International Science & Technology Institute, Inc. v. Inacom Communications, Inc.

• Decision Date: 11 February 1997
• Docket Number: No. 96-1142,96-1142
• Citation: 106 F.3d 1146
• Parties: , 25 Media L. Rep. 1498 INTERNATIONAL SCIENCE & TECHNOLOGY INSTITUTE, INCORPORATED, Plaintiff-Appellant, v. INACOM COMMUNICATIONS, INCORPORATED, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1146

106 F.3d 1146

65 USLW 2548, 25 Media L. Rep. 1498

INTERNATIONAL SCIENCE & TECHNOLOGY INSTITUTE, INCORPORATED Plaintiff-Appellant, v. INACOM COMMUNICATIONS, INCORPORATED, Defendant-Appellee.

No. 96-1142.

United States Court of Appeals Fourth Circuit.

Argued Oct. 29, 1996.

Decided Feb. 11, 1997.

ARGUED: John Thomas Ward, Ward, Kershaw & Minton, Baltimore, Maryland, for Appellant. John Patrick Passarelli, McGrath, North, Mullin & Kratz, P.C., Omaha Before NIEMEYER, WILLIAMS, and MOTZ, Circuit Judges.

Nebraska, for Appellee. ON BRIEF: Thomas J. Minton, Ward, Kershaw & Minton, Baltimore, Maryland; Mark Rollinson, Leesburg, Virginia, for Appellant. Patrick E. Brookhouser, Jr., McGrath, North, Mullin & Kratz, P.C., Omaha, Nebraska; Scott A. Fenske, Thompson, Hine & Flory, Washington, DC, for Appellee.

Affirmed by published opinion. Judge NIEMEYER wrote the opinion, in which Judge WILLIAMS and Judge MOTZ joined.

OPINION

NIEMEYER, Circuit Judge:

We today reach the somewhat unusual conclusion that state courts have exclusive jurisdiction over a cause of action created by federal law. Holding that the states have been given, subject to their consent, exclusive subject matter jurisdiction over private actions authorized by the Telephone Consumer Protection Act of 1991, 47 U.S.C. § 227, we affirm the district court's ruling dismissing this case.

I

In 1991, Congress amended the Communications Act of 1934, 47 U.S.C. § 201 et seq., with the enactment of the Telephone Consumer Protection Act of 1991 ("TCPA"), Pub.L. No. 102-243, 105 Stat. 2394 (1991) (codified at 47 U.S.C. § 227). The TCPA was enacted to "protect the privacy interests of residential telephone subscribers by placing restrictions on unsolicited, automated telephone calls to the home and to facilitate interstate commerce by restricting certain uses of facsimile ( [f]ax) machines and automatic dialers." S.Rep. No. 102-178, at 1 (1991), reprinted in 1991 U.S.C.C.A.N.1968.

The relevant section of the TCPA provides, "It shall be unlawful for any person 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 TCPA creates a private right of action to obtain an injunction, 47 U.S.C. § 227(b)(3)(A), and to recover the actual monetary damages or $500, whichever is greater. 47 U.S.C. § 227(b)(3)(B). If the court finds that the defendant "willfully or knowingly" violated the TCPA, it may treble the damage award. 47 U.S.C. § 227(b)(3). In creating a private right of action, the TCPA authorizes a plaintiff to file suit "if otherwise permitted by the laws or rules of court of a State ... in an appropriate court of that State." 47 U.S.C. § 227(b)(3). The TCPA also authorizes state attorneys general to bring civil actions on behalf of their state's residents to obtain an injunction against such calls and to recover monetary damages. 47 U.S.C. § 227(f)(1). The TCPA provides that the federal district courts have "exclusive jurisdiction" over actions brought by state attorneys general. 47 U.S.C. § 227(f)(2). Finally, the TCPA also authorizes the Federal Communications Commission to intervene as of right in any state attorney general's action. 47 U.S.C. § 227(f)(3).

