By: Kristen Marshall
As the number of TCPA-related lawsuits filed by private plaintiffs increases, debate has turned to which courts, state or federal, have jurisdiction to hear these lawsuits. Until the Supreme Court issues its decision regarding federal question jurisdiction pursuant to the TCPA, the debate will continue and many seeking their claims to be heard in federal court will be forced to rely on diversity jurisdiction.
There is little question that private plaintiffs have become increasingly more active in filing lawsuits pursuant to the federal Telephone Consumer Protection Act (TCPA) in recent years. Rather, the debate has turned to which courts, state or federal, have jurisdiction to hear these lawsuits.
You may ask why the jurisdiction of a lawsuit is relevant to its outcome. In general, Defendants prefer federal over state courts for several reasons. First, the Federal Rules of Civil Procedure place limitations on the amount of discovery available in federal court, limitations not always available in state court. Second, federal court judges are appointed, but most state court judges are elected. Third, federal courts are more likely to grant motions to dismiss earlier in litigation because of more detailed federal pleading rules. Finally, federal jury pools are generally more diverse because they draw from a larger geographical region than state courts.
The TCPA provides that “a person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State … an action based on a violation of [the TCPA] …” 47 U.S.C. § 227(b)(3). 1
However, under federal law, federal courts have jurisdiction to decide cases which arise under federal statutes or treaties, or the United States Constitution. This is called federal question jurisdiction.
So does the language of the federal law specifying state court, or the fact that application of the TCPA, a federal law, is a federal question control?
In search of an answer to this question, several courts have turned to the Eleventh Circuit’s decision in Nicholson v. Hooters of Augusta, Inc., where that Court held that “Congress granted state courts exclusive jurisdiction over private actions under the Act,” and therefore “federal courts lack subject matter jurisdiction [over] private actions under the Act.” 136 F.3d 1287, 1288-89 (11th Cir. 1998).
More specifically, six appellate circuit courts “have interpreted the jurisdictional provision of the TCPA to mean that Congress intended to refer private litigants under the TCPA to state court, and to preclude federal question jurisdiction, pursuant to 28 U.S.C. § 1331, over such consumer suits.” Accounting Outsourcing, LLC v. Verizon Wireless Pers. Communs., LP, 294 F. Supp. 2d 834, 837 (M.D. La. 2003).
The court in Accounting Outsourcing pointed out that, while these circuit court opinions refer to the “exclusive” jurisdiction of state courts over TCPA claims, “none of the courts were called upon to address, nor did they address, whether TCPA claims could be heard in federal court pursuant to diversity jurisdiction.” Id.
In contrast, at least two appellate circuit courts have held that 47 U.S.C. § 227(b)(3) does not preclude federal courts of their federal question jurisdiction . See Brill v. Countrywide Home Loans, Inc., 427 F.3d 446 (7th Cir. 2005); Charvat v. Echostar Satellite LLC, 630 F.3d 459 (6th Cir. 2010).
Both the Brill and Charvat courts issued similar holdings: that the use of the word “may” in the section of the TCPA granting state courts jurisdiction over private causes of action does not mean that state courts have exclusive jurisdiction over such claims. See id.
As a result of the split circuit decisions described above, the United States Supreme Court agreed to hear a case to decide whether federal question jurisdiction does in fact exist pursuant to § 227(b)(3) of the TCPA. On November 28, 2011, the Court heard oral arguments regarding whether federal courts have jurisdiction to hear disputes brought under the TCPA. See Mims v. Arrow Financial Services.2
In Mims, both the Southern District of Florida and the Eleventh Circuit refused to hear the plaintiff’s claims under the TCPA because those courts lacked federal question jurisdiction under the TCPA.
During oral argument, the Supreme Court justices brought up several interesting issues. For example, Justice Ginsberg asked if there are any other statutes similar to the TCPA, in that a claim arising under a federal law allegedly cannot be heard in federal court. Counsel for the Respondent subsequently admitted that no such law exists. 3
Justice Alito asked the question “isn’t that the oddest creature that’s ever been seen, a cause of action created by Congress that is not a claim arising under federal law?”
The one thing all nine Justices and both sides in Mims could agree on was the oddness of the jurisdictional issue found in the TCPA. Justice Kagan asked then, “where do we go from there?”
While courts cannot agree on whether federal question jurisdiction exists under the TCPA, the issue of diversity jurisdiction (i.e. jurisdiction based on the citizenship of the parties to the lawsuit and the amount in controversy) is not as highly contested. Courts have held that nothing in section 227(b)(3) expressly strips federal courts of diversity jurisdiction to hear cases brought pursuant to the TCPA. See Gottlieb v. Carnival Corp., 436 F.3d 335, 338 (2d Cir. 2006).
In other words, TCPA cases may be brought in federal court if the amount of damages sought meets a certain threshold and the parties to the lawsuit meet diversity of citizenship requirements.
Until the Supreme Court issues its decision regarding federal question jurisdiction pursuant to the TCPA, the debate will continue and many seeking their claims to be heard in federal court will be forced to rely on diversity jurisdiction.
1. In comparison, another section of the TCPA, 47 U.S.C. § 227(f)(2), grants exclusive jurisdiction to federal courts to hear cases filed by state attorneys general.
2. It is important to note that the Supreme Court did not grant certiorari to address two other topics of recent controversy: whether federal courts have jurisdiction over class action TCPA lawsuits, or whether federal courts can determine what is considered express consent under the TCPA. Instead, the issue presented before the Court was whether Congress deprived federal courts of their federal question jurisdiction under 28 U.S.C. § 1331 over private actions brought under the TCPA. See Petition for Certiorari, Mims v. Arrow Financial Services, Case No. 101195 (March 30, 2011).
3. The transcript for the oral argument in Mims is available at: http://www.supremecourt.gov/oral_arguments/argument_transcripts/10-1195.pdf.