Ron Golan v. Veritas Entertainment, LLC ( 2015 )

United States Court of Appeals
For the Eighth Circuit
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No. 14-2484
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Ron Golan; Dorit Golan, individually and on behalf of all others similarly situated
lllllllllllllllllllll Plaintiffs - Appellants
v.
Veritas Entertainment, LLC; Veritas Marketing Group, LLC; FreeEats.com, Inc.,
doing business as CC Advertising; AIC Communications, LLC, doing business as
CC Advertising; Gabriel S. Joseph, III; Stephen Wayne Griffin; Mission City
Management, Inc.; Courage 2012, LLC; James R. Leininger; SixDi, Inc., doing
business as SixDi; Bob Brewer; Michael Dale Huckabee, also known as Mike Huckabee
lllllllllllllllllllll Defendants - Appellees
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Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
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Submitted: March 11, 2015
Filed: June 8, 2015
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Before MURPHY and SHEPHERD, Circuit Judges, and BROOKS,1 District
Judge.
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MURPHY, Circuit Judge.
1
The Honorable Timothy L. Brooks, United States District Judge for the
Western District of Arkansas, sitting by designation.
In September 2012 Ron and Dorit Golan received two unsolicited, prerecorded
messages on their home phone line. Each message stated: "Liberty. This is a public
survey call. We may call back later." The Golans filed a putative class action against
Veritas Entertainment, LLC, Veritas Marketing Group, LLC, FreeEats.com, Inc., AIC
Communications, LLC, Gabriel Joseph, Stephen Griffin, Mission City Management,
Inc., Courage 2012, LLC, James Leininger, SixDi, Inc., Bob Brewer, and Mike
Huckabee (collectively, "defendants"), alleging that defendants initiated the phone
calls as part of a telemarketing campaign to promote the film Last Ounce of Courage,
in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227, and the
Missouri Do Not Call Law, Mo. Rev. Stat. § 407.1098. The district court dismissed
the complaint with prejudice, concluding that the Golans did not have standing and
were inadequate class representatives, and they now appeal. We reverse and remand.
Last Ounce of Courage was initially owned by Eastern Gate Films, LLC.
During the production of the film, Eastern Gate asked Stephen Griffin, the president
and chief executive officer of Veritas Entertainment, LLC and Veritas Management,
LLC, to "come alongside and fix the film." Griffin accepted the offer in exchange for
a 49 percent ownership interest in Last Ounce of Courage. Eastern Gate sold its
remaining interest in the film to James Leininger, the manager of Mission City
Management, Inc. and Courage 2012, LLC, after he invested $10,000,000 in
marketing the film. Leininger and Griffin then hired Gabriel Joseph, the owner of
AIC Communications, LLC, to launch a telemarketing campaign to promote the film.
Using the "celebrity voice" of Mike Huckabee, they agreed to play the following
prerecorded script to 4 million residential phone lines and 30 million cell phones:
Hello, this is Governor Mike Huckabee, with a 45-second survey. Do
you believe in American freedom and liberty? . . . Would you, like me,
Mike Huckabee, like to see Hollywood respect and promote traditional
American values? I am an enthusiastic supporter of a new movie called
Last Ounce of Courage. It is a film about faith, freedom, and taking a
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stand for American values. May I tell you more about why I recommend
that you . . . see the movie Last Ounce of Courage? (Please note that
only "yes" responses go to [the next segment of the script].)
Thank you for your interest. Last Ounce of Courage opens in theaters
on Friday, September 14, [2012]. Last Ounce of Courage will inspire
you and your loved ones to celebrate our nation and the sacrifices made
to protect our liberties. It is a great story about taking a stand for
religious freedom. The film is a timely reminder of all that is worth
defending in our nation. Experience the Last Ounce of Courage trailer
and see audience reactions at www.lastouncethemovie.com, that's last
ounce the movie dot com. Would you like to hear this information
again? (Please note that only "yes" responses [repeat this segment of the
script and] all other responses go to [the next segment of the script].)
