The Chair King v. Gte Mobilnet of Houston

• Citation: 184 S.W.3d 707
• Decision Date: 03 February 2006
• Docket Number: No. 04-0570.,04-0570.
• Parties: THE CHAIR KING, INC., Chair King, S.A., Inc., Jerome Kosoy, M.D., M.E. Ford and Associates, Beautique, Inc., Discovery Services of Texas, Inc., Vantage Shoe Warehouse, Inc., Counselor Systems, Inc., Pope and Booth, P.C., Jeffrey K. Musker, D.C., and Pope Escrow Company, Petitioners, v. GTE MOBILNET OF HOUSTON, INC., and Chick-Fil-A, Inc., Respondents.
• Court: Supreme Court of Texas

Page 707

184 S.W.3d 707

THE CHAIR KING, INC., Chair King, S.A., Inc., Jerome Kosoy, M.D., M.E. Ford and Associates, Beautique, Inc., Discovery Services of Texas, Inc., Vantage Shoe Warehouse, Inc., Counselor Systems, Inc., Pope and Booth, P.C., Jeffrey K. Musker, D.C., and Pope Escrow Company, Petitioners, v. GTE MOBILNET OF HOUSTON, INC., and Chick-Fil-A, Inc., Respondents.

No. 04-0570.

Supreme Court of Texas.

Argued April 14, 2005.

Decided February 3, 2006.

Anne Cohl Gravelle, Akin Gump Strauss Hauer & Feld, LLP, Austin, Steven M. Zager, Murry B. Cohen, Akin Gump Strauss Hauer & Feld, LLP, Houston, for Petitioner.

Julius Glickman, Ashton Carlo Bachynsky, Glickman & Hughes, L.L.P., Thomas C. Wright, Chad Michael Forbes, Richard Russell Hollenbeck, Wright Brown & Close, LLP, Geoffrey H. Bracken, Kimberly Robinson Phillips, Gardere Wynne Sewell LLP, Houston, for Respondents.

Justice O'NEILL delivered the opinion of the Court.

The suit underlying this appeal complains of unsolicited faxes sent in violation of the federal Telephone Consumer Protection Act, 47 U.S.C. § 227 ("TCPA"), which grants those who receive illegal faxes a private cause of action in state court "if otherwise permitted by the laws or rules of court of a State." 47 U.S.C. § 227(b)(3). Texas did not expressly permit a private right of action for unsolicited faxes until September 1, 1999, when the Legislature amended the Business and Commerce Code to allow parties to bring suit in state court for TCPA violations. Act of May 26, 1999, 76th Leg., R.S., ch. 635, § 1, 1999 Tex. Gen. Laws 3203 (current version at TEX. BUS. & COM. CODE § 35.47(f)). We must decide whether the faxes at issue in this case, which were sent before September 1, 1999, are actionable in Texas state courts under the TCPA. We conclude that they are not, and reverse and render judgment against the recipients.

I. Background

Beginning in 1992, The Chair King, Inc., and others¹ (collectively "plaintiffs" or "recipients") complain that they began to receive illegal faxes from various companies advertising their products. They originally filed suit in federal court, but the court dismissed the case for lack of subject-matter jurisdiction.² Chair King, Inc. v Houston Cellular Corp., 131 F.3d 507, 509 (5th Cir.1997). The plaintiffs then filed this suit in state court against a number of defendants³ alleging a private damage claim under the TCPA, negligence, negligence per se, invasion of privacy, trespass to chattels, gross negligence, and conspiracy among the senders. The trial court granted the defendants' joint and individual summary-judgment motions and denied the plaintiffs' motion for partial summary judgment. The plaintiffs settled with various defendants during the course of the proceedings, leaving only GTE Mobilnet of Houston, Inc. ("GTE Mobilnet") and Chick-Fil-A, Inc. ("Chick-Fil-A") as defendants before the court of appeals.

The court of appeals affirmed the trial court's judgment in part, and reversed and remanded in part. 135 S.W.3d 365. Specifically, the court affirmed the trial court's summary judgment on all of the commonlaw claims, on all claims against Chick-Fil-A after applying Texas' two-year statute of limitations, and on certain plaintiffs' TCPA claims against GTE Mobilnet that the court considered barred by limitations. Id. at 396-97. The court reversed the trial court's judgment as to the remaining plaintiffs' TCPA claims against GTE Mobilnet,⁴ which were remanded for further proceedings. Id.

Both sides petitioned this Court for review, the plaintiffs challenging the court of appeals' determination of the limitations issue and the defendants contending, inter alia, that there was no TCPA private right of action cognizable in Texas courts until the Legislature enacted enabling legislation in 1999. Alternatively, defendants claim they cannot be liable for faxes transmitted by independent advertising companies acting at the behest of independent retailers. We granted the parties' petitions for review to consider the TCPA's application and related issues.

