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L.L.C. v. Spectrum Laboratory Products, Inc.

United States District Court, E.D. Louisiana

March 19, 2018


         SECTION “N” (2)

          ORDER & REASONS

          KURT D. ENGELHARDT, United States District Judge

         Presently before the Court is Defendant Spectrum Laboratory Products, Inc.'s (“Spectrum” or “Defendant”) Alternative Motion to Dismiss and/or Strike Class Allegations for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2), as inappropriate for class treatment under Fed.R.Civ.P. 23(c)(1)(A) and 23(d)(1)(D), and as unconstitutional under the due process clause of the Fifth Amendment. (Rec. Doc. 15). Plaintiff Casso's Wellness Store and Gym, LLC (“Casso” or “Plaintiff”) opposes the Motion. (Rec. Doc. 21). Both parties filed numerous additional supporting and reply memoranda. (Rec. Docs. 28, 32, 35, 39, 42, and 45). Having considered the extensive submissions of the parties, the record, and the applicable law, the Court DENIES the Motion to Dismiss and/or Strike Class Allegations for the reasons stated herein.

         I. BACKGROUND

         On March 15, 2017, Casso filed its original putative-class action Complaint against Spectrum under the Telephone Consumer Protection Act of 1991 (“TCPA”), [1] as amended by the Junk Fax Protection Act of 2005 (“JFPA”), seeking to recover damages for and to enjoin Spectrum's massive junk faxing campaign. (Rec. Doc. 1, as amended by Rec. Doc. 9). Spectrum is a California corporation and a supplier of compounding chemicals, supplies, and equipment, with its principal place of business in New Brunswick, New Jersey. (Rec. Doc. 15-1 at p. 5). Casso alleges that Spectrum violated the TCPA and the regulations promulgated under the Act by the Federal Communications Commission (“FCC”) by sending unsolicited facsimiles to advertise their goods and/or services to Plaintiff and members of the Plaintiff Class. (Rec. Doc. 1 at p. 9). Plaintiff further alleges that Defendant blasted junk faxes without complying with the mandatory Opt-Out Notice Requirements, in direct violation of the TCPA, JFPA, and the FCC's regulations. (Id. at p. 10). Casso identifies Spectrum's alleged violations of the Act as including, but not limited to, the unsolicited facsimile advertisements sent to Casso's facsimile telephone number on December 21, 2016; February 14, 2017; February 17, 2017; and February 24, 2017.[2] (Id. at p. 9).

         Casso purports to bring a class action on behalf of a “Plaintiff Class” that includes:

[A]ll persons and entities that are subscribers of telephone numbers to which within four years of filing of the Complaint, Defendant sent facsimile transmission with content that discusses, describes, promotes products and/or services offered by Defendant, and does not contain the opt-out notice required by 47 U.S.C. § 227(b)(1)(C)(iii), (b)(2)(D), (b)(2)(E), (d)(2) or 47 C.F.R. § 64.1200(a)(4)(iii)-(vii).

(Rec. Doc. 1 at p. 6). Casso, on behalf of itself and members of the purported class, seeks the issuance of a permanent injunction, as well as damages in the amount of $500 for each violation of the TCPA by Defendant, and trebled statutory damages for violations Defendant committed “willfully or knowingly.” (Id. at pp. 10-11). Casso contends that this action is properly maintainable as a class action under authority of Federal Rule of Civil Procedure 23 and that a class action is the superior method for the fair and efficient adjudication of the controversy. (Rec. Doc. 1 at pp. 6-9).

         Spectrum filed the present Alternative Motion to Dismiss and/or Strike Class Allegations for (1) lack of personal jurisdiction, (2) as inappropriate for class treatment, and (3) as unconstitutional. (Rec. Doc. 15). First, Spectrum contends that the Court lacks general personal jurisdiction over Spectrum-a California corporation with its principal place of business in New Jersey-because it does not have pervasive contacts with Louisiana. (Rec. Doc. 15-1 at pp. 10-12). Relying on the Supreme Court's decision in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County[3] (“Bristol-Myers”), Spectrum also argues that specific jurisdiction does not exist over Spectrum with respect to the claims of non-Louisiana putative plaintiffs because their claims involve “faxes [received] from Spectrum in other states in violation of the TCPA [and] will not have arisen as a result of any conduct by Spectrum in Louisiana.” (Id. at p. 14). Thus, Spectrum argues that “Casso's class allegation claims should be dismissed and/or stricken.” (Id.).

