“Sorry, Wrong Number”: Northern District of California Denies Certification in TCPA Class ActionAs we have noted before, whether a claimant under the Telephone Consumer Protection Act (TCPA) gave “prior express consent” to receiving communications from the defendant is frequently a critical issue (and often the only issue standing between the defendant and massive class action liability). A recent decision from the Northern District of California in a “wrong number” class action, Revitch v. Citibank, N.A., is illustrative of the consent battleground.

The TCPA prohibits, inter alia, the making of unsolicited calls to cellular telephones using an automatic dialing system. A call is not unsolicited, however, where the call recipient gave the caller “prior express consent.” In Revitch, the plaintiff sued Citibank (an issuer and servicer of credit cards) after Citibank called him multiple times on his cell phone using an autodialer, despite the plaintiff not being a Citibank customer. Revitch sought certification of a class consisting of all persons in the U.S. who were called by Citibank using an autodialer where such persons were not listed in Citibank’s records as the intended recipients of the calls.

Recognizing that Citibank had prior express consent to call its customers about their accounts, Revitch pinned his certification theory on data from Citibank’s call system, indicating where call operators flagged particular phone numbers as “bad numbers” or “not valid” – thus indicating (according to Revitch) true “wrong numbers” as to which consent could not have been given or obtained. Revitch in his certification evidence also attempted to deal with the fact that a phone number can be flagged as “wrong” in Citibank’s system even when it is in fact the customer’s correct number (for example, an evasive customer might claim “wrong number” when being called about his delinquent account). To control for such false positives, Revitch’s expert used data from a “reverse lookup” service that, according to the expert, allowed for the identification of actual “wrong number” recipients.

The court nonetheless denied class certification, holding that individual issues of consent would predominate in any trial.  First it noted evidence from Citibank that many of the “wrong numbers” proposed by Ravitch’s expert were in fact associated with Citibank customers that the bank was trying to reach (such as family members who also had Citibank accounts). Citibank also proffered expert evidence of its own, claiming that many of the “wrong number” call recipients were called in connection with a different account than the one in which a “wrong number” notation had been made in the call log system. A further problem with Revitch’s theory, according to the court, was that Citibank’s “wrong number” data existed only from November 2017 forward; proof of wrong number calls prior to that date would have to be taken from individual, account-level records. Relying on Citibank’s evidence, the court concluded that adjudicating class members’ claims would “devolve into tedious resolution of individualized issues based on individualized evidence.”

From the defense perspective, there are a couple of takeaways from Revitch:

First, the opinion notes a split in district court decisions on the issue of whether “wrong number” notations in a defendant’s call records will suffice to establish predominance and commonality.  Some courts have said yes and certified classes; others (such as Revitch) have found the issue of consent to be too individualized for certification. To date no court of appeals has addressed the issue.

Second, Revitch illustrates the importance of the defendant’s evidence on the consent point (including, potentially, expert testimony), particularly when the plaintiff’s theory is premised on notations in the defendant’s call records. Several of the decisions certifying classes rejected as overly speculative the defendants’ arguments that “wrong number” notations didn’t necessarily mean an actual wrong number had been called.  Revitch shows, unsurprisingly, that such arguments have much more force if they are proven to be true. Failing to develop the proof needed on this issue at the time certification is decided makes it easy for a court to simply conclude, “I can always revisit this certified class if the defendant’s theoretical objection is later shown to be correct.” In a world that can involve huge class-wide statutory damages, having to file a motion to decertify is not the place any defendant wants to find itself.

Ninth Circuit to Decide Transgender Inmate's Right to Sex-Reassignment Surgery; First and Fifth Circuits Have Rejected Similar Constitutional ClaimsPrison healthcare litigation has been on the rise throughout the country. Private healthcare providers for state prison systems are often caught up in class actions or complex injunctive-relief litigation targeting both the provider and the state for alleged shortcomings in the types and adequacy of care provided, matters which are often a function of state funding and policy decisions. In recent years, an increasing number of cases have raised this question: Does the Eighth Amendment of the United States Constitution require prison officials to provide transgender inmates with sex-reassignment (or gender confirmation) surgery?

This constitutional and correctional healthcare issue has divided courts and prison systems. In 2017, after years of litigating the issue, the California Department of Corrections became the first state prison system to provide sex-reassignment surgery to an inmate: Shiloh Heavenly Quine, a convicted killer serving a life sentence. While there is a consensus among correctional healthcare professionals that gender dysphoria constitutes a serious medical need that requires appropriate treatment, most state prison systems continue to resist requests for sex-reassignment surgery.

Federal courts are also split on this issue, and the divide could soon deepen. The U.S. Court of Appeals for the Ninth Circuit is poised to consider the issue in Edmo v. Idaho Department of Correction, an appeal from a federal district court decision requiring prison officials to provide a transgender inmate with gender-confirmation surgery no later than June 13, 2019. Oral argument in Edmo is set for May 16 at the Ninth Circuit courthouse in San Francisco, California.

The Ninth Circuit will take up the issue just after the U.S. Court of Appeals for the Fifth Circuit rejected a transgender inmate’s claim that prison officials must provide sex reassignment surgery or else face liability under the Eighth Amendment for ignoring his serious medical needs (Gibson v. Collier, 2019). In Gibson, Judge James Ho, writing for the majority and relying on the First Circuit’s decision in Kosilek v. Spencer, 774 F.3d 63 (1st Cir. 2014), adopted at blanket rule that “[a] state does not inflict cruel and unusual punishment by declining to provide sex reassignment surgery to a transgender inmate.” In dissent, Judge Rhesa Barksdale criticized the majority for announcing a legal rule that was detached from the proof in the case, and argued that the inmate was entitled to an individualized analysis of his particular medical needs. The Harvard Law Review Blog posted a thorough summary of the Gibson decision.

