HUGHES v. CIRCLE STORES INC (2024)

ORDER

Plaintiff Emisiah Hughes (“Hughes”) has brought a class action against Circle K Stores, Inc. (“Circle K”) alleging Circle K violated the Telephone Consumer Protection Act (“TCPA”) by sending her, and those similarly situated, text messages after she requested that Circle K stop. Circle K responded to the Complaint by filing a Motion to Strike Class Allegations pursuant to Federal Rules of Civil Procedure 12(f) and 23. (D. 9). Hughes opposes the Motion. (D. 10). For the reasons set forth below, Circle K's Motion to Strike is DENIED.

I. BACKGROUND 1

Circle K has numerous convenience stores and gas stations throughout the United States and markets its products and services, in part, by sending advertisements via text message to consumers’ cell phones. On February 22, 2022, Hughes received a marketing text message from Circle K and responded “Stop” to end the messaging. Circle K immediately sent an automated response to Hughes, which stated: “You've been unsubscribed from all texts on 31310 & will no longer receive text msgs.” (D. 1, ¶ 22).

On May 6, 2022, Circle K sent Hughes another text message that stated: “Super Duper Announcement!!! Our new game is Live. Play Rock, Paper, Prizes & win daily prizes! [website redacted] Txt HELP for Info, STOP 2 end.” Id. at ¶ 24. On May 26, 2022, Hughes received another text message from Circle K, stating: “Breaking News! Mtn Dew Purple Thunder on Polar Pop! Exclusive at Circle K! Try for FREE! Expires 5/15 [website redacted].” Id. at ¶ 25. Clicking the links in these text messages directs the recipient “to a website with Circle K's logo and information about the offer contained in the message.” Id. at ¶ 26.

On February 9, 2024, Hughes filed a class action complaint, which includes one count alleging a violation of the TCPA under 47 U.S.C. § 227(c)(5), which provides a private right of action for violations of Federal Communications Commission regulations, including the internal do-not-call (“IDNC”) regulations found at 47 C.F.R. § 64.1200(d). Hughes alleges that Circle K violated these provisions by continuing to text individuals after they “requested that Circle K stop texting them, i.e., to be placed on Circle K's internal do not call list.” Id. at ¶ 36. Hughes asserts that she “reasonably believes that hundreds or thousands of people have been harmed by Circle K's actions,” and seeks to sue on behalf of herself and represent the following class:

All persons in the United States from four years prior to the filing of this action through class certification to whom: (1) Circle K sent text messages marketing its products or services, (2) Circle K sent more than one text message to the person in a twelve-month period, and (3) Circle K sent such text messages after the person requested that Circle K stop sending them text messages.

Id. at ¶¶ 32, 34. Hughes also claims that “[r]ecords of the phone numbers of the punitive class members and the text message correspondence with the putative members are readily identifiable through records available to Circle K.” Id. at ¶ 34.

Hughes provides that the following common questions of law and fact exist as to all members of the proposed class and predominate over any questions affecting individual members, including, but not limited, to:

a. Whether Circle K sent text messages to Hughes and the putative class members after they requested that Circle K no longer send them text messages;

b. Whether Circle K's conduct violates 47 U.S.C. § 227(c);

c. Whether Circle K's conduct violates the rules and regulations implementing the TCPA; and,

d. Whether Hughes and the putative class members are entitled to increased damages for each violation based on the willfulness of Circle K's conduct.

Id. at ¶ 37. “[P]articularly the propriety of sending text messages to persons who requested that Circle K no longer text them, i.e., place them on Circle K's internal do not call list, predominate over questions affecting only individual members.” Id. at ¶ 43.

Circle K argues that Hughes’ class allegations should be stricken pursuant to Federal Rules of Civil Procedure 12(f) and 23 because the class is “fail-safe,” and fails to adequately allege commonality and numerosity. (D. 9).

