is one of a series of suits arising from the california state attorney general's investigation of the california energy crisis but there is nothing peculiar to the energy crisis promised to hold power in reserve they did not hold in reserve and they sold power out of that reserve is just ordinary contact having nothing to do with the federal power act as a result of this conduct californians were  of millions of dollars for services that were never provided the attorney general filed these consumer protection cases in state court pursuant to state law on behalf of the people of the state of california they were moved to federal court for the past year we have been largely litigating the issue of why these cases are in federal court and the attorney general said minutes this issue is dispositive of this case the federal court  never should have started jurisdiction over these cases federalism the balance of power between the states and the federal government is what is that issue in these cases the district court was found to interpret its removal jurisdiction narrowly it interpreted it broadly the district court was bound to interpret the preemptive effect a federal law narrowly interpreted it bro cannot be removed and lastly could be brought in federal court no one has argued no one has argued in this case that the attorney general could have brought this suit originally in federal court that's number one number diction those two are expressed preemption which no one has argued is true in this case and complete reaction which again no one has argued exists in this case primarily because there is no federal ha's of action that could have been brought on behalf of the people of the state of california to address the can sue or protection issues raised by these cases neither d an exclusive jurisdiction clause the federal court had federal subject matter tourist section over the claim even though only state causes of action were alleged in that case it's a cause of action that were alleged for four against the pan american however the supreme court ruled that an identical prevention under the n g a which is treated identically for purposes of statutory interpretation as the f b i did not provide a federal cause of action preempted the state claims it did your honor but in that case the national bank act provided a federal cause of action for usury claims against national banks what the court said in that case is it would not be enough for the contacts to have to have violated section eighty five of the national banking act it was also necessary to find that section eighty six provided to federal cause of action demonstrating clear congressional intent to preempt state causes of action in fact with the court said in that case was that it was not enough to find that federal intent was to remove state causes of action that the court had to be able to find the congress's intent was to provide the ex if beneficial was not dispositive on this question under the precedents of this circuit prior to that official namely duncan and on from are these cases were not the root of all the causes of action stated in these complaints rely on state law as well as federal law there's only one cause of action plan in each complaint each of them has three independent basis for recovery an which would be a defense on the substantive merits of the claim but it would not establish the jurisdiction of the federal courts to entertain the claim in the first place i answered your question not satisfactorily but you certainly have and so you are i think the cases that you are referring to don't in fact this stablish that the federal courts can take jurisdiction for instance this court ruled in brown versus i that the plaintiff could pursue a cause of action and for violation of the tariff to recover charges that were made in excess of the tariff straight so i think there is a substantial body of law showing that these cases can move forward one of the supreme court cases are lost supreme a case that found the file great doctrine barred the remedy christie did in state court and there was no mention made that that haste could never have been brought in state court so i think there is a substantial body of law showing that even though there may be a defense based on the or on federal preemption which we claim would not prevail here those defenses do not create federal jurisdiction to return to duncan your honor under that case having i think will think my theory to support the claim will be enough to take the case out of the realm of federal jurisdiction under the well pleated complaint rule the plaintiff is permitted to avoid federal jurisdiction in this way and that is exactly what the attorney general did in this case by asserting state law claims pursuant to a state statu regulatory expression that expression cannot expand the jurisdiction of the courts beyond that which congress has allowed court cases dating from hans few louisiana has held that we are not limited to the literal terms of the eleventh amendment in determining the scope of the state sovereign immunity we have to look at the structure of the constitution and the causes of action at the time the constitution was adopted that could have been brought against the state absent a waiver of sovereign immunity one manifestation of the state sovereign immunity is the privilege to avoid a federal trial you know and the eleventh amendment that stated in terms of the state being sued but it is no less applicable in the state's case in federal court or you're in federal court seems to me that you don't have much of an eleven minute argument left the you've weighed in have you know now we haven't brought suit in federal court your honor if i said that i misspoke the cases were filed in state court it was a removal case it was a case in which a suit brought by the state of kansas was removed to the circuit court pursuant to the act of eight hundred seventy five which established federal question session removal jurisdiction in that case the state of kansas did not object to removal per se to the federal courts what it affected to was removal to the circuit court rather than pursuant to the original jurisdiction the supreme court later and huntsville who feel we see at all we have a true sovereign immunity case later we have illinois in her and there's no discussion of aims because it was not a sovereign immunity case in illinois there is discussion of things in that case the state brought suit in federal court and the question was indicate that remove all or jurisdiction is without regard to the character of the parties that doesn't address the question of sovereign immunity and the limitation of sovereign immunity on