Summary

Federal District Court rejects the application of New Jersey state law prohibiting private cause of action under Telephone Consumer Protection Act ("TCPA") by concluding that the prohibition does not apply when TCPA claim is brought in federal district court pursuant to FRCP, Rule 23.

On December 14, 2012, Judge William J. Martini, United States District Judge for the District of New Jersey, rejected Defendants' (as defined below) motion to deny class certification to the Plaintiffs (as defined below). In these consolidated cases, Afgo Mechanical Services, Banco Santander, S.A., Santander Holdings, S.A., Santander Holdings USA, Inc., Santander Consumer USA, Inc., Sovereign Bancorp, Inc. and Sovereign Bank (the "Defendants") allegedly caused unsolicited commercial advertising to be faxed to Goodrich Management Corp., Nicholas Fitzgerald, and others similarly situated (the "Plaintiffs"). The Plaintiffs assert that these communications were in violation of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. §227.

Prior to the Plaintiffs seeking certification as a class, the Defendants preemptively moved to deny class certification on the following grounds: (1) federal courts must enforce state law restrictions on TCPA claims; (2) under New Jersey law, private TCPA class actions are prohibited; and (3) New Jersey law applies to the Plaintiffs' class claims, as such denial of class certification is appropriate as a matter of law (the "Motion"). In opposition to the Motion, the Plaintiffs argue that Rule 23 of the Federal Rules of Civil Procedure, rather than state law, governs class certifications in private TCPA actions brought in federal court. It must be noted that under current New Jersey case law, class actions are prohibited in private TCPA brought in state court. See Local Banking Products, Inc. v. Kosher Bagel Munch, Inc., 421 N.J. Super. 268, 23 A.3d 469 (App. Div. 2011).

The District Court found that the Federal Rules of Civil Procedure, not New Jersey law, govern determination of class certification in private TCPA actions brought in federal court. Citing Judge Anne E. Thompson's recent decision in Bais Yaakov of Spring Valley v. Peterson's Nelet, LLC., Civ. No. 3:11-cv-11 (AET), which involved an identical issue, Judge Martini held that the Federal Rules of Civil Procedure govern private TCPA actions brought in federal court, not the law of the state where the action is located.

The decision is strong support for the argument that when private TCPA actions are brought in federal court, the Federal Rules of Civil Procedure apply and, therefore, preempt state substantive laws that prohibit class action lawsuits in private TCPA actions.