Levitt v. Fax. com, Inc.

• Decision Date: 13 September 2004
• Docket Number: No. 21,21
• Citation: 857 A.2d 1089,383 Md. 141
• Parties: Bruce LEVITT v. FAX.COM, INC., et al.
• Court: Maryland Court of Appeals

857 A.2d 1089

383 Md. 141

Bruce LEVITT v. FAX.COM, INC., et al.

No. 21, Sept. Term, 2003.

Court of Appeals of Maryland.

September 13, 2004.

Michael C. Worsham, Forest Hill (Stephen H. Ring, Stephen H. Ring, P.C., Gaithersburg), all on brief, for Appellants.

Ronald A. Baradel (Peter F. Axelrad, Council, Baradel, Kosmerl & Nolan, P.A., Annapolis), on brief, for Appellees.

Argued before BELL, C.J., ELDRIDGE¹, RAKER, WILNER, CATHELL, HARRELL and BATTAGLIA, JJ.

ELDRIDGE, Judge.

The broad question presented by this case is the same as the question recently decided by this Court in R.A. Ponte Architects, Ltd. v. Investors Alert, Inc., et al., 382 Md. 689, 857 A.2d 1 (2004), in which we filed an opinion a few weeks ago. That question is whether Maryland trial courts are authorized to entertain a private cause of action for damages under the federal Telephone Consumer Protection Act, 47 U.S.C. § 227(b)(3). We held in Ponte Architects that Maryland trial courts are authorized to entertain the private cause of action created by 47 U.S.C. § 227(b)(3).

Our opinion in Ponte Architects disposes of all of the arguments made in the present case with one exception. The appellee in this case makes an argument which was not raised by any party in the Ponte Architects case and, therefore, was not considered by the Court. For this reason, we are filing a separate opinion in this case.

I.

The basic facts of this case, taken from the parties' agreed statement of facts, are, with some minor stylistic changes, as follows. The plaintiff-appellant, Bruce Levitt, is an attorney in private practice in Maryland. Mr. Levitt allegedly received unsolicited advertisements via facsimile promoting the products and services of defendant-appellee JD & T Enterprises, Inc., a California corporation. JD & T Enterprises conducts business under the name "Travel To Go," and sells travel services, which it allegedly advertised through defendant-appellee Fax.com, Inc., by sending advertisements via facsimile. Fax.com, Inc., a Delaware corporation with its principal place of business in California, is engaged in the business of sending advertisements by facsimile on behalf of others to facsimile numbers throughout the United States, including Maryland.

Levitt filed this suit as a class action under the federal Telephone Consumer Protection Act, 47 U.S.C. § 227(b)(3), in the Circuit Court for Baltimore City against JD & T Enterprises, Inc., and Fax.com, Inc. Levitt sought statutory damages of $500 per violation, or up to $1,500 for each violation found to be the result of knowing or willful conduct. The defendants filed a motion for summary judgment which was denied on November 27, 2002. Shortly thereafter, the Circuit Court filed an order granting class action status.

On January 29, 2003, however, the Court of Special Appeals filed its opinion in R.A. Ponte Architects v. Investors' Alert, 149 Md.App. 219, 815 A.2d 816 (2003), holding that Maryland trial courts could not entertain the federal private cause of action created by the Telephone Consumer Protection Act, 47 U.S.C. § 227(b)(3).

The defendants on January 31, 2003, filed a "Renewed Motion for Summary Judgment," based upon the Court of Special Appeals' opinion in the Ponte Architects case. The Circuit Court granted the renewed motion on February 3, 2003, and filed an order dismissing the case. The plaintiff timely filed a notice of the appeal to the Court of Special Appeals.

This Court on May 7, 2003, granted a petition for a writ of certiorari in the Ponte Architects case, Ponte v. Investors' Alert, 374 Md. 358, 822 A.2d 1224 (2003). The grant of certiorari in Ponte Architects prompted the defendants in the case at bar, prior to briefing and argument in the Court of Special Appeals, to file in this Court a petition for a writ of certiorari. The petition was granted, Levitt v. Fax.Com, 374 Md. 582, 824 A.2d 58 (2003), and this case was argued on the same day as the argument in Ponte Architects.

As previously indicated, the arguments by both sides in the present case are, with a single exception, the same as the arguments in Ponte Architects. Our recently filed opinion in Ponte Architects disposes of those arguments. The one argument made in this case, which was not before us in Ponte Architects, is the defendants' contention that Congress's creation of a private cause of action, with exclusive jurisdiction in state courts, and without a state right to "opt out" of such jurisdiction, exceeds Congress's authority under Article I, Section 8, of the United States Constitution² and the Tenth Amendment to the United States Constitution.³ We shall reject this argument and reverse the judgment of the Circuit Court for Baltimore City.⁴

II.

