1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 JEFFREY KATZ CHIROPRATIC, INC.,, Case No. 20-cv-04108-CRB

9 Plaintiff,

ORDER DENYING MOTION FOR

10 v. CLASS CERTIFICATION

11 DIAMOND RESPIRATORY CARE, INC., 12 Defendant.

13 Defendant Diamond Respiratory Care, Inc. (“Diamond”) is a health care company that 14 sells medical devices to clinics. In April 2020, early in the COVID-19 pandemic, many clinics 15 struggled to procure hand sanitizer. Diamond had some in stock. It collected a list of fax numbers 16 pertaining to clients and potential clients that it believed had, over more than two decades of its 17 business, agreed to receive faxes from Diamond. To about 17,219 fax numbers, Diamond 18 attempted to transmit a fax stating that it had hand sanitizer for sale. 19 As amended by the Junk Tax Prevention Act, the Telephone Consumer Protection Act 20 (“TCPA”) provides statutory damages of $500 (or $1,500) for an “unsolicited advertisement” sent 21 via fax machine. Plaintiff Jeffrey Katz Chiropractic, Inc. (“Katz”) received one of the hand 22 sanitizer faxes. Katz now seeks to represent the following class under Rule 23(b)(2) and 23(b)(3):

23 All persons who, from the date June 22, 2016, through the date notice is sent to the Class, received at least one telephone facsimile message 24 [from Diamond] substantially similar to [the hand sanitizer fax], where prior express permission or invitation to send the faxes was 25 supposedly obtained by Diamond through its general sales process. 26 The Court denies certification under Rule 23(b)(2) because Katz lacks standing to request 27 injunctive relief. The Court denies certification under Rule 23(b)(3) because a class action is not a 1 (1) whether a recipient consented to receive the fax; and (2) whether the recipient received it on an 2 online fax service. Katz’s motion to exclude class member declarations is denied. 3 I. BACKGROUND 4 A. Facts 5 Diamond is a “healthcare company that provides respiratory therapy and medical 6 equipment to patients with chronic lung disease, various end stage disorders, and more recently 7 people recovering from COVID-19.” Rice Decl. (dkt. 37-1) ¶ 5. It sells its products to clinicians 8 and directly to patients with prescriptions. Id. It was founded in approximately 1996. Id. ¶ 2. It 9 is based in California. Compl. (dkt. 1) ¶ 2. 10 Katz is a chiropractic practice based in California. Id. ¶ 1. 11 Early in 2020, an unprecedented global pandemic hit the United States. By April, there 12 was a major shortage of hand sanitizer that made it difficult for medical clinics to service their 13 patients. See Rice Dep. (dkt. 34-1), at 13-14.1 Diamond, however, had hand sanitizer in stock. 14 Id. It produced a list of 19,985 unique fax numbers. Mot. for Cert. (dkt. 34) at 4. This list of 15 numbers corresponded to clients and potential clients that Diamond believed had, over 26 years of 16 business, agreed to receive fax communications from Diamond. See Rice Dep. at 52-53; see id. 17 36-48. On several days in late April and early May, Diamond used a third-party fax service called 18 jBlast to transmit a fax stating that it had hand sanitizer in stock. See Mot. for Cert. at 3. jBlast 19 records indicate that the fax was sent to 17,219 of those 19,985 numbers. Id. at 4–5. 20 At the top of the fax were the words: “HAND SANITIZER NOW IN STOCK.” See Fax 21 (dkt. 34-2). It also stated:

22 We’ve received a small shipment of hand sanitizer that is now available for sale on our website. . . . 23 As you may know, Diamond created a PPE co-op to help fellow home 24 care facilities and physician’s offices obtain the items they need to re- open their offices. 25 Id. The fax also included Diamond’s website and phone number. Id. 26

27 1 For ease of locating the relevant citations, the Court cites to depositions and other exhibits by the 1 Chris Rice, the President of Diamond, described its sales process and the manner in which 2 it attempts to secure consent to send fax communications:

