Miranda v. Saratoga Diagnostics , 2012 Ohio 2633 ( 2012 )

[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.