Thank you for your answers so far. I have just [one] more question[] for
demographic purposes. Do you own a smart phone?
If a recipient did not answer the call, the following message would be left on the
answering machine: "Liberty. This is a public survey call. We may call back later."
After Huckabee recorded the script on September 4, 2012, Joseph hired Bob
Brewer, an officer of the information technology company SixDi, Inc., to "review the
script" and research "the cities and states where the most theaters would be showing
the movie." Brewer charged AIC Communications for the work, but the bills were
paid by Griffin on behalf of Veritas Entertainment and Veritas Management. Griffin
also paid Joseph and AIC Communications $248,500 for their work on the campaign.
Although the Golans were registered on federal and state "do not call" lists,
Joseph and AIC Communications obtained their telephone number from a database
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they had purchased from Axiom Corporation. AIC Communications called the
Golans on September 10, 2012 as part of the campaign. The Golans did not answer
the call, so they heard only the automated message: "Liberty. This is a public survey
call. We may call back later." AIC Communications called the Golans again on
September 12, 2012 and recorded the same message. Last Ounce of Courage opened
nationwide two days later. Approximately 1,400 cinemas played the film that day
including the Wehrenberg Chesterfield Galaxy 14 Theater, located near the home of
the Golans in Chesterfield, Missouri. In total, AIC Communications called 4 million
residential phone lines, and over 1 million live responses were detected, subjecting
those recipients to the majority of the prerecorded script. The remaining recipients
who did not answer the call, like the Golans, heard only the brief message recording.
The Golans sued Veritas Entertainment and Veritas Marketing in Missouri state
court on October 3, 2012, alleging violations of the Telephone Consumer Protection
Act, 47 U.S.C. § 227(b)(1)(B), and 47 C.F.R. § 64.1200(a). After initial discovery,
they filed an amended class action complaint, adding Joseph, AIC Communications,
Freeeats.com, Inc., Griffin, Mission City, Courage 2012, Leininger, SixDi, Brewer,
and Huckabee as defendants to the action. The Golans then moved to certify a class
of "persons in the United States to whom [defendants] within four years of October
3, 2012, initiated one or more telephone calls to such persons' residential telephone
lines using the recorded voice of Mike Huckabee to deliver a message as part of the
above-mentioned campaign regarding the movie Last Ounce of Courage," in violation
of § 227(b)(1)(B) of the Telephone Consumer Protection Act. They also sought to
represent a subclass of Missouri residents who were registered on Missouri "do not
call" lists and received more than one telephone solicitation by or on behalf of
defendants, in violation of the Missouri Do Not Call Law, Mo. Rev. Stat. § 407.1098.
Defendants removed the case to federal district court on January 16, 2014.
While Griffin, Veritas Entertainment, Veritas Marketing, Joseph, AIC
Communications, and Freeeats.com, Inc., answered the amended class action
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complaint, Mission City, Courage 2012, Leininger, and Huckabee moved to dismiss
it on the ground that they could not be held vicariously liable for the calls. The
Golans moved to file a second amended class action complaint and to stay further
briefing on class certification. In response to the motions, the district court found
"issues of considerable concern that warrant[ed] holding any ruling in abeyance,
pending additional briefing by the parties." On its own accord, the court questioned
"whether [the Golans had] suffered any injury sufficient to give them standing to
bring this case in federal court and whether they [were] proper class representatives."
After the parties briefed those issues, the district court concluded that the
Golans had not suffered an injury in fact because none of the messages they had
received "contained an advertisement, telemarketing message, or telephone
solicitation," in violation of the Telephone Consumer Protection Act (TCPA) or the
Missouri Do Not Call Law. The district court also concluded that the Golans were
inadequate class representatives because they could not show that their claims were
typical of putative class members under Federal Rule of Civil Procedure 23(a).
