Opinion ID: 752071
Heading Depth: 2
Heading Rank: 1

Heading: Removal of Marcus Complaint to Federal Court

Text: 9 Any action that was originally filed in state court may be removed by a defendant to federal court only if the case originally could have been filed in federal court. 28 U.S.C. § 1441(a); see Hernandez v. Conriv Realty Assocs., 116 F.3d 35, 38 (2d Cir.1997). Where, as here, there is no diversity of citizenship, federal-question jurisdiction is required for removal. Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987); 28 U.S.C. § 1331. On this appeal, the Marcus appellants claim that removal was improper and that the district court erred in denying their motion to remand their class action to state court. 10 The presence or absence of federal question jurisdiction is governed by the well-pleaded complaint rule. That rule provides that federal question jurisdiction exists only when the plaintiff's own cause of action is based on federal law, see Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 43, 53 L.Ed. 126 (1908), and only when plaintiff's well-pleaded complaint raises issues of federal law, see Gully v. First Nat'l Bank, 299 U.S. 109, 112-13, 57 S.Ct. 96, 97-98, 81 L.Ed. 70 (1936). Under the well-pleaded complaint rule, the plaintiff is the master of the complaint, free to avoid federal jurisdiction by pleading only state claims even where a federal claim is also available. See Caterpillar, 482 U.S. at 392, 107 S.Ct. at 2429-30. 11 Generally, a complaint that pleads only state law causes of action may not be removed to federal court even where Congress has chosen to regulate the entire field of law in the area in question. A claim that federal law preempts all state law remedies is usually only a defense to the state law action, and a case generally may not be removed to federal court on that basis, even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue. Id. at 393, 107 S.Ct. at 2430; see also Hernandez, 116 F.3d at 38; Richard H. Fallon, et al., Hart & Wechsler's The Federal Courts and the Federal System 949 (4th ed.1996). 12
13 One so-called exception to the well-pleaded complaint rule is the complete preemption doctrine, which has been explained as follows: 14 On occasion ... the pre-emptive force of a statute is so extraordinary that it converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule. Once an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law. 15 Caterpillar, 482 U.S. at 393, 107 S.Ct. at 2430 (internal citations and quotations omitted). The complete preemption doctrine, therefore, is not really an exception to the well-pleaded complaint rule, but a corollary to it. When federal common or statutory law so utterly dominates a preempted field that all claims brought within that field necessarily arise under federal law, a complaint purporting to raise state law claims in that field actually raises federal claims. Therefore, the well-pleaded complaint rule is satisfied, and removal is proper. See Robert A. Cohen, Note, Understanding Preemption Removal Under ERISA § 502, 72 N.Y.U.L.Rev. 578, 584-86 (1997). 16 In this case, AT & T seeks to uphold the district court's denial of the Marcus appellants' motion to remand, claiming that the Marcus claims arise under (1) the FCA and/or (2) federal common law, converting their state law causes of action into ones arising under federal law. AT & T argues that the Marcus action therefore was properly removed pursuant to the complete preemption doctrine. We disagree. 17 We easily dispose of the first claim. As we held in Nordlicht v. New York Tel. Co., 799 F.2d 859, 861 (2d Cir.1986), the FCA does not itself provide a basis for removal pursuant to the complete preemption doctrine. We stated that the mere fact that the [FCA] governs certain aspects of [AT & T's] billing relationships with its customers does not mean that [the appellants'] claims arise under the Act. Id. Nordlicht precludes AT & T's argument that the FCA completely preempts traditional [state] common law claims. 18 We also disagree with AT & T that federal common law provides a basis for removal. Federal common law applies only in those limited situations where a uniform national rule is necessary to further the interest of the federal government, such as claims involving the obligations and rights of the United States and its officials or in those few areas involving uniquely federal interests. Boyle v. United Technologies Corp., 487 U.S. 500, 504, 108 S.Ct. 2510, 2514, 101 L.Ed.2d 442 (1988). The Supreme Court has cautioned against the broad use of federal common law. See, e.g., Miree v. DeKalb County, 433 U.S. 25, 31-32, 97 S.Ct. 2490, 2494-95, 53 L.Ed.2d 557 (1977) (federal common law does not govern aircrash survivors' suit against county as third-party beneficiaries of a contract between the county and federal government). In Nordlicht, we held that the class action plaintiffs' state law fraud claim, challenging the fraudulent billing practices of a carrier, was removable to federal courts under the doctrine of complete preemption based upon the preemptive force of federal common law in the area of interstate telecommunications. We reasoned that, although the FCA itself did not provide for complete preemption of state law fraud claims, the enactment of such comprehensive legislation regulating telecommunications carriers evidenced Congress's intent to create a uniform system of federal common law for the adjudication of the liabilities and obligations of carriers. 