Court Opinion

ID: 2703462
Source: CourtListenerOpinion
Date Created: 2014-08-04 20:09:51.081625+00
Date Added: 2024-06-11T12:54:26.916033
License: Public Domain

[Cite as Miranda v. Saratoga Diagnostics, 2012-Ohio-2633.]

                Court of Appeals of Ohio
                               EIGHTH APPELLATE DISTRICT
                                  COUNTY OF CUYAHOGA

                              JOURNAL ENTRY AND OPINION
                                      No. 97591

                       DELMACIO MIRANDA, ET AL.
                                                             PLAINTIFFS-APPELLANTS

                                                    vs.

                           SARATOGA DIAGNOSTICS
                                                             DEFENDANT-APPELLEE

                             JUDGMENT:
                         AFFIRMED IN PART,
                   REVERSED IN PART, AND REMANDED

                                     Civil Appeal from the
                            Cuyahoga County Court of Common Pleas
                                    Case No. CV-585894

        BEFORE: Keough, J., Boyle, P.J., and Sweeney, J.

        RELEASED AND JOURNALIZED: June 14, 2012
ATTORNEYS FOR APPELLANTS

Joseph R. Compoli
James R. Goodluck
612 East 185th Street
Cleveland, OH 44119

FOR APPELLEE

Saratoga Diagnostics
12619 Pasco Olivos
Saratoga, CA 95070
KATHLEEN ANN KEOUGH, J.:

       {¶1} Plaintiffs-appellants, Delmacio Miranda, Noberto Juan, and Sonia Tanio

(collectively “appellants”), appeal various rulings from the trial court, including denial of

class certification. For the reasons that follow, we affirm in part, reverse in part, and

remand.

                             I. Procedural History and Facts

       {¶2} On March 6, 2006, Delmacio Miranda filed a complaint for money damages

and injunctive relief, with class action status, against defendant-appellee, Saratoga

Diagnostics (“Saratoga”), a California company, alleging violations of the Telephone

Consumer Protection Act (“TCPA”), 46 U.S.C. 227. The complaint alleged that Miranda

received two unsolicited facsimile advertisements from Saratoga and that Saratoga acted

willfully and knowingly in sending the facsimile advertisements.             The complaint

requested both the mandatory minimum damages of $500 per violation and treble

damages. The summons and complaint were sent by certified mail to Saratoga at its

California address. Service was obtained on Saratoga on March 13, 2006.

       {¶3} Thereafter, on March 30, 2006, a first amended complaint for money

damages and injunctive relief, with class action status, was filed against Saratoga. The

first amended complaint maintained the same allegations but added new-party plaintiffs,

Norberto Juan and Sonia Tanio. The first amended complaint alleged that Norberto Juan

received two and Sonia Tanio received five unsolicited facsimile advertisements from
Saratoga. The first amended complaint was not sent to Saratoga until November 30,

2006, with service perfected by certified mail on December 11, 2006.

       {¶4} Despite having been served by certified mail of the complaint and first

amended complaint, Saratoga failed to file an answer. Moreover, Saratoga did not enter

an appearance in this lawsuit at any time.

       {¶5} In June 2006, although Saratoga had not filed an answer to the original

complaint and had yet to be served with the first amended complaint, appellants moved

the trial court for an order compelling Saratoga to comply with discovery, which included

interrogatories, requests for admissions and production of documents. The trial court

denied appellants’ motion.

       {¶6} In July 2006, appellants moved the trial court for class certification. On

January 22, 2007, the trial court issued an order scheduling a hearing on appellants’

motion for class certification. In its order, despite the fact that Saratoga had not filed an

answer to either the original complaint or amended complaint, the trial court stated that

Saratoga failed to appear at a pretrial held on January 2, 2007, and also noted that “failure

to appear at future dates may result in rendering a default judgment.”

       {¶7} On February 1, 2007, the trial court held an oral hearing on appellants’

motion for class certification. On the same date, the trial court issued a journal entry

noting that the oral hearing was held and that Saratoga failed to appear. The journal

entry did not indicate that any other matters were considered at the hearing and no

transcript of the hearing was provided to this court.
       {¶8} On October 28, 2011, well over four years after the hearing on appellants’

motion for class certification, the trial court rendered an opinion denying class

certification, but entering default judgment against Saratoga for failing to appear at the

class certification hearing. The individual appellants were granted a default judgment in

the amount of $500 per facsimile transmission, but were denied treble damages.

       {¶9} Appellants appeal, raising three assignments of error.

