Plaintiff,

V. OPINION

GANN LAW BOOKS, INC., GANN

LEGAL EDUCATION

FOUNDATION, INC. and MICHAELPROTZEL,

Defendants.

MCNULTY, District Judge

This matter comes before the Court upon Defendants’ motion to dismiss

the Complaint, which is pleaded as a class action. Plaintiff, on behalf of himself

and others similarly situated, alleges that Defendants have “caused to be sent

thousands of unsolicited fax advertisements for goods and/or services withoutproper-opt-out notices,” in violation of the Telephone Consumer Protection Act,47 U.S.C. § 227 (“TCPA”). Complaint, filed July 26, 2011, ECF No. 1

(“Complaint”). The only private cause of action explicitly provided for in TCPA is

a state-court right of action, which is available only “if otherwise permitted by

the laws or rules of court of a State.” 47 U.S.C. § 227(b)(3).’ And under the “law

(3) 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.

If the court finds that the defendant willfully or knowingly violated this

subsection or the regulations prescribed under this subsection, the court may,

in its discretion, increase the amount of the award to an amount equal to not

1
maintained as a class action here in federal court. Plaintiff responds that, infederal court, the appropriateness or not of class action treatment is governed

solely by Rule 23 of the Federal Rules of Civil Procedure (“Rule 23”). In

Plaintiff’s view, a state-law prohibition of private TCPA class actions has noforce here in federal court.

Judges in this District have had occasion to examine this issue on

several occasions. 3Applying U.S. Supreme Court precedent, those cases have

uniformly held that Rule 23, not state law, governs the viability of a class

action brought under TCPA in federal court. I agree, and I also reach the same

result as to a supplemental claim brought under New Jersey state law.

Accordingly, I will deny the Defendants’ Motion to Dismiss.

I. Factual Background

Gann Law Books, Inc. and its “sister charitable foundation,” Gann Legal

Education Foundation, Inc. (collectively, with defendant Protzel, “Gann”)publish legal treatises, “primarily in areas of New Jersey law,” and offer “live

and web-based seminars” qualifying for credit under New Jersey’s mandatory

more than 3 times the amount available under subparagraph (B) of this

paragraph.

47 U.S.C. § 227(b).2 See Local Baking Products, Inc. v. Kosher Bagel Munch, Inc., 421 N.J. Super.

268, 280-8 1, 23 A.3d 469, 476-77 (App. Div.) (applying state class action rule, N.J. Ct.R. 4:32-1, to TCPA claim), certf denied, 209 N.J. 96 (2011).

Seven such cases have been brought in the District of New Jersey by the same

counsel who represents Plaintiff in this action. In addition to this case, they are:Landsman & Funk, P.C. v. Skinder-Strauss Associates, Civ. No. 08-36 10 (Hayden, J.);

Goodrich Management Corp. v. Flierwire Inc., Civ. No. 08—58 18 (Sheridan, J.); Goodrich

Management Corp. v. Afgo Mechanical Services, Inc., Civ. No. 09-43 (Martini, J.); Bais

Yaakov of Spring Valley v. Peterson’s Nelnet, LLC, Civ. No. 11-11 (Thompson, J.);

Fitzgerald v. Banco Santander, S.A., Civ. No. 11—2769 (Martini, J.); Stem v. Alliance

Real Estate Group, Inc., Civ. No. 11—4285 (Cavanaugh, J.). The plaintiff in Banco

Saritander like the plaintiff here, is named Nicholas Fitzgerald and is identified as “a

New Jersey Resident who resides and works in Jersey City, NJ.”

2
Fitzgerald specifically identifies six faxed advertisements: one received on

February 26, 2009, one on August 14, 2009, three received on August 13,2009, and one received on April 8, 2011. Id. ¶ 10. He alleges that these faxedadvertisements did not contain opt-out notices, or that the notices they didcontain were legally defective under TCPA. 4In support of his class action

allegations, Fitzgerald alleges that for approximately four years, Gann “sent orcaused.to be sent from New Jersey at least hundreds—if not thousands—of

unsolicited facsimile advertisements and/or facsimile advertisements lacking

the proper opt-out notices to Plaintiff and the Classes.” Id. ¶ 20.

