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Bais Yaakov of Spring Valley v. Houghton Mifflin Harcourt Publishers, Inc.

United States District Court, S.D. New York

August 7, 2014

BAIS YAAKOV OF SPRING VALLEY, on behalf of itself and all others similarly situated, Plaintiff,
v.
HOUGHTON MIFFLIN HARCOURT PUBLISHERS, INC., and LAUREL KACZOR, Defendants

For Bais Yaakov of Spring Valley, on behalf of itself and all others similarly situated, Plaintiff: Aytan Yehoshua Bellin, LEAD ATTORNEY, Bellin & Associates, White Plains, NY; Roger Furman, Roger Furman, Esq., Los Angeles, CA.

For Houghton Mifflin Harcourt Publishers, Inc., Laurel Kaczor, Defendants: David Lender, Eric Shaun Hochstadt, LEAD ATTORNEYS, Weil, Gotshal & Manges LLP (NYC), New York, NY.

Page 418

ORDER

Lisa Margaret Smith, United States Magistrate Judge.

Plaintiff, a New York religious corporation, brings this case as a class action, asserting claims against Defendants, a publisher and one of its sales executives, for violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (" TCPA" ), and the New York General Business Law § 396-aa (" GBL" ). Docket # I, Complaint, in its Complaint, Plaintiff alleges that on November 15, 2012, " Defendants, jointly and severally, without Plaintiff's express invitation or permission, arranged for and/or caused a telephone facsimile machine, computer, or other device to send an unsolicited fax advertisement (the 'Fax Advertisement') advertising the commercial availability or quality of any property, goods, or services, to Plaintiff's fax machine . . ." Id. ¶ 10. Plaintiff attaches a copy of the Fax Advertisement to the Complaint as Exhibit A. Plaintiff alleges that it " did not provide Defendants with express invitation or permission to send any fax advertisements. The Fax Advertisement was wholly unsolicited." Id. ¶ 11. Plaintiff further alleges that the " Opt-Out Notice" in the Fax Advertisement violates both the TCPA and GBL in several respects. Id. ¶ ¶ 13-14.

In addition, Plaintiff alleges that

16. Upon information and belief, Defendants have, from four years prior to the date of the filing of the Complaint in this action through the present, either negligently or willfully and/or knowingly sent and/or arranged to be sent well over five thousand (5,000) unsolicited and/or solicited fax advertisements advertising the commercial availability or quality of any property, goods, or services, to fax machines and/or computers belonging to thousands of persons all over the United States. Upon information and belief, those fax advertisements contained a notice identical or substantially similar to the Opt-Out Notice contained in the Fax Advertisement sent to Plaintiff.
17. Upon information and belief, Defendants have, from four years prior to the date of the filing of the Complaint in this action through the present, either negligently or willfully and/or knowingly sent and/or arranged to be sent well over five thousand (5,000) unsolicited fax advertisements advertising the commercial availability or quality of any property, goods, or services, to fax machines and/or computers belonging to thousands of persons throughout the United States. Upon information and belief, those facsimile advertisements contained an opt-out notice identical or substantially similar to the Opt-Out Notice contained in the Fax Advertisement sent to Plaintiff.
18. Upon information and belief, Defendants have, from three years prior to the filing of the Complaint in this action to the present, either negligently or willfully and/or knowingly sent and/or arranged to be sent thousands of unsolicited fax advertisements advertising the commercial availability or quality of any property, goods, or services, to fax machines and/or computers belonging to thousands of persons in New York. Upon information and belief, those facsimile advertisements contained an opt-out notice identical or substantially similar to the Opt-Out Notice contained in the Fax Advertisement sent to Plaintiff.

Id. ¶ ¶ 116-18. In its " Class Allegations," Plaintiff defines the three classes that it seeks to represent as follows:

Page 419

Class A: All persons from four years prior to the date of the filing of the Complaint through the present to whom Defendants sent or caused to be sent at least one solicited or unsolicited facsimile advertisement advertising the commercial availability or quality of any property, goods, or services that contained a notice identical or substantially similar to the Opt-Out Notice in the Fax Advertisement sent to Plaintiff.
Class B: All persons from four years prior to the date of the filing of the Complaint through the present to whom Defendants sent or caused to be sent at least one unsolicited facsimile advertisement advertising the commercial availability or quality of any property, goods, or services that contained a notice identical or substantially similar to the Opt-Out Notice on the Fax Advertisement sent to Plaintiff.
Class C: All persons in the State of New York to whom, from three years prior to the date of the filing of the Complaint to the present, Defendants sent or caused to be sent at least one facsimile advertisement without having obtained express invitation or permission to do so and/or that contained a notice identical or substantially similar to the Opt-Out Notice on the Fax Advertisement sent to Plaintiff.

Id. ¶ 20 (emphases in original).

Currently before the Court is Plaintiff's motion to compel discovery on class issues, Docket # 25.[1] In sum, Plaintiff seeks to compel Defendants and their non-party fax broadcaster, Westfax, Inc., upon which Plaintiff served a subpoena, see Bellin Decl. (Docket # 26) Ex. C, " to provide discovery on all fax ads sent by Defendants during the applicable four-year limitations period that contain an opt-out notice substantially similar to the notice on the fax ad sent to Plaintiff and/or were unsolicited, not just to provide discovery on the single fax ad that Defendant sent to Plaintiff, as Defendants urge." Mem. of Law in Supp. (Docket # 27) at 1 (emphasis in original).

