Court Lassoes Junk-Fax Claims for Federal Trial

PHILADELPHIA (CN) - In a hairsplitting decision, a divided panel of the 3rd Circuit granted federal jurisdiction to a $5 million class action lawsuit over fax spam.

Three New Jersey federal judges had dismissed the separate suits, now consolidated on appeal, after finding that Congress intended for such claims to be brought in state court.

Lead plaintiffs Landsman & Funk and Goodrich Management say that their New York or New Jersey offices have received more than 10,000 unsolicited fax advertisements from three companies in violation of the Telephone Consumer Protection Act. Thousands of others throughout the country are in the same position, according to the plaintiffs' three original complaints. (Goodrich is the lead plaintiff in two of the suits.)

When Congress enacted the Telephone Consumer Protection Act, it included a provision for private causes of action that allows consumers to seek relief in state courts. But in simply enabling state enforcement, the law does not strip District Courts from exercising diversity jurisdiction, Judge Marjorie Rendell wrote for the majority of a three-judge panel. Under the diversity jurisdiction doctrine, federal courts are endowed with the right to hear civil cases involving parties of diverse citizenship.

Ordinarily, private citizens suing under the act achieve maximum damages awards of $500 - far short of the minimum $75,000 statutory damages to justify a federal cause of action - but the plaintiffs vault this obstacle by exceeding the $5 million requirement to file as a class, the April 4 decision states.

"We have little doubt that in designing a statute to provide relief to aggrieved recipients of unsolicited faxes, Congress expected that these individuals would sue in state court and did not want federal court to be bothered with their claims," Rendell wrote.

But precedent dictates that legislators' inability to foresee the situation at hand does not in itself bar jurisdiction.

"Its failure to anticipate this circumstance does not signal or predict its intent now that the circumstance has arisen," Rendell continued. "To conclude otherwise is to enter the realm of speculation. We would prefer to let Congress speak for itself. As it stands, the TCPA does not direct us to treat diversity jurisdiction any differently than we normally would, and the litigants present no argument for why we should disrupt the standard premise that a federal forum is available for completely diverse parties where the amount in controversy is $75,000 or more and for minimally diverse parties where the amount is $5 million or more."

In vacating the lower courts' dismissal orders, the majority noted that "a more robust record must be developed here as to the precise nature of the class claims."

Judge Leonard Garth dissented from the panel, saying he would affirm the dismissal of all three complaints as there is no federal question jurisdiction and no diversity jurisdiction. "It is evident that the Senate was keenly aware of both state and Federal jurisdictions, and had both in mind when it sorted them out for defined purposes: A consumer's private right of action had to be brought in state court; a State's cause of action had to be brought in Federal court," Garth wrote (emphasis in original). "What could be plainer or more unambiguous?"

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit