In Landsman & Funk PC v. Skinder-Strauss Associates, — F.3d —-, 2011 WL 1226371 (3d Cir. 2011), the Court of Appeals for the Third Circuit in a 2-1 split decision joined with other circuits and district courts to find that the TCPA’s exclusive grant of federal question jurisdiction in the state courts did not deprive the federal courts of jurisdiction to here TCPA claim based on diversity jurisdiction.  The Court of Appeals described the procedural history as follows:


This consolidated appeal encompasses three class actions brought in the District Court for the District of New Jersey under the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227(b). The TCPA is a unique federal statute that provides a private right of action for recipients of unsolicited facsimiles, as well as statutory damages of $500 per “violation.” The plaintiffs in these suits alleged that each respective defendant sent over 10,000 unsolicited fax advertisements to plaintiffs at their New York or New Jersey offices, and to thousands of others throughout the country, in violation of the TCPA.  The plaintiffs in each case requested more than $5 million in damages for themselves and the members of the classes they represented. All three cases were dismissed by the District Courts on the grounds that plaintiffs’ claims did not fulfill the requirements of diversity jurisdiction.  Although the District Courts’ specific reasons for dismissal varied slightly, a common question arises in our review of each of the cases: whether, notwithstanding our ruling in ErieNet, Inc. v. Velocity Net, Inc., 156 F.3d 513 (3d Cir.1998), that private TCPA claims do not present a federal question, the federal courts can exercise diversity jurisdiction over private suits brought under the TCPA. On appeal, appellees contend that the three District Courts that ruled on the issue of jurisdiction erred because none held—as they should have—that there can be no diversity jurisdiction over claims under the TCPA. Because this argument, if adopted, would be dispositive of all three cases—in that dismissal would be appropriate in each case if it is correct—we address this issue before considering other issues raised as to the propriety of the District Courts’ rulings in each case.


The Court of Appeals found that the TCPA did not prevent federal courts from hearing TCPA cases based on diversity jurisdiction, even though federal question jurisdiction for TCPA claims was not allowed:


Though we addressed federal question jurisdiction extensively in ErieNet, we had no occasion to consider whether there can be diversity jurisdiction over TCPA claims. 156 F.3d at 520. The issue presently before us is whether diversity jurisdiction exists in the federal courts, notwithstanding our conclusion in ErieNet that Congress intended for private litigants to seek recourse in state courts for TCPA violations. In ErieNet we asked whether Congress conferred subject-matter jurisdiction in the TCPA;  here we ask whether Congress intended state courts to have exclusive jurisdiction over TCPA claims and, thus, stripped away diversity jurisdiction. For the reasons set forth below, we hold that Congress did not divest the federal courts of diversity jurisdiction over private causes of action under the TCPA. Finding that we have diversity jurisdiction over TCPA claims does not disturb the concepts we set down in ErieNet; the TCPA has neither divested federal courts of diversity jurisdiction over private causes of action nor conferred on them federal question jurisdiction


Having found diversity jurisdiction properly lay in the federal courts for TCPA claims, the Court of Appeals turned to the question of class certification.  The Court of Appeals found that TCPA class claim might, or might not, be subject of class treatment, and remanded the case for further discovery to create a better record on the issue:


