No Certification Where Loss of Data Prevents Class Identification

by BakerHostetler

Junk fax case presents opportunities for some employment cases

Identifying potential class members is not an issue in most employment cases, as the employer likely has any number of employment records for each of the claimants, including personnel files, electronic data, tax forms, time records, and the like, many of which are required to be kept for a set period of time. But what if the records no longer exist or if the claims depend on data that cannot be located or readily retrieved?

That was the issue the Sixth Circuit faced in Sandusky Wellness Center, LLC v. ASD Specialty Healthcare, Inc., Case No. 16-3741 (6th Cir. July 11, 2017). In Sandusky Wellness, the plaintiff sought to bring a claim under the Telephone Consumer Protection Act (TCPA) and specifically the Junk Fax Protection Act Amendments of 2005 due to the plaintiff’s receipt of an unsolicited facsimile transmission. The facts giving rise to the case appear to have been largely undisputed. The defendant, a distributor of medical and pharmaceutical products, sent a fax to 40,343 providers based on a list of 53,502 names it had purchased as customer leads. Importantly, many of the names on the original list were pre-existing company customers that had in some fashion consented to the sending of fax solicitations. Eighteen months after the fax was sent, the specific names and numbers were deleted in the ordinary course of business. Thus, there was no record of who the recipients of the fax from the original list were and, similarly, no way to determine which of those recipients had consented through a prior business relationship.

The TCPA provides for penalties of $500 per unsolicited fax. Because the plaintiff sought to challenge a fax sent to over 40,000 recipients, the potential penalty if the case were certified was $20 million or more.

The court, however, refused to certify the class due to two related identification issues, and the Sixth Circuit affirmed. First, the court found that it would take an individual inquiry – a somewhat time-consuming one – to determine which of the names on the original list actually received a fax. Second, once that determination was made, the case would require an individual determination of which of those recipients had consented. The court specifically rejected the approach, proposed by the plaintiff, that it come up with subclasses to break the task down into more manageable parts. It described such an approach as requiring the kind of “painstaking sorting process” that “Rule 23(b)(3) tries to prevent.” Because of these difficulties in identifying class members with claims, the court found that the district court properly refused to certify the class, either because the class was not ascertainable or because the problems with identifying those with valid claims failed the predominance and superiority tests under Rule 23(b)(3).

While Sandusky Wellness was not an employment case, the problems it addresses do arise in workplace class actions. Data in failure-to-hire cases is typically less robust and kept for a shorter period of time than for current employees. Off-the-clock cases, almost by their very nature, involve situations where the class members might not be identifiable. They require an individual inquiry to determine which employees worked off the clock, which employees who did so incurred overtime and which weeks would be affected. While courts in some off-the-clock cases in particular have tended to gloss over these issues, analytically they should be no different.

The bottom line: Problems identifying the class members may result in the class’s not being certified.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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