II. LEGAL STANDARD

Federal Rule of Civil Procedure 12(f) provides that upon a motion made by a party the “court may strike from a pleading ․ any redundant, immaterial, impertinent, or scandalous matter.” Federal Rule of Civil Procedure 23(c)(1)(A), which regulates the timing of class-certification decisions, states: “At an early practicable time after a person sues or is sued as a class representative, the court must determine by order whether to certify the action as a class action.” These rules, read in conjunction with Rule 23(d)(1)(D), empowers the court to dismiss or strike class allegations at the pleading stage. Murdock-Alexander v. Tempsnow Emp., 2016 WL 6833961, at *3 (N.D. Ill. Nov. 21, 2016) (citing Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982); Kasalo v. Harris & Harris, Ltd., 656 F.3d 557, 563 (7th Cir. 2011); and Wright v. Fam. Dollar, Inc., 2010 WL 4962838, at *1 (N.D. Ill. Nov. 30, 2010) (“[A] motion to strike class allegations, made pursuant to [Rules 23(c)(1)(A) and 23(d)(1)(D)], is an appropriate device to determine whether the case will proceed as a class action.”)) (cleaned up). Nevertheless, many district courts in this circuit have found that motions to strike class allegations are “generally disfavored and fall under the purview of Rule 23 rather than Rule 12(f).” S.A. by Allen v. E.I. du Pont de Nemours & Co., 2023 WL 6976507, at *9 (N.D. Ind. Oct. 20, 2023) (quoting Beyer v. Michels Corp., 2023 WL 2693439, at * 12 (E.D. Wis. Mar. 29, 2023) (collecting cases); citing Womick v. Kroger Co., 2022 WL 1266630, at *2 (S.D. Ill. Apr. 28, 2022) (“District courts within the Seventh Circuit evaluate motions to strike class allegations under Rule 23, not Rule 12(f).”)).

To maintain a class action, the class representative must satisfy all four requirements under Rule 23(a):

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect the interests of the class.

Fed. R. Civ. P. 23(a). The class representative must also satisfy “any one of the conditions of Rule 23(b).” Oshana v. Coca-Cola Co., 472 F.3d 506, 513 (7th Cir. 2006) (citations omitted). While the plaintiff bears the burden of establishing a prima facie case that the requirements under Rule 23 are satisfied to certify a class, recent district court decisions within the Seventh Circuit have held that “where the plaintiffs have not yet had the benefit of class discovery, the defendant bears the burden of proving the proposed class is not certifiable.” S.A. by Allen, 2023 WL 6976507, at *9 (quoting Womick, 2022 WL 1266630, at *2 (collecting cases)). Additionally, when a factual dispute exists requiring discovery to determine whether a class should be certified, a motion to strike at the pleading stage is premature. Moore v. Nicole Hupp & Assoc., LLC, 2023 WL 7166555, at *4 (N.D. Ill. Oct. 31, 2023).

III. DISCUSSION

A. TCPA

Section 227(c)(5) provides that an individual “who has received more than one telephone call within any 12-month period by or on behalf of the same entity in violation of the regulations prescribed under this subsection” may pursue a private right of action. 47 U.S.C. § 227(c)(5). The IDNC regulations under 47 C.F.R. § 64.1200(d) require businesses that engage in telemarketing to maintain a do-not-call list for people who have requested not to be called for telemarketing purposes. See 47 C.F.R. § 64.1200(d). Section 64.1200(d)(3) provides: “No person or entity shall initiate ․ any call for telemarketing purposes to a residential telephone subscriber unless such person or entity has instituted procedures for maintaining a list of persons who request not to receive such calls made by or on behalf of that person or entity.” Id. § 64.1200(d)(3). The regulation goes on to list six minimum standards the business must meet, including that the business “must record the request [to opt out of telemarketing messages] and place the subscriber's name, if provided, and telephone number on the do-not-call list at the time the request was made.” Id. § 64.1200(d)(3). Businesses “must honor a residential subscriber's do-not-call request within a reasonable time from the date such request is made,” and this period “may not exceed 30 days from the date of such request.” Id.

B. Parties’ Arguments

Hughes’ TCPA class purports to include those who Circle K sent more than one text message to in a twelve-month period to market their product or service after the person requested that Circle K stop sending them text messages. (D. 1, ¶ 32). Circle K argues the class definition is “fail-safe” because it would require the Court “to affirmatively establish each individual punitive class member's lack of consent” to determine class membership. (D. 9, p. 4). Circle K also asserts the Court would be required to determine whether each individual class member: (1) received a “telemarketing” text message, as opposed to a non-marketing text message; and (2) received more than one marketing message within a twelve-month period and more than thirty days after they texted “STOP” without resubscribing in the interim. (D. 9, p. 5).²

Regarding commonality, Circle K argues that the only common contention is “whether Circle K sent text messages to Hughes and the putative class members after they requested that Circle K no longer send them text messages.” (D. 9, p. 6) (quoting D. 1, ¶ 37(a)). Circle K argues that is not common because this will require an individual inquiry into each class member's records to determine whether they requested Circle K stop sending them text messages, whether a subsequent text that qualified as “telemarketing” was sent more than thirty days after the class member requested the messages stop, and that they did not resubscribe. (D. 9, p. 6).

Regarding numerosity, Circle K argues that the Complaint alleges only that Hughes “reasonably believes that hundreds of thousands of people have been harmed by Circle K's actions.”(D. 9, p. 7). Circle K argues Plaintiff did not include any factual support for this assertion and that it is deficient as a matter of law.

In response, Hughes argues that Circle K bears the “heavy burden” of “definitively establishing” that a class cannot be certified and highlights that motions to strike are generally disfavored at the pleading stage and not a mechanism for deciding disputed issues. (D. 10, p. 2). Hughes argues that her proposed class definition is not “fail-safe,” because it is based on objective criteria—namely Circle K's text message records—and not Circle K's liability. Id. at p. 7. She also argues that discovery will show whether Circle K has affirmative defenses against class members, such those who consented by resubscribing, and whether Circle K had proper safeguards in place to not contact people who no longer wanted to be contacted under § 64.1200(d)(3). Alternatively, Hughes argues that even if the class definition is “fail-safe,” the appropriate remedy is to not strike the class allegations at the pleading stage, but rather to resolve the “fail-safe” problem by redefining the class definition during the class certification stage after discovery. Id. at pp. 8-9. Hughes also presents various arguments that she adequately pled commonality and numerosity to survive a motion to strike. See id. at pp. 9–14 (emphasis added).

C. Analysis

A defendant may move to strike class allegations at the pleading stage “when they are facially and inherently deficient, particularly when the dispute is not factual and discovery is unnecessary to resolve it.” S.A. by Allen, 2023 WL 6976507, at *9 (quoting Miles v. Am. Honda Mot. Co., Inc., 2017 WL 4742193, at *5 (N.D. Ill. Oct. 19, 2017)) (internal quotations and citations omitted). Generally, however, such motions are “disfavored and fall under the purview of Rule 23 rather than Rule 12(f).” Id. (quoting Beyer, 2023 WL 2693439, at *12 (collecting cases)).

1. “Fail-Safe” Class

Circle K argues that the class definition is “fail-safe,” because it would require the Court to consider each individual member's lack of consent and whether the text message received constituted “telemarketing” to prevail on liability under the TCPA to become a member of the class. A “fail-safe” class is “one that is defined so that whether a person qualifies as a member depends on whether the person has a valid claim.” Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 825 (7th Cir. 2012). The Seventh Circuit has held that such classes are precluded from certification because a class member “either wins or, by virtue of losing, is defined out of the class and is therefore not bound by the judgment.” Id.

At this point, the Court cannot find that class definition “fail-safe.” Based on the allegations in the Complaint, it appears that the proposed class can be determined without addressing the issue of liability. To determine whether someone is in the class, one needs to determine whether the person is on Circle K's IDNC list, and whether that person continued to receive unsolicited marketing texts message during the applicable timeframe. According to the allegations in the Complaint, under § 64.1200(d)(3) if a business is sending messages for “telemarking purposes” and receives a request from a residential telephone subscriber to stop sending those messages, then the business “must record the request and place the subscriber's name ․ and telephone number on the do-not-call list at the time the request is made.” (D. 1, p. 9) (quoting § 64.1200(d)(3)). As a result, it appears that membership in the class can be determined by objective criteria. Furthermore, the class would not necessarily consist of only people who would prevail on the merits. For example, class members who later received messages that were not for marketing purposes, or that Circle K obtained subsequent consent from before sending additional marketing messages would not prevail on the merits. Finally, to the extent the class cannot be determined without the Court needing to engage in a legal analysis as to whether each individual message constitutes as “telemarketing,” that argument can be reraised by Circle K at the class certification stage.

