Opera Plaza Residential Parcel v. Hoang

• Citation: 376 F.3d 831
• Decision Date: 12 July 2004
• Docket Number: No. 02-16682.,02-16682.
• Parties: OPERA PLAZA RESIDENTIAL PARCEL HOMEOWNERS ASSOCIATION, a California nonprofit corporation, Plaintiff-Appellant, v. Tuan HOANG; Betty S. Lee-Hoang, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

376 F.3d 831

OPERA PLAZA RESIDENTIAL PARCEL HOMEOWNERS ASSOCIATION, a California nonprofit corporation, Plaintiff-Appellant, v. Tuan HOANG; Betty S. Lee-Hoang, Defendants-Appellees.

No. 02-16682.

United States Court of Appeals, Ninth Circuit.

Submitted June 17, 2004^*.

Filed July 12, 2004.

Brandon E. Bickel, Esq., Piedmont, CA, for the plaintiff/appellant.

Appeal from the United States District Court for the Northern District of California; William H. Alsup, District Judge, Presiding. D.C. No. CV-02-01084-WHA.

Before HAWKINS, SILVERMAN, and BYBEE, Circuit Judges.

SILVERMAN, Circuit Judge:

We hold today that § 207 of the Telecommunications Act of 1996, Pub.L. No. 104-104, 110 Stat. 114 (hereinafter "§ 207"), does not confer jurisdiction on the federal courts to hear a routine suit by a condominium homeowners association to enforce its rules against the placement of a satellite television dish in common areas.

I. Facts

In September 1999, Opera Plaza Homeowners Association and Opera Plaza Master Owners Association (collectively "Opera Plaza") adopted a policy, as part of a "Declaration of Covenants, Conditions and Restrictions," which prohibited the placement of satellite dishes in common areas of the condominium complex. After adoption of this policy, the Hoangs, who owned one of the condominiums, installed a satellite dish on the exterior of their home in a common area, in violation of the policy. Opera Plaza filed suit in federal court, seeking (1) declaratory relief stating that the Opera Plaza satellite policy is valid, (2) a permanent injunction requiring the Hoangs to remove their satellite dish, and (3) damages from the Hoangs for breach of contract.

The district court dismissed the action for lack of subject matter jurisdiction, noting that only Congress — and not a federal agency — can confer subject matter jurisdiction, and that the Telecommunications Act of 1996 did not authorize the FCC to expand federal subject matter jurisdiction. First, the district court applied the four-factor test from Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), and concluded that § 207, and the implementing regulation, 47 C.F.R. § 1.4000(e), did not create a private cause of action. Next the court determined that no substantial federal question was presented by Opera Plaza's suit, as the federal statute and regulation were relevant only as a possible defense by a satellite TV viewer; under the well-pleaded complaint rule, a federal question was not alleged. Finally, the district court observed that state courts adjudicate analogous claims and that review of federal issues in such state actions could be appealed to the Supreme Court.

II. Jurisdiction and Standard of Review

We have jurisdiction pursuant to 28 U.S.C. § 1291. The existence of subject matter jurisdiction is a question of law reviewed de novo. See Chang v. United States, 327 F.3d 911, 922 (9th Cir.2003).

III. Discussion

Section 207, entitled "Restrictions on Over-the-Air Reception Devices," provides that "the [Federal Communications] Commission shall ... promulgate regulations to prohibit restrictions that impair a viewer's ability to receive video programming services through devices designed for over-the-air reception of television broadcast signals, multichannel multipoint distribution services, or direct broadcast satellite services." The accompanying regulation provides that

[p]arties may petition the [FCC] for a declaratory ruling..., or a court of competent jurisdiction, to determine whether a particular restriction is permissible or prohibited under this section.

47 C.F.R. § 1.4000(e). Furthermore, 47 C.F.R. § 1.4000(a)(4) provides in relevant part that "[n]o other civil, criminal, administrative, or other legal action of any kind shall be taken to enforce any restriction or regulation prohibited by this section except pursuant to paragraph (d) [which provides for a waiver] or (e) of this section." The House Committee Report on § 207 (then § 308¹)

directs the [FCC] to promulgate rules prohibiting restrictions which inhibit a viewer's ability to receive video programming from over-the-air broadcast stations or direct broadcast satellite services. The Committee intends this section to preempt enforcement of State or local statutes and regulations, or State or local legal requirements, or restrictive covenants or encumbrances that prevent the use of antennae designed for off-the-air reception of television broadcast signals or of satellite receivers designed for receipt of [Direct Broadcast Satellite] services. Existing regulations, including but not limited to, zoning laws, ordinances, restrictive covenants or homeowners' association rules, shall be unenforceable to the extent contrary to this section.

