Footnotes in HTML versions of opinions are designated by boxes (click on the box the footnote text) and are not numbered. For an exact copy of the opinion, retrieve the Adobe PDF version.
IN THE SUPREME COURT OF TEXAS
════════════
No. 04-0570
════════════
The Chair King, Inc., Chair King, S.A., Inc., Jerome Kosoy, M.D., M.E. Ford and Associates, Beautique, Inc., Discovery Services of Texas, Inc., Vantage Shoe Warehouse, Inc., Counselor Systems, Inc., Pope and Booth, P.C., Jeffrey K. Musker, D.C., and Pope Escrow Company, Petitioners,
v.
GTE Mobilnet of Houston, Inc., And Chick-Fil-A, Inc., Respondents
════════════════════════════════════════════════════
On Petition for Review from the
Court of Appeals for the Fourteenth District of Texas
════════════════════════════════════════════════════
Argued on April 14, 2005
Justice O’Neill delivered the opinion of the Court.
Justice Wainwright did not participate in the decision.
The suit underlying this appeal complains of unsolicited faxes sent in violation of the federal Telephone Consumer Protеction Act, 47 U.S.C. § 227 (“TCPA”), which grants those who receive illegal faxes a private cause of action in state court “if otherwise permitted by the laws or rules of court of a State.” 47 U.S.C. § 227(b)(3). Texas did not expressly permit a private right of action for unsolicited faxes until September 1, 1999, when the Legislature amended the Business and Commerce Code to allow parties to bring suit in state court for TCPA violations. Act of May 26, 1999, 76th Leg., R.S., ch. 635, § 1, 1999 Tex. Gen. Laws 3203 (current version at Tex. Bus. & Com. Code § 35.47(f)). We must decide whether the faxes at issue in this case, which were sent before September 1, 1999, are actionable in Texas state courts under the TCPA. We conclude that they аre not, and reverse and render judgment against the recipients. I. Background
Beginning in 1992, The Chair King, Inc., and others
(collectively “plaintiffs” or “recipients”)
complain that they began to receive illegal faxes from various companies advertising their products.
They originally filed suit in federal court, but the court dismissed the case for lack of subject-matter
jurisdiction.
Chair King, Inc. v. Houston Cellular Corp.,
The court of appeals affirmed the trial court’s judgment in part, and reversed and remanded
in part.
Both sides petitioned this Court for review, the plaintiffs challenging the court of appeals’ determination of the limitations issue and the defendants contending, inter alia, that there was no TCPA private right of action cognizable in Texas courts until the Legislature enacted enabling legislation in 1999. Alternatively, defendants claim they cannot be liable for faxes transmitted by independent advertising companies acting at the behest of independent retailers. We granted the parties’ petitions for review to consider the TCPA’s application and related issues. II. The Telephone Consumer Protection Act
A. History
Congress enacted the Telephone Consumer Protection Act in 1991 by amending the Communications Act of 1934. Pub. L. No. 102-243, 105 Stat. 2394, (codified as amended at 47 U.S.C. § 227). The TCPA’s purposes were to “protect the privacy interests of residential telephone subscribers by placing restrictions on unsolicited, automated telephone calls . . . and to facilitate interstate commerce by restricting certain uses of facsimile (fax) machines and automatic dialers.” S. Rep. No. 102-178, at 1 (1991), reprinted in 1991 U.S.C.C.A.N.1968, 1968. The legislation was intended to address a growing number of consumer complaints related to the use of automated telephone equipment to make unsolicited telephone calls and faxes. That growth was spurred by a dramatic decrease in the cost of long-distance service, which in turn reduced the expenses associated with telemarketing. Id. at 2, reprinted in 1991 U.S.C.C.A.N. 1968, 1969-70.
Before the TCPA’s enactment, many states had promulgated regulations aimed at limiting unsolicited intrastate telemarketing, but constitutional constraints prevented them from reaching interstate communications. Id. at 3, reprinted in 1991 U.S.C.C.A.N. 1968, 1970 (noting “States do not have jurisdiction over interstate calls. Many States have expressed a desire for Federal legislation to regulate interstate telemarketing calls to supplement their restrictions on intrastate calls.”). By the time the TCPA became law, over forty states had legislatively limited the use of automatic-dialer recorded-message players or otherwise restricted telemarketing. Id., reprinted in 1991 U.S.C.C.A.N. 1968, 1970. But given that state regulation reached only intrastate communications, consumer complaints to the Federal Communications Commission (FCC) soared. Id., reprinted in 1991 U.S.C.C.A.N. 1968, 1970. The TCPA quickly followed.
