Court Opinion

ID: 9497220
Source: CourtListenerOpinion
Date Created: 2023-08-05 16:46:08.273827+00
Date Added: 2024-06-11T17:58:03.328614
License: Public Domain

LUTTIG, Circuit Judge,
dissenting:
The majority holds that the plaintiffs state law cause of action against BellSouth for violation of the North Carolina Unfair Trade Practices Act, N.C. Gen.Stat. § 75-I.1, “arises under” federal law within the meaning of 28 U.S.C. § 1331 because it “effectively challenges” the rates set in BellSouth’s filed tariff with the FCC. Ante at 430. Because this standard has no basis in the Supreme Court’s precedent for determining whether statutory “arising under” jurisdiction exists, and because neither the plaintiffs right to relief nor the remedy that the plaintiff has requested entails resolution of any question of federal law, much less “necessarily depend[s] on the resolution of’ such a question, I dissent.
A state law claim “arises under” federal law within the meaning of 28 U.S.C. § 1331 in only two circumstances. Franchise Tax Bd. v. Constr. Laborers Vac. Trust, 463 U.S. 1, 13, 27-28, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). The first circumstance, commonly referred to as “complete preemption,” exists when “federal law so completely sweeps away state law that any action brought under state law is transformed into a federal action that can be brought originally in, or removed to, federal court.” King v. Marriott Int’l Inc., 337 F.3d 421, 425 (4th Cir.2003) (citing Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)). Our court has recently explained that in such cases, “in actuality, the plaintiff simply has brought a mislabeled federal claim, which may be asserted under some federal statute.” King, 337 F.3d at 425; see also Franchise Tax Bd., 463 U.S. at 13, 103 S.Ct. 2841 (describing such state law claims as “ ‘really’ one[s] of federal law”). The second, and more common, circumstance under which a state law claim can “arise under” federal law is “if a well-pleaded complaint established] ... that [the plaintiffj’s right to relief under state law necessarily depends on resolution of a substantial question of federal law.” Franchise Tax Bd., 463 U.S. at 27-28, 103 S.Ct. 2841; Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816 (4th Cir.2004). Cf. Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804, 813 & n. 12, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986) (holding that, even where the plaintiffs right to relief re*433quired the resolution of a federal question, the district court did not have statutory federal question jurisdiction where the adjudication of the federal question “would [not] serve congressional purposes and the federal system.”).
Because the majority finds jurisdiction under the second of these circumstances, it does not address the question of whether complete preemption is present. See ante at 429 n. 5. There is simply no argument in this case, however, that federal jurisdiction through complete preemption exists. As we recently explained, “the ‘touchstone’ of complete preemption is ‘whether Congress intended the federal cause of action’ to be ‘the exclusive cause of action’ for the type of claim brought by a plaintiff.” King, 337 F.3d at 425 (quoting Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 9 n. 5, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003)); Marcus v. AT&T, 138 F.3d 46, 54 (2d Cir.1998) (“[AJfter 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.”). For this reason,
a vital feature of complete preemption is the existence of a federal cause of action that replaced the preempted state cause of action. Where no discemable federal cause of action exists on a plaintiffs claim, there is no complete preemption, for in such cases there no federal cause of action that Congress intended to be the exclusive remedy for the alleged wrong.
King, 337 F.3d at 425 (emphasis added). In light of this direction, the absence of a federal cause of action analogous to the plaintiff S state law NCUTPA claim is fatal to any argument for complete preemption. As the Second Circuit has concluded, “while the FCA does provide some causes of action for customers, it provides none for deceptive advertising and billing.” Marcus, at 54; compare, e.g., 47 U.S.C. § 203(c)(1), 207 (authorizing suit in federal district court to challenge carrier’s collection of tariffs which are “greater or less or different” than those filed with the FCC).