                                   II. Class Certification

       {¶10} In their first assignment of error, appellants contend that the trial court

abused its discretion in denying class certification.

       {¶11} In Hamilton v. Ohio Sav. Bank, 82 Ohio St.3d 67, 69, 694 N.E.2d 442

(1998), the Ohio Supreme Court set forth the standard of review for decisions to certify a

class action as follows:

       A trial judge has broad discretion in determining whether a class action may

       be maintained and that determination will not be disturbed absent a showing

       of an abuse of discretion. * * * However, the trial court’s discretion in

       deciding whether to certify a class action is not unlimited, and indeed is

       bound by and must be exercised within the framework of Civ.R. 23. The

       trial court is required to carefully apply the class action requirements and

       conduct a rigorous analysis into whether the prerequisites of Civ.R. 23 have

       been satisfied.
       {¶12} Civ.R. 23 sets forth seven requirements that must be satisfied before a case

may be maintained as a class action. Those requirements are that (1) an identifiable class

must exist and the definition of the class must be unambiguous, (2) the named

representatives must be members of the class, (3) the class must be so numerous that

joinder of all members is impracticable, (4) there must be questions of law or fact

common to the class, (5) the claims or defenses of the representative parties must be

typical of the claims or defenses of the class, (6) the representative parties must fairly and

adequately protect the interests of the class, and (7) one of the three of Civ.R. 23(B)

requirements must be satisfied. Id.

       {¶13} In an action for damages, the trial court must specifically find, pursuant to

Civ.R. 23(B), that questions of law or fact common to the members of the class

predominate over any questions affecting only individual members, and that a class action

is superior to other available methods for the fair and efficient adjudication of the

controversy. Id. Failure to satisfy any one of these requirements will defeat class

certification. Warner v. Waste Mgt., 36 Ohio St.3d 91, 94, 521 N.E.2d 1091 (1988).

       {¶14} The party seeking to maintain a class action has the burden of demonstrating

that all factual and legal prerequisites to class certification have been met. Gannon v.

Cleveland, 13 Ohio App.3d 334, 335, 469 N.E.2d 1045 (8th Dist.1984). A class action

may be certified only if the court finds after a rigorous analysis that the moving party has

satisfied its burden and all the requirements of Civ.R. 23. Hamilton at 70.

       {¶15} In this case, the appellants sought to certify the following class:
       All persons and entities in the 216 and 440 telephone area codes to whom
       were transmitted one or more “Saratoga Diagnostics” advertisements via
       fax, anytime during the years 2000 through 2005, and for whom Defendant
       Saratoga Diagnostics possesses no record of obtaining prior express
       invitation or permission to send fax advertisements to that person or entity.

       {¶16} The trial court found that the appellants did not withstand their burden of

satisfying all the requirements for class certification because (1) the proposed class is not

readily identifiable, (2) questions of law or fact common to the members of the class do

not predominate over any questions affecting only individual members, and (3) the

numerosity requirement is not satisfied.

       {¶17} We agree with the trial court that numerosity has not been satisfied. For the

numerosity requirement to be met, the class must be so numerous that joinder of all

members is impracticable. Civ.R. 23; Miller v. Painters Supply & Equip., 8th Dist. No.

95614, 2011-Ohio-3976, ¶ 32 , citing Warner at 97. The numerosity requirement must

be determined on a case-by-case basis. Id.

       In   construing   Civ.R. 23(A)(1), known as the
                            numerosity requirement, courts
                            have not specified numerical
                            limits for the size of a class
                            action. This determination must
                            be made on a case-by-case basis.
                            Professor Miller, however, has
                            indicated: “[i]f the class has more
                            than forty people in it, numerosity
                            is satisfied; if the class has less
                            than twenty-five people in it,
                            numerosity probably is lacking; if
                            the class has between twenty-five
                            and forty, there is no automatic
                            rule * * *.”
Warner at id., quoting, Miller, An Overview of Federal Class Actions: Past, Present,

and Future, at 22 (2d. Ed.1977).

      Indeed, “[t]he numerosity requirement requires examination of the specific
      facts of each case and imposes no absolute limitations.” Gen. Tel. Co. of
      the Northwest, Inc., v. EEOC, 446 U.S. 318, 330, 100 S.Ct. 1698, 64
      L.Ed.2d 319 (1980). Nevertheless, while “the exact number of class
      members need not be pleaded or proved, impracticability of joinder must be
      positively shown, and cannot be speculative.” McGee v. East Ohio Gas
      Co., 200 F.R.D. 382, 389 (S.D.Ohio 2001); see also 7A Charles Alan
      Wright & Arthur R. Miller, Mary Kay Kane, Federal Practice And
      Procedure Section 1762 (3d Ed.2001) (observing that the party seeking
      class certification “bear[s] the burden of showing impracticability and mere
      speculation as to the number of parties involved is not sufficient to satisfy
      Rule 23(a)(1)”).

