Taking the Procedural Way Out: DC Circuit Dodges Substantive Question of Whether Bristol-Myers Squibb Applies to Rule 23 Class Actions
While not a Telephone Consumer Protection Act (“TCPA”) case, the DC Circuit’s 2-1 decision today in Molock v. Whole Foods Market Group, Inc., No. 18-7162, may impact TCPA class actions.
In Molock, the DC Circuit was considering the question of whether the Supreme Court’s decision in Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017) (“BMS”) precluded a DC district court sitting in diversity from exercising personal jurisdiction over Whole Foods, a Delaware corporation headquartered in Texas, for the claims of non-DC putative class members. Whole Foods had filed a motion under Fed. R. Civ. P 12(b)(2) seeking to dismiss the claims of the nonresident putative class members. The Court sidestepped this substantive question and instead found that Whole Foods’ motion was premature because the putative class members were not parties to the litigation. “Only after the putative class members are added to the action—that is, ‘when the action is certified as a class under Rule 23,’ Gibson, 261 F.3d , 940 [9th Cir. 2001]—should the district court entertain Whole Foods’ motion to dismiss the nonnamed class members.” In reaching this result, the DC Circuit rejected Whole Foods’ argument that plaintiffs had “forfeited” this argument by failing to raise it in the district court. The court found that the case fell within an “exception” to the forfeiture rule “because the party status of putative class members both precedes the question of personal jurisdiction and disposes of the appeal.”
Judge Silberman disagreed with the Molock majority, finding that he “would not excuse the forfeiture.” Moreover, Judge Silberman pointed out that the motion did not seek to dismiss any person but rather the claims in plaintiffs’ class action complaint. That is, Whole Foods challenged the named plaintiffs’ alleged entitlement to bring those claims on behalf of the putative class members. “The motion did not ask for dismissal of any person, let alone the putative class members.” Judge Silberman further explained that granting this motion is the functional equivalent of granting a motion to strike the nationwide class allegations – that is, a named plaintiff’s claim of entitlement to represent a class is defective as a matter of law… because the court would lack personal jurisdiction over the defendant with respect to class claims.” And, as a denial of class certification, there would be the potential for an interlocutory appeal.
Finally – and most interesting to those of us here at TCPAWorld–Judge Silberman tipped his hand on the substantive question of whether the reasoning of BMS applies in the class action context finding that “logic dictates that it does.” As Judge Silberman noted, “a class action is just a species of joinder.” Judge Silberman went on to note that the Supreme Court’s focus in BMS was on whether the limits on personal jurisdiction protect a defendant from out-of-state claims, which makes the party status of absent class members irrelevant. And, Judge Silberman found that Rule 23’s standards are not an adequate substitute for the principles of personal jurisdiction.
If you are thinking to yourself – why is this decision a big deal, as Whole Foods can raise the issue again at the class certification stage, then you have not been a defendant in a class action. The big deal is discovery. We are talking discovery concerning all stores nationwide versus discovery of only five DC stores. The added costs and burdens of nationwide discovery are huge. The majority’s response: “concerns about discovery costs must yield to Supreme Court precedent, which makes clear that putative class members are nonparties prior to class certification.”
For those of us here at TCPAWorld, Molock provides some helpful guidance on how to present the BMS issue. And, while the DC Circuit dodged the substantive question of whether BMS applies to class actions, other Courts of Appeal are poised to weigh in on this substantive question shortly. So stay tuned…