RA Ponte Architects v. INVESTORS'ALERT, INC.

• Citation: 815 A.2d 816,149 Md. App. 219
• Decision Date: 29 January 2003
• Docket Number: No. 537,537
• Parties: R.A. PONTE ARCHITECTS, Ltd., v. INVESTORS' ALERT, INC., et al.
• Court: Court of Special Appeals of Maryland

815 A.2d 816

149 Md. App. 219

R.A. PONTE ARCHITECTS, Ltd., v. INVESTORS' ALERT, INC., et al.

No. 537, Sept. Term, 2001.

Court of Special Appeals of Maryland.

January 29, 2003.

Stephen H. Ring of Rockville, (Philip L. Feliciano of Kensington, on the brief), for appellant.

Robert G. Lawman, Jr. of Houston, Texas (Patrick Donahue of Annapolis, on the brief), for appellant.

MURPHY, C.J., KENNEY, and BARBERA, JJ.

BARBERA, J.

In this appeal we decide a question of first impression—whether a private cause of action may be brought in Maryland to enforce the prohibition in the Telephone Consumer Protection Act of 1991 ("the TCPA" or "the Act"), against the transmission of unsolicited commercial facsimiles. We hold that the General Assembly has not accepted the jurisdiction conferred upon the states by the TCPA, and, thus, such private actions may not be brought in Maryland state courts.

The underlying facts of this case are not in dispute. On several occasions during the summer of 2000, appellant, R.A. Ponte Architects, Ltd., received on its fax machine unsolicited copies of an investment newsletter entitled "Investors' Alert." The transmissions were sent free of charge, and encouraged the purchase of stock in select corporations and solicited subscription to future issues of the newsletter.

On October 24, 2000, appellant filed a class action complaint in the Circuit Court for Montgomery County, naming as defendants appellees, Investors' Alert, Inc. and Access Financial Consulting, Inc. Appellant alleged that appellees had violated the TCPA, which prohibits, inter alia, the use of a telephone fax machine to send unsolicited advertising to another fax machine. 47 U.S.C. § 227(b)(1)(C) (1991). Appellees thereafter filed a motion to dismiss and a supporting memorandum of law, arguing that appellant's complaint failed to state a claim upon which relief can be granted. Appellees specified that Maryland law "does not provide for a private cause of action," and that, had the Maryland General Assembly intended a private cause of action to exist, its intent would be reflected in the language of Maryland's law prohibiting the intentional electronic or telephonic transmission to a fax machine for the purpose of commercial solicitation. See Md.Code (1975, 2000 Repl.Vol.), § 14-1313 of the Commercial Law Article ("CL").

Appellant opposed the motion to dismiss. Appellant mounted three arguments in support of the validity of its claim under the TCPA: (1) the Supremacy Clause of the United States Constitution vests jurisdiction over private causes of action in state courts; (2) statutory language enabling a private cause of action is not required in order for a plaintiff to file suit; and (3) CL § 14-1313 cannot be construed to mean that no private cause of action exists when the statute is silent on the issue.

The instant case was one of two such cases then pending in the Circuit Court for Montgomery County.¹ The cases presented identical motions to dismiss, which, at the request of appellant, were jointly heard. At the hearing's conclusion, the court granted appellees' motion to dismiss, stating:

In each of these cases [i.e., the instant case and the Nixon case], the Plaintiffs are bringing private causes of action under the Telephone Consumer Protection Act....

The Defendants have moved to dismiss on the basis that no private cause of action exists within the State of Maryland to allow these claims to proceed.

The language in the [TCPA] that [counsel for appellant] has referred to... states that "Private right of action, a person or entity may, if otherwise permitted by the laws or rules of the Court of a State, bring in an appropriate Court of that state and [sic] action," and that is the basis for bringing the action in these cases.

Commercial law article Section 14-1313 addresses the basis for bringing causes of action that the Plaintiffs seek to bring in these lawsuits.

The attorney general is empowered to bring the causes of action that exist under the state of the law in Maryland. There is no private cause of action with respect to these claims.