Furthermore, even if the FCA did provide a cause of action for deceptive and misleading billing, complete preemption would still be lacking, because Congress clearly intended for there not to be complete federal preemption of plaintiffs state law causes of action. Indeed, the FCA contains a savings clause that provides 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. See also Metropolitan Life Ins. v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) (stating that “even with” the existence of a cause of action under § 502(a) of ERISA, the Court “would be reluctant to find that extraordinary preemptive power ... that converts an ordinary state common law complaint into one stating a federal claim,” without explicit evidence of congressional intent from the legislative history); Marcus, 138 F.3d at 54 (finding that “[t]he 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.”).1
*434Accordingly, if the. district court possesses subject matter jurisdiction over the plaintiffs remaining state law claim, it must be on the more narrow ground that the plaintiffs right to relief, as set forth in her complaint, “necessarily depends on resolution of a substantial question of federal law.” Franchise Tax Bd., 463 U.S. at 13, 103 S.Ct. 2841; Interstate Petroleum Corp. v. Morgan, 249 F.3d 215, 220 (4th Cir.2001)(e% banc).
The majority refuses even to apply this established standard for determining federal jurisdiction and adopts instead the different standard of whether a complaint “effectively challenges” a filed rate, see ante at 430 (emphasis added) (inquiring “whether Count A of the Complaint effectively challenges the reasonableness of BellSouth’s filed rate”), a standard derived from cases that considered the applicability of the filed-rate doctrine as a defense to a particular claim, see, e.g., Brown v. MCI WorldCom Network Servs., Inc., 277 F.3d 1166, 1170 (9th Cir.2002) (noting that “the filed-rate doctrine also bars suits challenging services, billing, or other practices when such challenges, if successful, would have the effect of changing the filed tariff’); Fax Telecommunicaciones Inc. v. AT & T, 138 F.3d 479, 489 (2d Cir.1998) (noting that “[i]f this court were to enforce the promised rate and award damages on that basis, we would effectively be setting and applying a rate apart from that judged reasonable by the FCC, in violation of the nonjusticiability strand of the filed rate doctrine.”). The primary case on which the majority relies for its adoption of this standard, Hill v. BellSouth Telecomms., Inc., 364 F.3d 1308 (11th Cir.2004), commits without discussion the same mistake as the majority, using, for determination of the existence of federal jurisdiction, the standard developed to evaluate applicability of the filed-rate doctrine as a defense. Id. at 1315 (focusing its discussion on the applicability of the filed-rate doctrine, and noting simply that “federal question jurisdiction should have attached to Hill’s two remaining state-law causes of action because they implicated the filed rate doctrine.”).
This is error plain and simple. Notwithstanding the majority’s obvious belief (as well as its disclaimer that it so believes), the filed-rate doctrine is not coterminous with the scope of federal question jurisdiction under section 1331; it is significantly broader. See Fax Telecommunicaciones, 138 F.3d at 487-90 (holding that the plaintiffs breach of contract claim did not “arise under” federal law for the purposes of removal but that it was barred by the filed-rate doctrine). It is one thing to provide that “arising under” jurisdiction exists in that narrow class of cases where the plaintiffs right to relief necessarily depends on the resolution of a substantial federal question or Congress has preempted state court jurisdiction. It is quite another to provide that jurisdiction is present so long as the plaintiffs request for relief constitutes an “effective challenge” to the rate set by federal law. Indeed, as this case demonstrates, a claim can easily be characterized as an “effective challenge” to rates set in a tariff filed with a federal agency, even though the adjudication of the claim itself would require the court to decide no federal issues whatsoever. Of course, that a federal court may not have jurisdiction over a claim that would be barred by the filed-rate doctrine is not problematic in the least; the filed-rate doctrine may be raised as a federal defense to 'a state law claim before a state court just as easily as before a federal court. See Fax Telecommunicaciones, 138 *435F.3d at 486; see also Merrell Dow, 478 U.S. at 808, 106 S.Ct. 3229 (“A defense that raises a federal question is inadequate to confer federal jurisdiction.”) (citing Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908)).
