Foxhall Realty Law Offices, Inc. v. Telecommunications Premium Services, Ltd.

• Decision Date: 28 September 1998
• Docket Number: Docket No. 97-9147
• Citation: 156 F.3d 432
• Parties: 13 Communications Reg. (P&F) 952 FOXHALL REALTY LAW OFFICES, INC., on behalf of itself and all others similarly situated, Plaintiff-Appellant, v. TELECOMMUNICATIONS PREMIUM SERVICES, LTD., d/b/a TPS Call Sciences, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

Page 432

156 F.3d 432

13 Communications Reg. (P&F) 952

FOXHALL REALTY LAW OFFICES, INC., on behalf of itself and all others similarly situated, Plaintiff-Appellant, v. TELECOMMUNICATIONS PREMIUM SERVICES, LTD., d/b/a TPS Call

Sciences, Defendant-Appellee.

Docket No. 97-9147.

United States Court of Appeals, Second Circuit.

Argued May 7, 1998.

Decided Sept. 28, 1998.

Robert J. Schechter, New York City (Schechter & Nimkoff, LLP, New York City, of counsel), for Plaintiff-Appellant.

Warren Anthony Fitch, Washington, DC (Robert V. Zener, Swidler & Berlin, Chartered, Washington, DC, on the brief), for Defendant-Appellee.

Before: McLAUGHLIN and PARKER, Circuit Judges, and SPATT ^*, District Judge.

PARKER, Circuit Judge:

Like the Fourth Circuit, and the other circuit courts that have considered the issue before us, we too reach "the somewhat unusual conclusion that state courts have exclusive jurisdiction over a cause of action created by" a federal statute, the Telephone Consumer Protection Act of 1991, 47 U.S.C. § 227, Pub.L. No. 102-243, 105 Stat. 2394 (1991) (the "TCPA"). See International Science & Tech. Inst., Inc. v. Inacom Communications, Inc., 106 F.3d 1146, 1150 (4th Cir.1997) ("International Science "). Indeed, we do so for substantially the same reasons stated in International Science. Accordingly, we affirm the decision of the United States District Court for the Southern District of New York (Barrington D. Parker, Jr., Judge ) dismissing the case for lack of subject matter jurisdiction. See Foxhall Realty Law Offices, Inc. v. Telecommunications Premium Servs., Ltd., 975 F.Supp. 329 (S.D.N.Y.1997).

I. BACKGROUND

Foxhall Realty Law Offices, Inc. ("Foxhall") alleges that on November 5, 1996, the defendant-appellee, Telecommunications Premium Services, Ltd. ("TPS"), transmitted to it by facsimile an unsolicited advertisement in violation of the TCPA. TPS is a privately-held telecommunications company which provides a "personal assistant" service to its customers. A TPS customer using this service is assigned a single telephone number, and the customer's incoming calls are routed to any one of several other telephone numbers used by the customer. TPS allegedly purchased the facsimile number list containing Foxhall's number from a marketing services firm in New York. The list contained approximately 66,000 facsimile numbers in the New York metropolitan tristate area.

Foxhall filed this putative class action suit on behalf of itself and all New Yorkers who allegedly received "junk" facsimile advertisements from TPS. Foxhall claims that the advertisement it received was sent without its prior permission and was therefore a violation of 47 U.S.C. § 227. Section 227(b)(1)(C) prohibits the "use [of] any telephone facsimile machine, computer, or other device to send an unsolicited advertisement to a telephone facsimile machine." Section 227(b)(3) provides for a private right of action in the following terms:

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.

If the court finds that the defendant willfully or knowingly violated this subsection or the regulations prescribed under this subsection, the court may, in its discretion, increase the amount of the award to an amount equal to not more than 3 times the amount available under subparagraph (B) of this paragraph.

47 U.S.C. § 227(b)(3).

Following International Science, the district court held that the TCPA creates a private right of action for violations of § 227(b)(1)(C), but that state courts have exclusive jurisdiction over such causes of action under the terms of § 227(b)(3). We agree.

