Sparkle Hill, Inc. v. Interstate Mat Corporation , 788 F.3d 25 ( 2015 )

United States Court of Appeals
For the First Circuit
No. 14–1618
SPARKLE HILL, INC. and WILLIAM WARMING,
individually and as the representatives of a class
of similarly situated persons,
Plaintiffs, Appellants,
v.
INTERSTATE MAT CORPORATION,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
Before
Torruella, Thompson, and Kayatta,
Circuit Judges.
Phillip A. Bock, with whom Tod A. Lewis, Bock & Hatch, LLC,
Brian J. Wanca, David M. Oppenheim, Anderson + Wanca, Edward M.
Swartz, Alan L. Cantor, and Swartz & Swartz, were on brief, for
appellants.
Scott T. Ober, with whom David F. Hassett, Margarita I.
Warren, and Hassett & Donnelly, P.C., were on brief, for appellee.
June 3, 2015
KAYATTA, Circuit Judge. Nine years ago, plaintiffs
Sparkle Hill, Inc., and its vice president and owner William
Warming (collectively, "Sparkle Hill") received an unsolicited
advertisement on Sparkle Hill's fax machine from defendant
Interstate Mat Corporation ("Interstate"). Not one to act hastily,
Sparkle Hill filed suit against Interstate in federal district
court almost five years later, alleging a violation of the
Telephone Consumer Protection Act ("the Act"), 47 U.S.C. § 227.
The Act allows recipients of unsolicited fax advertisements to
recover from the sender $500 in statutory damages (trebled for
willful and knowing violations) for each fax transmission. Id.
§ 227(b)(1)(C), (b)(3). Invoking Federal Rule of Civil
Procedure 23(b)(3), Sparkle Hill sought to proceed both
individually and on behalf of others who also received an identical
fax from Interstate in May 2006. Interstate sought summary
judgment on the ground that a four-year statute of limitations
barred Sparkle Hill's claim. Sparkle Hill filed no opposition, and
the district court thereupon entered summary judgment dismissing
the case. We now affirm.
I. Background
The parties do not dispute the facts relevant to this
appeal. Interstate, a Massachusetts corporation with four
employees, paid a marketing firm $496.40 to fax to 10,000 potential
customers a one-page advertisement for Interstate's antifatigue
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floor mats. In May 2006, the marketing firm transmitted
Interstate's advertisement to 8,416 recipients. One of those
recipients was Sparkle Hill, a New Jersey corporation. Another was
West Concord 5-10-1.00 Store, Inc. ("West Concord"), a
Massachusetts corporation. Aside from later litigation, Interstate
never received any response to its fax advertisement.
More than three and a half years later, on January 28,
2010, West Concord--represented by the same plaintiffs' counsel who
now represent Sparkle Hill--filed a class action against Interstate
in Massachusetts superior court for sending unsolicited fax
advertisements in violation of the Act. See 47 U.S.C.
§ 227(b)(1)(C), (b)(3). The state court complaint alleged a class
of "[a]ll persons" who received a fax advertisement from
Interstate.
More than one year after West Concord filed the state
class action and nearly five years after the fax transmissions,
Sparkle Hill filed this lawsuit in federal district court
individually and on behalf of a class of "[a]ll persons" who
received a fax from Interstate. Given a putative class of more
than 8,000 fax recipients, and statutory damages of $500 for each
fax sent, Interstate faced more than $4,000,000 in damages
liability, potentially tripled if Interstate was found to have
willfully and knowingly violated the Act. Id. § 227(b)(3).
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On May 22, 2012, West Concord filed a motion in state
court to certify a class of "[a]ll persons in Massachusetts who
were successfully sent a facsimile" from Interstate in May 2006.
About a month later, Sparkle Hill moved in federal district court
to certify a class of "[a]ll persons who were successfully sent a
facsimile" from Interstate in May 2006. The federal district court
acted first, and certified Sparkle Hill's requested class on
December 18, 2012. Sparkle Hill, Inc. v. Interstate Mat Corp., No.
