Ball vs. GTE

• Decision Date: 08 June 2000
• Citation: 96 Cal.Rptr.2d 801,81 Cal. App. 4th 529
• Court: California Court of Appeals Court of Appeals
• Parties: (Cal.App. 3 Dist. 2000) SUSANNE BALL et al., Plaintiffs and Appellants, vs. GTE MOBILNET OF CALIFORNIA et al., Defendants and Respondents. 3 Civil C031783 (Sacramento) Filed:

96 Cal.Rptr.2d 801 (Cal.App. 3 Dist. 2000)

SUSANNE BALL et al., Plaintiffs and Appellants, vs. GTE MOBILNET OF CALIFORNIA et al., Defendants and Respondents.

3 Civil C031783

COURT OF APPEAL OF THE STATE OF CALIFORNIA, THIRD APPELLATE DISTRICT (Sacramento)

Filed: 6/8/00

APPEAL from judgment of the Superior Court of the County of Sacramento. John R. Lewis, Judge. Reversed.

(Super.Ct.No. 98AS03811)

Law Office of Franklin & Franklin, J. David Franklin, Law Office of Anthony A. Ferrigno, Anthony A. Ferrigno, Law Office of Whitmer & Law, James Whitmer for Plaintiffs and Appellants.

Law Office of Farella, Braun & Martel, Douglas R. Young, Robert C. Holtzapple, Grace K. Won, Law Office of Alston & Bird, Peter Kontio, Michael P. Kenny, for Defendants and Respondents GTE Mobilnet of California et al.

Law Office of Gibson, Dunn & Crutcher, Joel Steven Sanders, Steven S. Kimball, and Mark A. Perry for Defendant and Respondent Los Angeles Cellular Telephone Co.

Law Office of Pillsbury, Madison & Sutro, Mary B. Cranston, Kevin M. Fong, D. Kirk Jamieson, John S. Poulos for Defendants and Respondents AirTouch Cellular et al.

Law Office of Watson, Khachadourian, Re & Kraft, Kevin R. Iams, Law Office of Stokes Lawrence, P.S., Laura J. Buckland, Heather C. Francks for Defendants and Respondents AT&T Wireless Services, Inc. et al.

Law Office of Gray, Cary, Ware & Freidenrich, William N. Kammer, Daniel T. Pascucci, Mary A. Lehman for Defendants and Respondents Cox Communications et al.

Pacific Telesis Group Legal Department, Bart Kimball for Respondent and Defendant Pacific Bell Mobile Services.

Law Office of Stevens & O'Connell, Charles J. Stevens, Stephen J. Burns, Bradley A. Benbrook for Defendant and Respondent Bakersfield Cellular Telephone Company.

Law Office of Keker & Van Nest, Steven A.Hirsch and Loretta Lynch for Defendant and Respondent Bay Area Cellular Telehone Co. et al.

CERTIFIED FOR PUBLICATION

DAVIS, J.

Recognizing the rapid growth of the cellular phone industry and related wireless communication methods (termed "commercial mobile radio services (CMRS)", or "commercial mobile services"), the United States Congress in 1993 amended the Communications Act of 1934. (47 U.S.C. 151 et seq.; Omnibus Budget Reconciliation Act of 1993, Pub. L. 103-66, 6002, 107 Stat. 312, 387-97 (1993); see In re Comcast Cellular Telecom. Litigation (E.D.Pa. 1996) 949 F.Supp. 1193, 1197 (Comcast Cellular).) Pursuant to its stated goals of deregulating CMRS while providing a basic federal regulatory framework, Congress amended section 332 of the Communications Act to provide:

"[N]o 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. 332(c)(3)(A) (hereafter, 332(c)(3)(A)), italics added; see Comcast Cellular, supra, 949 F.Supp. at p. 1197.)

The plaintiffs here have sued every major provider and owner of cellular phone services and related wireless personal communication services in California (for simplicity, we will refer to these entities and services specifically as defendants and generically as cellular providers or cellular services). Basically, plaintiffs object to having to pay for non-communication time when using these services (essentially, non-talking time, including "rounding-up" to the next full minute); they ground their objection in California's law on unfair and unlawful business practices. (Bus. & Prof. Code, 17200 et seq.) The trial court sustained the defendants' demurrer without leave to amend and entered a judgment of dismissal, concluding that section 332(c)(3)(A) preempted these state law claims.

We conclude that plaintiffs cannot invoke state law to complain of having to pay non-communication time after August 7, 1995; this is because section 332(c)(3)(A)'s preemptive force became effective in California on August 8, 1995, and such a complaint would involve the state in regulating "the rates charged." However, plaintiffs can invoke state law to complain that such charges, before and after August 8, 1995, were not disclosed; this is because such disclosure is a "term and condition" over which the state can exercise its laws. Plaintiffs can also claim that defendants violated their pre-August 8, 1995 tariffs on file with the California Public Utilities Commission (PUC). Accordingly, we reverse the judgment of dismissal.

