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Giovanniello v. New York Law Publishing Co.


August 6, 2007


The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge*fn1


On March 8, 2007, Plaintiff Earle Giovanniello ("Plaintiff") filed a complaint against ALM Media, Inc. that alleged violations of the Federal Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227 et. seq. on behalf of himself and a putative class. Compl. ¶ 1 -- 2. The TCPA provides statutory damages against those who send unsolicited facsimile communications ("faxes"). 47 U.S.C. § 227 et. seq. On April 27, 2007, the Plaintiff filed an Amended Complaint ("Am. Compl.") against The New York Law Publishing Company ("Defendant") and, at the same time, terminated its action against ALM Media, Inc. Am. Compl. ¶ 1. Defendant now moves this Court to dismiss the Amended Complaint for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) ("Rule 12(b)(1)"). For the reasons stated below, the motion is GRANTED in its entirety.


Plaintiff resides in New Haven, Connecticut, and is a citizen of Connecticut. Am. Compl. ¶ 6. Defendant is a New York corporation with its principal place of business in New York, New York. Am. Compl. ¶ 7. Plaintiff asserts federal diversity jurisdiction in this Court pursuant to 28 U.S.C. § 1332(d)(2)(A) and alleges an amount in controversy in excess of $5,000,000. Am. Compl. ¶¶ 3 -- 4.

On or about January 28, 2004, Plaintiff received a fax from Defendant advertising the "commercial availability or quality of property, goods or services." Id. ¶ 8. Plaintiff alleges he is one of approximately 10,000 recipients of unsolicited facsimile advertisements between January 28, 2000, and the present. Id. ¶¶ 10, 1. According to Plaintiff, Defendant did not seek or obtain prior express invitation or permission from Plaintiff or any of the 10,000 "similarly situated" recipients. Id. ¶¶ 9, 12. Further, Plaintiff contends that at least two-thirds of the 10,000 recipients are citizens of states other than New York. Id. ¶ 11.

Plaintiff asserts, on behalf of himself and a putative class that Defendant violated 47 U.S.C. § 227(b)(1)(c)*fn2 and 47 C.F.R. § 64.1200(a)(3),*fn3 and seeks statutory damages pursuant to 47 U.S.C. § 227(b)(3)(A), treble damages pursuant to 47 U.S.C. § 227 (b)(3)(C), and an order enjoining Defendant from violating 47 U.S.C. § 227(b)(1)(c) and 47 C.F.R. § 64.1200(a)(3). Am. Compl. ¶¶ 14 -- 17.


A motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure challenges a court's statutory or constitutional power to adjudicate a case and "typically . . . alleges that the federal court lacks either federal question or diversity jurisdiction over the action." Menashe v. V Secret Catalogue, No. 05-CV-239, 2005 WL 1580799 at *3 (S.D.N.Y. July 7, 2005) (Baer, J.); Leyse v. Domino's Pizza LLC, No. 04-CV-2411, 2004 WL 1900328 at *1 (S.D.N.Y. Aug. 24, 2004) (Baer, J.) (citation omitted). The Court must construe the complaint liberally and in conformity with the principle set FORTH in Fed. R. Civ. P. 8(f). Menashe, 2005 WL 1580799 at *3; Goel v. U.S. Dept. of Justice, No. 03-Cv-579, 2003 WL 22047877 at *2 (S.D.N.Y. Aug. 29, 2003) (Baer, J.).

However, "argumentative inferences favorable to the pleader will not be drawn." Goel, 2003 WL 22047877 at *2; accord 5A Charles A. Wright et al., Federal Practice and Procedure § 1350, at 218-219 (1990 & Supp. 1991). The mover and the pleader may use affidavits and other materials beyond the pleadings themselves in support of, or in opposition to, a challenge to subject matter jurisdiction. Goel, 2003 WL 22047877 at *2; see Land v. Dollar, 330 U.S. 731, 735 n. 4 (1947); Exchange Nat'l Bank of Chi. v. Touche Ross & Co., 544 F.2d 1126, 1130 (2d Cir. 1976), cert. denied sub. nom., 469 U.S. 884, 884 (1984). Once challenged, the burden of establishing a federal court's subject matter jurisdiction rests on the party asserting jurisdiction. See Luckett v. Bure, 290 F.3d 493, 497-98 (2d Cir. 2002); Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000); see also Thomson v. Gaskill, 315 U.S. 442, 446 (1942).


The Second Circuit has held that diversity jurisdiction exists under the TCPA. Gottlieb v. Carnival Corp., 436 F.3d 335, 343 (2d Cir. 2006) ("Congress did not intend to divest the federal court's of diversity jurisdiction over private cause of action under the TCPA."). The issue in this case is whether Plaintiff may maintain a TCPA class action in federal court based on diversity jurisdiction*fn4 when New York state law would otherwise bar the action.*fn5 This issue is not one of first impression; in fact, both state and federal courts have concluded that TCPA class actions are barred by N.Y. C.P.L.R. § 901 (b). See, e.g. Bonime v. Avaya, No. 06-CV-1630, slip op. 2006 WL 3751219(E.D.N.Y. Dec. 20, 2006); Holster v. Gatco, 485 F. Supp.2d 179 (E.D.N.Y. Mar. 23, 2007); Weber v. U.S. Sterling Securities, Inc., 924 A.2d 816 (Conn. June 19, 2007);*fn6 Bonime v. Bridge 21 Inc., 799 N.Y.S.2d 417, 418 (2d Dep't 2005); Bonime v. Disc. Funding Assocs., 799 N.Y.S.2d 418, 419 (2d Dep't 2005); Giovanniello v. Carolina Wholesale Of. Mach. Co., Inc., 815 N.Y.S.2d 248, 249 (2d Dep't 2006); Leyse v. Flagship Capital Servs. Corp., 803 N.Y.S.2d 52, 53 (1st Dep't 2005); Rudgayzer & Gratt v. Cape Canaveral Tour & Travel, Inc., 799 N.Y.S.2d 795, 800 (2d Dep't 2005); Weber v. Rainbow Software, Inc., 799 N.Y.S.2d 428 (2d Dep't 2005).

