Opinion ID: 796829
Heading Depth: 3
Heading Rank: 1

Heading: Colorado Law Governs Assignability

Text: 20 As a threshold matter, the district court in iHire determined that Colorado law governed the assignability of claims. iHire, 362 F.Supp.2d at 1250-51. Although it was not clear from all the briefs, the parties disputed this conclusion at oral argument, with the Plaintiffs arguing that federal law should govern assignability. Because this conclusion is a question of law, we review it de novo. See Dang v. UNUM Life Ins. Co. of Am., 175 F.3d 1186, 1189 (10th Cir.1999). 21 In this case, the TCPA itself directs that Colorado law govern the matter of assignability. The statute states: A person or entity may, if otherwise permitted by the laws or rules of a court of a State, bring in an appropriate court of that State [a TCPA claim]. 47 U.S.C. § 227(b)(3) (emphasis added). Thus, Congress expressly directed that federal courts apply substantive state law to determine which persons or entities may bring TCPA claims in federal court. This reference to state law encompasses the matter of assignability and directs that Colorado law should apply. 22 Even without the explicit language in the TCPA directing the use of state law, Colorado law would inevitably apply under general choice of law principles. Federal courts sitting in diversity typically apply the substantive law of the forum state. Clark v. State Farm Mut. Auto. Ins. Co., 433 F.3d 703, 709 (10th Cir.2005). This is not necessarily the case, however, when diversity jurisdiction is invoked to pursue a right created by federal law. See, e.g., Bluebird Partners, L.P. v. First Fidelity Bank, N.A., 85 F.3d 970, 973 (2d Cir.1996). Instead, when the federal government has an articulable interest in the outcome of a dispute, federal law governs. Howard v. Group. Hosp. Serv., 739 F.2d 1508, 1510 (10th Cir.1984). This means that federal law will apply in diversity suits when diverse resolutions of a controversy would frustrate the operations of a federal program, conflict with a specific national policy, or have some direct effect on the United States or its treasury. Id. (internal citations omitted). 23 In TCPA cases, the United States is not a party, and we are unaware of any federal program that could be frustrated. After all, assuming the circuit cases rejecting federal question jurisdiction for TCPA claims are accurate, the bulk of TCPA litigation has been shifted to the states where suits are brought by individuals. Federal courts would hear only those TCPA claims that qualify for diversity jurisdiction. Thus, federal law should only apply to determine the enforceability of the assignment if Colorado law on assignment would conflict with a specific national policy. 24 No corresponding national policy is apparent. Congress enacted the TCPA to protect the privacy interests of residential telephone subscribers by placing restrictions on unsolicited, automated telephone calls to the home and to facilitate interstate commerce by restricting certain uses of [fax] machines and automatic dialers. S.Rep. No. 102-178, at 1 (1991), U.S.Code Cong. & Admin.News 1991, p. 1968. The TCPA never mentions the assignability of claims, let alone suggests that the free assignability of claims is an important component of the TCPA. Consequently, allowing state law to govern the assignability of TCPA claims does not conflict with any federal policy. Even if state law prevents assignment of TCPA claims, individuals harmed by unsolicited telephone calls or faxes are always free to bring suits themselves. Because this is merely a dispute between private parties, the rights and duties of the United States are not implicated. See Bank of Am. Nat'l Trust & Sav. Ass'n v. Parnell, 352 U.S. 29, 33, 77 S.Ct. 119, 1 L.Ed.2d 93 (1956). Nor is there any significant conflict between federal policy and state law. See Wallis v. Pan Am. Petroleum Corp., 384 U.S. 63, 68, 86 S.Ct. 1301, 16 L.Ed.2d 369 (1966). Accordingly, Colorado law would govern the assignability of TCPA claims under a choice of law analysis as well. 5 25 B. The Claims are Not Assignable Under Colorado Law Because They Are Personal In Nature 26 In iHire, the court determined that TCPA claims amount to personal-injury privacy claims, and are penal in nature, and thus are unassignable under Colorado law. 362 F.Supp.2d at 1252-53. Plaintiffs assert that the claims are generally assignable under Colorado law, that TCPA claims are compensatory and not penal, and that they are essentially economic claims as opposed to privacy claims. We review the district court's conclusions of state law de novo. County of Santa Fe v. Public Serv. Co., 311 F.3d 1031, 1035 (10th Cir.2002). 27 The Colorado Court of Appeals recently addressed the assignability of TCPA claims in McKenna v. Oliver, No. 05-CA-0298, 2006 WL 2564636, ___ P.3d ___ (Colo.Ct.App. Sept. 7, 2006). The plaintiff in McKenna had been assigned several unsolicited fax advertisement claims and sought the same remedies as the Plaintiffs in this case. Id. at , ___ P.3d at ___. The Colorado court reviewed the decision on assignability rendered in iHire. The court refused to determine whether the sole purpose of the TCPA was to protect privacy rights. See id. at , ___ P.3d at ___ ([W]e need not address whether the statute may have the dual purpose of preventing privacy rights and economic harm.). Instead, the court held that because the plaintiff's complaint failed to assert economic harm, the claims were unassignable. Id. 6 The court held that an action based upon the receipt of unsolicited faxes by individuals in violation of the TCPA is not assignable because such an action is in the nature of a violation of the right to privacy. Id. 28 We note that the reasoning in McKenna has recently been followed by another panel of the Colorado Court of Appeals. See U.S. Fax Law Center, Inc. v. Myron, ___ P.3d ___, No. 05-CA-1426, 2006 WL 3094074, at  (Colo.Ct.App. Nov.2, 2006). Because there is no convincing evidence that the Colorado Supreme Court would hold otherwise, we elect to follow the decision of the Colorado Court of Appeals in McKenna and find that TCPA claims are unassignable because they are in the nature of personal-injury, privacy claims. See MidAmerica Constr. Mgmt. Inc. v. MasTec N. Am., Inc., 436 F.3d 1257, 1262 (10th Cir.2006). Because this ground alone is sufficient to defeat the assignability of TCPA claims, we decline to address the district court's alternative holding that TCPA claims are unassignable because they are penal in nature. C. Plaintiff-Appellants Lack Standing 29 Because the underlying assignment of TCPA claims was invalid, the Plaintiff-Appellants lack standing. The irreducible constitutional minimum for standing requires that a plaintiff sustain an injury in fact. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). However, the assignee of a claim has standing to assert the injury in fact suffered by the assignor. Vermont Agency of Natural Res. v. U.S. ex rel. Stevens, 529 U.S. 765, 773, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000). Because it determined that the underlying assignments were invalid, the iHire court held that the plaintiff in that case could not assert the injury in fact of the assignors. 362 F.Supp.2d at 1253. 30 This conclusion is consistent with the premise of representational standing discussed in Vermont Agency. If a valid assignment confers standing, an invalid assignment defeats standing if the assignee has suffered no injury in fact himself. See, e.g., Texas Life, Accident, Health & Hosp. Serv. Ins. Guar. Ass'n v. Gaylord Entm't Co., 105 F.3d 210, 216 (5th Cir.1997) (noting that if there is no valid assignment there is no derivative standing). Here, the Plaintiffs suffered no injury at all. They received no faxes from Defendants. Thus, there is no representational standing. 31 We therefore hold that diversity jurisdiction is available for TCPA claims, but AFFIRM the judgments of dismissal based upon lack of standing. 7