Siding & Insulation Co. v. Alco Vending, Inc.

THE SIDING AND INSULATION CO., PLAINTIFF, v. ALCO VENDING, INC., DEFENDANT.

CASE NO. 1:11-cv-1060

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION

August 25, 2017

JUDGE SARA LIOI

MEMORANDUM OPINION

Arising under the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227(b)(1)(C), this junk fax case is before the Court on two motions: (1) the second motion of plaintiff Siding and Insulation Co. ("plaintiff" or "Siding") for class certification (Doc. No. 113 ["Mot. Class"]), and (2) the second motion of defendant Alco Vending, Inc. ("defendant" or "Alco") for summary judgment. (Doc. No. 120 ["MSJ"].) Defendant opposes plaintiff's request for class certification (Doc. No. 118 ["Mot. Class Opp'n"]), and plaintiff has filed a reply. (Doc. No. 121 ["Mot. Class Reply"].) Plaintiff, in turn, opposes defendant's summary judgment motion (Doc. No. 124 ["MSJ Opp'n"]), and defendant has replied. (Doc. No. 125 ["MSJ Reply"].) On June 23, 2017, the Court held a hearing on these motions.¹ For the reasons that follow, defendant's second summary judgment motion and plaintiff's second motion to certify the class are both denied.

I. BACKGROUND

This case is one of a string of lawsuits filed in connection with the activities of a company known as Business to Business Solutions ("B2B"), an entity run by Caroline Abraham out of her home in New York and in concert with a Romanian company known as Macaw (where appropriate, collectively referred to as "B2B/Macaw"), which sold fax advertising services to companies in the United States. "B2B purchased a list of fax numbers from a company called InfoUSA, Inc. For a fee, B2B faxed clients' advertisements to hundreds of numbers from that list, a practice known as 'fax-blasting.'" Bridging Communities Inc. v. Top Flite Fin. Inc., 843 F.3d 1119, 1122 (6th Cir. 2016) (quotation marks and internal citations omitted). To date, the activities of B2B and Macaw have sparked over 100 lawsuits.² Compressor Eng'g Corp. v. Thomas, 319 F.R.D. 511, 517 (E.D. Mich. 2016) (quotation marks and citation omitted).

Alco, the defendant is this particular case, is in the business of placing and stocking vending machines for its customers. (Doc. No. 120-1 (2010 Deposition of Richard Gajdos ["Gajdos Dep. I"]) at 7-8³.) At all times relevant to the present litigation, Richard Gajdos was the president of Alco and owned 100% of its stock. (Id. at 7, 11.) Sometime in 2005, Gajdosreceived one or more unsolicited faxes from B2B offering to send faxes on behalf of Alco advertising its vending machine services. (Gajdos Dep. 1 at 19-20; Doc. No. 120-2 (2016 Deposition of Richard Gajdos ["Gajdos Dep. II"]) at 9-10, 21.) Gajdos contacted B2B and spoke with someone who referred to himself as Kevin Wilson.⁴ Wilson explained that B2B had a list of businesses in Alco's area (and with the same area code) that would receive the fax advertisements. He represented that B2B could send faxes to these business "with no problem to" Gajdos. (Gajdos Dep. II at 10, 13.) Wilson sent Gajdos several sample advertisements. Gajdos settled on one particular advertisement, after offering his input on certain content details. (Id. at 10-11, 18-19; Gajdos Dep. I at 22.)

During the course of their negotiations, Wilson made several representations to Gajdos regarding the nature of the advertising services offered by B2B. He assured Gajdos that B2B already had communicated with the businesses on the recipient list, and that B2B had a right to send them a fax because it "had a business relationship with them." (Gajdos Dep. I at 23-24; see Gajdos Dep. II at 24.) Wilson also volunteered that the faxes were "100 percent legal," reiterating that B2B "had a full and open relationship with" each of the proposed recipients. (Gajdos Dep. I at 25-26; Gajdos Dep. II at 13, 20-21.)⁵ B2B/Macaw controlled the list of recipients, though Gajdos admitted that he never asked to see the list and believed it did not contain any of Alco's clients. (Gajdos Dep. I at 23-24; Gajdos Dep. II at 24-25, 44-45; Doc. No. 120-6 (Deposition of Caroline Abraham ["Abraham Dep."]) at 95-97, 100-01.)

Gajdos ultimately authorized B2B to transmit the advertisement and paid for this service by faxing a check for $188 to B2B. (Gajdos Dep. I at 11.) Following payment, the initial round of faxes was sent in November 2005 by Macaw working with B2B.

