United States District Court, S.D. California
PAUL STEMPLE, Individually and On Behalf of All Others Similarly Situated, Plaintiff,
QC HOLDINGS, INC., Defendant.
ORDER: (1) GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR CLASS CERTIFICATION (ECF No. 39); (2) DENYING DEFENDANT'S EX PARTE MOTION TO STRIKE PLAINTIFF'S NOTICE OF ERRATA (ECF NO. 47); AND (3) DENYING DEFENDANT'S MOTION TO STRIKE THE REPORT AND TESTIMONY OF ILYA EVDOKIMOV (ECF NO. 51).
CYNTHIA BASHANT, District Judge.
Presently before the Court is a motion to certify a Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq. ("TCPA"), class action filed by Plaintiff Paul Stemple ("Plaintiff"). (ECF No. 39.) Defendant QC Holdings, Inc. ("Defendant") opposes certification primarily arguing that individualized issues pertaining to prior express consent defeat the "commonality" requirement in Federal Rule of Civil Procedure 23(a) and the "predominance" requirement in Rule 23(b). (ECF No. 54.) In addition, Defendant also argues: (1) the proposed class is not ascertainable in part because cell phone numbers could have changed over time, (2) class action is not a superior method of adjudication because the plan for noticing the class is unworkable, (3) Plaintiff cannot adequately represent the class because he has a felony conviction, and (4) Plaintiff's request for hybrid certification under both Rule 23(b)(2) and Rule 23(b)(3) is improper. In his reply, Plaintiff suggests that the class definition could be amended by the court sua sponte to exclude any prior loan applicants, thereby negating Defendant's main argument regarding prior express consent.
Finally, Defendant moves to strike Plaintiff's Errata ostensibly amending Plaintiff's expert's testimony as an improper Notice of Errata (ECF Nos. 46, 47) and moves to strike all of Plaintiff's expert's testimony as unreliable under Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 597 (1993) (ECF No. 51).
The Court finds this motion suitable for determination on the papers submitted and without oral argument. See Civ. L.R. 7.1(d)(1). For the reasons set forth below, this Court GRANTS IN PART AND DENIES IN PART Plaintiff's Motion for Class Certification (ECF No. 39). The Court GRANTS Plaintiff's Motion for Class Certification under Rule 23(b)(3) with the Court's modification to the class definition as discussed below, and DENIES Plaintiff's Motion for Class Certification under Rule 23(b)(2). The Court further DENIES Defendant's Ex Parte Motion to Strike Plaintiff's Notice of Errata and Declaration of Ilya Evdokimov in support thereof (ECF No. 47) and DENIES Defendant's Motion to Strike the Report and Testimony of Ilya Evdokimov in support of Plaintiff's Motion for Class Certification (ECF No. 51).
I. STATEMENT OF FACTS
Defendant QC Holdings, Inc. is a company that provides short-term (payday) loans to applicants. (ECF No. 1 at ¶ 5; ECF No. 54 at p. 4.) Applicants for a short-term loan are required to fill out a loan application. (ECF No. 39 at Exh. F; ECF No. 54 at p. 4.) As part of the loan application, applicants are required to provide contact telephone numbers and give express consent to be contacted at these telephone numbers, cellular or not, via an automated telephone dialing system ("ATDS") or not, for purposes of debt collection. (ECF No. 39 at Exh. F; ECF No. 54 at p. 4, Exh. D; ECF No. 72 at Exhs. B, C (sealed).) Applicants are also required to give "Employment" information, including Employer's name, telephone number and address, and "Contacts" information, including but not limited to, current landlord and "nearest relative not living with you" together with telephone contact information for these individuals. (ECF No. 39 at Exh. F; ECF No. 54 at p. 4, Exh. D; ECF No. 72 at Exhs. B, C (sealed).)