It is clear that the plaintiffs claim does not meet the standard that we must apply, and have consistently applied, in such cases: whether the plaintiffs right to relief, as set forth in “a well-pleaded complaint,” “necessarily depends on resolution of a substantial question of federal law.” See Franchise Tax Bd., 463 U.S. at 13, 103 S.Ct. 2841; Interstate Petroleum Corp. v. Morgan, 249 F.3d 215, 220 (4th Cir.2001) (en banc). To prevail on a claim under the NCUTPA, N.C. Gen.Stat. 75-1.1, a plaintiff must prove “ ‘(1) an unfair or deceptive act or practice, or unfair method of competition, (2) in or affecting commerce, and (3) which proximately caused actual injury to the plaintiff or his business.’ ” See, e.g., Basnight v. Diamond Developers, Inc., 146 F.Supp.2d 754, 764 (M.D.N.C.2001). None of these elements has anything whatsoever to do with federal law. Moreover, there can be no argument that the plaintiffs claim is, in fact, a claim based on the tariff, which simply has been artfully pled under the NCUTPA; as counsel for BellSouth conceded at argument, the allegedly unfair and deceptive billing and marketing practices at the heart of plaintiffs NCUTPA claim are not addressed in the tariff. Compare Marcus, 138 F.3d at 56, with Fax Telecommunicaciones, 138 F.3d at 487.
The majority maintains that the plaintiffs claim presents a federal question because “the only plausible reading of the Complaint is that [the count alleging a violation of the NCUTPA] ... seeks a refund of a portion of the FUSC” and such a refund would require the court to “alter th[e] rate” set forth in the tariff. Ante at 432. This contention is simply wrong, for two reasons. First, even if the Complaint were so read, it would not present a federal question. Second, the court is not necessarily required to impose a different rate or to refund a portion of the rate in order to award damages to the plaintiff, as there are other viable theories of damages under the plaintiffs Complaint.
As to the first, the determination of a damage award with reference to the tariff rate charged by BellSouth does not pose a federal question. The tariffs BellSouth has filed with the FCC represent a judgment by the government that the FUSC rates included therein are reasonable. For that reason, claims requiring the court to second-guess the reasonableness of this determination are properly said to require the court to resolve a substantial federal question. However, the calculation of damages for the injury caused to the plaintiff by BellSouth’s violation of the NCUT-PA does not require the court to make any determination about the reasonableness of the rate charged in the tariff. Compare Fax Telecommunicaciones, 138 F.3d at 487 (finding no federal question jurisdiction over breach of contract claim where the basis for the claim was “independent of the rate on file with the FCC”). Rather, it seeks to measure the injury caused by Bell-South’s omissions and misrepresentation. Put another way, even if the plaintiffs damages are characterized as a “refund” of a portion of the FUSC paid by BellSouth, the amount of the “refund” may only be permissibly determined by reference to BellSouth’s misconduct and the plaintiffs reliance on that misconduct. Even if the consequence of awarding such damages would be to effectively lower the rates for some customers and not for others, the determination of damages would not “necessarily depend” on the court’s determination of the reasonableness of the *436rate, but rather on its determination of the extent to which the billing and marketing practices of BellSouth violated the NCUT-PA.
As to the second reason, even if a claim by the plaintiff that she was entitled to a “refund of a portion of the FUSC” would require a federal court to reconsider the reasonableness of a filed rate and thus would pose a federal question, it is incorrect to say that the plaintiffs claim necessarily depends on awarding a “refund of a portion of the FUSC.” See Dixon, 369 F.3d at 816 (“A plaintiffs right to relief for a given claim necessarily depends on a question of federal law only when every legal theory supporting the claim requires the resolution of a federal issue.”). The majority maintains that the Complaint must be read to request a refund because “the Complaint — read in the light most favorable to the plaintiff — nowhere purports to seek any form of damages other than a refund of some form of the FUSC” and otherwise fails to put BellSouth on notice of the plaintiffs intent to do so. Ante at 431. However, the plaintiffs Complaint cannot plausibly be read to set forth any theory of damages,2 let alone a single exclusive request for “a refund of some portion of the FUSC.” Ante at 431.
