Today, the Seventh Circuit reversed a decision certifying a class because the trial court did not adequately consider whether the credibility of the class representative regarding a defense made the person a proper class representative in
, Case No. 10-8050. It held that serious defenses and credibility problems are vital in assessing a person's adequacy as a class representative.
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Telephone Consumer Protection Act forbids "unsolicited" fax advertisements and provides for statutory damages in the amount of $500 per violation. CE Design, a civil engineering firm, received a fax advertisement from King Architectural Metals, which advertised King Architectural Metals's building components to CE Design, and instituted a class action against King Architectural Metals. In its defense, King Architectural Metals argued that CE Design had consented to the advertisement by subscribing to a trade publication and by putting "Contact Us" next to its fax number on its website. CE Design's president testified that he was familiar with the terms of the contract with the trade publication and that CE Design had not consented to the advertisement.
CE Design moved for class certification. When ruling on that motion, the district court noted a "discrepancy" in the testimony of CE Design's president, but held that this was "immaterial" to the issue of certification. It then granted CE Design's motion for class certification. The Court granted King Architectural Metals's petition for an interlocutory appeal and decided the appeal without further briefing.
On appeal, the Court emphasized the need for district courts to conduct a rigorous analysis when ruling on a motion for class certification. This extended to determining whether the testimony of CE Design's president was too incredible for CE Design to serve as an adequate class representative.
A named plaintiff who has serious credibility problems or who is likely to devote too much attention to rebutting an individual defense may not be an adequate class representative.
By giving its fax number to the Blue Book for publication, CE publicized the number to the Blue Book's other subscribers. ... Pezl's testimony that he was unaware that he had authorized publication of CE's fax number in the Blue Book is both difficult to credit, as the district judge acknowledged, and, if disbelieved, could be thought evidence of Pezl's fearing that the publication of CE's fax number could indeed be construed as permission to fax ads to that number. The legend "Contact Us" next to CE's fax number on the company's website could be thought to reinforce an inference of permission from the publication of the fax number in the Blue Book.
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The record raises serious doubts concerning the truthfulness of Pezl's testimony about his familiarity with the terms of the contract with the Blue Book. The district court erred in treating the subject as immaterial; express consent to communications by fax and email from Blue Book subscribers raises a substantial question. The contractual "consent" to communications among a community of businesses involved in the construction industry seems to have no point other than to provide the consent required by this federal law and perhaps similar state laws. The credibility problem and the consent defense are vital in assessing CE Design's adequacy as a class representative.
The Court, therefore, ordered that the district court "reconsider its ruling that the named plaintiff is a proper class representative." However, the Court also tried to lessen the impact of this ruling on other class actions.
We don't want to be misunderstood, however, as extending an invitation to defendants to try to derail legitimate class actions by conjuring up trivial credibility problems or insubstantial defenses unique to the class representative. Serious challenges to typicality and adequacy must be distinguished from petty issues manufactured by defendants to distract the judge from his or her proper focus under
Rules 23(a)(3) and (4) on the interests of the class.
For an attack on the class representative's credibility to succeed in removing that person as class representative, "the party mounting the assault must demonstrate that there exists admissible evidence so severely undermining plaintiff's credibility that a fact finder might reasonably focus on plaintiff's credibility, to the detriment of the absent class members' claims."
Finally, the Court noted that another class representative could be substituted for CE Design or the district court could create different subclasses. Either of these solutions could remedy the adequacy of class representation issues the Court noted.
As the Court anticipated, it is likely that class defendants will use this decision as a tools to oppose class certification. However, attacking the class representative's adequacy is generally a delay tactic; as the Court noted, many inadequacies can be resolved in class proceedings.
