Career Counseling, Inc. v. AmeriFactors Fin. Grp.

91 F.4th 202

CAREER COUNSELING, INC., d/b/a Snelling Staffing Services,

a South Carolina corporation, individually and as the representative of

a class of similarly-situated persons, Plaintiff - Appellant, v. AMERIFACTORS FINANCIAL GROUP, LLC, Defendant - Appellee,andJohn Does 1-5, Defendants.

Career Counseling, Inc., d/b/a Snelling Staffing Services,

a South Carolina corporation, individually and as the representative of

a class of similarly-situated persons, Plaintiff - Appellee, v. AmeriFactors Financial Group, LLC, Defendant - Appellant,andJohn Does 1-5, Defendants.

No. 22-1119

No. 22-1136

United States Court of Appeals, Fourth Circuit

Argued: December 9, 2022

Decided: January 22, 2024

Appeals from the United States District Court for the District of South Carolina, at Columbia. J. Michelle Childs, District Judge. (3:16-cv-03013-JMC)

ARGUED: Glenn Lorne Hara, ANDERSON & WANCA, Rolling Meadows, Illinois, for Appellant/Cross-Appellee. Lauri Anne Mazzuchetti, KELLEY DRYE & WARREN, LLP, Parsippany, New Jersey, for Appellee/Cross-Appellant. ON BRIEF: John G. Felder, Jr., MCGOWAN HOOD FELDER, Columbia, South Carolina, for Appellant/Cross-Appellee. William H. Latham, Jonathan M. Knicely, NELSON MULLINS RILEY & SCARBOROUGH LLP, Columbia, South Carolina, for Appellee/Cross-Appellant.

Before WILKINSON, NIEMEYER, and KING, Circuit Judges.

Affirmed by published opinion. Judge King wrote the opinion, in which Judge Wilkinson and Judge Niemeyer joined.

KING, Circuit Judge:

In this putative class action initiated in the District of South Carolina, it is alleged that defendant AmeriFactors Financial Group, LLC, sent an unsolicited advertisement by fax to plaintiff Career Counseling, Inc., and thousands of other recipients, in contravention of the Telephone Consumer Protection Act of 1991 (the "TCPA"), as amended by the Junk Fax Prevention Act of 2005. By its appeal (No. 22-1119), Career Counseling contests the district court's Order and Opinion denying class certification. See Career Counseling, Inc. v. Amerifactors Fin. Grp., LLC, No. 3:16-cv-03013-JMC, 2021 WL 3022677 (D.S.C. July 16, 2021), ECF No. 229 (the "Class Certification Decision"). And by the cross-appeal (No. 22-1136), AmeriFactors challenges the court's subsequent Order and Opinion awarding summary judgment to Career Counseling on its individual TCPA claim. See Career Counseling, Inc. v. AmeriFactors Fin. Grp., LLC, No. 3:16-cv-03013-JMC, 2022 WL 286189 (D.S.C. Jan. 31, 2022), ECF No. 244 (the "Summary Judgment Decision"). As explained herein, we affirm both the denial of class certification and the award of summary judgment.

I.

The operative First Amended Class Action Complaint of November 2017 alleges a single TCPA claim premised on Career Counseling's receipt in June 2016 of an uninvited fax from AmeriFactors advertising its commercial goods and services. See Career Counseling, Inc. v. AmeriFactors Fin. Grp., LLC, No. 3:16-cv-03013 (D.S.C. Nov. 28, 2017), ECF No. 70 (the "Complaint").¹ Relevant here, the TCPA generally makes it unlawful "to send, to a telephone facsimile machine, an unsolicited advertisement." See 47 U.S.C. § 227(b)(1)(C).

According to the Complaint, AmeriFactors "sent facsimile transmissions of unsolicited advertisements to [Career Counseling] and the Class in violation of the [TCPA], including, but not limited to, the [fax sent to Career Counseling in June 2016]." See Complaint ¶ 2. Career Counseling ultimately proposed a class comprised of the nearly 59,000 other persons and entities who were successfully sent the same June 2016 fax that Career Counseling received.

As more fully discussed below, by its Class Certification Decision of July 2021, the district court denied Career Counseling's request for class certification. Thereafter, by its Summary Judgment Decision of January 2022, the court awarded summary judgment to Career Counseling on its individual TCPA claim against AmeriFactors. That award includes $500 in statutory damages. See 47 U.S.C. § 227(b)(3)(B) (providing for recovery of "actual monetary loss from [a TCPA] violation, or . . . $500 in damages for each such violation, whichever is greater").

Following the district court's entry of the judgment, the parties timely noted their respective appeals. We possess jurisdiction pursuant to 28 U.S.C. § 1291.

II.

