In late December, the United States District Court for the Middle District of Florida indicated that Article III standing for members of a class action should not be determined at the pleadings stage. In Sharfman v. Premier Medical, Inc., 2021 U.S. Dist. LEXIS 247447 (M.D. Fla. Dec. 29, 2021), the magistrate judge issued a report and recommendation recommending the district court deny Defendant Premier Medical’s motion to strike Plaintiff’s claims and allegations and to deny class certification. The district judge has yet to rule on the magistrate judge’s recommendation. Read on to learn what the district judge’s ultimate decision may mean in the context of the Supreme Court’s ruling last year in Ramirez.
First, some background. On or about July 16, 2019, Defendant sent Plaintiff Sharfman an unsolicited fax advertisement for Defendant’s DIABETESpredict® genetic test. Plaintiff alleges that he did not give Defendant permission to send the fax, nor did the fax contain an opt-out notice. As such, Plaintiff alleges that Defendant violated section 227(b)(1)(C) of the Telephone Consumer Protection Act (“TCPA”). Plaintiff also alleges that Defendant sent the same unsolicited fax to at least 40 other recipients, purporting to bring a class action on their behalf. Plaintiff alleges injuries in the form of wasted paper and toner, tying up the fax machine, wasted time, and intrusion into seclusion and violation of privacy rights.
Defendant moved under Federal Rules of Civil Procedure 12(f) and 23 to strike Plaintiff’s claims and allegations and to deny class certification. Defendant urged the court to dismiss the action because each individual class member cannot establish that he or she has Article III standing. A brief refresher on standing—a plaintiff must have Article III standing in order to bring an action in federal court. In order to have Article III standing, a plaintiff must allege a concrete injury in fact.
In making the recommendation to deny Premier Medical’s motions, the magistrate judge cited three reasons: 1) the motion to strike was untimely; 2) striking class allegations at the pleadings stage is inappropriate; and 3) Plaintiff alleged sufficient Article III standing, and class members’ standing is better determined after discovery. The magistrate judge found that Defendant filed the 12(f) motion too late and failed to join it with previous Rule 12 motions. The magistrate judge also found the motion to strike premature before the “benefit of discovery,” noting that challenges to class allegations are most appropriate in opposition to a motion for class certification.
Defendant argued that Plaintiff could not establish a concrete injury in fact for all class members under the TCPA if the faxes were sent via online as opposed to via telephone. The magistrate judge rejected this argument, given that “[t]he Eleventh Circuit has previously determined, in a published decision, that the transmission of an unsolicited fax, and that transmission’s occupation of the plaintiff’s fax machine, is a sufficiently concrete injury to establish Article III standing.”
The magistrate judge rejected Defendant’s argument that the court should strike the class at the pleadings stage, reasoning that no cited case law supports doing so “based on the mere possibility that the unnamed class members may not have standing.” First, the magistrate judge distinguished Spokeo, Inc. v. Robins, 578 U.S. 330 (2016), which held that a plaintiff must allege a concrete harm beyond a bare procedural violation in order to confer Article III standing. The magistrate judge reasoned that Spokeo dealt with the Fair Credit Reporting Act (“FCRA”), not the TCPA, and that the present Plaintiff alleges actual harm beyond a mere procedural violation.
The magistrate judge also distinguished Cordoba v. DIRECTV, LLC, 942 F.3d 1259 (11th Cir. 2019), which held that a court must separate injured from uninjured members of a class before ordering relief. First, the magistrate judge noted the different procedural posture, as Cordoba “involved a case where a class had already been certified,” whereas in the present case “discovery is still open and no motion to certify a class has been filed.” The magistrate judge also reasoned that “Cordoba nowhere holds that class certification should be outright denied, and instead emphasizes the need for a full analysis by the district court — an analysis that has not yet taken place in this case (nor has been requested).”
Lastly, the magistrate judge distinguished Defendant’s use of TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021). In TransUnion, the Supreme Court reiterated Spokeo’s holding that plaintiffs must show concrete harm in order to confer Article III standing. However, the magistrate judge distinguished TransUnion in part on procedural grounds, noting that TransUnion “does not hold that the standing analysis should be determined solely at the pleading stage,” as the TransUnion action had the benefit of a jury verdict. As such, the magistrate judge notes, TransUnion “expressly declined to address ‘the distinct question whether every class member must demonstrate standing before a court certifies a class.’”
The ultimate significance of the case will be determined by the district judge’s decision on the magistrate judge’s report and recommendation. In the meantime, Sharfman may signal a growing trend to limit TransUnion’s applicability in early stages of litigation. For more developments in this area of the law, stay tuned. CPW will be there to keep you in the loop.