In a decision that could have far-reaching effects, an appellate court recently ruled that federal courts have jurisdiction to hear lawsuits against companies that bombard potential customers with unwanted phone calls, text messages, and faxes.
On December 3, the United States Court of Appeals for the Second Circuit issued its decision in Todd Bank v. Independence Energy Group , reversing a lower court’s dismissal of a class action lawsuit alleging that an energy company violated federal law by “robo-calling” over 10,000 potential customers.
These types of telephone solicitations are generally banned, unless the recipient of the message has provided the company with advance, written consent stating his or her desire to receive such calls.
The Telephone Consumer Protection Act
The lawsuit was filed under the Telephone Consumer Protection Act (the “TCPA”), a federal law that prohibits companies from using automated dialing machines and prerecorded messages in making sales and marketing calls to potential customers.
Companies that are found to be violating the TCPA are subject to fines of $500 – $1,500, per call. For companies that use robo-dialing machines to call thousands of customers daily, these fines can quickly add-up to millions of dollars. For example, pizza maker Papa Johns recently settled a texting lawsuit for $16.5 million. Under the terms of the settlement, each class member received $50 and a free pizza.
Citing the Supreme Court, Second Circuit Rules Federal Courts Have Jurisdiction to Hear TCPA Lawsuits
Todd C. Bank, an attorney from Long Island, New York, filed the TCPA lawsuit against Independence Energy Group after receiving one of the company’s robo-calls at his home. Mr. Bank filed the class action on behalf of himself and all other people that Independence Energy Group called using a prerecorded voice message. The lawsuit alleged that the company robo-called approximately 10,000 people, potentially subjecting the energy company to a minimum judgment of $5,000,000.
After the lawsuit was filed, Judge William F. Kuntz, II of the United States District Court for the Eastern District of New York dismissed it on the grounds that federal courts do not have jurisdiction to preside over TCPA lawsuits. According to the lower court’s decision, the suit should have been filed in state court.
Judge Kuntz also ruled that the lawsuit should be dismissed because the rules of civil procedure applicable to New York state courts do not allow plaintiffs to file class actions seeking statutory damages. According to the judge’s reasoning, state rules of civil procedure should apply to TCPA cases filed in federal court, because the statute creates a private right of action, i.e ., the ability to file a lawsuit, only “if otherwise permitted by the laws or rules of a court of a State.” New York Civil Practice Law and Rules prohibits class actions seeking statutory damages. Statutory damages are an amount set forth in a law or statute that a plaintiff will receive if he or she can prove that the defendants violated a provision of the statute, such as the $500 – $1,500 set forth in the TCPA. Thus, under the lower court’s interpretation of the law, Mr. Bank would be prohibited from filing a class action representing the interests of all others who received calls from the energy company.
In reversing Judge Kuntz’s decision, the Second Circuit observed that the Supreme Court’s 2012 decision in Mims v. Arrow Financial Services, LLC , “uprooted much of our TCPA jurisprudence.” In Mims, the Supreme Court held that there was “no convincing reason to read into the TCPA’s permissive grant of jurisdiction to state courts any barrier to the U.S. district courts’ exercise of the general federal-question jurisdiction they have possessed since 1875.”
Relying on Mims , the Second Circuit ruled that federal courts have jurisdiction to hear TCPA lawsuits and that the Federal Rules of Civil Procedure apply to TCPA cases filed in federal court. Importantly, Federal Rule of Civil Procedure 23, which governs class actions, does not prohibit class action lawsuits seeking statutory damages.
The Second Circuit’s decision is binding authority in federal courts in New York, Connecticut, and Vermont. Judges sitting in federal courts in other states may find the court’s reasoning persuasive, although they are not legally bound to follow it.
The court‘s decision highlights the fact that if a company does not have your prior written consent to robo-call or text you, the company may be subject to fines and penalties. With the help of a class action attorney, you may be able to file a lawsuit on behalf of all other individuals who have also received the unwanted calls, text messages, or faxes. As more of these cases work their way through the judicial system, the corporate community will become increasingly aware of the requirements of the TCPA, leading to less annoying phone calls and unwanted text messages.
Author Bio :
Shanon J. Carson is an attorney with Berger & Montague, P.C. , a nationally-known law firm headquartered in Philadelphia. Mr. Carson represents consumers, employees, and shareholders in class actions, collective actions, and multiple plaintiff lawsuits through the United States. Among his many achievements in the courtroom, Mr. Carson secured a $21.4 million settlement on behalf of a nationwide class of African-American employees of Kodak who alleged a pattern and practice of racial discrimination at the company.
Originally published on LawyerCentral by Shanon Carson on December 19, 2013 Read the original (Internet Archive).