BACKGROUND

Before 1993, the regulation of cellular services was divided between federal and state authorities, largely along an interstate/intrastate line. (See former 47 U.S.C. 152(b); 47 U.S.C. 201; Kennedy and Purcell, Section 332 of the Communications Act of 1934: A Federal Regulatory Framework That Is "Hog Tight, Horse High, and Bull Strong" (1998) 50 Federal Communications L.J. 547, 555-561 (hereafter, Kennedy and Purcell, Section 332, 50 Federal Communications L.J.). For example, the PUC had the power to review certain cellular rates that were filed with it in a tariff, under a "just and reasonable" standard. (See e.g., Pub. Util. Code, 728.)

By enacting section 332(c)(3)(A) in 1993, Congress "dramatically revise[d] the regulation of the wireless telecommunications industry, of which cellular telephone service is a part." (Conn. Dept. of Public Utility Cont. v. F.C.C. (2d Cir. 1996) 78 F.3d 842, 845; see Kennedy and Purcell, Section 332, 50 Federal Communications L.J. at pp. 555-565.) "To foster the growth and development of mobile services [i.e., cellular and related mobile wireless communications] that, by their nature, operate without regard to state lines as an integral part of the national telecommunications infrastructure, new section 332(c)(3)(A) . . . preempt[s] state rate and entry regulation of all commercial mobile services," but permits state regulation of "other terms and conditions." (H.R. Rep. No. 103-111, at p. 260, reprinted in 1993 U.S.C.C.A.N. 378, 587 (hereafter, H.R. Rep. No. 103-111, with page numbers from 1993 U.S.C.C.A.N.); 332.) These "other terms and conditions," notes this House Report, include "such matters as customer billing information and practices and billing disputes and other consumer protection matters; facilities siting issues (e.g., zoning); transfers of control; the bundling of services and equipment; and the requirement that carriers make capacity available on a wholesale basis or such other matters as fall within a state's lawful authority." (H.R. Rep. No. 103-111, p. 588; see also Tenore v. AT&T Wireless SVCS (Wa. 1998) 962 P.2d 104, 111 (Tenore); GTE Mobilnet of Ohio v. Johnson (6th Cir. 1997) 111 F.3d 467, 477-478.)

The trial court sustained the defendants' demurrer without leave to amend "on the ground the Federal Communications Act [ 332(c)(3)(A)] preempts all state regulatory authority over wireless service rates."¹

DISCUSSION

1. Standard of Review

A general demurrer challenges only the legal sufficiency of the complaint, not the truth or the accuracy of its factual allegations or the plaintiff's ability to prove those allegations. (Amarel v. Connell (1988) 202 Cal.App.3d 137, 140.) When a demurrer is sustained without leave to amend, we determine whether there is a reasonable possibility that a cause of action can be stated: if it can be, we reverse; if not, we affirm. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

A demurrer is an appropriate vehicle to secure a dismissal of a state law action based on federal law preemption. (See Smiley v. Citibank (1995) 11 Cal.4th 138, 164; Sanderson, Thompson, Ratledge & Zimny v. AWACS (D.Del. 1997) 958 F. Supp. 947, 957 (Sanderson).) Federal law preemption is based on the Supremacy Clause of the federal Constitution, and may be demonstrated by the explicit language of a federal statute, by an actual conflict between state and federal law, or by a federal law exclusively occupying the "legislative field." (U.S. Const., art VI, cl. 2; Smiley, supra, at p. 147; Sanderson, supra, at p. 957.) The preemption alleged here is based on the explicit language of section 332(c)(3)(A).

2. The Plaintiffs' Challenges to Paying for Non-Communication Time

The plaintiffs' complaint identifies five items of non-communication time that are billed in alleged violation of Business and Professions Code section 17200's prohibition on unfair or unlawful business practices. The five are:

--charging in full-minute billing increments (what the plaintiffs call "rounding up"), in which a full minute of wireless service is charged for each part of a minute used (the first cause of action alleges this is an unfair business practice; the second cause of action alleges it is an unlawful business practice);

--charging from connection to disconnection (what the plaintiffs term the "send" to "end" measurement--pressing the send and end buttons starts and ends the charging; the third cause of action alleges this as an unfair business practice, the fourth cause of action as unlawful);

--charging for ringing time for completed calls, while not charging for ringing time for uncompleted calls (the fifth cause of action alleges this as an unfair business practice, the sixth cause of action as unlawful; this claim was not asserted against Los Angeles Cellular);

--charging full rates for "incomplete calls" in the Los Angeles area for "bucket plans" in violation of PUC-filed tariffs; a "bucket plan" gives a customer a certain number of minutes of use per month; the seventh cause of action alleges this is an unlawful business practice);

--charging for the time it takes for the system to disconnect at the telephone company's facilities after a conversation is concluded (what the plaintiffs term the "lag time"; the eighth cause of action alleges this as an unlawful business practice, the ninth cause of action as unfair).

In each of these causes of action, plaintiffs seek ...