For many years, TCPA class actions in federal courts in New York have been stymied by the application of a New York law that bars class certification for actions to recover a penalty (see N.Y. C.P.L.R. § 901(b)), as well as application of New York statutes of limitations. But a decision by the Second Circuit last week could make those arguments more difficult going forward.

In Giovanniello v. ALM Media, LLC, 2013 WL 4016567 (2nd Cir. August 8, 2013), the district court dismissed a TCPA class action on statute of limitations grounds, holding that the New York state statute of limitations governed. This decision was based on Second Circuit precedent indicating that state procedural rules (such as statutes of limitation and class action limitations) govern TCPA cases. Last week, the Second Circuit upheld dismissal based on the defendant’s tolling argument, but held that the federal statute of limitations governed. Id. at *9. The court said the Supreme Court’s decision in Mims v. Arrow Financial Services, LLC, 132 S. Ct. 740 (2012), which held that the TCPA establishes federal question jurisdiction for TCPA cases, “fundamentally alters” its view of the key language in the TCPA and supports the conclusion that federal procedural rules should apply. Id. at *8.

The Second Circuit’s decision was not surprising to those who saw the oral argument in May. It was clear from the outset that the three-judge panel was very hostile toward the argument that the New York state statute of limitations should apply. When plaintiff’s counsel started his remarks, Judge Reena Raggi began by asking whether there was any reason why the court should apply anything other than the federal statute of limitations period if the court had federal question jurisdiction. When plaintiff’s counsel answered no, Judge Raymond J. Lohier, Jr. quickly followed by noting that, in his view, the only real issue presented was the tolling issue. From there, the judges questioned plaintiff’s counsel exclusively about the tolling issue. During defense counsel’s remarks, Judge J. Clifford Wallace (sitting by designation from the Ninth Circuit) repeatedly said that it was very difficult to argue for the application of the state statute in light of Mims because while the relevant language in Mims may be dicta, “Supreme Court dicta is with a capital D.”

Although the Giovanniello decision did not expressly address the application of Section 901(b) to TCPA claims, TCPA plaintiffs’ attorneys will undoubtedly rely on its holding as evidence that TCPA class actions are no longer barred in New York federal courts. Any lawyer or company defending TCPA claims in New York therefore should be intimately familiar with the details of the Giovanniello decision.