One of the applicants for such a short-term loan provided Plaintiff's name and cellular telephone number as his Employer under the Employment section of his loan application. (ECF No. 39 at p. 3; ECF No. 39-16; ECF No. 54 at pp. 5-6; ECF No. 72-3 (sealed).) Plaintiff was not an applicant for a loan himself (ECF No. 54 at p. 1) and alleges he never provided his telephone number to Defendant nor gave any consent to Defendant to be contacted on his telephone. (ECF No. 1 at ¶¶ 9, 10, 18.) Nonetheless, according to Plaintiff, when attempting to collect a debt from this applicant, Defendant repeatedly contacted Plaintiff via an ATDS in violation of the TCPA. ( Id. at ¶ 12.)
A. Identification of the Class
In his original moving papers, Plaintiff proposes that the class be defined as follows:
All persons whose 10-digit cellular telephone numbers with a California area code were listed by an account holder in the Employment and/or Contacts fields of a California customer loan application produced to [Defendant], which were called by [Defendant] using an [ATDS] and/or an artificial or prerecorded voice for the purpose of collecting or attempting to collect an alleged debt from the account holder, between August 13, 2008 and August 13, 2012.
(ECF No. 39-1 at p. 4.) Plaintiff proposes identifying this class by extracting all of the ten-digit cellular telephone numbers listed in the Employer or Contact sections of the California loan applications produced in discovery and then cross-referencing this list with the list of California cellular telephone numbers identified by Defendant as being called for debt collection between August 2008 and August 2012. ( Id. at pp. 9-11.) In other words, any owner of a California cellular telephone number listed by a loan applicant in the Employer or Contact sections and then called by Defendant using an ATDS would be a member of the class.
In opposition, Defendant argues that this proposed class might include individuals who are also applicants and who had thus provided express prior consent to be contacted for purposes of debt collection. (ECF No. 54 at pp. 11-14.) Defendant identifies two potential groups this might encompass. First, Defendant points to examples where applicants had put the same numbers in the Personal section of the application as they had in the Employer section. ( Id. at p. 11-12.) These applicants expressly consented to be contacted on their personal cell phone, even though they later repeated the number in the Employer section. (ECF Nos. 54 and 72 at Exhs. I-N.) Second, Defendant argues there might be individuals who are applicants but are also listed as an Employer or Contact on another applicant's application. (ECF No. 54 at pp. 13-14.) Defendant points to two examples where an applicant is also a relative contact in the Contact section of another loan applicant. (ECF Nos. 54 and 72 at Exhs. B and P, Q and R.) Finally, Defendant argues that individuals can, under certain circumstances, provide prior express consent to be called at a telephone number other than their own, so the individual factual circumstances surrounding each applicant's relationship with the third party is necessary to determine consent. (ECF No. 54 at pp. 14-15.)
In response, Plaintiff suggests that the proposed class definition could be modified by the Court sua sponte to exclude calls to Defendant's customers. (ECF No. 61 at p. 2, n. 2.)
B. Expert Testimony of Ilya Evdokimov
In support of his Motion for Class Certification, Plaintiff retained Ilya Evdokimov, a contractor with Electronic & Speech Discovery, Inc. to extract cellular telephone numbers from the loan applications and then, using computer software, to compare them to the cellular telephone numbers called by Defendant to collect debts. (ECF No. 39-1 at pp. 10-11; ECF No. 39-13.)
In a Declaration attached to Plaintiff's Motion for Class Certification, Mr. Evdokimov testified that the numbers in the Employer and Contact sections of the loan applications were manually entered into computers and then run against the numbers provided by Defendant as those numbers called by an ATDS for debt collection. (ECF No. 39-13 ("Evdokimov Decl.") at ¶¶ 3-5, 7; ECF No. 39-2 at ¶ 7-12.) Mr. Evdokimov testified the comparison resulted in 14, 635 matches. (Evdokimov Decl. at ¶ 7.)
