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Court of Appeals of Georgia. 

 McGARRY

v.

CINGULAR WIRELESS, LLC.

Case No. A03A2575

Decided March 24, 2004

  NOTICE: On April 13, 2004, the Georgia Court of Appeals withdrew this opinion, and issued a revised decision.

DISPOSITION:

Affirmed

SYNOPSIS:

Plaintiff brought claims against cellular provider for unsolicited faxes sent by its reseller and moved to certify a class. The court denied class certification on grounds that the plaintiff failed to demonstrate she was a member of the class so adequacy of representation was not satisfied, and that Georgia was the improper forum to bring the case, which sought to certify a class of florida consumers who received faxes in Florida on behalf of defendant. Plaintiff appealed. The Court of Appeals affirmed.

SUBSEQUENT HISTORY:

none

PRIOR HISTORY:

none

CITED BY:

none

APPEARANCES:

Corey Holzer, Michael Fistel, Christi Cannon, for appellant.

Stephen Schaetzel, James Bogan, Olivia Baratta, Curtis Garrett, for appellee.

JUDGES:

Adams, J; Andrews, P. J., and Barnes, J.

HOLDINGS:

Vicarious Liability

To establish liability of defendant advertiser, plaintiff was required to prove that the facsimile she received was sent at the direction of the advertiser’s agent.

EBR (fax)

At the time the facsimiles in this case were sent, the Federal Communications Commission, the agency charged with enforcing the TCPA, expressly recognized an "established business relationship" defense to TCPA claims.

EBR (fax)

While the FCC regulations do not provide an express "established business relationship" exemption to unsolicited facsimile advertisements, the FCC made it clear that during the pertinent period, the agency considered the existence of a business relationship between the sender and the recipient to provide prior consent or invitation to receive facsimile advertisements.

OPINION:

   Jennifer McGarry appeals from the trial court’s denial of her motion for class certification in the lawsuit she filed against Cingular Wireless, LLC, alleging violations of the Telephone Consumer Protection Act of 1991, 47 U.S.C. § 227. McGarry sought to certify a class of individuals who had received unsolicited faxes advertising Cingular’s cellular telephone services.

    Cingular is a limited liability company headquartered in Atlanta. McGarry is a Cingular customer residing in Palm Beach County, Florida. Under a "Semi-Non- Exclusive Authorized Distributorship Agreement," Cingular authorized American Cellular, Inc. to offer Cingular’s services to consumers in the West Palm Beach-Boca Raton, Florida area. Under this agreement, Cingular authorized American Cellular to use the Cingular name, trademarks and logos to market and sell such services.

   In that regard, American Cellular engaged Fax.com, Inc., a fax broadcasting company located in California, to disseminate advertisements offering Cingular’s services to facsimile machines located in the 305, 561 and 954 area codes between August 22, 2001 and November 14, 2001. American Cellular’s November 14, 2001 order to Fax.com requested 200,000 facsimile advertisements promoting services from three companies, Cingular, Voicestream Wireless, and Sprint, to be disseminated at a rate of 10,000 per day, five days per week to facsimile machines in the 561 and 954 area codes in Florida. McGarry received a facsimile advertisement matching this description at her residence in the 561 area code in Delray Beach, Florida, approximately one week later. In addition to advertising the three wireless phone companies, the fax listed American Cellular’s name and number, and had a notation indicating that it was sent from a particular number in the 561 area code.

   McGarry filed this class action asserting that Cingular’s agent, American Cellular, acting through Fax.com transmitted hundreds of thousands of unsolicited facsimile advertisements touting the services of Cingular throughout southern Florida. After the parties engaged in extensive class- related discovery over a five-month period, McGarry moved to certify the following class: 

All persons located within the 561, 954 and 305 area codes who received an unsolicited facsimile advertisement, which offered Cingular’s cellular phone services, at the direction of Cingular’s agent, American Cellular.

