Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Class certification of TCPA, UCL claims denied in alleged cramming scam, (Nov 20, 2013)

By Linda O’Brien, J.D., LL.M.

Consumers asserting putative class actions claims under the Telephone Consumer Protection Act (TCPA) and California’s Unfair Competition Law (UCL) against a marketing communications company and its operators for allegedly placing unauthorized charges of their cell phone bills failed to show that the proposed classes satisfied the numerosity requirement of Federal Rule of Civil Procedure Rule 23(a) and the predominance requirement of Rule 23(b), the federal district court in San Francisco has ruled (Fields v. Mobile Messengers America, Inc., November 18, 2013, Alsup, W.). Thus, the plaintiffs’ motion for class certification and appointment of class counsel was denied.

Edward Fields and other consumers filed a complaint against Mobile Messengers America, Inc. (Mobile Messengers), mBlox Inc., Motricity, Inc. and Wise Media, LLC for allegedly placing unauthorized, misleading, or deceptive charges on the consumers’ telephone bills. The cell phone scam, known as “cramming,” involves the placement of unauthorized third-party charges on wireless bills for subscription services that provide trivia information by text message to a consumer’s phone. Consumers received unauthorized text messages containing trivia information that were sent by five-digit sender numbers (short codes) owned by Wise Media, and a monthly fee for the subscription services was charged to their phone bill.

The plaintiffs claimed that Mobile Messengers, mBlox, and Motricity facilitated the scam by serving as “aggregators” between the mobile carriers and merchant Wise Media and administering the subscription plans. In this role, the aggregator defendants retained a significant portion of the revenue earned from the plans. The defendants claimed that the plaintiffs consented to participating in the text-messaging subscription plans by entering their information into Wise Media’s websites that detailed the subscription plans. The plaintiffs denied visiting any of Wise Media’s websites or consenting to the enrollment in Wise Media’s subscription plans.

The plaintiffs sought to certify two classes and one subclass under Federal Rule of Civil Procedure 23(a) and 23(b). Under Rule 23(b), the plaintiffs must show that the questions of law or fact common to class members predominate over any questions affecting only individual members. First, the plaintiffs sought to certify a nationwide “text-receipt” class alleging a claim under the TCPA that prohibits placing calls to a mobile phone using an automatic telephone dialing system without the recipient’s prior express consent. The class would be limited to persons who received text messages from one of Wise Media’s short codes. The court noted that there were three elements of a TCPA claim: (1) the defendant called a cellular telephone number; (2) using an automatic telephone dialing system; and (3) without the recipient’s prior express consent. The court found that the plaintiffs failed to prove that the issue of consent could be addressed with class-wide proof. The plaintiffs’ allegations of mass fraud were mere speculation absent actual evidence.

Second, the plaintiffs sought to certify an “enrollment class” alleging claims for damages, unjust enrichment, and negligence under California law. The class would be limited to persons who received text messages from one of Wise Media’s short codes and did not receive a refund for the charges. In rejecting the plaintiffs’ argument that California’s significant contact to each member of the putative class was that California was the central hub of Wise Media’s mobile operations, the court found that the plaintiffs presented no evidence that the aggregator defendants maintained their message platforms in California. The court determined that there may be some members of the enrollment class that received their text messages from an out-of-state maintained platform and therefore had no significant contacts with California.

Third, the plaintiffs sought to certify a “California enrollment subclass,” a class of California residents asserting claims under the UCL. The class would be limited to persons who received text messages from one of Wise Media’s short codes, did not receive a refund for the charges, and were residents of California at the time of their enrollment. Although the plaintiffs presented evidence of the number of individuals enrolled in the defendants’ subscription plans, they could not estimate the substantial amount of refunds issued to consumers by Wise Media or the mobile carriers. Since there was no evidence that any remaining putative class member resided in California at the time of their enrollment in the plans, the court concluded that the plaintiffs failed to show numerosity as to the proposed subclass.

The case is No. C 12-05160 WHA.

Attorneys: Jeffrey Michael Rosenfeld (Kronenberger Rosenfeld, LLP) for Edward Fields. Laura Elizabeth Miller (DurieTangri LLP) for Wise Media, LLC. Alan Daniel Sege (Alan Sege Esq., PC) and Ari N. Rothman (Venable LLP) for Mobile Messenger Americas, Inc. Annette Michele McGarry (McGarry & McGarry, LLC) and Matthew F. Miller (Carroll Burdick & McDonough LLP) for mBlox Inc. Steven D. Allison (Crowell Moring LLP) for Motricity, Inc.

Companies: Mobile Messengers America, Inc.; mBlox Inc.; Motricity, Inc.; Wise Media, LLC.

Cases: ConsumerProtection Privacy StateUnfairTradePractices CaliforniaNews