ErieNet, Inc. v. Velocity Net, Inc., No. 97-3562

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Writing for the CourtRENDELL; ALITO
Citation156 F.3d 513
Docket NumberNo. 97-3562
Decision Date25 September 1998
Parties13 Communications Reg. (P&F) 956 ERIENET, INC.; Sandra MacKenzie; John Knauer; Frank Mezler, Jr., Appellants, v. VELOCITY NET, INC.; Thomas Dylewski; Chad Ferenack.

Page 513

156 F.3d 513
13 Communications Reg. (P&F) 956
ERIENET, INC.; Sandra MacKenzie; John Knauer; Frank
Mezler, Jr., Appellants,
v.
VELOCITY NET, INC.; Thomas Dylewski; Chad Ferenack.
No. 97-3562.
United States Court of Appeals,
Third Circuit.
Argued April 27, 1998.
Decided Sept. 25, 1998.

Page 514

Daniel J. Pastore [ARGUED], The McDonald Group, Erie, PA, for Appellants.

Craig A. Markham [ARGUED], Elderkin, Martin, Kelly & Messina, Erie, PA, for Appellees.

BEFORE: ALITO, RENDELL, and GARTH, Circuit Judges.

OPINION OF THE COURT

RENDELL, Circuit Judge.

This appeal requires us to consider the unique and apparently unprecedented question of whether federal district courts have jurisdiction over consumer lawsuits brought under a federal statute that creates a private cause of action, is silent as to whether such actions can be brought in federal courts, but expressly refers consumer claims to state courts. Appellant ErieNet, Inc., an Internet service provider, and the individual appellants, ErieNet subscribers, brought suit in federal district court under the private enforcement provision of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227. Appellants allege that appellees VelocityNet, Inc., another Internet service provider, and its agents and employees sent unsolicited e-mail messages to ErieNet subscribers in violation of the TCPA. Because the TCPA refers such consumer suits to state courts, the district court concluded that it lacked subject matter jurisdiction and dismissed the case pursuant to Federal Rule of Civil Procedure 12(h)(3). We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291, and we will exercise plenary review. See Growth Horizons, Inc. v. Delaware County, 983 F.2d 1277, 1280 (3d Cir.1993) (citations omitted). We will affirm.

I.

Enacted in 1991 as part of the Federal Communications Act, the TCPA seeks to deal with an increasingly common nuisance--telemarketing. More than 300,000 solicitors call more than 18,000,000 Americans each day. See 47 U.S.C. § 227, Congressional finding No. 3. By 1991, over half the states had enacted statutes restricting the marketing uses of the telephone. However, Congress recognized that "telemarketers can evade [state] prohibitions through interstate operation; therefore, Federal law is needed to control residential telemarketing practices." 47 U.S.C. § 227, Congressional finding No. 7; see also S.Rep. No. 102-178, at 5 (1991), reprinted in, 1991 U.S.C.C.A.N. 1968, 1973 ("The Committee believes that Federal legislation is necessary to protect the public from automated telephone calls ... Federal action is necessary because the States do not have the jurisdiction to protect their citizens against those who use these machines to place interstate telephone calls.").

Accordingly, Congress enacted the TCPA, which prohibits, inter alia, various uses of automatic telephone dialing systems, the initiation of certain telephone calls using artificial or prerecorded voices, and the use of any device to send an unsolicited advertisement to a telephone facsimile machine. See 47 U.S.C. § 227(b). 1 Under § 227(f), states may bring civil actions in federal court on behalf of their residents for violations of the TCPA. In addition, the statute expressly creates a private right of action:

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--

Page 515

(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. § 227(b)(3). Senator Hollings, the sponsor of the bill, stated:

The substitute bill contains a private right-of-action provision that will make it easier for consumers to recover damages from receiving these computerized calls. The provision would allow consumers to bring an action in State court against any entity that violates the bill. The bill does not, because of constitutional constraints, dictate to the States which court in each State shall be the proper venue for such an action, as this is a matter for state legislators to determine. Nevertheless, it is my hope that the States will make it as easy as possible for consumers to bring such actions, preferably in small claims court. The consumer outrage at receiving these calls is clear. Unless Congress makes it easier for consumers to obtain damages from those who violate this bill, these abuses will undoubtedly continue.

