Oh, so close… Summary Judgment Order gets overturned on appeal and Defendants get, what rarely happens in court, a Second Chance…

This recent TCPA case, Compressor Eng’g Corp. v. Mfrs. Fin. Corp., No. 09-14444, 2019 U.S. Dist. LEXIS 48573 (E.D. Mich. Mar. 25, 2019), almost got dismissed via a summary judgment motion by Defendants, but Plaintiff successfully appealed, and the case was remanded back to trial court.

In a lawsuit filed in connection to a fax advertising business, Business to Business Solutions (“B2B”), B2B faxed clients’ advertisements to hundreds of numbers, in violation of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227(b). These faxes from B2B led to over 100 lawsuits, including this case out of the Eastern District of Michigan. Here, Defendants filed a motion for summary judgment to address four questions of fact. One of the questions, which ended up being overturned on appeal and led to this ruling, was whether Manufacturers Financial Corporation (“MFC”), one of B2B’s clients, could be deemed a “sender”, when it did not promote goods or services it provided, and the fax was not authorized by MFC. There were two declarations of Caroline Abraham, the woman who operated B2B, which were submitted by Plaintiff in opposition to Defendant’s motion, discussing how she operated the business, and the records and equipment she turned over to Plaintiff’s counsel.

The District Court granted summary judgment in favor of Defendants because the Court concluded that Plaintiff and the Class could not produce sufficient evidence at trial such that a reasonable jury could conclude that the two fax ads at issue in this case were sent “on behalf of” Defendant MFC. The body of Defendant’s brief in support of its motion asserted that the Abraham Declarations are inadmissible hearsay. The Opinion noted that the parties disputed whether Abraham’s Declarations could be considered for purposes of summary judgment, given that she may not testify at trial (since Abraham was unreachable at this point). However, the Court did not address that issue because the Court concluded that even when the declarations were considered, Defendants were entitled to summary judgment.

Plaintiff then appealed. In an unpublished opinion, the Sixth Circuit reversed the summary judgment ruling concluding that a reasonable jury could find that the faxed ads were sent “on behalf of” MFC. MFC had asked the Sixth Circuit to affirm the grant of summary judgment on the alternative ground that declarations of Abraham are inadmissible hearsay and could therefore not support Plaintiff. Although the issue had been fully briefed, the Sixth Circuit declined to make a ruling, stating: “[a]s a general rule, appellate courts do not consider any issue not passed upon below,” and remanded the case to the district court to decide the admissibility of the Abraham declarations in the first instance.

On Remand, Defense Counsel argued that declarations submitted by Plaintiff in opposing Defendants’ motion for summary judgment were inadmissible under USCS Fed Rules Civ Proc R 56(c)(2), and should not be considered by the Court. The Court concluded that since Defendants had not cited USCS Fed Rules Civ Proc R 56(c)(2) in their initial papers and had merely objected to the declarations as “inadmissible hearsay,” they could not now cite USCS Fed Rules Civ Proc R 56(c)(2) to challenge the admissibility of the declarations at the remand stage. Seems harsh, right? Well it serves as a strong reminder to carefully consider rules of procedure and evidence when defending a class action, particularly under the TCPA, because who knows what will stick with the trial judge, and when it comes to appeal, “ appellate courts do not consider any issue not passed upon below.”

There is a saving grace though, if the case ends up going to trial – which may happen here – Defendants will get an opportunity to challenge the admissibility of the initially admitted evidence under Fed Rules Civ Proc R 56(c)(2). According to the 2010 Advisory Committee Notes to Rule 56: “If the case goes to trial, failure to challenge admissibility under 56(c)(2) 5y at the summary judgment stage does not forfeit the right to challenge admissibility at trial.” So all is not lost, however, losing a motion for summary judgment can have significant repercussions, as would have been in this case if the summary judgment order was not reversed on appeal, and the issue of admissibility of the declarations was not remanded back to the trial court. Defendants are still stuck with the affidavits until trial though.

But really, a case filed in 2009 is ordered to proceed to a jury trial in 2019? After a motion for summary judgment is reversed on appeal? Hopefully we’re not setting new precedents on the average lifespan of TCPA cases…