City of Tucson v. U.S. West Communications, Inc.

• Decision Date: 26 March 2002
• Docket Number: No. 00-16416.,00-16416.
• Citation: 284 F.3d 1128
• Parties: CITY OF TUCSON, Plaintiff-Appellee, v. U.S. WEST COMMUNICATIONS, INC., a Colorado Corporation, now known as Qwest Corporation, Defendant-Appellant, v. Martha Chase, ex rel State of Arizona, County Attorney for Santa Cruz County; County of Santa Cruz, Plaintiffs-Intervenors-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

284 F.3d 1128

CITY OF TUCSON, Plaintiff-Appellee, v. U.S. WEST COMMUNICATIONS, INC., a Colorado Corporation, now known as Qwest Corporation, Defendant-Appellant, v. Martha Chase, ex rel State of Arizona, County Attorney for Santa Cruz County; County of Santa Cruz, Plaintiffs-Intervenors-Appellees.

No. 00-16416.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted January 14, 2002.

Filed March 26, 2002.

COPYRIGHT MATERIAL OMITTED

Paul J. Mooney, (Argued and Briefed), Phoenix, AZ, for the defendant-appellant.

William Malone, (Argued and Briefed), Washington, DC, for the plaintiff-appellee.

Ronald M. Lehman, (Argued), Tucson, AZ, for the plaintiffs-intervenors-appellees.

Appeal from the United States District Court for the District of Arizona, Frank R. Zapata, District Judge, Presiding.

Before: NOONAN, TROTT, Circuit Judges, and EZRA,¹ District Judge.

OPINION

TROTT, Circuit Judge.

OVERVIEW

U.S. West Communications, Inc., now Qwest Corporation ("Qwest"), appeals the district court's Burford abstention order remanding this quo warranto/declaratory judgment action to state court. In response, the City of Tucson ("Tucson") challenges our jurisdiction to hear Qwest's appeal. Because we conclude that: (1) the requirements for Burford abstention are not present, and (2) the Declaratory Judgment Act provides no bases for abstention, we reverse and remand for further proceedings in the district court.

BACKGROUND

Tucson is a municipal corporation and a political subdivision of Arizona. Qwest is a public service corporation registered in Colorado with its principal place of business in Colorado. Qwest provides telecommunication services in Arizona, specifically in Tucson, and has done so for over 100 years. To provide these services, Qwest installed, and currently operates and maintains, equipment and facilities within the public rights-of-way of Tucson.

Tucson filed a complaint in Arizona Superior Court for quo warranto or in the alternative for declaratory relief, alleging Qwest "illegally usurped and continues to illegally usurp the franchise for the use of the public rights-of-way of the City of Tucson for the transaction of its telecommunications business." A franchise is a grant of the right to use public property in a particular way, and Tucson's quo warranto action asks "by what authority" is Qwest using Tucson's public property? Tucson's objective in bringing this action was to force Qwest to apply to use, and pay for its use, of the public rights-of-way in Tucson.

After removing the action to federal court on the basis of diversity jurisdiction, Qwest filed its answer, claiming it held a valid pre-statehood, statewide franchise and was therefore not required to obtain additional franchises from each Arizona city. Based on various abstention doctrines, Tucson moved to remand the case to state court.

The district court assigned the case to a magistrate judge, who recommended granting Tucson's motion to remand based on Burford abstention. In a subsequent Report and Recommendation, the magistrate judge confirmed the existence of subject matter jurisdiction but reiterated the recommendation to remand. The district court adopted the magistrate judge's two reports in its memorandum opinion and order and cited judicial discretion under the Declaratory Judgment Act as an alternative basis for declining jurisdiction. The Declaratory Judgment Act states that a court "may" declare the rights of the parties seeking such a declaration. Thus, the district court reasoned that the Act grants discretionary relief, and because the complaint sought such relief the court's decision to abstain was discretionary and "need not be supported by findings of exceptional or extraordinary circumstances" as required under typical abstention doctrines. Qwest challenges the use of abstention as a valid basis for remanding the case.

DISCUSSION

I Appellate Jurisdiction Is Not Barred By 28 U.S.C. § 1447(d)

Tucson claims as a preliminary matter that 28 U.S.C. § 1447(d), which states that "[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise," prohibits appellate review of the district court's remand order. Yet, the language of " § 1447(d) must be read in pari materia with § 1447(c), so that only remands based on grounds specified in § 1447(c) are immune from review under § 1447(d)." Things Remembered Inc. v. Petrarca, 516 U.S. 124, 127, 116 S.Ct. 494, 133 L.Ed.2d 461 (1995). Section 1447(c) specifically refers to remands based on procedural defects in removal and lack of subject matter jurisdiction:

A motion to remand the case on the basis of any defect in the removal procedure must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.