3 Diamond’s sales team communicates with prospective and current customers over the phone and via facility visits on a daily basis. 4 During these facility visits and telephone calls, Diamond obtains referrals and contact information from prospective and current 5 customers. These are often provided in connection with a pitch regarding Diamond’s products, or a request for information about 6 those products. Diamond also obtains the prospective and current customers’ express permission to send them marketing and 7 informational materials via contact information provided in the context of individualized overviews of Diamond’s business, which 8 can occur in person or on the phone. 9 Rice Decl. ¶ 6. In some sales discussions, the record indicates that the customers provided prior 10 express permission for the fax in question. See generally Declarations (dkt. 37-3 to 37-18).2 But 11 it appears that in many sales talks with clients, Diamond did not specifically ask if it could send 12 marketing materials. See Rice Dep. at 53 (Rice: “I think we just asked if we could fax them, 13 period.”). 14 B. Procedure 15 On June 22, 2020, Katz filed a class action complaint against Diamond for a violation of 16 the TCPA, as amended by the Junk Fax Prevention Act of 2005, 47 U.S.C. § 227. See Compl. 17 After discovery, on September 2, 2021, Katz moved to certify an “Unsolicited Fax Class” defined 18 as follows:

19 All persons who, from the date June 22, 2016, through the date notice is sent to the Class, received at least one telephone facsimile message 20 substantially similar to Exhibit B [the hand sanitizer fax], where prior express permission or invitation to send the faxes was supposedly 21 obtained by Diamond through its general sales process. 22 Mot. for Cert. at 2. Diamond filed an opposition with attached declarations from about a dozen 23 2 In its motion to strike the declarations or for leave to take depositions, Katz argues that these 24 declarations are not properly before the Court because the declarants were not properly disclosed during discovery. Yet Katz saw nine of these declarations during settlement negotiations in July 25 2021. See Mot. to Strike (dkt. 42), at 2. In light of Katz’s awareness of the names of these declarants, the clinics where they worked, and the content of their statements, the Court concludes 26 that any discovery failure was harmless. Fed. R. Civ. P. 37(c)(1); Barnett v. Garrigan, 2021 WL 4851043, at *1 (N.D. Cal. Oct. 19, 2021). The Court therefore DENIES the motion to strike. 27 However, the Court also concludes that it makes no difference. It would reach the same 1 putative members of this class attesting that they consented to the hand sanitizer fax. See 2 Declarations. Katz filed a motion to strike these declarations or for leave to take depositions. See 3 Mot. to Strike (dkt. 42). 4 II. LEGAL STANDARD 5 Rule 23(a) of the Federal Rules of Civil Procedure “states four threshold requirements 6 applicable to all class actions: (1) numerosity (a class so large that joinder of all members is 7 impracticable); (2) commonality (questions of law or fact common to the class); (3) typicality 8 (named parties’ claims or defenses are typical of the class); and (4) adequacy of representation 9 (representatives will fairly and adequately protect the interests of the class).” Amchem Prods., 10 Inc. v. Windsor, 521 U.S. 591, 613 (1997) (citing Fed. R. Civ. P. 23(a)) (internal quotation marks 11 and alterations omitted). In addition to Rule 23(a)’s above-described “prerequisites,” a class 12 action must “fall within one of the three types specified in Rule 23(b).” In re Hyundai and Kia 13 Fuel Economy Litig., 926 F.3d 539, 556 (9th Cir. 2019) (en banc). 14 Rule 23(b)(2) permits class certification where “the party opposing the class has acted or 15 refused to act on grounds that apply generally to the class, so that final injunctive relief or 16 corresponding declaratory relief is appropriate respecting the class as a whole.” Fed. R. Civ. P. 17 23(b)(2). “[I]t does not authorize class certification when each class member would be entitled to 18 an individualized award of monetary damages” and where “the monetary relief is not incidental to 19 the injunctive or declaratory relief.