New York City Debt Collection Defense Attorney

The United States Supreme Court examines the Telephone Consumer Protection Act (TCPA) and holds that consumers bothered by intrusive telemarketing calls can bring cases in federal district courts, in addition to state courts.

The case discussed in this blog entry represents a big win for consumers because it leaves open the option of suing harassing telemarketers in federal courts. So many federal district courts and federal appeals courts were reading the TCPA too narrowly so as to exclude federal district courts from hearing cases arising under this federally created law.

The case: Mims v. Arrow Financial Services, LLC. Justice Ginsburg delivered the opinion. Decided: January 18, 2012.

What is the Telephone Consumer Protection Act ("TCPA")?

The TCPA of 1991 is the United States' primary law governing unwanted telephone solicitation. Congress needed to address interstate nuisance calls that were escaping the reach of state laws. Such calls, Congress found, amounted to an "invasion of privacy."

The Telephone Consumer Protection Act (TCPA) outlaws:

  1. Automatic, artificial, or pre-recorded voice messages, without prior express consent, to any emergency telephone line, hospital patient, pager, cellular phone, or other service for which the receiver is charged for the call.
  2. Artificial or pre-recorded voice messages to residential telephone lines without prior express consent.
  3. Unsolicited advertisements to fax machines.
  4. Automatic telephone dialing systems to engage two or more of a business' telephone lines simultaneously.

Unfortunately, the TCPA exempts debt collection calls primarily because such calls are for a "commercial purpose" and do not communicate "unsolicited advertisements."

The TCPA can be enforced by State Attorney Generals and by private parties. This law is powerful for private parties because it entitles the aggrieved party to recover $500 per call, and if the call(s) were made willfully in violation of this law, then damages can be tripled, up to $1,500 per call.

The issue decided in this case:

Whether Congress granted exclusive jurisdiction to state courts while depriving the federal courts of jurisdiction of claims arising under the TCPA.

The case holding:

No. A consumer can bring the case in either state court or federal court. Congress' "permissive" grant of jurisdiction to state courts was not meant to deprive the federal judiciary's jurisdiction over this federal law. The court found unavailing Arrow's arguments that 1) the federal courts would be "inundated" with these small claims; and 2) consumers' rights would somehow become impaired because defendants would force removal of these "small claims" to federal courts where consumers are unfamiliar.

The heart of Mims v. Arrow Financial involves such a fundamental federal jurisdictional issue that the U.S. Supreme Court granted "certiorari" (a discretionary review of a lower court's decision) to resolve a split in the opinions (referred to as a "percolating issue") of the federal appeals courts across the country as to whether or not federal courts were granted authority to hear these telephone-nuisance actions under the TCPA.

The Supreme Court held that "federal courts have no more right to decline the exercise of jurisdiction, which is given, than to usurp that which is not given." The bottom line is that by way of 28 U.S.C. 1331, federal district courts have original jurisdiction "of all civil actions arising under the constitution, laws or treatises of the United States." The TCPA is a law of the United States. It is a federally created claim and it creates the private right of action. So unless a showing can be made that Congress explicitly sought to take away the federal judiciary's authority to hear these claims, the issue must be resolved in favor of federal courts retaining subject matter jurisdiction over these claims.

Here, Arrow did not convince the Supreme Court that the TCPA, through its clear grant of jurisdiction to state courts, divested the federal courts of its adjudicative authority under 28 U.S.C. 1331. The plain language of the TCPA itself and through "fair implication" cannot be read to deprive the federal courts of subject matter jurisdiction.

The U.S. Supreme Court reversed the Court of Appeals for the Eleventh Circuit and finally resolved this issue, which has generated considerable litigation across the nation.