Class actions seeking statutory damages pursuant to the Telephone Consumer Protection Act are still not viable in New York federal court, according to a district court judge.
Earlier this year, U.S. District Court Judge William F. Kuntz, in dismissing the case sua sponte for a lack of subject matter jurisdiction, ruled that class actions pursuant to the TCPA seeking statutory damages are not permitted under federal law.
The suit was filed by New Yorker Todd Bank on behalf of himself and an estimated 10,000 other residential phone lines that received prerecorded calls advertising Independence Energy Group LLC’s electricity-related services.
Bank filed a motion to reconsider, relying upon last year’s U.S. Supreme Court decision in Mims v. Arrow Financial Services. In that case, the justices held that state and federal courts have concurrent jurisdiction over TCPA claims and plaintiffs may file in either venue.
But Judge Kuntz held firm to his earlier ruling. Because the court was considering whether TCPA claims could be brought in state – not federal – court, the comments on federal jurisdiction were mere dicta, he said. Instead, he relied upon a 2010 decision from the U.S. Court of Appeals for the Second Circuit, Holster III v. Gatco, Inc., where the panel held that Section 901(b) of New York Civil Practice Law and Rules bars TCPA class actions in federal court.
The Mims decision did not abrogate the Holster decision, Judge Kuntz said. The justices relied upon federal-question jurisdiction to reach their holding. Alternatively, the Second Circuit explicitly stated that it was not relying upon the Erie doctrine, but instead it looked to state court rules. Therefore, the Holster decision remains untouched by Mims, Judge Kuntz wrote, and “remains the binding law within this Circuit.”
He was similarly unswayed by other district court post-Mims holdings, including another case from the Southern District, that state procedural rules regulating class actions do not apply to TCPA claims brought under federal question jurisdiction. Although the District Court judge in that suit predicted that the Second Circuit would depart from its prior case law in light of Mims, Judge Kuntz refused to prognosticate. “The Second Circuit has not yet so departed,” he wrote. “Therefore, Holster remains the binding law of this Circuit. And, in any event, district court cases, even those within the Second Circuit, do not bind this Court.”
To read the court’s order in Bank v. Independence Energy Group, click here.
Why it matters: The battle over federal court jurisdiction of TCPA claims in New York will continue, as the plaintiff has already filed notice of appeal to the U.S. Court of Appeals for the Second Circuit. If the court accepts the case, the answer to whether Mims overruled the Circuit’s existing law may be answered.