Opinion
Case No. 1:03-cv-422
February 9, 2004
OPINION AND ORDER ON PLAINTIFF'S MOTION TO REMAND AND ON DEFENDANT ATT'S MOTION TO DISMISS
Plaintiff JSJ Corporation ("JSJ") filed this action in Michigan's Ottawa County Circuit Court against ATT Corporation ("ATT"). In its complaint, JSJ asserts state law claims of breach of contract, promissory estoppel, and negligence arising from alleged interruptions in voice and data service which ATT allegedly agreed to provide JSJ. JSJ seeks damages of $72,000, alleging that this was the amount of a credit to JSJ's bill to which ATT agreed in order to retain JSJ as a customer.
ATT filed a timely Notice of Removal. In its Notice, ATT asserts that this court has subject matter jurisdiction over the action because it necessarily arises under the Federal Communications Act of 1934, as amended, 47 U.S.C. § 151 et seq. The matter is currently before the court on two motions: (1) Plaintiff's Motion to Remand (docket no. 7), and (2) Defendant ATT's Motion to Dismiss (docket no. 10). Each motion is opposed.
For the following reasons, the court GRANTS JSJ's motion to remand. Because the court lacks subject matter jurisdiction over this matter, the court makes no ruling on ATT's motion to dismiss.
Motion to Remand
Federal law provides that "[a]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). Because ATT has not alleged that the requirements for diversity jurisdiction are satisfied, original jurisdiction must be established pursuant to 28 U.S.C. § 1331, which provides federal district courts with "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." The burden to establish federal jurisdiction is clearly upon the defendant as the removing party. Alexander v. Electronic Data Sys. Corp., 13 F.3d 940, 949 (6th Cir. 1994). If jurisdiction is not established, the required course of action is clear: "the case shall be remanded." 28 U.S.C. § 1447(c).
In its Notice of Removal, ATT asserts that JSJ's state contract and tort claims are "preempted by federal law[.]" Notice of Removal at 2, ¶ 6. However, in response to the motion to remand, ATT now argues that this court has subject matter jurisdiction over this action because a "fair reading" of the complaint reveals that JSJ raises federal claims. Defendant's Response in Opposition to Plaintiff's Motion to Remand at 1.
"Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant."Caterpillar Inc. v. Williams, 482 U.S. 386, 107 S.Ct. 2425, 2429 (1987) (footnote omitted). Where federal question jurisdiction is the asserted basis for removal, "[t]he presence or absence of federal-question jurisdiction is governed by the `well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Id. "The rule makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law." Id.
A corollary of the well-pleaded complaint rule exists, known as the "complete preemption" doctrine. Strong v. Telectronics Pacing Sys., Inc., 78 F.3d 256, 259 (6th Cir. 1996). Under the complete preemption doctrine,
when Congress intends the preemptive force of a statute to be so extraordinary that it completely preempts an area of state law, `any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law.'Id. (quoting Caterpillar, 482 U.S. at 393, 107 S.Ct. at 2430). However, "[r]emoval and preemption are two distinct concepts." Warner v. Ford Motor Co., 46 F.3d 531, 535 (6th Cir. 1995). "The fact that a defendant might ultimately prove that a plaintiff's claims are pre-empted . . . does not establish that they are removable to federal court." Caterpillar, 482 U.S. at 398, 107 S.Ct. at 2432.
In nonremovable cases, the federal preemption defense is decided in state court, subject to review on certiorari in the United States Supreme Court. Id. "Absent complete pre-emption, the plaintiffs in a non-diversity action are masters of their complaint and may avoid federal subject-matter jurisdiction by relying exclusively on state law."Ahearn v. Charter Twp. of Bloomfield, 100 F.3d 451, 456 (6th Cir. 1996). `"Complete preemption' applies only in the extraordinary circumstance when Congress intends, not merely to preempt a certain amount of state law, but also to transfer jurisdiction to decide the preemption question from state to federal courts." Musson Theatrical, Inc. v. Federal Express Corp., 89 F.3d 1244, 1253 (6th Cir. 1996). "Congress has long since decided that federal defenses do not provide a basis for removal[,]" Caterpillar, 482 U.S. at 399, 107 S.Ct. at 2433, and absent complete preemption, a plaintiff may effectively choose not to be in federal court.
