A junk fax class action was brought under the TCPA against Curaden AG and its US subsidiary.  At the summary judgment stage, the District Court held that plaintiffs could not pierce the corporate veil, that faxes received by a computer over a telephone line (in addition to faxes received by traditional fax machine) violated the TCPA, and that it had personal jurisdiction over both defendants. Following a bench trial, the District Court held that Curaden USA violated the TCPA by sending two unsolicited faxes to the named plaintiff, but that Curaden AG was not liable as a “sender” under the TCPA. The District Court further held that plaintiffs’ evidence and supporting expert witness testimony as to the total number of violations were inadmissible due to unauthenticated fax records. The District Court therefore established a claims-administration process for class members to verify their receipt of Curaden USA’s unsolicited fax advertisements.  Both parties appealed and cross-appealed, and the U.S. Sixth Circuit affirmed.

Initially, the Court of Appeals noted that Defendants did not move to decertify the class after the district court found at the bench trial that the summary report log evidence was inadmissible. Rather, they argue now that the District Court district court abused its discretion by relying on inadmissible evidence for ascertainability and predominance purposes in certifying the class.

Then, moving to the issue of whether a court can rely on inadmissible evidence at the class certification stage, the Sixth Circuit joined the Eighth and Ninth Circuits in holding that the evidentiary proof required at the certification stage need not amount to admissible evidence – at least with respect to nonexpert evidence.  “Because class certification must occur at an early practicable time after a person sues or is sued as a class representative, limiting class-certification-stage proof to admissible evidence risks terminating actions before a putative class may gather crucial admissible evidence and transforms a preliminary stage into an evidentiary shooting match…. Summary judgment and class certification occurred simultaneously in this case, but the district court nevertheless relied on the natural progression of litigation and evidentiary discovery. It noted that, although the summary-report logs were not admissible evidence, Lyngaas has indicated that he will be able to admit the evidence at trial. Further, unlike a summary-judgment decision or a judgement after trial, a class-certification order is inherently tentative…. Numerous district courts in our circuit have indeed depended on the concept that the manner and degree of evidence required shifts through successive stages of the litigation, and have thus considered evidence at the class-certification stage that is reliable but that might ultimately be deemed inadmissible.”

In this particular case, “the district court here undertook the rigorous analysis required of it and correctly found sufficient evidence for class certification. The court had before it summary-report logs that detailed which fax numbers had purportedly received the faxes at issue, as well as other corroborating evidence, such as Curaden USA’s target lists of fax numbers and numerous emails detailing the transmissions. All that was left was authentication of the summary-report logs. Requiring the court to rely on formalistic evidentiary objections at this stage would have been inappropriate, particularly given Lyngaas’ assurance that he would be able to authenticate the logs at trial. The court therefore did not abuse its discretion in granting class certification when it relied on evidence that had yet to be authenticated.”

Finally, the Court approved of the claims process implemented by the District Court post-trial. Quoting from Newberg and Miller & Wright, the Court noted that “courts in class actions must use their discretion, and in many cases their ingenuity, to shape decrees or to develop procedures for ascertaining damages and distributing relief that will be fair to the parties. The manner of a claims-administration process is to be driven by the particular needs of an individual case, with the ultimate goal of distributing as much of the available damages remedy to class members as possible and in as simple and expedient a manner as possible.”

The situation at hand, the Court noted, “where there exists a target list of fax numbers that were sent the unsolicited fax advertisement – is precisely the type best handled through a claims-administration process….  The class here consists of ‘all persons who were successfully sent one or more facsimiles in March 2016 offering the Curaprox 5460 Ultra Soft Toothbrush for .98 per/brush to dental professionals only.’ To secure relief, claimants must submit sworn affidavits attesting to the following information: (1) their name, (2) their contact information, including fax number and address, (3) their receipt of a fax from Curaden USA on March 8, 2016 and/or on March 28, 2016, and (4) that they did not expressly invite or permit Curaden USA to send them faxes. The claims administrator will then verify the information contained in each claimant’s affidavit with the information reflected on the target lists and the parties will confer regarding disputes or agreement with respect to each claimant’s status as a class member. Curaden USA’s concern that those who did not receive the fax will erroneously be afforded damages is alleviated by the claims-administration process designed by the district court to weed out those who do not fit within the class definition. We therefore conclude that the district court’s establishment of a claims-administration process was proper.”

 

Lyngaas v. Curaden AG, 992 F.3d 412 (6th Cir. 2021).