799 F.2d at 862. See also, Ivy Broadcasting Co. v. American Tel. & Tel. Co., 391 F.2d 486, 491 (2d Cir.1968). Thus, while the Nordlicht court did not allow removal based directly on the FCA, it did allow removal on the basis of federal common law, relying on the comprehensive nature of the FCA and the regulatory scheme which it engendered. 19 Subsequent to Nordlicht, however, the Supreme Court decided Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65-66, 107 S.Ct. 1542, 1547-48, 95 L.Ed.2d 55 (1987), in which the Court sharply circumscribed the availability of removal based on complete preemption. Specifically, the Court held that the doctrine applies only in the very narrow range of cases where Congress has clearly manifested an intent to make a specific action within a particular area removable. Id. at 66, 107 S.Ct. at 1548. Justice Brennan cautioned in his concurrence in Metropolitan Life: 20 The Court holds only that removal jurisdiction exists when, as here, Congress has clearly manifested an intent to make causes of action ... removable to federal court. In future cases involving other statutes, the prudent course for a federal court that does not find a clear congressional intent to create removal jurisdiction will be to remand the case to state court. 21 481 U.S. at 67-68, 107 S.Ct. at 1548 (Brennan J., concurring) (internal citation omitted). The limited applicability of the complete preemption doctrine is evidenced by the fact that the Court has only approved its use in three areas: (1) claims under the Labor Management Relations Act by a labor union against an employer under a collective bargaining agreement, see Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557, 561-62, 88 S.Ct. 1235, 1237-38, 20 L.Ed.2d 126 (1968), but not claims arising from individual employment contracts, see Caterpillar, 482 U.S. at 398-99, 107 S.Ct. at 2432-33; (2) Employment Retirement and Insurance Security Act (ERISA) suits by a beneficiary, see Metropolitan Life, 481 U.S. at 66-67, 107 S.Ct. at 1547-48, but not suits by a state against an ERISA plan, see Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 25-26, 103 S.Ct. 2841, 2854-55, 77 L.Ed.2d 420 (1983); and (3) certain Indian land grant rights, see Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 666-67, 94 S.Ct. 772, 776-77, 39 L.Ed.2d 73 (1974). Thus, after Metropolitan Life, it is clear that the complete preemption doctrine applies only where Congress has clearly manifested an intent to disallow state law claims in a particular field. 22 Given the narrow scope of the complete preemption doctrine after Metropolitan Life, absent some express statement or other clear manifestation from Congress that it intends the complete preemption doctrine to apply, we believe that federal common law does not completely preempt state law claims in the area of interstate telecommunications. The FCA not only does not manifest a clear Congressional intent to preempt state law actions prohibiting deceptive business practices, false advertisement, or common law fraud, it evidences Congress's intent to allow such claims to proceed under state law. The FCA's savings clause states that nothing in the FCA shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this chapter are in addition to such remedies. 47 U.S.C. § 414 (emphasis added). Moreover, while the FCA does provide some causes of action for customers, 1 it provides none for deceptive advertisement and billing. After Metropolitan Life, it would be disingenuous to maintain that, while the FCA does not preempt state law claims directly, it manages to do so indirectly under the guise of federal common law. 23 Furthermore, while the FCA does evidence a federal interest in uniformity of charges in telecommunications, see Boyle, 487 U.S. at 504, 108 S.Ct. at 2514, it does not indicate a uniquely federal interest, of the scope required for the application of federal common law, in preventing a carrier from misrepresenting the nature of its rates to its customers. The states may have an equal or greater interest in preventing such conduct as manifested by state consumer protection laws. 24 AT & T points to the recent Seventh Circuit decision in Cahnmann v. Sprint Corp., 133 F.3d 484 (7th Cir.1998) to support its claim of complete preemption. In Cahnmann, customers of Sprint, a long distance carrier, brought a class action in Illinois state court against Sprint alleging various state law breach of contract and fraud claims. The plaintiffs alleged that Sprint offered a year of free long distance telephone calls on Fridays to small business customers who agreed to subscribe to Sprint and who made certain minimum volume commitments. However, once the plaintiff class subscribed to Sprint, the carrier amended the applicable tariff, deleting several countries from the Fridays Free program. The plaintiff in effect sought to have the Illinois court throw out the amended tariff on the ground that this tariff violated the contract to provide service pursuant to the original tariff. Id. at 488. 25 Although the complaint purported to raise only state law claims, Sprint removed the case to federal district court. The district court allowed removal, reasoning that a suit to invalidate a filed tariff necessarily arises under federal law. Id. The Seventh Circuit affirmed. The court noted, correctly, that [a] tariff filed with a federal agency is the equivalent of a federal regulation. Id. at 488. It concluded that since the federal regulation defines the entire contractual relation between the parties, there is no contractual undertaking left over that state law might enforce. Federal law does not merely create a right; it occupies the whole field, displacing state law. Id. (citing, inter alia, Metropolitan Life, 481 U.S. at 63-64, 107 S.Ct. at 1546-47). Applying the artful pleading doctrine, see Section I.B., infra, the court decided that the case [was] removable to federal court even [though] the plaintiff[s] strenuously avoid[ed] mention of federal law in [their] complaint. Cahnmann, 133 F.3d at 490. The court went on to conclude that the plaintiffs' claims of fraud were completely preempted as well. Id. at 490-91. 