On December 1, 2016 a California federal judge issued two rulings in a lawsuit where an attorney/plaintiff accused Dick’s Sporting Goods Inc. (DSG) of sending him text messages in violation of the TCPA.  The attorney/plaintiff survived a Motion to Dismiss by DSG but was deemed not to be an adequate class representative and, as a result, was denied a request for class certification.

The case is Nghiem v. Dick’s Sporting Goods, Inc. (Case No. 8:16-cv-00097, United States District Court, Central District of California). A copy of the Order Denying Defendant’s Motion to Dismiss for Lack of Standing can be found here.  A copy of the Order Denying Plaintiff’s Motion for Class Certification can be found here.

insideARM has previously written about this case. In July of this year the same judge ruled that DSG could not compel arbitration in the case. Our July 6, 2016 story on that decision can be found here.

Background

Plaintiff Phillip Nghiem (Plaintiff or Nghiem) brought this action against Defendants DSG and Zeta Interactive Corporation (Zeta) for violations of the TCPA. Nghiem is a plaintiffs’ attorney who handles consumer and debtor disputes, including TCPA claims. The Complaint sought statutory damages, treble damages, attorney’s fees, and an order certifying a class.

The Complaint alleged that DSG administers a marketing program centered on what they call “mobile alerts”—text messages sent to subscribers. Consumers can sign up for mobile alerts on DSG’s website or by sending a text message with the word “JOIN” to a number associated with DSG, called a “short code.”

On May 4, 2015, Plaintiff enrolled in DSG’s mobile alert program by texting the word “JOIN” to DSG’s short code. Thereafter, on December 6, 2015, Plaintiff texted the word “Stop” to that same short code, indicating that he no longer wished to receive mobile alerts from DSG. DSG sent Plaintiff a text message indicating that he had unsubscribed and would no longer receive mobile alerts.

But, the Complaint alleges that DSG continued to send Plaintiff text messages, including on at least eight particular occasions between December 11, 2015 and January 22, 2016.

The Motion to Dismiss the Complaint

On October 27, 2016, DSG filed a Motion to Dismiss, contending that Plaintiff lacked standing to bring this action in light of the Supreme Court’s recent opinion in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), because Plaintiff had not alleged a concrete and particularized injury in fact as required by Article III of the Constitution. In the alternative, they argued that Plaintiff does not have “prudential standing.”

Editor’s Note: As discussed in our August 18, 2016 article about a professional TCPA Plaintiff: “The issue of “prudential standing” and the arguments made by the parties and Court’s opinion are hyper-technical and best left for a Law School Civil Procedure exam.” 

The Honorable Cormac J. Carney, United States District Court Judge, denied Defendant’s motion to Dismiss. After a lengthy discussion of Spokeo and its aftermath, Judge Carney ruled:

“Based on Spokeo, the Court is satisfied that Plaintiff has alleged an injury-in-fact that is concrete and particularized.”

When considering the issue of “prudential standing” Judge Carney determined:

“The statutory question of the TCPA’s “zone of interests” involves disputed issues of material fact that cannot be resolved by the Court at this early stage of the case. What matters at this early stage are the allegations of the First Amended Complaint (FAC), and those allegations explicitly state that Plaintiff opted out of DSG’s mobile alerts program and yet continued to receive text messages from DSG that violated his privacy. This is all that is necessary for Nghiem to defeat Defendants’ motion.”

The Motion for Class Action Certification

Plaintiff sought to certify a class as “[a]ll persons who, after opting-out of Dick’s Sporting Goods, Inc.’s mobile alerts program, received unconsented text message advertisements from Defendants via Dick’s mobile alerts program.” The FAC alleged that as a result of Defendants’ conduct, “Plaintiff and class members have had their privacy rights violated, have suffered actual and statutory damages, and, under the TCPA are each entitled to, among other things, a minimum of $500.00 in damages for each of Defendants’ violations of the TCPA.” The FAC seeks statutory damages, treble damages, attorneys’ fees, and an order certifying a class.

Judge Carney wrote:

“Under Federal Rule of Civil Procedure 23, district courts have broad discretion to determine whether a class should be certified. The party seeking class certification bears the burden of showing that each of the four requirements of Rule 23(a) and at least one of the requirements of Rule 23(b) are met.

Rule 23(a) provides that a case is appropriate for certification as a class action if: “(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.”

These four requirements are often referred to as numerosity, commonality, typicality, and adequacy.

Judge Carney determined that the numerosity and commonality requirements existed in this case. However, when considering the typicality and adequacy requirements, the Judge decided that those requirements were not met.

When considering typicality Judge Carney wrote:

"Ninth Circuit authority directs district courts not to grant class certification if 'there is a danger that absent class members will suffer if their representative is preoccupied with defenses unique to it.' Here, there is such a danger. Defendants will continue to dispute whether Nghiem opted in and out of DSG’s mobile alerts program in good faith and if he suffered any invasion of privacy whatsoever. Indeed, Defendants will argue at every opportunity that (1) Nghiem fabricated this lawsuit; (2) he welcomed and hoped for text messages that violated the TCPA; (3) he is perpetrating a fraud by claiming his privacy was invaded when he received more text messages from DSG after opting out of its mobile alerts program; and (4) he should not be awarded a penny for his lawyer shenanigans. The major focus of this litigation will be on these issues and defenses unique to Nghiem, not on the claims of the class."

When considering adequacy, Judge Carney wrote:

“Defendants argue that Nghiem is not an adequate class representative because he is subject to defenses that do not apply to the rest of the class and has no credibility. While these arguments primarily relate to typicality, “a named plaintiff who has serious credibility problems or who is likely to devote too much attention to rebutting an individual defense may not be an adequate class representative. Additionally, “[t]he honesty and credibility of a class representative is a relevant consideration when performing the adequacy inquiry ‘because an untrustworthy plaintiff could reduce the likelihood of prevailing on the class claims.

The Court is convinced that if Nghiem is the class representative, he and his counsel will have to devote most of their time and resources trying to refute Defendants’ attacks on his character and his motivations for filing and litigating this lawsuit. This skewed focus and diversion of resources will come at the expense of Nghiem’s ability to vigorously prosecute this case on behalf of the rest of the class and obtain monetary recovery for any members of the class who undisputedly had their privacy invaded when they received unwanted text messages from DSG.” 

insideARM Perspective

This story is interesting to the ARM industry for two reasons.

First. The TCPA/Spokeo discussion is quite topical.  Though, in this instance the court decided that the case should survive a Motion to Dismiss for Lack of Standing.

Second, the portion of the story relating to the denial of class certification is also required reading for companies in the ARM industry that are being sued by alleged “professional” plaintiffs.  Does this case continue a trend in court’s view of TCPA cases started by the June 24, 2016 Opinion and Order in the case of Stoops v. Wells Fargo Bank, NA (Case No. 3-15-83, United States District Court, W.D PA) and continued with the August 8, 2016 decision in  Telephone Science Corporation. v. Asset Recovery Solutions, (Case No. 15-CV-5182, N.D. Ill)?

Here the facts are slightly less salacious. But, the implications are similar. In this case the defendants also believe that the plaintiff/attorney was trying to manufacture a TCPA claim.

It will be interesting to see where this case goes next.


Tags: TCPA

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