Golden v. Columbus, 404 F.3d 950, 965-966 (6th Cir.2005).

      {¶18} On appeal, appellants contend that the trial court erred in finding that

“plaintiffs[ sic] only support for their [numerosity] position is the allegation in their

complaint that faxes were sent to ‘forty-one or more recipients within the 216 and 440

area codes.’” Appellants contend that the numerosity requirement has been satisfied

because (1) the amended complaint substantively alleges that Saratoga sent fax

advertisements to “forty-one or more” recipients within the 216 or 440 telephone area

codes, which must be taken as true, (2) Saratoga failed to deny the “forty-one or more”

allegation by filing an answer; thus, the allegation is deemed admitted, and (3) their

expert’s affidavit clearly establishes that the number of class member is far in excess of

the minimum number of class members under Warner. However, our review of the
complaint, motion for class certification, and expert affidavit proves differently and is

consistent with the trial court’s review and decision.

       {¶19} Examining the facts in the record, we find that the three individual

appellants received a combined total of nine unsolicited facsimiles advertisements over

the course of four years. Attached to appellants’ motion for class certification is the

affidavit of purported expert George Melnyk. A review of the affidavit is somewhat

confusing because the affidavit discusses fax broadcasting companies who were hired by

Prime TV, LLC to transmit faxes containing advertisements of DirecTV services. The

affiant’s statements and these advertisements have no bearing on the case against

Saratoga. Moreover, the affidavit also discusses Flagstaff Industries Corporation, which

again has no relevance to the case against Saratoga.       Nothing within this affidavit

mentions or even hints at any facts or relevant information pertaining to the case against

Saratoga.

       {¶20} Another affidavit from George Melnyk was filed by appellants in

preparation for the class certification hearing. In this affidavit, Melnyk states that in

January 2005, he spoke with the owner of Saratoga Diagnostics and learned that Saratoga

is a company that sells medical equipment. The remaining relevant information in the

affidavit states:

       13. I further learned that, between the years 2000 and 2005, Saratoga
       Diagnostics had sent faxes advertising its [sic] to many licensed family
       medical physicians in Ohio.

       14. According to the records of the Ohio State Medical Board, there are
       over 33,000 licensed medical physicians in Ohio, including approximately
       400 family Physicians [sic] located within the 216 and 440 telephone area
       codes.

       15. These Family Physicians are made easily identifiable by common
       commercial data bases, including Info USA, and its derivatives as well as
       data bases made available by the Ohio Academy of Physicians.

       {¶21} We find that these statements do not establish any facts that would support

or withstand appellants’ burden of proving the numerosity requirement — that joinder of

all class members is impracticable.

       {¶22} Appellants direct this court to consider the holding and analysis in Siding &

Insulation Co. v. Beachwood Hair Clinic, Inc., N.D.Ohio No. CV-1074, 2012 WL

262556 (Jan. 30, 2012). In Beachwood Hair, the plaintiffs alleged that Beachwood Hair

hired a fax broadcaster to send the advertisements, and according to the plaintiffs’ expert,

the specific fax at issue was successfully transmitted 37,219 times to 16,847 recipients.

Id. at *1. Additionally it was alleged that the fax broadcasting company sent the faxes to

numbers from a purchased database, InfoUSA. Id. The court found that these alleged

facts satisfied the numerosity requirement — that joinder would be impracticable. Id. at

*2.

       {¶23} However, and unlike the facts in Beachwood Hair, the appellants in this

case have failed to identify how the potential class size of “forty-one or more” was

computed.    In their motion for class certification, they do not point to any facts

substantiating this number. Despite the fact that their expert makes the blanket statement

that Saratoga sent advertising faxes to many family physicians in Ohio and that there are

approximately 400 family physicians in the 216 and 440 area codes, this information does
not support class identification or numerosity. Although appellants need not identify or

even prove the exact number of class members to satisfy the numerosity requirement,

some facts must be pled or averred to make the class number beyond mere speculation.

       {¶24} Accordingly, we find that the allegation that the class consists of “forty-one

or more” is merely speculative and that the appellants have failed to withstand their

burden to positively show the impracticability of joinder to satisfy the numerosity

requirement.

