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Thursday, January 19, 2012

Supreme Court Rules for Consumer in Robocall Case

The Supreme Court yesterday issued its decision in the case of Mims v. Arrow Financial Services, holding that state and federal courts have concurrent jurisdiction to hear civil suits brought by consumers who have fallen victim to illegal and harassing robocalls.

Arrow Financial Services (“Arrow”) is an originator, servicer, and collector of private student loans. Marcus Mims claims that Arrow harassed him about student loan payments by repeatedly calling his cell phone with an automated dialing system and leaving prerecorded voicemails. Mims sued in federal district court and argued that Arrow’s activity violated the Telephone Consumer Protection Act (“the Act”), a statute passed by Congress to restrict the ability of companies to harass consumers over the phone. The district court dismissed the complaint and the Eleventh Circuit upheld (.pdf download) the dismissal, reasoning that Congress intended to limit jurisdiction over lawsuits under the Act to state courts.

The Supreme Court reversed this holding, allowing consumers to stand up for their rights under the Act in both state and federal court. The Court reasoned that the Act does not use the words “only” or “exclusively” in granting jurisdiction to state courts. Furthermore, the Court found that the Act created a federal right of action, and thus, federal courts retain concurrent jurisdiction over causes of action under the Act as an exercise of their general federal-question jurisdiction.

A brief (.pdf download) filed by the National Association of Consumer Advocates, an AFJ member organization, and the National Consumer Law Center states that, “[n]otwithstanding Congress’s clearly stated intentions, extensive non-compliance by national and international telemarketing and related industries under the Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA) is not at all uncommon.”  The organizations added that “this unfortunate state of affairs is the failure of the Act’s private right of action, § 227(b)(3), to provide the vigorous enforcement and effective deterrence mechanism that Congress envisioned when it adopted this law.”

By siding with Mims, the Supreme Court has provided consumers with the ability to hold companies accountable for unlawful telephone harassment in federal court, where they might receive greater relief than they would in the courts of states with weaker consumer protections.

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