In re Nos Communications, Mdl No. 1357

• Decision Date: 10 July 2007
• Docket Number: No. 04-17040.,04-17040.
• Citation: 495 F.3d 1052
• Parties: In re NOS COMMUNICATIONS, MDL NO. 1357. Olga Fisher, d/b/a Fisher Enterprises; Hudson Cap Partners; Kids International, Inc.; Omnipure Filter Company; National Food Distributors, Inc.; Honeymoon Paper Products, Inc.; CTA Research Corporation; Sound Travel, Plaintiffs-Appellants, and Peter Enns, Plaintiff, v. NOS Communications, MDL No. 1357; Affinity Network Incorporated, dba Quantumlink Communications, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

495 F.3d 1052

In re NOS COMMUNICATIONS, MDL NO. 1357.

Olga Fisher, d/b/a Fisher Enterprises; Hudson Cap Partners; Kids International, Inc.; Omnipure Filter Company; National Food Distributors, Inc.; Honeymoon Paper Products, Inc.; CTA Research Corporation; Sound Travel, Plaintiffs-Appellants, and Peter Enns, Plaintiff, v. NOS Communications, MDL No. 1357; Affinity Network Incorporated, dba Quantumlink Communications, Inc., Defendants-Appellees.

No. 04-17040.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 18, 2006.

Filed July 10, 2007.

Robert S. Green, Green Welling LLP, San Francisco, CA; Daniel F. Johnson, Breskin Johnson & Townsend PLLC, Seattle, WA, for the plaintiffs-appellants.

Joseph A. Boyle and Danny E. Adams, Kelley Drye & Warren LLP, Parsippany, NJ, and Vienna, VA, for the defendants-appellees.

Appeal from the United States District Court for the District of Nevada; Lloyd D George, District Judge, Presiding. D.C. No. CV-01-00861-LDG.

Before: J. CLIFFORD WALLACE, ANDREW J. KLEINFELD, and JAY S. BYBEE, Circuit Judges.

WALLACE, Senior Circuit Judge:

This appeal arises from Multidistrict Litigation. Plaintiffs are Olga Fisher; Hudson Cap Partners (Hudson); Kids International, Inc. (Kids); Peter Enns; Omnipure Filter Company (Omnipure); National Food Distributors, Inc. (National); Honeymoon Paper Products, Inc. (Honeymoon); CTA Research Corporation (CTA); and Sound Travel. They appeal from the district court's dismissal of their state law claims, claims under the Federal Communications Act (FCA), 47 U.S.C. § 151 et seq., and claims under the Truth-in-Billing regulations. Sound Travel also appeals from the district court's denial of its motion to remand to state court. We have jurisdiction under 28 U.S.C. § 1291, and we affirm in part, reverse in part, and remand.

I.

NOS Communications, Inc. (NOS) and Affinity Network, Inc. (Affinity) are telecommunications companies offering interstate service. Plaintiffs were customers of and subject to NOS's and Affinity's federally filed tariffs.

Fisher alleges claims for state law fraud and deceit, as well as a claim under Nevada's consumer fraud statute, Nevada Revised Statute § 41.600. Damages are requested for the difference between the charges incurred at the rates billed by NOS and the charges incurred at the rates billed by its previous carrier, statutory damages, attorney's fees, and "other and further relief as the [c]ourt may deem just and proper."

National charges fraud regarding the rates and services under NOS's tariff. National's prayer for relief includes compensatory and punitive damages, but does not specify a method for calculating the damages.

Omnipure asserts claims under the FCA, 47 U.S.C. §§ 201(b) and 203(a), 47 C.F.R. § 61.2, and the Truth-in-Billing regulations, 47 C.F.R. § 64.2001 et seq. Hudson, Honeymoon, CTA, Kids, and Enns make essentially the same claims. In addition, Honeymoon alleges fraud, and CTA alleges intentional interference with contract. Kids and Enns assert state law claims for fraud, fraudulent inducement, breach of contract, and intentional infliction of emotional distress. The prayers for relief are varied, and include an order that NOS cease and desist its practices, compensatory damages, attorneys fees, mandatory arbitration, exemplary damages, punitive damages, and other necessary and appropriate damages. Honeymoon's complaint includes a measure of damages "no less than an amount equal to the difference between the charges incurred at the rates billed by[its] previous long distance carriers and the charges incurred after switching to NOS."

Sound Travel alleges a claim under the Washington Consumer Protection Act, requesting damages for economic loss caused by NOS's allegedly false and deceptive trade practices. It requests damages equal to economic loss caused by NOS's practices; attorney's fees and litigation expenses; treble, exemplary, or punitive damages; and prejudgment interest. NOS removed the action to federal district court, contending that federal jurisdiction existed under 28 U.S.C. §§ 1331, 1332, 1367, and 1441. The district court denied Sound Travel's motion to remand under 28 U.S.C. § 1447.

NOS and Affinity moved to dismiss plaintiffs' complaints pursuant to Federal Rule of Civil Procedure 12(b)(6). The district court granted the motion against all plaintiffs and entered judgment, holding that all claims brought by the plaintiffs were barred by the filed-rate doctrine. This appeal followed.

