James C. Reynolds, Appellant, v. Diamond Foods & Poultry, Inc., and Bob Smugala, Respondents.

This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court. Opinion Missouri Court of Appeals Eastern District Case Style: James C. Reynolds, Appellant, v. Diamond Foods & Poultry, Inc., and Bob Smugala, Respondents. Case Number: ED79488 Handdown Date: 02/05/2002 Appeal From: Circuit Court of St. Louis County, Hon. Carolyn C. Whittington Counsel for Appellant: Mitchell B. Stoddard Counsel for Respondent: Robert K. Heidenreich and Lee R. Elliott Opinion Summary: James C. Reynolds appeals from the court's dismissal of his action against Diamond Foods & Poultry, Inc., and Bob Smugala seeking damages pursuant to 47 U.S.C. section 227, the Telephone Consumer Protection Act (hereinafter "the TCPA"). The court granted Diamond Foods and Smugala's motion to dismiss finding no private right of action in Missouri under the TCPA. Reynolds contends the court erred in granting the motion to dismiss because there is a private right of action in Missouri under the plain meaning of the TCPA. REVERSED AND REMANDED FOR FURTHER PROCEEDINGS. Division One holds: Under federal precedent, the clause in 47 U.S.C. section 227 of the TCPA, "if otherwise permitted by the laws or rules of court of a State," does not require affirmative state enabling legislation before a consumer can file a private right of action in state court under the TCPA. Accordingly, we hold that a private right of action may be brought in state courts of Missouri pursuant to the TCPA, and that Reynolds's petition states a cause of action under the statute. Therefore, the court erred in dismissing Reynolds's petition. Citation: Opinion Author: Robert G. Dowd, Jr., Judge Opinion Vote: REVERSED AND REMANDED FOR FURTHER PROCEEDINGS. Crandall, P.J., and Crane, J., concur. Opinion:

James C. Reynolds ("Reynolds") appeals from the trial court's dismissal of his action against Diamond Foods & Poultry, Inc. ("Diamond Foods"), and Bob Smugala ("Smugala") seeking damages pursuant to 47 U.S.C. Section 227, the Telephone Consumer Protection Act (hereinafter "the TCPA"). The trial court granted Diamond Foods and Smugala's motion to dismiss finding no private right of action in Missouri under the TCPA. Reynolds contends the trial court erred in granting the motion to dismiss because there is a private right of action in Missouri under the plain meaning of the TCPA. Because we find that enabling legislation is not necessary to create a private right of action under the TCPA, we reverse the dismissal of Reynolds's action and remand. Between November 1 and November 28, 2000, Diamond Foods and Smugala sent four separate unsolicited facsimile transmissions to Reynolds, who maintains a fax machine at his barbecue restaurant, Reynolds Barbecue, located in St. Louis County. The facsimile transmissions included a price list for various meat and fish products offered by Diamond Foods. Reynolds filed suit in the St. Louis County circuit court, seeking statutory damages for Diamond Foods and Smugala's violations of the TCPA. Diamond Foods filed its motion to dismiss Reynolds's petition for failure to state a claim upon which relief may be granted. Smugala later joined Diamond Foods' motion to dismiss. The motion to dismiss asserted that Reynolds could not maintain an action under the TCPA in the state courts of Missouri because Missouri law did not permit a private right of action under the TCPA without enabling legislation. The motion further asserted that the TCPA only applied to "persons" and, therefore, Reynolds Barbecue could not recover under the TCPA because it is an "entity" and not a "person." The trial court granted Diamond Foods and Smugala's motion to dismiss finding no private right of action in Missouri under the TCPA.(FN1) Reynolds now appeals the dismissal of his action.(FN2) A motion to dismiss for failure to state a claim is solely a test of the adequacy of the plaintiff's petition. Gettings v. Farr, 41 S.W.3d 539, 540-41 (Mo. App. E.D. 2001). We assume all of the plaintiff's averments are true and give the plaintiff the benefit of every reasonable inference therefrom. Id. at 541. We review the petition to determine whether the facts alleged meet the elements of a recognized cause of action, or of a cause that might be adopted in that case. Id. If the allegations invoke principles of substantive law entitling plaintiff to relief, the petition should not be dismissed. Id. On appeal, Reynolds contends the trial court erred in dismissing his TCPA action because there is a private right of action under the TCPA in Missouri and enabling legislation is not necessary to confer jurisdiction to the state courts of Missouri to hear the cause of action.(FN3) We agree. In 1991, Congress amended the Communications Act of 1934, 47 U.S.C. Section 201 et seq., with the enactment

