McNair v. Synapse Grp. Inc.
| Decision Date | 06 March 2012 |
| Docket Number | No. 11–1743.,11–1743. |
| Parties | Charles McNAIR; Theodore Austin; Danielle Demetriou; Ushma Desai; Julie Dynko, Appellants v. SYNAPSE GROUP INC. |
| Court | U.S. Court of Appeals — Third Circuit |
OPINION TEXT STARTS HERE
Paul Diamond, Fort Lee, NJ, Gary S. Graifman, [Argued] Kantrowitz, Goldhamer & Graifman, Chestnut Ridge, NY, Michael S. Green, Green & Associates, East Brunswick, NJ, for Appellants.
Geoffrey W. Castello, III, Lauri A. Mazzuchetti, Vincent P. Rao, II, Kelley, Drye & Warren, Parsippany, NJ, Thomas E. Gilbertsen [Argued], Veneble, Washington, DC, for Appellee.
Before: FUENTES, JORDAN, and NYGAARD, Circuit Judges.
A group of former customers (collectively, “Appellants” or “the named plaintiffs”) of Synapse Group Inc. (“Synapse”) successfully petitioned under Federal Rule of Civil Procedure 23(f) 1 for interlocutory review of an order denying class certification. More specifically, Appellants challenge the decision of the United States District Court for the District of New Jersey to deny certification of a Rule 23(b)(2) injunctive relief class consisting of Synapse customers who received automatic renewal notifications in connection with magazine subscriptions obtained through Synapse. Because we conclude that Appellants, none of whom are current Synapse customers, lack standing to seek the remedy they are pursuing on behalf of the class, we will affirm the District Court's order denying class certification.2
I. BackgroundA. Synapse's Magazine Sales
Synapse, a wholly-owned subsidiary of Time Inc. (“Time”), is the largest marketer of magazine subscriptions in the United States. It conducts its business operations under several other names, including Magazine Direct, New Sub Magazine Services, SynapseConnect, Synapse Solutions, and CAP Systems. Aiming to “bring magazine publishers and potential subscribers together by promoting trial offers that might evolve into long-term subscriptions,” Synapse markets over 800 magazines to consumers through “credit card issuers, catalogers, retailers, airlines, and internet companies.” (App. at 643.)
The majority of Synapse's magazine subscriptions are offered under what is known as a “continuous service plan” whereby a customer's subscription does not expire unless and until the customer opts to cancel it. To secure subscribers to those plans, Synapse offers introductory promotional offers under which customers can receive magazine subscriptions for free or at greatly reduced rates. Although the offers are varied, all customers provide a credit or debit card number upon signing up and are informed that, once the promotional rate expires, their card will be charged at the regular subscription rate, unless the subscription is cancelled.
Prior to processing charges for the promised rate increase, however, Synapse provides its customers with advance notice. That notice, made in accordance with the terms of Synapse's initial offer, explains the impending charge for continued services and provides a toll-free telephone number for the customer to call to cancel his or her magazine subscriptions. Before 2009, Synapse provided the majority of those notifications by sending its customers a sealed double postcard with a visible exterior and a concealed interior (the “Standard Postcard”). The front of the Standard Postcard's exterior was addressed to the customer and contained no other text besides a return address. The back of the Standard Postcard's exterior appeared as follows:
Image 1 (4.53" X 4.04") Available for Offline Print (App. at 507.) The Standard Postcard's interior, which, again, was only visible if opened, stated the names of the magazines subscribed to, the number of issues ordered, the cost of the automatic renewal, and a toll-free number for customers to call to cancel their magazine subscriptions, if they so desired.
Synapse's market testing demonstrated that an explicit statement on the exterior of the Standard Postcard that it was an “automatic renewal notice” or an “automatic magazine renewal” would increase the number of pre-billing cancellations. For example, adding the words “Your Automatic Magazine Renewal Notice” to the front of the Standard Postcard's exterior resulted in an increase of several percentage points in pre-billing cancellations. An expert retained by Appellants took that into account in opining that the Standard Postcard was “intentionally designed to avoid giving customers notice of renewal.” (App. at 1098.)