   The trial court denied the motion for class certification on three grounds. First, the court found that McGarry had failed to prove that the facsimile she received was from Cingular’s agents or to establish the origin of the facsimile at all. Thus, she could not show "with any certainty" that she was even a member of the proposed class, which also raised questions as to whether the class members could be identified without difficulty. Second, the trial court determined that McGarry did not fulfill the typicality requirement for a class representative because, as an existing Cingular telephone customer she could be subject to a defense under the TCPA that other members of the class would not face. This issue raised a further question as to whether other members of the class also would be subject to an "established business relationship" defense, requiring individualized inquiries among class members. Third, the trial court found that a Georgia court was "poorly suited" to hear cases brought by class plaintiffs who by definition reside in Florida, and thus the trial court was not the superior forum for hearing this class action. McGarry takes issue with all three of these findings on appeal.

   The requirements for certifying a class under OCGA § 9-11-23(a), [FN1] are defined as follows:

FN1. Because this action was filed on January 18, 2002, before the recent amendments to OCGA § 9-11-23 became effective on July 1, 2003, the pre- amendment version of the statute applies to this action. See Ga. L.2003, p. 820, § 9.

   The requirements for class certification are numerosity, commonality and adequacy of representation. Alternatively stated, to certify the class the trial court must find that the class is so numerous as to make it impracticable to bring all members before the court; that the questions of law and fact common to the class members predominate over any individual questions; that the claim of the named plaintiff is typical of the claims of the members of the class; that the named plaintiff and class counsel will adequately represent the interests of the class; and that a class action is superior to other available methods of achieving a fair and efficient adjudication of the controversy.

(Punctuation and citations omitted.) Duffy v. Landings Ass’n, 254 Ga.App. 506, 507-508(1) (563 S.E.2d 174) (2002). This Court will affirm a trial court’s decision applying these factors to a motion for class certification in the absence of an abuse of discretion. Jones v. Douglas County, 262 Ga. 317, 323(2) (418 S.E.2d 19) (1992).

   1. McGarry first asserts that the trial court erred in finding that she had failed to prove she was a member of the proposed class. She contends that the trial court mistakenly required her to prove her case in chief at the class certification stage.

    "In determining the propriety of a class action, the first issue to be resolved is not whether the plaintiffs have stated a cause of action or may ultimately prevail on the merits but whether the requirements of OCGA § 9- 11-23(a) have been met." (Punctuation and citations omitted.) Duffy, 254 Ga.App. at 507(1). But the United States Supreme Court has recognized that "the class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff’s cause of action." Eisen v. Carlisle and Jacquelin, 417 U.S. 156, 160 (94 SC 2140, 40 LE2d 732) (1974). See also Rutstein v. Avis Rent-A-Car Systems, 211 F3d 1228, 1234 (11th Cir.2000). And in this case, McGarry defined her class to encompass elements of her cause of action, as it includes those who received "unsolicited" facsimiles "at the direction of Cingular’s agent, American Cellular." Thus, in order to determine whether class certification was proper, the trial court was required to look at issues that will also be considered in examining the merits of McGarry’s claims.

   Moreover, McGarry bears the burden of establishing her right to class certification, which includes the burden of demonstrating that she will adequately represent the class. See UNUM Life Ins. Co. & C. v. Crutchfield, 256 Ga.App. 582 (568 S.E.2d 767) (2002). This burden necessarily includes a showing that she is a member of the class she seeks to represent.

   Here, McGarry presented evidence to show that Cingular authorized American Cellular to market its services in the south Florida area. And she established that American Cellular engaged Fax.com to fax advertisements for Cingular’s services to facsimile machines in the 561, 954 and 305 area codes. McGarry also showed that she resides in the 561 area code and that she received an advertisement matching the description of one of the Fax.com advertisements on her home facsimile machine. But the facsimile received by McGarry reflects that it was sent from a certain telephone number in the 561 area code, and Cingular presented evidence showing that that particular telephone number belonged to an individual residence, not to Fax.com or American Cellular. [FN2]

FN2. McGarry takes issue with Cingular’s filing affidavits containing this evidence on the day of the class motion hearing, but she has not pointed to anything in the record indicating that she objected at the time of the hearing or requested a continuance in order to respond to the affidavits. Accordingly, she has failed to preserve this issue for appellate review. Cf. Suttle v. Northside Realty Associates, 171 Ga.App. 928, 932(2)(c) (321 S.E.2d 424) (1984) (motion for summary judgment); OCGA § 9-11-6(b).