Unlike most putative class members who had heard the full script of the call, the court
reasoned that the Golans were subject to a "unique defense" because they had heard
only the brief message recording on their answering machine. It thus dismissed the
case without addressing whether Mission City, Courage 2012, Leininger, or
Huckabee could be held vicariously liable for the calls, and the Golans now appeal.
The Golans first argue that the district court erred in concluding that they
lacked standing to pursue their TCPA claims because they had not suffered an injury
in fact.2 We review the district court's standing determination de novo. Plymouth
Cnty., Iowa v. Merscorp, Inc., 774 F.3d 1155, 1158 (8th Cir. 2014). Article III
2
Because the Golans waived argument related to their Missouri Do Not Call
Law claims by failing to mention those claims in their briefs, we limit our review to
the dismissal of the TCPA claims. Fair v. Norris, 480 F.3d 865, 869 (8th Cir. 2007).
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standing requires a plaintiff to "demonstrate the now-familiar elements of injury in
fact, causation, and redressability." Lance v. Coffman, 549 U.S. 437, 439 (2007).
Although Congress may not convert a generalized grievance into an "individual right
vindicable in the courts," Lujan v. Defenders of Wildlife, 504 U.S. 555, 577 (1992),
it "may create a statutory right or entitlement the alleged deprivation of which can
confer standing to sue even where the plaintiff would have suffered no judicially
cognizable injury in the absence of the statute," Warth v. Seldin, 422 U.S. 490, 514
(1975). Injury in fact may thus be shown "solely by the invasion of a legal right that
Congress created." Hammer v. Sam's East, Inc., 754 F.3d 492, 498 (8th Cir. 2014).
With few exceptions, the TCPA prohibits the initiation of "any telephone call
to any residential telephone line using an artificial or prerecorded voice to deliver a
message without the prior consent of the called party." 47 U.S.C. § 227(b)(1)(B).
Congress created a private right of action for enforcement of violations of the statute,
permitting recovery for "actual monetary loss from such a violation, [or] $500 in
damages for each such violation, whichever is greater." Id. § 227(b)(3)(B). Since the
TCPA creates a statutory cause of action, we must consider whether the Golans have
alleged an injury under it sufficient to confer standing. See Hammer, 754 F.3d at 499.
Congress enacted the TCPA to protect consumers from the "proliferation of
intrusive [telemarketing] calls to their homes." Mims v. Arrow Fin. Servs., LLC, 132
S. Ct. 740, 745 (2012). Although most states had enacted legislation restricting
telemarketing, members of Congress believed that federal law was necessary because
telemarketers could evade state law through interstate operations. See id. The TCPA
thus prohibits "any person within the United States, or any person outside the United
States if the recipient is within the United States," from using prerecorded messages
to call residential phone lines without prior consent, "unless the call is initiated for
emergency purposes or is exempted by rule or order by the Commission under
paragraph 2(B)." 47 U.S.C. § 227(b)(1)(B). Paragraph 2(B) provides that the Federal
Communications Commission (FCC) may exempt noncommercial calls, see id. §
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227(b)(2)(B)(i), and commercial calls if they do not "adversely affect the privacy
rights that this section is intended to protect [and] do not include the transmission of
any unsolicited advertisement," see id. § 227(b)(2)(B)(ii)(I)–(II). The FCC has
subsequently exempted from regulation any artificial or prerecorded call which is
"made for a commercial purpose but does not include or introduce an advertisement
or constitute telemarketing." 47 C.F.R. § 64.1200(a)(3)(iii); accord In re Rules and
Regulations Implementing the Telephone Consumer Protection Act of 1991, 18
F.C.C. Rcd. 14014, 14101 ¶ 145, 2003 WL 21517853, at *51 (F.C.C. July 3, 2003).
