May It Please The Court

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May It Please The Court
by Leonard Rivkin
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Quote of the Day - I got a chain letter by fax. It's very simple. You just fax a dollar bill to everybody on the list. - Stephen Wright
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The $1.5 Million Facsimiles You Received On Your Fax Machine

Tired of receiving junk faxes on your fax machine or computer?  After receiving over 1,000 faxes in a three-year period, Travel Agent Sherman Gottlieb was, and he decided to do something about it.   He sent by fax instructions to Carnival Corporation asking the company to remove his facsimile numbers from its dialer, but they didn't follow his instructions.

Then he invoked the Telephone Consumer Protection Act and sued the offending sender, Carnival Corporation, apparently the parent of Carnival Cruise Lines, in addition to several other companies.

Carnival fought back and alleged that Gottlieb didn't have diversity or subject matter jurisdiction as a private attorney general to bring his case in federal court in New York, where Gottlieb lived.  Carnival is a Panama corporation, with offices in Florida.  Carnival argued (and won) in the trial court that Gottlieb had to proceed in state court.  On appeal to the Second Circuit, however, Carnival lost.  Gottlieb can now prosecute his federal and state claims in federal court. 

If he wins, Carnival is subject to $500 for each of the 1,000 faxes he received from Carnival, and possibly treble damages if Carnival acted knowingly and willfully under the federal law.  Under a parallel law in New York, the Second Circuit notes he can recover $100 for each fax.  The Circuit noted that the TCPA raises a federal question and that Congress did not divest the federal courts of jurisdiction over claims by private parties.  It also cited to legislative history that supported federal jurisdiction.

While Congress may have thought that the TCPA would typically avoid federal jurisdiction because the amount in controversy was less than the $75,000 threshold to invoke federal jurisdiction, but Carnival brought disaster down on itself.  Gottlieb's 1,000 faxes translate into damages of $500,000, and possibly as much as $1.5M, well over the jurisdictional limit.

That's an expensive travel agent fax campaign for a cruise line.

Posted by J. Craig Williams on Tuesday, February 07, 2006 at 15:08 Comments (0)


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