II.

In 1934, Congress enacted the FCA, which required telecommunications carriers to file a list of tariffs with the Federal Communications Commission (FCC) showing "all charges" and "the classifications, practices, and regulations affecting such charges." 47 U.S.C. § 203(a). The purpose was to "prevent[ ] unreasonableness and discrimination in charges." MCI Telecomms. Corp. v. AT & T Co., 512 U.S. 218, 230, 114 S.Ct. 2223, 129 L.Ed.2d 182 (1994). To ensure compliance with the tariff, "courts developed the `filed rate doctrine,' which prohibited a regulated entity from charging rates for its services other than those specified in its duly filed tariff." Ting v. AT&T, 319 F.3d 1126, 1131 (9th Cir.2003). Under the doctrine, "the rights and liabilities defined by the tariff could not be varied or enlarged by either contract or tort of the carrier," and federal law preempted state law claims seeking to enforce a rate that varied from the filed rate. Id. (internal quotation marks & citation omitted).

The Telecommunications Act of 1996, Pub.L. No. 104-104, 100 Stat. 56, subsequently "detariffed" the regulatory scheme. Id. at 1132. The new regime went into effect in July 2001, however, after each of the plaintiffs had already filed its action. Since the filed rate doctrine was in force at the time the plaintiffs filed their actions, we apply the law as it stood when the doctrine was in force.

III.

Plaintiffs argue that the district court erred in dismissing their claims under the FCA. The district court held that the FCA claims were nonjusticiable pursuant to the filed-rate doctrine. We review the district court's dismissal de novo. See Zimmerman v. City of Oakland, 255 F.3d 734, 737(9th Cir.2001). A complaint should not be dismissed under Rule 12(b)(6) "unless it appears beyond a doubt that[plaintiffs] can prove no set of facts in support of [their] claim[s] that would entitle [them] to relief." Evanns v. AT&T Corp., 229 F.3d 837, 839 (9th Cir.2000) (internal quotation marks & footnote omitted).

Under the FCA, every common carrier must file tariffs showing "all charges" and the "classifications, practices, and regulations affecting such charges." 47 U.S.C. § 203(a). The filed-rate doctrine "derives from the tariff-filing requirements of the [FCA]." Evanns, 229 F.3d at 840. We have described the filed-rate doctrine as follows:

[O]nce a carrier's tariff is approved by the FCC, the terms of the federal tariff are considered to be the law and to therefore conclusively and exclusively enumerate the rights and liabilities as between the carrier and the customer. Not only is a carrier forbidden from charging rates other than as set out in its filed tariff, but customers are also charged with notice of the terms and rates set out in that filed tariff and may not bring an action against a carrier that would invalidate, alter or add to the terms of the filed tariff.

Id. (internal quotation marks & footnotes omitted).

Plaintiffs argue that the "charges, practices, and regulations in Defendants' tariffs are unjust or unreasonable because their terms are not clear and do not contain explicit explanatory statements regarding the rates and regulations." This argument is foreclosed. Brown v. MCI WorldCom Network Servs., Inc., held that "no one may bring a judicial challenge to the validity of a filed tariff," and that "[t]he filed-rate doctrine precludes courts from deciding whether a tariff is reasonable, reserving the evaluation of tariffs to the FCC." 277 F.3d 1166, 1170-71 (9th Cir.2002); accord Cahnmann, 133 F.3d at 487. In Brown, the plaintiff's claims were justiciable only because the plaintiff sought to have the court interpret and enforce the terms of a tariff, not to challenge the filed tariff itself. 277 F.3d at 1171-72. We observed, however, that the filed-rate doctrine precludes courts from determining whether a tariff is reasonable. Id. at 1171.

Plaintiffs are not helped by their citation of Security Services Inc. v. K Mart Corporation, 511 U.S. 431, 114 S.Ct. 1702, 128 L.Ed.2d 433 (1994). There, the Court held that the common carrier could not recover under the tariff because there was essentially no tariff on file. Id. at 440-41, 114 S.Ct. 1702. That is not the case here. Defendants had a tariff on file that had been approved by the FCC. Plaintiffs' FCA claims were a direct challenge to the filed rate, and consequently barred by the filed-rate doctrine. Thus, we affirm the district court's dismissal of plaintiffs' FCA claims.

IV.

Sound Travel contends that the district court erred in denying its motion for remand. Sound Travel's complaint alleges only one legal claim: violation of the Washington Consumer Protection Act. In essence, Sound Travel alleges that NOS violated the Washington Consumer Protection Act by marketing false billing information and by failing to notify consumers of differences between the quoted price and the actual price. It seeks damages due to economic loss, reasonable attorney's fees and litigation expenses, and treble, exemplary and/or punitive damages. We review de novo the district court's denial of Sound Travel's motion to remand. See Audette v. Int'l Longshoremen's & Warehousemen's Union, 195 F.3d 1107, 1111 (9th Cir.1999).

A defendant may remove an action originally filed in state court only if the case originally could have been filed in federal court. 28 U.S.C. § 1441(a), (b). Where, as here, no diversity of citizenship exists, a federal...