January 18, 2012: Telephone Consumer Protection Act Suits allowed in State AND Federal Court

The Telephone Consumer Protection Act (“TCPA”) of 1991 is a statute passed by Congress intended to restrict the ability of companies to harass consumers over the phone. The TCPA is the primary law in the United States governing the conduct of telephone solicitations (for example, telemarketing).

The TCPA:

(i)                  Restricts the use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages received by cell phones;

(ii)                Restricts the use of fax machines to send unsolicited advertisements; and

(iii)               Specifies technical requirements for fax machines, auto-dialers, and voice messaging systems; and

(iv)              Requires identification and contact information of the entity using the device to be contained in the message.

The TCPA is a relatively unique statute in that it is a federal law, but suits brought by consumers against violators are generally heard in state courts. However, more recent court decisions have found that at times, TCPA cases can be brought in federal courts. This can be seen in the Supreme Court’s January 18, 2012 decision in Mims v. Arrow Financial Services.

Arrow Financial Services is an originator, servicer, and collector of private student loans. Marcus Mims claimed that Arrow harassed him about student loan payments by repeatedly calling his cell phone with an automated dialing system and leaving prerecorded voicemails. Mims sued in federal district court, alleging that Arrow’s activity violated the TCPA. The district court dismissed the complaint and the Eleventh Circuit affirmed the dismissal, reasoning that Congress intended to limit jurisdiction over lawsuits under the TCPA to state courts.

The Supreme Court reversed this decision, allowing consumers to stand up for their rights under the TCPA in both state and federal court. The TCPA does not use the words “only” or “exclusively” in granting jurisdiction to state courts. The Court found that the TCPA created a federal right of action, and thus, federal courts have jurisdiction over causes of action under the TCPA as an exercise of their general federal-question jurisdiction.

The Supreme Court in Mims v. Arrow Financial Services has provided consumers with the ability to hold companies accountable for unlawful telephone harassment in federal court, where they might receive greater relief than they would in state courts with weaker consumer protections.