Get Outta Here: Court Finds No Personal Jurisdiction Over Defendants Who Contracted With Company That Placed Calls To Individuals In The Jurisdiction

The Eastern District of Texas recently adopted a report and recommendation finding that it lacked personal jurisdiction over an attorney and law firm even though they allegedly contracted to place calls to individuals in Texas. The defendants in the case, Cunningham v. Mark D. Guidubaldi & Assocs., 2019 U.S. Dist. LEXIS 38652 (E.D. Tex. Jan. 11, 2019), were an individual attorney, Sanford J. Feder, and his firm, the Law Office of Sanford J. Feder, LLC. Feder resides in New Jersey and the firm is a New Jersey limited liability company. The firm did not have employees, offices, or bank accounts in Texas. So why was the case even filed in Texas?

The plaintiff argued that the defendants contracted with a Texas company that ultimately placed calls to individuals in Texas (or at least individuals who had phone numbers with a Texas area code). The court held that this was not enough, either for general or specific jurisdiction.

General jurisdiction doesn’t seem close. The plaintiff would have to show that the New Jersey-based attorney and his New Jersey-based law firm were “at home” in Texas. That is obviously a stretch, and the court easily disposed of it. But the holding is significant for TCPA World defendants facing class actions, because it could limit the jurisdictions in which plaintiffs can file nationwide class actions. If courts apply Bristol-Myers Squibb to class actions, a nationwide class action would have to be filed in the jurisdiction where the defendant is “at home,” which means more than a state to which the defendant allegedly directed calls.

Specific jurisdiction appears to be a closer question, the holding has potential significance in a variety of TCPA cases. The court found that even though the defendants entered into a contract with a Texas entity that placed calls to individuals in Texas, nothing in the record indicated that Texas was a focus of the telemarketing or that the defendants knew calls would be placed to individuals in Texas. Thus, neither had fair warning that they could be hauled into a Texas courtroom and were not subject to jurisdiction there, even if calls happened to be placed to individuals in Texas.

The specific jurisdiction issue could arise in a variety of contexts. A company could attempt to dial an individual located in Texas, but erroneously reach an individual in California. Or a company could dial an individual whom its records indicate lives in Pennsylvania but who recently moved to Arizona. In both of those cases, the defendant has no notice or expectation that it could be sued in California or Arizona and has an argument under Cunningham that the courts lack jurisdiction over it. Which is very significant in TCPA World, because it could mean the difference between applying Dominguez and applying Marks. Thus, until the FCC or Supreme Court steps in and resolves the fractured law in TCPA World, jurisdictional issues like those in Cunningham could be the difference between winning and losing.