Cafarelli v. Yancy, 99-1331

• Decision Date: 02 August 2000
• Docket Number: No. 99-1331,99-1331
• Citation: 226 F.3d 492
• Parties: (6th Cir. 2000) John P. Cafarelli, d/b/a Battle Creek Taxi, Car Service, Plaintiff-Appellant, v. Ross Yancy, d/b/a Yellow Cab Company,Defendant-Appellee. Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 492

226 F.3d 492 (6th Cir. 2000)

John P. Cafarelli, d/b/a Battle Creek Taxi, Car Service, Plaintiff-Appellant, v. Ross Yancy, d/b/a Yellow Cab Company,Defendant-Appellee.

No. 99-1331

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: August 2, 2000

Decided and Filed: September 5, 2000

Appeal from the United States District Court for the Western District of Michigan at Kalamazoo. No. 96-00198--Richard A. Enslen, Chief District Judge.

Samuel T. Field, Kalamazoo, Michigan, for Appellant.

Daryl J. Mumford, John H. Macfarlane, MUMFORD, SCHUBEL NORLANDER, MACFARLANE & BARNETT, Battle Creek, Michigan, for Appellee.

Before: MOORE and CLAY, Circuit Judges; HOOD, District Judge.^*

OPINION

CLAY, Circuit Judge.

Plaintiff, John P. Cafarelli, d/b/a Battle Creek Taxi, Car Service, appeals from the district court's judgment sua sponte dismissing Plaintiff's claim seeking declaratory, injunctive, and monetary relief against Defendant, Ross Yancy, d/b/a Yellow Cab Company, under § 605 of the Federal Communications Act, 47 U.S.C. § 151 et seq., for lack of subject matter jurisdiction. For the reasons set forth below, we REVERSE the judgment of the district court.

I. BACKGROUND

On October 15, 1996, Plaintiff, then proceeding pro se, filed a complaint in the United States District Court for the Western District of Michigan against Defendant seeking declarative, injunctive, and monetary relief for Defendant's alleged interception of Plaintiff's taxi cab radio messages, which Defendant then allegedly appropriated for his own use. Plaintiff claimed that Defendant's unauthorized interception, reception, and conversion of Plaintiff's radio messages for Defendant's gain was a violation of § 605 of the Federal Communications Act ("Communications Act").

Acting through counsel, Defendant answered Plaintiff's complaint on August 13, 1997, after the district court set aside Plaintiff's default judgment that had been entered against Defendant for failing to respond to the complaint. After a series of orders regarding various motions which are not at issue here, the district court entered an order on May 28, 1998, which, among other things, extended the deadline for completion of discovery to October 1, 1998; ordered that mediation be completed by October 15, 1998; and extended the deadline for filing dispositive motions to November 1, 1998.

On December 24, 1998, Plaintiff, now acting through counsel, filed proposed findings of fact and conclusions of law with the district court. Plaintiff proffered that Defendant, owner of Yellow Cab Company, owned Star Charter-Battle Creek Limousine; that Star Charter owned five to ten "Greyhound" style charter buses; and that Battle Creek owned several stretch limousines. Plaintiff also proffered that Defendant owned Ross' Auto Sales, and that Defendant organized Battle Creek Taxi which, as its name implies, provides taxi cab services in the City of Battle Creek, Michigan.

Plaintiff contended that in July of 1991, Defendant sold Battle Creek Taxi to Plaintiff for $100,000. The terms of the sale were that Plaintiff would make weekly payments to Defendant in the amount of at least $500; in exchange, Plaintiff acquired the business, approximately seven motor vehicles with taxi meters, dispatch radio equipment, as well as the right to occupy space at 1434 Northeast Capital. The Federal Communications Commission ("FCC") re-issued a five-year radio station license to Plaintiff and Battle Creek Taxi on February 5, 1993, for use in connection with Battle Creek Taxi. In September of 1993, Defendant purchased Yellow Cab Company for $150,000, but this transaction was not known to Plaintiff. In December of 1993, Plaintiff still owed Defendant $30,000 on the purchase price of Battle Creek Taxi, so Defendant agreed to accept from Plaintiff ownership of a limousine service called Black Tie Service as payment-in-full for Battle Creek Taxi.

Plaintiff further claimed that in December of 1994, Defendant began a deliberate effort to drive Plaintiff out of business by "hijacking" Plaintiff's taxi cab customers. Plaintiff alleged that Defendant intercepted Plaintiff's dispatch calls, and then appropriated the fare for his own use by sending one of his cabs, which had then been designed to look like Plaintiff's cabs, to pick up the fare before one of Plaintiff's cabs could get to it. Plaintiff alleged that a number of "no shows" is expected in the cab industry; however, the number of "no shows" experienced by Plaintiff increased from an average of 727 per month as of December of 1993, to 1,251 per month for the period of January 1, 1994 to August 31, 1994. Plaintiff attributed the increase in "no shows" to Defendant's "hijacking," and concluded that this misappropriation was a violation of § 605(a) of the Communications Act for which Defendant should be held liable.

