Bank v. Independence Energy: In Federal Court, Federal Class Action Rules Govern Telephone Consumer Protection Act Claims

The Second Circuit said no. In Bank v. Independence Energy Group LLC, 736 F.3d 660 (2d Cir. 2013), a per curiam panel of Judges Walker, Cabranes, and Parker held that Federal Rule of Civil Procedure 23, not New York law, decides whether a federal TCPA case can proceed as a class action.

How the Case Got Here

The pro se plaintiff filed the TCPA class action against two Independence Energy entities in the Eastern District of New York. District Judge William F. Kuntz dismissed the complaint sua sponte for lack of subject matter jurisdiction. The basis for his ruling was New York Civil Practice Law and Rules § 901(b) which the panel said "prohibits class-action suits for statutory damages." The plaintiff appealed.

The "If Otherwise Permitted" Puzzle

The TCPA's private right of action provides that a person "may, if otherwise permitted by the laws or rules of court of a State," sue in state court. For years, the Second Circuit read that language as giving states real control over TCPA claims. That led to Bonime v. Avaya (2008), which held that New York's class action ban applied to TCPA suits.

Then came Mims v. Arrow Financial Services (2012), where the Supreme Court held that federal courts have ordinary federal question jurisdiction over TCPA claims. The Second Circuit said Mims "uprooted much of our TCPA jurisprudence."

Giovanniello Paved the Way

Earlier in 2013, in Giovanniello v. ALM Media, the Second Circuit held that the federal four year catch-all limitations period, not a state limitations period, applies to TCPA claims in federal court. That decision recognized that the state-centric reading of the statute "no longer holds true," and that Mims emphasized a "strong federal interest in uniform standards for TCPA claims in federal court."

The panel in Bank saw no reason a state procedural rule should come out differently. Both of Bonime's rationales were gone:

• The Erie rationale (that state class action rules had to apply) was overturned by the Supreme Court in Shady Grove Orthopedic Associates v. Allstate (2010).
• The jurisdictional rationale fell with Mims.

Thus, the court vacated the dismissal and sent the case back. The district court ruled after Mims but before Giovanniello was decided and relied largely on cases the circuit now considers abrogated.

My Favorite Line

In a footnote, the court added that just as Congress "knew full well" how to displace the federal limitations period but didn't, "it knew full well how to preclude TCPA class actions by private parties, but chose not to do so." That's a tidy way of saying: if Congress wanted to ban these class actions, it would have said so.

Why It Still Matters

• Federal forum, federal rules. In the Second Circuit, a state's statutory damages class action ban does not block a TCPA class in federal court.
• Class fights move to Rule 23. The question becomes whether the case meets the federal class action rule, not whether a state statute forbids it.
• Mind the scope. The holding addresses federal TCPA suits.

Read the full Second Circuit opinion.