FDS Rest., Inc. v. All Plumbing Inc., No. 16-CV-1009

• Decision Date: 26 March 2020
• Docket Number: No. 16-CV-1009
• Citation: 241 A.3d 222
• Parties: FDS RESTAURANT, INC., Appellant, v. ALL PLUMBING INC., Service, Parts Installation, et al., Appellees.
• Court: D.C. Court of Appeals

241 A.3d 222

FDS RESTAURANT, INC., Appellant,

v.ALL PLUMBING INC., Service, Parts Installation, et al., Appellees.

No. 16-CV-1009

District of Columbia Court of Appeals.

Argued October 17, 2018

Decided March 26, 2020

Jonathan B. Piper, with whom Phillip A. Bock, Chicago and Stephen H. Ring, Germantown, were on the brief, for appellant.

Molly A. Arranz, Chicago, with whom Tamara B. Goorevitz, Baltimore and Michael L. Resis, Chicago, were on the brief, for appellees.

Before Blackburne-Rigsby, Chief Judge, and Glickman and Fisher, Associate Judges.

Blackburne-Rigsby, Chief Judge:

This case requires us to construe the so-called "junk fax" provisions of the Telephone Consumer Protection Act of 1991 ("TCPA")¹ and its implementing regulation,² which restrict the sending of unsolicited advertisements via facsimile machine. In particular, we must decide whether a person or entity whose goods or services are advertised in an unsolicited fax ad qualifies as the "sender" of that ad and is therefore liable for violations of the TCPA – even if the fax was actually transmitted by a third party. We conclude that the statute and the regulation, read together and in the context of their purpose and history, do not impose strict liability on any person or entity whose good or service is advertised in a fax ad, but rather impose vicarious liability on a person or entity on whose behalf unsolicited fax ads were sent, regardless of who actually transmitted the faxes. In determining the standard for imposing vicarious liability, we discern no meaningful difference between the traditional agency law approach followed by some courts and the "on whose behalf" formulation followed by other courts; we therefore employ an agency law analysis in determining whether faxes were sent on behalf of a person or entity. Applying these principles to the case before us, we affirm the trial court's judgment for appellees based on its determination that the fax that appellant received in this case was not sent "on behalf of" appellees, and that appellees are therefore not liable for a violation of the TCPA. We also affirm the trial court's denial of class certification based on its determination that the proposed class, represented by appellant, did not meet the requirements for a class action.

I. Factual and Procedural Background

On December 2, 2011, appellant FDS Restaurant, Inc. ("FDS"), a District of Columbia corporation with its principal place of business in the District, filed suit against appellees All Plumbing Inc. Service, Parts, Installation, a Virginia corporation with its principal place of business in Arlington, Virginia, and All Plumbing's officer, director, and control person, Kabir Shafik (collectively "All Plumbing"). FDS alleged that All Plumbing, through Shafik, approved, authorized, and participated in sending to FDS an unsolicited fax advertisement for All Plumbing on or about September 23, 2006. FDS's complaint made class action allegations under Superior Court Rule of Civil Procedure 23, purporting to bring suit on behalf of all persons who received unsolicited fax ads advertising All Plumbing's goods or services on or after September 14, 2006.³ FDS alleged that these faxes violated the TCPA and that, with FDS serving as class representative, the requirements for a class action seeking damages for these violations were met.

All Plumbing filed a motion to dismiss, which Judge Todd Edelman denied on February 29, 2012, and the parties began discovery. All Plumbing then filed motions for summary judgment; following a hearing before Judge Thomas Motley on January 7, 2015, the motions were denied by written order the same day. Judge Motley held that whether unsolicited fax ads were sent "on behalf of" All Plumbing, and whether Shafik directly participated in or authorized the sending of the fax ads, were material, factually disputed issues and therefore jury questions.

A. Denial of Class Certification

On March 1, 2012, FDS had filed an amended motion for class certification, and, on November 6, 2014, a second amended motion for class certification, the latter of which defined the class as: "All persons who between September 14, 2006 and September 30, 20[06] were sent telephone facsimile messages of material advertising the commercial availability of any property, goods, or services by or on behalf of [All Plumbing]." Following several written submissions from the parties and four days of hearings between January and June 15, 2015, on September 3, 2015, Judge Motley issued an order denying class certification.

