$1,000 A CALL IN TEXAS?: Another Court Holds Automatic Double Recovery For TCPA Violations Permitted Under 305.053 of Texas Business and Commerce Code–But Here’s Why That’s Not Quite Right
Tuesday, November 15, 2022

Buckle up folks, I have another fascinating TCPA story for you. And it will show, once again, why the Czar’s reputation for greatness is, indeed, well earned.

Plus this is one that–although important–I haven’t told in a while.

In  Johnson v. Palmer Administrative Servs. 2022 WL 16919786 (E.D. Tex. Nov. 14, 2022), a federal court in Texas just held that a violation of the TCPA constitutes an automatic violation of Section 305.053 of the Texas Business and Commerce Code.

That means a TCPA violation in Texas will now cost you not $500.00 but $1,000.00. Minimum (up to $3k). Automatically. And every time.

To the untrained eye, the Court got it precisely right. The Texas statute does, indeed, appear to afford that remedy. And many other Courts have–regrettably–reached the same decision lately.

But that is not quite right. And the first case ever on the subject–which was, of course, the Czar’s case–reached the exact opposite conclusion: NO double recoveries were permitted.

To understand why you have to really understand the background and history of the TCPA. And it all starts with how the TCPA’s odd duck private right of action is structured. For folks who have been doing this for a while you know exactly what I mean.

But for those who have only been doing it 10 years or so, you may not be following. So walk with me for a little while and let’s chat it through.

First, here is the key language from 227(b)(3) of the TCPA:

(3)Private right of action
A person or entity may, if otherwise permitted by the laws or rules of court of a Statebring 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.

I can promise you that you can read federal statutes until your eyes bleed and you will never see another private right of action quite like this one.

Any “plain language” reading of the statute plainly suggests that TCPA cases can only be brought in state court. Moreover–haven’t used that lawyerly word in a while– it seems clear (at least to the Czar) that there is no private right of action at all, unless a state specifically permits such a cause of action.

The back story to this odd provision is pretty straightforward. Many states already had laws that limited unwanted robocalls made using automatic dialing devices at the time the TCPA was passed. Due to federalist limits, however, those statutes could ONLY limit calls made IN THE STATE. So, for instance, California could ban calls made to Californians FROM CALIFORNIA but it was unclear whether it could ban calls to Californians made from, say, Florida. (These same limits still exist today BTW–which is why the FTSA’s application to calls made from outside the state raises eyebrows.)

To address these concerns, Congress enacted the TCPA which, in essence, operated like a longarm statute, bringing out-of-state calls within the purview of state legislatures–essentially Congress waived off the dormant commerce clause here–and allowing suit where it was not permitted before. And Congress fixed the $500-$1,500.00 statutory damage amount  ($1,100-$3,800.00 in today’s dollars)  to the statute assuming that consumers would file suit in small claims court to recover their own personal bounties–not in federal court, which appeared to be specifically forbidden by the language of the TCPA.

And for a while that’s exactly how it worked. For instance, way back in 1997 the Fifth Circuit COA–following the lead of the Fourth Circuit which had addressed the issue a few months earlier–concluded that TCPA jurisdiction existed exclusively in state court. See Chair King, Inc. v. Houston Cellular Corp., 131 F. 3d 507 (5th Cir. 1997). While later cases would soften the rule to allow diversity filings, the state of TCPA cases in Texas was very much in doubt in the mid 2000s.

Enter the Texas legislature.

In 2007 Texas added Section 305.053 of the Texas Business and Commerce Code to its books that plainly appears designed to give the direct cause of action to folks in Texas that the federal TCPA envisioned but did not permit:

A person who receives a communication that violates 47 U.S.C. Section 227, a regulation adopted under that provision, or Subchapter A may bring an action in this state against the person who originates the communication for:
(1)an injunction;
(2)damages in the amount provided by this section; or
(3)both an injunction and damages.
(b)A plaintiff who prevails in an action for damages under this section is entitled to the greater of:
(1)$500 for each violation; or
(2)the plaintiff’s actual damages.
(c)If the court finds that the defendant committed the violation knowingly or intentionally, the court may increase the amount of the award of damages under Subsection (b) to not more than the greater of:
(1)$1,500 for each violation; or
(2)three times the plaintiff’s actual damages.