the article three authority of the court so ins in illinois has not decided this issue this court has not decided the issue and if you must be decided pursuant to the sovereign immunity your honor in a sense stole my opening line with your opening question which is that if we get to the merits the district court correctly found that there are two separate but related grounds for dismissal preemption and the filed rate doctrine that both defenses apply follows necessarily from the straightforward application of recent decisions  the main controversy appears to be over jurisdiction on the jurisdictional issue as with americans all we asked the court to do is apply a stablished law of this response well let's first of all it's important to understand what sparta decided which is specifically that even where claims are stated  terms if the complaint seeks relief quote based in part upon close quote purported violation of the n a s d rules then it falls within the exclusive jurisdiction provision of the securities act at issue there according to this court quote because spartacist complaint sought relief based upon violation of federal exchange rules subject matter jurisdiction which specifically vested in the federal district court because quote by in that case fifteen u s c section seventy eight gov that appears that one fifty nine hundred thirty two eleven securities feel well there's no rationale for doing that as i pointed out the jurisdictional provisions are identical and the other porton point also conceded by the attorney general is that their complaint in part seeks relief based on a violation of federal statute so there is no logical distinction between the theory advanced here and the theory advanced inspired now what about beneficial bank does that change the equation well let's know first of all that the jurisdictional statute that we rely on equity and actions that law brought to enforce any liability or duty created by or to enjoin any violation of this chapter or any rule regulation or order there under close  in other words we're outside the standard federal question jurisdiction arena and in the arena where congress has passed a special jurisdictional statute giving federal courts jurisdiction to do now it wouldn't take any of the of the regulations or statutes relating to federal interview commission to make that a cause of action that's a cause of action that is created either by common law or by the statutes of the state of california and so if we just put a focus on that  surely these defendants are not immune from some claim of common law or statutory fraud just because they can say well what we were doing that we were violating the rules of fur or we were violating  tariff we can't be subjected to your claim of common law fraud because the all of the common law fraud that you're going to prove is also going to be a violation of ali so the statute says somebody else censors now is that in too narrow a statement of what they've come up with i think it is a bit too narrow but even if this even if the situation were as narrow as you posit that my answer would be they are mean and you've already decided that issue in both and in in particular because there were fraud claims in tank that explicitly were found to be barred by the preemption and filed rate defenses that we raised here that would take total preemption to do and they can get away with fraud as far as no no no as far as staying out of state court as long as they are doing so they violate federal law well the the answer is that in this area the remedy for the fraud according to tank is with first not with the state courts and so the answer is yes that's precisely what tank holds the other thing i would say is that as a practical matter if you look at the tariff and the way in which the market operates engines here in order to establish fraudulent conduct you really have to look at what the tar durex authorized and how it defines the way in which the market works the core issue of fraud would have to be that sas in light of the language of the the market operates in unison one of the allegations of fraud that they were selling power or reserving capacity that they never intended to abide by their entering into a contract they had no intention of obeying fail if the fact is that they were contracting to do things that they had no intention of doing but when you get into the the facts the determination is going to be whether or not improperly and with a tariff i would direct your honor to the discussion in tank at two ninety five fed thirty page nine twenty eight where the court is discussing the tort and property claims that were asserted in that case and according to the court quote what tank seeks to achieve by its toward and property claims would defeat the entire purpose of exclusive federal regulation there of interstate transmission of electricity quote ferk alone subject to court review of its final decision can modify that decision on allocation and here's the rest of the language or deal with any party who operates the intertie improperly because quote these are issues fair not for states let me go back to the jurisdictional issue rather than the defense if i may we were in only two circumstances when congress expressly so provides or there is complete preemption they draw that principle from beneficial bank part authorizes clearly removal  separate circumstance that says that there's a special jurisdictional statute like this you can remove there's a necessarily federal question presented why is beneficial not inconsistent with sparta two reasons come immediately to mind first the cases interpret different statutes the entire framework of the well pleaded complaint rule and the complete preemption exception to that  it's simply a way of determining when a case arises under federal law for purposes of stablish in jurisdiction under twenty eight u s c section thirteen thirty one for example the discussion of the supreme court sparta by contrast finds jurisdiction under fifteen u s c section seventy eight double a and here of course the jurisdiction is under the companion provision of the federal power act and they say they just read differently and therefore the issues that the court was addressing in beneficial back are not the same all right but suppose we were relying in part on thirteen thirty one the a g misreads the beneficial bank victim only it can't mean what they argue that it means even if this were a section thirteen thirty one case under many supreme courts think fans of the well pleaded complaint rule for those arising under cases the courts have jurisdiction to hear quote cases in which a well pleaded complaint establish rem franchise tax board