II. Procedural History

Plaintiff Fitzgerald filed his Complaint on July 26, 2011, and the case

was assigned to District Judge Hochberg. While this case has been pending,

the law has developed quickly.

Gann moved to dismiss the Complaint on September 23, 2011.

Defendants’ Motion to Dismiss for Lack of Jurisdiction, ECF No. 11 (“Def. 1 st

MTD”). On December 30, 2011, District Judge Hochberg administrativelyterminated that first motion to dismiss pending the outcome of two thenpending cases: Mims v. Arrow Financial Services, LLC, — U.S. —, 132 S.Ct. 740,

181 L.Ed.2d 881 (Jan. 18, 2012), and Landsman & Funk PC v. Skinder-Strauss

Associates, 640 F.3d 72 (3d Cir. 2011), opinion reinstated in part, 09-3 105,

2012 WL 2052685 (3d Cir. Apr. 17, 2012) (“Landsman 1”).

On July 27, 2012, following the resolution of those two cases, Gann filed

a renewed motion to dismiss. See Def. 2d MTD. TCPA’s grant of a right ofaction if “otherwise permitted by the laws or rules of a court of a state,” argued

Gann, incorporated New Jersey state law that would bar class action

Plaintiff alleges the following deficiencies in Defendants’ “opt-out notices”: they

“(i) do not provide a domestic contact telephone and facsimile machine number for the

recipient to transmit an opt-out request to the sender; (ii) do not state that failure to

comply within the shortest reasonable time, as determined by the FederalCommunications Commission , with such a request is unlawful; and (iii) do not state

that such a request will only be effective if the person making the request does not,

subsequent to such request, provide express invitation or permission to the sender, in

writing or otherwise, to send such advertisements to such person at his or her

telephone facsimile machine.” Complaint ¶ 13.

3
On March 22, 2013, Defendants moved to stay this action pending the

outcome of an interlocutory appeal that the defendants had sought in Bais

Yaakov of Spring Valley v. Peterson’s Nelnet, LLC, Civ. 11-00011, 2012 WL

4903269 (D.N.J. Oct. 17, 2012). In Bais, District Judge Thompson certified tothe Third Circuit the issue of whether state law could bar a federal-court class

action under TCPA. See Civ. 11-00011, 2013 WL 663301 (D.N.J. Feb. 21,2013). On May 8, 2013, however, the Court of Appeals denied leave to pursue

an interlocutory appeal. ECF No. 69, Ex. A. That rendered Gann’s motion to

stay this action moot.

Gann’s second motion to dismiss remains pending. As is appropriate in

the context of a motion to dismiss, Gann does not dispute the factual

allegations. Rather, Gann challenges the Plaintiff’s legal basis for bringing afederal TCPA class action claim, while reserving its right to “challenge

certification of any class under Rule 23 should any such claims remain viable

after disposition of the [motion to dismiss].” Def. 2d MTD at n. 1.

III. Discussion

A. Federal Rule of Civil Procedure 23 governs the class treatment of

Plaintiff’s federal TCPA claims

The Supreme Court decisions in Shady Grove and Mims, as well as the

Third Circuit’s decision in Landsman i, establish that, in federal court, Rule 23,

not state law, determines whether a TCPA case may proceed as a class action.

Those decisions effectively dictate that Gann’s motion to dismiss be denied.

In 2010, the United States Supreme Court decided Shady Grove

Orthopedic Associates, P.A. v. Allstate Ins. Co., 559 U.S. 393, 130 S. Ct. 1431

(2010). That diversity case involved state-law claims for unpaid statutory

interest. A New York state statute would have barred those claims from beingbrought as a class action, but plaintiff asserted that they could nevertheless be

maintained as a class action in federal court under Rule 23, Fed. R. Civ. p•5

Denial of class action status was tantamount to dismissal of the action. The

Supreme Court described the district court’s ruling, reversed on appeal, as follows:

The District Court dismissed the suit for lack ofjurisdiction. It reasoned

that N.Y. Civ. Prac. Law Ann. § 90 1(b), which precludes a suit to recovera ‘penalty’ from proceeding as a class action, applies in diversity suits in

4
added) because of the relief it seeks

it cannot apply in diversity

suits unless Rule 23 is ultra vires.

Id. at 1437.

In Landsman i, the Third Circuit applied Shady Grove to a TCPA case.

