Consumer Finance Litigation

A New Jersey federal district court recently denied a motion to reconsider its previous holding that state law limitations on class actions do not apply to TCPA claims filed in federal court. At issue in the case, Landsman & Funk, P.C. v. Skinder-Strauss Associates, No. 08-3610, 2013 WL 466448 (D.N.J. Feb. 8, 2013), was a New York procedural law, C.P.L.R. § 901(b), which prohibits statutory class actions unless the statute creating liability explicitly provides for recovery in the form of class actions. The court had previously determined that the statute would apply under a choice of law analysis. Under the defendant's theory of the case, because the TCPA does not explicitly provide for recovery in the form of class actions, the case should be dismissed due to the operation of C.P.L.R. § 901(b). The court had previously denied the defendant's motion to dismiss based on this argument, and the defendant moved to reconsider.

The applicability of New York's C.P.L.R. § 901(b) turned on the interpretation of the TCPA's private right of action clause, which states that "[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 a violation of the TCPA. The defendant argued that the phrase "if otherwise permitted by the laws or rules" of a state required the application of state procedural law, under which the class action would be prohibited.

The court rejected the defendant's argument, holding that the private right of action clause merely set the conditions under which a TCPA claim could be filed in state court by stating that the claim could be filed in state court if so permitted under state law. The court reexamined its order denying the motion to dismiss, in which the court relied on the Supreme Court's decision in Mims v. Arrow Financial Services, LLC, 132 S. Ct. 740 (2012). In Mims, the Court interpreted the TCPA's private right of action clause to hold that federal and state courts have concurrent jurisdiction over private suits arising under the TCPA and that TCPA claims may be brought in federal court under federal question jurisdiction.

The Skinder court noted that the TCPA's private right of action clause was interpreted in Mims to simply give states the option of deciding whether to entertain TCPA claims, and was not meant to affect the viability of TCPA claims brought in federal court. The Mims Court had noted that, if neither federal question jurisdiction nor diversity jurisdiction were available to a plaintiff, "residents of States that choose not to hear TCPA claims would have no forum in which to sue."

The district court also relied on the Mims' Court's discussion of the important federal interest presented by TCPA claims, namely, protecting the privacy of individuals from unreasonable telemarketing practices. The district court interpreted Mims to conclude that Congress did not want to require consumers to rely on state law to gain redress for TCPA violations. The district court found that the state procedural law could not apply, therefore, noting that, under Mims, "a federal court addressing a federal law that serves an important federal interest would be remiss were it to hold that a plaintiff's claim must be dismissed because of a state law."

The district court therefore affirmed its holding that C.P.L.R. § 901(b) did not apply to TCPA claims filed in federal court, and denied the defendant's motion to reconsider for failure to present new evidence or an intervening change in controlling law.

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