B. Statutory Framework
The TCPA presents what has been described as “an unusual constellation of statutory
features.” Chair King,
Under the TCPA, it is illegal to “use any telephone facsimile machine, computer or other device to send an unsolicited advertisement to a telephone facsimile machine.” 47 U.S.C. § 227(b)(1)(c). Section 227(b)(3) creates a private right of action for recipients of unsolicited faxes to obtain monetary and injunctive relief, as follows:
Private Right of Action. 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 —
(A) an action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation,
(B) an action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater, or
(C) both such actions.
Id. § 227(b)(3) (emphasis added). It is the import of the statutory proviso—“if otherwise permitted by the laws or rules of court of a State”—that the parties dispute and that courts have struggled to interpret.
The defendants claim the right of action that the TCPA affords is not self-implementing; that is, the private cause of action the Act creates is not immediately enforceable in Texas courts without state enabling legislation. For the plaintiffs to bring such a claim, defendants contend, Texas laws or rules of сourt must “otherwise permit” it, and Texas did not until September 1, 1999, when the Legislature amended the Texas Business and Commerce Code to permit private TCPA claims. Act of May 26, 1999, 76th Leg., R.S., ch. 635, § 1, 1999 Tex. Gen. Laws 3203, 3203 (codified as amended at Tex. Bus. & Com. Code § 35.47(f)). Defendants’ argument mirrors what has sometimes been referred to as the “opt-in” approach to the TCPA, in effect requiring some type of affirmative state buy-in before the federally-created private right of action is cognizable in state court.
The plaintiffs take a contrary view. Because the TCPA is federal law, they claim, state courts
of general jurisdiction are inherently empowerеd, and indeed required, to enforce it. See Tafflin v.
Levitt,
For reasons that we will explain, we believe the TCPA’s plain language, purpose, and historical context favor the “opt-in” interpretation. We begin by examining all three interpretive approaches and the reasoning behind them. C. Interpreting the Statutory Proviso
1. The “Acknowledgment” Approach
The “acknowledgment” position that some courts have adopted interprets the Supremacy
Clause of the United States Constitution to require states to provide a forum for private TCPA
damage claims with no ability to decline. See R.A. Ponte Architects, Ltd. v. Investors’ Alert, Inc.,
[T]he Constitution and laws passed pursuant to it are as much laws in the State as laws passed by the state legislature. The Supremacy Clause makes those laws “the supreme Law of the Land,” and charges state courts with a coordinate responsibility to enforce that law according to their regular modes of procedure.
Howlett v. Rose,
It is, of course, generally true that states may not decline to recognize or enforce federal law.
Howlett,
Under the “acknowledgment” interpretation, the TCPA’s “if otherwise permitted” language
merely acknowledges states’ rights to structure their court systems and apply neutral state-court
procedures to federal causes of action. See, e.g., Consumer Crusade,
The substitute bill contains a private right-of-action provision that will make it easier for consumers to recover damages from receiving these computerized calls. The provision would allow consumers to bring an action in State court against any entity that violates the bill. The bill does not, because of constitutional constraints, dictate to the States which court in each State shall be the proper venue for such an action, as this is a matter for State legislators to determine. Nevertheless, it is my hope that States will make it as easy as possible for consumers to bring such actions, preferably in small claims court. The consumer outrage at receiving these calls is clear. Unless Congress makes it easier for consumers to obtain damages from those who violate this bill, these abuses will undoubtedly continue.
Small claims court or a similar court would allow the consumer to appear before the court without an attorney. The amount of damages in this legislation is set to be fair to both the consumer and the telemarketer. However, it would defeat the purposes of the bill if the attorneys’ costs to consumers of bringing an action were greater than the potential damages. I thus expect that the States will act reasonably in permitting their citizens to go to court to enforce this bill.
137 Cong. Rec. 30821-22 (1991) (statement of Sen. Hollings). Senator Hollings’s speech on the day the substitute bill was introduced is the only available legislative history concerning the private-right-of-action provision.
We do not find the argument that Senator Hollings’s speech compels an “acknowledgment”
interpretation persuasive. While the statement may have accurately reflected Senator Hollings’s
understanding of the private right of action, there can be no certainty that it reflected the view of the
entire Congress. See Gen. Chem. Corp. v. De La Lastra,
The “acknowledgment” approach to interpreting the TCPA’s “if otherwise permitted” proviso
presents a number of problems. For one, it renders certain language in the TCPA “doubly
redundant.” Chair King,
The strоngest argument supporting the “acknowledgment” approach emphasizes the statutory
proviso’s reference to court rules: “if otherwise permitted by the laws or rules of court of a State
. . . .” 47 U.S.C. § 227(b)(3) (emphasis added). “Rules of court” generally refer to the procedures
courts implement to conduct official business. See, e.g., Black’s Law Dictionary 369 (7th ed.
