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Abante Rooter and Plumbing, Inc. v. Alarm.Com Inc.

United States District Court, N.D. California

May 5, 2017

Abante Rooter and Plumbing, Inc., Mark Hankins, and Philip K. Charvat, individually and on behalf of all others similarly situated Plaintiffs,
v.
Alarm.com Incorporated and Alararm.com Holdings, Inc., Defendants.

          ORDERS GRANTING PLAINTIFFS' MOTION FOR CLASS CERTIFICATION AS MODIFIED BY THE COURT; GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO STRIKE

          YVONNE GONZALEZ ROGERS UNITED STATES DISTRICT COURT JUDGE.

         Plaintiffs Abante Rooter and Plumbing, Inc., Mark Hankins, and Philip K. Charvat bring this punitive class action against defendants Alarm.com, Inc. and Alarm.com Holdings, Inc. (collectively “Alarm.com”) alleging four counts; namely violations of the Telephone Consumer Protection Act (“TCPA”) for calls made to (i) cellular telephones and (ii) residential telephone lines; and violations of 47 C.F.R. Section 64.1200(c) and 47 U.S.C. Section 227(c)(5) for (iii) failure to follow procedures for maintaining a list of persons who request not to receive telemarketing calls; and (iv) for calls made to members of the National Do-Not-Call Registry (“DNC registry”).

         Now before the Court is plaintiffs' motion for class certification. (Dkt. No. 85, “Motion”).[1] Plaintiffs seek to represent three damages classes pursuant to Rule 23(b)(3). Specifically, plaintiffs define the classes as follows:[2]

(1) Cell Phone Class:
All persons in the United States to whom: (a) Alliance or its agents, on Defendants' behalf, instituted one or more non-emergency telephone calls; (b) promoting Defendants' goods or services; (c) to a recipient's cellular telephone number; (d) through the use of an automatic telephone dialing system or an artificial or prerecorded voice; (e) at any time since October 15, 2013.
(2) Residential Class:
All persons in the United States to whom: (a) Alliance or its agents, on Defendants' behalf, initiated one or more non-emergency telephone calls; (b) promoting Defendants' goods or services; (c) to a recipient's residential telephone line; (d) through the use of an artificial or prerecorded voice; (e) at any time since October 15, 2013.
(3) National Do-Not-Call Class (“DNC Class”):
All persons in the United States who: (a) received more than one call, made by Alliance on Defendants' behalf; (b) promoting Defendants' goods or services; (c) in a twelve-month period; (d) on their cellular telephone line or residential telephone line; (e) whose cellular or residential telephone line number(s) appear on the National Do-Not-Call Registry; (f) at any time since December 30, 2010.

         On March 28, 2017, Alarm.com filed motions to strike the expert reports of (i) Anya Verkhovakaya and (ii) Jeffery Hansen and (iii) the declaration of Rachel Hoover. (Dkt. Nos. 98, 100, 102.)

         Having carefully considered the papers submitted, the pleadings in this action, the admissible evidence, and oral argument held on May 5, 2017, the Court Orders as follows: the Court Grants As Modified By The Court plaintiffs' motion to certify the three proposed classes, as described herein.[3] The Court Grants defendants' motion to strike the expert report of Jeffery Hansen. The Court Denies defendants' motions to strike the expert report of Anya Verkovskaya and the declaration of Rachel Hoover.

         I. Relevant Background

         Plaintiffs are consumers and a small business that allegedly received telemarketing calls from Alliance or its agents, allegedly on behalf of Alarm.com. (Dkt. No. 1, Class Action Complaint (“Complaint”) at ¶ 2.) Plaintiffs allege that Alliance or its agents made these calls to (i) cell phone numbers using an automatic dialing system or an artificial or prerecorded voice; (ii) residential numbers using an artificial or prerecorded voice, and (iii) numbers on the DNC registry. (Id. at ¶¶ 157-164, 169-174.)

         Alarm.com is a publicly traded company incorporated in Delaware, with its principal place of business in Virginia. (Id. at ¶ 9.) It sells cloud-based home automation, monitoring and security services. (Id. at ¶¶ 1, 21.) Alarm.com uses a network of 6, 000 third-party security system dealers and service providers, including Alliance Security (“Alliance”), to sell subscriptions to its services.[4](Id. at ¶ 37.) Alliance pays Alarm.com an “activation fee” and “monthly service charge” for each Alarm.com subscription sold. (Dkt No. 86, Declaration of Beth E. Terrell in Support of Motion to Certify Class (“Terrell Decl.”), Exh. 1 at 19:6-20:8.)

         Alliance sells, installs, and services fully-integrated security systems. (Dkt. No. 94, Declaration of Matthew Pitts (“Pitts Decl.”) at ¶ 8.) To provide these integrated systems, Alliance contracts with companies that manufacture hardware components (e.g. Honeywell), develop the “necessary software system for components to communicate part of an integrated system” (e.g. Alarm.com), and monitor the alarm systems and contract emergency services when the alarm is triggered (e.g. Monitronics). (Dkt. No. 95, Declaration of Anne Ferguson (“Ferguson Decl.”) at ¶¶ 3, 6.) Alliance thus sells to consumers an integrated system of Alarm.com and non-Alarm.com products and services. In support of its sales efforts, Alliance uses Nationwide Alarms, LLC (“Nationwide”) to conduct telemarketing. (Complaint at ¶¶ 37, 83.)

