Sparkle Hill, Inc. v. Interstate Mat Corp.

• Decision Date: 03 June 2015
• Docket Number: No. 14–1618.,14–1618.
• Parties: SPARKLE HILL, INC. and William Warming, individually and as the representatives of a class of similarly situated persons, Plaintiffs, Appellants, v. INTERSTATE MAT CORPORATION, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

788 F.3d 25

SPARKLE HILL, INC. and William Warming, individually and as the representatives of a class of similarly situated persons, Plaintiffs, Appellants

v.INTERSTATE MAT CORPORATION, Defendant, Appellee.

No. 14–1618.

United States Court of Appeals, First Circuit.

June 3, 2015.

Phillip A. Bock, with whom Tod A. Lewis, Bock & Hatch, LLC, Brian J. Wanca, David M. Oppenheim, Anderson + Wanca, Edward M. Swartz, Alan L. Cantor, and Swartz & Swartz, were on brief, for appellants.

Scott T. Ober, with whom David F. Hassett, Margarita I. Warren, and Hassett & Donnelly, P.C., were on brief, for appellee.

Before TORRUELLA, THOMPSON, and KAYATTA, Circuit Judges.

Opinion

KAYATTA, Circuit Judge.

Nine years ago, plaintiffs Sparkle Hill, Inc., and its vice president and owner William Warming (collectively, “Sparkle Hill”) received an unsolicited advertisement on Sparkle Hill's fax machine from defendant Interstate Mat Corporation (“Interstate”). Not one to act hastily, Sparkle Hill filed suit against Interstate in federal district court almost five years later, alleging a violation of the Telephone Consumer Protection Act (“the Act”), 47 U.S.C. § 227. The Act allows recipients of unsolicited fax advertisements to recover from the sender $500 in statutory damages (trebled for willful and knowing violations) for each fax transmission. Id. § 227(b)(1)(C), (b)(3). Invoking Federal Rule of Civil Procedure 23(b)(3), Sparkle Hill sought to proceed both individually and on behalf of others who also received an identical fax from Interstate in May 2006. Interstate sought summary judgment on the ground that a four-year statute of limitations barred Sparkle Hill's claim. Sparkle Hill filed no opposition, and the district court thereupon entered summary judgment dismissing the case. We now affirm.

I. Background

The parties do not dispute the facts relevant to this appeal. Interstate, a Massachusetts corporation with four employees, paid a marketing firm $496.40 to fax to 10,000 potential customers a one-page advertisement for Interstate's antifatigue floor mats. In May 2006, the marketing firm transmitted Interstate's advertisement to 8,416 recipients. One of those recipients was Sparkle Hill, a New Jersey corporation. Another was West Concord 5–10–1.00 Store, Inc. (“West Concord”), a Massachusetts corporation. Aside from later litigation, Interstate never received any response to its fax advertisement.

More than three and a half years later, on January 28, 2010, West Concord—represented by the same plaintiffs' counsel who now represent Sparkle Hill—filed a class action against Interstate in Massachusetts superior court for sending unsolicited fax advertisements in violation of the Act. See 47 U.S.C. § 227(b)(1)(C), (b)(3). The state court complaint alleged a class of “[a]ll persons” who received a fax advertisement from Interstate.

More than one year after West Concord filed the state class action and nearly five years after the fax transmissions, Sparkle Hill filed this lawsuit in federal district court individually and on behalf of a class of “[a]ll persons” who received a fax from Interstate. Given a putative class of more than 8,000 fax recipients, and statutory damages of $500 for each fax sent, Interstate faced more than $4,000,000 in damages liability, potentially tripled if Interstate was found to have willfully and knowingly violated the Act. Id. § 227(b)(3).

On May 22, 2012, West Concord filed a motion in state court to certify a class of “[a]ll persons in Massachusetts who were successfully sent a facsimile” from Interstate in May 2006. About a month later, Sparkle Hill moved in federal district court to certify a class of “[a]ll persons who were successfully sent a facsimile” from Interstate in May 2006. The federal district court acted first, and certified Sparkle Hill's requested class on December 18, 2012. Sparkle Hill, Inc. v. Interstate Mat Corp., No. 11–cv–10271–RWZ, 2012 WL 6589258, at *5 (D.Mass. Dec. 18, 2012) ; see also Fed.R.Civ.P. 23(b)(3). Several months later, the state trial court refused to certify a class of Massachusetts fax recipients because of the court's doubts about West Concord's ability to represent the class, the lack of predominant common facts, the “enormous contrast between Interstate Mat's potential liability and the actual harm suffered by potential class members,” and the “inescapable [conclusion] that these class actions exist for the benefit of the attorneys who are bringing them and not for the benefit of individuals who are truly aggrieved.” West Concord 5–10–1.00 Store, Inc. v. Interstate Mat Corp., No. 10–00356–C, 2013 WL 988621, at *5–8 (Mass.Super.Ct. Mar. 5, 2013).

