Court Opinion

ID: 2994161
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:13:08.26419+00
Date Added: 2024-06-11T11:45:18.856425
License: Public Domain

In the
United States Court of Appeals
For the Seventh Circuit

No. 99-2127
Steven Bastien,

Plaintiff-Appellant,

v.

AT&T Wireless Services, Inc.,

Defendant-Appellee.

Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 99 C 0049--Charles P. Kocoras, Judge.

Argued November 9, 1999--Decided March 6, 2000

  Before Bauer, Easterbrook and Kanne,
Circuit Judges.

  Kanne, Circuit Judge. Steven Bastien
sued AT&T Wireless Services, Inc. in an
Illinois court over his allegations that
the company misled him about his cellular
telephone service. Congress has decreed
that suits related to rates and service
of telephone companies be handled in
federal court, and despite Bastien’s best
efforts at crafting a state-law
complaint, AT&T Wireless exercised its
right to have Bastien’s case removed to
federal court. Bastien challenged the
removal order and the jurisdiction of the
federal district court to hear what he
contended were state law matters. Because
we read Bastien’s complaint to challenge
only AT&T Wireless’s rates and right to
enter the market on the terms specified
by the FCC, we affirm the district
court’s ruling and hold that jurisdiction
over Bastien’s complaint belongs
exclusively to the federal courts.

I.  History
  Until recently, the Chicago wireless
telephone market consisted of Ameritech
and Southwestern Bell (Cellular One).
AT&T Wireless, a subsidiary of AT&T,
entered the market in the late 1990s,
after receiving approval of its rates and
infrastructure arrangements from the
Federal Communications Commission, as
required by federal law. See 47 C.F.R.
sec. 24.1 et seq. To encourage new market
entrants, the FCC allows service
providers to begin operations in an area
before it has fully built out its
network. For this reason, the service
provided by AT&T Wireless in 1998 was far
from flawless.

  In 1998, Bastien signed up as an AT&T
Wireless customer, although his
complaint, filed in state court in Cook
County, provided no information regarding
the terms and conditions of his service
agreement with AT&T Wireless. He quickly
became dissatisfied with the quality of
service. Because of the insufficient
coverage provided by AT&T Wireless’s
network and also because of the inherent
difficulties and unreliability of
wireless service generally, many of
Bastien’s calls were "dropped," that is,
cut off in mid-call. Dropped calls occur
because of interference to the radio wave
carrying the call, such as from tunnels,
buildings and the rare Midwestern hill.
A more fully developed infrastructure
would lose fewer calls because there
would be less chance of interference.

  Upset about the number of dropped calls,
Bastien complained to AT&T Wireless and
was told that he could get refunds either
automatically by redialing the dropped
call within sixty seconds, or by later
calling a customer representative and
having a credit applied to his bill.
Bastien took full advantage of both
options, although he often was unable to
get the automatic rebate by redialing
since a source of interference that
interrupts a call may prevent re-
connection for longer than sixty seconds.
Unhappy that the automatic credit option
did not always work, Bastien complained
to the FCC, but was told that AT&T
Wireless was in full compliance with all
FCC rules.

  Bastien then filed suit in Illinois
state court, alleging that AT&T Wireless
breached its contract with him and
committed consumer fraud. In the
complaint, Bastien alleged that:

9. AT&T Wireless signed up subscribers
without first building the cellular
towers and other infrastructure necessary
to provide reliable cellular connections.

10. As a result, a large proportion of
attempts to place calls on AT&T Wireless’
system are unsuccessful.

11. AT&T Wireless nevertheless continued
marketing and selling its telephones and
telephone service, without regard to the
fact that it knew that it could not
deliver what it was promising.

. . .

23. By signing up subscribers without
first building the cellular towers and
other infrastructure necessary to
accommodate good cellular connections to
such subscribers, with the result that a
large proportion of attempts to place
calls on AT&T Wireless’ system are
unsuccessful, AT&T Wireless violated:

a.   Its contracts; and

b. The implied duty of good faith and
fair dealing under such contracts.

. . .