         Alarm.com provides its dealers with resources and support. It encourages dealers to use the Alarm.com logo and to include the slogan, “powered by Alarm.com, ” on their websites. (Terrell Decl., Ex. 3 at 92:16-94:9.) Since at least 2012, Alarm.com has also drafted scripts for dealers to use when making telephone calls to potential customers. (Id. at 95:20-97:9.) Its “Premier Partner Program” rewards high-performing dealers by providing them with additional sales and marketing tools, a marketing allowance, and an opportunity to participate in Alarm.com's Customer Lead Service (“CLS”) program. (Terrell Decl., Ex. 2 at 10834-35.) Alarm.com provides these dealers with leads on potential customers that inquire about Alarm.com's products and services through its website or a customer service representative. (Terrell Decl., Ex. 3 at 31:18-32:5.) These potential customers' numbers are compiled in Alarrm.com's CLS database. Alarm.com highlights its strong relationship with dealers by promoting them on its website. It further supports dealers though a “partner portal” that enables dealers to create customer accounts, access subscriber information, and receive support, documentation, and training. (Terrell Decl., Ex. 4 at 16671.)

         II. Legal Framework

         A. Daubert Standard for Expert Opinions

         Rule 702 permits opinion testimony by an expert as long as the witness is qualified and their opinion is relevant and reliable. Fed.R.Evid. 702. An expert witness may be qualified by “knowledge, skill, experience, training, or education.” Fed.R.Evid. 702.

         At the class certification stage, courts analyze challenges to expert testimony under the standards set forth in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). See Ellis, 657 F.3d at 982. “[A]t this early stage, robust gatekeeping of expert evidence is not required; rather, the court should ask only if expert evidence is useful in evaluating whether class certification requirements have been met.” Culley v. Lincare, Inc., No. 2:15-CV-00081-MCE-CMK, 2016 WL 4208567, at *1 (E.D. Cal. 2016) (quoting Tait v. BSH Home Appliances Corp., 289 F.R.D. 466, 492-93 (C.D. Cal. 2012). The trial judge has discretion to determine reasonable measures of reliability. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 153 (1999).

         The proponent of expert testimony has the burden of proving admissibility in accordance with Rule 702. Fed.R.Evid. 702, Advisory Committee Notes (2000 amendments). An expert should be permitted to testify if the proponent demonstrates that: (i) the expert is qualified; (ii) the evidence is relevant to the suit; and (iii) the evidence is reliable. See Thompson v. Whirlpool Corp., No. C06-1804-JCC, 2008 WL 2063549, at *3 (W.D. Wash. 2008) (citing Daubert, 509 U.S. at 589-90).

         B. Class Certification

         Under Federal Rule of Civil Procedure 23(a), the Court may certify a class only where “(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.” Fed.R.Civ.P. 23(a). Courts refer to these four requirements as “numerosity, commonality, typicality[, ] and adequacy of representation.” Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012).

         Once the threshold requirements of Rule 23(a) are met, plaintiffs must then show “through evidentiary proof” that a class is appropriate for certification under one of the provisions in Rule 23(b). Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1432 (2013). Here, plaintiffs seek certification under Rule 23(b)(3), which requires plaintiffs to establish “that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3). The predominance inquiry focuses on “whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1022 (9th Cir. 1998) (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623 (1997)).

         “[A] court's class-certification analysis must be ‘rigorous' and may ‘entail some overlap with the merits of the plaintiff's underlying claim.'” Amgen, Inc. v. Conn. Ret. Plans & Trust Funds, 133 S.Ct. 1184, 1194 (2013) (quoting Wal-Mart, 564 U.S. at 351); see also Mazza, 666 F.3d at 588. The Court considers the merits to the extent they overlap with the Rule 23 requirements. Ellis, 657 F.3d at 983. The Court must resolve factual disputes as “necessary to determine whether there was a common pattern and practice that could affect the class as a whole.” Id. (Emphasis in original.) “When resolving such factual disputes in the context of a motion for class certification, district courts must consider ‘the persuasiveness of the evidence presented.'” Aburto v. Verizon Cal., Inc., No. 11-CV-03683, 2012 WL 10381, at *2 (C.D. Cal. 2012) (quoting Ellis, 657 F.3d at 982), abrogated on other grounds as recognized by Shiferaw v. Sunrise Sen. Living Mgmt., Inc., No. 13-CV-2171, 2014 WL 12585796, at * 24n. 16 (C.D. Cal. June 11, 2014). “A party seeking class certification must affirmatively demonstrate [its] compliance with the Rule.” Wal-Mart, 564 U.S. at 350. Ultimately, the Court exercises its discretion to determine whether a class should be certified. Califano v. Yamasaki, 442 U.S. 682, 703 (1979).

         III. MOTIONS TO STRIKE

         The Court begins it analysis with the motions to strike, as defendants' arguments on the class certification motion stem, in part, from these challenges.

         A. Expert Report of ...


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