Opinion ID: 168738
Heading Depth: 3
Heading Rank: 1

Heading: Colorado Law Governs A ssignability

Text: -12- As a threshold matter, the district court in iHire determined that Colorado law governed the assignabilility 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). 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. 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 M ut. 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, -13- “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). 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. 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). 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 -14- 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 U nited States” are not implicated. See Bank of A m. Nat’l Trust & Sav. Ass’n v. Parnell, 352 U.S. 29, 33 (1956). Nor is there any significant conflict between federal policy and state law. See W allis v. Pan Am. Petroleum Corp., 384 U.S. 63, 68 (1966). Accordingly, Colorado law would govern the assignability of TCPA claims under a choice of law analysis as w ell. 5 B. The Claims are Not Assignable Under Colorado Law Because They Are Personal In N ature 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. 363 F. Supp. 2d at 1252-53. Plaintiffs assert that the claims are 5 Our conclusion would be the same even if federal law governed the assignability of claims because the content of federal law would be supplied by Colorado law. See United States v. Kimbell Foods Inc., 440 U.S. 715, 728 (1979). Under Kimbell, three factors are considered in determining whether state law should supply the content of federal law or w hether a unique federal rule is needed. Those factors include: (1) the need for national uniformity, (2) whether adoption of state law would frustrate a federal objective, and (3) whether adoption of a federal rule would disrupt commercial relationships under state law. Id. at 728-29. As noted above, there is no pressing need for national uniformity because most TCPA litigation should arise in state courts. For this same reason, there is no federal objective to be undermined by incorporation of state law. Accordingly, there is no reason to supply a differing federal rule, where Colorado law already regulates the assignability of claims. -15- 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. W e 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). The Colorado Court of Appeals recently addressed the assignability of TCPA claims in M cKenna v. Oliver, No. 05-CA-0298, 2006 W L 2564636 (Colo. Ct. App. Sept. 7, 2006). The plaintiff in M cKenna had been assigned several “unsolicited fax advertisement” claims and sought the same remedies as the Plaintiffs in this case. Id. 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  (“[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. 6 The plaintiff in M cKenna alleged that unsolicited faxes were sent to the “Assignors’ home or office facsimile machines.” Complaint at ¶ 2.4, M cKenna v. Oliver, No. 03-CV-2099, (Colo. Dist. Ct., Boulder Co., Oct. 23, 2003). The plaintiff sought the statutory award of $500 for each fax, $1500 for each fax sent willfully or knowingly, and injunctive relief. Id. ¶ 6.0-6.1. -16- W e note that the reasoning in M cKenna has recently been followed by another panel of the Colorado Court of Appeals. See U.S. Fax Law Center, Inc. v. M yron, – P.3d –, No. 05-CA-1426, 2006 W L 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 A ppeals in M cK enna and find that TCPA claims are unassignable because they are in the nature of personal-injury, privacy claims. See M idAmerica Constr. M gmt. Inc. v. M astec 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 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 W ildlife, 504 U.S. 555, 560 (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 (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. -17- 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. W e therefore hold that diversity jurisdiction is available for TCPA claims, but AFFIRM the judgments of dismissal based upon lack of standing. 7 7 US Fax Law Center, Inc. v. iHire, No. 05-1325, presents the additional question of whether plaintiffs have standing to bring assigned claims for unsolicited faxes under the Colorado Consumer Protection Act (CCPA ). The district court concluded that CCPA unsolicited fax claims, like TCPA claims, are unassignable and that US Fax Law Center lacked standing as a result. See U.S. Fax Law Center, Inc. v. iHire, 374 F. Supp. 2d 924, 929-30 (D. Colo. 2005). W e affirm the district court’s determination that CCPA claims are unassignable under Colorado law based on the reasoning in M yron. See 2006 W L 3094074, at . -18-