Class actions pursuant to the Telephone Consumer Protection Act seeking statutory damages are not allowed under New York law, a federal judge in the state ruled.
After receiving a pre-recorded call advertising Independence Energy Group LLC’s electricity-related services, Todd Bank filed a TCPA suit against the company on behalf of himself and an estimated 10,000 other residential phone lines. He claimed the putative class had not given the defendant permission to make the calls and sought statutory and double damages as well as an order enjoining the company from future TCPA violations.
The defendant sought to dismiss the lawsuit for failure to state a claim. Instead, U.S. District Court Judge William F. Kuntz II sua sponte tossed the case for a lack of subject matter jurisdiction.
State courts “unequivocally” have exclusive jurisdiction over private actions under the TCPA and federal courts lack federal question jurisdiction over such claims, he wrote. He also cited precedent from the U.S. Court of Appeals for the Second Circuit that §901(b) of New York Civil Practice Law and Rules bars TCPA class actions in federal court.
“The specific language of the TCPA creates a private right of action only ‘if otherwise permitted by the laws or rules of a court of a state.’ New York state law ‘prohibits class actions predicated on statutory damages.’ Therefore, plaintiff’s class action seeking statutory damages pursuant to the TCPA may not proceed,” Judge Kuntz concluded.
To read the court’s order in Bank v. Independence Energy Group LLC, click here.
Why it matters: While the decision is a clear victory for marketers in New York, the decision neglected to reference last year’s U.S. Supreme Court decision in Mims v. Arrow Financial Services, where the Court reached the opposite conclusion. Analyzing the same language referenced by Judge Kuntz that TCPA private right of actions are permitted only “if otherwise permitted by the laws or rules of a court of a state,” the justices held in Mims that federal courts do have jurisdiction over TCPA claims. “Beyond doubt, the TCPA is a federal law that both creates the claim [the plaintiff] has brought and supplies the substantive rules that will govern the case,” Justice Ruth Bader Ginsburg wrote for a unanimous court. “We find 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.” Whether or not Bank appeals his decision based on the contradictory ruling remains to be seen.