Opinion
Civil No. 04-180-GPM.
July 21, 2004
MEMORANDUM AND ORDER
Before the Court is Plaintiff's motion to remand (Doc. 14) which was argued June 21, 2004. For the reasons stated in this Order, the motion to remand is denied.
Plaintiff, Tamara Chandler, challenges cellular phone service agreements entered into with Defendant, ATT Wireless Services, Inc. ("ATT"). As part of its term plans (contracts entered into for a specified period of time) with customers, ATT charges an "Early Cancellation Fee" ("ECF") when a customer decides to terminate service at any time before the end of the term of the agreement. The amount of the charge is the same regardless of when the customer terminates the service, as long as such service is cancelled before the term of the agreement expires. Chandler challenges ATT's utilization of the ECF as a valid liquidated damages provision.
Does the Court have subject matter jurisdiction? The Federal Communications Act of 1934 ("FCA"), 47 U.S.C. §§ 151 et seq., completely preempts any state law claims affecting a cellular provider's rates or market entry. See 47 U.S.C. § 332(c)(3)(A). More specifically, FCA § 332 provides "no State or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service or any private mobile service, except that this paragraph shall not prohibit a State from regulating the other terms and conditions of commercial mobile services." Id.
ATT asserts federal question jurisdiction under 28 U.S.C. § 1331 because Chandler's claims attack the rates charged for cellular service and are, therefore, preempted by federal law pursuant to FCA § 332. See 47 U.S.C. § 332(c)(3)(A). Chandler argues the ECF is not related to the rates charged by ATT but is instead a penalty and, thus, part of the "other terms and conditions" of the service agreement. The question is whether Chandler's claims challenge the rates of the service agreements.
This case is similar to Redfern v. ATT Wireless Services, Inc., Civil No. 03-CV-206-GPM (S.D. Ill. June 16, 2003). There, the defendant argued that the early termination fee was an essential component of the rates charged for its mobile services. In support of its contention, the defendant explained that lower rates are offered on term plans because the early termination fee accounts for planned future earnings. On the other hand, plans with no expiration date charge higher rates because there is no early termination fee.
ATT makes the same arguments here as it did in Redfern. It seems clear that the ECF is directly connected to the rates charged for mobile services, and any challenge to such a fee is preempted by federal law. 47 U.S.C. § 332(c)(3)(A); see also Bastien v. ATT Wireless Services, Inc., 205 F.3d 983, 986-987 (7th Cir. 2000) ("There can be no doubt that Congress intended complete preemption when it said `no State or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service.'") (emphasis in original).
In support of her position, Chandler relies on a line of cases based on the early termination fees of cellular providers that were remanded to state courts. Kinkel v. Cingular Wireless, et al., Civil No. 02-CV-999-GPM (S.D. Ill. Nov. 8, 2002); Zobrist v. Verizon Wireless, et al., No. 02-CV-1000-DRH (S.D. Ill. Dec. 3, 2002); Votava v. Sprint Spectrum, L.P., No. 02-CV-0932-DRH (S.D. Ill. Dec. 10, 2002). Those cases, however, are distinguished from this case in that this case involves the use of different rate plans with different durations.
Unlike in those cases, here ATT treats its rates differently depending on the multiple plans it offers to customers — plans with defined term periods and plans without term requirements. ATT offers lower monthly rates on term plans because such plans include a liquidated damages provision (the ECF), which allows ATT to recover expected revenues. In Kinkel, this Court noted "there is no question that a cellular provider could fashion an LDP that is undisputedly an integral part of its rate structure." Kinkel at 3. Furthermore, the Court stated that "if the LDP [liquidated damages provision] was prorated or adjusted according to the term of the agreement, this Court would look at things differently." Id. at 4 (emphasis added). Because ATT treats such plans and their respective rates differently, the arguments relied upon by Chandler do not apply here.
In addition, because the nature of Chandler's claims would necessarily require an examination of the reasonableness of the rates charged by ATT, such claims are preempted under the FCA. See 47 U.S.C. § 332(c)(3)(A); see also Fedor v. Cingular Wireless Corp., 355 F.3d 1069, 1073-1074 (7th Cir. 2004).
Chandler also argues the Court lacks diversity jurisdiction pursuant to 28 U.S.C. § 1332. The Court has federal question jurisdiction so there is no need to reach the issue of diversity jurisdiction.
Accordingly, Plaintiff's motion to remand (Doc. 14) is DENIED.
IT IS SO ORDERED.