II. The Telephone Consumer Protection Act

A. History

Congress enacted the Telephone Consumer Protection Act in 1991 by amending the Communications Act of 1934. Pub.L. No. 102-243, 105 Stat. 2394, (codified as amended at 47 U.S.C. § 227). The TCPA's purposes were to "protect the privacy interests of residential telephone subscribers by placing restrictions on unsolicited, automated telephone calls . . . and to facilitate interstate commerce by restricting certain uses of facsimile (fax) machines and automatic dialers." S. REP. No. 102-178, at 1 (1991), reprinted in 1991 U.S.C.C.A.N.1968, 1968. The legislation was intended to address a growing number of consumer complaints related to the use of automated telephone equipment to make unsolicited telephone calls and faxes. That growth was spurred by a dramatic decrease in the cost of long-distance service, which in turn reduced the expenses associated with telemarketing. Id. at 2, reprinted in 1991 U.S.C.C.A.N.1968, 1969-70.

Before the TCPA's enactment, many states had promulgated regulations aimed at limiting unsolicited intrastate telemarketing, but constitutional constraints prevented them from reaching interstate communications. Id. at 3, reprinted in 1991 U.S.C.C.A.N.1968, 1970 (noting "States do not have jurisdiction over interstate calls. Many States have expressed a desire for Federal legislation to regulate interstate telemarketing calls to supplement their restrictions on intrastate calls."). By the time the TCPA became law, over forty states had legislatively limited the use of automatic-dialer recorded-message players or otherwise restricted telemarketing.⁵ Id., reprinted in 1991 U.S.C.C.A.N.1968, 1970. But given that state regulation reached only intrastate communications, consumer complaints to the Federal Communications Commission (FCC) soared. Id., reprinted in 1991 U.S.C.C.A.N.1968, 1970. The TCPA quickly followed.

B. Statutory Framework

The TCPA presents what has been described as "an unusual constellation of statutory features." Chair King, 131 F.3d at 512. On one hand, the Act creates a federal private right of action, but on the other it confers exclusive jurisdiction on state courts to entertain it. Id. The TCPA does contain an exclusive federal enforcement component, authorizing state attorneys general to bring civil actions in federal court on behalf of their state's residents to obtain injunctive relief against unauthorized telephone calls and facsimiles and to recover monetary damages. 47 U.S.C. § 227(f)(1)-(2). For such actions the TCPA authorizes the FCC to intervene as of right, to be heard in all such matters, and to file petitions for appeal. 47 U.S.C. § 227(f)(3). But for purposes of private enforcement and redress, state-court jurisdiction is exclusive.

Under the TCPA, it is illegal 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). Section 227(b)(3) creates a private right of action for recipients of unsolicited faxes to obtain monetary and injunctive relief, as follows:

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.

Id. § 227(b)(3) (emphasis added). It is the import of the statutory proviso — "if otherwise permitted by the laws or rules of court of a State" — that the parties dispute and that courts have struggled to interpret.

The defendants claim the right of action that the TCPA affords is not self-implementing; that is, the private cause of action the Act creates is not immediately enforceable in Texas courts without state enabling legislation. For the plaintiffs to bring such a claim, defendants contend, Texas laws or rules of court must "otherwise permit" it, and Texas did not until September 1, 1999, when the Legislature amended the Texas Business and Commerce Code to permit private TCPA claims.⁶ Act of May 26, 1999, 76th Leg., R.S., ch. 635, § 1, 1999 Tex. Gen. Laws 3203, 3203 (codified as amended at TEX. BUS. & COM. CODE § 35.47(f)). Defendants' argument mirrors what has sometimes been referred to as the "opt-in" approach to the TCPA, in effect requiring some type of affirmative state buy-in before the federally-created private right of action is cognizable in state court.

The plaintiffs take a contrary view. Because the TCPA is federal law, they claim, state courts of general jurisdiction are inherently empowered, and indeed required, to enforce it. See Tafflin v. Levitt, 493 U.S. 455, 459-61, 110 S.Ct. 792, 107 L.Ed.2d 887 (1990). According to plaintiffs, the TCPA created an immediately actionable private right of action in state court and there was no need for state enabling legislation. To support their position, plaintiffs posit two interpretations of the TCPA commonly known as "acknowledgment" and "opt-out."

For reasons that we will explain, we believe the TCPA's plain language, purpose, and historical context favor the "opt-in" interpretation. We begin by examining all three interpretive approaches and the reasoning behind them.

C. Interpreting the Statutory Proviso

1. The "Acknowledgment" Approach

The "acknowledgment" position that some courts have adopted interprets the Supremacy Clause of the United States Constitution to require states to provide a forum for private TCPA damage claims with no ability to decline. See R.A. Ponte Architects, Ltd. v. Investors' Alert, Inc., 382 Md. 689, 857 A.2d 1 (2004); Consumer Crusade, Inc. v. Affordable Health Care Solutions,...