Small claims court or a similar court would allow the consumer to appear before the court without an attorney. The amount of damages in this legislation is set to be fair to both the consumer and the telemarketer. However, it would defeat the purposes of the bill if the attorneys' costs to consumers of bringing an action were greater than the potential damages. I thus expect that the States will act reasonably in permitting their citizens to go to court to enforce this bill.

137 Cong. Rec. S16205-06 (daily ed. Nov. 7, 1991) (statement of Sen. Hollings) (emphasis added).

Although actual monetary losses from telemarketing abuses are likely to be minimal, this private enforcement provision puts teeth into the statute by providing for statutory damages and by allowing consumers to bring actions on their own. Consumers who are harassed by telemarketing abuses can seek damages themselves, rather than waiting for federal or state agencies to prosecute violations. Although § 227(f)(1) of the statute does authorize states to bring actions on their citizens' behalf, the sheer number of calls made each day--more than 18,000,000--would make it impossible for government entities alone to completely or effectively supervise this activity.

II.

We recognize at the outset that the circumstances of this case are unique. We are confronted with "an unusual constellation of statutory features." Chair King, Inc. v. Houston Cellular Corp., 131 F.3d 507, 512 (5th Cir.1997). A federal statute creates a private cause of action. The statute is not silent as to where such actions may be brought; rather, it refers potential plaintiffs to the state courts. Neither the text nor the legislative history makes any reference to federal courts. Furthermore, the statute does not appear to reflect any significant federal interest, or one that is uniquely federal. It does not reflect an attempt by Congress to occupy this field of interstate communication or to promote national uniformity of regulation. Rather, Congress recognized that state regulation of telemarketing activity was ineffective because it could be avoided by interstate operations. Federal legislation was necessary in order to prevent telemarketers from evading state restrictions. See Van Bergen v. Minnesota, 59 F.3d 1541, 1548 (8th Cir.1995).

This statutory scheme is significant because a district court's federal question jurisdiction is dependent on an act of Congress. "While Article III of the Constitution authorizes judicial power of 'cases, in law and equity, arising under' ... the Constitution, laws, and treaties of the United States, the district courts have only that jurisdiction that Congress grants through statute." International Science & Tech. Inst., Inc. v. Inacom Communications, Inc., 106 F.3d 1146, 1153 (4th Cir.1997) (citing Sheldon v. Sill, 49 U.S. 441, 449, 8 How. 441, 12 L.Ed. 1147 (1850)). The question, therefore, is whether Congress

Page 516

has provided for federal court jurisdiction over consumer suits under the TCPA. To answer that question, we first examine whether the TCPA itself reflects Congress' intent to grant federal jurisdiction. If the TCPA does not reflect such an intent, we must then consider whether some other statute authorizes federal jurisdiction under these circumstances. In considering these questions, we keep in mind the "fundamental precept that federal courts are courts of limited jurisdiction. The limits upon federal jurisdiction, whether imposed by the Constitution or by Congress, must be neither disregarded nor evaded." Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978).

A.

Every court of appeals to consider the question has held that the TCPA does not grant federal court jurisdiction over the private causes of action at issue in this litigation. See Nicholson v. Hooters of Augusta, Inc., 136 F.3d 1287, 1287-88 (11th Cir.1998), modified, 140 F.3d 898 (11th Cir.1998); Chair King, 131 F.3d at 509; International Science, 106 F.3d at 1150. But see Kenro, Inc. v. Fax Daily, Inc., 962 F.Supp. 1162, 1164 (S.D.Ind.1997) (rejecting the International Science analysis and finding federal jurisdiction over private enforcement actions under the TCPA). Appellants nonetheless argue that the statute does reflect Congress' intent to create a private right of action that may be brought in federal court, and that nothing in the text or legislative history expressly precludes federal court jurisdiction.

