Telemarketers Beware: Supreme Court Raises Stakes of Telephone Consumer Protection Act Violations

On January 18, 2012, a unanimous Supreme Court ruled that consumers are permitted to file private actions under the Telephone Consumer Protection Act in federal as well as state court. The decision in Mims v. Arrow Financial Services opens the door for additional TCPA complaints, particularly those brought by consumers in states with weaker consumer protection laws. More importantly, by ruling that private citizens have access to federal courts, the Supreme Court has increased the stakes for telemarketers who don’t play by the rules: not only do limits on damages imposed by state small-claims courts no longer apply, but the decision may permit federal class-action litigation – with potentially unlimited damages – over TCPA violations.

For your reference, here’s a brief roundup of legal commentary and analysis regarding the lawsuit:

Supreme Court Opens the Federal Court Doors to TCPA Claims (Morrison & Foerster LLP)

“After today’s decision, defendants can no longer successfully argue that a TCPA claim filed in federal court must be dismissed because the TCPA confers exclusive jurisdiction on the state courts. The decision, however, likely will not significantly impact defendants’ ability to defend against TCPA claims… The real impact of today’s decision is the increased opportunity for removal to federal court. Before today, in several circuits, defendants could remove TCPA actions filed in state court only if the requirements for diversity jurisdiction could be satisfied… Prepare for an uptick in TCPA actions litigated in federal court.” Read more»

Supreme Court Resolves Circuit Split By Allowing Suits Against Telemarketing Violations Into Federal Court Under “Federal Question” Jurisdiction (Davis Wright Tremaine LLP)

“The TCPA gives the FCC rulemaking authority to regulate in these areas, as well as the ability to impose fines for violations. At the same time, it provides a private right of action for violations of its do-not-call provisions, autodialed/prerecorded-call restrictions, and/or of other technical prohibitions and obligations. The statue provides that such claims may be brought in the courts of the various states and the complainant can seek actual damages or $500 in statutory damages, which may be trebled for any willful violation(s). But courts have split on whether such claims may be brought in the federal courts.” Read more»

Previous Commentary and Analysis

A Question Worth Answering Under the Telephone Consumer Protection Act: U.S. Supreme Court to Hear Whether the TCPA Contemplates Suits in Federal Courts (Reed Smith)

“As the petition and grant of certiorari highlights, telephonic marketing is still on the national agenda. In addition to potentially increasing the number of forums in which TCPA private actions could be brought, the case could also provide a forum for the plaintiffs’ bar to generate interest among consumers in pursuing TCPA claims. For organizations that abide by TCPA regulations, examining the impact Mims v. Arrow Financial Services could have on your business could be worth the time.” Read more»

Unusual Supreme Court Case Could Have Far-Reaching Consequences for TCPA Compliance (Venable LLP)

“The Act governs the conduct of all telephone solicitation in the United States, including solicitations sent via fax or to cellular telephones via text or email messaging. While the case does not address any of the substantive ambiguities in that Act, or the FCC’s rules implementing the Act, it deals exclusively with a narrow legal question that only a lawyer (or nine Justices) could love. The outcome of the case, which is expected in a few months, could significantly affect the calculus of risk that telemarketers face in attempting to comply with the TCPA.” Read more»

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See also:

Violations of the “Anti-Telemarketing” Law (McNees Wallace & Nurick LLC)

Mobile Marketing & the Telephone Consumer Protection Act (David Almeida)

Legal Issues Associated with Mobile Marketing to Sports Fans (Loeb & Loeb LLP)

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