         Next, Spectrum moves to strike Casso's class allegations asserting that Casso cannot meet the threshold requirements of class certification under Federal Rule of Civil Procedure 23. (Id. at p. 14). Particularly, Spectrum argues that Casso's “allegations undoubtedly fail the typicality and adequacy of representation” requirements because Casso's claims “will require unique proof” and “are subject to unique defenses.” (Id. at pp. 16-19). Finally, Spectrum moves for dismissal of the class allegations, arguing that “pursuit of alleged TCPA violations via a class action violates the due process clause, ” essentially because compounding the TCPA's statutory damages in a class action is unreasonable and disproportionate to the underlying offense. (Id. at pp. 19-25).

         In its opposition, Casso counters that, analogous to Neur v. Dental Resource Systems, Inc., [4]Spectrum is subject to specific personal jurisdiction[5] and that this Court may adjudicate the claims of all absent class members, claiming: “(1) Spectrum purposefully directed its illegal advertising activities in Louisiana; and (2) the claims arise out of or relate to Spectrum's illegal advertising in Louisiana.” (Rec. Doc. 21 at p. 6). Casso further argues that this Court's exercise of specific personal jurisdiction comports with fair play and substantial justice:

(1) Burden on defendant: it is not unreasonable to ask a defendant to defend in Louisiana, where the company avails itself of the benefit of that Louisiana's market for its products. Luv N' care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 474 (5th Cir. 2006). Additionally, once minimum contacts are established, the interests of the forum and the plaintiff justify even large burdens on the defendant. See Asah Metal Industry Co., Ltd v. Superior Court of California, Solano County, 480 U.S. 102, 115, 107 S.Ct. 1026 (1987). (2) The forum state's interest in resolving the dispute: where a product allegedly causes economic injury in Louisiana, it is in the interest of that state to have its courts mediate the dispute. Id. (3) Plaintiff's interest in receiving convenient and effective relief: Louisiana and the plaintiff (Casso's, which is organized under Louisiana law and based there) obviously have some legitimate interest in litigating this matter in Louisiana, where the offending conduct has regularly occurred. Id. (4) The interstate judicial system's interest in obtaining the most efficient resolution of controversies: The Fifth Circuit has stated that the “judicial system has a strong interest in resolving related, consolidated claims against a defendant.” Clearly, the resolution of TCPA violations via a class action device is an efficient method to resolve related, consolidated claims against Spectrum. (5) The shared interest of the several states in furthering fundamental substantive social policies: this case seeks class wide relief for violations of a federal statute intended to protect consumers nationwide from abusive illegal advertising practices. Accordingly, litigating these violations of federal law in a federal court will only serve to further the several states' shared interest in fundamental substantive social policies.

(Id. at pp. 6-7). Next, Casso argues that the instant case is distinguishable from Bristol-Myers because (1) this matter is not being adjudicated in a Louisiana state court; (2) none of the nonresident plaintiffs are asserting state law causes of action; (3) “the claims asserted by the Plaintiff on behalf of a nationwide class arise under the laws of the United States and the action was originally filed and remains in federal district court pursuant to 28 U.S.C. § 1331 federal question jurisdiction;” and (4) the absent class members claims “arise from the exact same course of conduct and transaction as do the claims of the resident named Plaintiff, i.e., Spectrum's illegal fax blast advertising.” (Id. at p. 8). Accordingly, Casso maintains that the holding in Bristol-Myers is inapplicable to a nationwide class action arising under the TCPA. (Id. at p. 9).

         Next, Casso argues for denial of Spectrum's motion to strike class allegations at this stage in the litigation, stating that “nearly every court presented with a motion to strike class allegations prior to discovery in a case arising under violations under the TCPA, has denied the motion.” (Id. at p. 11) (collecting cases). Casso contends that violations of the TCPA are amenable to class wide resolution and that its claims satisfy the requirements of Fed.R.Civ.P. 23. (Id. at pp. 10-20). Finally, Casso rejects Spectrum's argument that aggregation of the TCPA's statutory ...

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