In its lengthy and thorough order, the trial court summarized the evidence that had emerged from discovery – including a deposition of Shafik – which revealed that, in 2006, a company called Business to Business Solutions ("B2B") approached Shafik about advertising All Plumbing's services to other companies via fax.⁴ Shafik provided written authorization to B2B to send 5,000 faxes to "all apartments, condo[ ]s [,] managements, [and] resta[u]rants" within thirty listed zip codes, all within Virginia, at a cost of $350. Shafik could not recall who submitted the payment from All Plumbing to B2B, but admitted that it may have been another employee of All Plumbing. In any event, between September 22 and 28, 2006, for reasons that are unclear, B2B faxed ads for All Plumbing's business to 10,281 fax numbers located in Virginia, Maryland, and D.C., of which about 5,000 were in Virginia and about 5,000 were in D.C. FDS received one of these faxes at its place of business in D.C.

The trial court then discussed All Plumbing's proposed defense, which was that FDS would be unable to prove that the fax it received was sent "on behalf of" All Plumbing because FDS was located in D.C., and All Plumbing had only authorized faxes to be sent to Virginia fax numbers. After reviewing case law from other jurisdictions, the court stated:

[T]his Court finds that FDS would have the burden to prove that the faxes sent by B2B were sent on behalf of All Plumbing – that is, within the scope of All Plumbing's authorization. All Plumbing's defense relating to the lack of authorization for the advertisement sent to FDS, the proposed class representative, therefore, has merit and will be a highly contested issue at trial. With practically no other issues in dispute, it is likely that a large portion of the litigation – perhaps all of the litigation – will be spent focused on this defense.

Based on this holding, the court proceeded to analyze whether FDS had met the requirements of commonality, typicality, and adequacy under Rule 23(a). It found that, because the question of whether a fax ad was sent "on behalf of" All Plumbing was likely to generate different answers for different groups of proposed class members based on whether or not they were located in Virginia – and that, even for proposed class members located in Virginia, the answers would be different depending on whether or not they fell into the business types (e.g., restaurants) or particular zip codes identified by Shafik – FDS had failed to demonstrate sufficient commonality. Similarly, because FDS would be susceptible to All Plumbing's defense in a way that 5,000 Virginia fax recipients would not – and because, again, these Virginia class members would be differently situated from FDS and from each other based on whether they fell into the business types or particular zip codes identified by Shafik – FDS had failed to show that its claim was typical of putative class members. The court also found that, for the same reasons articulated above, FDS could not demonstrate that it was an adequate class representative.

The trial court then considered FDS's request to cure potential defects in its class definition by narrowing the definition to include only fax recipients located in D.C.⁵ The court noted that this "D.C.-only class definition" had been presented to the court "more than five months after the filing of the [second amended] motion [for class certification] and more than three years after the filing of the complaint," as it was contained in "FDS' third supplemental memorandum, and after three lengthy hearings on class certification." The court found that FDS had submitted an "eleventh-hour fallback position, after years of litigation and ample notice of its originally proposed class definition's deficiencies," and the court "exercise[d] its discretion to reject an attempt to remake a suit more than four years after it began" (citation and internal quotation marks omitted).⁶

B. Trial

The parties proceeded to trial on FDS's individual claim against All Plumbing, i.e., that it had received one unsolicited fax ad promoting All Plumbing's services. The court received written submissions from the parties and held pretrial hearings, in which the parties presented arguments regarding the issue on which the judge had earlier denied summary judgment: whether the fax ad that FDS received was sent (by B2B) "on behalf of" All Plumbing. Judge Motley then presided over a four-day bench trial in late August 2016, at which several people testified, including Shafik and All Plumbing employee Freddy Gonzalez. Several exhibits were admitted into evidence, including Shafik's original written request to B2B to send faxes, two copies of fax ads that were transmitted by B2B advertising All Plumbing's services, and the check from All Plumbing to B2B. As relevant here, the trial court found the following facts:

• In August 2006, a representative of B2B approached Shafik regarding advertising All Plumbing's business by fax.

• On September 19, Shafik provided written instructions to B2B (sent via fax) to send 5,000 faxes to fax numbers falling within thirty zip codes in northern Virginia – zip codes that he had obtained using a hard copy map of northern Virginia (where All Plumbing primarily did business) – at a cost of $350.

• Between September 19 and 21, B2B designed two fax ads for All Plumbing.

• On September 21, apparently in

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