Second Circuit: TCPA Class Actions Can Proceed in New York Federal Courts

The Second Circuit recently held that Federal Rule of Civil Procedure 23 governs whether TCPA class actions can proceed in New York federal courts, and concluded that a prior Second Circuit ruling to the contrary no longer was good law.  Bank v. Independence Energy Group LLC, No. 13-1746-cv (2d Cir. Dec. 3, 2013).

Previously, in Bonime v. Avaya, Inc., 547 F.3d 497 (2d Cir. 2008), the Second Circuit had held that state procedural rules governed whether a TCPA action could proceed as a class action in federal court, instead of Rule 23.  Because N.Y. C.P.L.R. § 901(b) bars class actions seeking statutory damages unless the statute at issue expressly authorizes recovery in a class action (which the TCPA does not), the Bonime court ruled that a TCPA plaintiff could not pursue a class action for statutory damages in New York federal courts.  This effectively sounded the death knell for TCPA class actions in New York.

So what changed?  In 2012, the United States Supreme Court decided Mims v. Arrow Financial Services, LLC, 132 S. Ct. 740 (2012), which held that federal and state courts have concurrent jurisdiction over private suits arising under the TCPA.  Mims resolved a circuit split, and abrogated decisions from several circuit courts (including the Second Circuit) that had concluded that federal question jurisdiction under 28 U.S.C. § 1331 was unavailable in TCPA actions because a provision of the TCPA suggested that Congress intended to confer exclusive jurisdiction on state courts.  See 47 U.S.C. § 227(b)(3) (“A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring [an action] in an appropriate court of that State”).

The reasoning underlying the Supreme Court’s decision in Mims fundamentally altered the way the Second Circuit and other courts interpret the TCPA.  Indeed, the Second Circuit observed that Mims “uprooted much of our TCPA jurisprudence.”  The Bank court determined that both of the rationales underlying its prior holding in Avaya had since been rejected by the Supreme Court.  Accordingly, the court concluded that Federal Rule of Civil Procedure 23 governs TCPA class actions in federal court, and not state procedural rules such as C.P.L.R. § 901(b).

As a result of Bank, the Second Circuit has re-opened the door to TCPA class actions in New York federal courts.  Perhaps not coincidentally, the named plaintiff in Bank served as counsel for the plaintiff in Avaya, proving that persistence sometimes pays off.

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