§ 1447(c). Thus, it is clear that non-jurisdictional, discretionary remands are not barred from appellate review. In Quackenbush v. Allstate Insurance Co., the Supreme Court noted that § 1447(d) "interpose[d] no bar to appellate review" of a remand order based on Burford abstention. 517 U.S. 706, 711, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996). More specifically, the Court held that, although a remand based on Burford abstention is not a typical final order, it is immediately appealable under 28 U.S.C. § 1291. Id. at 711-12, 116 S.Ct. 1712.

Here, the magistrate judge found subject matter jurisdiction based on diversity of citizenship: Tucson is an Arizona municipal corporation; Qwest is a citizen of Colorado; and the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332; see also Ames v. Kansas, 111 U.S. 449, 4 S.Ct. 437, 28 L.Ed. 482 (1884); Wilder v. Brace, 218 F.Supp. 860, 863-65 (D.Me. 1963) (holding that a federal court with diversity jurisdiction can hear a state quo warranto action). According to its order, the district court remanded this case utilizing its "discretion to abstain ... based upon comity and wise judicial administration," grounds not specified in § 1447(c). Because the remand order was predicated upon abstention, appellate review is not barred by § 1447(d).

II The Requirements For Abstention Have Not Been Met

A. Standard of Review

We review de novo whether the requirements for abstention have been met. Fireman's Fund Ins. Co. v. Quackenbush, 87 F.3d 290, 294 (9th Cir.1996). When the requirements for abstention are present, we review the district court's decision to abstain for an abuse of discretion. Id.

B. Burford Abstention

District courts have an obligation and a duty to decide cases properly before them, and "[a]bstention from the exercise of federal jurisdiction is the exception, not the rule." Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 813, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976). Nevertheless, Burford abstention allows a federal district court to abstain from exercising jurisdiction if the case presents "difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar," or if decisions in a federal forum "would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern." Colorado River, 424 U.S. at 814, 96 S.Ct. 1236; see also Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943).

In Burford, the Sun Oil Company brought suit in federal district court, based on diversity jurisdiction, seeking to cancel the Texas Railroad Commission's grant of certain oil drilling permits, or in the alternative, to enjoin the operation of the new wells and prevent them from extracting more than their fair share of oil from the field. 319 U.S. at 317, 63 S.Ct. 1098; Sun Oil Co. v. Burford, 124 F.2d 467, 468 (5th Cir.1941), vacated by 130 F.2d 10 (5th Cir.1942). The federal district court dismissed the case, holding that prior precedent dictated that conservation cases, such as the one before it, should be relegated to state courts, even though the federal courts had jurisdiction. Sun Oil Co. v. Burford, 124 F.2d at 468. However, the Fifth Circuit Court of Appeals reversed the district court's dismissal upon rehearing and determined that a federal court with jurisdiction should decide all questions of law and fact necessary for a complete disposition of the case. See Sun Oil Co. v. Burford, 130 F.2d 10 (5th Cir.1942), reversed by 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). The Supreme Court agreed with the district court's dismissal, recognizing that, due to the "geologic realities" of oil and gas, Texas had created a comprehensive, centralized state regulatory system to conserve resources and allocate drilling rights. Burford, 319 U.S. at 318, 63 S.Ct. 1098. In addition, the Texas legislature had concentrated all direct reviews from the commission's orders in the state district courts of Travis County, Texas. Id. at 326, 63 S.Ct. 1098. Considering the specialized system of state administration that affected issues of vital local concern, the Supreme Court affirmed the district court's dismissal of the case. Id. at 332-34, 63 S.Ct. 1098 ("The state provides a unified method for the formation of policy and determination of cases by the Commission and by the state courts.... Conflicts in the interpretation of state law, dangerous to the success of state policies, are almost certain to result from the intervention of the lower courts.").

Since Burford, the Supreme Court has not "provide[d] a formulaic test for determining when dismissal under Burford is appropriate," but it has made it clear that "Burford represents an `extraordinary and narrow exception to the duty of the District Court to adjudicate a controversy properly before it.'" Allstate, 517 U.S. at 727-28, 116 S.Ct. 1712 (quoting Colorado River, 424 U.S. at 813, 96 S.Ct. 1236). While ...