1999) (defining “court rules” as “[r]egulations having the force of law governing practice and
procedure in the various courts”). Plaintiffs assert that by referencing “rules of court,” which
generally do not confer subject-matter jurisdiction over causes of action, Congress chose to
acknowledge states’ rights to independently administer their own courts and, by negative
implication, signaled no intent to require affirmative legislative action at the state level before a party
could exercise the private right of action. Any other interpretation, plaintiffs claim, would render
the “rules of court” language mere surplusage. See Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d
578, 580 (Tex. 2000). However, applying an “acknowledgment” interpretation to the statutory
proviso is no less problematic. As we have said, the same rule against surplusage is equally
applicable to the “acknowledgment” interpretation. See Chair King,
In sum, we see no clear indication in either the statutory language or the legislative history that would indicate Congress intended to unconditionally mandate a private TCPA damage claim in state court that the states could nоt choose to decline. Like the court of appeals, we reject the “acknowledgment” interpretation of the TCPA that some courts have followed.
Having determined that the statutory proviso was intended to give the TCPA some conditional effect, we must decide whether Congress intended for the Act to apply unless a state opted out, or only if a state opted in.
2. The “Opt-out” Approach
The “opt-out” interpretation reads the TCPA to immediately authorize private rights of action
in state court without the necessity of affirmative state action, but allows states to legislatively
decline to entertain them. To date, this appears to be the majority view of the relatively few courts
that have had occasion to decide the issue. See Mulhern v. MacLeod,
Until this case, only one court of appeals in Texas has had occasion to interpret section 227(b)(3)’s “if otherwise permitted” proviso, and it determined that the statute’s plain language compelled an “opt-in” interpretation; that is, a state must affirmatively act before the federally-created claim is cognizable in its courts. Autoflex Leasing, Inc. v. Mfrs. Auto Leasing, 16 S.W.3d 815, 817 (Tex. App.—Fort Worth 2000, pet. denied). The court held that the “plain and ordinary” meaning of the statutory proviso indicates “Congress intended the states to pass legislation or promulgate court rules consenting to state court actions based on the TCPA, before such suits under the TCPA may be brought in state courts.” Id. Because Texas did not authorize a private right of action in state court under the TCPA until September 1, 1999, and the faxes at issue in Autoflex were sent before the state legislation became effective, the court affirmed the trial court’s judgment dismissing the plaintiff’s claim. Id. at 817-18.
In this case, the court of appeals rejected the Autoflex interpretation in favor of the “opt-оut”
approach for several reasons, some of which have similarly led other courts along the same path.
Chair King,
The court of appeals rejected the “acknowledgment” notion that the Supremacy Clause mandates unconditional state enforcemеnt of private TCPA damage claims because of internal inconsistencies in the statutory language such an interpretation would create. Id. at 381-82. If Congress wished to unconditionally mandate TCPA enforcement in state courts, the court of appeals explained, it could easily do so by amending the TCPA and preempting state statutes to the contrary. Id. at 382. But at the same time, by construing the TCPA private right of action as mandatory unless a state legislatively declines enforcement, it appears the court of appeals attempted to give a nod to Supremacy Clause concerns. Id. Of coursе, Congress’s ability to clarify the extent of its mandate by amending the statute is the same whether the proviso is construed as “acknowledgment,” “opt-out,” or “opt-in.” More importantly, as we have said, the TCPA defines the federal cause of action with a prominent proviso; giving effect to the proviso that Congress created cannot run afoul of the Supremacy Clause. Having concluded that Congress intended the statutory proviso to have some conditional effect, be it “opt-out” or “opt-in,” we fail to see how Supremacy Clause concerns are implicated at all.
The court of appeals also reasoned that the “opt-in” approach does not comport with Congress’s purpose to help states regulate and penalize illegal fax advertisements by overcoming their inability to regulate interstate faxes. Id. at 380. The court posited that there would be no reason for Congress to create a statutory remedy that would allow states to regulate illegal interstate faxes but at the same time prohibit them from doing so until the state enacted enabling legislation; such a result would be, the court concluded, “inefficient and ineffective.” Id. (citing Aronson, 51 Pa. D. & C.4th at 429).
This interpretation, though, ignores the unique nature of the federal right of action the TCPA
created. Rather than make federal court jurisdiction over private TCPA claims concurrent with that
of state courts, Congress chose to make the private remedy available exclusively through state-court
proceedings. Such a conscious decision was undoubtedly due, at least in part, to the estimated
eighteen million telemarketing calls made daily. Telephone Consumer Protection Act of 1991, Pub.
L. No. 102-243, § 2(3), 105 Stat. 2394 (1991); see Int’l Sci. & Tech. Ins., Inc. v. Inacom Commc’ns,
Inc.,
We think it significant that the reason Congress created the TCPA private right of action at
all was “out of solicitude for states which were thwarted in their attempts to stop unwanted
telemarketing.” Id. at 1154. Congress noted in the TCPA: “Over half the States have statutes
restricting various uses of the telephone for marketing, but telemarketers can evade their prohibitions
through interstate operations; therefore, Federal law is needed to control residential telemarketing
practices.” Telephone Consumer Protection Act of 1991, Pub. L. No. 102-243, § 2(7), 105 Stat.
