Antitrust Law Daily Wrap Up, PRIVACY—1st Cir.: Class action for violation of TCPA barred by statute of limitations, (Jun 4, 2015)

By Michael Menzhuber, J.D., LL.M.

Dismissal of a class action suit brought under the Telephone Consumer Protection Act (TCPA) on statute of limitations grounds was affirmed by the U.S. Court of Appeals in Boston. The court also affirmed the denial of the company’s Federal Rule of Civil Procedure 60(b)(6) motion to vacate the district court’s order and clarify the memorandum opinion to decertify the class (Sparkle Hill, Inc. v. Interstate Mat Corporation, June 3, 2015, Kayatta, W.).

Background. In May 2006, a marketing firm, on behalf of Interstate Mat Corporation (Interstate), transmitted an unsolicited facsimile advertisement to 8,416 recipients, including Sparkle Hill, Inc. and its vice-president and owner, William Warming (collectively, “Sparkle Hill”). Nearly five years later, and almost a year after the class action filing by another recipient of the Interstate fax, West Concord 5-10-1.00 Store, Inc., Sparkle Hill filed a class action in federal district court alleging that sending the unsolicited fax advertisement was a violation of the TCPA.

After the district court certified the class, Sparkle Hill moved for summary judgment. Interstate opposed the motion by, among other things, filing a cross-motion asserting that the applicable four-year state of limitations barred Sparkle Hill’s claim. After Sparkle Hill failed to respond to Interstate’s statute of limitations defense, the district court granted Interstate’s motion.

The district court also addressed the merits of Interstate’s statute of limitations defense and it determined that the Sparkle Hill’s claim was time-barred. It considered whether West Concord’s state court class action tolled the statute of limitations for Sparkle Hill’s class action and concluded that Sparkle Hill could not stack one class action on top of another to extend the limitations period.

Sparkle Hill moved to vacate the district court’s order, arguing that, instead of entering judgment for Interstate, the district court should have decertified the class and allowed class members to pursue individual tolling arguments.

The district court denied the motion and Sparkle Hill appealed. In its opening brief on appeal, Sparkle Hill limited its arguments to the merits of the limitations defense as applied to both the class and to Sparkle Hill. Interstate, in its brief, brought attention to Sparkle Hill’s failure to challenge the district court’s reliance on its procedural defalcation. In its reply brief, Sparkle Hill raised two new points: (1) its failure to oppose the motion was of no issue because the burden of proving an affirmative limitations defense rested with Interstate; and (2) any waiver was harmless and should fit within an exception to the normal rules concerning waiver.

Analysis. Sparkle Hill did not argue the substantive merits of its claim in its opening brief but, instead, saved those arguments for its reply brief. The appellate court noted the precedent that it not consider arguments for reversing a district court’s decision when the argument is not raised in the opening brief. Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F3d 288 (2000). The court did acknowledge that counterpoints and rebuttal rejoinder may arise as a reply to an unanticipated argument and, under this circumstance, an argument may not be considered waived. However, the court determined that this exception did not apply.

The court found added reason not to deviate from its customary practice of not considering arguments that were not raised in the opening brief after it determined that Sparkle Hill would not prevail on “plain error review.” To do so, Sparkle Hill would have to show that: (1) an error occurred (2) which was clear and obvious and which not only (3) affected it substantive rights, but also; (4) seriously impaired the fairness, integrity, or public reputation of the judicial proceedings. After considering the practical effect of the suit on the parties, the court determined that Sparkle Hill could not meet this standard.

The court agreed with Sparkle Hill that the district court should have decertified the class instead of entering judgment against it. However, it read the district court’s orders as doing just that.

The case is No. 14-1618.

Attorneys: Phillip A. Bock, Tod A. Lewis (Bock & Hatch, LLC); Brian J. Wanca, David M. Oppenheim (Anderson & Wanca); and Edward M. Swartz, Alan L. Cantor (Swartz & Swartz) for Sparkle Hill, Inc. and William Warming. Scott T. Ober, David F. Hassett, Margarita I. Warren (Hassett & Donnelly, P.C.) for Interstate Mat Corporation.

Companies: Sparkle Hill, Inc.; Interstate Mat Corporation

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