25. AT&T Wireless violated sec. 2 of the
Illinois Consumer Fraud Act, 815 ILCS
505/2 by committing unfair acts or
practices as follows:

a. Signing up subscribers without first
building the cellular towers and other
infrastructure necessary to accommodate
good cellular communications to such
subscribers, with the result that a large
proportion of attempts to place calls on
AT&T Wireless’ system are unsuccessful;

b. Misrepresenting the quality and
benefits of its products and services;

c. Concealing the material facts that it
did not have the capacity to handle the
volume of its cellular calls; and

d. Failing to have appropriate means for
crediting customers for incomplete calls.

26. AT&T Wireless knew that it was
signing up subscribers without first
building the cellular towers and other
infrastructure necessary to handle the
call range reasonably expected to be used
by such subscribers, and that a large
proportion of attempts to place calls on
AT&T Wireless’ system would be
unsuccessful.

  AT&T Wireless removed the case pursuant
to 28 U.S.C. sec. 1441(b) on the ground
that Congress had expressly preempted
regulation of rates and market entry for
mobile telephone service in the
amendments to the Federal Communications
Act of 1934, 47 U.S.C. sec. 332(c)(3)(A).
That section states that "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. With this preemption
clause in mind, Bastien diligently
attempted to state his claim in terms of
Illinois state law actions. However, AT&T
Wireless contended that Bastien’s
complaint in fact challenged AT&T
Wireless’s rates and right to enter the
market, two subjects specifically granted
to the primary jurisdiction of the FCC.

  Bastien moved under Rule 12(b)(1) to
remand the case to Illinois state court
for lack of federal subject-matter juris
diction, and AT&T Wireless moved for
dismissal of the complaint under Rule
12(b)(6) of the Federal Rules of Civil
Procedure for failure to state a claim.
Because the federal statute completely
preempted the stated actions, Judge
Charles P. Kocoras denied Bastien’s
12(b)(1) motion and granted AT&T
Wireless’s motion to dismiss. Bastien
appealed the denial of the 12(b)(1)
motion to remand the case to state court.
On appeal, he did not brief or argue the
Rule 12(b)(6) dismissal so that issue is
deemed waived. See Sere v. Board of
Trustees, 852 F.2d 285, 287 (7th Cir.
1988)./1

II.   Analysis

  Bastien contends that his complaint
properly set out two claims under
Illinois law--breach of contract and
consumer fraud--that were distinct from
the rates and market entry claims
specifically reserved for the FCC. As
such, Bastien believes that the federal
district court did not have jurisdiction
to hear his case, and the doctrine of
primary jurisdiction, which ordinarily
would refer the case to the
administrative agency, did not apply. If
Bastien’s complaint in fact raises
regulatory issues preempted by Congress,
then the claims would fail as a matter of
law since they are couched in terms of
two state law actions. In that case,
Bastien’s suit properly would be
dismissed.

  It is true that a plaintiff is a master
of his own complaint and may seek to
avoid federal jurisdiction by pleading
only state law claims, see Franchise Tax
Bd. v. Construction Laborers Vacation
Trust for S. Cal., 463 U.S. 1, 10 (1983);
Taylor v. Anderson, 234 U.S. 74, 75-76
(1914); Lister v. Stark, 890 F.2d 941,
943 (7th Cir. 1989), but when that
complaint, fairly read, states a federal
question, the defendant may remove the
case to federal court. See 28 U.S.C. sec.
1441(a)-(b); Burda v. M. Ecker Co., 954
F.2d 434, 438 (7th Cir. 1992) (holding
that court may look beyond face of the
complaint to determine if plaintiff
"artfully pleaded" matters under state
law that actually raise a federal
question). Federal preemption normally
would constitute a federal defense to a
state law action, and therefore would not
support removal from state court. See
Gully v. First Nat’l Bank, 299 U.S. 109,
113 (1936). However, in some instances,
Congress has so completely preempted a
particular area that no room remains for
any state regulation and the complaint
would be "necessarily federal in
character." See Metropolitan Life Ins.
Co. v. Taylor, 481 U.S. 58, 63-64 (1987).
In that situation, removal is proper
despite the well-pleaded complaint rule.
See id.