Defendants' opposition to the motion, although broken down into three separate arguments, boils down to just one -- that Plaintiff lacks standing to sue over, and seek discovery about, any other fax advertisements other than the one which it received. Mem. of Law in Opp. (Docket # 29). In making this argument, however, Defendant leapfrogs over Plaintiff's entitlement to discovery in aid of its future motion for class certification and advances arguments more properly addressed in the context of such a motion.[2]

Defendants concede that Plaintiff has Article III standing to sue Defendants in its own right based on its receipt of what Defendants call the " Criterion Fax," which advertises the " Criterion Online Writing Evaluation," and is appended as Exhibit A to the Complaint. See Mem. of Law in Opp. at 1-2 (" Second, Plaintiff's motion conflates its ability to seek class-wide discovery concerning the Criterion Fax that Plaintiff received -- which Defendants have not contested and have already provided discovery on -- with Plaintiff's ability to seek discovery concerning other

Page 420

alleged fax advertisements that Plaintiff does not claim to have received." ) (emphases in original); see also NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145, 158 (2d Cir. 203.2) (finding that the plaintiff had Article III standing to sue, citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992): " a plaintiff must allege (1) an injury in fact (2) fairly traceable to defendants' actions that is (3) redressable by the requested relief to demonstrate Article III standing" ), cert. denied, 133 S.Ct. 1624, 185 L.Ed.2d 576(2013). Plaintiff here has Article III standing to sue Defendants based on allegations that it suffered injury as a result of receiving an unsolicited fax advertisement from Defendants that lacked the opt-out notice required by both the TCP A and the GBL and that its injury is redressable by the award of statutory damages under those two statutes as well as injunctive relief.

However, Article III standing is distinct from the issue of " class standing," i.e., standing to assert claims on behalf of others who received fax advertisements from Defendants which were solicited and/or unsolicited and contained " a notice identical or substantially similar" to the allegedly deficient opt-out notice in the fax advertisement received by Plaintiff. In NECA-IBEW, the Second Circuit held that the plaintiff, a health and welfare fund, had standing to assert class claims concerning certain mortgage-backed securities offerings from the defendants which the plaintiff did not itself purchase. The court held that the plaintiff had both Article III standing and statutory standing to sue the defendants in its own right. NECA-IBEW, 693 F.3d at 158.[3] However, the court explained, " whether NECA has 'class standing' -- that is, standing to assert claims on behalf of purchasers of Certificates from other Offerings, or from different tranches of the same Offering -- does not turn on whether NECA would have statutory or Article III standing to seek recovery for misleading statements in those Certificates' Offering Documents." Id. (emphasis in original). Indeed, the court noted, " [T]he class standing analysis is different[.]" Id.

The Second Circuit further explained, " we have said that, to establish Article III standing in a class action for every named defendant there must be at least one named plaintiff who can assert a claim directly against that defendant, and at that point standing is satisfied and only then will the inquiry shift to a class action analysis." Id. at 159 (internal quotation marks, alterations, and citation omitted). Moreover, " [t]he conclusion that a named plaintiff has a case or controversy does not automatically establish that she [or he] is entitled to litigate the interests of the class she [or he] seeks to represent, but it does shift the focus of examination from the elements of justiciability to the ability of the named representative to 'fairly and adequately protect the interests of the class.' (quoting Fed.R.Civ.P. 23(a))." Id. (alterations omitted) (quoting Sosna v. Iowa, 419 U.S. 393, 403, 95 S.Ct. 553, 42 L.Ed.2d 532 (1975)).[4] After examining Supreme Court case law on the issue of class standing, the Second Circuit concluded

Page 421

that the case law " stand[s] collectively for the proposition that, in a putative class action, a plaintiff has class standing if he [or she] plausibly alleges (1) that he [or she] personally has suffered some actual injury as a result of the putatively illegal conduct of the defendant, and (2) that such conduct implicates the same set of concerns as the conduct alleged to have caused injury to other members of the putative class by the same defendants." Id. at 162 (internal quotation marks, alteration, and citations omitted). The Second Circuit held that the district court had erred in requiring the plaintiff to allege that its injuries were identical to those suffered by the putative class members. Id.[5]

Because Plaintiff in this case has satisfied the requirements for Article III standing, the issue of whether Plaintiff has standing to represent putative class members who received fax advertisements from Defendants other than the Criterion Fax, whether solicited or unsolicited, which also failed to include the opt-out notice required by the TCPA and GBL, is an issue to be decided on a motion for class certification. See, e.g., In re Frito-Lay N. Am., Inc. All Natural Litig., No. 12-MD-2413, 2013 WL 4647512, at *12 (E.D.N.Y. Aug. 29, 2013) (" NBCA-IBEW thus instructs that, because plaintiffs have satisfied the Article III standing inquiry, their ability to represent putative class members who purchased products plaintiffs have not themselves purchased is a question for a class certification motion." ) (collecting cases).[6]

Aside from the issue of standing, Defendants provide no other reason why Plaintiff should be denied the discovery that it seeks through this motion to compel.[7] In deciding the issue of whether Plaintiff is entitled to the discovery which it seeks, the Court finds that such discovery would be relevant to Plaintiff's future motion for class certification. See, e.g., Sirota v. Solitron Devices, Inc., 673 F.2d 566, 571 (2d Cir. 1982) (" [T]here can be no doubt that it is proper for a district court, prior to certification of a class, to allow discovery and to conduct hearings to determine whether the prerequisites of Rule 23 are satisfied." ).[8]

Page 422

Accordingly, Plaintiff's motion is granted.[9]

CONCLUSION

For the foregoing reasons. Plaintiff's motion to compel discovery on class issues, Docket # 25, is granted. Defendants are hereby directed to serve their responses to Plaintiff's discovery requests, and non-party Westfax, Inc. is hereby directed to serve its response to Plaintiff's subpoena, within thirty (30) days of the date of this Order.

Plaintiff is hereby directed to serve a copy of this Order on non-party Westfax, Inc., and shall file appropriate proof of service.

SO ORDERED,


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