Court Opinion

ID: 767913
Source: CourtListenerOpinion
Date Created: 2012-04-18 08:46:07+00
Date Added: 2024-06-11T12:51:27.956932
License: Public Domain

205 F.3d 983 (7th Cir. 2000)
Steven Bastien,    Plaintiff-Appellant,v.AT&T Wireless Services, Inc.,    Defendant-Appellee.
No. 99-2127
In the  United States Court of Appeals  For the Seventh Circuit
Argued November 9, 1999Decided March 6, 2000

Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 99 C 0049--Charles P. Kocoras, Judge.
Before Bauer, Easterbrook and Kanne,  Circuit Judges.
Kanne, Circuit Judge.

1
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

2
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.

3
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.

4
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.

5
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:

6
9.  AT&T Wireless signed up subscribers  without first building the cellular  towers and other infrastructure necessary  to provide reliable cellular connections.

7
10. As a result, a large proportion of  attempts to place calls on AT&T Wireless'  system are unsuccessful.

8
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.    . . .

9
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:

10
a.  Its contracts; and

11
b.  The implied duty of good faith and  fair dealing under such contracts.    . . .

12
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:

13
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;

14
b.  Misrepresenting the quality and  benefits of its products and services;

15
c.  Concealing the material facts that it  did not have the capacity to handle the  volume of its cellular calls; and

16
d.  Failing to have appropriate means for  crediting customers for incomplete calls.

17
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.

18
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.

19
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

20
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.

21
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.

22
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

23
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.

24
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]).

25
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.").

26
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.

27
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.

28
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.

29
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

30
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."

31
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.

32
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.

33
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 f the well-  pleaded complaint rule.

III.  Conclusion

34
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.

Notes:

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.