2394 (1991). The principal motivation behind the TCPA strongly suggests that its remedies were
meant to enhance the states’ existing attempts to regulate unsolicited calls and faxes. As the Fourth
Circuit noted, “although Congress created the private TCPA action, it was from the beginning a
cause of action in the states’ interest.” Int’l Sci.,
In sum, we do not believe the Supremacy Clause concerns and purported inefficiencies that some courts have perceived in adopting an “opt-out” approach are valid in light of the explicit statutory proviso and the TCPA’s purpose to supplement state efforts to regulate unsolicited faxes. Instead, we consider the Congressional intent underlying the TCPA, as expressed in the statutory prоviso and legislative history, to favor the “opt-in” interpretation.
3. The “Opt-in” Interpretation
We must begin with the text of the statutory proviso. See New York State Conf. of Blue
Cross and Blue Shield Plans v. Travelers Ins. Co.,
We believe the requirement that states must “otherwise permit” a private right of action before a TCPA claim is cognizable in their courts can only mean that the TCPA alone does not create an immediately enforceable right. The term “otherwise” denotes “(1) in a different way or manner: DIFFERENTLY; (2) in different circumstances: under other conditions.” Webster’s Third New International Dictionary (1961). And “permit” is defined as “(1) to consent to expressly or formally: grant leave for or the privilege of: ALLOW, TOLERATE; (2) to give (a person) leave: AUTHORIZE; . . . (4) to make possible.” Id. Use of the words “otherwise permitted,” then, suggests the necessity of affirmative state action to activate the TCPA’s рrivate cause of action.
Congressional intent underlying the TCPA also supports an “opt-in” reading of the statutory proviso. As we have said, the federal legislation was intended to supplement state regulation, and Congress was surely conscious that state courts could suddenly be burdened with a potential flood of unsolicited-fax suits. It is clear that Congress intended significant deference to states, allowing them to determine whether to entertain the private TCPA claims that Congress decided to make exclusively actionable in state court. Int’l Sci., 106 F.3d at 1156. We believe the “if otherwise permitted” language Congress craftеd in creating the federal TCPA private right of action indicates deliberate deference to an area of uniquely state concern. Id.
It is true, as the plaintiffs assert, that “the statute’s intended and most important purpose [is] to swiftly wipe out unsolicited facsimile advertising.” But we believe Congress hinged the swiftness of the federal legislation on the willingness of states to bear the burden and cost of overseeing these claims. After all, the TCPA provides a federal enforcement mechanism by which state attorneys general may protect residents if the state wishes to direct state resources elsewhere:
If state rеsidents would prefer their government to devote its attention and resources to problems other than those deemed important by Congress, they may choose to have the Federal Government rather than the State bear the expense [and administrative burden] of [the TCPA] . . . . Where Congress [thus] encourages state regulation rather than compelling it, state governments remain responsive to the local electorate’s preferences; state officials remain accountable to the people.
Int’l Sci.,
Plaintiffs further contend an “opt-in” interpretation would render the TCPA’s preemption language meaningless. Section 227(e) provides that the TCPA does not preempt state laws imposing more restrictive requirements or even prohibiting the use of telemarketing equipment. 47 U.S.C. § 227(e). Plaintiffs claim the negative implication suggests that less restrictive penalties are indeed preempted. If the TCPA were inoperativе absent enabling legislation, the plaintiffs assert, then the TCPA could not preempt less restrictive state law and the section would be rendered meaningless. Of course, the same argument would apply to the “opt-out” approach; if a state opted out then the preemption language would be equally meaningless. Only an “acknowledgment” interpretation, which we have rejected, would give full effect to subsection (e) if in fact it were intended to preempt less restrictive state penalties. But we do not agree with the plaintiffs’ reading of section 227(e).
First, we note that section 227(e)(1) is specifically titled “State law not preempted.” 47
U.S.C. § 227(e) (1) (emphasis added). Furthermore, Congress’s intent to supplement state
legislation explains why the preemption concern would have focused on more aggressive regulation
by the states. See Chair King,
III. ConclusionWe conclude that, because Texas did not otherwise permit a cause of action for the receipt of unsolicited fax advertisements until September 1, 1999, and the faxes at issue in this case were sent before that date, plaintiffs have no actionable claim. Because this conclusion is dispositive, we do not reach the parties’ other arguments involving the limitations period applicable to TCPA claims and the application of Texas agency law under the facts presented here. Accordingly, we reverse the judgment of the court of appeals and render judgment in favor of GTE Mobilnet.
____________________________________
Harriet O’Neill
Justice
OPINION DELIVERED: February 3, 2006.