Further, in the specific context of claims filed under the TCPA statute, it is difficult to resolve without discovery whether there are factual issues regarding class members’ business relationships with defendants or whether they consented to the receipt of faxes. See Gene & Gene LLC v. BioPay LLC, 541 F.3d 318, 327–28 (5th Cir.2008) (in discussing issues of commonality regarding consent, noting that “there are no invariable rules regarding the suitability of a particular case filed under [§ 227(b)(3) ] of the TCPA for class treatment; the unique facts of each case generally will determine whether certification is proper”). Without discovery, the “unique facts” of this case, or any other, will not really be exposed. As the Fifth Circuit noted, differences among plaintiffs’ consent may be defeated by common proof developed in discovery. See id. at 327–28 (noting the possibility of presenting a “novel, class-wide means of establishing … lack of consent” on discovery—where the common question was whether inclusion of the recipients’ fax numbers in a purchased database indicated their consent to receive faxes). The parties should have the opportunity to develop the record on this issue.    Furthermore, we believe that the Afgo Court’s reasoning on many of the aspects of how the class might or might not pass muster under Rule 23 were conclusory and subject to debate. First, it is not clear that, as a matter of law, differences regarding consent are sufficient to defeat class certification. In Hinman v. M & M Rental Center, Inc., 545 F.Supp.2d 802 (N.D.Ill.2008), the district court rejected the defendant’s argument that considerations of consent and receipt of faxes are individualized questions so as to defeat class certification and noted that “commonality and typicality are generally met where, as here, a defendant engages in a standardized course of conduct vis-a-vis the class members, and plaintiffs’ alleged injury arises out of the conduct.” 545 F.Supp.2d at 806–07 (citing Keele v. Wexler, 149 F.3d 589, 594 (7th Cir.1998)). The defendant had argued that, because the TCPA applies only to unsolicited faxes, individual analysis is required to determine whether each class member consented to transmission of the faxes in question. The court nonetheless found that the class members met Rule 23’s commonality requirement. It pointed out that the defendant’s fax broadcasts were transmitted en masse based on a “leads” list compiled several years earlier and that, under these circumstances, the consent question could be understood as a common question. “The possibility that some of the individuals on the list may separately have consented to the transmissions at issue is an insufficient basis for denying certification.” Id. at 807. But see Forman v. Data Transfer, Inc., 164 F.R.D. 400, 404 (E.D.Pa.1995) (denying certification of TCPA claim based on “inherently individualized” question of consent).    Second, the Afgo Court stated that a class action would not be a superior method of handling claims under the TCPA. We are not so sure this is correct.  The Afgo Court’s suggestion that the individual statutory damages of $500 to $1500 are enough to both punish offenders and spur victims substitutes its judgment for that of Congress and makes unmerited presumptions regarding deterrence and the motivation to litigate. Had Congress wanted to preclude aggregation of individual TCPA claims, it could have so provided in the TCPA itself or in CAFA, which specifically lists certain types of statutory claims that could not be brought as class actions. 28 U .S.C. § 1332(d). CAFA lists various other statutes, but not the TCPA. Moreover, although nuisance faxes are not the most egregious of wrongs policed by Congress, the District Court was speculating when it assumed that individual suits would deter large commercial entities as effectively as aggregated class actions and that individuals would be as motivated—or even more motivated—to sue in the absence of the class action vehicle. The District Court should not have dismissed out of hand the possibility that a class action could provide a superior method of “fairly and efficiently adjudicating the controversy,” as required by Rule 23(b)(3). Although individual actions under the TCPA may be easier to bring in small claims court than other types of cases, that does not necessarily undermine the greater efficiency of adjudicating disputes involving 10,000 faxes as a single class action. Indeed, as plaintiffs point out, we have little reason to believe that individual actions are automatically efficient; plaintiffs can still face protracted litigation when they sue individually.    Finally, where common issues certainly exist, a district court might consider subclassing in lieu of decertification. The Hinman court, for example, noted the viability of defining the class to include only individuals who did not consent. “[B]y certifying a class of individuals who received unsolicited faxes,” the court explained, it was “ ‘merely setting the boundaries of the class’ not resolving the substantive issues.’ “ Hinman, 545 F.Supp. at 807 (internal quotation marks and citation omitted). See Chiang v. Veneman, 385 F.3d 256, 268–69 (3d Cir.2004) (rather than decertifying a class, choosing the “less drastic course” of “simply modify[ing] the class definition”); Simer v. Rios, 661 F.2d 655, 672 n.29 (7th Cir.1981) (“[Decertification] ignores the possibility of subclassing, a viable alternative in resolving such problems.”).    Discovery is necessary for the district court to conduct the “rigorous analysis” it is tasked with at this stage, and more than speculation and supposition is needed to say that any vehicle is really superior. A more robust record must be developed here as to the precise nature of the class claims. Accordingly, we will vacate the orders of the District Court dismissing these three cases and remand for further proceedings consistent with this opinion.