While finding the former owner of a Des Plaines-based nursing home were not just a mere pawn of its attorneys, a state appeals court has blocked the plaintiff's attempt to proceed with a junk fax lawsuit against an Omaha-based pharmacy as a class action.
In an unpublished order issued Sept. 30, a panel of the First District Appellate Court tossed the certification of a class in the action Ballard RN Center Inc. brought against Kohll’s Pharmacy and Homecare Inc. and remanded the matter for further proceedings.
The order was delivered by Justice William Henry Taylor II, with justices Nathaniel R. Howse Jr. and James Fitzgerald Smith concurring. The matter came to the panel on interlocutory appeal.
The decision reversed the April 2013 ruling of Cook County Circuit Court Judge Neil Cohen to grant Ballard’s request to certify a class of potentially more than 4,600 others who may have received an unsolicited fax advertisement sent on behalf of Kohll’s Pharmacy in 2010, allegedly in violation of both a federal law regulating advertising conducted via fax and of a state consumer fraud law.
While the judge could reduce damages, the federal law could allow the plaintiffs in this action to have sued for as much as $500 per violation, amounting to hundreds of thousands of dollars in damages, if not more.
The justices in this decision, however, found Kohll’s attempt to offer Ballard $2,500 to settle the matter, and Ballard’s subsequent rejection of that offer without legal explanation why it instead would choose to pursue litigation, nullified Ballard’s attempt to certify a class under precedent related to the federal Telephone Consumer Protection Act (TCPA).
The case stems from a 2010 fax blast sent by Kohll’s Pharmacy to 4,760 business fax numbers, including the Ballard nursing home, advertising the pharmacy’s corporate flu vaccination services.
Kohll’s sent the fax through a third party, using numbers the pharmacy purchased from another company.
The fax was seen by Mark Pick, who at the time was chief executive officer of the then-family owned nursing home in Des Plaines, and was forwarded to the nursing home’s corporate counsel as a potential violation of federal telemarketing law.
According to a report published online by REJournals.com, Pick and his family sold the nursing home in 2011 to Resurrection Health Care, now known as Presence Health, for $22 million.
In 2010, however, Pick opted, after consulting with his counsel, to sue Kohll’s Pharmacy purportedly in an attempt to make a statement to prevent the pharmacy and others from sending unsolicited fax messages in the future and to collect damages related to his company’s costs.
Along with the initial three-count complaint, Ballard filed a motion to certify a class action on behalf of all others who received the same fax blast advertisement.
In response, Kohll’s offered Ballard money to settle the matter three times, culminating in a high offer of $2,500. Each of the offers was refused by Ballard without explanation.
The circuit judge rejected Kohll’s motion for summary judgment and last year, certified a class in the case.
On interlocutory appeal, Kohll’s said the class certification should have been denied, arguing among other factors that 1) the plaintiffs could not prove all of the intended recipients did not have a standing business relationship with Kohll’s; 2) the Ballard company was a “pawn” of its attorneys, but for whom the company would have accepted the $2,500 payment instead of pursuing litigation; and 3) the certification request was merely a “shell” motion filed simply to sidestep more stringent class certification requirements and to get out in front of Ballard’s attempts to offer a relatively small payment to end the matter.
The appeals panel rejected most of Kohll’s legal reasoning, finding, for instance, that it would not be absolved of the threat of class action simply because factors may have allowed the pharmacy to legally send its fax message to some of the intended recipients.
Likewise, the justices determined Pick and Ballard were not mere pawns of their attorneys. Kohll’s had argued that Pick’s deposition testimony indicated he would have accepted its $2,500 payment to settle, as it more than covered his costs related to the faxed document, but only opted to press forward with the litigation after consulting with his attorneys from the firm of Edelman, Combs, Latturner & Goodwin in Chicago.
The First District panel, however, pointed to other testimony of Pick that indicated he had concerns over the costs of other potential class members, and made the ultimate decision to pursue the class action suit.
“Based upon this testimony, we cannot say that Ballard is a mere ‘pawn’ of its lawyers or that it lacks the desire and ability to prosecute the claim vigorously on behalf of itself and the other class members,” Taylor wrote for the panel.
The justices, however, said Kohll’s had found more sound legal ground in arguing Ballard had essentially jumped the gun in filing its class certification motion before discovery had even occurred in the case. That, in turn, meant, Kohll’s offer of $2,500 should have sufficed to have thwarted Ballard’s attempt to pursue a class action under federal law.
“That motion was filed contemporaneously with the complaint, before any discovery had taken place and before Ballard had any knowledge of the class,” Taylor wrote in the order. “Indeed, at that point in the litigation, Ballard had no evidence that other class members even existed, other than speculation based on the nature of the one-page fax it received.”
The justices remanded the case back to circuit court for new proceedings on whether Ballard should be allowed to pursue a class action under the remaining two counts.