AVIO, Inc. v. Alfoccino, Inc.

18 F.Supp.3d 882

AVIO, INC., a Michigan corporation individually and as the representative of a class of similarly situated persons, Plaintiff

v.ALFOCCINO, INC., D. Taliercio Investments, Inc. and Farshid (Tony) Shushtari, Defendants.

No. 2:10–cv–10221.

United States District Court, E.D. Michigan, Southern Division.

Signed May 9, 2014.

Brian J. Wanca, Ryan M. Kelly, George K. Lang, Anderson & Wanca, Rolling Meadows, IL, Danielle C. Schoeny, Jason J. Thompson, Sommers Schwartz, P.C., Southfield, MI, Phillip A. Bock, Tod A. Lewis, Bock & Hatch, LLC, Chicago, IL, for Plaintiff.

Jason R. Mathers, John R. Prew, Harvey Kruse, Troy, MI, for Defendants.

OPINION AND ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF'S MOTION TO CERTIFY CLASS

GERALD E. ROSEN, Chief Judge.

I. INTRODUCTION

This is a “junk fax” case arising out of Defendants' use of a third-party to send advertisements via facsimile to numerous businesses in southeast Michigan. Plaintiff's putative class action generally asserts that this third-party, Business–to–Business Solutions (B2B), faxed over ten thousand advertisements on Defendants' behalf in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA). Presently before the Court are two Motions: (1) Plaintiff's Motion to Certify Class (Plf's Mtn., Dkt. # 109); and (2) Defendants' Motion for Summary Judgment (Defs' Mtn., Dkt. # 117). Having reviewed and considered the parties' Motions, respective responses and replies thereto, supplemental authority,¹ and the entire record of this matter, the Court has determined that the relevant allegations, facts, and legal arguments are adequately presented in these written submissions, and that oral argument would not aid the decisional process. Therefore, the Court will decide these matters “on the briefs.” See Eastern District of Michigan Local Rule 7.1(f)(2). The Court's Opinion and Order is set forth below.

II. PERTINENT FACTS

A. B2B Junk Fax Litigation across the Country

This litigation is but one of at least one hundred junk fax matters filed by Plaintiff's attorneys across the country involving facsimiles sent by B2B. It is, to turn a phrase, not the first rodeo for these facts and legal issues.² Judge Cox of this District expansively discussed this history in three nearly identical matters, which put this litigation into perspective:

Anderson + Wanca and Bock & Hatch are two Chicago area law firms that specialize in representing plaintiffs in class action lawsuits under the Telephone Consumer Protection Act as amended by the Junk Fax Prevention Act of 2005 (the “TCPA”). The TCPA authorizes $500.00 in statutory damages for faxing an unsolicited advertisement, and each transmission is a separate violation. And the award triples upon a showing of willfulness. Because plaintiffs may enforce the statute via class action and because a single advertisement is often faxed to hundreds—if not thousands—of phone numbers, suits under the Act present lucrative opportunities for plaintiffs' firms.

A woman named Caroline Abraham functioned as a modern-day “typhoid mary” in the small business communities in which she operated. As the Seventh Circuit explained [in Reliable Money Order, Inc. v. McKnight Sales Co., 704 F.3d 489 (7th Cir.2013) ], Abraham and her company, Business–to–Business Solutions (‘B2B’) sit at the center of this lawsuit and scores of others: B2B contracted with businesses to send advertisements via facsimile. Advertisers would pay a fee, and B2B would send the ad to hundreds of fax numbers purchased from InfoUSA, Inc. (a practice known as “fax-blasting”). Abraham, B2B's sole employee, never obtained from the fax recipients['] permission to send them the advertisements.

* * *

Anderson + Wanca came across B2B and Abraham while they were investigating four putative class actions in Illinois. They learned that the defendants in those four cases had contracted with B2B to fax the offending advertisements. Unsurprisingly, Caroline Abraham's B2B records became the focus of discovery. Abraham ultimately produced spreadsheets in discovery that listed only the recipients of the advertisements at issue in the four cases.

* * *

Flush with success, Anderson + Wanca recognized that the B2B hard drives and fax lists likely contained a treasure trove of potential clients for putative class action lawsuits. So, despite having all information necessary to certify the classes in the Four Cases, Anderson + Wanca continued pushing Caroline Abraham to disclose all B2B fax transmission data. Ryan Kelly, an attorney at Anderson + Wanca, met with Caroline Abraham and asked her for the actual backup disks and hard drive. He told her that “nobody would look at anything on these media not related” to the Four Cases. Indeed, Kelly even emailed Ms. Abraham a copy of the protective order filed in one of the Four Cases, explaining that it “will prevent [Kelly] from disclosing any of the back-up disks or hard drive to any third-party.” To receive those protections, however, the producing party had to stamp documents confidential or notify plaintiff's counsel of their confidential nature at the time of production. Ms. Abraham continued to resist.

