By Jared Marx – Law360, New York (October 4, 2017, 4:36 PM EDT) –
In the last five years, federal courts have begun denying class certification for so-called “fail-safe” classes. The fail-safe class concept (explained below) derives from a combination of the rules of class certification and res judicata, and is not exactly intuitive. But it reveals something useful about the general weakness in many non-fail-safe class definitions under the Telephone Consumer Protection Act.
In general, a fail-safe class is a class whose membership is defined by a legal concept key to winning the case — like a class defined as, “all people harmed by the defendant’s negligence.” In truth, there seems at first glance little wrong with this type of definition (assuming the other general requirements for a class were met), since it discretely describes a group of people who would have valid claims. But the problem isn’t with who is in the class, but with what happens when someone is excluded from the class.
If a court finds that a person is not a member of a class, that person is of course not entitled to relief. But that excluded person is also not bound by the denial of relief. As a general matter of doctrine, nonparties — which is what you are if excluded from a class — are not subject to the constraints of res judicata. And as a matter of fairness, since members of a putative class seldom participate in the case, it hardly seems right to hold those people to the substantive legal decision that they aren’t entitled to relief without giving them a day in court.
It’s worth noting that this fairness principle is in some tension with the class action rules generally, since class members (who don’t opt out) are bound by judgments in proceedings that they, too, usually had nothing to do with. But there remains an important difference between being deemed not a member of a class — a concept that is at least a mixed issue of law and fact — and having a court rule solely that a given legal theory of liability is wrong. In the first case, it’s more important that individuals have their say, since presentation of facts is individualized, and less so in the second, since pure legal determinations are more comfortably generalized. So there is some intuitive sense behind not binding excluded class members to anything that took place in court.
Still, this seems odd. To stick with our example above, if a court has ruled that excluded class members were not harmed by the defendant’s negligence, this ought to carry precedential value. But that’s the issue: from an efficiency perspective, that decision should carry precedential value, but doctrinally it can’t, because the relevant persons were literally not a party to the lawsuit. Even though a judge has ruled on a legal issue at the heart of the dispute, each of those excluded class members can still relitigate the issue, undoing the whole point of the class action rules.
So many federal circuits now bar — or at least look askance at — fail-safe class definitions. Those courts might deny class certification for “all people wrongly harmed by the defendant’s negligence,” and instead certify a class of “all people who tripped and fell on the sidewalk maintained by defendant in 2017.” Whereas inappropriate class membership is defined by legal concepts, proper class membership is instead defined by factual description.
In the Telephone Consumer Protection Act context, this new focus reveals the limits of the class action rules as a means of vindicating TCPA claims. By weeding out classes defined by legal concepts, it has become easier to recognize when some classes fail to share sufficient commonality.
The fail-safe issue has arisen most commonly in TCPA litigation because the statute requires callers to get “prior express consent” from a recipient before making or sending automated calls or texts. To assert a cause of action, therefore, plaintiffs must claim that the defendant obtained no consent from the called parties. Counsel in turn often defines classes to include the concept of consent: e.g., “all persons receiving automated texts from defendant without providing prior express consent.”
But “consent” is a key legal concept in this context, just as negligence is a key legal concept for tort claims. Indeed, the issue of consent is often at the center of TCPA litigation. A class defined by lack of consent is therefore a fail-safe class: the moment the court decides that someone did give express consent, they’re out of the class and, ironically, free to file a new TCPA lawsuit on the same facts. So the class description is invalid.
Class counsel sensibly seek to solve this by describing facts related to consent. And there lies the problem. A class defined by nonconsent readily appears to satisfy commonality requirements. But as a factual matter, consent is often very case specific. How was consent to be obtained in each instance? What did the putative class members say or read or do? Is there evidence that different putative class members exhibited their express consent in ways others did not? If plaintiffs are forced to identify those issues in a class description, the lack of uniformity among putative class members can become much clearer. And of course, if the putative class members don’t genuinely share common characteristics, then a court won’t certify the class.
This is not to say that all TCPA classes have divergent facts when it comes to consent issues. But prior express consent — or its withdrawal — is inherently specific. For the TCPA, then, what appears at first a weird quirk of various procedural rules ultimately helps highlight the misfit between some TCPA claims and the class action rules. The relatively new focus on this issue therefore prevents use of the class action rules in places where they are ultimately not appropriate.
Jared P. Marx is an attorney at Washington, D.C., law firm Harris, Wiltshire & Grannis LLP. He represents companies and individuals in civil and criminal proceedings.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.