Each finding is discussed more fully below.

Background

The plaintiff claimed that the defendant sent an unsolicited advertisement by fax to it and 59,000 other recipients, violating the TCPA. The district court denied the plaintiff’s class certification motion but awarded summary judgment in the plaintiff’s favor for its individual claim in the amount of $500. Both parties appealed.

Class Certification

The district court had found that while the plaintiff met the Rule 23 prerequisites of numerosity, commonality, typicality, and adequacy of representation, it failed to demonstrate that the proposed class members were “readily identifiable;” a requirement also referred to as ascertainability. In other words, the plaintiff could not distinguish which of the 59,000 recipients were using stand-alone fax machines and which were using online fax services.

The distinction is crucial under the Federal Communication Commission’s (FCC) 2019 Amerifactors decision that held an online fax service that essentially receives faxes sent as email over the Internet is not a “telephone facsimile machine” and thus falls outside the scope of the [TCPA’s] statutory prohibition.” Notably, the Amerifactors Ruling was sought by the defendant for purposes of this litigation. The district court deemed itself bound by the FCC ruling pursuant to the Administrative Order Review Act, also known as the Hobbs Act. Since the district court would need to make individual inquiry of each fax recipient to determine how it received the fax, it found the class was not ascertainable.

On appeal, the plaintiff argued, among other things, that the district court erred in according Hobbs Act deference to the Amerifactors Ruling. The appellate court held that it did not need to consider the plaintiff’s argument because the plain text of the statute prohibits sending unsolicited advertisements to stand-alone fax machines but not to online fax services. “[T]he TCPA renders it unlawful ‘to use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement.’ … Thus, to fall within the § 227(b)(1)(C) prohibition, a fax can be sent from a ‘telephone facsimile machine’ … or from a ‘computer,’ or from some ‘other device.’ But that fax can be received in only one way: ‘on a telephone facsimile machine.'” And since that term is defined by statute as “equipment which has the capacity … to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper,” an online fax service does not qualify. Since the appellate court agreed with the district court — albeit based on the statutory language rather than the Amerifactors Ruling — it concluded that class membership must be limited to stand-alone fax machine users and the plaintiff did not satisfy the ascertainability requirement.

The Fourth Circuit’s discussion of the ascertainability requirement is particularly notable. In recent years, a circuit split has developed over the proper test for satisfying Rule 23’s implicit requirement that a class be ascertainable. Several circuits have adopted a rigorous test that requires the class action plaintiff to prove class membership can be ascertained in a “reliable and administratively feasible” way. See Carrera v. Bayer Corp., 727 F.3d 300, 308 (3d Cir. 2013). By contrast, other courts have applied a much lower standard that simply looks at the adequacy of the class definition, without inquiry into the feasibility of identifying particular class members. See Mullins v. DirectDigital, LLC, 795 F.3d 654, 659 (7th Cir. 2015). A decade ago — and prior to some of the primary cases articulating the more lenient standard — the Fourth Circuit applied the heightened administrative feasibility test in EQT Production Co. v. Adair, 764 F.3d 347, 358 (4th Cir. 2014). The Career Counseling decision makes it definitively clear that despite the passage of time since EQT Production Co. and the intervening decisions from other courts on this issue, the Fourth Circuit still firmly upholds a rigorous test for ascertainability that requires reliable proof of a feasible method for identifying class members.

TCPA Claim

The defendant argued pursuant to the FCC’s Akin Gump Ruling that while it was the advertiser in the fax at issue, it was not liable as the fax’s “sender” because it was defrauded and deceived by the fax broadcaster it employed to disseminate the faxes. In Akin Gump, the FCC ruled that a fax broadcaster may be held exclusively liable for TCPA violations when it engages in fraud or deception such as falsely representing that it has the consumers’ consent for faxes. While the district court recognized the applicability of the Akin Gump ruling, it held that the defendant did not establish that its fax broadcaster made materially false statements. Notably the Fourth Circuit refused to decide whether Akin Gump was applicable, nevertheless it agreed with the district court that there was insufficient evidence of fraud to negate the defendant’s sender liability.