Ultimately, plaintiff's counsel subpoenaed Joel Abraham to testify at a deposition. The subpoena also ordered Mr. Abraham to produce, at the time of his deposition, the back-up disks and hard drive. Appearing at the deposition with attorney Eric Ruben, Joel Abraham produced the materials. Neither he nor Ruben, who had read the protective order, asserted confidentiality. Even so, Anderson + Wanca later instructed defense counsel to “treat the DVD produced by Joel Abraham as confidential pursuant to the protective order[.]”

The back-up disks and hard drive revealed not only the recipients of fax advertisements sent by the defendants in the Four Cases but the names of other B2B clients as well.

Then, armed with data from B2B's electronic files, Plaintiff's counsel filed scores of putative class actions under the TCPA. The B2B files provided a treasure trove of potential new clients for Anderson + Wanca, revealing the names of other potential defendants who contracted with B2B to send unsolicited fax advertising and listing the recipients of that advertising.... Anderson + Wanca attorneys have filed over one hundred putative class actions under the Act, all rooted in data recovered from the B2B disks and hard drive.

APB Associates, Inc. v. Bronco's Saloon, Inc., 297 F.R.D. 302, 304–06 (E.D.Mich.2013) (Cox, J.) (internal citations and quotations to Reliable Money Order omitted); see also Compressor Eng'g Corp. v. Mfrs. Fin. Corp., 292 F.R.D. 433 (E.D.Mich.2013) (Cox, J.); Machesney v. Lar–Bev of Howell, Inc., 292 F.R.D. 412 (E.D.Mich.2013) (Cox, J.).³

B. Pertinent Facts Regarding Plaintiff's Claim in This Litigation

This case involves a fax campaign by B2B⁴ on behalf of two Alfoccino restaurants located in Auburn Hills and Farmington Hills on two separate occasions in 2006. Defendant Farshid Shushtari was responsible for Alfoccino's marketing and advertising. (Ex. D to Plf's Class Mtn., Dkt. # 109–4, at 10, 80). In 2006, B2B contacted Alfoccino—ironically through Alfoccino's fax machine—advertising its services. (Id. at 12–13). Shushtari responded, and eventually engaged B2B to send 20,000 advertisements via fax, split between delivery dates in November and December 2006. (Id. at 64–65). The content of these ads are immaterial.

What is material is to what numbers were the facsimiles to be sent, and who made this decision? As to the latter, it was a combination of both Shushtari and B2B. Shushtari provided B2B with a target area for these ads—he wanted to advertise in Southeast Michigan around the two Alfoccino restaurants. (Id. at 33–34). As to the former, B2B had obtained a list of fax numbers from a company called InfoUSA (Ex. A to Plf's Class Mtn., Dkt. # 109–1, at ¶ 7) and then culled this list based upon Shushtari's geographical restrictions (based upon zip codes) to create the final distribution list. (Ex. B to Plf's Class Mtn., Dkt. # 109–2, at 51–53; Ex. D to Plf's Class Mtn., Dkt. # 109–4, at 68–70). B2B represented to Shushtari that this list was composed of individuals who were willing to accept fax advertisements:⁵

Q: Did you or anyone else at Alfoccino's or at [B2B] contact anyone whom they were going to send faxes to before they were sent seeking permission?

A: As much as I know they had the list, and the reason they had the list is because they asked those questions from those numbers and that's why they had the numbers.

Q: And it's your understanding that the list that [B2B] had was a list of people who were willing to accept fax advertisements; is that correct?

A: Exactly.

Q: They told you that?

A: Of course.

(Id. at 34–35; see also id. at 76). Shushtari also testified that he would not have engaged B2B had he known that the facsimiles did not comply with the TCPA:

Q: Did you knowingly authorize any fax advertisement that would be in violation of any laws?

A: If I knew I would not have advertised. The answer is no.

Q: Because you wouldn't have done that, right?

A: I wouldn't have done that.

Q: If someone would have explained to you that there is this statute, the [TCPA], and the faxes we propose sending for you could possibly violate that law you wouldn't have agreed to send them, right?

A: Exactly.

Q: You were shown a lot of documents [during your deposition] that purportedly came from ... Business To Business ..., right?

A: Yes.

Q: There was a hotline number at the bottom of some of those documents, right?

A: Yes.

Q: Was your understanding in any of the fax advertisements that your company ever engaged in regardless of the company that because of those hotlines [allowing recipients to opt-out of receiving faxes] and maybe any efforts to get permission that those faxes would only be sent to companies, individuals that wished to received them?

A: That's exactly was what I understood.

(Id. at 75–76).

B2B ultimately sent these...