  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." 47 U.S.C. sec. 332(c)(3)
(emphasis added). This clause completely
preempted the regulation of rates and
market entry, allowing removal to federal
court, although the savings clause
continues to allow claims that do not
touch on the areas of rates or market
entry. Therefore, Bastien’s attempt to
use the "well-pleaded complaint" rule to
shield himself from federal court
jurisdiction would be unavailing if his
complaint in fact challenges rates or
market entry. See Caterpillar, Inc. v.
Williams, 482 U.S. 386, 393 (1987);
Metropolitan Life, 481 U.S. at 65-66
(holding that a purported state law claim
that involves areas preempted by federal
law must be recharacterized as a federal
claim); Bartholet v. Reishauer A.G.
(Zurich), 953 F.2d 1073, 1075 (7th Cir.
1992). We will not be bound by the names
and labels placed on a complaint by the
plaintiff when that complaint in fact
raises a federal question. See Burda, 954
F.2d at 438. The issue is whether
Bastien’s complaint, however denominated,
actually challenges AT&T Wireless’s rates
or market entry. We review de novo the
denial of the 12(b)(1) motion, which
challenges the subject matter
jurisdiction of the federal district
court. See Retired Chicago Police Ass’n
v. City of Chicago, 76 F.3d 856, 862 (7th
Cir. 1996); see also Selbe v. United
States, 130 F.3d 1265, 1266 (7th Cir.
1997).

A.   Preemption and the Savings Clause

  This case asks us to resolve an
ambiguity between two statutory clauses.
First, the preemption clause states that
"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." 47 U.S.C. sec.
332(c)(3)(A). Second, Congress passed a
"savings clause" to the Federal
Communications Act which provided,
"Nothing in this chapter contained 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.
sec. 414.

  At first blush, the savings clause
appears to encompass most actions, but it
is well established that such cannot be
true. To read the clause expansively
would abrogate the very federal
regulation of mobile telephone providers
that the act intended to create. See AT&T
Co. v. Central Office Telephone, Inc.,
524 U.S. 214, 228 (1998) ("[T]he act
cannot be held to destroy itself.")
(citation omitted); Cahnmann v. Sprint
Corp., 133 F.3d 484, 488 (7th Cir. 1998).
Therefore, we have read the savings
clause narrowly to avoid swallowing the
rule, but not so narrowly as to render it
a dead letter. Although most complaints
will involve rates or other issues
specially reserved to federal control, we
have recognized before that some claims
do not and may be addressed in state
court. See Cahnmann, 133 F.3d at 488
(citing In re Long Distance
Telecommunications Litig., 831 F.2d 627,
633-34 (6th Cir. 1987) [hereinafter Long
Distance Litigation]).

  The two clauses read together create
separate spheres of responsibility, one
exclusively federal and the other
allowing concurrent state and federal
regulation. Cases that involve "the entry
of or the rates charged by any commercial
mobile service or any private mobile
service" are the province of federal
regulators and courts. 47 U.S.C. sec.
332(c)(3)(A). The states remain free to
regulate "other terms and conditions" of
mobile telephone service. Id. The
district court aptly characterized the
phrase "other terms and conditions" as
"somewhat enigmatic," and we agree, but
the court’s review of the legislative
history regarding the meaning of this
phrase was unnecessary and not
particularly authoritative since it
reflected only the views of one chamber
of Congress. See Board of Trade v. SEC,
187 F.3d 713, 720 (7th Cir. 1999)
("Legislative history is problematic
under the best circumstances, and even so
reliable a source as the Conference
Committee Report may be used only when
there is a genuine ambiguity in the
statute.").

  Furthermore, this case does not demand
so nuanced a study of the phrase "other
terms and conditions" because the meaning
of "entry of or the rates charged by any
commercial mobile service" adequately
resolves the issue here. In practice,
most consumer complaints will involve the
rates charged by telephone companies or
their quality of service. See Central
Office Telephone, 524 U.S. at 223 ("Any
claim for excessive rates can be couched
as a claim for inadequate services and
vice versa."). As the Supreme Court
recognized in Central Office Telephone, a
complaint that service quality is poor is
really an attack on the rates charged for
the service and may be treated as a
federal case regardless of whether the
issue was framed in terms of state law.
Id. In addition to rates and service,
federal regulations expressly dictate the
terms under which a provider may enter a
new market. The act makes the FCC
responsible for determining the number,
placement and operation of the cellular
towers and other infrastructure. See,
e.g., 47 C.F.R. sec.sec. 24.103
(geographic and population coverage
requirements), 24.132 (narrowband antenna
power and height requirements), 24.232
(broadband antenna power and height
requirements). Congress has expressed its
decision that these areas be reserved
exclusively for federal adjudication, a
point that Bastien does not contest.

