District Court (Ohio) Declines to Exercise Supplemental Jurisdiction Over Collection Counter-Claim in TCPA Case

In Slaughter v. Reg’l Acceptance Corp., No. 2:20-cv-01888, 2020 U.S. Dist. LEXIS 234729 (S.D. Ohio Dec. 14, 2020), Judge Marbley declined to exercise supplemental jurisdiction over a collection counter-claim to a TCPA case.

The Court declines to exercise supplemental jurisdiction over Regional’s counterclaim for breach of contract in view of the second and fourth considerations. With respect to the former, the Dotson court observed that courts have considered such factors as whether the state law claims outnumber the federal law claims, whether the state and federal law claims are distinct, and whether the state law claims involve proof not needed to establish the federal law claims. Dotson v. Ally Fin., Inc., No. 2:19-cv-2274, 2019 U.S. Dist. LEXIS 193764, 2019 WL 5847848, at *6 (W.D. Tenn. Nov. 7, 2019) (citing Williamson v. Recovery Ltd. P’ship, No. C2-06-292, 2009 U.S. Dist. LEXIS 23264, 2009 WL 649841, at *9 (S.D. Ohio Mar. 11, 2009)) (citations omitted). Here, as in Dotson, the contract underlying the counterclaim is likely relevant to the resolution of the TCPA claim, because the contract contains terms that may establish prior express consent by Ms. Slaughter. See Dotson, 2019 U.S. Dist. LEXIS 193764, 2019 WL 5847848 at *7. But “the main evidence relevant to the TCPA Claim will likely consist of records and testimony about the number of calls received and the use of the automatic dialing system, evidence that would be of no relevance to” Regional’s breach of contract claim. Id. Moreover, the counterclaim, “which contain[s] no allegations about telephone calls or an automatic dialing system, will rely primarily on evidence” not necessary to the TCPA, such as proof of Ms. Slaughter’s failure to make timely payments on the car. Id. Thus, despite the Court’s conclusion, supra, that the set of facts relevant to resolution of the TCPA claim are not completely separate and distinct from the set of facts relevant to resolution of Regional’s counterclaim, neither do the two sets of facts or the proof going to them significantly overlap. Accordingly, this consideration cuts against the exercise of jurisdiction in the case sub judice.

The District Court also held that the purposes of the TCPA weighed in favor of declining jurisdiction.

There are other compelling reasons for declining jurisdiction here. See § 1367(c)(4). The TCPA is a remedial statute. Parchman v. SLM Corp., 896 F.3d 728, 740-41 (6th Cir. 2018). Its “primary purpose . . . was to protect individuals from the harassment, invasion of privacy, inconvenience, nuisance, and other harms associated with unsolicited, automated calls.” Id. at 738. As such, it “must [be] liberally construe[d]   in favor of consumer protection.” Physicians Healthsource, Inc. v. A-S Medication Sols., LLC, 950 F.3d 959, 967 (7th Cir. 2020). Where a TCPA claim is met by a counterclaim that attempts to collect an underlying debt, there is a risk of a chilling effect on a plaintiff’s willingness to bring TCPA actions. See Dotson, 2019 U.S. Dist. LEXIS 193764, 2019 WL 5847848 at *7 (citations omitted). In other words, the exercise of supplemental jurisdiction over counterclaims seeking to collect on the underlying debt that motivated the TCPA violations would potentially discourage prospective plaintiffs “‘from bringing forth meritorious TCPA claims for fear of such counterclaims.'” Ammons v. Ally Fin., Inc., 305 F. Supp. 3d 818, 824 (M.D. Tenn. 2018) (quoting Watkins v. Synchrony Bank, No. 4:15-CV-00842, 2015 U.S. Dist. LEXIS 118202, 2015 WL 5178134, at *5 (M.D. Penn. Sept. 4, 2015)) (dicta). While that risk may be lower where the plaintiff’s TCPA claim far exceeds the defendant’s counterclaim for the underlying debt, in this case it is unclear what the relative values of the parties’ claims are. Regional’s counterclaim is not nominal, being for nearly ten thousand dollars. Ms. Slaughter’s claim, however, is based on an unspecified number of violations. Thus, the Court cannot say that the risk of a chilling effect in cases such as this is low. The Court also cannot say that the values of judicial economy or convenience will be greatly served by the exercise of jurisdiction here. . . As discussed above, however, the facts the parties must establish and the evidence they will likely give in proving their respective claims are largely different. Thus, whatever gains are made in economy and efficiency are unlikely to be significant. Comity also supports declining jurisdiction, because Regional may sue Ms. Slaughter in state court and use any judgment obtained there as a set-off to any judgment Ms. Slaughter obtains here. See Dotson, 2019 U.S. Dist. LEXIS 193764, 2019 WL 5847848 at *7. Thus, in light of the foregoing considerations, the Court declines to exercise supplemental jurisdiction in this case.