Schulman v. Chase Manhattan

• Decision Date: 12 June 2000
• Citation: 710 N.Y.S.2d 368,268 A.D.2d 174
• Parties: MELISSA SCHULMAN, Respondent,<BR>v.<BR>CHASE MANHATTAN BANK, Appellant.
• Court: New York Supreme Court — Appellate Division

268 A.D.2d 174

710 N.Y.S.2d 368

MELISSA SCHULMAN, Respondent,

v.CHASE MANHATTAN BANK, Appellant.

June 12, 2000.

Barry, McTiernan & Moore, New York City (William E. Fay, III and Laurel A. Wedinger of counsel), for appellant.

Scott Star, Brooklyn, for respondent.

JOY, FLORIO and H. MILLER, JJ., concur.

OPINION OF THE COURT

O'BRIEN, J. P.

This appeal presents the issue of whether a private right of action under the Telephone Consumer Protection Act of 1991 (47 USC § 227 [hereinafter the TCPA]) may be brought in a New York State court. We conclude that it may.

The TCPA was enacted to address telemarketing abuses, in particular, those attributable to the use of automated telephone calls that deliver prerecorded messages. The TCPA was designed 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" (Senate Rep No. 102-178, 102d Cong, 1st Sess 1, reprinted in 1991 US Code Cong & Admin News 1968). At the time the TCPA was enacted, over 40 States, including New York (see, General Business Law § 399-p), had enacted legislation restricting unsolicited telemarketing; however, those measures had limited effect since States do not have jurisdiction over interstate calls (see, 1991 US Code Cong & Admin News, 1970).

Insofar as is relevant to this appeal, the TCPA places restrictions on the use of certain telephone equipment, such as an "automatic telephone dialing system" (hereinafter ATDS). An ATDS stores numbers to be called and can dial such numbers. The TCPA prohibits any person from, inter alia, initiating any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the party (see, 47 USC § 227 [b] [1] [B]). This subdivision of the TCPA provides for 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—

"(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 USC § 227 [b] [3]; emphasis added).

If the court finds that the violation was willful or knowing, it has the discretion to award an amount three times the amount specified above.

The TCPA also includes a subdivision on the protection of residential telephone subscribers' privacy rights with respect to telephone solicitations. This subdivision, relied upon by the plaintiff in the case at bar, includes a provision establishing a private right of action:

"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 this subsection 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 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 up to $500 in damages for each such violation, whichever is greater, or

"(C) both such actions" (47 USC § 227 [c] [5]; emphasis added).

This provision also permits an award of treble damages for a willful or knowing violation of the TCPA regulations.

The TCPA further prohibits any person from making a telephone call using any ATDS that does not comply with the provisions of the act. The Federal Communications Commission (hereinafter FCC) was required to prescribe standards for systems that are used to transmit any artificial or prerecorded telephone message, including a requirement that all artificial or prerecorded telephone messages shall identify, at the beginning of the message, the individual or business making the call (see, 47 USC § 227 [d] [1] [A]; [3]).

The plaintiff, Melissa Schulman, commenced this action in the Supreme Court, Kings County, against Chase Manhattan Bank (hereinafter Chase) in November 1998 to recover damages pursuant to the TCPA. She alleged that, beginning about June 29, 1998, she began receiving automated or prerecorded telephone calls on her residential telephone line which eventually numbered about 60. She alleged that Chase initiated such calls without her consent and that the calls did not identify the business or entity initiating the calls. On July 15, 1998, she orally requested that the bank cease the unsolicited calls and, on July 20, 1998, she made the same request in writing. Despite her requests, the unsolicited telephone calls continued and numbered approximately 75. The complaint alleged that these telephone calls were a nuisance, violated her privacy rights, and restricted her use of the telephone. She asserted a claim pursuant to the TCPA.

Chase moved to dismiss the complaint on the ground that it failed to state a cause of action. Specifically, Chase contended that a private right of action under the TCPA in State court was conditioned on the existence of State statutory or regulatory authority permitting such a private right of action, and that there was no such authority in New York State.

We note that, on a motion to dismiss for failure to state a cause of action, the plaintiff's allegations are presumed to be true and all inferences must be resolved in favor of the plaintiff (see, Cron v Hargro Fabrics, 91 NY2d 362, 366; Leon v Martinez, 84 NY2d 83, 87-88). No issue has been raised or considered as to the merits of the plaintiff's claims.

The position advocated by Chase is that the phrase "if otherwise permitted by the laws or rules of court of a State" in section 227 (b) (3) and (c) (5) of the TCPA imposes a requirement that the States enact legislation or regulations which expressly authorize the prosecution of a private right of action in the State courts. We conclude that such an interpretation of the statute is inconsistent with established principles governing State court jurisdiction over claims based on Federal laws.

State courts are courts of general jurisdiction and are presumed to have jurisdiction over Federally created causes of action unless Congress dictates otherwise (see, Tafflin v Levitt, 493 US 455; see also, Yellow Frgt. Sys. v Donnelly, 494 US 820, 823; International Science & Technology Inst. v Inacom Communications, 106 F3d 1146; Simpson Elec. Corp. v Leucadia, Inc., 72 NY2d 450, 455). "Federal law is enforceable in state courts not because Congress has determined that Federal courts would otherwise be burdened or that state courts might provide a more convenient forum—although both might well be true—but because the Constitution and laws passed pursuant to it are as much laws in the States as laws passed by the state legislature. The Supremacy Clause makes those laws `the supreme Law of the Land,' and charges state courts with a coordinate responsibility to enforce that law according to their regular modes of procedure" (Howlett v Rose, 496 US 356, 367).

Further, with respect to the TCPA, Congress has clearly expressed its intent that State courts have jurisdiction over private claims under the...