A.

The defendants' argument, that the federal cause of action created by the Telephone Consumer Protection Act, 47 U.S.C. § 227(b)(3), is unconstitutional, begins with the premise that state trial courts have exclusive jurisdiction over that cause of action. Several United States Courts of Appeal have taken the position that state courts have exclusive jurisdiction over the private causes of action created by 47 U.S.C. §§ 227(b)(3) and 227(c)(5), and that federal district courts may not entertain such actions. See Murphey v. Lanier, 204 F.3d 911, 914-915 (9th Cir.2000)

; Erienet, Inc. v. Velocity Net, Inc., 156 F.3d 513 (3d Cir.1998); Foxhall Realty Law Offices, Inc. v. Telecommunications Premium Services, Ltd., 156 F.3d 432, 438 (2d Cir.1998); Nicholson v. Hooters of Augusta, Inc., 136 F.3d 1287, 1289, modified 140 F.3d 898 (11th Cir.1998); Chair King, Inc. v. Houston Cellular Corp., 131 F.3d 507, 510 (5th Cir.1997); International Science & Technology Institute v. Inacom Communications, 106 F.3d 1146 (4th Cir.1997). These appellate opinions, however, dealt with the jurisdiction conferred by the federal Telephone Consumer Protection Act or with general federal question jurisdiction. They did not consider or discuss the possibility of federal court jurisdiction based upon diversity of citizenship. Nonetheless, the broad "no federal jurisdiction" and "exclusive state court jurisdiction" language of these opinions may indicate a view that there is no federal court jurisdiction on any basis.

The plaintiff in the case at bar, relying upon some federal district court opinions, disagrees with the state court exclusive jurisdiction premise. See Kopff v. World Research Group, 298 F.Supp.2d 50 (D.D.C.2003)

(Federal district courts have diversity jurisdiction over private actions under the Telephone Consumer Protection Act); Accounting Outsourcing, LLC v. Verizon Wireless Personal Communications, 294 F.Supp.2d 834 (M.D.La.2003) (same); Kinder v. Citibank, 2000 WL 1409762 (S.D.Cal.2000) (same). See also Bank of the United States v. Deveaux, 9 U.S. (5 Cranch) 61, 3 L.Ed. 38 (1809) (Although the right to bring the action was based on a federal statute, the Court, in an opinion by Chief Justice Marshall, held that the federal circuit court lacked federal question jurisdiction but had jurisdiction based on diversity of citizenship). In addition, the United States District Court for the Southern District of Indiana has held that federal district courts have concurrent federal question jurisdiction over private actions under the Telephone Consumer Protection Act, Kenro, Inc. v. Fax Daily, Inc., 904 F.Supp. 912 (S.D.Ind.1995), on motion for reconsideration, 962 F.Supp. 1162 (S.D.Ind.1997).

The Supreme Court of the United States does not appear to have addressed the issue of whether state courts have exclusive jurisdiction over the private federal causes of action created by the Telephone Consumer Protection Act. We shall, for purposes of this case, accept the defendants' exclusive jurisdiction premise and assume, arguendo, that private actions under the Telephone Consumer Protection Act may be brought only in state courts.

B.

In arguing that Congress may not constitutionally create federal causes of action with exclusive jurisdiction in state courts, without a state right to "opt out," the defendants draw a sharp distinction between concurrent state court jurisdiction over federal causes of action and exclusive state court jurisdiction over federal causes of action. They concede that Congress may constitutionally confer concurrent jurisdiction on state courts over federal causes of action and that, when Congress does so, state law may not "opt out" or discriminate against the federal causes of action.⁵ The defendants contend, however, that when Congress confers exclusive jurisdiction on state courts, without authorization to discriminate against the federal cause of action, Congress acts unconstitutionally because it "runs the serious risk of commandeering state resources and violating a state's right to determine how its resources will be utilized," (defendants' brief at 12).

The defendants do not explain how required state court exclusive jurisdiction violates "a state's right to determine how its resources will be utilized," whereas required state court concurrent jurisdiction does not violate this "right." In either situation, a state's judicial resources will be utilized with no ability on the part of a state to prohibit its courts from entertaining the federal causes of action. In fact, certain types of concurrent state court jurisdiction over federal causes of action (i.e., claims under 42 U.S.C. § 1983) might result in much more state court litigation than certain types of exclusive state court jurisdiction over federal claims. Exclusive state court jurisdiction over civil causes of action under federal law may have been common during the first one hundred years following the American Revolution, but it is rare today. Today, most state court jurisdiction over federal claims is concurrent with federal district court jurisdiction. In light of this, it is difficult to accept an argument that exclusive state court jurisdiction over federal claims imposes an...