Co-authored by Jason F. Clouser.

The U.S. Court of Appeals for the Seventh Circuit vacated the lower court’s decision to grant class certification based on the misconduct of plaintiff’s counsel.

The lower court certified a class consisting of more than 14,000 recipients of unsolicited faxed advertisements from Ashford Gear LLC, a small California home furnishings wholesaler. The Telephone Consumer Protection Act imposes a fine of $500 per “junk” fax and provides for treble damages in cases of willful violations. Class counsel learned about the potential violations from the fax broadcaster who sent the faxes on behalf of Ashford. Counsel allegedly asked the broadcaster for the transmission reports of the junk faxes and promised to keep information about the faxes confidential. Nevertheless, based on information procured from the fax broadcaster, the attorneys contacted Creative Montessori Learning Center, and misleadingly implied that Creative could join a class that had already been formed.

The district court found that the lawyers engaged in misconduct, but, applying a standard whereby only the most egregious attorney misconduct could result in denial of class certification, ruled that the misconduct did not preclude counsel from representing the class and granted class certification. The Seventh Circuit reversed, finding that misconduct that creates “serious doubt” about counsel’s ability to represent the class loyally was sufficient to deny class certification. The case was remanded to the district court with instructions to apply the proper standard.

Creative Montessori Learning Centers v. Ashford Gear LLC, No. 11-8020 (7th Cir. Nov. 22, 2011).