II. DISCUSSION

We note at the outset that since the Fourth Circuit decision in International Science, the Fifth and Eleventh Circuits have analyzed 47 U.S.C. § 227(b)(3) and have both reached the same conclusion. See Nicholson v. Hooters of Augusta, Inc., 136 F.3d 1287 1289 (11th Cir.1998); Chair King, Inc. v. Houston Cellular Corp., 131 F.3d 507, 509 (5th Cir.1997); see also Murphey v. Lanier, 997 F.Supp. 1348 (S.D.Cal. 1998) (finding exclusive state court jurisdiction under 47 U.S.C. § 227(b)(3)). Only the United States District Court for the Southern District of Indiana has found that there is concurrent federal and state jurisdiction over private rights of action brought under the TCPA. See Kenro, Inc. v. Fax Daily, Inc., 904 F.Supp. 912, 915 (S.D.Ind.1995), on reconsideration, 962 F.Supp. 1162 (S.D.Ind.1997) (denying motion to reconsider earlier decision based on Fourth Circuit authority reaching opposite conclusion).

In determining whether Congress intended to confer federal jurisdiction over private rights of action brought under the TCPA, our "analysis begins with the text of the provision in question." New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). The language of the TCPA at issue here is the line that reads: "[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 violation of the TCPA's prohibition on unsolicited facsimile advertising. 47 U.S.C. § 227(b)(3) (emphasis added). As the Fourth Circuit observed in International Science, although the use of the word "may" in federal statutes conferring jurisdiction on federal courts has not been held to confer exclusive jurisdiction on those courts, see, e.g., Tafflin v. Levitt, 493 U.S. 455, 460-61, 110 S.Ct. 792, 107 L.Ed.2d 887 (1990) (holding that the RICO statute which provided that any person "may sue ... in any appropriate United States district court" for violations of the statute did not "oust a state court from concurrent jurisdiction over the cause of action"), use of the word "may" to confer jurisdiction on state courts has a different effect. The difference derives from the fact that state courts are courts of general jurisdiction and are accordingly presumed to have jurisdiction over federally-created causes of action unless Congress indicates otherwise, whereas federal courts are courts of limited jurisdiction which thus require a specific grant of jurisdiction. See Sheldon v. Sill, 49 U.S. (8 How.) 441, 449, 12 L.Ed. 1147 (1850). As the Fourth Circuit in International Science explained:

When ... the permissive authorization extends only to courts of general jurisdiction, that authorization cannot confer jurisdiction on unmentioned courts of limited jurisdiction, which require a specific grant. If a federal statute permissively authorizes suit in federal court, that authorization does not of necessity preclude suit in state courts of general jurisdiction, which are presumed competent unless otherwise stated. But the contrary assertion cannot be true. If a statute authorizes suit in state courts of general jurisdiction through the use of the term "may," that authorization cannot confer jurisdiction on a federal court because federal courts are competent to hear only those cases specifically authorized.... In light of this difference between the federal and state courts, it is meaningful that Congress explicitly mentioned only state courts in 47 U.S.C. § 227(b)(3) because under usual circumstances, mentioning state courts is unnecessary to vest them with concurrent jurisdiction.

106 F.3d at 1151-52 (citations omitted). See also Chair King, Inc., 131 F.3d at 512 (reasoning that since "the TCPA's express grant of jurisdiction would not have been necessary if Congress had intended to confer concurrent jurisdiction upon state and federal courts" and "[b]ecause a statute should be construed in a way that gives meaning and effect to all the provisions, it appears the specific authorization of state court jurisdiction was intended as more than a confirmation of concurrent jurisdiction") (citations omitted). We agree with, and adopt, the reasoning of the Fourth and Fifth Circuits that Congress intended to confer exclusive state court jurisdiction over private rights of action under the TCPA.

Foxhall contends, however, that the specific grant of federal jurisdiction seemingly absent from § 227(b)(3) is supplied by the general "federal question" jurisdiction statute, 28 U.S.C. § 1331, which provides The district court shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.

According to Foxhall, since the TCPA's language does not expressly carve out an exception to this general jurisdiction statute, it cannot do so implicitly. However, Foxhall's argument misunderstands the nature of the federal question jurisdiction statute.

Section 1331 is based on Article III, Section 2, of the Constitution of the United States, which provides that the judicial power of the United States shall extend, inter alia, to "cases, in law and equity arising under the Constitution, laws, and treaties of the United States." U.S. Const. Art. III, § 2. However, the federal question jurisdiction conferred on district courts by § 1331 "has been construed more narrowly than its constitutional counterpart." Chair King, Inc., 131 F.3d at 510 (citing Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 495, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983) and Romero v. Int'l Terminal Operating Co., 358 U.S. 354, 379-80, 79 S.Ct. 468, 3 L.Ed.2d 368 (1959)). Thus, while it is generally true that an action that "arises under" a federal statute will properly be brought in federal district court, that is not always the case. See International Science, 106 F.3d at 1154. "Inferior federal courts' 'federal...