Class actions alleging violations of the "junk fax" provisions of the federal Telephone Consumer Protection Act may not be brought under New York law, because they are barred by N.Y.C.P.L.R. 901(b), the U.S. Court of Appeals for the Second Circuit ruled. The TCPA permits private actions to enforce its provisions "if otherwise permitted by the laws or rules of a court of a state." N.Y.C.P.L.R. 901(b) prohibits class-actions suits seeking statutory damages. The case was remanded by the Supreme Court for reconsideration in light of its ruling in Shady Grove Orthopedic Associates, P.A., v. Allstate Insurance Co., 130 S. Ct. 1431 (2010), a class action brought under a provision of New York insurance law, that federal courts are not bound to follow N.Y.C.P.L.R. 901(b) under the Erie doctrine because it is preempted by Fed. R. Civ. P. 23, which authorizes class-action suits in federal courts when various criteria are met. The circuit court concluded that the ruling in Shady Grove did not preclude it from ruling that actions brought under the TCPA are barred by N.Y. C.P.L.R. 901(b), because, under the express language of the Act, Congress intended to give states "considerable power to determine which causes of action lie under the TCPA."

Holster v. Gatco, Inc., 2010 U.S. App. LEXIS 17661 (2d Cir. Aug. 24, 2010) Download PDF