11-cv-10271-RWZ, 2012 WL 6589258, at *5 (D. Mass. Dec. 18, 2012);
see also Fed. R. Civ. P. 23(b)(3). Several months later, the state
trial court refused to certify a class of Massachusetts fax
recipients because of the court's doubts about West Concord's
ability to represent the class, the lack of predominant common
facts, the "enormous contrast between Interstate Mat's potential
liability and the actual harm suffered by potential class members,"
and the "inescapable [conclusion] that these class actions exist
for the benefit of the attorneys who are bringing them and not for
the benefit of individuals who are truly aggrieved." West Concord
5-10-1.00 Store, Inc. v. Interstate Mat Corp., No. 10-00356-C, 2013
WL 988621, at *5-8 (Mass. Super. Ct. Mar. 5, 2013).
In federal court, Sparkle Hill filed a motion for summary
judgment on May 28, 2013. Interstate opposed Sparkle Hill's motion
by disputing both that the faxes were unsolicited advertisements
and also that it willfully and knowingly violated the Act.
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Interstate also cross-moved for summary judgment, asserting that
the applicable four-year statute of limitations barred Sparkle
Hill's claim under the Act. See 28 U.S.C. § 1658(a) (federal four-
year catch-all statute of limitations). Sparkle Hill filed a reply
brief in support of its own motion for summary judgment, but did
not address the merits of the statute of limitations defense
Interstate had raised. Instead, Sparkle Hill filed a motion to
strike (as untimely) Interstate's motion for summary judgment.
Eight months later, the district court denied Sparkle Hill's motion
to strike. At the same time, the district court gave Sparkle Hill
an additional twenty-one days to file an opposition to the merits
of Interstate's limitations defense. The twenty-one days passed
with no word from Sparkle Hill.
After waiting two more months, the district court entered
summary judgment for Interstate on May 23, 2014. The district
court interpreted Sparkle Hill's silence in the face of
Interstate's limitations defense as a concession. Because Sparkle
Hill "d[id] not respond to [the limitations defense]," the court
"allow[ed] [Interstate's] motion for that reason." Sparkle Hill,
Inc. v. Interstate Mat Corp., No. 11-cv-10271-RWZ, 2014 WL 2215756,
at *2 (D. Mass. May 23, 2014).
Wisely adding belt to suspenders, see Fed. R. Civ. P.
56(e)(3), the district court also addressed the merits of
Interstate's statute of limitations defense and concluded that
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Sparkle Hill's claim under the Act was time-barred.1 Id. at *3-4.
Sparkle Hill received the fax in May 2006 but did not file suit
until February 2011, well after the four-year limitations period
the district court found applied.2 The district court considered
whether West Concord's state court class action tolled the statute
of limitations for Sparkle Hill's subsequent class action. See
American Pipe & Constr. Co. v. Utah, 414 U.S. 538, 553 (1974)
("[T]he commencement of the original class suit tolls the running
of the statute for all purported members of the class who make
timely motions to intervene after the court has found the suit
inappropriate for class action status."); Crown, Cork & Seal Co. v.
Parker, 462 U.S. 345, 353–54 (1983) (extending American Pipe
1
The district court also ruled that Massachusetts's three-
year statute of limitations for torts barred a state law conversion
claim contained in Sparkle Hill's complaint. See Mass. Gen. Laws
ch. 260, § 2A. Sparkle Hill does not contest this ruling on
appeal, so we say no more about it.
2
The district court noted a split of authority over the
source of the limitations period for claims under the Act. Sparkle
Hill, 2014 WL 2215756, at *3. Some courts apply the federal four-
year catch-all statute of limitations, 28 U.S.C. § 1658(a), see,
e.g., Giovanniello v. ALM Media, LLC, 726 F.3d 106, 115 (2d Cir.
2013); others apply the applicable state law statute of
limitations, see, e.g., Spillman v. Dominos Pizza, LLC, No. Civ.
10-349-BAJ-SCR, 2011 WL 721498, at *5–6 (M.D. La. Feb. 22, 2011).
The district court did not decide the applicable statute of
limitations, however, because it concluded that Sparkle Hill's
claim was time-barred under both federal and state limitations
periods. Because we affirm the district court on other grounds, we
similarly need not decide the applicable statute of limitations.
For simplicity, however, we follow the parties' lead and assume for
the sake of argument that the longer, four-year limitations period
in section 1658(a) applies. Compare Mass. Gen. Laws ch. 260, § 2A
(three-year statute of limitations for torts).