Pulling this all together, then, the TCPA says you can sue but only if a state statute allows it. So Texas passed a state statute allowing suit. Makes sense. Good for Texas, I suppose.

After all, this was exactly how the TCPA was supposed to work. If the state wanted to allow citizens to sue for unwanted robocalls it could do so. Even for interstate calls.

The problem, of course, is that many other states had not passed a TCPA enabling statute permitting suit and by 2011 TCPA filings had reached a fever pitch. The RIGHT thing for the courts to have done was to throw the cases out and advise Plaintiffs to take it up with their state legislators. But by then Americans were already increasingly frustrated with robocalls. And judges are Americans. And they hated robocalls too.

So they did what they shouldn’t have done. And they allowed TCPA suits to be brought without any sort of enabling statute on the books at the state level.

Texas got it right. Most everyone else got it wrong.

Except, according to the U.S. Supreme Court, Texas didn’t get it right.

In Mims v. Arrow Financial Services, LLC, 565 U.S. 368 (2012) the U.S. Supreme Court held that all of this discussion about the language of the TCPA was for not. A VERY DIFFERENT definitely NOT TEXTUALIST court essentially said the text of the TCPA’s private right of action was meaningless. The TCPA was a federal statute. So of course the TCPA could be enforced in federal court.

Interestingly the Supreme Court did NOT address the state enabling act issue–so that might still be live in some jurisdictions–but when the Supremes slammed the door shut on the “no jurisdiction” argument it threw open the doors to a massive onslaught of TCPA suits and… here we are.

Those who started their TCPA practice after 2012 probably know very little of this back story but–trust me–those of us who have been in the game since 2010 or earlier remember the jurisdictional battles very well.

But all of this brings me back to Section 305.053. Since the statute was PLAINLY drawn up just to give Texans the private right of action that the Texas Legislature thought it was lacking under the TCPA there should be NO double recovery under both laws, right?

Well that was the holding of the very first district court ruling to address the issue–and, of course–it was brought to you by the Czar:

There is no indication in either the TCPA or in Texas’s analogue that either legislative body intended to allow double recovery under both state and federal law for the same TCPA violations. The Court’s conclusion is reinforced by Mims, in which the United States Supreme Court held federal and state courts enjoy concurrent jurisdiction over TCPA claims. 132 S. Ct. at 747. Prior to Mims, the law in the Fifth Circuit held state courts had “exclusive jurisdiction over private actions filed under the TCPA.” See Chair King, Inc. v. Hous. Cellular Corp., 131 F.3d 507, 514 (5th Cir. 1997), overruled by Mims, 132 S. Ct. at 747. It thus makes sense for Texas to have adopted a statute implementing the TCPA’s private right of action, lest Texas citizens be left without a forum. These authorities suggest plaintiffs have a choice of forum rather than two separate avenues for recovery.

See Masters v. Wells Fargo, 12-CA-376-SS (W.D. Tex. Jul. 11, 2013).

Bingo.

The Masters court got it just right. Following the breadcrumbs to the correct conclusion and providing yet another first in the nation win for the Czar’s clients. (I have, so many of those.)

And yet, as has also happened with other wins that the Czar provided but others could not sustain, other Defendants (and their lawyers) have been unable to build off of this critical ruling.

Instead, the majority rule in Texas now is that a double recovery IS permitted under section 305.053. Indeed courts now hold that a double recovery is AUTOMATIC!

In other words, a violation of the TCPA in Texas costs $1,000.00 and not $500.00–everything is bigger in Texas, I suppose.

And that–again– was the holding in Johnson v. Palmer Administrative Servs. 2022 WL 16919786 (E.D. Tex. Nov. 14, 2022), which was the jumping off point for this long analysis.

So takeaways:

  1. If anyone else if your lawyer, a TCPA violation in Texas will cost you $1,000.00 minimum these days owing to the state law down there that also allows for a recovery of $500.00 when the TCPA is violated;

  2. If the Czar is your lawyer then–maybe, just maybe–I can resurrect Masters and keep the recovery limited to a single violation (no guarantees though because there’s a lot of water under that bridge unfortunately);

  3. The “state enabling statute” argument may still be viable in some jurisdiction. I may bring it out again for fun–not sure it will go anywhere in light of Mims, but it IS still out there. Something to think about.

 

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