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Cellphone Spam Lawsuit Defies Class Certification

SAN FRANCISCO (CN) - Consumers who claim to have incurred millions in charges from cellphone spam are not suited for class-action status, a federal judge ruled.

Lead plaintiffs Edward Fields, Cathie O'Hanks, Erik Kristianson, Richard Parmentier, Kimberly Brewster and Kristian Kunder originally sued Wise Media in October 2012 after receiving unsolicited text messages. The texts contained information about the company's subscription plans for flirting tips, horoscope updates, celebrity gossip and weight-loss advice.

A typical initial text sent to cellphone users by Wise Media allegedly stated: "Lovegenietips Flirting Tips; 3msg/week for $9.99/m T&Cs: Msg&data rates may apply. Reply HELP for help, STOP to cancel." Wise Media sent the texts with the help of equipment that produced cellphone numbers through a random sequential number generator.

Then, through a process known as "cramming," Wise Media enlisted the help of aggregators - including co-defendants Mobile Messenger Americas, mBlox Incorporated and Motricity - to act as middlemen between itself and cellphone companies, according to the complaint.

The aggregators allegedly placed the charges on millions of cellphone bills and monitored complaints - for a piece of the revenue pie - regardless of whether users canceled or even responded to the texts at all.

After a federal receiver in Georgia asked for a stay against Wise Media, the plaintiffs pressed ahead with their case against the aggregators. Earlier this year, U.S. District Judge William Alsup refused to dismiss claims against Mobile Messenger Americas and the other companies.

On Tuesday, however, Alsup found that a plethora of individual circumstances and experiences with the spam texts made it impossible to certify any class - either under the federal Telephone Consumer Protection Act or California law. The problem, Alsup said, is that while many potential class members never consented to the service, many others actually signed up and regretted it later.

"After examining the evidence and other submitted documentation, this order finds that plaintiffs have failed to meet their burden to prove that the issue of consent can be addressed with class-wide proof," Alsup wrote. "Wise Media's platform has recorded over 1.5 million instances of consent by subscribers. Plaintiffs' argument alleging mass fraud does not satisfy their evidentiary burden under Rule 23(b) because it merely speculates, without any actual evidence, that mass fraud may have occurred. Thus, even if consent is an affirmative defense, individualized inquiries regarding consent remain."

In the case of a proposed California subclass, a 98 percent refund rate doomed class certification for numerosity, according to the ruling.

"Plaintiffs have not even attempted to speculate as to the number of members in the California subclass," the judge wrote. "The California subclass, by plaintiffs' own definition, excludes persons who received complete refunds. Plaintiffs present evidence that approximately 1.4 million individuals were enrolled in defendants' subscription plans, but plaintiffs' own expert concedes that the 1.4 million enrollment figure does not take into account the substantial amount of refunds issued to customers by Wise Media or the mobile carriers. Plaintiffs themselves admit that 'refund rates reached as high as 98% of those enrolled, depending on the time period and subscription plan examined.'"

And while there may be thousands who never received refunds, an additional California residency requirement and the plaintiffs' failure to even estimate how many might still remain in the subclass is a "showstopper," Alsup said.

Although he declined to certify the class, Alsup invited the plaintiffs to continue with their individual claims against the spammers.

A similar and short-lived class action against Wise Media - also filed last year - ended after the company produced website and text message evidence that the lead plaintiff in that case had consented to the "Lovegenietips" subscription plan.

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