   The trial court determined that McGarry failed to prove that the number from which she allegedly received her facsimile is a telephone number belonging to Cingular’s agents. And the trial court found that, despite five months of discovery, including discovery served directly on Fax.com, McGarry "has offered no proof as to whose number the ‘sent from’ number was, and made no showing that she attempted to avail herself of any discovery from any telephone company to establish to whom the ‘sent from’ number belonged, or otherwise attempted to trace that number."

   Thus, while Cingular’s evidence did not definitively establish that the facsimile received by McGarry did not come from Fax.com or American Cellular, [FN3] it was not the company’s burden to do so. Rather, McGarry was required to prove that the facsimile she received was "sent at the direction of Cingular’s agent, American Cellular." We find no abuse of discretion in the trial court’s determination that she failed to meet that burden.

FN3. For example, there was hearsay evidence indicating that the individual who owned the "sent from" number did not even own a facsimile machine, which raises the question of whether McGarry’s machine may have mis-recorded the "sent from" number.

   2. McGarry also contests the trial court’s conclusion that she and other potential members of the class may be subject to a defense that they had consented to receive Cingular facsimile advertisements through an existing business relationship with Cingular. McGarry asserts that no such defense exists to the receipt of a facsimile sent in violation of the TCPA.

   It is well established that courts generally defer to an agency’s interpretation of a federal statute, unless the Court finds that interpretation conflicts with that statute. Stinson v. United States, 508 U.S. 36, 44-45, (113 SC 1913, 123 L.Ed.2d 598) (1993); Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 843-844 (104 SC 2778, 81 LE2d 694) (1984). See also Charvat v. Dispatch Consumer Serv., 95 Ohio. St.3d 505, 510 (769 N.E.2d 829) (2002). At the time the facsimiles in this case were sent, the Federal Communications Commission, the agency charged with enforcing the TCPA, expressly recognized an "established business relationship" defense to TCPA claims. See In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 7 FCCR 8752, 8779, n. 87-88 (Oct. 16, 1992). In recognizing this defense, the FCC noted that "facsimile transmission from persons or entities who have an established business relationship with the recipient can be deemed to be invited or permitted by the recipient."  The FCC reiterated this position in 1995, stating that the 1992 release "makes clear that the existence of an established business relationship establishes consent to receive telephone facsimile advertisements transmissions." In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 10 FCCR 12391, 12408 (August 7, 1995). [FN4]

FN4. In July 2003, the FCC "reversed its prior conclusion that ‘an established business relationship’ provided the necessary permission to deliver unsolicited facsimile advertisements." See Rules and Regulations of the Federal Communications Commission, 68 FR 44144, 44158 (2003). Instead, new regulations will require a signed, written document indicating a recipient’s "clear consent" to receive facsimile advertisements from the sender. See 47 CFR § 64.1200(a)(3)(i). But due to industry response, the FCC postponed the implementation of these regulations until Jan 1, 2005. In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 FCCR 16972 (August 18, 2003). See also D. Reed Freeman, Jr., FCC Grants Time to Comply with No Fax Ad Rule, ‘Established Relationship’ Exception Scrapped, 20 No. 5 e-Commerce Law & Strategy 1 (2003). Thus, we will not consider the FCC’s recent change in position in our deliberations in this case.

   Moreover, this Court has previously recognized the existence of an "established business relationship" defense to TCPA claims based upon unsolicited telephone calls containing a pre-recorded message. Schneider v. Susquehanna Radio Corp., 260 Ga.App. 296 (581 S.E.2d 603) (2003). At the time, the TCPA banned unsolicited telephone calls sent to residential telephones that contain a pre-recorded message "without the prior express consent of the called party." 47 USC § 227(b)(1)(b). The FCC passed regulations expressly exempting from this ban telephone calls sent to any person with whom the caller has an established business relationship. 47 CFR § 64.1200(c)(3). This Court recognized that "within the context of an established business relationship, calls containing an unsolicited advertisement are not automatically prohibited." Schneider v. Susquehanna, 260 Ga.App. at 300(1).

