China Agritech May Cork Repeat TCPA Class Actions
Acrobatics. Music. Mystery. Faxes?
When envisioning the international performing arts troupe of Cirque du Soleil, there would be little reason to consider the appropriateness of their use of faxes for marketing purposes. But this conduct is exactly what the company finds itself repeatedly defending, having become one of many targets for a nationwide putative class action under the Telephone Consumer Protection Act, one of the most hotly litigated federal statutes in the country.
When the U.S. Supreme Court issued its unanimous opinion earlier this year in China Agritech Inc. v. Resh1, clarifying that equitable tolling of potential class members’ claims during pending class action litigation was limited only to their individual claims — not to successive class actions — it was only a matter of time before this ruling spread to TCPA actions. In fact, less than two months after China Agritech, the Northern District of Illinois in Practice Management Support Services Inc. v. Cirque du Soleil Inc.2, relied on this very case to decertify a putative class action against Cirque du Soleil concerning the sending of faxes advertising its theater shows.
The Cirque decision is an indicator that, following China Agritech, courts are starting to rein in abuses of equitable tolling to plug up such interminable class action exposure.
Case Background
Like many federally created private causes of action, the TCPA carries a four-year statute of limitations.3 In the course of protracted class litigation that may span several years, many prospective class members’ claims may expire during the pendency of an unsuccessful bid for class certification. Conversely, potentially endless class action litigation — based on allegations from many years ago — also presents continued uncertainty. So too are defendants forced to contest multiple class actions for the same allegations many years later.
Prior to China Agritech, the high court’s decision in American Pipe & Construction Co. v. Utah4, permitting equitable tolling — in other words, stopping the clock for the applicable statute of limitations — during the pendency of class actions left unclear how it applied to subsequent (and otherwise untimely) class actions. Appellate treatment over several decades since American Pipe had varied between those circuits that permitted tolling; those that outright forbade tolling; and a middle-ground that allowed tolling only where a prior class certification denial was premised on lead plaintiff deficiencies — rather than class suitability. China Agritech appeared to finally resolve that question by limiting these untimely claims to individual lawsuits.
Cirque du Soleil Defeats Third Class Attempt
The nearly decade-long legal battle between Cirque du Soleil and the plaintiff-side class action lawyers at Anderson & Wanca of Illinois began in 2009 — after Cirque du Soleil allegedly sent unsolicited faxes advertising its upcoming shows in Illinois without adequate opt-out language in compliance with the TCPA. Anderson & Wanca, on behalf of G.M. Sign Inc., filed suit against several Cirque du Soleil entities. After the deadline to add parties and the close of fact discovery in 2011, G.M. Sign moved to add yet more parties, extend the time to complete discovery, and compel production of documents. All three motions were denied.
Also in 2011, G.M. Sign filed a second putative class action, this time in state court, against different Cirque du Soleil entities. (In fact, these were subsidiaries of the initially-named Cirque defendant, but relating to the same at-issue faxes.) G.M. Sign eventually dismissed the federal action with prejudice in 2012, and in 2014, the state court Cirque defendants successfully moved for summary judgment based on res judicata. One day after the adverse summary judgment ruling, Anderson & Wanca filed yet another TCPA class action against the Cirque subsidiaries relating to the same faxes — now in federal court, but with a new client and a new putative class representative: Practice Management Support Services Inc.
Illinois sits within the Seventh Circuit, which, prior to China Agritech, had found that equitable tolling under American Pipe permitted new, otherwise untimely class actions in Sawyer v. Atlas Heating & Sheet Metal Works Inc.5 Following that precedent, the Illinois federal court permitted Practice Management’s 2014 class claims — that would have otherwise have been time-barred with respect to faxes sent in 2009, given the four-year statute of limitations — to go forward. After several years of litigating, Practice Management’s motion for class certification was granted on March 12, 2018. But eight days later, the court also granted the Cirque defendants’ motion to stay pending the Supreme Court’s China Agritech decision.
Following the Supreme Court’s ruling, the Cirque defendants moved to decertify the class pursuant to Rule 23(c)(1)(C) of the Federal Rules of Civil Procedure, which permits class certification determinations to be altered or amended before final judgment. Following China Agritech’s holding “that American Pipe does not permit a plaintiff who waits out the statute of limitations to piggyback on an earlier, timely filed class action,” Judge Thomas M. Durkin subsequently decertified the very class he had certified just five months earlier. Although it is unclear whether Practice Management will appeal the decertification to the Seventh Circuit, the breadth of the China Agritech ruling indicates that any such appeal will likely be unsuccessful.
Implications: The TCPA Tightrope Walk
The China Agritech and Cirque decisions are positive signs for TCPA class action targets that defeating certification will have greater finality, rather than being just a short pause while enterprising plaintiffs’ counsel seek a better (or different) lead plaintiff and/or a more receptive judge. For now, the open question is whether this trend will incentivize plaintiffs’ lawyers to file additional putative class action lawsuits during the relevant statutory time frame and/or to file with numerous named plaintiffs as potential class representative backups.
Until more courts weigh in on this issue, defendants will have to continue to bend over backward to get their TCPA cases dismissed so that the final curtain can fall on these claims.
Footnotes:
1 138 S. Ct. 1800 (2018).
2 No. 1:14-cv-02032, 2018 WL 3659349 (N.D. Ill. Aug. 2, 2018).
3 28 U.S.C. § 1658.
4 414 U.S. 538 (1974).
5 642 F.3d 560 (7th Cir. 2011)
"China Agritech May Cork Repeat TCPA Class Actions," by Ana Tagvoryan, Jeffrey N. Rosenthal, and Justin M. Brandt was published in Law360 on August 23, 2018. Reprinted with permission. To view the article online, please click here.