ATT has not raised the issue of complete preemption; ATT raises preemption only as a defense. However, even if ATT had argued in support of removal jurisdiction based on complete preemption, such an argument would not succeed. In the past, the Supreme Court has found complete preemption applicable under the Labor Management Relations Act and the Employee Retirement Income Security Act of 1974. El Paso Natural Gas Co. v. Neztsosie, 526 U.S. 473, 119 S.Ct. 1430, 1437 n. 6 (1999); Vorhees v. Naper Aero Club, Inc., 272 F.3d 398, 403 (7th Cir. 2001). More recently, the Court also concluded that the National Bank Act completely preempted any cause of action for usury against a national bank. Beneficial Nat'l Bank v. Anderson, 123 S.Ct. 2058 (2003). However, the majority of federal courts which have considered the question have concluded that the Federal Communications Act does not completely preempt state law claims in the field of interstate telecommunications, Marcus v. ATT Corp., 138 F.3d 46, 54 (2d Cir. 1998): Gattegno v. Sprint Corp., No. CIV A 03-11887-REK, 2003 WL 22955867, at *5 (D. Mass. Dec. 11, 2003);Lewis v. Nextel Communications, Inc., 281 F. Supp.2d 1302, 1306 (N.D. Ala. 2003); Moriconi v. ATT Wireless PCS, LLC, 280 F. Supp.2d 867, 876 (E.D. Ark. 2003); Russell v. Sprint Corp., 264 F. Supp.2d 955, 961 (D. Kan. 2003); Nixon v. Nextel West Corp., 248 F. Supp.2d 885, 891 (E.D. Mo. 2003); Threadgill v. Cingular Wireless, L.L.C., 223 F. Supp.2d 786, 789 (E.D. Tex. 2002);Sapp v. ATT Corp., 215 F. Supp.2d 1273, 1278 (M.D. Ala. 2002); Wisconsin v. ATT Corp., 217 F. Supp.2d 935, 938 (W.D. Wis. 2002); Braco. v. MCI Worldcom Communications, Inc., 138 F. Supp.2d 1260, 1269 (C.D. Cal. 2001); Crump v. Worldcom, Inc., 128 F. Supp.2d 549, 560 (W.D. Tenn. 2001); Bryceland v. ATT Corp., 122 F. Supp.2d 703, 710 (N.D. Tex. 2000); Heichman v. American Telephone Telegraph Co., 943 F. Supp. 1212, 1221-1222 (C.D. Cal. 1995):see also Fedor v. Cingular Wireless Corp., No. 02-3332, 2004 WL 99032 (7th Cir. Jan. 22, 2004) (state law contract-related claims were not preempted by the Federal Communications Act and therefore district court erred in failing to grant plaintiff's motion to remand to state court); In re Long Distance Telecommunications Litigation, 831 F.2d 627, 634 (6th Cir. 1987) (savings clause of 47 U.S.C. § 414 gives plaintiffs the option of pursuing remedy at common law); but see Cahmann v. Sprint Corp., 133 F.3d 484, 488 (7th Cir. 1998) (Federal Communications Act extinguishes right to bring breach of contract suit under state law when the effect of the suit would be to challenge a tariff).
The Supreme Court's decision in ATT v. Central Office Telephone, Inc., 524 U.S. 214, 118 S.Ct. 1956 (1998), cited by ATT, does not support the proposition that this case is removable based on complete preemption. In Central Office Telephone, the Court held that the plaintiff's claims for breach of contract and tortious interference with contract were pre-empted by the federal file-tariff requirements of the Federal Communications Act. 524 U.S. at 216, 118 S.Ct. at 1960. Nothing in the Supreme Court's decision inCentral Office Telephone suggests that that case was a removal case. Central Office Telephone does not counsel that a pre-emption defense cannot be applied in state court.
Likewise for the case of Boomer v. ATT Corp., 309 F.3d 404 (7th Cir. 2002), on which ATT also relies. Nothing inBoomer indicates that removal of an action of this nature is proper based on complete preemption.
Applying the complete preemption corollary under the circumstances presented here would essentially mean that every dispute over a phone bill would become a federal case whether or not the plaintiff elects to plead claims based on federal law. "Of vital importance is understanding that removal jurisdiction in this type of situation does not rest upon a finding that the state claims are preempted, but upon a finding that Congress clearly intended for removal jurisdiction to be available" Little v. Purdue Pharma, L.P., 227 F. Supp.2d 838, 855 (S.D. Ohio 2002) (granting motion to remand in action asserting state law claims arising from plaintiffs' use of prescription drug OxyContin; rejecting defendants' arguments that case was removable because the subject matter was governed by the federal Food, Drug and Cosmetic Act and Controlled Substances Act). In the absence of clear indications from Congress of an intent for removal to be available, the court refuses to adopt the position that removal jurisdiction is available in all cases where the plaintiff's claims may have merely some relation to matters regulated by the Federal Communications Act.
Finally, ATT relies on the "artful pleading doctrine" in support of its argument that this action is properly removable to federal court. "Allied as an `independent corollary' to the well-pleaded complaint rule is the further principle that `a plaintiff may not defeat removal by omitting to plead necessary federal questions.'" Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 118 S.Ct. 921, 925 (1998) (quoting Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 103 S.Ct. 2841, 2853 (1983)). "If a court concludes that a plaintiff has `artfully pleaded' claims in this fashion, it may uphold removal even though no federal question appears on the face of the plaintiff's complaint." Rivet 118 S.Ct. at 925.