Beginning in February 2009, Synapse voluntarily began using a new, non-folded, postcard to provide its advance notifications to customers (the “Single Postcard”). Unlike the Standard Postcard, the Single Postcard contains no interior. The back of the Single Postcard has a picture of magazines in a mailbox and states that magazine subscriptions are available for up to 40% off newsstand prices. The front of the Single Postcard contains two panels. On the left side, it states in large print: “The low rate for your next year of issues is guaranteed!” (App. at 1483.) And then, in smaller print, it says:
We guarantee a hassle-free subscription. You'll never miss an issue. No bills, reminders, publisher renewal notices and no telemarketing calls. We do the work for you by automatically extending your subscription each year for as long as you want your selections.
Your service includes convenient home delivery and huge savings off the newsstand price.
We guarantee to send you advance notice every year about your next subscription period and rates. We will send you notice that spells out: your guaranteed low rate, your number of issues and when your credit card will be charged. If you don't wish to continue, you can simply cancel before your new term begins.
We guarantee you outstanding savings. As a Valued Subscriber, enjoy substantial savings off cover price. For more great deals, visit www. magazineoutlet. com.
( Id.) On the right side, the following appears:
Thank you for being a valued customer. We hope you have been enjoying your service, as your complete satisfaction is our ultimate goal.
For your convenience, we will continue to ensure that you don't receive extra unwanted mail—the multiple renewal notices and bills that normally come with a subscription. For the next term of issues the credit card you previously provided for your selections and will be charged for [magazine title], at $ [price].... If you do not wish to continue, call 800 927 9351 by [date] and no charge will appear. As long as you are satisfied, your selections will continue through our open-ended, customer-friendly subscription method—continuous service. Of course, we will always send you a courtesy reminder before you are ever billed to ensure your satisfaction. Remember, you can always look for the expiration date on your magazine label. You may cancel anytime and receive a refund of unserved issues. If a title ceases, it will be replaced with one of equal or greater value. We hope you enjoy your selections and look forward to serving you in the future. Please keep this notice for your records.
( Id.)
Appellants' expert reviewed Synapse's Single Postcard and concluded that it, like the Standard Postcard, is “an exercise in deception” inasmuch as it provides scant information and is designed to appear like a direct mail offer for a new subscription rather than an automatic renewal notice for an existing subscription.3 (App. at 1495.)
As detailed above, while the effectiveness of the message may be open to dispute, both the Standard Postcard and the Single Postcard state that a customer will be automatically charged a renewal rate if the customer does not cancel his subscription before a certain date. If a customer's subscription is not timely cancelled, however, the customer can still seek a complete or pro rata refund. There are at least two ways to reach Synapse to request cancellation or seek reimbursement of an unwanted automatic renewal charge. The customer may either call the number listed on the advance notification mailing, or he may call a toll-free number that is automatically listed on his credit or debit card statement when a charge is submitted by Synapse.
While the toll-free number that appears on a customer's billing statement differs from the phone number that appears on Synapse's advance renewal notices, both lead customers to Synapse's Interactive Voice Recognition (“IVR”) telephone system. That system is meant to be entirely automated, so that a caller will not ordinarily interact with a human being, but the IVR usually does permit customers to reach a live operator by pressing zero or failing to respond to the IVR's prompts. When a customer attempts to cancel his magazine subscriptions using the IVR system, the IVR attempts to retain that business by presenting so-called “save offers.” On average, approximately 30% of callers accept a save offer. The remaining 70% of Synapse customers who call to cancel end up doing so, and most are, in fact, able to accomplish that without speaking with a live operator.
B. Procedural History
Appellants, who are “residents” 4 of New Jersey, New York, or the District of Columbia, received the Standard Postcard when they were Synapse customers and brought suit against Synapse after allegedly suffering monetary injury as a result of Synapse's deceptive business practices.5
On June 29, 2009, Appellants moved for class certification based on a prior iteration of their complaint, which pleaded consumer fraud claims for monetary and injunctive relief under New Jersey, New York, and District of Columbia law. McNair v. Synapse Grp., Inc., No. 06–cv–5072, 2009 WL 1873582, at *8, *12 (D.N.J. June 29, 2009). Specifically, Appellants asked the District Court to certify the following class under Rules 23(b)(2) and (b...
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