Flood of TCPA Claims Expected in Federal Courts
On January 18, 2012, the Supreme Court of the United States handed down an opinion regarding the proper forum for cases arising under the increasingly popular Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227. Previously, the majority of circuits considering the issue had found that private actions brought under the TCPA could be brought only in state court.
In Mims v. Arrow Financial Services, LLC, 565 U.S. ____ (2012), the Supreme Court resolved the circuit split and held that state and federal courts have concurrent jurisdiction over private actions brought under the TCPA. Further, these TCPA claims filed in state court can be removed based on federal-question jurisdiction under 28 U.S.C. § 1331, which gives defendants expanded opportunities to choose their forum.
While the majority of the Circuits, including the Ninth, Tenth, Fourth, Third and Second, held that district courts lack federal question jurisdiction under the TCPA, the Supreme Court failed to side with them. Instead, the Supreme Court agreed with the minority – the Seventh and Sixth Circuits – who held that district courts have federal question jurisdiction under the TCPA.
What is the TCPA?
Congress passed the TCPA in 1991 and sought to protect the public from certain telemarketing activities. Focusing on the TCPA's provisions for consumers, the Act generally prohibits, among other things, automatically dialed calls or artificial or prerecorded messages to cell phones without the prior express consent of the called party. 47 U.S.C. § 227(b)(1)(A). The Act also prohibits using artificial or prerecorded voice messages to call residential phone lines without prior express consent and sending unsolicited advertisements to fax machines. Id. §§ 227(b)(1)(B), 227(b)(1)(C).
With the increase of debt collection efforts through phone calls and text messages to consumers, plaintiffs’ lawyers have seized on the TCPA to leverage the significant penalties that may be imposed for proven violations of the Act. The TCPA provides for statutory penalties of $500 per violation, and treble damages if the violation was a willful or knowing violation.
What this Means For You
The most important effect of the decision is the increased opportunity for removal to federal court. Previously, in several circuits, defendants could remove TCPA actions filed in state court only if the requirements for diversity jurisdiction or the Class Action Fairness Act could be satisfied. After this decision, defendants now have expanded opportunities to remove pursuant to federal question jurisdiction.
Troutman Sanders is an accomplished and experienced leader in providing litigation and regulatory advice to a broad spectrum of financial services institutions. Troutman Sanders’ CFPB Team monitors the development and activities of the CFPB on its CFPB Report blog and also advises clients on CFPB and Dodd-Frank issues. Additionally, Troutman Sanders’ Financial Services Litigation Group has successfully litigated a wide individual and class action litigation, as well as other federal and state consumer protection laws now under the umbrella of the CFPB.
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