Lower Court Properly Shifted Costs of Class Notice to TCPA Defendant, Says 7th Circuit
The Northern District of Illinois in Chicago had the authority to assign the costs of class notice to defendant Consolidated World Travel (CWT) in an “unusual” Telephone Consumer Protection Act case and didn’t abuse its discretion in doing so, ruled the 7th U.S. Circuit Court of Appeals in a Friday decision (docket 21-2653). The case presented “a narrow but important question about the administration of class actions,” said the 7th Circuit: “What authority do district courts have to impose the cost of class notice on a defendant that already has been found liable to the class?”
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The district court ultimately granted the plaintiffs’ motion to certify a nationwide class, said the 7th Circuit. “The court then entered summary judgment in favor of the nationwide class for the same reasons it had entered summary judgment in favor of the Illinois class,” it said. “At the same time, it determined that the new class members were entitled to notice and an opportunity to opt out.”
The district court resolved the ensuing dispute in the plaintiffs’ favor over which side should bear the costs of providing notice to the nationwide class, said the 7th Circuit. It explained it was doing so because CWT’s liability “already had been established through the summary judgment order,” it said.
The “general rule” that a plaintiff must initially bear the cost of notice “implies that the cost may later be shifted,” said the 7th Circuit. That general rule “is most likely to apply when liability has yet to be determined,” it said. “Normally, the class certification decision and the attendant notice to the class come before any decision on the defendant’s liability.”
But not all cases “fit that mold -- this one, for instance,” said the 7th Circuit. “The district court made its liability determination after it had a certified class of Illinois residents, but before class certification and the necessary notice had been given to the non-Illinois group.” In these situations, “courts have relied on a finding of liability to shift notice costs to a defendant,” it said.
That doesn’t mean “costs must be shifted when liability has been found,” said the 7th Circuit: “The ultimate decision rests in the district court’s discretion.” The 7th Circuit agrees with the courts “that have said that the district court may elect to shift the cost of class notice (with or without a security bond) to the defendant after the plaintiff’s success on the mer-its has been established,” it said.
That the district court’s TCPA liability determination may be reversed on appeal “does not affect our decision,” said the 7th Circuit. “If the defendant fears that the plaintiffs may not be able to reimburse them, then it should seek a bond.” The 7th Circuit emphasized “the unusual way in which this case unfolded,” it said. “In the mine run of cases, a class-certification decision and class notice come before a decision on the merits,” it said. “This case is different precisely because the court properly ruled on class certification, found a class, and proceeded to the merits.”