Tuesday, April 05, 2011

Third Circuit Finds Federal Diversity Jurisdiction Under TCPA

Landsman & Funk v. Skinder-Strauss Associates (3rd Cir. April 4, 2011)

The Third Circuit has addressed the often confusing issue of whether federal courts have diversity jurisdiction over lawsuits filed by individuals for TCPA violations - In this case, as in so many others, for receiving junk faxes. The law specifically permits claims under the federal law to be heard in state courts - but does that mean that federal courts can't hear TCPA claims, or that both state and federal courts can? In other words, is state jurisdiction exclusive?

The Third Circuit held it was not:

"We hold here that Congress did not intend for exclusive state court jurisdiction. The TCPA does not strip federal courts of diversity jurisdiction over actions brought under § 227(b)(3)."

The statute reads:

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 —

47 U.S.C. Section 227(b)(3)

Most, but not all, federal appellate courts have found that federal courts do not have federal question jurisdiction over TCPA claims. (Including the 3rd). The rd circuit in this case found that while Congress did not specifically grant federal question jurisdiction over such cases, it did not specifically strip away diversity jurisdiction either.

Since 28 U.S.C. 1332 permits class action suits in federal courts with minimal diversity and $5 million in controversy, diversity jurisdiction prevails unless the law (in this case, the TCPA) takes it away.

There was no such clear directive from Congress. Congress did give state courts jurisdiction, but that does mean such suits can only be heard in a state court. In fact, the court noted, Congress seems to have allowed claims to be filed in state court in an effort to help plaintiffs with small claims representing themselves. The 3rd Cir. joined the majority of courts and upheld diversity jurisdiction for TCPA claims.