Cordoba v. Directv, LLC

          Appeal from the United States District Court for the Northern District of Georgia D.C. Docket No. 1:15-cv-03755-MHC

          Before MARCUS and BLACK, Circuit Judges, and RESTANI, ^[*] Judge.

          MARCUS, CIRCUIT JUDGE.

         The defendants in this class action have appealed from the district court's certification of a class of plaintiffs who claimed they received telemarketing calls from DIRECTV in violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227. Congress sought to protect consumer privacy by placing limits on telemarketing calls and granting individuals who unlawfully receive calls permission to sue. At the direction of Congress, the Federal Communications Commission (FCC) promulgated a regulation requiring telemarketers to maintain lists of individuals who have asked not to receive calls from particular callers -- so-called "internal do-not-call lists."

         Sebastian Cordoba alleges that DIRECTV and the company it contracted with to provide telemarketing services, Telecel Marketing Solutions, Inc., failed to maintain this list and continued to call individuals who asked not to be contacted. He claims that he was wrongfully called some eighteen times by Telecel, even though he repeatedly demanded that he not be contacted. Cordoba seeks to represent a class of all persons who received more than one telemarketing call from Telecel on behalf of DIRECTV while it failed to maintain an internal do-not-call list, in violation of FCC regulations.

         The district court certified the class and we granted interlocutory review under Federal Rule of Civil Procedure 23(f). We now vacate the district court's certification order. The unnamed members of the putative class who did not ask DIRECTV to stop calling them -- and thus would not have been on the internal do-not-call list, even if it had existed and had been maintained perfectly -- were not injured by the failure to comply with the regulation. That means their injuries are not fairly traceable to DIRECTV's alleged wrongful conduct, and therefore they lack Article III standing to sue DIRECTV.

         This does not mean the case is nonjusticiable, because the named plaintiff --who repeatedly asked not to be called -- has standing, and all that Article III requires for the claim to be justiciable is that a named plaintiff have standing. Cordoba has established an injury in fact, traceability, and redressability. But the fact that many, perhaps most, members of the class may lack standing is extremely important to the class certification decision. In a case like this -- where the class certification has proceeded under Rule 23(b)(3) -- the district court is required to determine whether "the questions of law or fact common to class members predominate over any questions affecting only individual members." Fed.R.Civ.P. 23(b)(3). At some point before it may order any form of relief to the putative class members, the court will have to sort out those plaintiffs who were actually injured from those who were not. Determining whether each class member asked Telecel to stop calling requires an individualized inquiry, and the district court did not consider this problem at all when it determined that issues common to the class predominated over issues individual to each class member. We, therefore, conclude that the district court abused its discretion in certifying the class as it is currently defined, vacate the class it certified, and remand for further proceedings consistent with this opinion.

         I.

         The Telephone Consumer Protection Act was enacted in 1991 because, as Congress put it, "[m]any consumers [were] outraged over the proliferation of intrusive, nuisance [telemarketing] calls to their homes." Mims v. Arrow Fin. Servs., LLC, 565 U.S. 368, 372 (2012) (quoting the Telephone Consumer Protection Act of 1991, Pub. L. No. 102-243, § 2, 105 Stat. 2394, 2394). In particular, Congress noted that "[a]utomated or prerecorded telephone calls made to private residences . . . were rightly regarded by recipients as 'an invasion of privacy.'" Id. (quotation omitted).

         "Subject to exceptions not pertinent here, the TCPA principally outlaws four practices. First, the Act makes it unlawful to use an automatic telephone dialing system or an artificial or prerecorded voice message, without the prior express consent of the called party, to call any emergency telephone line, hospital patient, pager, cellular telephone, or other service for which the receiver is charged for the call. See 47 U.S.C. § 227(b)(1)(A). Second, the TCPA forbids using artificial or prerecorded voice messages to call residential telephone lines without prior express consent. § 227(b)(1)(B). Third, the Act proscribes sending unsolicited advertisements to fax machines. § 227(b)(1)(C). Fourth, it bans using automatic telephone dialing systems to engage two or more of a business' telephone lines simultaneously. § 227(b)(1)(D)." Id. at 373.

