26 December 2012

NJ federal court denies motions to deny class certifications in two TCPA cases

Goodrich Management Corp. v. Afgo Mechanical Svcs., Inc., Civ. No. 09-43, 11-2769 (WJM) (D.N.J. Dec. 14, 2012).

Judge Martini recently denied motions to deny class certifications in two cases brought under the Telephone Consumer Protection Act (the "TCPA"), 47 U.S.C. § 227. (The opinion can be accessed
here via Google Scholar.)

In Goodrich, the plaintiffs seek to represent classes of persons who allegedly received unsolicited faxes from defendants Afgo Mechanical Services (to plaintiff Goodrich Management Corp.) and defendants Banco Santander, S.A., Santander Holdrings USA, Inc., Santander Consumer USA, Inc., Sovereign Bancorp, Inc. and Sovereign Bank (to plaintiff Nicholas Fitzgerald).

Generally, the TCPA prohibits persons and entities from faxing "unsolicited advertisements," i.e., "material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission." 47 U.S.C. § 227(a)(4), (C).

The TCPA gives private parties standing to enforce this prohibition: "A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State [an action for an injunction or monetary damages]." 47 U.S.C § 227(b)(3).

In his opinion, Judge Martini noted that there has been a flurry of recent case law discussing the extent to which the "if otherwise permitted by the laws or rules of court of a state" language of TCPA § 227(b)(3) requires a federal court to follow state law, including in the context of TCPA class actions brought in federal court. Rule 23 of the Federal Rules of Civil Procedure normally governs whether a suit in federal district court may proceed as a class action.

In their motions to deny class certifications, the defendants argued that: (i) federal courts must enforce state law restrictions on bringing TCPA claims; (ii) under New Jersey law, private TCPA class actions are prohibited; and (iii) because New Jersey law applied to the plaintiffs’ class claims, denial of class certification was appropriate as a matter of law. In turn, the plaintiffs argued that Rule 23, rather than any state law, governs class certification determinations of private TCPA actions brought in federal court.

Judge Martini agreed with the plaintiffs, and found that the Court “is 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."

In doing so, Judge Martini followed the rationale laid out by Judge Anne E. Thompson in Bais Yaakov of Spring Valley v. Peterson's Nelet, LLC., Civ. No. 3:11-cv-11 (AET) (D.N.J. Oct. 10, 2012). Judge Thompson, after noting the "uncertain legal landscape," on the issue, stated: 

The Mims [v. Arrow Financial Services, LLC, 132 S. Ct. 740 (2012)] Court opined that Congress likely meant § 227(b)(3) to serve as a permissive grant to states to enforce the statute. On this reading, there is no direct conflict between Rule 23 and state law such as to imply a congressional limitation on Rule 23, because the section at issue applies to a suit brought in state court, not federal. As in other instances where the Supreme Court enforces a federal statutory cause of action, federal law — substantive and procedural — applies. In light of Mims, a case bolstering the previous Shady Grove [Orthopedic Associates, P.A. v. Allstate Insurance Company, 130 S. Ct. 1431 (2010)] opinion favoring application of Rule 23 in federal court unless specifically barred by Congress, this Court does not believe it appropriate to interpret the text of § 227(b)(3) as requiring a federal court to follow state law. A growing number of lower courts have also decided likewise. See, e.g., Hawk Valley, Inc., v. Taylor, No. 10-CV-00804, 2012 WL 1079965, *10 (E.D. Pa. Mar. 30, 2012); American Copper & Brass, Inc. v. Lake City Indust. Prods., No. 1:09-CV-1162, 2012 WL 3027953, *2 (W.D. Mich. July 24, 2012); Jackson's Five Star Catering v. Beason, No. 10-10010, 2012 WL 3205526, *4 (E.D. Mich. July 26, 2012); Bank v. Spark Energy Holdings, LLC, No. 4:11-CV-4082, 2012 WL 4097749, *2-3 (S.D. Tex. Sept 13, 2012); Bailey v. Domino's Pizza, LLC, No. 11-4, 2012 WL 1150882, *3 (E.D. La. Apr. 5, 2012).
Ultimately, Judge Thompson held the language of § 227(b)(3) did not to require a federal court to apply state law to a TCPA class action before it, and ruled that the New York state law barring plaintiff's TCPA class claims was inapplicable.  

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