26 While we agree with the Cahnmann court that the breach of contract claim at issue in that case actually arose under federal law, we cannot agree with Cahnmann's broader implications that every state law claim challenging a carrier's rates or billing practices necessarily arises under federal law. After Metropolitan Life, there is no complete preemption without a clear statement to that effect from Congress. Neither AT & T nor the Seventh Circuit has identified such a statement in the FCA. While federal law may dominate the consideration of most claims against telecommunications carriers, only Congress can say that federal law dominates the form of these claims as well. 27 In sum, the doctrine of complete preemption does not support removal of these actions. To the extent that Nordlicht may be read to express a contrary view, it is no longer the law after Metropolitan Life. 28
29 AT & T makes an alternative argument in support of removal. It asserts that the Marcus appellants' breach of warranty claim, although presented in the complaint as a state law claim, in reality arises under federal law and therefore provides an alternative basis for removal jurisdiction pursuant to the artful-pleading doctrine. The artful-pleading doctrine, another corollary to the well-pleaded complaint rule, prevents a plaintiff from avoiding removal by framing in terms of state law a complaint the real nature of [which] is federal, regardless of plaintiff's characterization, or by omitting to plead necessary federal questions in a complaint. Derrico v. Sheehan Emergency Hosp., 844 F.2d 22, 27 (2d Cir.1988) (internal quotations and citations omitted); see In re Agent Orange Prod. Liab. Litig., 996 F.2d 1425, 1430 (2d Cir.1993) ([A] complaint which appears to be grounded solely in state law actually may be federal in nature, and thus removable, if its true nature has been disguised by the plaintiff's artful pleading.); Travelers Indemnity Co. v. Sarkisian, 794 F.2d 754, 758 (2d Cir.1986) ([I]n certain limited circumstances a plaintiff may not defeat removal by clothing a federal claim in state garb, or, as it is said, by the use of 'artful pleading.' ). 30 AT & T argues that the breach of warranty claim necessarily arises from AT & T's only contract between it and its customers--the tariff filed with the FCC in accordance with 47 U.S.C. § 203(a). Because the tariff is filed with the FCC pursuant to the FCA, AT & T argues, the breach of warranty claim arises under federal law. We agree, and on this basis we affirm the district court's order denying the Marcus appellants' motion to remand. 31 The Marcus appellants' breach of warranty claim alleges that by choosing defendant as their long distance telephone carrier or by using defendant for making long distance calls using residential service, [the Marcus appellants] entered into agreements for long distance telephone service with AT & T. See Marcus Complaint p 42. The complaint further alleges that those agreements contain two warranties: (1) that defendant would disclose the true nature of its billing practices for residential long distance telephone calls and (2) that defendant would bill in a manner that would result in 'True Savings' to its customers. Id. 32 In essence, the Marcus appellants' breach of warranty claim seeks to enforce the terms of the agreements between AT & T and its customers. Although the Marcus appellants do not expressly identify the source of these agreements, the only possible source is the tariffs filed in accordance with the FCA. Cf. Derrico, 844 F.2d at 28. The legal relationship between AT & T and its customers is defined by the tariffs, which consist of the terms and conditions of the common carrier's service and rates, that AT & T is required to file and maintain with the FCC under the FCA. American Tel. & Tel. Co. v. City of New York, 83 F.3d 549, 552 (2d Cir.1996); see Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17, 19 (2d Cir.1994). Moreover, federal tariffs are the law, not mere contracts. MCI Telecommunications Corp. v. Garden State Inv. Corp., 981 F.2d 385, 387 (8th Cir.1992). See also American Tel. & Tel. Co. v. City of New York, 83 F.3d at 552 (filed tariffs have the force of law and are not simply contractual.); Carter v. American Tel. & Tel. Co., 365 F.2d 486, 496 (5th Cir.1966) ([A] tariff, required by law to be filed, is not a mere contract. It is the law.). The tariffs conclusively and exclusively enumerate the rights and liabilities of the contracting parties. American Tel. & Tel. Co. v. New York City Human Resources Admin., 833 F.Supp. 962, 970 (S.D.N.Y.1993) (emphasis added); United States v. DeBerry, 487 F.2d 448, 449 n. 1 (2d Cir.1973); Tishman & Lipp, Inc. v. Delta Air Lines, 413 F.2d 1401, 1403 (2d Cir.1969). See also MCI v. Garden State Inv., 981 F.2d at 387. Therefore, the breach of warranty claim necessarily raises a substantial federal question over which federal courts may properly exercise jurisdiction. We therefore affirm so much of the district court's order that denied the Marcus appellants' motion to remand and hold that removal was proper. 33