II

During the summer months of 1995, International Science & Technology Institute, Inc. ("International Science") received at its fax machine several unsolicited advertisements for discount long-distance telephone service from Inacom Communications, Inc. ("Inacom"). International Science claims that Inacom sent "thousands of such unsolicited advertisements to small business enterprises throughout the United States in knowing and willful violation of the [TCPA]." Proceeding under the TCPA and invoking federal-question jurisdiction granted by 28 U.S.C. § 1331, International Science filed a class action suit in the district court, demanding $500 for each violation--or $1,500 if the court were to find the violation willful--and praying for injunctive relief against future unsolicited advertising. On Inacom's motion, the district court dismissed International Science's complaint for lack of subject matter jurisdiction, ruling that private actions authorized by the TCPA may be filed only in state courts. The court explained The language in § 227(b)(3) is unambiguous. The statute clearly places jurisdiction for a private right of action in the state courts, just as it places jurisdiction for actions brought by the State or the FCC in the District Courts of the United States. Contrary to plaintiff's assertion, there is no ambiguity created because Congress omitted the phrase "exclusive jurisdiction" from § 227(b)(3).

In response to International Science's argument that the statute did not make state jurisdiction exclusive and that federal jurisdiction could therefore be implied, the district court ruled that it could not imply a federal right of action when Congress had expressed an intent to create only a right of action in state courts.

On appeal, International Science makes three arguments: (1) that the permissive language of 47 U.S.C. § 227(b)(3) that a private action may be brought in state courts does not make state court jurisdiction exclusive; (2) that a federally created cause of action "arises under" federal law within the meaning of 28 U.S.C. § 1331 granting district courts federal-question jurisdiction; and (3) that an exclusive jurisdictional grant to state courts would violate both the Equal Protection Clause of the Fourteenth Amendment and the Tenth Amendment.

III

To discern whether Congress intended to authorize jurisdiction over private actions exclusively in state courts, we first turn, as we must, to the TCPA's text. See, e.g., New York State Conf. of Blue Cross and Blue Shield Plans v. Travelers Insurance Co., 514 U.S. 645, ----, 115 S.Ct. 1671, 1677, 131 L.Ed.2d 695 (1995) (in determining congressional intent, analysis begins with interpretation of the statutory text and "move[s] on, as need be, to the structure and purpose of the Act in which it occurs"). In relevant part, the TCPA provides 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 violation of the TCPA's ban on unsolicited fax-advertising. 47 U.S.C. § 227(b)(3) (emphasis added). In providing that a private person "may bring" a TCPA action in an appropriate state court, Congress authorized state courts to enforce the right it created. In using the customary "may" language for conferring jurisdiction, ¹ Congress did not prescribe that an action must be brought in court; rather it authorizes jurisdiction by stating that an action may be brought there. As International Science observes, it cannot be disputed that the term "may bring" is permissive, simply authorizing suit in state court by a person who elects to enforce the federal right. Use of the term "may" does not itself confer exclusive jurisdiction on the court mentioned. See, e.g., Tafflin v. Levitt, 493 U.S. 455, 460-61, 110 S.Ct. 792, 795-96, 107 L.Ed.2d 887 (1990) (the grant of jurisdiction to federal courts through the phrase, "suits of a kind described 'may' be brought in federal district courts," "does not operate to oust a state court from concurrent jurisdiction over the cause of action").

When, however, 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. See Tafflin, id. 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. See Sheldon v. Sill, 49 U.S. (8 How.) 441, 449, 12 L.Ed. 1147 (1850) (inferior federal courts only have jurisdiction which Congress confers).

Thus, when International Science argues that the Supreme Court's holding in Tafflin has foreclosed our finding exclusive jurisdiction in state court for private TCPA actions, it fails to recognize that the circumstances in Tafflin are the reverse of those in the case before us. While state courts are presumed to have jurisdiction over federally created causes of action unless Congress indicates otherwise, see Tafflin, 493 U.S. at 461, 110 S.Ct. at 796 ("mere grant of jurisdiction to a federal court does not operate to oust a state court from concurrent jurisdiction"), federal courts require a specific grant of jurisdiction, see Sheldon, 49 U.S. (8 How.) at 449. 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.

Accordingly, we conclude that when, in § 227(b)(3) of the TCPA, Congress authorized jurisdiction over private actions in state courts without mentioning federal courts, it did not intend to grant jurisdiction over TCPA claims in federal district courts.

We are further confirmed in this construction of § 227(b)(3) by the fact that the TCPA, while authorizing state court jurisdiction for private rights of action, confers exclusive federal jurisdiction over actions by states attorneys general. See 47 U.S.C. § 227(f)(2) ("the district courts of the United States ... shall have exclusive jurisdiction over all civil actions brought under this subsection" (emphasis added)). We find it significant that in enacting the...