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tolling to class members who file their own suits after the denial
of class certification). The district court concluded that our
precedent foreclosed the application of American Pipe tolling to
sequential class actions, as opposed to class members' individual
actions. See Basch v. Ground Round, Inc., 139 F.3d 6, 11 (1st Cir.
1998) ("Plaintiffs may not stack one class action on top of another
and continue to toll the statute of limitations indefinitely.").
Sparkle Hill then filed a motion under Federal Rule of
Civil Procedure 60(b)(6) to "vacate" the district court's order and
"clarify the Memorandum Opinion . . . to decertify the class." The
Rule 60(b)(6) motion did not contest the district court's
conclusion that Sparkle Hill could not stack one class action on
top of another to extend the limitations period. Nor did it
challenge the district court's reliance on Sparkle Hill's failure
to respond as a basis for granting summary judgment. Sparkle Hill
instead advanced a limited argument that even if American Pipe
tolling did not apply to its class action, tolling might still
apply to its and the other class members' individual claims.
Therefore, Sparkle Hill argued, the district court should have
decertified the class and allowed class members to pursue
individual tolling arguments, instead of entering judgment for
Interstate. The district court denied Sparkle Hill's motion
without explanation.
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Sparkle Hill timely appealed. In its opening brief on
appeal Sparkle Hill offers no argument at all for finding error in
the district court's decision to hold Sparkle Hill accountable for
its lack of opposition to Interstate's limitations defense.
Instead, Sparkle Hill's brief argues the merits of the limitations
defense as applied both to the class and to Sparkle Hill. After
Interstate in its brief blew the whistle on Sparkle Hill's failure
to challenge the district court's reliance on its procedural
defalcation, Sparkle Hill in its reply brief made two new points:
(1) because the burden of proving an affirmative limitations
defense rested with Interstate, Sparkle Hill's failure to oppose
the motion was of no moment; and (2) any waiver was harmless, and
should fit within an exception to the normal rules concerning
waiver.3
II. Analysis
We have seen this story before. A district court
dismisses a claim for perceived procedural defalcations; the losing
3
Sparkle Hill also suggests that the district court did not
rely on any waiver by Sparkle Hill as one grounds for granting
summary judgment. The district court, though, repeatedly made
plain that it considered Sparkle Hill's failure to respond to the
limitations defense an independently sufficient grounds for
granting Interstate's cross-motion for summary judgment:
"[b]ecause plaintiffs concede that their suit is barred by the
statute of limitations, plaintiffs' motion is DENIED and
defendant's motion is ALLOWED"; "[p]laintiffs do not respond to
this [statute of limitations] argument, and I allow defendant's
motion for that reason"; and "for lack of opposition and on the
merits, defendant's motion for summary judgment is allowed."
Sparkle Hill, 2014 WL 2215756, at *1–2, *4.
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party then files a brief on appeal arguing the substantive merits
of its claim, saving for its reply brief any argument challenging
the actual, procedural basis for the district court's ruling. See,
e.g., Díaz-Colón v. Fuentes-Agostini, No. 13–2340, 2015 WL 2345496,
at *3–4 (1st Cir. May 18, 2015). Our precedent is clear: we do
not consider arguments for reversing a decision of a district court
when the argument is not raised in a party's opening brief. Waste
Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 299 (1st Cir. 2000)
("We have held, with a regularity bordering on the monotonous, that
issues advanced for the first time in an appellant's reply brief
are deemed waived."). Sandbagging of this type deprives the
appellee of an opportunity to respond in writing on the issue. And
any attempt to remedy that unfairness by allowing a second
opposition, or sur-reply, brief can both increase costs for the
appellee and result in considerable delay.4
This does not mean that any and all contentions in
support of an appellant's argument are waived if not included in
the opening brief. Often, counterpoints and rebuttal rejoinders
arise or fit most naturally as a reply to an opposition argument
that could not have reasonably been anticipated. Neither our rules
4
Reply briefs are often filed after a case has been assigned
to a panel and within a month of oral argument. Allowing thirty
days for a new opposition brief, plus time to review it, would
therefore often require postponing argument until the same panel is
scheduled to sit again. See First Circuit Internal Operating
Procedure VII(D)(3).
