Denial of class certification in TCPA suit highlights importance of Established Business Relationship defense

In rejecting the plaintiff’s argument that more than just a purchase or sale was required to form an EBR between a company and a consumer, the court offered a strategic roadmap for companies defending Do Not Call (DNC) claims. 

EBRs Under the TCPA

Under the TCPA, a company can create an EBR with a customer in one of two ways: (1) a purchase or transaction with the entity within the eighteen (18) months immediately preceding the date of the telephone call; or (2) an inquiry or application regarding products or services offered by the entity within the three months immediately preceding the date of the call. An EBR can be terminated before the expiration of the statutory period by either party. 

Procedural Background

The plaintiff claimed Circle K violated the TCPA by sending her unsolicited text messages after she registered her phone number on the federal DNC Registry. She began receiving the text messages after someone entered her number into Circle K’s in store touchscreen system, which offers discounts in exchange for phone numbers. The plaintiff claimed that she never entered her number and argued that Circle K had sent similar messages to millions of others on the DNC Registry. She sought to represent two groups: (1) a broad class of all recipients; and (2) a narrower subclass of individuals who, like her, allegedly never provided their phone numbers to Circle K.

The Court’s Decision

The court, which initially considered certifying a proposed subclass, ultimately denied certification of both the proposed class and the subclass, citing Circle K’s EBR defense as a key obstacle. The parties disputed what was required to form an EBR. The plaintiff argued that it “requires more than just a purchase or sale”; while Circle K maintained that an EBR could be established through “a single purchase or transaction.” 

The court sided with Circle K, finding that an EBR could be formed through a single voluntary purchase, even if the consumer did not provide a phone number during the transaction. The court emphasized that courts have “uniformly agreed” with this interpretation and rejected the plaintiff’s contention that the phrase “voluntary two way communication” in the regulatory definition necessitates the provision of a phone number. 

This ruling doomed the plaintiff’s proposed classes. With respect to the principal proposed class, which included individuals who provided their phone numbers to Circle K, the court found that determining whether each class member had an EBR with Circle K would require individual analysis, defeating predominance under Fed. R. Civ. P. 23(b)(3). Specifically, Circle K introduced evidence suggesting that a substantial portion of the proposed class had an EBR with the chain. The court also concluded that the plaintiff’s circumstances were atypical. If she had not formed an EBR with Circle K (as she insisted), she was unlike most class members. And, if she had formed an EBR, she might not have a valid claim at all. 

The court noted that the proposed subclass, which excluded individuals who had provided their phone numbers to Circle K, did not suffer from the same overbreadth as the proposed class. Nonetheless, the court found that many subclass members, including the plaintiff, may still have formed an EBR with Circle K based solely on prior purchases. Because determining whether each subclass member had an EBR would require individualized inquiries, the court held that common issues did not predominate. The court further held that the plaintiff’s claim was not typical of the subclass, for the same reason her claim was not typical of the class.

Impact of Decision

This ruling reinforces that the EBR defense can be a powerful tool to deny class certification and offers a clear example of how to frame EBR issues and supporting evidence. If a company can show that many putative class members had prior transactions or interactions with the company, courts may find that individualized inquiries overwhelm common issues, undermining certification. 

The decision further confirms that under the TCPA, a single voluntary transaction may be sufficient to form an EBR, even without the exchange of a phone number. This highlights how even minimal customer engagement can carry legal weight and complicate efforts to certify a class.

Plaintiffs may attempt to sidestep this defense by narrowing class definitions, such as by excluding those who made a voluntary purchase during the preceding 18 month period. Nevertheless, such tailoring will come at a steep price because doing so likely shrinks potential class sizes, weakens the overall impact of the case, and increases the cost and complexity of pursuing certification. 

Finally, the Circle K decision shows the value of implementing a robust TCPA compliance program that includes tracking consents, revocations of consent, and EBRs. 
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