Putative TCPA Class Action Lawsuits No Longer Barred From Proceeding in New York Federal Court?

blogpic5-2Earlier this year, a putative class action under the Telephone Consumer Protection Act (“TCPA”) was dismissed by a New York federal court on the grounds that state courts “unequivocally” have exclusive jurisdiction over TCPA private actions.  The court held that New York State law, specifically § 901(b) of the New York Civil Practice Law and Rules (“CPLR”), bars TCPA class actions from proceeding in federal court.  Among other prohibitions, CPLR § 901(b) prevents class certification for actions seeking to recover a penalty.  Federal courts in New York generally have relied on this section of the CPLR to dismiss TCPA actions.

Last year, however, in Mims v. Arrow Financial Services, the United States Supreme Court held that the TCPA does, in fact, establish federal question jurisdiction, meaning that federal courts have jurisdiction to hear TCPA cases.  Therefore, when the Second Circuit decision in Giovanniello v. ALM Media came before it that completely disregarded the Mims holding (and had dismissed a putative TCPA class action pursuant to state law), the Supreme Court vacated the decision and sent it back to the Second Circuit for a new decision in line with Mims.

The Giovanniello TCPA Actions

Plaintiff filed four separate putative class actions under the TCPA against defendant ALM Media commencing in April 2004. The actions stemmed from an unsolicited fax advertisement that was sent to Plaintiff in January 2004.  The first two actions were filed in Connecticut state court and were voluntarily dismissed by Plaintiff.  The third action was filed in New York federal court and was dismissed in August 2007 in reliance on state law (CPLR§ 901(b)).

In September 2009, Plaintiff filed his fourth action in Connecticut federal court.  The court held that Plaintiff’s case was untimely and dismissed it. On appeal, the Second Circuit agreed and held that Connecticut state law (with a two year statute of limitations) applied, as opposed to the longer four year federal limitations period.

The Supreme Court then vacated the Second Circuit’s decision in light of Mims.  When the case returned to the Second Circuit for a new decision, the Second Circuit stated that Mims “casts doubt” on controlling precedent that the TCPA’s language requires federal courts to apply state law when adjudicating TCPA claims.  Thus, federal courts hearing TCPA cases should apply federal, not state, law.

What that means for the Giovanniello Plaintiff is that he had a short-lived “win.”  The state statute of limitations (which is shorter than the federal statute) did not apply to time bar his action.  However, he nevertheless lost in the end.  Plaintiff argued that although he filed this action five years after he received the first fax message (which would ordinarily be too late under the federal statute of limitations), the statute of limitations was “tolled” (or frozen) during the pendency of his other actions. The court held that while tolling did apply, it no longer applied when the New York federal court denied class status to his action and dismissed his case in 2007.  Therefore, the statute of limitations began to run again and, based upon the court’s calculations, the action was still filed too late (and was, therefore, dismissed again).

Further Considerations

  • Arguably, Plaintiff’s New York action would have been vacated on the same grounds that the U.S. Supreme Court vacated the Second Circuit’s decision – failure to follow Mims and permit the TCPA action to be heard in federal court.  However, Plaintiff failed to prosecute his appeal of the New York decision to his – and his fellow class members’ – peril.
  • Defenses that often were successful to TCPA defendants in the past in federal court, such as the state statute of limitations defense, will likely no longer provide an “easy way out” of class actions.   Thus, in light of Mims and Giovanniello, the often more favorable (to defendants) state law arguably will no longer be considered in TCPA federal court actions.

If you are interested in learning more about this topic or the TCPA in general, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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David Klein

David Klein is one of the most recognized attorneys in the technology, Internet marketing, sweepstakes, and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

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