Confusingly, however, it did so in the context of a jurisdictional framework that

was later superseded by Mims, see infra. To simplify a bit, Landsman I held

that, although TCPA is a federal statute, it does not support federal-question

jurisdiction under 28 U.S.C. § 1331; thus a TCPA action, despite its grounding

in federal law, could be maintained in federal court only pursuant to diversity

jurisdiction. See 28 U.S.C. § 1332.6 The district court in Laridsman had

concluded that, in such a diversity case, the Erie doctrine compelled the federal

federal court, despite Federal Rule of Civil Procedure 23. Concluding that

statutory interest is a ‘penalty’ under New York law, it held that § 901(b)

prohibited the proposed class action. And, since Shady Grove conceded

that its individual claim (worth roughly $500) fell far short of the

amount-in-controversy requirement for individual suits under 28 U.S.C.

§ 1332(a), the suit did not belong in federal court.

Shady Grove, 130 5. Ct. at 1437.

6 Landsman Ifollowed the holding of an earlier panel decision, ErieNet, Inc. v.

Velocity Net, 156 F.3d 513 (3d Cir. 1998), which held that Congress did not intend to

confer federal-question jurisdiction over a private right of action under TCPA.Landsman Istated that, despite some expansive language, ErieNet held only that TCPA

did not grant federal question jurisdiction, and did not settle any issue relating to

diversity or state-court jurisdiction. See 640 F.3d at 77-78 and nn. 4-6. Landsman I

held that TCPA, in granting a state court TCPA cause of action, was not intended to

divest the federal courts of diversity jurisdiction over a TCPA cause of action. See

Landsman 1 640 F.3d at 77-78 and nn. 4-6. Thus Landsman Itreated the TCPA cause

of action as that rare bird: a cause of action under federal law, but one that could be

asserted in federal court only pursuant to diversity jurisdiction. Judge McKee’sdissenting view, that TCPA supports federal-question jurisdiction, was later embracedby the U.S. Supreme Court in Mims. After Mims, the Third Circuit vacated its pending

order in Landsman 1, granting en banc consideration of the issue of federal jurisdiction

over TCPA claims, and reinstated its panel decision “to the extent it is consistent with

Mims.” Landsman & Funk PC v. Skinder-Strauss Associates, 09-3 105, 2012 WL

2052685 (3d Cir. Apr. 17, 2012).

5
govern the propriety, or not, of class action treatment. Since the requirementsof diversity jurisdiction were met, “[t]he only remaining question [was] whether

Rule 23 was satisfied.” Id. 8

Landsman I brought some equilibrium to the law, but it was an uneasy

equilibrium. In Mims v. Arrow Fin. Servs, 132 5. Ct. 740 (2011), the Supreme

Court went a long way toward settling the outstandmg issues. Mims dealt with

the interrelated issues of whether the state-court cause of action granted by

TCPA is exclusive, and whether the federal courts possess federal-question

jurisdiction over TCPA claims pursuant to 28 U.S.C. § 1331.

The claim in Mims that the state court cause of action granted by TCPA

is exclusive was by no means frivolous. TCPA provides that a person “may, ifotherwise permitted by the laws or rules of court of a State, bring in an

appropriate court ofthat State ... an action to recover for actual monetary lossfrom such a violation, or to receive $500 in damages . .. .“ 47 U.S.C. § 227(b)

(emphasis added). Mims held that this language was permissive, not exclusive:

“Nothing in the text, structure, purpose, or legislative history of the TCPA calls

for displacement of the federal-question jurisdiction U.S. district courtsordinarily have under 28 U.S.C. § 1331. In the absence of direction from

Congress.. . we apply the familiar default rule: Federal courts have § 1331

jurisdiction over claims that arise under federal law.” Id. at 748, 753. In so

holding, the Supreme Court explicitly abrogated ErieNet and similar cases.

“Choice of law” may refer to the choice between federal and state law or the

district court’s choice between the laws of New Jersey and New York. If Erie and its

progeny do not require application of state law, then neither is necessary.