         The TCPA also authorized the FCC to promulgate regulations "concerning the need to protect residential telephone subscribers' privacy rights to avoid receiving telephone solicitations to which they object." 47 U.S.C. § 227(c)(1). The FCC was instructed by Congress to consider various approaches, "including the use of electronic databases, telephone network technologies, special directory markings, industry-based or company-specific 'do not call' systems, and any other alternatives." Id. § 227(c)(1)(A). The FCC promulgated regulations creating a national do-not-call list and requiring telemarketers to maintain their own internal do-not-call lists. Both of these provisions are involved in this case. The National Do Not Call Registry is maintained by the federal government, and telemarketers are prohibited from soliciting residential telephone subscribers who have registered their numbers on the list. 47 C.F.R. § 64.1200(c)(2). Telemarketers can avoid liability for any violation if they can show that the violation was a mistake and that they meet minimum compliance standards. Id. § 64.1200(c)(2)(i).

         Internal do-not-call lists are created and maintained by companies engaged in telemarketing. The main FCC regulation at issue today provides that "[n]o person or entity shall initiate any call for telemarketing purposes to a residential telephone subscriber" without "institut[ing] procedures for maintaining a list of persons who request not to receive telemarketing calls made by or on behalf of that person or entity." Id. § 64.1200(d) (emphasis added). The FCC requires that telemarketers have a written policy for maintaining an internal do-not-call list, train their personnel on its "existence and use," put people on the list when they ask, and refrain from calling individuals on the list for five years after a request is made. See id. The TCPA creates a private right of action for anyone who receives more than one call within a year from the same entity in violation of these regulations, and plaintiffs can recover $500 in statutory damages for each violation. See 47 U.S.C. § 227(c)(5). The statute provides an affirmative defense for defendants who "established and implemented, with due care, reasonable practices and procedures to effectively prevent telephone solicitations in violation of the regulations," but it also makes available treble damages against a defendant who "willfully or knowingly violated the regulations." Id. "[U]nder federal common-law principles of agency, there is vicarious liability for TCPA violations." Campbell-Ewald Co. v. Gomez, 136 S.Ct. 663, 674 (2016).

         Cordoba complains that DIRECTV hired Telecel Marketing Solutions, Inc., sometime around 2003 to market its goods and services via telephone. Between March 27, 2015, and March 3, 2016, Telecel placed over 60, 000 marketing calls on DIRECTV's behalf to 24, 566 unique telephone numbers. Cordoba personally began receiving unsolicited calls from DIRECTV in July 2014. According to the complaint, he was called at least eighteen times between April and November of 2015, even though his number appeared on the National Do Not Call Registry and even though he repeatedly told Telecel that he did not want to be called. The owner of Telecel admitted that the company did not maintain an internal do-not-call list (plainly a violation of FCC regulation), and said that its practice was to simply delete individuals' contact information from its database if they asked not to be called. Cordoba says that he went so far as to write to DIRECTV and request that they cease calling him. DIRECTV responded and promised that they would no longer contact him, but still the calls continued.

         Cordoba commenced this class action lawsuit in the United States District Court for the Northern District of Georgia, alleging that DIRECTV and Telecel have violated several aspects of the TCPA's regulatory scheme. He sought to represent two classes. The first class -- and the one at issue today in this interlocutory appeal -- was defined as including "all individuals who received more than one telemarketing call from Telecel on behalf of DIRECTV on or after October 27, 2011," during which time Telecel failed to adhere to the internal do-not-call list regulations set out in 47 C.F.R. §§ 64.1200(d)(1)-(6). Based on call data produced during discovery, Cordoba said this class includes at least "16, 870 individuals who received a total of 52, 810 calls." The second class -- which is not involved in this appeal -- was defined as all individuals whose telephone numbers were on the National Do Not Call Registry but nevertheless received more than one DIRECTV marketing call from Telecel on or after October 27, 2011. This class consisted of 926 individuals who received a total of 2, 829 calls.