In federal court, Sparkle Hill filed a motion for summary judgment on May 28, 2013. Interstate opposed Sparkle Hill's motion by disputing both that the faxes were unsolicited advertisements and also that it willfully and knowingly violated the Act. Interstate also cross-moved for summary judgment, asserting that the applicable four-year statute of limitations barred Sparkle Hill's claim under the Act. See 28 U.S.C. § 1658(a) (federal four-year catch-all statute of limitations). Sparkle Hill filed a reply brief in support of its own motion for summary judgment, but did not address the merits of the statute of limitations defense Interstate had raised. Instead, Sparkle Hill filed a motion to strike (as untimely) Interstate's motion for summary judgment. Eight months later, the district court denied Sparkle Hill's motion to strike. At the same time, the district court gave Sparkle Hill an additional twenty-one days to file an opposition to the merits of Interstate's limitations defense.

The twenty-one days passed with no word from Sparkle Hill.

After waiting two more months, the district court entered summary judgment for Interstate on May 23, 2014. The district court interpreted Sparkle Hill's silence in the face of Interstate's limitations defense as a concession. Because Sparkle Hill “d[id] not respond to [the limitations defense],” the court “allow[ed] [Interstate's] motion for that reason.” Sparkle Hill, Inc. v. Interstate Mat Corp., No. 11–cv–10271–RWZ, 2014 WL 2215756, at *2 (D.Mass. May 23, 2014).

Wisely adding belt to suspenders, see Fed.R.Civ.P. 56(e)(3), the district court also addressed the merits of Interstate's statute of limitations defense and concluded that Sparkle Hill's claim under the Act was time-barred.¹ Id. at *3–4. Sparkle Hill received the fax in May 2006 but did not file suit until February 2011, well after the four-year limitations period the district court found applied.² The district court considered whether West Concord's state court class action tolled the statute of limitations for Sparkle Hill's subsequent class action. See American Pipe & Constr. Co. v. Utah, 414 U.S. 538, 553, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974) (“[T]he commencement of the original class suit tolls the running of the statute for all purported members of the class who make timely motions to intervene after the court has found the suit inappropriate for class action status.”); Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 353–54, 103 S.Ct. 2392, 76 L.Ed.2d 628 (1983) (extending American Pipe tolling to class members who file their own suits after the denial of class certification). The district court concluded that our precedent foreclosed the application of American Pipe tolling to sequential class actions, as opposed to class members' individual actions. See Basch v. Ground Round, Inc., 139 F.3d 6, 11 (1st Cir.1998) (“Plaintiffs may not stack one class action on top of another and continue to toll the statute of limitations indefinitely.”).

Sparkle Hill then filed a motion under Federal Rule of Civil Procedure 60(b)(6) to “vacate” the district court's order and “clarify the Memorandum Opinion ... to decertify the class.” The Rule 60(b)(6) motion did not contest the district court's conclusion that Sparkle Hill could not stack one class action on top of another to extend the limitations period. Nor did it challenge the district court's reliance on Sparkle Hill's failure to respond as a basis for granting summary judgment. Sparkle Hill instead advanced a limited argument that even if American Pipe tolling did not apply to its class action, tolling might still apply to its and the other class members' individual claims. Therefore, Sparkle Hill argued, the district court should have decertified the class and allowed class members to pursue individual tolling arguments, instead of entering judgment for Interstate. The district court denied Sparkle Hill's motion without explanation.

Sparkle Hill timely appealed. In its opening brief on appeal Sparkle Hill offers no argument at all for finding error in the district court's decision to hold Sparkle Hill accountable for its lack of opposition to Interstate's limitations defense. Instead, Sparkle Hill's brief argues the merits of the limitations defense as applied both to the class and to Sparkle Hill. After Interstate in its brief blew the whistle on Sparkle Hill's failure to challenge the district court's reliance on its procedural defalcation, Sparkle Hill in its reply brief made two new points: (1) because the burden of proving an affirmative limitations defense rested with Interstate, Sparkle Hill's failure to oppose the motion was of no moment; and (2) any waiver was harmless, and should fit within an exception to the normal rules concerning waiver.³

II. Analysis

We have seen this story before. A district court dismisses a claim for perceived procedural defalcations; the losing party then files a brief on appeal arguing the substantive merits of its claim, saving for its reply brief any argument challenging the actual, procedural basis for the district court's ruling. See, e.g., Díaz–Colón v. Fuentes–Agostini, No. 13–2340, 786 F.3d 144, 148–51, 2015 WL 2345496, at *3–4 (1st Cir. May 18, 2015). Our precedent is clear: we do not consider arguments for reversing a decision of a district...