We first address Career Counseling's challenge to the district court's Class Certification Decision of July 2021, denying Career Counseling's request for class certification pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure. In so doing, we review the Class Certification Decision for abuse of discretion. See Brown v. Nucor Corp., 576 F.3d 149, 152 (4th Cir. 2009). A district court abuses its discretion in granting or denying class certification "when it materially misapplies the requirements of Rule 23." See EQT Prod. Co. v. Adair, 764 F.3d 347, 357 (4th Cir. 2014). More generally, a court also abuses its discretion when its decision rests on an error of law or a clearly erroneous finding of fact. See In re Grand Jury 2021 Subpoenas, 87 F.4th 229, 250 (4th Cir. 2023); Hunter v. Earthgrains Co. Bakery, 281 F.3d 144, 150 (4th Cir. 2002).

A.

As we explained in our 2014 decision in EQT Production, "Rule 23(a) requires that the prospective class comply with four prerequisites: (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of representation." See 764 F.3d at 357.² Additionally, "the class action must fall within one of the three categories enumerated in Rule 23(b)," with certification being appropriate under Rule 23(b)(3) when "(1) common questions of law or fact . . . predominate over any questions affecting only individual class members; and (2) proceeding as a class [is] superior to other available methods of litigation." Id. (internal quotation marks omitted). In other words, Rule 23(b)(3) requires both "predominance" and "superiority." Id. at 365.

Relying on precedent, we clarified in our EQT Production decision that Rule 23 also "contains an implicit threshold requirement that the members of a proposed class be 'readily identifiable.' " See 764 F.3d at 358 (quoting Hammond v. Powell, 462 F.2d 1053, 1055 (4th Cir. 1972)). Under that requirement — which is commonly referred to as "ascertainability" — "[a] class cannot be certified unless a court can readily identify the class members in reference to objective criteria." Id. So, "if class members are impossible to identify without extensive and individualized fact-finding or 'mini-trials,' then a class action is inappropriate." Id. (alteration and internal quotation marks omitted).

The party seeking class certification must present evidence and demonstrate compliance with Rule 23. See EQT Prod., 764 F.3d at 357-58. Concomitantly, "the district court has an independent obligation to perform a 'rigorous analysis' to ensure that all of the prerequisites have been satisfied." Id. at 358 (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011)).

B.

In denying class certification here, the district court determined that — although Career Counseling has complied with the Rule 23(a) prerequisites of numerosity, commonality, typicality, and adequacy of representation — it has failed to satisfy Rule 23's implicit further requirement of ascertainability. See Class Certification Decision 18-24.³ That determination derived from the uncontroverted factual premise that each of the nearly 59,000 recipients of the June 2016 AmeriFactors fax was using either a "stand-alone fax machine" or an "online fax service," as well as from the court's legal conclusion that the TCPA prohibits unsolicited advertisements sent to stand-alone fax machines, but does not reach unsolicited advertisements sent to online fax services. Id. at 14-18. Specifically, the court concluded that stand-alone fax machines — but not online fax services — qualify as "telephone facsimile machine[s]" under the TCPA. See 47 U.S.C. § 227(b)(1)(C) (making it unlawful "to send, to a telephone facsimile machine, an unsolicited advertisement" (emphasis added)). And that conclusion rendered it necessary to be able to identify which of the fax recipients were using stand-alone fax machines and which were using online fax services. Because the court was not convinced that the stand-alone fax machine users are readily identifiable, it decided that the ascertainability requirement has not been satisfied.

For its interpretation of the TCPA, the district court relied on a December 2019 declaratory ruling of the Federal Communications Commission (the "FCC") that "an online fax service . . . is not a 'telephone facsimile machine' and thus falls outside the scope of the statutory prohibition [on sending unsolicited advertisements by fax]." See AmeriFactors Fin. Grp., LLC, 34 F.C.C.R. 11950, 11950-51 (2019) (the "AmeriFactors FCC Ruling"). The AmeriFactors FCC Ruling was sought by defendant AmeriFactors for purposes of this very litigation, and it was issued by the Chief of the FCC's Consumer and Governmental Affairs Bureau.

As explained in the Class Certification Decision, the district court deemed itself without jurisdiction to review the AmeriFactors FCC Ruling and bound to defer to it pursuant to the Administrative Orders Review Act, or Hobbs Act. See 28 U.S.C. § 2342(1) (specifying, in pertinent part, that "[t]he court of appeals . . . has exclusive jurisdiction . . . to determine the validity of . . . all final orders of the Federal Communications Commission made reviewable by section 402(a) of title 47"); see also PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., — U.S. —, 139 S. Ct. 2051, 2055-56, 204 L.Ed.2d 433 (2019) (outlining factors to be considered when deciding whether Hobbs Act obliges district court to follow particular FCC order). That is, upon assessing the relevant factors, the court concluded that it was "required to find that the [AmeriFactors FCC Ruling] is entitled to Hobbs Act deference...