8 Landsman I’s holding as to Rule 23 tended to determine the issue of diversity

subject matter jurisdiction as well. The typical individual TCPA claim for $500 in

statutory damages comes nowhere near the diversity statute’s required amount in

controversy of $75,000. See 28 U.S.C. § 1332(a). To satisfy diversity requirements, aplaintiff must aggregate many such claims in a class action. See 28 U.S.C. § 1332(d)(2)

(a diversity-based class action requires 100 claimants, minimal diversity and claims

aggregating in excess of $5 million). And unless Rule 23 displaces contrary state law

which bars class action treatment, that will not happen.

6
See 

U.S.C. § 227(b) (cause of action 

if otherwise permitted by the

laws or rules of court of a State....”). And if there were such a specific statutory

command, would it trump Rule 23 or displace the 1938 Rules Enabling Act, 28U.S.C. § 2072?

To the extent those questions might remain open, I answer them in the

negative. Thçre is no statement in TCPA sufflciently explicit to persuade methat Congress intended to supplant the well-established principle that the

Federal Rules of Civil Procedure reign supreme in a federal court action basedon federal law. All TCPA actually says on this issue is that a state court causeof action must comport with state law. The underlying principle of Mims is that

TCPA does not limit the availability of remedies in federal court. And Shady

Grove holds that, even where a federal-court plaintiff asserts a state-law cause

of action, Rule 23 may permit class-wide relief where state law would deny it.

Put together, these authorities imply that, in a federal-court TCPA case, class

action eligibility is governed by Rule 23, not state law.

Post-Mims cases in this District are generally in accord. For example, in

Bais Yaakov, 2012 WL 4903269 at *4, District Judge Thompson concluded:

In light of Mims, a case bolstering the previous Shady Grove

opinion favoring application of Rule 23 in federal court unless

specifically barred by Congress, this Court does not believe it

appropriate to interpret the text of § 227(b)(3) as requiring a federalcourt to follow state law. A growing number of lower courts have

also decided likewise. See, e.g., Hawk Valley, Inc., v. Taylor, No.

10—CV—00804, 2012 WL 1079965, * 10 (E.D.Pa. March 30, 2012);

American Copper & Brass, Inc. v. Lake City Indust. Prods., No.

1:09—CV—1 162, 2012 WL 3027953, * 2 (W.D.Mich. July 24, 2012);

Jackson’s Five Star Catering v. Beason, No. 10—100 10, 2012 WL

3205526, *4 (E.D.Mich. July 26, 2012); Bank v. Spark EnergyHoldings, LLC, No. 4:1 1—CV4082, 2012 WL 4097749, * 2—3 (S.D.

I use “Erie” here in a generic sense to refer to a whole collection of issues

involving the relative scope of federal and state law in federal court litigation. Strictly

speaking, an issue under, e.g., Hanna v. Plumer as to the scope of a federal Rule of

Civil Procedure is not analyzed under Erie; rather, a court must determine whether the

Rule truly conflicts with state law, and if so, give the federal rule precedence.

7
Writing in what she recognized to be “a substantially shifted legal

context,” District Judge Hayden reversed her earlier decision in Landsman and

concluded that plaintiff was “not precluded from bringing this class actioncomplaint.” Landsman & Funk, P.C. v. Skinder-Strauss Associates, Civ. 08-

3610 KSH, 2012 WL 6622120 at *1 (D.N.J. Dec. 19, 2012) reconsideration

denied, Civ.. 08-3610 KSH, 2013 WL 466448 (D.N.J. Feb. 8, 2013) (“Landsrnan

II’). Citing Mims and Shady Grove, Judge Hayden denied the defendant’smotion to dismiss, reasoning that “the state-law limitations. . . have no

application in this federal-question case in federal court. Federal law onlyapplies, and Skinder has not otherwise suggested that the complaint fails to

state a claim under federal law.” Id. at *9 District Judge Martini, too, has held

that the court was “not required to—nor should it—forgo the class certification

requirements set forth in Federal Rule of Civil Procedure 23 by instead

applying New Jersey class action law to Plaintiffs’ TCPA class claims brought infederal court.” Goodrich Mgmt. Corp. v. Afgo Mech. Servs., Inc., Civ. 09-43

WJM, 2012 WL 6554221 at *3 (D.N.J. Dec. 14, 2012). Those opinions are

persuasive, and they are based on appellate case law that controls my decision

here.