  A review of two cases addressing the
divide between the state and federal
spheres will illustrate the point. First,
in Cahnmann, this court held that a
putative breach of contract claim filed
against long-distance carrier Sprint
Corp. belonged in federal court because
the effect of the challenge would be to
invalidate a tariff approved by the FCC.
Cahnmann, 133 F.3d at 489. In the world
of telephone regulation, a tariff is a
proposal filed by the carrier with the
FCC setting out the rates and conditions
at which it intends to offer service to
the public. Once approved by the FCC, the
carrier may not depart from its terms.
Sprint, the defendant in Cahnmann, had
initially filed a tariff offering
customers "Fridays Free" long-distance
service. Id. at 486. The tariff was
approved, and Sprint marketed the deal to
small business customers. For a variety
of reasons, Sprint filed a second,
amended tariff a few months later,
changing the terms of the first tariff.
The FCC approved the amended tariff, and
shortly afterward, a consumer class
action was filed alleging that Sprint
breached its contract with customers who
signed up under the first tariff.
Although the claim intended to sound in
state contract law, we held that a direct
challenge to the legitimacy of an
approved tariff must be litigated through
the federal system. See Cahnmann, 133
F.3d at 490-91. We refused to read the
savings clause to nullify the provisions
of the Communications Act, despite the
clause’s admittedly expansive wording.
See id. at 488; see also Central Office
Telephone, 524 U.S. at 228.

  While instructive, Cahnmann addressed a
different type of claim than the one at
issue here. The plaintiffs in Cahnmann
wielded state law weapons in a facial
attack on an approved tariff. The
plaintiff here, Bastien, does not dispute
AT&T Wireless’s compliance with the FCC
rules or the validity of those rules, but
attempts to use state law as a means of
attacking wrongs that he believes are not
covered by the preemption clause. If that
were true, it would fall within the ambit
of the savings clause.

  A similar situation arose in the Long
Distance Litigation, 831 F.2d at 633-34,
which we noted in Cahnmann, 133 F.3d at
488. In that Sixth Circuit case, the
plaintiffs accused the long-distance
companies of state law fraud and deceit
for failing to tell customers of their
practice of charging for uncompleted
calls. Long Distance Litigation, 831 F.2d
at 633. The court reasoned that the
purpose of the preemption clause to
achieve nationwide uniformity in
telecommunications regulation was not at
issue in a case challenging fraudulent
and deceitful statements by the telephone
service providers. Id. Because the claims
for fraud and deceit would not have
affected the federal regulation of the
carriers at all, the court held that
Congress could not have intended to
preempt the claims.

B.   Bastien’s Complaint

  We do not need to go so far as to divine
the intention of Congress to see that
Bastien’s complaint directly attacks AT&T
Wireless’s rates and its right to enter
the Chicago market and therefore can be
distinguished from the Long Distance
Litigation. We merely need to look at the
face of the complaint and ask what the
nature of the claims are and what the
effect of granting the relief requested
would be. This shows that, in sharp
contrast to the Long Distance Litigation,
Bastien’s complaint would directly alter
the federal regulation of tower
construction, location and coverage,
quality of service and hence rates for
service. In Paragraph 9, Bastien alleges
that AT&T Wireless "signed up subscribers
without first building the cellular
towers and other infrastructure necessary
to provide reliable cellular
connections." In Paragraph 11, AT&T
Wireless "nevertheless continued
marketing and selling its telephones and
telephone service." In Paragraph 23, AT&T
Wireless allegedly "sign[ed] up
subscribers without first building the
cellular towers and other infrastructure
necessary to accommodate good cellular
connections." In Paragraph 25(a), AT&T
Wireless "sign[ed] up subscribers without
first building the cellular towers and
other infrastructure necessary to
accommodate good cellular connections to
such subscribers." In Paragraph 26, AT&T
Wireless "knew that it was signing up
subscribers without first building the
cellular towers and other infrastructure
necessary to handle the call range
reasonably expected to be used such
subscribers."