       {¶25} Appellants also contend that the allegations in the complaint must be

accepted as true because Saratoga failed to file an answer. Therefore, according to

appellants, Saratoga has admitted all the allegations in the complaint, including that the

class consists of “forty-one or more,” and no additional numerosity evidence needs to be

provided to satisfy this requirement of Civ.R. 23. We disagree.

       {¶26} Appellants failed to file a transcript of the class certification hearing held on

February 7, 2011; therefore, we presume regularity of the proceedings. Bohrer v. Bakers

Square Restaurant, 8th Dist. No. 88143, 2007-Ohio-2223, ¶ 5, citing Corsaro, Giganti &

Assoc. v. Stanley, 8th Dist. No. 77201, 2000 WL 1369900 (Sept. 21, 2000). We presume

that the trial court considered all the evidence and arguments raised. The standard the

trial court must conduct is a rigorous analysis. Merely because a party is in default or

fails to defend a lawsuit does not alleviate a plaintiff’s burden to satisfy the class

certification factors or the trial court’s duty to strictly construe those factors to determine

if class certification is proper. The record before us demonstrates that the trial court
considered all the factors, analyzed each rigorously, and found certification improper.

We find nothing arbitrary, unreasonable, or unconscionable in the trial court’s decision.

Therefore, the trial court did not abuse its discretion in denying appellants’ motion for

class certification. Appellants’ first assignment of error is overruled.

                                  III. Default Judgment

       {¶27} Appellants raise as their second assignment of error that the trial court

abused its discretion in granting default judgment without conducting a hearing or

granting treble damages. Appellants do not appear to challenge the granting of default

judgment, per se; rather, the award of damages.

       {¶28} A trial court’s decision to grant a party default judgment is reviewed under

an abuse of discretion standard. Huffer v. Cicero, 107 Ohio App.3d 65, 74, 667 N.E.2d

1031 (4th Dist.1995). Under Civ.R. 55(A), a default judgment is only proper when a

party has “failed to plead or otherwise defend.” Chase Manhattan Automotive Fin.

Corp. v. Glass, 11th Dist. No. 2000-T-0090, 2001 WL 799875, *1 (July 13, 2001).

       {¶29} Civ.R. 55(A) provides in pertinent part as follows:

       When a party against whom a judgment for affirmative relief is sought has
       failed to plead or otherwise defend as provided by these rules, the party
       entitled to a judgment by default shall apply in writing or orally to the court
       * * *. If, in order to enable the court to enter judgment or to carry it into
       effect, it is necessary to take an account or to determine the amount of
       damages or to establish the truth of any averment by evidence or to make an
       investigation of any other matter, the court may conduct such hearings or
       order such references as it deems necessary and proper and shall when
       applicable accord a right of trial by jury to the parties.
       {¶30} In this case, appellants did not apply in writing for default pursuant to

Civ.R. 55 and the record before this court does not indicate that appellants orally moved

for default. The trial court entered default against Saratoga essentially as a sanction for

failing to appear at the class certification hearing. Even as a sanction, the trial court

could only have granted judgment after hearing evidence sufficient to establish the

essential elements of the claim. Chase Manhatttan at *2.

       {¶31} When a trial court decides to grant judgment as a sanction, it must first

provide the parties with adequate notice of its intent. Chase Manhattan. The trial court

issued an order on January 22, 2007 stating: “Pre-trial held on 01/02/2007. Counsel for

plaintiff’s [sic] present, defendant failed to appear. Failure to appear at future dates may

result in a rendering of default judgment. Hearing on plaintiff’s [sic] motion for class

certification scheduled for 02/01/2007 at 4:00 p.m.”

       {¶32} At the hearing on the motion for class certification, Saratoga failed to

appear. In its judgment entry denying appellants’ motion for class certification, the trial

court held:

       The court having denied plaintiff’s [sic] motion for class certification,
       hereby proceeds with granting default judgment for plaintiffs on their
       individual claims. Pursuant to the court’s prior order, defendant was
       warned that failure to appear at any future dates would result in a rendering
       of default judgment. Defendant failed to appear for the class certification
       hearing. Thus the court grants default judgment against defendant * * *.

       {¶33} In this case, no transcript of the class certification hearing was filed with his

court; thus, we are unable to determine from this record whether the trial court accepted

any evidence or considered any arguments made by appellants before entering a default
judgment against Saratoga.        Typically we presume regularity of the trial court

proceedings below. However, because appellants did not file for default and the trial

court only granted default judgment as a sanction, we presume that no hearing or

evidence was considered by the trial court. Moreover, appellants’ assignment of error is

premised on the fact that no hearing was held.