And, in fact, plaintiffs counsel at argument proposed an example of a plausible mechanism for determining damages that does not challenge the amount of the filed tariff: the difference between the FUSC charged by BellSouth and the FUSC for the carrier that Plaintiff might have chosen absent BellSouth’s lack of disclosure. The majority dismisses this method of computing damages as “purely hypothetical” and asserts that “nothing in the Complaint suggests such an injury.” Ante at 431. But looking solely to the plaintiffs Complaint, it is no more “hypothetical” that the plaintiff will seek to prove damages by demonstrating that “she might have chosen a different carrier that would have charged a lower FUSC,” ante at 431, than it is that she will seek damages of “a portion of the FUSC” that she has already paid to BellSouth. Ante at 432.
Thus, because the plaintiff could prove damages under at least one theory that does not require resort to any concept of federal law, her claim does not “arise under” federal law within the meaning of section 1331. Dixon, 369 F.3d at 817 (“[I]f the plaintiff can support [her] claim with even one theory that does not call for an interpretation of federal law, [her] claim does not ‘arise under’ federal law for purposes of § 1331.”).
The majority argues that Dixon is inap-posite because in it and the cases on which it relies, “the courts found alternative theories of recovery on the face of the complaint itself,” rather than “eonjurfing] out of whole cloth an alternative theory of liability without some support in the allegations of the complaint.” Ante at 431-32 n. 10. The theory of liability proposed by plaintiffs counsel, however, no more lacks support in the allegations of the complaint than does the majority’s “refund” theory. Plaintiffs Complaint, which complains of omissions and misrepresentations, see Complaints 19-24, would clearly support a theory that those actions led the plaintiff to purchase a service she would not have otherwise purchased. If anything, that *437theory is more clearly supported in the allegations of the Complaint than the theory that plaintiff seeks a refund of the portion of the rate that is unreasonable, a theory that has little if any direct connection to the allegations in the Complaint.
It is not only the case, then, that pursuing a refund of a portion of the rate would not necessarily depend on resolution of a federal question, if the claim for a refund did not rest solely on the reasonableness of the rate. Even if pursuing a refund did depend on resolution of a federal question, it is implausible to read the Complaint so narrowly as to define that remedy as the only supportable calculation of damages.
In sum, the majority’s analysis of the district court’s subject matter jurisdiction under 28 U.S.C. § 1331 fails to heed even the most basic tenets of the Supreme Court’s or this court’s direction on the subject, adopting a standard drawn from a possible federal defense to plaintiffs claim, rather than from whether plaintiffs right to relief, as set forth in her Complaint, “necessarily depends on a question of federal law.” Under the correct standards, there is no basis on which it may be said that the district court possessed “arising under” jurisdiction over the plaintiffs state law claim pursuant to 28 U.S.C. § 1331. I dissent from the majority’s contrary judgment.

. For an example of a statement of congressional intent sufficient to completely preempt a state law claim, see Metropolitan Life, 481 U.S. at 65-66, 107 S.Ct. 1542 (quoting a direct statement in the House Conference Report on ERISA that "all such actions in Federal or State courts are to be regarded as arising under the laws of the United States in similar fashion to those brought under section *434301 of the Labor-Management Relations Act of 1947”).

. As it pertains to damages, the plaintiffs Complaint alleges that ''Bell-South’s actions and omissions have been an actual, producing, direct and proximate cause of damages to Plaintiff and to BellSouth's other North Carolina customers in an amount exceeding $10,000.00,” J.A. 22 (Complaint ¶31), and provides that the plaintiff is entitled to treble damages under section 75-16 of the NCUTPA for BellSouth's unfair and deceptive trade practices. Id. (Complaint ¶ 32).