  These claims tread directly on the very
areas reserved to the FCC: the modes and
conditions under which AT&T Wireless may
begin offering service in the Chicago
market. The statute makes the FCC
responsible for determining the number,
placement and operation of the cellular
towers and other infrastructure, as well
as the rates and conditions that can be
offered for the new service. Should the
state court vindicate Bastien’s claim,
the relief granted would necessarily
force AT&T Wireless to do more than
required by the FCC: to provide more
towers, clearer signals or lower rates.
The statute specifically insulates these
FCC decisions from state court review.

  Bastien’s complaint contains other
allegations sounding more like state law
claims. For instance, in Paragraph 9,
AT&T Wireless allegedly "knew that it
could not deliver what it was promising."
In Paragraph 23, AT&T Wireless violated:
"a) Its contracts; and b) The implied
duty of good faith and fair dealing under
such contracts." In Paragraph 25, AT&T
Wireless allegedly "b) [m]isrepresented
the quality and benefits of its products
and services; c) [concealed] the material
facts that it did not have the capacity
to handle the volume of its cellular
calls." While these charges appear more
like traditional state law claims, they
are all founded on the fact that AT&T
Wireless had not built more towers and
more fully developed its network at the
time Bastien tried to use the system. The
reason AT&T Wireless had not more fully
developed its network was because it was
in compliance with the FCC schedule for
building towers and establishing service
in the Chicago market. In this complaint,
Bastien has repackaged challenges to the
FCC-approved plan in a state law wrapper,
but the contents of that package remain
challenges to the FCC approved plan.

  An indication of Bastien’s transparent
attempt to recast federal claims as state
law fraud and breach of contract actions
can be seen in the complete absence of
any details in the pleading regarding the
particular promises or representations
made by AT&T Wireless. Normally we do not
scrutinize a complaint so closely because
under our system of notice pleading, we
set a very low threshold to determine
whether a complaint states a claim upon
which relief can be granted. See Jackson
v. Marion County, 66 F.3d 151, 153-54
(7th Cir. 1995). Such is not the case
when a complaint is challenged for want
of jurisdiction. On a motion to dismiss
under Rule 12(b)(1), the court is not
bound to accept the truth of the
allegations in the complaint, but may
look beyond the complaint and the
pleadings to evidence that calls the
court’s jurisdiction into doubt.
Commodity Trend Service, Inc. v.
Commodity Futures Trading Commission, 149
F.3d 679, 685 (7th Cir. 1998); Aquafaith
Shipping, Ltd. v. Jarillas, 963 F.2d 806,
808 (5th Cir. 1992). Scrutinizing
Bastien’s complaint more closely, we note
that the complaint alleges
"misrepresentation" and "concealing" but
does not offer specific instances of the
words used by AT&T Wireless that would
qualify as such. Rather we are left with
facts suggesting AT&T Wireless had not
sufficiently built up its network and the
bare conclusory allegation that this
constituted misrepresentation and fraud.
That is not adequate to earn the
plaintiff the protection of the well-
pleaded complaint rule.

III.   Conclusion

  Bastien’s complaint, although fashioned
in terms of state law actions, actually
challenges the rates and level of service
offered by AT&T Wireless, an area
specifically reserved to federal
regulation. The district court was
correct in removing the case from state
court and denying Bastien’s motion to
dismiss and remand the case under Rule
12(b)(1). Because Bastien did not appeal
the grant of AT&T Wireless’s motion to
dismiss for failure to state a claim, the
order of the district court dismissing
the complaint is AFFIRMED.

/1 Bastien has indicated that he "want[s] to stand
or fall on [his] claim that this is really a suit
under state law," and we therefore do not need to
address the doctrine of primary jurisdiction and
whether the case should be directed to the FCC or
retained by the federal district court.