After this first wave of faxes went out, Gajdos received "a couple" of complaints from attorneys representing recipients who did not consent to receiving the faxes. Some of the attorney letters threatened litigation. Gajdos did not read the letters or complaints, but directed his staff to "refer the complaint[s] right to Mr. Wilson . . . it was [B2B's] job[.]" (Gajdos Dep. II at 48.) For his part, Wilson assured Gajdos "he would have [the complaining businesses] taken off the list. He said he would take care of it." (Gajdos Dep. at 32, 56.) Gajdos ultimately authorized and paid B2B to send a second wave of fax advertisements that were transmitted in July 2006. Between the two attempts, Macaw successfully sent 7,055 transmissions to 4,547 unique fax numbers. (Doc. No. 113-4 (Expert Report of Robert Biggerstaff ["Biggerstaff Ex. Rpt."]) ¶ 21.)

Plaintiff was one of the businesses to receive one or more of the faxes sent by B2B/Macaw advertising the services of Alco. On May 24, 2011, plaintiff brought the present action alleging that, by authorizing the faxes, Alco violated the TCPA inasmuch as plaintiff did not invite or give permission to Alco to send the faxes. (Doc. No. 1 (Complaint ["Compl."]) ¶ 13.) Plaintiff moved for certification of the class of all those who received the allegedly offending faxes, and defendant moved for summary judgment. The motions were referred to the magistrate judge who issued a report and recommendation that summary judgment be granted to defendant and the class certification motion be denied as moot. The Court adopted the R&R and dismissed the action.

On appeal, the Sixth Circuit reversed. In so ruling, the court found that the magistrate judge and the district court had applied the wrong standard when evaluating Alco's conduct under the TCPA. Because the faxes were sent between November 2005 and July 2006, the court determined that the "on-whose-behalf" standard governed. Siding & Insulation Co. v. Alco Vending, Inc., 822 F.3d 886, 898 (6th Cir. 2016). The court explained that, pursuant to this standard, a plaintiff alleging a violation of the TCPA, 47 U.S.C. § 227(b)(1)(C), "must do more than simply show that the defendant's goods or services were advertised in the offending fax, but need not establish a complete agency relationship between the defendant and the fax broadcaster." Id. (citing Cin-Q Auto., Inc. v. Buccaneers Ltd. P'ship, No. 8:13-cv-01592-AEP, 2014 WL 7224943, at *1 (M.D. Fla. Dec. 17, 2014) (explaining that the standard is "more forgiving than a blanket application of per se liability but somewhat more stringent than vicarious liability through common law agency[]")).

The Sixth Circuit further identified a number of factors that guide a court's consideration of whether a fax broadcaster had sent the transmission "on behalf of" another entity. Id. at 898-99. Applying these factors to the record in this case, the court observed that some of the factors indicate that "B2B did not act on Alco's behalf[,]" while others "tend to support the conclusion that B2B did in fact act on Alco's behalf." Id. at 899-901. The court remanded the matter to the district court "to apply the correct legal standard." Id. at 901. The Sixth Circuit noted that, on remand, the district court could allow further discovery and permit any such "further proceedings as it determines is [sic] necessary to effectuate the standard described above." Id. It also directed the district court to "reconsider whether, after conducting such proceedings, Siding's motion for class certification remains moot." Id.

The case was reassigned to the undersigned pursuant to General Order 2015-12, due to the original judge's retirement. At the request of counsel, the Court permitted the parties to conduct limited discovery before re-briefing plaintiff's request for class certification. (Minutes, dated 6/28/16.) Following this period of discovery, the parties filed the previously mentioned pending motions.

II. DEFENDANT'S SECOND SUMMARY JUDGMENT MOTION

A. Standard of Review

Under Fed. R. Civ. P. 56(a), when a motion for summary judgment is properly made and supported, it shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."

An opposing party may not rely on allegations or denials in its own pleading; rather, by affidavits or by materials in the record, the opposing party must set out specific facts showing a genuine issue for trial. Fed. R. Civ. P. 56(c)(1). Affidavits or declarations filed in support of or in opposition to a motion for summary judgment "must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated." Fed. R. Civ. P. 56(c)(4). A movant is not required to file affidavits or other similar materials negating a claim on which its opponent bears the burden of proof, so long as the movant relies upon the absence of the essential element in the pleadings, depositions, answers to interrogatories, and admissions on file. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986).

In reviewing summary judgment motions, the Court must view the evidence in a light most favorable to the non-moving party to determine whether a genuine issue of material factexists. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970); White v. Turfway Park Racing Ass'n, 909 F.2d 941, 943-44 (6th Cir. 1990), impliedly overruled on other grounds by Salve Regina Coll. v....