Melito v. Experian Mktg. Solutions, Inc.

• Citation: 923 F.3d 85
• Decision Date: 30 April 2019
• Docket Number: 17-3279-cv (Con),August Term, 2018,Docket Nos. 17-3277-cv (L)
• Parties: Christina MELITO, individually and on behalf of all others similarly situated, Ryan Metzger, Alison Pierce, Gene Ellis, Walter Wood, Christopher Legg, on behalf of himself and all others similarly situated, Plaintiffs–Appellees, American Eagle Outfitters, Inc., a Delaware Corporation, AEO Management Co, a Delaware Corporation, Defendants–Third-Party-Plaintiffs–Appellees, v. EXPERIAN MARKETING SOLUTIONS, INC., Consolidated Defendant–Third-Party-Defendant–Appellant, Kara Bowes, Objector–Appellant, eBay Enterprise, Inc., fka eBay Enterprise Marketing Solutions, Inc., Defendant.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

923 F.3d 85

Christina MELITO, individually and on behalf of all others similarly situated, Ryan Metzger, Alison Pierce, Gene Ellis, Walter Wood, Christopher Legg, on behalf of himself and all others similarly situated, Plaintiffs–Appellees,American Eagle Outfitters, Inc., a Delaware Corporation, AEO Management Co, a Delaware Corporation, Defendants–Third-Party-Plaintiffs–Appellees,

v. EXPERIAN MARKETING SOLUTIONS, INC., Consolidated Defendant–Third-Party-Defendant–Appellant,Kara Bowes, Objector–Appellant,eBay Enterprise, Inc., fka eBay Enterprise Marketing Solutions, Inc., Defendant.

Docket Nos. 17-3277-cv (L)

17-3279-cv (Con)

August Term, 2018

United States Court of Appeals, Second Circuit.

Argued: November 5, 2018

Decided: April 30, 2019

Meir Feder, Jones Day, New York, NY (John A. Vogt, Jones Day, Irvine CA, on the brief), for Consolidated Defendant–Third-Party-Defendant–Appellant Experian Marketing Solutions, Inc.

Eric Alan Isaacson, Law Office of Eric Alan Isaacson, La Jolla, CA (C. Benjamin Nutley, Pasadena, CA, on the brief), for Objector–Appellant Kara Bowes.

Beth E. Terrell, Terrell Marshall Law Group PLLC, Seattle, WA (Joseph A. Fitapelli, Fitapelli & Schaffer, LLP, New York, NY, on the brief), for Plaintiffs–Appellees.

Before: Hall and Lynch, Circuit Judges, and Engelmayer, District Judge.^*

Hall, Circuit Judge:

Plaintiffs each received unsolicited spam text messages sent from or on behalf of American Eagle Outfitters ("AEO"). They then filed a putative class-action lawsuit against AEO, claiming that these text messages were sent in violation of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227. Plaintiffs alleged no injury other than the receipt of the unwanted texts.

Plaintiffs and AEO agreed to settle the class action and moved in district court for approval of the settlement and certification of the settlement class. Third-party defendant Experian Marketing Solutions, Inc. ("Experian") objected to certification, arguing that Plaintiffs lacked standing under Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016). Class member Kara Bowes objected to the class settlement as unfair. The district court (Caproni, J. ) approved the settlement and certified the settlement class, and Experian and Bowes appeal.

The principal question we are tasked with deciding is whether Plaintiffs' receipt of the unsolicited text messages, sans any other injury, is sufficient to demonstrate injury-in-fact. We hold that it is. First, the nuisance and privacy invasion attendant on spam texts are the very harms with which Congress was concerned when enacting the TCPA. Second, history confirms that causes of action to remedy such injuries were traditionally regarded as providing bases for lawsuits in English or American courts. Plaintiffs were therefore not required to demonstrate any additional harm. Having concluded that Plaintiffs have satisfied Article III's standing requirement, we dismiss Experian's appeal for lack of appellate jurisdiction and affirm the judgment of the district court with respect to Bowes's appeal.

I.

"In the interest of reducing the volume of unwanted telemarketing calls, the Telephone Consumer Protection Act, in relevant part, makes it ‘unlawful ... to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system [ ("ATDS") ] ... to any telephone number assigned to a ... cellular telephone service, ... unless such call is made solely to collect a debt owed to or guaranteed by the United States.’ " King v. Time Warner Cable Inc. , 894 F.3d 473, 474 (2d Cir. 2018) (quoting 47 U.S.C. § 227(b)(1)(A)(iii) ). In enacting the Act, Congress found that "[u]nrestricted telemarketing ... can be an intrusive invasion of privacy" and that "[b]anning such automated or prerecorded telephone calls to the home, except when the receiving party consents to receiving the call[,] ... is the only effective means of protecting telephone consumers from this nuisance and privacy invasion." Telephone Consumer Protection Act of 1991, Pub. L. No. 102-243, §§ 5, 12, 105 Stat. 2394 (1991).