   While the FCC regulations do not provide an express "established business relationship" exemption to unsolicited facsimile advertisements, the FCC made it clear that during the pertinent period, the agency considered the existence of a business relationship between the sender and the recipient to provide prior consent or invitation to receive facsimile advertisements. See, e.g. Missouri ex rel. Nixon v. American Blast Fax, 323 F3d 649, 657 (8th Cir.2003); Texas v. American Blast Fax, 159 F.Supp2d 936, 937 (W.D.Tex.2001); Kaufman v. ACS Systems, 110 Cal.App. 4th 886, 911 (2 CalRptr3d 296) (Cal.App. 2 Dist., 2003) (acknowledging FCC’s interpretation). And contrary to McGarry’s arguments, we find nothing in the other provisions of the TCPA or in our review of the materials relating to the legislative history of the statute that precludes such an interpretation. Compare Chair King, Inc. v. GTE Mobilenet of Houston, __ Tex.App. __ (I)(3), 2004 WL 162938 (2004) (questioning this interpretation, but holding that it creates a fact issue precluding summary judgment).

   Thus, because the existence of her established business relationship with Cingular establishes her consent to receive the facsimile, McGarry has failed to show that she is even a member of the class she defined. Accordingly, the trial court did not abuse its discretion in determining that McGarry’s prior business relationship defense precluded class certification because she failed to demonstrate that she would be an adequate class representative.

   And because the inadequacy of the proposed class representative precludes the certification of the class in this case, we need not reach the issue of whether the established business relationship defense would also defeat a class action under the commonality requirement based upon the potential that other class members may have a business relationship with Cingular or with the other telephone companies advertised. [FN5]

FN5. See Hammond, __ Ga.App. __ (2)(b) (Case No. A03A2487 decided March 12, 2004). But compare Kondos v. Lincoln Liberty Property Co., 110 SW3d 716, 722 n. 9 (Tex.App.2003) (after holding that the issue of whether class members had given prior permission to send facsimile advertisements presented individual issues that predominated over common issues, and noting that if evidence of an established business relationship were considered relevant, "the permission issue would occupy an even greater portion of the litigants’ efforts, and further militate against" a conclusion that common issues would predominate over individual ones).

   We note that this Court affirmed the certification of a class action in a case asserting claims for unsolicited facsimiles under the TCPA in Hooters v. Nicholson, 245 Ga.App. 363, 367-368(4) (537 S.E.2d 468) (2000). But it appears that neither the trial court nor this Court considered the issue of an established business relationship defense in certifying that class, and there was no issue that the class plaintiff had such a relationship.

   Similarly, even more recently, this Court reversed a trial court’s denial of another class action under the TCPA involving unsolicited facsimiles. Hammond v. Carnett’s, Inc., __ Ga.App. __ (Case No. A03A2487 decided March 12, 2004). Although in dicta, the Hammond opinion addresses the issue of an established business relationship defense under the commonality requirement, that case is also distinguishable because there is no evidence that the class representative had such an established business relationship with the sender of the facsimiles. Thus, there was no issue that the class representative could be excluded from the class as a result of that relationship.

   3. McGarry also argues that the trial court erred in determining that the Georgia superior court was not a superior forum for this class action because it involves claims by Florida citizens, involving evidence primarily located in other states. She contends that the superiority requirement does not involve a question of whether location of the court is superior to other venues, but rather contemplates a determination of whether the class action device is superior to individual lawsuits.

   In reaching its determination, the trial court relied upon a subsection of the federal class action statute, Fed.R.Civ.P. 23(b)(3)(C), which requires courts to consider "the desirability or undesirability of concentrating the litigation of the claims in the particular forum." Pretermitting the issue of whether the trial court should have relied upon this federal requirement under the prior version of OCGA § 9-11-23, [FN6] we note that the subsection relied upon by the court is only one prong of a four factors to be considered by courts in addressing the issue of superiority under the federal rule. Fed.R.Civ.P. 23(b)(3)(A)--(D). Accordingly, we find that the trial court’s reliance on this one factor was insufficient to make a determination on the issue of superiority.

FN6. The current version of OCGA § 9-11-23, effective for class actions filed on or after July 1, 2003, closely tracks the federal rule and expressly includes the factor relied upon by the court. OCGA § 9-11- 23(b)(3)(C).

   Nevertheless, given our holdings in divisions 1 and 2 above, we affirm the trial court’s denial of McGarry’s motion for class certification.

   Judgment affirmed. Andrews, P. J., and Barnes, J., concur.

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