H.R.Rep. No. 104-204(I), at 123-24 (1995), reprinted in 1996 U.S.C.C.A.N. 10, 91. Moreover, § 205 of the Telecommunications Act of 1996, Pub.L. No. 104-104, § 205, 110 Stat. 114(hereinafter" § 205"), amends 47 U.S.C. § 303(v) so that it reads, "the [FCC] ... shall ... [h]ave exclusive jurisdiction to regulate the provision of direct-to-home satellite services."

Opera Plaza's argument that the district court erred in dismissing this case for lack of subject matter jurisdiction is three-fold: first, this cause of action "aris[es] under" federal law, see 28 U.S.C. § 1331, because it is predicated on § 207 and 47 C.F.R. § 1.4000(e); second, subject matter jurisdiction exists because federal law completely preempts the field; and third, a substantial federal question exists sufficient to confer subject matter jurisdiction.

A. "Arising Under" Jurisdiction

Opera Plaza argues that the district court erred in dismissing the case for lack of subject matter jurisdiction because its complaint states a cause of action arising under 47 C.F.R. § 1.4000(e). Opera Plaza contends that § 1.4000(e) is the exclusive procedure for testing a restriction such as its satellite policy. Moreover, it argues that while neither §§ 205 nor 207 nor the House Committee Report employs the phrase "cause of action," the direction by Congress to the FCC and Congress's intent to create a private cause of action are clear.

"The question whether a statute creates a cause of action, either expressly or by implication, is basically a matter of statutory construction." Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 15, 100 S.Ct. 242, 62 L.Ed.2d 146 (1979). However,"the fact that a federal statute has been violated and some person has been harmed does not automatically give rise to a private cause of action in favor of that person." Touche Ross & Co. v. Redington, 442 U.S. 560, 568, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979). While there is some authority suggesting that the four-factor Cort v. Ash test is no longer the exclusive means by which to determine when a private cause of action exists, see Thompson v. Thompson, 484 U.S. 174, 189, 108 S.Ct. 513, 98 L.Ed.2d 512 (1988) (Scalia, J., concurring) (noting that the second Cort factor, legislative intent, subsumes the others); Touche Ross, 442 U.S. at 575, 99 S.Ct. 2479 (noting the first three Cort factors all go to legislative intent), courts still apply this test in making this determination, see, e.g., California v. Sierra Club, 451 U.S. 287, 292, 101 S.Ct. 1775, 68 L.Ed.2d 101 (1981) (noting that Cort outlined a preferred approach for determining whether an implied private right of action existed); First Pacific Bancorp, Inc. v. Helfer, 224 F.3d 1117, 1121-28 (9th Cir.2000) ("[W]e still find the four-factor test helpful in determining whether a statute provides a private right of action."). The four Cort factors are:

First, is the plaintiff one of a class for whose especial benefit the statute was enacted — that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? Third, is it consistent with the underlying purpose of the legislative scheme to imply such a remedy for the plaintiff? And finally, is the cause of action one traditionally delegated to state law, so that it would be inappropriate to infer a cause of action based solely on federal law?

Cort, 422 U.S. at 78, 95 S.Ct. 2080 (citations and quotation marks omitted). In the Cort analysis, the second factor — whether Congress intended to provide the plaintiff with a private right of action — is the key inquiry in this calculus. See, e.g., Helfer, 224 F.3d at 1121. The burden is on the plaintiff seeking to establish that a private right of action exists. See Suter v. Artist M., 503 U.S. 347, 363, 112 S.Ct. 1360, 118 L.Ed.2d 1 (1992). Importantly, there is support for the proposition — extremely damaging to Opera Plaza's argument — that only federal statutes, and not rules adopted pursuant to that statute, can create a private cause of action, as the district court noted. See Touche Ross, 442 U.S. at 577 n. 18, 99 S.Ct. 2479 (Plaintiffs "appear to suggest that the rules adopted under [the federal statute in question] can themselves provide the source of an implied damages remedy even if [the statute] itself cannot. It suffices to say, however, that the language of the statute and not the rules must control.") (citation omitted).

As to the first Cort factor, which asks whether the plaintiff belongs to the class for whose benefit the statute was enacted, the district court found that the federal scheme is of no "benefit" to Opera Plaza because it has the effect of limiting Opera Plaza's ability to enforce its policy. Thus, the district court reasoned, only a "viewer" (as mentioned in § 207) could assert an action under federal law. Opera Plaza, in turn, points out that § 1.4000(e) mentions "parties," plural, which means that Opera Plaza may bring this suit.

In applying the first Cort factor, courts look to whether the plaintiffs that claim a cause of action exists are specifically mentioned as beneficiaries...