Gann argues that it is unjust, or at least unseemly, that “a $500 TCPA

case can be transformed into a federal question national class action” claimingmillions of dollars in damages. It may even be true that this is “an unintended

consequence of the statutory language.” But that statutory language, as

interpreted by the higher courts, leaves me no discretion. “Congress passed

[the TCPA] as written, and the federal courts are left with the consequences.”

Bank v. Spark Energy Holdings, LLC, 4:1 1-cv-4082, 2012 WL 4097749 at *3

(S.D. Tex. Sept. 13, 2012). I hold that Rule 23, not state law, governs the

availability of class action treatment of plaintiff’s claims under TCPA.

B. Federal Rule of Civil Procedure 23 governs the class treatment of

Plaintiff’s state law claims under the NJ Fax Act

One loose end remains. Plaintiff asserts a state-law claim under N.J.

Stat. Ann. 56:8-157 et seq. (the “NJ Fax Act”). Like TCPA, the NJ Fax Act

prohibits transmission of certain unsolicited advertisements. N.J. Stat. Ann.

56:8-158. Like TCPA, it provides for a private right of action, with statutory

8
U.S.C. § 1367. (Complaint ¶ 4).

It is possible to see the NJ Fax Act class claim as presenting a stronger

case for dismissal than the federal TCPA claim. The statutory injunction toproceed “in a summary manner,” tends to suggest that a class action was not

within the State legislature’s contemplation. And after all, nothing compelled

New Jersey to create a. substantive right of action at all; does not that greaterpower include the lesser one of setting the conditions under which plaintiffs

may obtain classwide relief?

That argument, however plausible, was substantially cut off by the

Supreme Court in Shady Grove. The Shady Grove plaintiff, too, was asserting a

cause of action created by a state statute. And that state, New York, had by

statute, N.Y. Civ. Prac. L. R. § 90 1(b), foreclosed a class action. The UnitedStates Supreme Court found it sufficient that the standards of Rule 23, Fed. R.

Civ. P., were in direct conflict with those of the New York statute, § 901(b). This

I0

56:8-159. Action by aggrieved person; damages and other reliefa. Any person aggrieved by a violation of this act may bring an action in the

Superior Court in the county where the transmission was sent or was received,

or in which the plaintiff resides, for damages or to enjoin further violations of

this act.b. The court shall proceed in a summary manner and shall, in the event theplaintiff establishes a violation of this act, enter a judgment for the actual

damages sustained, or $500 for each violation, whichever amount is greater,

together with costs of suit and reasonable attorney’s fees.

c. If the plaintiff establishes that the sender was notified by return facsimile or

written means of communication to cease and desist transmission of such

unsolicited advertisements, the court shall enter a judgment, on account of

each subsequent transmission, for actual damages or $ 1,000 for eachtransmission, whichever amount is greater, together with costs of suit and

reasonable attorney’s fees, not to exceed $1,000.

N.J. Stat. Ann. § 56:8-159.

9
IV. Conclusion

For the reasons discussed herein, Defendants’ Motion to Dismiss

Plaintiff’s Class Action Claims is DENIED, and Defendants’ Motion to Stay is

DISMISSED AS MOOT. The parties are directed to contact Magistrate Judge

Arleo to confer about a schedule for further proceedings in this case.

An appropriate order follows.

H N. KEVINMCNULT\)

United States District Ju e

11 Justice Stevens, concurring in part and concurring in the judgment, took issue

with the plurality’s interpretation of the Rules Enabling Act, but ultimately agreed that

Rule 23, as opposed to § 90 1(b), controlled class certification and that its applicationdid not violate the Enabling Act. See Shady Grove, 130 S. Ct. at 1451, 1459-60

(writing “[The Rules Enabling Acti requires, inter alia, that federal rules “not abridge,

enlarge or modify any substantive right.” 28 U.S.C. § 2072(b) (emphasis added).Unlike Justice SCALIA, I believe that an application of a federal rule that effectively

abridges, enlarges, or modifies a state-created right or remedy violates this command,”but concluding “we should respect the plain textual reading of § 901(b), a rule in New

York’s procedural code about when to certify class actions brought under any source

of law, and respect Congress’ decision that Rule 23 governs class certification in

federal courts. In order to displace a federal rule, there must be more than just a

possibility that the state rule is different than it appears.”).

10