The messages at issue here stated, "Liberty. This is a public survey call. We
may call back later." Even if the calls were made for a commercial purpose,
defendants contend that they did not violate the TCPA because neither message
contained an "advertisement" or qualified as "telemarketing" under the implementing
regulations. "Advertisements" include "material advertising the commercial
availability or quality of any property, goods, or services." 47 C.F.R. § 64.1200(f)(1).
Because the messages did not mention property, goods, or services, we agree that they
were not advertisements prohibited by the TCPA or its implementing regulations. Id.While the content of the calls controlled whether they were "advertisements,"
their purpose controlled whether they were "telemarketing." The implementing
regulations define "telemarketing" as the "initiation of a telephone call or message for
the purpose of encouraging the purchase or rental of, or investment in, property,
goods, or services, which is transmitted to any person." 47 C.F.R. § 64.1200(f)(12).
A "person or entity 'initiates' a telephone call when it takes the steps necessary to
physically place [the] call." In the Matter of the Joint Petition filed by Dish Network,
LLC, 28 F.C.C. Rcd 6574, 6583 ¶ 26, 2013 WL 1934349, at *8 (F.C.C. May 9, 2013).
Notwithstanding the plain language of the regulations, defendants argue that
we should consider only the content of the calls in determining whether they were
"telemarketing." See, e.g., Alleman v. Yellowbook, Inc., No. 12-CV-1300-DRH-
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PMF, 2013 WL 4782217, at *6 (S.D. Ill. Sept. 6, 2013). We refuse to do so. Neither
the TCPA nor its implementing regulations "require an explicit mention of a good,
product, or service" where the implication of an improper purpose is "clear from the
context." Chesbro v. Best Buy Stores, L.P., 705 F.3d 913, 918 (9th Cir. 2012).
Congressional findings indicate that consumers consider "prerecorded calls,
regardless of the content [of the] message, to be a nuisance and an invasion of
privacy." See TCPA of 1991, Pub. L. No. 102–243, 105 Stat. 2394, § 2(10). Even
when the intended content of a message is not conveyed, the intrusion into the home
and the "seizure" of the phone line is the same. Id. § 2(5).
Senator Hollings, the sponsor of the TCPA, has explained that "computerized
calls are the scourge of modern civilization." Mims, 132 S. Ct. at 752 (citing 137
Cong. Rec. 30821–30822 (1991)). They wake us up in the morning, interrupt our
dinner at night, force the sick out of bed, and "hound us until we want to rip the
telephone right out of the wall." Id. Given these findings and the plain language of
the regulations, we conclude that content may be instructive, but it is not dispositive.
Cf. Solis v. Summit Contractors, Inc., 558 F.3d 815, 823–24 (8th Cir. 2009).
"Telemarketing" occurs when the context of a call indicates that it was initiated and
transmitted to a person for the purpose of promoting property, goods, or services. See
47 C.F.R. § 64.1200(a)(2)(iii); 47 C.F.R. § 64.1200(f)(12); see also In re Rules and
Regulations Implementing the Telephone Consumer Protection Act of 1991, 18
F.C.C. Rcd at 14098 ¶ 141, 2003 WL 21517853, at *49.
Here, the context of the calls indicates that they were initiated for the purpose
of promoting Last Ounce of Courage. The Golans alleged that Leininger and Griffin
hired Joseph of AIC Communications to promote the film as part of a nationwide
"telemarketing campaign." Although the campaign appeared to survey whether
recipients had "traditional American values," Griffin and Joseph were "more
concerned with getting viewers to see Last Ounce of Courage than gathering
information about them." AIC Communications thus called the Golans and 4 million
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other phone lines by using a prerecorded script that promoted the film as a "timely
reminder of all that is worth defending in our nation" and "a great story about taking
a stand for religious freedom." The script explained where recipients could watch the
trailer and when the film would open. Since the calls were initiated and transmitted
to the Golans in order to promote Last Ounce of Courage, they qualified as
"telemarketing" even though the messages never referenced the film. See 47 C.F.R.
