In Re Long Distance Telecommunications Litigation, MDL 598. Civ. No. 86 71767.

• Decision Date: 29 July 1986
• Docket Number: No. MDL 598. Civ. No. 86 71767.,MDL 598. Civ. No. 86 71767.
• Citation: 640 F. Supp. 997
• Parties: In re LONG DISTANCE TELECOMMUNICATIONS LITIGATION. Sam SOLOMON, Plaintiff, v. MCI TELECOMMUNICATIONS CORPORATION and GTE Sprint Communications Corporation, Defendants.
• Court: U.S. District Court — Western District of Michigan

640 F. Supp. 997

In re LONG DISTANCE TELECOMMUNICATIONS LITIGATION.

Sam SOLOMON, Plaintiff, v. MCI TELECOMMUNICATIONS CORPORATION and GTE Sprint Communications Corporation, Defendants.

No. MDL 598. