Consumer Crusade, Inc. v. Affordable Health Care Solutions, Inc., No. 04CA1839.

• Decision Date: 25 August 2005
• Docket Number: No. 04CA1839.
• Citation: 121 P.3d 350
• Parties: CONSUMER CRUSADE, INC., a Colorado corporation, Plaintiff-Appellant, v. AFFORDABLE HEALTH CARE SOLUTIONS, INC., a California corporation, Defendant-Appellee.
• Court: Colorado Supreme Court

121 P.3d 350

CONSUMER CRUSADE, INC., a Colorado corporation, Plaintiff-Appellant, v. AFFORDABLE HEALTH CARE SOLUTIONS, INC., a California corporation, Defendant-Appellee.

No. 04CA1839.

Colorado Court of Appeals, Division II.

August 25, 2005.

Demirali Law Firm, P.C., A.M. Demirali, Denver, Colorado, for Plaintiff-Appellant.

Richilano & Ridley, P.C., Patrick L. Ridley, Robert T. Fishman, Denver, Colorado, for Defendant-Appellee.

WEBB, J.

Plaintiff, Consumer Crusade, Inc. (Consumer), appeals the judgment dismissing its complaint against defendant, Affordable Health Care Solutions, Inc. (Affordable), for lack of subject matter jurisdiction. We reverse and remand for further proceedings.

Consumer's complaint alleged that Affordable had sent out unsolicited advertisements via facsimile (fax) to persons in the State of Colorado in violation of 47 U.S.C. § 227, the Telephone Consumer Protection Act (TCPA). Based on assignments of recipients' claims, Consumer sought damages, costs, and an injunction against Affordable.

Affordable moved to dismiss the complaint under C.R.C.P. 12(b)(1) and 12(b)(5) asserting, as here relevant, that the trial court lacked subject matter jurisdiction to hear a private claim under the TCPA. According to Affordable, because the General Assembly had enacted a statute regulating unsolicited fax advertising after the adoption of the TCPA, see Colo. Sess. Laws 1997, ch. 133, § 6-1-105 at 500, which was less restrictive than the federal act, this statute deprived the Colorado courts of jurisdiction to entertain private actions under the TCPA.

The trial court concluded that, until the state statute was amended in 2004 to make specific reference to the TCPA, see § 6-1-702(1)(c), C.R.S.2004, Colorado courts had lacked jurisdiction to hear such private actions. Because Affordable sent the faxes at issue in 2003, the court dismissed Consumer's complaint.

I.

The parties agree that the TCPA is ambiguous, but dispute how it should be interpreted as to private actions. We conclude state courts have jurisdiction over such actions under the Supremacy Clause, U.S. Const., art. VI, cl. 2, and the TCPA does not limit this jurisdiction, even assuming that Congress could do so.

When presented with a dismissal for lack of subject matter jurisdiction under C.R.C.P. 12(b)(1), we review the trial court's factual determinations under a clear error standard and its legal conclusions under a de novo standard. Egle v. City & County of Denver, 93 P.3d 609 (Colo.App.2004); Bazemore v. Colo. State Lottery Div., 64 P.3d 876 (Colo.App.2002). Here, the case turns on statutory interpretation, which we review de novo. Vigil v. Franklin, 103 P.3d 322 (Colo.2004).

When interpreting a statute, we first look to its language, which we construe as written if that language is clear and unambiguous. However, if the language is ambiguous, we may rely on legislative history to discern the legislature's intent. City of Aurora v. Bd. of County Comm'rs, 919 P.2d 198 (Colo.1996). We must construe statutory provisions in their entirety and give effect to every word contained therein. Bd. of County Comm'rs v. Vail Assocs., Inc., 19 P.3d 1263 (Colo.2001).

The TCPA states: "It shall be unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States ... to use any telephone facsimile machine, computer, or other device to send an unsolicited advertisement to a telephone facsimile machine." 47 U.S.C. § 227(b)(1)(C).

The statute creates at least a conditional private right of action for violation of its provisions:

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 —

(A) an action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation,

(B) an action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater, or

(C) both such actions.

47 U.S.C. § 277(b)(3) (emphasis supplied).

In addition to a private action, the TCPA may be enforced through an action brought by any state attorney general in federal court. Murphey v. Lanier, 204 F.3d 911 (9th Cir.2000). However, courts have concluded that the TCPA cannot be enforced by private action in federal court. See, e.g., Murphey v. Lanier, supra; Foxhall Realty Law Offices, Inc. v. Telecommunications Premium Servs., Ltd., 156 F.3d 432 (2d Cir.1998).

The TCPA also provides: "[N]othing in this section or in the regulations prescribed under this section shall preempt any State law that imposes more restrictive intrastate requirements or regulations on, or which prohibits . . . the use of, telephone facsimile machines or other electronic devices to send unsolicited advertisements." 47 U.S.C. § 227(e)(1)(A) (emphasis supplied).

We agree with the parties that the phrase concerning private actions, "if otherwise permitted by the laws or rules of court of a State," is ambiguous. Only one court has found this phrase to be clear, albeit without explanation. Autoflex Leasing, Inc. v. Mfrs. Auto Leasing, Inc., 16 S.W.3d 815, 817 (Tex.App.2000). Other courts have ascribed one of three different and inconsistent interpretations to this phrase.

II.

We examine each of those interpretations in light of the Supremacy Clause, which provides: "This constitution, and the laws of the United States which shall be made in pursuance thereof. . . shall be the supreme law of the land; and the judges in every state shall be bound thereby; anything in the constitution or laws of any state to the contrary notwithstanding."

The Supremacy Clause requires that state law yield when it conflicts with federal law. Middleton v. Hartman, 45 P.3d 721, 731 (Colo.2002). Moreover, it "charges state courts with a coordinate responsibility to enforce that law according to their regular modes of procedure," Howlett v. Rose, 496 U.S. 356, 367, 110 S.Ct. 2430, 2438, 110 L.Ed.2d 332 (1990), unless Congress dictates otherwise. Yellow Freight Sys., Inc. v. Donnelly, 494 U.S. 820, 110 S.Ct. 1566, 108 L.Ed.2d 834 (1990).

However, federal law must take state courts "as it finds them," because the states "have great latitude to establish the structure and jurisdiction of their own courts." Howlett v. Rose, supra, 496 U.S. at 372, 110 S.Ct. at 2441. Thus, a state may decline to exercise jurisdiction over a federal claim by applying a neutral rule of judicial administration. Testa v. Katt, 330 U.S. 386, 67 S.Ct. 810, 91 L.Ed. 967 (1947).

A.

In Autoflex Leasing, Inc. v. Manufacturers Auto Leasing, Inc., supra, the court interpreted the "if otherwise permitted" phrase as an "opt in" provision. This interpretation assumes that Congress intended to deprive state courts of jurisdiction over private TCPA actions, unless and until the state takes affirmative steps, either by legislation or court rule, to exercise jurisdiction over such actions. Applying this view, until the Colorado statute was amended in 2004, no private action under the TCPA could be prosecuted in the Colorado courts.

However, no other court has adopted this interpretation, and Autoflex has been criticized as misconstruing the federal cases on which it relied. See Accounting Outsourcing, LLC. v. Verizon Wireless Pers. Communications, L.P., 329 F.Supp.2d 789 (M.D.La.2004). This interpretation "would most likely run afoul of the Tenth Amendment," because it mandates state legislation. Accounting Outsourcing, LLC. v. Verizon Wireless Pers. Communications, L.P., supra, 329 F.Supp.2d at 796.

The legislative history indicates that the TCPA was enacted because several states had adopted legislation regulating unsolicited faxes, but effective enforcement of such regulations was hindered by the fax senders' use of interstate communications, jurisdiction over which is vested in Congress. By adopting federal legislation, Congress intended to close this loophole.

Given this purpose, we doubt that Congress would require the states to adopt additional laws or rules of court to enable claims under the TCPA to be enforced in their courts. See Chair King, Inc. v. GTE Mobilnet of Houston, Inc., 135 S.W.3d 365, 380 (Tex.App.2004)(review granted Mar. 11, 2005)(there is no reason to conclude that Congress structured the TCPA in such an inefficient manner as to require states to enact legislation to allow their courts to hear those claims).

Moreover, state courts of general jurisdiction are presumed to have jurisdiction over federal claims. Tafflin v. Levitt, 493 U.S. 455, 110 S.Ct. 792, 107 L.Ed.2d 887 (1990). This presumption can only be rebutted "by an explicit statutory directive, by unmistakable implication from legislative history, or by a clear incompatibility between state-court jurisdiction and federal interests." Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 478, 101 S.Ct. 2870, 2875, 69 L.Ed.2d 784 (1981).

We discern nothing in the ambiguous language of the TCPA or its legislative history that would satisfy either the first or second prongs of this test. Moreover, the legislative history shows Congressional intent to facilitate state regulation of unsolicited fax advertisements, which negates the third prong. Hence, we discern no basis for inferring a condition of prior state approval, and therefore we reject the opt in interpretation.

B.

The majority of courts have also rejected this interpretation and concluded that the phrase in question establishes an "opt out" process. Under this interpretation, the phrase authorizes a state to refuse to entertain private TCPA actions, but only by affirmative legislation or court rule doing so. These courts have recognized that, unless a state affirmatively opts out of private enforcement actions, the Supremacy Clause would require state courts to enforce the TCPA. See, e.g., Mulhern v. MacLeod, 441 Mass. 754, 808 N.E.2d 778 (2004); Reynolds v....