of the TCPA.(FN4) The TCPA was enacted 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 facsimile ([f]ax) machines and automatic dialers." S.Rep. No. 102-178, at 1 (1991), reprinted in 1991 U.S.C.C.A.N. 1968. The relevant section of the TCPA provides: 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. 47 U.S.C. Section 227(b)(3) (emphasis added). If the court finds that the violation was willful or knowing, it has the discretion to award an amount three times the amount specified above. 47 U.S.C. Section 227(b)(3). At the heart of this matter is the language, "if otherwise permitted by the laws or rules of court." Diamond Foods interprets this language to mean that before a plaintiff can bring suit under the TCPA in a court of this state, the Missouri legislature must pass specific enabling legislation to "opt-in" to the TCPA. On the other hand, Reynolds argues that the statutory language refers to the absence of jurisdictional barriers and does not require a state to "opt-in" to the TCPA because the TCPA "does not condition the substantive right to be free from unsolicited faxes on state approval," citing Int'l Science & Tech. Institute, Inc. v. Inacom Communications, Inc., 106 F.3d 1146, 1156 (4th Cir. 1997). There is no Missouri appellate decision construing the TCPA. However, because this court is construing a federal statute, the decisions of the federal courts interpreting the TCPA are binding. Fox v. McDonnell Douglas Corp., 890 S.W.2d 408, 410 (Mo. App. E.D. 1995). The leading federal case directly addressing the "if otherwise permitted" language of the TCPA is Int'l Science & Tech. Institute, Inc. v. Inacom Communications, Inc., 106 F.3d 1146 (4th Cir. 1997). The plaintiff in Int'l Science brought a TCPA claim in federal district court, which dismissed the action finding that only state courts had jurisdiction to hear private TCPA claims. Id. at 1150-51. In Int'l Science, the Fourth Circuit found that the TCPA does create a private right of action for violations of the act, but that state courts have exclusive jurisdiction over such causes of action. Id. The plaintiff argued that interpreting the TCPA to authorize exclusive jurisdiction in state courts would violate the Equal Protection Clause of the Fourteenth Amendment because the authorization is conditioned on the phrase "if otherwise permitted by the laws or rules of court of a State." Id. at 1155-56. The Fourth Circuit rejected this interpretation of the "if otherwise permitted" language, and held specifically that: The clause in 47 U.S.C. [Section] 227(b)(3) "if otherwise permitted by the laws or rules of court of a State" does not condition the substantive right to be free from unsolicited faxes on state approval.