       {¶34} The trial court’s judgment entry provides no indication that it considered

anything other than the complaint and subsequent filings in preparation for the class

certification hearing in rendering judgment. Therefore, a reasonable inference from the

trial court’s judgment entry would be that the trial court granted default judgment solely

based upon Saratoga’s failure to appear at the class certification hearing.

       {¶35} Appellants’ cause of action was based on a violation of the TCPA, and if the

violation was done willfully and knowingly, appellants are entitled to treble damages. 47

U.S.C. 227 (b)(3)(C). Although awarding treble damages is discretionary by the trial

court, because appellants alleged in their complaint that Saratoga acted willfully and

knowingly in sending the facsimile advertisements, and Saratoga has not filed an answer

disputing this allegation, the trial court should have conducted a hearing to determine

whether there was any evidence to substantiate appellants’ assertion. To hold otherwise

would require that a plaintiff prove its case in its complaint when seeking treble damages

under the TCPA, which is clearly in contravention of Ohio’s notice pleading requirement

under Civ.R. 8. See State ex rel. Cincinnati Enquirer v. Ronan, 124 Ohio St.3d 17,
2009-Ohio-5947, 918 N.E.2d 515, at ¶ 7-8 (because of the notice pleading requirements,

“a plaintiff is not required to prove his or her case at the pleading stage.”)

       {¶36} Accordingly, we find that due to the facts, circumstances, and procedural

nature of this case, the trial court abused its discretion in granting default judgment

against Saratoga without holding a hearing to consider whether appellants were entitled to

treble damages pursuant to 47 U.S.C. 227(b)(3)(C). Appellants’ assignment of error is

sustained.

                                   IV. Motion to Compel

       {¶37} In their final assignment of error, appellants contend that the trial court

abused its discretion in denying their motion to compel.

       {¶38} It is not unusual for a trial court to limit discovery with respect to class

certification issues. However, it is uncertain how a motion to compel could have been

granted because Saratoga did not file an answer to the complaint; thus, it never submitted

to the trial court’s jurisdiction. It is a fundamental principle of law that a court has no

jurisdiction to issue an order compelling an action by a non-answering defendant.

Therefore, the trial court did not abuse its discretion in denying appellants’ motion to

compel.

       {¶39} Judgment affirmed in part; reversed in part and remanded to the trial court to

hold a default judgment hearing and consider whether treble damages pursuant to 47

U.S.C. 227(b)(3)(C) should be awarded.

       It is ordered that the parties share equally the costs herein taxed.
       The court finds there were reasonable grounds for this appeal.

       It is ordered that a special mandate be sent to said court to carry this judgment into

execution.

       A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of

the Rules of Appellate Procedure.

KATHLEEN ANN KEOUGH, JUDGE

JAMES J. SWEENEY, J., CONCURS;
MARY J. BOYLE, P.J., DISSENTS WITH SEPARATE OPINION.

MARY J. BOYLE, P.J., DISSENTING:

       {¶40} I respectfully dissent. It is my view that the trial court abused its discretion

when it denied appellants’ motion to compel discovery.              Thus, I would sustain

appellants’ third assignment of error.

       {¶41} Appellants served interrogatories, requests for admissions, and requests for

production of documents upon Saratoga. Saratoga failed to respond. Appellants assert

that discovery would have revealed the identity of the members of the proposed class, as

well as its size. I agree.

       {¶42} Sustaining appellants’ third assignment of error would render their first and

second assignments of error moot.         Upon remand, and upon obtaining discovery,

appellants may be able to establish what is necessary to obtain class certification.

       {¶43} The class action is an invention of equity. Ritt v. Billy Blanks Ents., 171

Ohio App.3d 204, 2007-Ohio-1695, 870 N.E.2d 212, ¶ 32. Indeed, the purpose of
allowing class actions is “to enable numerous persons who have small claims that might

not be worth litigating in individual actions to combine their resources and bring an action

to vindicate their collective rights.” Id. at ¶ 56.

       {¶44} This case concerns consumer protections. Class actions are particularly

appropriate to punish and deter companies from violating consumer protections.

Sometimes it is the only way. If trial courts do not enforce plaintiff’s rights to obtain

discovery in class actions, consumers will suffer the consequences.

       {¶45} Accordingly, I respectfully dissent.