331 F.3d 13 (2nd Cir. 2003), 01-9069, Parker v. Time Warner Entertainment Co., L.P.
|Citation:||331 F.3d 13|
|Party Name:||Parker v. Time Warner Entertainment Co., L.P.|
|Case Date:||June 02, 2003|
|Court:||United States Courts of Appeals, Court of Appeals for the Second Circuit|
Argued: Sept. 12, 2002.
Samuel Issacharoff, New York, NY, (Roger W. Kirby, Peter S. Linden, Daniel Hume, Kirby McInerney & Squire LLP, New York, NY; Steve W. Berman, George W. Sampson, Hagens Berman, LLP, Seattle, WA; Jonathan W. Cuneo, Michael G. Lenett, The Cuneo Law Group, P.C., Washington, D.C.; James M. Beaulaurier, Seattle, WA, on the brief), for plaintiffs-appellants.
Jonathan D. Thier, Cahill Gordon & Reindel, New York, N.Y. (Landis C. Best, David G. Montone, Cahill Gordon & Reindel, New York, NY; Ronald L. Plesser, Emilio W. Cividanes, Piper Marbury Rudnick & Wolfe, LLP, Washington, D.C., on the brief), for defendants-appellees.
Michael S. Schooler, Washington, D.C., for amicus curiae.
Before: NEWMAN and F.I. PARKER, Circuit Judges; and UNDERHILL, [*] District Judge.
Vacated and remanded for further proceedings. Judge JON O. NEWMAN concurs with a separate opinion.
UNDERHILL, District Judge.
This appeal raises issues concerning the appropriateness of certifying a plaintiff class of potentially millions of cable television subscribers in a case seeking various forms of relief, including injunctive relief, actual damages, and statutory damages under the Cable Communications Policy Act of 1984. These issues arise from decision of defendants' motion to deny class certification as a matter of law, which was issued before discovery on issues affecting class certification. For the reasons that follow, we vacate the order appealed from and remand for further proceedings.
Andrew Parker and Eric DeBrauwere (collectively "Parker") subscribe to cable television services provided by Time Warner Cable, a division of Time Warner Entertainment Co. ("Time Warner"). Parker claims that Time Warner violated the provisions of the Cable Communications Policy Act of 1984 ("Cable Act"), 47 U.S.C. § 521 et seq., and several state consumer protection laws, by selling and disclosing personally identifiable subscriber information to third parties, and by failing clearly and conspicuously to inform the subscribers of such disclosure, as required by the Cable Act. Parker seeks monetary relief in the form of statutory damages, actual damages, punitive damages and attorneys' fees, as well as declaratory and injunctive relief to prevent further Cable Act violations.
Parker commenced this action in the Eastern District of New York on June 16, 1998. On October 30, 1998, appellants filed an Amended Class Action Complaint. In September 1999, Parker served extensive discovery requests, to which Time Warner objected in October 1999. On November 8, 1999, the District Court issued an "Amended Memorandum and Order Denying Defendant's Motion to Dismiss Complaint," rejecting Time Warner's contention that the Amended Complaint failed to state a cause of action under the Cable Act. In issuing that order, Judge Edward R. Korman relied upon the allegations of the Amended Complaint that Time Warner: (1) failed to provide adequate notification to subscribers that it was selling information gathered from third-party sources along with information it collected directly from subscribers; and (2) improperly disclosed subscribers' programming selections without first providing a valid means for subscribers to opt out. Prior to the issuance of the written ruling on its motion to dismiss, Time Warner changed its privacy notice to provide a warning regarding the potential for disclosure of personally identifiable information, as well as a means for subscribers to opt out of releasing their programming selections to third parties.
Soon after the ruling on its motion to dismiss, Time Warner moved for an order denying class certification as a matter of law. In January 2000, Magistrate Judge Joan M. Azrack, to whom various discovery disputes had been referred, stayed discovery pending a ruling on Time Warner's motion to deny class certification. Later that month, Senior District Judge I. Leo Glasser stayed determination of Parker's "contemplated motion for class certification" and confirmed that discovery remained stayed pending decision of Time Warner's motion. As a result of the court's rulings, no motion for class certification has been filed and no discovery establishing the size of the prospective plaintiff class or the extent of the alleged statutory violations has occurred. Parker has indicated in pleadings that he would, under Rule 23(b)(2) and 23(b)(3), pursue class certification for a class of Time Warner cable subscribers whose privacy interests allegedly were violated by the disclosure and sale of subscriber information.