Nonetheless, Plaintiff contends that N.Y. C.P.L.R. § 901(b) does not apply to the TCPA because the TCPA arises under federal rather than state law.*fn7 This argument relies upon the Second Circuit's dicta in Gottlieb:

It is odd, of course, that a federal court sitting in diversity and considering a TCPA claim would apply federal substantive and procedural law. This fact, however, only emphasizes the sui generisnature of the statute. It is the rare federal statute that creates a cause of action that gives rise to jurisdiction under [28 U.S.C.] § 1332, but not under [28 U.S.C.] § 1331.

436 F.3d at 343 n.8. Plaintiff argues that because the TCPA arises under federal, and not state law, the doctrine pronounced in Erie R. Co. v. Tompkins is inapplicable.*fn8 Plaintiff relies upon the Second Circuit's statement in Achtman v. Kirby, McInerney & Squire, LLP, to support this proposition, "[t]he Erie doctrine applies, whatever the ground for federal jurisdiction, to any issue or claim which has its source in state law." 464 F.3d 328, 337 n.4 (2d Cir. 2006) (quoting Maternally Yours, Inc. v. Your Maternity Shop, Inc., 234 F.2d 538, 541 n.1 (2d Cir. 1956)).

In a nearly identical case,*fn9 Judge Bianco rejected Plaintiff's arguments*fn10 because of the overall context of the Gottlieb footnote read in conjunction with the express language of the TCPA. See Holster, 485 F.Supp.2d 179 (E.D.N.Y. Mar. 23, 2007). First, the Holster court explained,

Although Gottlieb did recognize the anomaly created by a federal statute under which federal courts may only hear private causes of action in diversity jurisdiction, it did not instruct courts to ignore the dictates of Erie and its progeny when exercising diversity jurisdiction over TCPA claims. To read the footnote in Gottlieb as plaintiff proposes would ignore Gottlieb's statement that the TCPA is "the functional equivalent of a state law."

Holster, 485 F.Supp.2d at 183 -184 (quoting Gottlieb, 436 F.3d at 342). Second, the TCPA expressly incorporates state limits on its private cause of action: "[a] person or entity may, if otherwise permitted by the laws or rules of court of a State, bring [an action] in an appropriate court of that State." 47 U.S.C.A. § 227 (b)(3). In this connection, "the language of the TCPA clearly indicates that the TCPA merely enables states to permit a cause of action and contemplates that the laws or rules of the courts of the state may restrict such actions." Holster, 485 F.Supp.2d at 184.

This Court agrees with the reasoning of the Holster court and finds that the Erie doctrine applies to the case at bar. The Erie doctrine requires "federal courts sitting in diversity [to] apply state substantive law and federal procedural law." Gasperini, 518 U.S. at 427. Plaintiff contends that N.Y. C.P.L.R. § 901(b) is procedural rather than substantive; therefore, according to Plaintiff, federal substantive law governing class actions suits should control this case. Although Plaintiff cites several cases explaining the class action device as a procedural remedy, authorities in both state and federal courts have concluded otherwise. See, e.g. United States Parole Comm'n v. Geraghty, 445 U.S. 388, 402 (1980) ("the right to represent a class is a procedural claim"); Blaz v. Belfer, 368 F.3d 501, 505 (5th Cir. 2004) ("there is no substantive right to a class remedy; a class action is a procedural device."); but see Weber, 924 A.2d at 828 (citing Leider v. Ralfe, 387 F.Supp.2d 283, 291 (S.D.N.Y. 2005) (Baer, J.) ("Thus, the bulk of cases to address the applicability of N.Y. C.P.L.R. § 901(b) have decided that the statute is substantive and applies with equal force in federal litigation.")); Bonime, No. 06CV1630, slip op. 2006 WL 3751219 at *3 (citing cases).*fn11

Recently, two judges in the Eastern District of New York have ruled that N.Y. C.P.L.R. § 901(b) bars TCPA class actions in federal court and dismissed the cases for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). See Bonime, No. 06CV1630, slip op. 2006 WL 3751219; Holster, 485 F.Supp.2d 179; see also McGaughey v. Treistman, No. 05CV7069, slip copy 2007 WL 24935 at *3 n.5 (S.D.N.Y. Jan. 4, 2007) (Baer, J.) (noting issue but declining to comment because of distinguishing facts of case).*fn12 Both Bonime and Holster are factually similar to the present action, and, in fact, Plaintiff's attorney tried both cases and is no stranger to these cases.*fn13

In Bonime, a New York resident received an unsolicited fax advertisement through an agent and sought damages between $500 and $1,500 on his behalf as well as 10,000 potential class members. 2006 WL 3751219 at *1. The court held, the "TCPA does not specifically authorize recovery of statutory damages in a class action." Id. at *2. In dismissing the case for lack of subject matter jurisdiction, Judge Amon noted that N.Y. C.P.L.R. § 901(b) "prohibits class actions predicated on statutory damages" and concluded that plaintiff "cannot invoke diversity jurisdiction under [the Class Action Fairness Act of 2005 ("C.A.F.A.")]. Id. at *5. Three months later, Holster presented a nearly identical situation*fn14 and Judge Bianco, relying upon Bonime, concluded that "just as plaintiff is unable to maintain a class action alleging claims under the TCPA in a state

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