The 1964 cold war era movie, “Fail-Safe,” centered on the plight of a U.S. military jet pilot who received an errant instruction to drop a nuclear bomb on Moscow.
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Sutherland Observation: Unlike the movie, where Henry Fonda, as the fictional President of the United States, could not stop the U.S. bomber from passing the fail-safe point and unloading its nuclear arsenal, defendants in TCPA cases facing so-called fail-safe classes are not defenseless and can shield themselves against such attacks. |
A proposed class is considered fail-safe if the class definition incorporates disputed merits issues such if the class is certified, but liability is ultimately not established, no one is bound by the judgment. This situation can arise, for example, when the proposed class definition tracks the language from the statute that forms the basis of the complaint. For years, defendants in class actions have argued, with mixed success, that proposed class allegations should be stricken—or class certification denied outright—if the proposed class is a “fail-safe” class.
The U.S. Court of Appeals for the Seventh Circuit has held that if an individual’s membership in a class depends on the validity of the underlying claims in a case, the proposed definition is “improper because a class member either wins or, by virtue of losing, is defined out of the class and is therefore not bound by the judgment.” Messner v. Northshore Univ. Health System, 669 F.3d 802, 825 (7th Cir. 2012). Courts have the power to redefine the class allegations, or can give plaintiffs an opportunity to redefine the class to avoid the fail-safe pitfall.
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Sutherland Observation: A defendant may challenge a fail-safe class at various stages of litigation. Two recent district court decisions highlight that the arguments in opposition to fail-safe classes can be particularly effective in defeating class certification in putative class actions brought under the Telephone Consumer Protection Act (TCPA). |
Many TCPA claims are based on the theory that the defendant used a phone, a fax or a text to contact the plaintiff without first obtaining requisite consent. For example, 47 U.S.C. § 227(b)(1)(A) prohibits the use of an auto-dialer to call someone unless the call is “made for emergency purposes or made with the prior express consent of the called party.” It is fairly common to see proposed class definitions in TCPA class actions track the language of the statute, as was the case in Lanteri v. Credit Protection Association, L.P., 2016 WL 4394139 (S.D. Ind. Aug. 17, 2016), where the plaintiff asserted violations of the TCPA based on the defendants’ alleged use of an auto-dialer without express consent or invitation.
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Sutherland Observation: The Lanteri court found that the proposed class constituted a fail-safe class because it improperly “defined a class member as someone as to which the Defendants violated the statute.” The court denied the plaintiff’s motion for certification, albeit with leave to file a new motion with an amended definition. |
In Dixon v. Monterey Financial Services, Inc., 2016 WL 3456680 (N.D. Ca. June 24, 2016), the court considered a fail-safe argument in connection with the defendant’s consolidated motion for summary judgment and motion to strike the class allegations. As in Lanteri, the proposed definition in Dixon hinged on whether the class member received a call from an auto-dialer without first providing consent. The Dixon court, citing Ninth Circuit precedent, rejected the class definitions where “the class itself is defined in a way that precludes membership unless the liability of the defendant is established.” The plaintiff was given an opportunity to propose an amended class definition, but only “if she can.”
While defendants in TCPA class actions should consider how case law regarding fail-safe classes has developed in their respective jurisdictions, as well as the procedural posture of the case before raising the fail-safe issue, this argument is relevant to many TCPA and other statutory class action claims. The more carefully plaintiffs define—and the courts scrutinize—class definitions, the better.