         The district court certified both classes. First, the court held that the members of both classes had standing because an unsolicited phone call is an injury in fact and that the proposed classes were ascertainable. The court then determined that each of the requirements of Rule 23(a) -- numerosity of parties, commonality of issues, typicality of the class representative's claims, and adequacy of representation -- was satisfied. Since Cordoba's claim was for money damages, the court moved on to Rule 23(b)(3), which further requires that common questions "predominate over any questions affecting only individual members" and that a class action be "superior" to other methods of adjudication. Fed.R.Civ.P. 23(b)(3). The trial court determined that any individual issues would be "amenable to resolution by fairly 'simple and objectively verifiable means, '" and that class litigation was superior due to the relatively small amount of damages available in an individual TCPA action.

         DIRECTV then sought relief in this Court, filing a petition pursuant to Rule 23(f), seeking permission to appeal on an interlocutory basis from the district court's order certifying the classes. See Fed.R.Civ.P. 23(f) ("A court of appeals may permit an appeal from an order granting or denying class-action certification . . . ."); see also Prado-Steiman ex rel. Prado v. Bush, 221 F.3d 1266, 1274-76 (11th Cir. 2000) (setting out guideposts for determining whether a 23(f) petition ought to be granted). DIRECTV's petition asked for review of two questions, but we granted permission to appeal on only one of them.^[1] That question, which we now address, is "[w]hether a recipient of a telemarketing call who did not request to be placed on the caller's internal DNC [do-not-call] list has standing under Article III to maintain a claim that the caller failed to institute appropriate internal DNC list procedures."

         II.

         Rule 23(f) limits our review to the district court's order granting or denying class certification. We review the class certification order for abuse of discretion. Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1264 (11th Cir. 2009). "A district court abuses its discretion if it applies an incorrect legal standard, follows improper procedures in making the determination, or makes findings of fact that are clearly erroneous." Id. (quoting Klay v. Humana, Inc., 382 F.3d 1241, 1251 (11th Cir. 2004), abrogated in part on other grounds by Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008)). And we review issues of fact for clear error and issues of law de novo. Id.

         For a class to be certified, the named plaintiff must have standing and the putative class must satisfy both the requirements of Federal Rule of Civil Procedure 23(a)^[2] and the requirements found in one of the subsections of Rule 23(b).^[3] City of Hialeah v. Rojas, 311 F.3d 1096, 1101 (11th Cir. 2002). The district court certified this class under Rule 23(b)(3), which permits class certification when "the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members" and "that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed.R.Civ.P. 23(b)(3).

         A.

         We start with the question on which we granted review, whether the members of the internal do-not-call list class who did not ask to be put on the internal do-not-call list have standing. Article III extends "'[t]he judicial power of the United States' . . . only to 'Cases' and 'Controversies.'" Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (quoting U.S. Const. art. III, §§ 1-2). Standing doctrine is "rooted in the traditional understanding of a case or controversy" and "limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong"; it "'serves to prevent the judicial process from being used to usurp the powers of the political branches' and confines the federal courts to a properly judicial role." Id. (quoting Clapper v. Amnesty Int'l USA, 568 U.S. 398, 408 (2013)) (citations omitted). The three requirements for Article III standing are familiar: the plaintiff must allege that he suffered an "injury in fact" that is "concrete and particularized" and "actual or imminent"; that injury must be "fairly traceable to the challenged action of the defendant"; and it must be "likely . . . that the injury will be redressed by a favorable decision." Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992) (quotation omitted and alterations adopted). The plaintiff bears the burden of establishing each element. Id. DIRECTV claims that the unnamed class members who did not ask Telecel to stop calling cannot satisfy either of the first two prongs of the analysis -- injury in fact or traceability.

         DIRECTV first says that the absent class members lack standing because they have not suffered an injury in fact under Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016). In Spokeo, the Supreme Court explained that "Article III standing requires a concrete injury even in the context of a statutory violation." Id. at 1549. In other words, plaintiffs do not "automatically satisf[y] the injury-in-fact requirement whenever a statute" grants them the right to sue; they still must allege a "concrete" harm that is more than a "bare procedural violation." Id. To be concrete, an injury "must be 'de facto' ...