It is questionable whether the "artful pleading doctrine" can be considered to be separate from the doctrine of complete preemption. See Id. ("The artful pleading doctrine allows removal where federal law completely preempts a plaintiff's state law claim"); see also Crump, 128 F. Supp.2d at 559 ("At least one court has thoughtfully recognized that in the context of this case, the artful pleading doctrine is subsumed by the complete preemption inquiry"). Caterpillar seems to suggest that the "independent corollary" of complete preemption is the only exception to the well-pleaded complaint rule. 107 S.Ct. at 2430. Regardless of whether these two corollaries exist independent of one another, what is clear is that both doctrines assume that the plaintiff indeed has a claim, but one which can only be maintained under federal law. See Cahnmann v. Sprint Corp., 133 F.3d 484, 489 (7th Cir. 1998); see also Bastien v. ATT Wireless Serv., Inc., 205 F.3d 983 (7th Cir. 2000) (affirming acceptance of jurisdiction but declining to review decision to dismiss for failure to state claim, insofar as plaintiff did not appeal grant of dismissal).
Despite ATT's position that federal jurisdiction exists by virtue of JSJ's "artful pleading" of what is essentially a federal claim, ATT has taken the inconsistent course of also seeking dismissal of JSJ's claims "in their entirety and with prejudice" without explaining the substantive standards which govern the supposedly federal claim or claims providing the basis for jurisdiction. Defendant ATT Corp.'s Motion to Dismiss, at 5. In its motion for dismissal, ATT also argues that tariffs filed with the FCC exclusively govern the parties' relationship, but then ATT proceeds to merely repeat its argument that plaintiff's state law claims are preempted. Id. at 3. Finally, ATT's dismissal motion also asserts the doctrine of "primary jurisdiction," arguing that plaintiffs claims are so intertwined with the tariffs that they fall within the special competence of the Federal Communications Commission ("FCC"). Id. at 7. However, ATT fails to comprehend that dismissal with prejudice would not be appropriate under the doctrine of primary jurisdiction. See Brown v. MCI Worldcom Network Serv., Inc., 277 F.3d 1166, 1173 (9th Cir. 2002) (primary jurisdiction provides court with discretion either to retain jurisdiction and stay proceedings or to dismiss without prejudice); Kiefer v. Paging Network. Inc., 50 Supp.2d 681, 686 (E.D. Mich. 1999) (deciding to stay case, rather than to dismiss without prejudice, pending FCC determination of reasonableness of fee). In any event, the court concludes that ATT's reliance on the "artful pleading" doctrine is misguided. What is at issue here is whether complete preemption applies to support removal. The court holds that complete preemption does not apply in this instance to support the assertion of federal removal jurisdiction.
ATT does not appear to grasp the import of its "artful pleading" argument. The argument that JSJ has attempted to artfully plead around what is in essence a federal claim is based on the premise that there is indeed a federal claim subject to federal standards (the standards here being embodied in the filed tariffs). See Brown v. MCI Worldcom Network Serv., Inc., 277 F.3d 1166, 1169 (9th Cir. 2002) (plaintiff who alleged overcharging by telephone service provider properly stated claim under federal law to enforce existing FCC-approved tariff). However, notwithstanding ATT's invocation of federal question jurisdiction, ATT would have any federal claim evaporate once the court assumes jurisdiction. Under the circumstances, JSJ may well be correct in observing, as it has, that ATT "desperately does not want this lawsuit heard by this Court or any court." Plaintiff's Brief in Opposition to Defendant's Motion to Dismiss at 1.
Motion to Dismiss
As noted above, ATT has moved for dismissal, arguing that the court should dismiss this case in its entirety with prejudice. However, because this court concludes that it lacks subject matter jurisdiction over this controversy, the court has no authority to rule on the substance of the motion to dismiss. After remand, ATT should request a ruling from the Michigan court on its motion. Nothing in this decision should be construed as expressing any views on the merits of ATT's motion.
Attorneys' Fees
As part of its motion for remand, JSJ requests that the court order ATT to pay JSJ's costs, expenses, and attorneys' fees incurred as a result of the removal.
Title 28 U.S.C. § 1447(c) provides that "[a]n order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." Upon due consideration, the court concludes that JSJ is entitled to an award of costs, expenses, and attorneys' fees, limited to those reasonably incurred in filing its motion to remand. JSJ shall, within 14 days from the date of this order, file a properly-supported petition detailing the amount sought pursuant to § 1447(c). ATT shall have 10 days thereafter in which to respond to the specifics of the amount sought.
CONCLUSION
The court concludes that federal jurisdiction is lacking and removal was improper. The court therefore grants plaintiff JSJ's Motion to Remand. JSJ's claims against ATT are hereby remanded to the Ottawa County Circuit Court. This remand is effectively immediately, notwithstanding JSJ's outstanding request for attorneys' fees pursuant to 28 U.S.C. § 1447(c).Because this federal court lacks subject matter jurisdiction over this action, the court makes no ruling on ATT's Motion to Dismiss.
The Clerk of Court for this district shall cause a certified copy of this order to be mailed to the Clerk of the Ottawa County Circuit Court.