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nor fairness require a robust application of waiver in such
circumstances. See, e.g., Holmes v. Spencer, 685 F.3d 51, 66 (1st
Cir. 2012) (considering argument raised for first time in reply
brief in response to new argument in appellee's brief). Here,
though, the opening brief presents no argument at all challenging
express grounds upon which the district court prominently relied in
entering judgment. Indeed, the opening brief did not even mention
the procedural grounds upon which the district court ruled. One
hundred percent of the argument advanced for why we should reverse
that holding is in the reply brief.
We have, too, added reason not to deviate from our
customary practice in this case. Even if we ignored Sparkle Hill's
waiver on appeal, that would simply get us to considering the
effect of its failure to oppose the summary judgment motion in the
district court. At best, that might lead us to plain error review.
Díaz-Seijo v. Fajardo-Vélez, 397 F.3d 53, 55 (1st Cir. 2005). To
prevail on plain error review, Sparkle Hill would need to show that
"(1) an error occurred (2) which was clear or obvious and which not
only (3) affected the [appellant's] substantial rights, but also
(4) seriously impaired the fairness, integrity, or public
reputation of the judicial proceedings." Dávila v. Corporación de
P.R. para la Difusión Pública, 498 F.3d 9, 14–15 (1st Cir. 2007)
(alteration in original) (quoting United States v. Duarte, 246 F.3d
56, 60 (1st Cir. 2001)) (internal quotation marks omitted). Plain
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error review is "extremely demanding," and "in this circuit, it is
rare indeed for a panel to find plain error in a civil case."
Chestnut v. City of Lowell, 305 F.3d 18, 20 (1st Cir. 2002) (en
banc) (per curiam).
Sparkle Hill has not come close to satisfying this
"extremely demanding" standard. Without expressing any view on the
correctness of the district court's denial of American Pipe tolling
to a second class action under our decision in Basch, we do not
perceive the district court's reasoning on this difficult issue as
clearly or obviously wrong. See Dávila, 498 F.3d at 15 ("The lack
of any clear, easily determinable answer to a legal conundrum is,
in itself, enough to defeat a claim of plain error."); cf.
Chestnut, 305 F.3d at 20 (plain error where district court's
decision was contrary to clearly applicable, decades-old Supreme
Court precedent).
Disposing of an appeal on technical or procedural grounds
rarely feels satisfying. Here, though, any hesitation ebbs quickly
when one assays the practical effect on the parties. For having
received one unwanted fax, Sparkle Hill would be entitled to at
most $1,500 ($500 in statutory damages, trebled for a willful and
knowing violation of the Act). See 47 U.S.C. § 227(b)(3). None of
the fax recipients complained to Interstate until plaintiffs'
counsel filed (on West Concord's behalf) the state court class
action. Sparkle Hill itself waited nearly five years after it
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received the fax to file the complaint in this case. And it points
to no class members who have relied on its prosecution of this
case. Interstate, in turn, has likely spent far more in defending
two class actions and an appeal than it gained in profits from
mass-faxing the advertisement. On the whole, we simply do not have
the type of circumstances that might cause us to use any slack in
the enforcement of our rules in order to avoid a miscarriage of
justice.
Finally, we do agree with Sparkle Hill that the district
court, rather than entering judgment against the entire class,
should have decertified the class. We read the district court's
orders, however, as doing just that. It did so by denying Sparkle
Hill's request for permission to send notice to the absent class
members. Sparkle Hill, 2014 WL 2215756, at *5. Absent such
notice, no Rule 23(b)(3) damages class can be bound by the
judgment. See AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740,
1751 (2011) ("For a class-action money judgment to bind absentees
in litigation, . . . absent members must be afforded notice, an
opportunity to be heard, and a right to opt out of the class.")
(citing Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811–12
(1985)); see also Fed. R. Civ. P. 23(c)(2)(B), (c)(3)(B).
Accordingly, in affirming the judgment, we construe it as a
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judgment against the named plaintiffs only, with the class
decertified.5
III. Conclusion
We affirm the district court's grant of summary judgment
to Interstate on the claims of the named plaintiffs. We also
affirm the district court's denial of Sparkle Hill's Rule 60(b)(6)
motion.
5
At oral argument, counsel for Interstate agreed that
Interstate will not be able to assert a res judicata defense
against the absent, unnoticed class members.
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