Id. at 1156. In coming to its decision, the Fourth Circuit relied on the legislative history of the TCPA to support its interpretation that Congress intended private rights of action under the TCPA in state courts designed to handle such cases. Id. at 1152. The Fourth Circuit cited to Senator Hollings's, the sponsor of the bill, statements urging the TCPA's passage: The substitute bill contains a private right-of-action provision that will make it easier for consumers to recover damages from receiving these computerized calls. The provision would allow consumers to bring an action in State court against any entity that violates the bill. The bill does not, because of constitutional constraints, dictate to the States which court in each State shall be the proper venue for such an action, as this is a matter for State legislators to determine. Nevertheless, it is my hope that States make it as easy as possible for consumers to bring such actions, preferably in small claims court. The consumer outrage at receiving these calls is clear. Unless Congress makes it easier for consumers to obtain damages from those who violate this bill, these abuses will undoubtedly continue. Id. at 1152-53 (citing 137 Cong. Record S16205-16206 (daily ed. Nov. 7, 1991)). The Fourth Circuit held that the clear thrust of Senator Hollings's statements was consistent with the text of the TCPA that state courts were the intended forums for private TCPA actions. Id. at 1153. The holding in Int'l Science was adopted by the Second Circuit in Foxhall Realty Law Offices, Inc. v. Telecommunications Premium Svcs., Ltd., 156 F.3d 432 (2nd Cir. 1998).(FN5) In Foxhall, the Second Circuit was faced with the same jurisdictional question and Equal Protection Clause challenge to the TCPA that the Fourth Circuit faced in Int'l Science. Id. at 438. The Second Circuit found exclusive jurisdiction over individual TCPA claims in state courts. Id. The Second Circuit quoted Int'l Science and expressly held that there was no requirement for a state to "opt-in" to the TCPA because the statute "does not condition the substantive right to be free from unsolicited faxes on state approval." Foxhall, 156 F.3d at 438. Federal interpretation of the language in the TCPA is clear that legislatures do not need to pass enabling legislation to create a private right of action under the TCPA in state courts.(FN6) Thus, under the federal precedent interpreting the TCPA, we find the clause in 47 U.S.C. Section 227, "if otherwise permitted by the laws or rules of court of a State," does not require affirmative state enabling legislation before a consumer can file a private right of action in state court under the TCPA. Further, the particulars of this case, including the parties, amount in controversy, and relief sought clearly fit the jurisdiction of the circuit courts as described by the Missouri Constitution. Accordingly, we hold that a private right of action may be brought in state courts of Missouri pursuant to the TCPA, and that Reynolds's petition states a cause of action under the statute. Therefore, the trial court erred in dismissing Reynolds's petition. The order of dismissal is reversed and the cause is remanded for further proceedings. Footnotes:

FN1. The trial court entered two orders granting each respective defendant's motion to dismiss. The trial court first granted Diamond Foods' motion to dismiss without stating a reason for such dismissal. The trial court then entered a second order and judgment granting Smugala's motion to dismiss stating there is no private cause of action under the TCPA in Missouri. FN2. To the extent the court below relied on Diamond Foods and Smugala's argument that Reynolds Barbecue is not a "person" within the protection of the TCPA, such reliance was error. Diamond Foods concedes this point because Congress has defined "person" to include "corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals." 1 U.S.C. Section 1. FN3. We note Smugala did not file a brief in this appeal. FN4. The TCPA was a response to many states expressing a desire for federal legislation to regulate interstate telemarketing calls to supplement their restrictions on intrastate calls. FN5. The Third Circuit, Fifth Circuit, Ninth Circuit, and Eleventh Circuit have also followed the holding in Int'l Science that the state courts have exclusive jurisdiction over individual claims arising under the TCPA. See ErieNet, Inc. v. Velocity Net, Inc., 156 F.3d 513, 520 (3rd Cir. 1998); Chair King, Inc. v. Houston Cellular Corp., 131 F.3d 507, 509 (5th Cir. 1997); Murphy v. Lanier, 204 F.3d 911,912-13 (9th Cir. 2000); Nicholson v. Hooters of Augusta, Inc., 136 F.3d 1287, 1289, modified, 140 F.3d 898 (11th Cir. 1998). FN6. Other states have followed Int'l Science. See Kaplan v. Democrat and Chronicle, 698 N.Y.S.2d 799, 800 (N.Y. App. 1999); Worsham v. Nationwide Ins., 772 A.2d 868, 874 (Md. App. 2001); Hooters of Augusta, Inc. v. Nicholson, 537 S.E.2d 468, 470 (Ga. App., 2000) (en banc). Separate Opinion: None This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court.