Eldee-K Rental Props. LLC v. DirecTV, Inc.

• Decision Date: 17 November 2011
• Docket Number: No. C 11-02416 CRB,C 11-02416 CRB
• Parties: ELDEE-K RENTAL PROPERTIES, LLC, Plaintiff, v. DIRECTV, INC., Defendant.
• Court: U.S. District Court — Northern District of California

ELDEE-K RENTAL PROPERTIES, LLC, Plaintiff,

v.DIRECTV, INC., Defendant.

No. C 11-02416 CRB

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

Dated: November 17, 2011

ORDER GRANTING MOTION TO

DISMISS

Eldee-K, a Connecticut apartment building owner, brings this putative class action against DIRECTV, alleging that DIRECTV installed satellite reception equipment on its property without its consent. Eldee-K challenges DIRECTV's nationwide policy permitting apartment tenants to obtain their landlords' verbal authorization to install the satellite equipment, claiming that the policy enables unauthorized installations.

DIRECTV moves to dismiss and to strike Eldee-K's class allegations. It essentially argues that this case, at its core, involves local and individual claims that the class plaintiffs must bring in the jurisdictions where their properties are located. The Court agrees.

I. BACKGROUND

DIRECTV provides television programming to subscribers throughout the United States. Compl. (dkt. 1) ¶ 7. Unlike cable television companies, DIRECTV transmits the TV signal from orbiting satellites to satellite reception equipment that it installs at customers' homes. Id.

FCC regulations allow owners of multiple dwelling units ("MDU") control over the installation of this equipment "in common areas or restricted access areas that are not within the tenant's exclusive use or control." Id. ¶ 10. DIRECTV thus requires that MDU-tenants obtain landlord consent, where necessary, prior to installation of receivers through one of two methods: (1) written authorization from the landlord (Part 1 of DIRECTV's "Permission Form"), or (2) verbal authorization that the tenant certifies to DIRECTV, stating that the landlord has consented to the tenant putting up a satellite receiver (Part 2 of the Form). Id. ¶ 11.

Eldee-K, a Connecticut MDU owner, alleges that DIRECTV affixed a satellite reception dish to the exterior wall of one of its MDU's, pursuant to a Part 2 authorization, without in fact obtaining permission to do so. Id. ¶ 10. Eldee-K does not challenge DIRECTV's Part 1 authorization policy. However, it argues that the use of the Part 2 Form constitutes "a uniform, nationwide practice and policy designed to enable installation of the [satellite] Equipment in or on common or restricted areas of MDU's without prior written permission from the Landlord." Id. ¶ 12. Eldee-K alleges that this practice of "'documenting' non-existent Landlord 'consents'" has caused the unauthorized, "permanent[] and illegal[]" installation of DIRECTV equipment on Eldee-K properties. Id. ¶¶ 16-17.¹

Eldee-K seeks to bring a class action under Federal Rule of Civil Procedure 23(a) and 23(b)(3) on behalf of the following class:

All persons or entities ("Landlords") that own and lease residential MDUs [sic] in the United States (the "MDU's") upon or in common or restricted areas of which Defendant DIRECTV or its agents ("DIRECTV") have permanently installed DIRECTV Equipment after obtaining Part 2 of a DIRECTV Installation Form to the installation of the Equipment.

Id. ¶ 18. Eldee-K claims that DIRECTV's Part 2 policy constitutes: (A) a violation of California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq., based on DIRECTV's "adopti[on] and implement[ation] [of] policies and practices with the purpose and effect of enabling the illegal installation of the Equipment . . . in contravention of [DIRECTV's] legal duty not to enter common or restricted areas of MDU's without permission . . ." (Count I), id. ¶ 30; and (B) common law negligence, entitling the landlords to equitable relief (Count II) and damages (Count III), based on breach of an alleged "duty not to install the Equipment in or on common or restricted areas . . . upon receipt of the Part 2 of the DIRECTV Installation Form," id. ¶¶ 36.

DIRECTV now moves to dismiss, see Mot. to Dismiss, and to strike the class allegations, see Strike Mot. (dkt. 8).

II. DISCUSSION

DIRECTV moves to dismiss on two grounds. First, it argues that the Court lacks subject matter jurisdiction because Eldee-K's claims "concern an injury to, and interest in, real property and thus are local in nature." Mot. to Dismiss at 1-2. DIRECTV argues that, under the "local action doctrine," "jurisdiction must be exercised in the state where the property is located." Id. at 2.² DIRECTV moves to dismiss the case, because the alleged injuries occurred in Connecticut, where Eldee-K's properties are located.³

Second, apart from the local action question, DIRECTV argues that the Court should equitably abstain from exercising jurisdiction where, as here, "complex regulatory schemes are implicated and which may result in the court's interference with the functions of an administrative agency." Id.