After this Declaration was filed, Plaintiff filed a Notice of Errata. (ECF No. 46.) Attached to the Notice of Errata was a Declaration from Mr. Evdokimov stating that in the process of testifying he had come to realize that data had been inputted incorrectly in that only cellular telephone numbers from the "Contacts" section of the loan applications had been manually entered, not the "Employment" section. (ECF No. 46-1 at ¶ 3.) He corrected the problem and had the "Employment" section numbers added to the comparison. ( Id. ) The resulting matches were increased to 20, 075. ( Id. )
After receiving Defendant's Opposition to the Motion for Class Certification, objecting that this process could include Defendant's customers, Plaintiff then requested that Mr. Evdokimov take the above revised matches and remove any cellular telephone numbers of applicants that were listed in the "Personal" section of the applications. (ECF No. 61 at p. 2; ECF No. 61-1 ("Evdokimov Reply Decl.".) According to Plaintiff, this would modify the class to avoid Defendant's concern that the class may include applicants who had given express prior consent to be contacted. (ECF No. 61 at p. 2, n. 2.) When Mr. Evdokimov made this modification, he testified he obtained 6, 387 matches. (Evdokimov Reply Decl. at ¶ 9).
II. STATEMENT OF LAW
A. Certification of Class Under Federal Rule of Civil Procedure 23
"The class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.'" Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2550 (2011) (quoting Califano v. Yamasaki, 442 U.S. 682, 700-01 (1979)). In order to justify a departure from the usual rule, a party seeking class certification must satisfy all of the requirements under Rule 23(a) of the Federal Rules of Civil Procedure, and at least one of the categories in Rule 23(b). Wang v. Chinese Daily News, Inc., 737 F.3d 538, 542 (9th Cir. 2013); United Steel, Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int'l Union v. ConocoPhillips Co., 593 F.3d 802, 806 (9th Cir. 2010). A class may be certified only "if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied." Gen. Tel. Co. of the S.W. v. Falcon, 457 U.S. 147, 161 (1982); Ellis v. Costco Wholesale Corp., 657 F.3d 970, 980 (9th Cir. 2011). The merits of the class members' substantive claims may be highly relevant to determining whether to certify a class and "a district court must consider the merits' if they overlap with Rule 23(a)'s requirements." Wang, 737 F.3d at 433 (quoting Ellis, 657 F.3d at 983). "The same analytical principles govern Rule 23(b)." Comcast v. Behrend, 133 S.Ct. 1426, 1432 (2013). The burden is on the plaintiff to establish that the Rule 23(a) and Rule 23(b) requirements have been met. Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186 (9th Cir. 2001).
As a preliminary matter, "and apart from the explicit requirements of Rule 23(a), the party seeking class certification must demonstrate that an identifiable and ascertainable class exists." Mazur v. eBay Inc., 257 F.R.D. 563, 567 (N.D. Cal. 2009). Although the exact identities of the class members need not be specified at the class certification stage, "the proposed class must be sufficiently definite in order to demonstrate that a class actually exists." Oshana v. Coca-Cola Bottling Co., 225 F.R.D. 575, 580 (N.D. Ill. 2005); see also Mazur, 257 F.R.D. at 567; O'Connor v. Boeing N. Am., Inc., 184 F.R.D. 311, 319 (C.D. Cal. 1998) ("[A] class will be found to exist if the description of the class is definite enough so that it is administratively feasible for the court to ascertain whether an individual is a member."). Once a plaintiff has established that a class is actually ascertainable, then it must show that the Rule 23 requirements have been met. Id.
"Rule 23(a) provides four prerequisites that must be satisfied for class certification: (1) the class must be so numerous that joinder of all members is impracticable [numerosity']; (2) questions of law or fact must exist that are common to the class [commonality']; (3) the claims or defenses of the representative parties must be typical of the claims or defenses of the class [typicality']; and (4) the representative parties must fairly and adequately protect the interests of the class [adequacy']." Otsuka v. Polo Ralph Lauren Corp., 251 F.R.D. 439, 443 (N.D. Cal. 2008) (citing Fed.R.Civ.P. 23(a)).
"A plaintiff must also establish that one or more of the grounds for maintaining the suit are met under Rule 23(b), including: (1) that there is a risk of substantial prejudice from separate actions; (2) that declaratory or injunctive relief benefitting the class as a whole would be appropriate; or (3) that common questions of law or fact predominate and the class action is superior to other available methods of adjudication." Otsuka, 251 F.R.D. at ...