The TCPA delegated the authority to implement these requirements to the Federal Communications Commission (the "FCC"). See 47 U.S.C. § 227(b)(2). Although text messages are not explicitly covered under the TCPA, the FCC has interpreted the Act to cover them. See In the Matter of Rules and Regulations Implementing the Tel. Consumer Prot. Act of 1991 , 7 FCC Rcd. 14014, 14115 (July 3, 2003); see also Campbell-Ewald Co. v. Gomez , ––– U.S. ––––, 136 S.Ct. 663, 667, 193 L.Ed.2d 571 (2016) ("A text message to a cellular telephone, it is undisputed, qualifies as a ‘call’ within the compass of § 227(b)(1)(A)(iii).").¹

The TCPA provides for statutory damages of $ 500 per violation, which can be trebled "[i]f the court finds that the defendant willfully or knowingly violated" the statute. 47 U.S.C. § 227(b)(1)(A)(iii).

A.

Plaintiffs Christina Melito, Christopher Legg, Alison Pierce, and Walter Wood (collectively, "Plaintiffs") brought a putative class-action lawsuit against American Eagle Outfitters, AEO Management Co. (collectively, "AEO"), and Experian Marketing Solutions, Inc. ("Experian"). Plaintiffs alleged that Experian, acting on behalf of AEO, sent spam text messages to their phones using an ATDS platform designed by nonparty Archer USA, Inc. Plaintiffs alleged only that they received the unconsented-to messages in violation of the TCPA.

The district court dismissed the claims against Experian, and AEO filed a third-party complaint against Experian, claiming contractual indemnity, breach of contract, common-law indemnity, and negligence based on Experian's handling of the alleged spam text messages.

Experian moved to dismiss the class-action complaint for lack of subject-matter jurisdiction. According to Experian, all of AEO's claims against it were derivative of Plaintiffs' claims against AEO. Therefore, Experian argued, pursuant to Federal Rule of Civil Procedure 14(a)(2)(c), it could assert any defense that AEO would have had against the Plaintiffs' claims. Experian asserted that Plaintiffs lacked standing under Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016), because they alleged only a bare statutory violation and statutory damages cannot substitute for concrete harm. While Experian's motion was pending, Plaintiffs and AEO filed a notice of conditional settlement. The district court then denied Experian's motion as moot.

B.

Plaintiffs moved for preliminary approval of the class settlement and conditional certification of the settlement class. The district court granted the motion and conditionally certified the following class:

The approximate[ly] 618,289 persons who, on or after April 8, 2010 and through and including the date of entry of the Preliminary Approval Order, received a text message from AEO or any entity acting on its behalf, to her or her [sic] unique cellular telephone number, and who did not provide AEO with appropriate consent under the TCPA. Excluded from the Settlement Class are the Judge to whom the Action is assigned and any member of the Court's staff and immediate family, and all persons who are validly excluded from the Settlement Class.

Sp. App. 3. The court appointed a claims administrator who compiled a list of class members consisting of 618,301 unique phone numbers.² The administrator provided class notice via email or postcard to those members for whom he had addresses and posted notice regarding the class settlement on a website. The notices explained the nature of the lawsuit. They informed the recipients that AEO had agreed to pay a total of $ 14,500,000 and explained that, after attorneys' fees, costs, and potential service awards, each claimant could expect to receive between $ 142 and $ 285. Further, the notices informed the class members that they could withdraw or object and explained how to do so.

As relevant here, two objections were received. Experian objected to class certification, arguing that Plaintiffs failed adequately to allege injury, not all class members may have received text messages from an ATDS, and the class was unascertainable. Kara Bowes, a class member, objected to the reasonableness of the settlement, arguing that the award was too low, the notice was inadequate, and incentive awards were inappropriate.

C.

After a final approval hearing, the district court entered a final order approving the settlement. The court explained its reasoning in a subsequent memorandum. It first concluded, for the following reasons, that Plaintiffs did not lack standing. Under Spokeo , "alleging only a statutory violation, without alleging any additional harm beyond the one Congress has identified could be sufficient to establish a concrete injury," and "unwanted and unauthorized telephone contact by an automated system is precisely the harm that Congress was trying to avoid when it enacted the TCPA." Sp. App. 32 (internal quotation marks, citation, and alteration omitted).

The court then went on to conclude that the requirements of Federal Rule of Civil Procedure 23(a) and (b)(3) were satisfied. With respect to Experian's ascertainability objection, the court ruled that Experian lacked standing to object because it was a nonsettling third-party defendant. Moreover, even if Experian did have standing to object, its objection was meritless because the settling class was clearly ascertainable.

Regarding the settlement, the district court determined that it was fair, adequate, and reasonable. In doing so, it analyzed the nine factors under City of Detroit v. Grinnell Corp. , 495 F.2d 448, 463 (2d Cir. 1974), and concluded that all but one (the ability of AEO to withstand a greater judgment) weighed in favor of approving the settlement.³ The district court overruled Bowes's objection to the adequacy of the settlement amount, noting that she overlooked...