Defendant also submitted proposed findings of fact and conclusions of law on December 24, 1998; however, Defendant's proposals were decidedly shorter than Plaintiff's proposals. Specifically, Defendant simply stated that he did not violate § 605 and was not liable to Plaintiff.

The district court then ordered the parties to submit briefs as to the effect of § 2511 of the Wire Interception and Interception of Oral Communications ("Wiretap Act"), 18 U.S.C. § 2510 et seq., on this case. Plaintiff complied with the district court's order, and submitted a "Memorandum of Law Re: Effect of 18 USC § 2511" along with a "Fact Sheet" from the FCC entitled "Interception and Divulgence of Radio Communications." Defendant also submitted a brief regarding § 2511. Thereafter, on February 17, 1999, the district court entered an order directing Plaintiff to show cause why judgment should not be entered in favor of Defendant as a matter of law. Specifically, the show cause order provided in relevant part as follows:

On December 23, 1998, the Court ordered the parties to brief the issue of the effect of 18 U.S.C. § 2511 (and related statutes, regulations, and case law) on the potential liability of Defendant in this case. Both parties have submitted briefs in this regard. Upon review of these briefs and materials submitted, and upon further research and consideration, the Court has determined that Defendant is entitled to judgment in this matter as a matter of law. However, since a sua sponte entry of judgment is inappropriate in the absence of notice to Plaintiff, he shall be given time to show cause why judgment should not be entered in favor of Defendant. See Celotex Corp. v. Catrett, 477 U.S. 317, 326 (1986).

In order to provide complete notice to Plaintiff, the Court will outline the two primary reasons for its initial conclusion that Defendant is entitled to judgment in his favor. First, the Court's analysis focuses not only on 18 U.S.C. § 2511(2)(g)(ii)(II), but also on that subsection's impact on §§ 2511(1)(c) and (d), and the resulting effect on 47 U.S.C. § 605. It appears that in order for use or disclosure of an intercepted communication to be prohibited under § 2511(1), the initial interception must be unlawful. Since the alleged interception here is lawful, per § 2511(2)(g)(ii)(II), use or disclosure under § 2511(1) is also lawful. The interception, use, and/or disclosure of the communication is therefore "authorized" by § 2511, and is permitted, in turn, by § 605.

Second, it appears to the Court that the Federal Communications Commission Fact Sheet upon which Plaintiff relies in support of his claim is contrary to the language of the statutes, and is therefore not entitled to deference.

(J.A. at 71-72.)

On March 5, 1999, Plaintiff entered a "Memorandum of Law Filed Pursuant to Order to Show Cause Entered 2/16/99," and attached to the memorandum the FCC "Fact Sheet" upon which Plaintiff previously relied. Thereafter, on March 16, 1999, the district court entered its opinion finding that "Defendant's alleged actions do not fall within the ambit of § 605," and thus concluded that "Defendant is entitled to judgment as a matter of law, and that, . . . the Court lacks subject matter jurisdiction over this matter." See Cafarelli v. Yancy, 72 F. Supp. 2d 791, 792 (W.D. Mich. 1999). The district court entered its corresponding judgment, and it is from the judgment of dismissal that Plaintiff now appeals.

II.DISCUSSION

A. Procedural Basis for Dismissal by the District Court

The district court concluded that because Plaintiff had not stated a viable claim under § 605 as a mater of law, the court lacked subject matter jurisdiction over Plaintiff's case. We disagree with the court's conclusion. Plaintiff filed his claim under a federal statute, 47 U.S.C. § 605(a), thus invoking federal subject matter jurisdiction. Indeed, § 605 of the Communications Act provides a jurisdictional basis upon which an aggrieved party may seek damages:

Any person aggrieved by any violation of subsection (a) of this section or paragraph (4) of this subsection may bring a civil action in a United States district court or in any other court of competent jurisdiction.

47 U.S.C. § 605(e)(3)(A) (1994). See 13 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 3522 (2d ed. 1984); Restatement (Second) of Judgments § 11 (1982) (defining "subject matter jurisdiction" as the "authority [of the court] to adjudicate the type of controversy involved in the action"). Accordingly, because the district court had subject matter jurisdiction over this "type" of case, the court erroneously couched its dismissal as one for lack of subject matter jurisdiction.

Moreover, because the court looked beyond Plaintiff's complaint in adjudicating the case, the proper characterization of the court's sua sponte dismissal is one for summary judgement. See Fed. R. Civ. P. 12(b) ("[I]f . . . matters outside the pleading are presented to and considered by the court, the motion [to dismiss] shall be treated as one for summary judgment and disposed of as provided in Rule 56, and...