From the dismissal of its case, appellant has appealed,² and presents the following question:

Do Maryland courts have subject matter jurisdiction over private suits for unsolicited faxes under the TCPA [Telephone Consumer Protection Act]?

DISCUSSION

The issue presented by this case is, at its core, an issue of statutory construction. Its resolution requires that we examine not only the TCPA itself, but Maryland's Consumer Protection Act, particularly CL § 14-1313, which prohibits the sending of unsolicited commercial advertisements by facsimile. We therefore begin our analysis with a discussion of the TCPA and CL § 14-1313, as well as other commercial law provisions relevant to the decision in this case.

I. The Telephone Communications Protection Act

In 1991, Congress amended the Communications Act of 1934 with enactment of the TCPA, codified at 47 U.S.C. § 201 et seq. Its purpose "is to protect residential telephone subscriber privacy rights by restricting certain commercial solicitation and advertising uses of the telephone and related telecommunications equipment." H.R.Rep. No. 102-317, at 5 (1991), reprinted in 14082 U.S. Congressional Serial Set, 102d Cong. 1st Sess.1991; see also Int'l Science & Tech. Inst., Inc. v. Inacom Comm., Inc., 106 F.3d 1146, 1150 (4th Cir.1997).

At the time of the TCPA's enactment, over half the states had enacted statutes restricting marketing uses of the telephone. See 47 U.S.C. § 227, Congressional finding No. 7. Congress recognized, however, that "telemarketers can evade [state] prohibitions through interstate operation; therefore, Federal law is needed to control residential telemarketing practices." Id.; see also S.Rep. No. 102-178, at 5 (1991), reprinted in 1991 U.S.C.C.A.N.1968, 1972-73 (noting that "Federal legislation is necessary to protect the public from automated telephone calls [and that] Federal action is necessary because States do not have the jurisdiction to protect their citizens against those who use these machines to place interstate telephone calls").

The Act was enacted for the benefit of the states, not the federal government. As the Court of Appeals for the Third Circuit commented, the Act "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." Erienet, Inc. v. Velocity Net, Inc., 156 F.3d 513, 515 (3d Cir.1998).

The TCPA proscribes, in general, both unsolicited telephone calls made for a commercial purpose and the transmission of unsolicited facsimiles for the same purpose. With respect to faxes in particular, the House Report recognized that "the proliferation of facsimile machines has been accompanied by explosive growth in unsolicited facsimile advertising, or `junk fax.'" H.R.Rep. No. 102-317, at 10 (1991), reprinted in 14082 U.S. Congressional Serial Set, 102d Cong. 1st Sess.1991. The House Report identified two problems with this sort of telemarketing: "First, it shifts some of the costs of advertising from the sender to the recipient. Second, it occupies the recipient's facsimile machine so that it is unavailable for legitimate business messages while processing and printing the junk fax." Id.

To remedy this situation, Congress included the following prohibition in the TCPA:

(b) Restrictions on use of automated telephone equipment

(1) Prohibitions

It shall be unlawful for any person within the United States—

* * *

(C) 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). An "unsolicited advertisement" is defined as "any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission." 47 U.S.C. § 227(a)(4).

The TCPA authorizes state attorneys general to bring civil actions on behalf of the residents of their respective states for an injunction or money damages or both. 47 U.S.C. § 227(f)(1). In these actions, the Act gives the federal district courts exclusive jurisdiction. 47 U.S.C. § 227(f)(2). The Act 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).

In addition, and of particular relevance to the instant case, the Act creates a private cause of action to obtain an injunction and to recover $500.00 or actual monetary damages, whichever is greater. 47 U.S.C. § 227(b)(3). This subsection reads:

(b) Restrictions on use of automated telephone equipment

* * *

(3) 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—

(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 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.

Id.

A similar private right of action is created for violations of the unsolicited telephone call provisions. See 47 U.S.C. § 227(c)(5) (providing that: "A person who has received more than one telephone call within any 12-month period by or on behalf of the same entity in violation of the regulations prescribed under [the TCPA] may, if otherwise...