Germantown Copy Center, Inc. v. Comdoc, Inc., No. DKC 10-2799, 2011 WL 1323020 (D. Md. April 1, 2011).

In this case, a District Court in Maryland held that while determining whether a class action meets the requirements of CAFA, it cannot decide whether a class certification is feasible in the future, unless a class action is not viable as a clear legal matter.

Germantown Copy Center, Inc. filed a putative class action under the Telephone Consumer Protection Act (“TCPA”) against ComDoc Inc. alleging that ComDoc violated the TCPA by sending it an unsolicited advertisement by fax. (Editors’ Note: We can only imagine the outrage of receiving an unsolicited fax advertisement must cause in today’s economic environment.)

The TCPA forbids the sending of unsolicited fax advertisements. The TCPA was passed in an attempt to end the harmful consequences of “junk faxes,” namely the “depletion of the recipient’s time, toner, and paper, and occupation of the fax machine and phone line.” 

Germantown Copy alleged that ComDoc sent unsolicited advertisements to thousand of consumers over the course of several years. For each unsolicited fax they received, Germantown Copy and the other class members would be entitled to statutory damages of $500 or the amount of their actual loss, whichever is greater. As a result, the complaint alleged that the matter in controversy exceeded $5 million in the aggregate for the class, exclusive of interest and costs.

ComDoc filed a motion to dismiss, arguing that Germantown Copy had not established subject matter jurisdiction. The District Court denied the motion. (Editors’ Note:  Hopefully, so the court would dismiss the action with prejudice later on).

The complaint alleged both federal question jurisdiction and diversity jurisdiction as sources of subject matter jurisdiction. The Court observed that although private TCPA actions may not be premised on the general federal question jurisdiction, Germantown Copy alleged enough to establish diversity jurisdiction under CAFA. ComDoc briefly observed that there is disagreement among the courts as to whether diversity jurisdiction exists at all under the TCPA. The Court stated that it had earlier held in Baltimore-Washington Tel. Co. v. Hot Leads Co., LLC, 584 F.Supp.2d 736, 741 (D. Md. 2008) that diversity jurisdiction may be used to bring to private actions under the TCPA in federal court. The circuit courts which addressed this issue came to the same conclusion.

ComDoc instead protested that this case did not meet CAFA’s $5 million amount-in-controversy requirement, despite the complaint’s allegation of more than $5 million in damages. The Court maintained that a plaintiff’s allegation that the matter in controversy exceeds the jurisdictional amount requirement, even when it is in cursory form, has been held to be sufficient by a significant number of federal courts. In this case, the complaint averred that ComDoc sent “thousands” of unsolicited faxes over “several years.” The Court remarked that unlike some other remedial statutes, the TCPA contains no damages cap; thus, it was certainly conceivable at that stage that a $5 million damage award could result from such circumstances, given that each one of these “thousands” of violations would result in guaranteed damages of $500 or more.

ComDoc also argued that Germantown Copy could not invoke CAFA’s provisions because several courts have declined to certify TCPA class actions. These courts have determined that one fact issue — whether each putative class member actually consented to the receipt of fax transmissions — rendered a class action inappropriate. The Court noted that if ComDoc could show that a class action was not viable in this case as a clear legal matter, that finding would prevent Germantown Copy from using CAFA to justify jurisdiction. The Court, however, remarked that ComDoc’s cases did not prove to a legal certainty that a class action would fail here or a class action may never be certified under TCPA. To the contrary, many courts have in fact certified “junk fax” class actions under TCPA.

The Court observed that fundamentally, ComDoc’s argument was an invitation to make a premature ruling on class certification that was unnecessary and unwarranted under the plain language of CAFA. CAFA applies to any class action before or after the entry of a class certification order. The jurisdictional hook under CAFA is not whether class certification will ultimately prove successful, but rather whether the representative plaintiff intends to seek class certification for a purported class meeting CAFA’s requirements. Federal jurisdiction under the CAFA does not depend on certification, and that class certification may be difficult, or ultimately unsuccessful, is irrelevant to the jurisdictional issue because the question is not what damages the plaintiff will recover, but what amount is ‘in controversy’ between the parties. Thus, the Court concluded that the perceived class certification issues that ComDoc raised were no bar to jurisdiction here.

Finally, ComDoc argued that because it had a policy to only fax information to those businesses that granted prior permission to do so, Germantown Copy could not be able to cobble together a sufficient class necessary to establish the requisite amount in controversy. The Court opined that ComDoc was confusing jurisdictional issues with issues going to the merits of Germantown Copy’s claims because here, the only relevant question was whether Germantown Copy and the rest of the putative class would be able to collect all that it asked for as a matter of law.

Accordingly, the Court declined to dismiss the complaint for lack of subject matter jurisdiction.