McNULTY, District Judge.
This matter comes before the Court upon Defendants' motion to dismiss the Complaint, which is pleaded as a class action. Plaintiff, on behalf of himself and
In Defendants' view, a federal-court TCPA class action, no less than a state-court action, must comply with "the laws or rules of court of [this] State." 47 U.S.C. § 227(b)(3). Thus, in their motion to dismiss, Defendants maintain that New Jersey state law also operates to bar a TCPA claim from being maintained as a class action here in federal court. Plaintiff responds that, in federal court, the appropriateness or not of class action treatment is governed solely by Rule 23 of the Federal Rules of Civil Procedure ("Rule 23"). In Plaintiff's view, a state-law prohibition of private TCPA class actions has no force here in federal court.
Judges in this District have had occasion to examine this issue on several occasions.
Gann Law Books, Inc. and its "sister charitable foundation," Gann Legal Education Foundation, Inc. (collectively, with defendant Protzel, "Gann") publish legal
Fitzgerald specifically identifies six faxed advertisements: one received on February 26, 2009, one on August 14, 2009, three received on August 13, 2009, and one received on April 8, 2011. Id. ¶ 10. He alleges that these faxed advertisements did not contain opt-out notices, or that the notices they did contain were legally defective under TCPA.
Plaintiff Fitzgerald filed his Complaint on July 26, 2011, and the case was assigned to District Judge Hochberg. While this case has been pending, the law has developed quickly.
Gann moved to dismiss the Complaint on September 23, 2011. Defendants' Motion to Dismiss for Lack of Jurisdiction, ECF No. 11 ("Def. 1st MTD"). On December 30, 2011, District Judge Hochberg administratively terminated that first motion to dismiss pending the outcome of two then-pending cases: Mims v. Arrow Financial Services, LLC, ___ U.S. ___, 132 S.Ct. 740, 181 L.Ed.2d 881 (2012), and Landsman & Funk PC v. Skinder-Strauss Associates, 640 F.3d 72 (3d Cir.2011), opinion reinstated in part, 09-3105, 2012 WL 2052685 (3d Cir. Apr. 17, 2012) ("Landsman I").
On July 27, 2012, following the resolution of those two cases, Gann filed a renewed motion to dismiss. See Def. 2d MTD. TCPA's grant of a right of action if "otherwise permitted by the laws or rules of a court of a state," argued Gann, incorporated New Jersey state law that would bar class action treatment. Id. at 2-3. Fitzgerald countered that this interpretation of the TCPA's language "flies directly in the face of the recent decision of the Supreme Court in [Mims] that holds that state laws and state rules of court do not apply to private TCPA actions brought in federal courts." Plaintiff's Memorandum of Law in Opposition to Defendants' Motion to Dismiss Plaintiff's Class Action Claims, August 9, 2012, ECF No. 49 ("Pl. Opp.").
On March 22, 2013, Defendants moved to stay this action pending the outcome of an interlocutory appeal that the defendants had sought in Bais Yaakov of Spring
Gann's second motion to dismiss remains pending. As is appropriate in the context of a motion to dismiss, Gann does not dispute the factual allegations. Rather, Gann challenges the Plaintiff's legal basis for bringing a federal TCPA class action claim, while reserving its right to "challenge certification of any class under Rule 23 should any such claims remain viable after disposition of the [motion to dismiss]." Def. 2d MTD at n. 1.
The Supreme Court decisions in Shady Grove and Mims, as well as the Third Circuit's decision in Landsman I, establish that, in federal court, Rule 23, not state law, determines whether a TCPA case may proceed as a class action. Those decisions effectively dictate that Gann's motion to dismiss be denied.
In 2010, the United States Supreme Court decided Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co., 559 U.S. 393, 130 S.Ct. 1431, 176 L.Ed.2d 311 (2010). That diversity case involved state-law claims for unpaid statutory interest. A New York state statute would have barred those claims from being brought as a class action, but plaintiff asserted that they could nevertheless be maintained as a class action in federal court under Rule 23, Fed.R.Civ.P.
Id. at 1437.
In Landsman I, the Third Circuit applied Shady Grove to a TCPA case. Confusingly, however, it did so in the context of a jurisdictional framework that was later superseded by Mims, see infra. To simplify a bit, Landsman I held that, although TCPA is a federal statute, it does not support federal-question jurisdiction under 28 U.S.C. § 1331; thus a TCPA action, despite its grounding in federal law, could be maintained in federal court only
Landsman I brought some equilibrium to the law, but it was an uneasy equilibrium. In Mims v. Arrow Fin. Servs., ___ U.S. ___, 132 S.Ct. 740, 181 L.Ed.2d 881 (2012), the Supreme Court went a long way toward settling the outstanding issues. Mims dealt with the interrelated issues of whether the state-court cause of action granted by TCPA is exclusive, and whether the federal courts possess federal-question jurisdiction over TCPA claims pursuant to 28 U.S.C. § 1331.
The claim in Mims that the state court cause of action granted by TCPA is exclusive was by no means frivolous. TCPA provides that a person "may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State ... an action to recover for actual monetary loss from such a violation, or to receive $500 in damages...." 47 U.S.C. § 227(b) (emphasis added). Mims held
Mims's holding that the federal courts have direct, federal-question jurisdiction over TCPA claims further undercuts the Erie
To the extent those questions might remain open, I answer them in the negative. There is no statement in TCPA sufficiently explicit to persuade me that Congress intended to supplant the well-established principle that the Federal Rules of Civil Procedure reign supreme in a federal court action based on federal law. All TCPA actually says on this issue is that a state court cause of action must comport with state law. The underlying principle of Mims is that TCPA does not limit the availability of remedies in federal court. And Shady Grove holds that, even where a federal-court plaintiff asserts a state-law cause of action, Rule 23 may permit class-wide relief where state law would deny it. Put together, these authorities imply that, in a federal-court TCPA case, class action eligibility is governed by Rule 23, not state law.
Post-Mims cases in this District are generally in accord. For example, in Bais Yaakov, 2012 WL 4903269 at *4, District Judge Thompson concluded:
Id. at *7.
Writing in what she recognized to be "a substantially shifted legal context," District Judge Hayden reversed her earlier decision in Landsman and concluded that plaintiff was "not precluded from bringing this class action complaint." Landsman & Funk, P.C. v. Skinder-Strauss Associates, Civ. 08-3610 KSH, 2012 WL 6622120 at *1 (D.N.J. Dec. 19, 2012) reconsideration denied, Civ. 08-3610 KSH, 2013 WL 466448 (D.N.J. Feb. 8, 2013) ("Landsman II"). Citing Mims and Shady Grove, Judge Hayden denied the defendant's motion to dismiss, reasoning that "the state-law limitations... have no application in this federal-question case in federal court. Federal law only applies, and Skinder has not otherwise suggested that the complaint fails to state a claim under federal law." Id. at *9. District Judge Martini, too, has held that the court was "not required to — nor should it — forgo the class certification requirements set forth in Federal Rule of Civil Procedure 23 by instead applying New Jersey class action law to Plaintiffs' TCPA class claims brought in federal court." Goodrich Mgmt. Corp. v. Afgo Mech. Servs., Inc., Civ. 09-43 WJM, 2012 WL 6554221 at *3 (D.N.J. Dec. 14, 2012). Those opinions are persuasive, and they are based on appellate case law that controls my decision here.
Gann argues that it is unjust, or at least unseemly, that "a $500 TCPA case can be transformed into a federal question national class action" claiming millions of dollars in damages. It may even be true that this is "an unintended consequence of the statutory language." But that statutory language, as interpreted by the higher courts, leaves me no discretion. "Congress passed [the TCPA] as written, and the federal courts are left with the consequences." Bank v. Spark Energy Holdings, LLC, 4:11-cv-4082, 2012 WL 4097749 at *3 (S.D.Tex. Sept. 13, 2012). I hold that Rule 23, not state law, governs the availability of class action treatment of plaintiff's claims under TCPA.
One loose end remains. Plaintiff asserts a state-law claim under N.J. Stat. Ann. 56:8-157 et seq. (the "NJ Fax Act"). Like TCPA, the NJ Fax Act prohibits transmission of certain unsolicited advertisements. N.J. Stat. Ann. 56:8-158. Like TCPA, it provides for a private right of action, with statutory damages of $500 per violation. N.J. Stat. Ann. 56:8-159(a).
The Complaint seeks class-action treatment of the NJ Fax Act claim on behalf of persons in putative "Class C." (Complaint ¶ 48). As to this state-law claim, Plaintiff invokes this Court's supplemental jurisdiction pursuant to 28 U.S.C. § 1367. (Complaint ¶ 4).
It is possible to see the NJ Fax Act class claim as presenting a stronger case for dismissal than the federal TCPA claim. The statutory injunction to proceed "in a summary manner," tends to suggest that a class action was not within the State legislature's contemplation. And after all, nothing compelled New Jersey to create a substantive right of action at all; does not that greater power include the lesser one of setting the conditions under which plaintiffs may obtain classwide relief?
That argument, however plausible, was substantially cut off by the Supreme Court in Shady Grove. The Shady Grove plaintiff, too, was asserting a cause of action created by a state statute. And that state, New York, had by statute, N.Y. Civ. Prac. L.R. § 901(b), foreclosed a class action. The United States Supreme Court found it sufficient that the standards of Rule 23, Fed.R.Civ.P., were in direct conflict with those of the New York statute, § 901(b). This valid federal rule, being in conflict with a state one, was deemed to control by virtue of the Rules Enabling Act, 28 U.S.C. § 2072.
To be sure, a federal-question action under TCPA presents the a fortiori case. But the state-law scenario, under Shady Grove, is fortis enough. For the NJ Fax Act claim, as for the TCPA claims, Rule 23 controls the permissibility of class-action treatment. In this respect, too, Gann's motion to dismiss is denied.
For the reasons discussed herein, Defendants' Motion to Dismiss Plaintiff's Class Action Claims is
An appropriate order follows.
47 U.S.C. § 227(b).
Shady Grove, 130 S.Ct. at 1437.
N.J. Stat. Ann. § 56:8-159.