Opinion ID: 752071
Heading Depth: 3
Heading Rank: 1

Heading: Complete Preemption as a Basis for Removal

Text: 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