Antitrust Law Daily Wrap Up, PRIVACY—S.D. Cal.: Consumers granted certification of TCPA claim against Schwan’s, (Sep 9, 2013)

By Jody Coultas, J.D.

Consumers were granted certification of a Telephone Consumer Protection Act (TCPA) claim against Schwan’s Home Service, Inc. based on telephone call from Schwan’s made by an automatic telephone dialing system or with a prerecorded voice by the federal district court in San Diego (Knutson v. Schwan’s Home Service, Inc., September 5, 2013, Curiel, G.).

Schwan’s, which delivers frozen foods to residential customers, contracted with NutriSystem, Inc. to deliver weight-loss food to NutriSystem customers on Schwan’s routes. NutriSystem provided Schwan’s telephone numbers, addresses, and other information for NutriSystem customers. When Schwan’s is unable to make a delivery, it autodials customers and leaves prerecorded messages stating that their delivery must be rescheduled. Because NutriSystem customers were placed on Schwan’s ordinary delivery routes, NutriSystem customers received rescheduling calls as if they were regular Schwan’s customers.

The consumers alleged that Schwan’s calls to their phones violated the TCPA. The consumers did not have a relationship with Schwan’s outside of being on delivery routes pursuant to the prior arrangement between NutriSystem and Schwan’s. Calls are made to every customer on affected routes, whether or not they are current Schwan’s customers and whether or not they have pending orders, unless the customer is removed from the route.

To obtain certification of a class, the consumer needed to meet the four requirements of Federal Rule of Civil Procedure 23(a)—numerosity, commonality, typicality, and adequacy—and at least one of the requirements of Rule 23(b). The class must also be ascertainable.

A class is ascertainable if it identifies a group of unnamed plaintiffs by describing a set of common characteristics sufficient to allow a member of that group to identify as having a right to recover based on the description. Schwan’s argued the proposed class was not ascertainable because the court would have to conduct individual hearings to determine whether potential class members received a prerecorded call or a live voice call. Whether a customer received an autodialed or artificial/prerecorded call could be determined objectively, according to the court.

Rule 23(a). The consumers met the Rule 23(a) requirements, according to the court. The number of calls made to NutriSystem customers was in the thousands. The questions of law and fact common to the class included: (1) whether Defendants used an ATDS or artificial/prerecorded voice, (2) to call (3) NutriSystem customers’ cell phones, (3) for non-emergency purposes, and (4) without the customers’ prior express consent. The consumers offered common proof to answer each of the questions. The consumers’ claims were also typical of the class and were adequate representatives.

Rule 23(b)(2). Certification under Rule 23(b)(2) was inappropriate because the consumers were primarily interested in monetary damages. A class may be certified under Rule 23(b)(2) if the party opposing the class has acted or refused to act on grounds that apply generally to the class, and is appropriate only where the primary relief sought is declaratory or injunctive. The consumers sought statutory damages for each violation of the TCPA, and the number of allegedly illegal calls was unclear. It was undisputed that Schwan’s had stopped calling NutriSystem customers, making injunctive relief unnecessary.

Rule 23(b)(3). The consumers met the Rule 23(b)(3) requirements for certification, according to the court. Rule 23(b)(3) is met if questions of law or fact common to class members predominate over any questions affecting only individual members, and if a class action is superior method of adjudication. Schwan’s unsuccessfully argued that individual hearings were required to determine whether a customer consented to receive calls. The court rejected Schwan’s argument that the issue of consent might vary by individual depending on whether Schwan’s and NutriSystem were still partnered. The question of the number of calls each class member received could be answered partly by Schwan’s records without the need for a multitude of mini-trials. Further, a class action would achieve the consumers’ objective better than if class members were required to bring individual actions.

Class definition. The court certified a class of: All persons who are past or present customers of NutriSystem, Inc., who had or have a number assigned to a cellular telephone service, which number was called by Defendants using an automatic telephone dialing system and/or an artificial or prerecorded voice between April 18, 2008 and August 31, 2012. Excluded from the class are persons who Defendants called for emergency purposes and persons who gave express consent to Defendants to call their cellular telephone number prior to Defendants first placing a call using an automatic telephone dialing system and/or an artificial or prerecorded voice.

The case is No. 3:12-cv-0964-GPC-DHB.

Attorneys: Abbas Kazerounian (Kazerounian Law Group, APC) for Erik Knutson. Alan L. Rupe (Kutak Rock, LLP) for Schwan’s Home Service, Inc.

Companies: Schwan’s Home Service, Inc.; NutriSystem, Inc.

Cases: Privacy CaliforniaNews