Opinion ID: 2339712
Heading Depth: 1
Heading Rank: 5

Heading: Superiority of Class Action over Other Options

Text: K.S.A. 2010 Supp. 60-223(b)(3) states that a class action must be superior to other available methods for fairly and efficiently adjudicating the controversy. The district court found: Defendant argues that a class action is not a `superior method' because `certification would result in a due process violation given the potential for horrendous, possibly annihilating punishment. . . . Defendant cites various cases involving inapposite statutes such as the Truth in Lending Act (TILA), Fair Credit Reporting Act (FCRA), Cable Communications Act, and the Fair Credit and Accurate Credit Transactions Act (FACTA) cases attempting to support its position. However, this Court finds defendant's argument premature. A determination of the constitutionality of an Act of Congress is not appropriate under in [sic]a finding of class certification, but suffice it to say that this legal issue would be another common question of law for the Class. From the perspective of the court system, the class members, and the potential witnesses, a class action is a superior means of resolving the issues regarding Defendant's junk faxes, especially when compared to individual actions, because the maximum recovery for each class member is only $500 and the TCPA does not allow for fee shifting.  Conclusion of Law: The court finds that allowing this class to proceed as a class action would be a superior use of judicial resources, and K.S.A. 60-223(b)(3) is satisfied. See Hinman [v. M and M Rental Center , 545 F.Supp.2d 802], 208 [2008] WL 927910 at  [ (2008) ] (`resolution of the [TCPA] issues on a class wide basis, rather than in thousands of individual lawsuits would be an efficient use of both judicial and party resources'). Other methods are available for adjudicating claims the proposed class seeks to litigate. One possible alternative to class certification is small claims court. See, e.g., Local Baking Products, Inc. v. Kosher Bagel Munch, Inc., 421 N.J.Super. 268, 280-81, 23 A.3d 469, (2011) (where damages under TCPA far exceed actual losses, aggrieved parties have incentive to prosecute separately in small claims courts); In Blitz v. Xpress Image, Inc., No. 05CVS679, 2006 WL 2425573, at  n. 13 (N.C.Sup.Ct.2006) (unpublished opinion) (quoting Senator Ernest Hollings of South Carolina suggesting small claims courts appropriate venues for TCPA violations). Other courts have found that class action claims under the TCPA represent the superior remedy. See Sadowski, 2008 WL 2224892, at  (superiority requirement is satisfied in junk fax cases in consumer actions involving small individual claims because each member's damages too insignificant to provide incentive to pursue claims individually); Blitz, 677 S.E.2d at 10 (small claims courts cannot per se be superior venue for violations of the TCPA because they lack authority to grant injunctions); see also Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir.1997) (policy at core of class action mechanism is to overcome problem that small recoveries do not provide incentive for individuals to bring solo actions to protect their rights). We do not agree with the defendant's contention that over 100,000 individual small claims actions would be superior to a single class action. While the defendant in such an action might benefit if only a small number of plaintiffs found it worth their while to bring suit or were aware of their rights under the TCPA, this small turnout would serve only to frustrate the intent of the TCPA and to protect junk fax advertisers from liability. It would, accordingly, not provide a superior method for individual plaintiffs. If, on the other hand, many thousands of plaintiffs elected to pursue their rights in small claims courts, those courts would be overwhelmed, plaintiffs would have to invest time and money in prosecuting their claims, and the defendant would have to appear in thousands of actions around this state and other states. See Landsman & Funk PC v. Skinder-Strauss Associates, 640 F.3d 72, 95 (3d Cir. 2011) (little reason to believe individual actions automatically efficient, and thousands of TCPA actions may be more efficiently brought as single class action). The small claims alternative is contrary to the policy behind Federal Rule 23(b)(3), which the Kansas statute resembles. The United States Supreme Court has noted that [w]hile the text of Rule 23(b)(3) does not exclude from certification cases in which individual damages run high, the underlying policy of the class action mechanism is to overcome the problem that small recoveries provide little incentive for individuals to bring solo actions to protect their rights. Amchem Products, Inc. v. Windsor, 521 U.S. 591, 617, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997). Taranto argues that one way in which a class action is inferior to numerous individual actions is because of the threat of an annihilating judgment in favor of the class. This argument in essence informs the court that it has engaged in such widespread unlawful behavior that the court should give it special protection. The court in Chevalier v. Baird Sav. Ass'n, 72 F.R.D. 140, 150 (E.D.Pa.1976), rejected this kind of argument: [W]hether this suit proceeds as a class action or not, the law places joint and several liability upon the defendants for all injuries caused by any conspiracy of which they were members. The class action device merely provides a procedure for adjudicating the respective rights of the parties. If defendants' liability shocks the conscience, it is the fault of the substantive law which places joint and several liability on co-conspirators, not the class action. We refuse to hold that the extent of defendants' liability affects the superiority of the class action procedure in this case. In Samuel v. University of Pittsburgh, 538 F.2d 991, 996 (3d Cir.1976), the Third Circuit Court of Appeals found that the district court had abused its discretion when it considered the irrelevant factor of the financial hardship that a class action judgment would impose on the defendant as grounds for decertifying a class. In Circle v. Jim Walter Homes, Inc., 535 F.2d 583, 589 (10th Cir.1976), the Tenth Circuit Court of Appeals reversed the denial of class certification that was based in part on the economic impact on the defendant. The court held: [T]he reason given by the court that the damages would be prohibitively highor in his words, annihilatingis not a valid basis for refusal to certify. Conceivably the awards at this juncture may not include treble damages, but even if they do there is nothing in the record to indicate that this would prove to be annihilating. In any event, the damages flow from an unlawful trade practicea practice prohibited by statuteand thus there is no basis for saying that the award is disproportionate to the magnitude of the violation. If, as the plaintiffs allege, Taranto engaged in a widespread violation of the law, then class certification would fulfill a purpose of class action litigation. [A]ggregate proof of the defendant's monetary liability promotes the deterrence objectives of the substantive laws underlying the class actions. . . . 3 Newberg on Class Actions § 10:5, 487 (4th ed. 2002). We conclude that the threat of catastrophic judgments should not protect parties that violate the law on a large scale and is not a relevant factor in determining whether a plaintiff class should be certified.