On October 2, 2000, Magistrate Judge Azrack issued a Recommendation and Report ("R & R") on Time Warner's motion to deny class certification. Parker v. Time Warner Entertainment Co., L.P., 2000 U.S. Dist. Lexis 20131 (E.D.N.Y.2000). In the R & R, Judge Azrack considered whether class certification was appropriate under Rules 23(b)(2) and 23(b)(3) of the Federal Rules of Civil Procedure, and recommended that the District Court grant in part Time Warner's motion to deny class certification as a matter of law. Although Judge Azrack assumed that Parker would be able to satisfy the threshold requirements for class certification under Rule 23(a), ultimately she concluded that certification of the damages claim under 23(b)(2) should be denied because Parker's request for monetary relief predominated over the claim for injunctive relief. Judge Azrack recommended against certification of a class under Rule 23(b)(3) principally on the ground that a class action was not the superior means of adjudicating this controversy. Concerning Parker's request for injunctive and declaratory relief, Judge Azrack recommended that Rule 23(b)(2) certification be granted, noting that, under Rule 23(c), a district court is authorized "to determine which classes and issues, if any, should be appropriately certified." Id. at *8. Finally, Judge Azrack recommended that the District Court decline to exercise supplemental jurisdiction over the pendent state law claims, which arose under the deceptive practices statutes of twenty-three states.
Parker objected to the R & R, and on January 9, 2001, Judge Glasser entered an order adopting the recommendations to limit class certification under Rule 23(b)(2) to Parker's declaratory and injunctive claims, to deny class certification under Rule 23(b)(3), and to decline supplemental jurisdiction over the state law claims. Parker v. Time Warner Entertainment Co., L.P., 198 F.R.D. 374 (E.D.N.Y.2001). Judge Glasser noted that he had precluded Parker from filing a motion for class certification, but that the Amended Complaint indicated that certification would be sought "pursuant to Rules 23(b)(2) and (3) for a plaintiff class of approximately 12 million cable subscribers in 23 states whose privacy interests allegedly were violated by defendants' disclosure and sale of subscriber information. Defendants argue that certification should be denied as a matter of law under both subdivisions." Id. at 376 (citation to Amended Complaint omitted). Judge Glasser also explained that, because "[n]o discovery has been conducted concerning the purported class," Parker contended that the "motion for denial of certification should be viewed as a premature motion to dismiss under Rule 12(b)(6) and that defendants carry the burden of proving why a class action is not warranted." Id. The District Court rejected that argument, holding that "[b]efore a plaintiff moves for class certification, a defendant may 'test the propriety of the action' by a motion for denial of class certification," and that "the burden of establishing the propriety of a class action remains with the plaintiff." Id. (citations omitted).
Judge Glasser began his analysis of the motion to deny certification under Rule 23(b)(2) by recognizing that certification under that rule "is only appropriate for class actions where the relief sought is exclusively or predominantly declaratory or injunctive." Id. at 377. He cited the Fifth Circuit's decision in Allison v. Citgo Petroleum Corporation, 151 F.3d 402 (5th Cir. 1998), for the proposition that the "purpose of Rule 23(b)(2)'s predominance requirement is to ensure a degree of cohesiveness that would otherwise be easily disrupted when a plaintiff class seeks monetary remedies, since monetary remedies 'are more often related directly to the
disparate merits of individual claims.' " Id. at 378 (quoting Allison, 151 F.3d at 413). " 'Ideally, incidental damages should be only those to which class members automatically would be entitled once liability to the class (or subclass) as a whole is established.' " Id. at 378-79 (quoting Allison, 151 F.3d at 415).
In determining whether the instant case conformed to the predominance standard of Rule 23(b)(2), Judge Glasser recognized that, although the court in Arnold v. United Artists Theatre Circuit, Inc., 158 F.R.D. 439 (N.D.Cal.1994), suggested that Rule 23(b)(2) certification "may be appropriate for statutorily mandated individual damages awards, the statutory damages claim here is but one aspect of plaintiffs' request for monetary relief. Thus it cannot be said that the entirety of plaintiffs' damages claim is 'incidental' to their request for injunctive relief." Parker, 198 F.R.D. at 381. Judge Glasser adopted the recommendation that Parker's damages claims not be certified, noting that the...
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