for sixty three us at twenty seven twenty eight but that's just an example of a number of cases one at least three occasions the supreme court expressly upheld removal under the well pleaded complaint rule where the plaintiff's cause of action was created by state law but required the resolution  question and was not within the complete preemption line of cases the most recent of these is the one that i think is the most significant city of chicago versus international interpretating beneficial danke as abolishing the razor is a substantial federal question rule and limiting removal to complete preemption situations would mean that the supreme rehnquist o'connor kennedy souter and grier who all joined in the international college of surgeons opinion and joined the majority opinion and beneficial thing reversed themselves without comment in the span of six years that's more than a well then what's happened what how does one explain the only language in beneficial bank  answer is that the complete preemption exception to a well pleaded complaint applies when it isn't beneficial bank the complaint quote does not refer to any federal law close then perhaps you either have to say there is complete preemption or come up with a special removal statute if jurisdiction is based on the arising under federal question jurisdiction provision originally here the complaint however does refer to federal law just like the complainants part violations of the iso tariff or alleged as one basis for the state law cause of action a case that rises under federal law when the complaint relies in part on federal law and thus raises the question of whether the resolution of a state created cause of action necessarily involves a substantial question of federal law florida this court's decision and arco in this case resent the problem of what do you do if the complain does mention a federal issue not the situation dealt with in beneficial than if your honor prefers we would be willing to submit a letter brief on this issue since it did come up  fairly late in the process i think that the affirmative defenses on which we rely are well established in the  considered only whether the court's jurisdiction over suits brought by states was exclusive and didn't find any indication of the opinion or names that says that the central issue here the presented for consideration and one is whether a suit brought by a state in one of its own courts against a corporation can be removed to the circuit court of the united states  jurisdiction of for absolutely not your honor in fact mr houlihan with a twenty five c which is pretty broad maybe twenty five your honor in talking about sparta mr hu i had fails to deal with an american which serve as a justice with the language that gives me trouble here the district courts the united states shall have exclusive jurisdiction of violations of this chapter of the federal power or the rules regulations or orders they're under  that's pretty broad if you're talking about interpret in tariffs it's very broad language your honor but what the supreme court held in pan american is that jurisdiction is only exclusive for causes of action that arise under the act there is no cause of action here at that arises under the act to vindicate the consumer protection claims asserted by the attorney general that is squarely at odds with the interpretation of  that the generators for urging here there is no cause of action under the f d a that could have been alleged that is why sparta does not apply this is clear from a long line of supreme court cases i'm not familiar with the city of chicago taste that mr houlihan mentioned but i am familiar with smith and hopkins smith was a case which was a facial constitutional challenge facial constitutional challenge to a federal statute is always arising under period so i think we can take that case out of the running the hopkins case was a case  whether there was a federal statute that authorized the cause of action or not in that case the jurisprudence of the supreme court on this matter has changed significantly over time however in a long line of cases franchise tax board caterpillar gali rivet homes before nato the supreme court has emphasized over and over again the significance particularly these two what the significance in terms of  even if mr houlihan is correct his argument with now because there is nothing necessarily federal about this claim even if the attorney general were to didn't govern and its language is certainly broad enough to cover the situation the earlier pressure sensors this court would clearly establish that the federal court was without jurisdiction to hear these claims yes there are certain situations and will remain officials can be sued prospect of playing in federal court no but i'm talking about the removal of the state of a state case law enforcement case honor i had not thought about it in terms of younger but the answer to your question is we are not arguing that the eleventh amendment prohibits all removal with the status of plank if we could i'm sure that there's no fourteenth amendment implied your honor i'm not familiar with the line of cases that you're referring to but i think the answer to your question is from now absolutely your time has expired i do have one housekeeping matter i would like to ask both counsel on the court's own time we have recently received a document called suggestion of stay with respect to the morans corporation which is attached to the bankruptcy court order do you have any advice stay in the sense that bankruptcy courts usually do that and i kind of had the impression i haven't followed it maybe as closely as i should but it simply took a hands off attitude that it didn't decide whether or not the automatic i think that well first of all the cases the cases are separate cases even though they've been consolidated i take it you represent miranda you know is miranda represented and we're here well week didn't use that language to the didn't use the language lifted no case to go forward ok and it further held quite specifically that it was not reaching the issue at this time of whether the state would in fact apply the parties also if we agreed that the appeals could go forward  so it's your assurance that whatever we do we're not running afoul of any bankruptcy court orders or bankruptcy law well i can tell you with the bankruptcy court rules all right for him under the counsel for the state and counsel from right and i had erroneously assume that you were speaking for all of the parties would notify us as to their understanding of where this bankruptcy matter is and to what extent are we free to proceed with respect court will adjourn for the day