In interpreting a statute, we are charged with the duty to consider the provisions of the whole law, its object, and its policy. See United States Nat'l Bank of Oregon v. Independent Ins. Agents of Am., Inc., 508 U.S. 439, 455, 113 S.Ct. 2173, 124 L.Ed.2d 402 (1993) (quoting United States v. Heirs of Boisdore, 49 U.S. 113, 122, 8 How. 113, 12 L.Ed. 1009 (1850)). Furthermore, we must construe the statute " 'so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void, or insignificant.' " Pennsylvania Medical Soc'y v. Snider, 29 F.3d 886, 895 (3d Cir.1994) (quoting 2A Norman J. Singer, Sutherland Statutory Construction § 46.06, at 119-20 (5th ed.1992) (citations omitted)). Guided by these principles, we join the Fourth, Fifth, and Eleventh Circuits in concluding that Congress...

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    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • April 4, 2011
    ...a common question arises in our review of each of the cases: whether, notwithstanding our ruling in ErieNet, Inc. v. Velocity Net, Inc., 156 F.3d 513 (3d Cir.1998), that private TCPA claims do not present a federal question, the federal courts can exercise diversity jurisdiction over privat......
  • Kaufman v. Acs Systems, Inc., No. B155804.
    • United States
    • California Court of Appeals
    • July 22, 2003
    ...for government entities alone to completely or effectively supervise this activity." (Erienet, Inc. v. Velocity Net, Inc. (3d Cir.1998) 156 F.3d 513, 2. State Permission In deciding whether a state permits private suits under the TCPA, all but one state court have held that a state's permis......
  • Mims v. Arrow Fin. Servs., LLC., No. 10–1195.
    • United States
    • United States Supreme Court
    • January 18, 2012
    ...(C.A.9 2000) (U.S. district courts lack federal-question jurisdiction over private TCPA actions), ErieNet, Inc. v. Velocity Net, Inc ., 156 F.3d 513, 519 (C.A.3 1998) (same), Foxhall Realty Law Offices, Inc. v. Telecommunications Premium Servs., Ltd., 156 F.3d 432, 434 (C.A.2 1998) (same), ......
  • Mims v. Arrow Fin. Servs., LLC., No. 10–1195.
    • United States
    • United States Supreme Court
    • January 18, 2012
    ...(C.A.9 2000) (U.S. district courts lack federal-question jurisdiction over private TCPA actions), ErieNet, Inc. v. Velocity Net, Inc ., 156 F.3d 513, 519 (C.A.3 1998) (same), Foxhall Realty Law Offices, Inc. v. Telecommunications Premium Servs., Ltd., 156 F.3d 432, 434 (C.A.2 1998) (same), ......
  • Request a trial to view additional results
101 cases
  • Landsman & Funk Pc v. Skinder–strauss Associates, Nos. 09–3532
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • April 4, 2011
    ...a common question arises in our review of each of the cases: whether, notwithstanding our ruling in ErieNet, Inc. v. Velocity Net, Inc., 156 F.3d 513 (3d Cir.1998), that private TCPA claims do not present a federal question, the federal courts can exercise diversity jurisdiction over privat......
  • Kaufman v. Acs Systems, Inc., No. B155804.
    • United States
    • California Court of Appeals
    • July 22, 2003
    ...for government entities alone to completely or effectively supervise this activity." (Erienet, Inc. v. Velocity Net, Inc. (3d Cir.1998) 156 F.3d 513, 2. State Permission In deciding whether a state permits private suits under the TCPA, all but one state court have held that a state's permis......
  • Mims v. Arrow Fin. Servs., LLC., No. 10–1195.
    • United States
    • United States Supreme Court
    • January 18, 2012
    ...(C.A.9 2000) (U.S. district courts lack federal-question jurisdiction over private TCPA actions), ErieNet, Inc. v. Velocity Net, Inc ., 156 F.3d 513, 519 (C.A.3 1998) (same), Foxhall Realty Law Offices, Inc. v. Telecommunications Premium Servs., Ltd., 156 F.3d 432, 434 (C.A.2 1998) (same), ......
  • Mims v. Arrow Fin. Servs., LLC., No. 10–1195.
    • United States
    • United States Supreme Court
    • January 18, 2012
    ...(C.A.9 2000) (U.S. district courts lack federal-question jurisdiction over private TCPA actions), ErieNet, Inc. v. Velocity Net, Inc ., 156 F.3d 513, 519 (C.A.3 1998) (same), Foxhall Realty Law Offices, Inc. v. Telecommunications Premium Servs., Ltd., 156 F.3d 432, 434 (C.A.2 1998) (same), ......
  • Request a trial to view additional results

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