§ 64.1200(a)(2)(iii); 47 C.F.R. § 64.1200(f)(12). The district court therefore erred in
concluding that the calls were exempt from regulation and that the Golans had failed
to allege an injury in fact sufficient to confer Article III standing. See Hammer, 754
F.3d at 499; cf. Wallace v. ConAgra Foods, Inc., 747 F.3d 1025, 1033 (8th Cir. 2014).
The Golans next argue that the district court erred in concluding that they were
inadequate class representatives because they could not show that their TCPA claims
were typical of putative class members under Federal Rule of Civil Procedure 23(a).
A trial court must "evaluate carefully the legitimacy of the named plaintiff's plea that
he is a proper class representative under Rule 23(a)." General Tel. Co. v. Falcon, 457
U.S. 147, 160 (1982). The typicality and adequacy criteria serve as "guideposts" for
determining whether "maintenance of a class action is economical and whether the
named plaintiff's claim and the class claims are so interrelated that the interests of the
class members will be fairly and adequately protected in their absence." Amchem
Prods., Inc. v. Windsor, 521 U.S. 591, 626 n.20 (1997). We review the district court's
rulings on these issues for an abuse of discretion, reversing only if the court
committed an error of law or rested its conclusions on clearly erroneous factual
determinations. See, e.g., Blades v. Monsanto Co., 400 F.3d 562, 566 (8th Cir. 2005).
Relying on its conclusion that the Golans lacked standing to pursue their TCPA
claims, the district court concluded that they were inadequate class representatives.
It is well established that a plaintiff who lacks standing to assert his claims cannot be
a proper class representative under Rule 23(a). See Hall v. Lhaco, Inc., 140 F.3d
1190, 1196 (8th Cir. 1998); Great Rivers Co-op. of S.E. Iowa v. Farmland Indus.,
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Inc., 120 F.3d 893, 899 (8th Cir. 1997). That is not the situation here, however, for
the Golans have alleged an injury under the TCPA, see 47 U.S.C. § 227(b)(1)(B),
along with the remaining elements of causation and redressability, see id. § 227(b)(3).
Cf. Vervaecke v. Chiles, Heider & Co., Inc., 578 F.2d 713, 719–20 (8th Cir. 1978).
The district court also concluded that the Golans were inadequate class
representatives because they suffered a different injury than class members who had
heard the full script of the prerecorded message. Class representatives "must be part
of the class and possess the same interest and suffer the same injury as the class
members." Alpern v. UtiliCorp United, Inc., 84 F.3d 1525, 1539 (8th Cir. 1996). A
class representative is "not adequate or typical if it is subject to a unique defense that
threatens to play a major role in the litigation." In re Milk Prods. Antitrust Litig., 195
F.3d 430, 437 (8th Cir. 1999). Because the purpose of the calls is the critical issue
in this case, see 47 C.F.R. § 64.1200(f)(12), the Golans were not subject to a unique
defense. Nor did they suffer a different injury than class members who heard the
entire message. What matters for all class members, including the Golans, is that
each call was initiated for the purpose of promoting Last Ounce of Courage. Cf. In
re Milk Prods. Antitrust Litig., 195 F.3d at 437. The district court therefore erred as
a matter of law in concluding that the Golans were inadequate class representatives.
Although the district court did not rule on whether Mission City, Courage
2012, Leininger, or Huckabee could be held vicariously liable for the calls,
defendants argue for affirmance on this alternative ground. As a general rule, federal
appellate courts "do not decide issues that the district court did not adjudicate." E.g.,
Daisy Mfg. Co., Inc. v. NCR Corp., 29 F.3d 389, 395 (8th Cir. 1994). We thus
decline to pass on this issue and remand to the district court to consider whether those
defendants can be held vicariously liable for the calls. See, e.g., Braden v. Wal-Mart
Stores, Inc., 588 F.3d 585, 603 (8th Cir. 2009).
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For these reasons, we reverse the judgment and remand the case to the district
court for further proceedings consistent with this opinion.
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