The Court agrees with DIRECTV's argument under the local action doctrine, and thus, need not reach the second issue. "The local action doctrine is a relic of English common law imported into this country by Chief Justice Marshall while sitting as a circuit judge in Livingston v. Jefferson, 15 Fed. Cas. 660 (C.C.D.Va. 1811) . . . . It is not frequently invoked by the courts." Prawoto v. PrimeLending, 720 F. Supp. 2d 1149, 1152 (C.D. Cal. 2010) (citations and quotations omitted).⁴ Although no federal statute codifies or defines the doctrine, a leading treatise states that "this concept imported from the common law now is established firmly in federal jurisprudence and the case law makes it as clear as anything can be that this distinction exists [between local and transitory actions] and that local actions can be brought only where the property involved in the action is located." 14D Wright, Miller & Cooper, Federal Practice and Procedure § 3822 (3d ed. 2011) (citing cases); see also United States v. Byrne, 291 F.3d 1056, 1061 (9th Cir. 2002) ("The federal district courts' jurisdiction over actions concerning real property is generally coterminous with the states' political boundaries."); Josevig-Kennecott Copper Co. v. James F. Howarth Co., 261 F. 567, 569-71 (9th Cir. 1919) (applying the local action doctrine).

Despite the doctrine's 200-year history, courts have struggled to define what constitutes a local action. Eldee-K and DIRECTV charge headlong into this definitional ambiguity: does this putative class action on behalf of landlords across the United States (based on DIRECTV's use of the Part 2, verbal consent process and its installation of equipment upon receipt of Part 2 authorization) constitute a transitory or a local action?

The Court's resolution of this question turns on its characterization of the lawsuit (see infra section 3), however, the Court must first clear some procedural brush regarding the doctrine's proper application (see infra sections 1 and 2).

1. State Law Controls Whether This Case is Local or Transitory

The parties dispute whether state or federal law should determine whether this actionis local or transitory. DIRECTV argues that California law controls, citing a Ninth Circuit decision from 1919 that "admit[s] that the question whether the action is local or transitory is to be determined by the law of the state." See Mot. to Dismiss at 6-7 (citing Josevig, 261 F. at 569).

Eldee-K, on the other hand, argues that "federal common law" controls. Opp'n (dkt. 19) at 4 n.1. Although courts have challenged the quality of the precedent upon which Josevig relied,⁵ Josevig remains binding authority in the Ninth Circuit. See Prawoto, 720 F. Supp. 2d at 1154 ("It matters not whether the court might, in the absence of binding circuit authority, interpret [the precedent] differently. It is bound to apply Josevig[] as the law of the Ninth Circuit."). Thus, this Court will apply California law in determining the nature of this action.

2. The Court May Apply State Venue Rules in its Analysis

Eldee-K also argues that the local action doctrine impacts jurisdiction as a matter of federal law but impacts venue as a matter of state law. Opp'n at 8-9.⁶ Although California codifies a local action doctrine for venue purposes, see Cal. Code Civ. Proc. § 392,⁷ it doesnot do so for jurisdictional purposes, see Opp'n at 14-15 (noting that, in 1966, California repealed Article VI, section 5 of its Constitution, which previously defined local actions jurisdictionally). Eldee-K thus argues that the local action doctrine does not limit the Court's jurisdiction, if indeed the Court finds California law controlling, because California jurisdictional rules do not contain a local action concept. Id.

Eldee-K's argument fails. No cases in the Ninth Circuit address the issue of applying California venue principles to a federal local action analysis.⁸ Despite this lack of direct authority, the strongest argument urges application of § 392. Accepting Eldee-K's argument (that the Court should not use § 392 in its application of California law to the local action question) would effectively abolish the local action doctrine in federal courts in California. California's local action doctrine pertains to venue; the federal doctrine pertains to jurisdiction. If the Court cannot transpose the doctrine from California's venue rules, this will result in the doctrine's complete absence in federal court.

Indeed, the fact that federal courts sitting in California continue to apply the doctrine⁹ indicates that the Circuit's application of state law does not cancel out the doctrine in its federal (jurisdictional) form. Accordingly, the Court will apply California law and rely on § 392 and its related case law to determine whether this action is local.

3. This Action is Essentially Local in Character

Trespass constitutes a local action under both federal¹⁰ and California¹¹ law. DIRECTV claims that Eldee-K has tried to "style[] [the action] as one of negligence and unfair business practices, although the gravamen of the suit plainly is one for injury to property,"¹² Reply (dkt. 22) at 10 - namely "DIRECTV's unconsented entry onto and...