2. Rule 23 Requirements

Circle K also asks the Court to strike the class allegations on the basis that the proposed class lacks commonality and because Hughes failed to adequately plead the element of numerosity. Regarding numerosity, Circle K's arguments focus on the sufficiency of the pleadings by applying a motion to dismiss standard under Rule 12(b). (See D. 9, p. 7). Here, however, the motion before the Court is not a motion to dismiss under Rule 12(b), but rather a motion to strike class allegations under Rules 12(f) and 23. When a court is deciding whether to strike class allegations prior to discovery, the standard that is applied is whether the complaint shows that “a class action cannot be maintained on the facts alleged.” Panacci v. A1 Solar Power, Inc., 2015 WL 3750112, at *4 (N.D. CA June 15, 2015). Put differently, a motion to strike under Rules 12(f) and 23 is appropriate only when the class allegations are “facially and inherently deficient.” Beyer, 2023 WL 2693439, at *12 (citing Harris v. Rust-Oleum Corp., 2022 WL 952743, at *3-4 (N.D. Ill. Mar. 30, 2022)). “When the plaintiff has had no opportunity for discovery, the defendant bears the burden of showing the class is not certifiable.” Beyer, 2023 WL 2693439, at *12 (citing Womick, 2022 WL 1266630, at *2). Circle K has not met that burden.

Additionally, in Arreola v. Godinez, the Seventh Circuit held that “under the federal-notice pleading regime,” a complaint based on “bare bone” allegations is all that is required to properly plead numerosity for purposes of 23(a)(1). 546 F.3d 788, 796 (7th Cir. 2008). The Seventh Circuit went on to explain that defendant's argument that plaintiff failed to establish numerosity, moved the argument from being about the pleadings to a question regarding the merits, which was a class certification issue. Id.; see also See Moore, 2023 WL 7166555, at *4 (quoting Perez v. City of Chicago, 2015 WL 5163165 at *5 (N.D. Ill. Sept. 2, 2015)) (“[A]t the pleadings stage, [proposed class action plaintiffs] only are required to allege that the requirements of [Rule 23] are met. They need not establish or prove that class certification is proper.”) Furthermore, because the defendant is in control of the information needed for the class to establish that the requirements of Rule 23 are met, allowing discovery before addressing whether class certification is proper is appropriate. Moore, 2023 WL 7166555, at *4.

This reasoning extends to Circle K's arguments challenging commonality as well. While the Court appreciates that Circle K has concerns regarding the class definition, scope of the class, and factual challenges to commonality, its motion to strike class allegations is premature. See Moore, 2023 WL 7166555, at *4 (“[W]here the dispute is factual and discovery is needed to determine whether a class should be certified, a motion to strike the class allegations at the pleading stage is premature.”) (Internal citations omitted). As discovery progresses, the class definition may very well need to be redefined and nothing in this Order precludes the Court from doing so. See Chapman v. First Index, Inc., 796 F.3d 783, 785 (7th Cir. 2015) (Ultimately “the obligation to define the class falls on the judges’ shoulders under Fed. R. Civ. P.23(c)(1)(B).”). However, at this stage, Circle K has not met its burden of proving that the class allegations should be stricken.

IV. CONCLUSION

Circle K's [9] Motion to Strike Class Allegations is therefore DENIED, without prejudice to Circle K raising its arguments in opposition to any Rule 23 motion filed by Hughes or at some other appropriate juncture.

FOOTNOTES

2.   Circle K cites to 47 C.F.R. § 64.1200(d)(3) (“allowing the caller 30 days to honor the do-not-call request”), and 47 C.F.R. § 64.1200(f)(13) (“defining ‘telemarketing’ to mean ‘the initiation of telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services’ ”).

Michael M. Mihm, United States District Judge