If the Ninth Circuit affirms the decision that Edmo must receive sex-reassignment surgery, creating a circuit split, the issue could be ripe for review by the Supreme Court. The Supreme Court has not considered a significant Eighth Amendment adequate care case since Brown v. Plata, 563 U.S. 493 (2011), which involved mental healthcare and overcrowding in California’s prison system. As reported by Amy Howe at SCOTUSblog, the court has just agreed to take up the issue of LGBT rights in the workplace under Title VII of the Civil Rights Act. Perhaps high court consideration of transgender rights in prison is not far behind.

The Eleventh Circuit Finds Class Rep Has Standing to Settle a FACTA Class ActionBucking a recent trend and departing from both the Second Circuit’s Katz decision and the Third Circuit’s Kamal decision, the Eleventh Circuit found that a plaintiff had standing to settle a FACTA claim on behalf of a class. This decision—Muransky v. Godiva Chocolatier, Inc.—signals the continuing debate about what Spokeo means for federal statutory damages class actions.

As is now familiar, FACTA (the federal “Fair and Accurate Credit Transactions Act”) prohibits merchants from printing more than the last five digits of a credit or debit card number on any electronically printed receipt provided to the card holder at the point of sale. And Spokeo is the United States Supreme Court decision that holds (among other things) that Congress cannot create Article III standing merely by creating a cause of action.

Muransky claimed a garden-variety FACTA violation: He alleged that Godiva printed the first six and last four digits of his credit card on his receipt. The case mediated, and the parties reached a class-wide settlement that would create a $6.3 million settlement fund to pay around $235 to each class member who submitted a claim form–with $2.1 million to Muransky’s lawyers. About 15% of the class members who received notice made claims, and there were five objectors. The objectors primarily focused on the issue of attorneys’ fees and Muransky’s $10,000 incentive award for serving as class representative, but one objector asserted that Muransky lacked standing. The district court overruled the objections and approved the settlement. Two objectors appealed.

The Eleventh Circuit affirmed the settlement approval. It did so initially on October 3, 2018, but sua sponte vacated its previous opinion and published a new one on April 22, 2019. The major changes all came in the court’s discussion of the standing issue, where the Eleventh Circuit took pains to distinguish the Second Circuit’s opinion in Katz v. Donna Karan Co. In particular, the court disagreed with how Katz allowed evidence that certain FACTA violations did not pose any real threat of identity theft: “We are wary of Katz’s premise that a federal district court may make factual finding that override Congress’s standard for what harm constitutes a concrete injury” and “[w]e do not read Spokeo as giving courts a license to reject the standard set by Congress in favor of judge-found facts at odds with that standard.” Instead, the Eleventh Circuit accepted that ”Congress established the acceptable level of risk at printing five digits,” so a receipt with too many digits plus an allegation of “a heightened risk of identity as a result of Godiva’s FACTA violation… satisfies Article III under the principles Spokeo laid down.”

The Eleventh Circuit also decided that the plaintiff’s standing could arise from the similarity between a FACTA claim and the common law tort of breach of confidence. While acknowledging that “the match is not exact,” the court found that the common law tort was close enough to confer standing. This alternative rationale–arguably dicta–could apply outside of the FACTA context, given the court’s broad language: “A consumer provides a merchant with his credit card number with the expectation that it will remain secret, not least because of the risk of credit card fraud if the merchant reveals it.” The proposition is not self-evident: Have you ever followed the restaurant server to see what he or she does with your credit card when you pay your bill? In any event, how the Eleventh Circuit might apply this apparently sweeping reasoning in the context of a data breach, for example, remains to be seen.

This alternative holding also pits the Eleventh Circuit directly against Kamal from the Third Circuit. That case rejected the analogy to breach of confidence, noting that the harm addressed in such a tort is actual disclosure, not the mere risk of disclosure. We believe Kamal has the better analysis because the disclosure to a third party is essential to resulting harm. Indeed, the Muransky rule could reduce Spokeo’s injury requirement to a mere pleading trick, as it is hard to imagine what species of ephemeral harms could not be reclassified as risk of harms that are recognized to give rise to standing. Muransky justifies its lax standing rule as being deferential to Congress, but Spokeo (as we read it) disallows such deference. If it is true that “where the common law allowed a cause of action to remedy an injury, Congress can create a statutory cause of action to remedy the risk of such an injury,” then standing defenses may come in for rough sledding in the Eleventh Circuit.

We have two main takeaways:

First, the Supreme Court needs to clarify Spokeo. In particular, the Supreme Court will likely need to address what it means for an intangible harm to have a “close relationship” to a traditional harm. The circuits are already divided on that issue, and it should be resolved sooner rather than later (even if not this term, as we hoped).

Second, some of the practical issues of the case may be explained by its procedural posture. Muransky arose from an objection to a class settlement, not a traditional motion to dismiss. As Judge Jordan’s concurring opinion notes, the objector’s challenge to Muransky’s standing raises its own jurisdictional questions: The objector “may lack Article III standing to challenge the Article III challenge of Dr. Muransky.” If the objection to standing had succeeded, the settlement would have been unwound and the consideration made available to the class would not have been paid. Given that the defendant did not challenge standing, nearly 50,000 class members made claims as compared to only a handful of objectors, and given the fact that the objector pressing the standing issue was himself a class-action plaintiffs’ lawyer, the posture of the case may go a long way to explaining the outcome.