On October 2, 2013, the United States District Court for the District of New Jersey rejected a defendant’s argument that class action proceedings under the Telephone Consumer Protection Act (“TCPA”) are not the superior means of resolving TCPA class action claims because alternative forums are available. Specifically, in a federal action involving transmission of unsolicited facsimiles, the defendant argued that TCPA class action claims are best resolved individually in small-claims court rather than in conflated class action proceedings. The defendant relied heavily on a New Jersey State Appellate Court decision that adopted the same reasoning. Rejecting this theory, the federal court determined that based on federal law and considerations of fairness, class action proceedings are indeed an effective means of resolving TCPA class action complaints.
The New Jersey State Appellate Court Decision
In a case titled Local Baking Products v. Kosher Bagel Munch, Inc., the New Jersey State Appellate court denied a TCPA class certification motion. The state court began its decision by noting that there are 3 avenues of enforcement under the TCPA: 1) regulatory and court actions brought by the Federal Communications Commission; 2) civil actions by state attorneys general; and 3) private actions brought by persons or entities for injunctive relief and recovery of statutory damages. With respect to private rights of action, the court reasoned that because the statutory minimum award under the TCPA is $500 (which is significantly higher than the actual cost to the consumer of receiving an unwanted facsimile transmission), consumers would be motivated to pursue their claims in small claims court, thus providing a more efficient alternative than class action proceedings.
The Federal Court Rejects the TCPA Class Action Defense
The federal court declined to follow the reasoning of the New Jersey State appellate court. The court noted that a number of other federal courts throughout the country have disagreed with the New Jersey State Appellate Court’s analysis. The federal court noted that even though the statutory damages of $500 under the TCPA was greater than the actual damages suffered by consumers, the amount was likely still too small for consumers to take the time to go to small claims court for damages. Accordingly, the court reasoned, because consumers will be less likely to go to court when the statutory recovery is so small, class action litigation is “simply a better available method to fairly and efficiently resolve the claims of potential class members in this case.”
Protect Yourself Against TCPA Class Action Claims
The decision of this federal court strips marketers and advertisers of a viable defense to avoiding class action litigation in the court’s jurisdiction. In recent years, there has been a noticeable increase in TCPA class action complaints that are costly to defend and potentially disastrous if judgment is entered against the defendant (See Record Breaking TCPA Class Action Settlement Record Breaking TCPA Class Action SettlementRecord Breaking TCPA Class Action Settlement). As such, it is critical that marketers, advertisers and businesses consult with experienced counsel to protect themselves against the specter of TCPA class action litigation.