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 360–61 20 (2011). 21 Rule 23(b)(3) requires that (1) “questions of law or fact common to class members” must 22 “predominate over any questions affecting only individual members,” and that (2) the class action 23 must be “superior to other available methods for fairly and efficiently adjudicating the 24 controversy.” Fed. R. Civ. P. 23(b)(3). The predominance inquiry “tests whether proposed 25 classes are sufficiently cohesive to warrant adjudication by representation.” Id. at 623. Because 26 Rule 23(a)(2) already requires the existence of common issues of fact or law, Rule 23(b)(3) 27 requires something more: that “common questions present a significant aspect of the case and 1 at 557 (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011, 1021 (9th Cir. 1998)). A court assesses 2 predominance on the basis of evidence currently in the record, rather than evidence that a 3 defendant might later advance. True Health Chiropractic, Inc. v. McKesson Corp., 896 F.3d 923, 4 931 (9th Cir. 2018). 5 The party seeking certification bears the burden of demonstrating that it has met all of Rule 6 23’s required elements. Ellis v. Costco Wholesale Corp., 657 F.3d 970, 979-80 (9th Cir. 2011) 7 (citation omitted). 8 III. DISCUSSION 9 The Court denies certification because the proposed class does not satisfy the requirements 10 of either Rule 23(b)(2) or 23(b)(3).3 11 A. Certification Under Rule 23(b)(2) 12 The Court denies certification under Rule 23(b)(2) because Katz lacks Article III standing 13 to bring a claim for “final injunctive relief or corresponding declaratory relief.” Fed. R. Civ. P. 14 23(b)(2). Katz received exactly one fax 18 months ago. See Katz Dep. (dkt. 37-2) at 45 (“Q: Do 15 you have any evidence that Diamond ever sent you another fax? Katz: No.”). It faces no “real and 16 immediate threat” of another fax. Chapman v. Pier 1 Imports (U.S.) Inc., 631 F.3d 939, 946 (9th 17 Cir. 2011) (en banc). And where a named plaintiff lacks standing as to the requested relief, there 18 is no class. See Hodgers-Durgin v. de la Vina, 199 F.3d 1037, 1044-45 (9th Cir. 1999) (en banc).4 19 B. Certification Under Rule 23(b)(3) 20 Rule 23(b)(3) requires that (1) “questions of law or fact common to class members” must 21 “predominate over any questions affecting only individual members,” and that (2) the class action 22 must be “superior to other available methods for fairly and efficiently adjudicating the 23 controversy.” Fed. R. Civ. P. 23(b)(3). The Court holds that neither predominance nor superiority 24 is met because of the individualized factual questions of (1) whether each class member consented 25 3 Because these issues are dispositive, the Court need not reach other issues in the parties’ briefs. 26 4 Nor, for that matter, do any members of the proposed class appear to have standing as to injunctive relief. And even if Katz, or some other plaintiff, had standing, Rule 23(b)(2) would still 27 be inappropriate, as Diamond has not “acted or refused to act on grounds that apply generally to 1 to receive the fax via Diamond’s “general sales process”; and (2) whether each class member 2 received the fax on a standalone fax machine or an online fax service. 3 1. Consent 4 First, common issues do not predominate over individualized issues of consent. The 5 TCPA prohibits the sending of an “unsolicited advertisement” “to a telephone facsimile machine.” 6 47 U.S.C. § 227(b)(1)(c). “[P]rior express invitation or permission” is an affirmative defense 7 against this claim. True Health, 896 F.3d at 931. Common issues therefore may predominate 8 when a consent defense involves “little or no variation,” such as when consent was procured 9 through a standardized agreement. Id. at 932. But common issues do not predominate when the 10 consent defense has considerable factual “variation” because it is “based on individual 11 communications and personal relationships between [defendant’s] representatives and their 12 customers.” Id. 13 Diamond used a wide variety of ways to obtain consent (or fail to do so). As Chris Rice, 14 Diamond’s CEO, explained:

15 Diamond’s sales team communicates with prospective and current customers over the phone and via facility visits on a daily basis. 16 During these facility visits and telephone calls, Diamond obtains referrals and contact information from prospective and current 17 customers. These are often provided in connection with a pitch regarding Diamond’s products, or a request for information about 18 those products. Diamond also obtains the prospective and current customers’ express permission to send them marketing and 19 informational materials via contact information provided in the context of individualized overviews of Diamond’s business, which 20 can occur in person or on the phone. 21 Rice Decl. (dkt. 37-1) ¶ 6. This wide variety of ways to obtain consent apparently yielded 22 different answers in different sales team visits. For example, the record indicates that Diamond 23 often did not specifically ask if it could send a client marketing faxes. See Dkt. 34-1, at 53 (Rice 24 Dep. at 203:17-19) (“I think we just asked if we could fax them, period.”). Yet in other sales 25 discussions, the record indicates that the customers provided prior express permission. See 26 generally Declarations. The factual variation in the ways Diamond communicated with its 27 prospective and current customers is not “hypothetical.” 1 class to include fax recipients where prior consent was (supposedly) obtained through Diamond’s 2 “general sales process.” But climbing up the ladder of abstraction does not solve the 3 predominance problem. Predominance—and, indeed, commonality itself—concerns whether a 4 class-wide proceeding will “generate common answers apt to drive the resolution of the 5 litigation.” See Dukes, 564 U.S. at 350 (quotation and citation omitted).5 Common answers are 6 absent here. Some of the recipients whose prior consent was “supposedly” obtained via the 7 “general sales process” apparently consented; others apparently did not. A class action would be 8 manifestly unhelpful in sorting through this key factual question that determines liability. 9 Because consent can only be determined on an individualized basis, common issues do not 10 predominate. See True Health, 896 F.3d at 932; Fed. R. Civ. P. 23(b)(3). And because 11 meritorious individual claims might be resolved in small claims court, the class action is not 12 “superior to other available methods for fairly and efficiently adjudicating the controversy.” Id. 13 2. Virtual Fax 14 An independent ground that defeats predominance is the question of whether each fax 15 recipient used a standalone fax machine or an online fax service. Only those who receive faxes on 16 standalone fax machine have a cognizable TCPA claim. Another court in this district recently 17 decertified a class because, after hearing from 100 major telephone companies on this issue, it 18 concluded that it is impossible to determine on a class-wide basis whether recipients received the 19 fax on a standalone fax machine. True Health Chiropractic Inc. v. McKesson Corp., No. 13-cv- 20 02219, 2021 WL 4818945, at *1-3 (N.D. Cal. Oct. 15, 2021). So it is here. 21 As noted, the TCPA claim requires sending the fax “to a telephone facsimile machine.” 47 22 U.S.C. § 227(b)(1)(c). A “telephone facsimile machine” is “equipment which has the capacity . . . 23 to transcribe text or images (or both) from an electronic signal received over a regular telephone 24 line onto paper.” Id. § 227(a)(3). On December 9, 2019, the Federal Communications 25 Commission (“FCC”) held in a declaratory ruling that an online fax service is not a “telephone 26 facsimile machine” under the TCPA. In the Matter of Amerifactors Fin. Grp., LLC, No. 05-338, 27 1 2019 WL 6712128, at *1 (OHMSV Dec. 9, 2019). 2 Under the Hobbs Act, challenges to the validity of final FCC orders must be filed in the 3 circuit courts. See 28 U.S.C. § 2342(1); 47 U.S.C. § 402. A plaintiff may not file a complaint in 4 the district court that “raise[s] the same issues and seek[s] the same relief in substance as the 5 declaratory ruling.” Wilson v. A.H. Belo Corp., 87 F.3d 393, 399 (9th Cir. 1996). A “final order” 6 is one that is not “merely tentative or interlocutory” and is “one by which rights or obligations 7 have been determined, or from which legal consequences will flow. US W. Commc’ns, Inc. v. 8 Hamilton, 224 F.3d 1049, 1054–55 (9th Cir. 2000), as amended on reh’g (Sept. 13, 2000) (citation 9 and quotation omitted). The complaint in this case seeks the remedy for a viable TCPA claim— 10 precisely the relief foreclosed by Amerifactors. And the Amerifactors decision is clearly final: it 11 is not tentative and it determines rights and obligations under the TCPA. See True Health 12 Chiropractic, 2021 WL 4818945, at *1. 13 Judge Gilliam’s analysis in True Health is instructive. After Amerifactors, Judge Gilliam 14 modified the class definition to include two subclasses: one for those who received the fax on a 15 “stand-alone fax machine” and one for those who received the fax on an “online fax service.” 16 True Health Chiropractic Inc. v. McKesson Corp., 2020 WL 7664484, at *7 (N.D. Cal. Dec. 24, 17 2020). At the time, the court was “satisfied with Plaintiffs’ proposed three-step subpoena process 18 to distinguish members of these subclasses.” Id. at *8. (In a later order, he granted summary 19 judgment to the defendant as to the “online fax services” subclass, holding that Amerifactors 20 foreclosed their cause of action. See True Health Chiropractic, Inc. v. McKesson Corp., No. 13- 21 cv-2219 [Dkt. 418] (N.D. Cal. Aug. 13, 2021)). 22 But Judge Gilliam later decertified all of the class. He found that, in spite of nearly a year 23 of work by plaintiffs to delineate the subclasses, this individualized factual issue still swamped all 24 common issues. True Health, 2021 WL 4818945. Judge Gilliam explained:

25 While Defendants sought decertification of the class after the Amerifactors ruling issued, see Dkt. No. 362, the Court gave Plaintiffs 26 the opportunity to obtain class-wide proof sufficient to show how class members received the faxes at issue, see Dkt. No. 393. Plaintiffs 27 returned with over 100 telephone carrier declarations, which carriers who provided service to over 60% of the class members 1 affirmatively say they have no way of knowing if the class member received faxes via a standalone fax machine or via an online fax 2 service. Defendants’ Response at 4; see Dkt. Nos. 460, 465, 468, 469, 470, 471; see, e.g., Dkt. No. 460, Exhibit A Part 5 at 63 (“Comcast 3 has no mechanism to determine whether its subscribers received faxes 4 on a standalone fax machine or via online fax service.”). Id. at *1 (emphasis added); see also id. at *1 n.1 (noting that plaintiffs still lacked any response 5 whatsoever from telephone carriers servicing at least 17% of the class members). Judge Gilliam 6 also explained that the plaintiffs’ other ways of purportedly “proving” who in the class had a valid 7 claim—including the use of experts opining on trends in online fax service usage and the 8 likelihood of particular consumer choices—failed as a matter of law. Id. at *1. 9 Katz cannot evade this individualized factual issue that yields such dissimilar answers. It 10 first argues that the Court should exclude users of online fax services from the class. See Rep. at 11 11. Yet that is exactly what Judge Gilliam did. He then waited a year and heard from Comcast a 12 and more than 100 other telephone carriers, and the common issues still did not predominate. 13 3 Katz is correct that “there is no requirement to determine class membership at this stage.” Id. 14 But True Health teaches that any common answer to this question is indeterminate at any stage, 15 even after a year of subpoenas, declarations, and expert testimony. Nor is this the sort of issue that 16 can be determined easily at the claims phase. vo 617 Common issues do not predominate over the question of whether the fax was received on

Z 18

an online fax service, and the class action is not a “superior” vehicle for this dispute. See Fed. R. 19 Civ. P. 23(b)(3). 20 5] IV. CONCLUSION For the foregoing reasons, the Court DENIES class certification under both Rule 23(b)(2) 22 and Rule 23(b)(3). 23

IT ISSO ORDERED.

24 E i — Dated: December 9, 2021 25 CHARLES R. BREYER United States District Judge 27 28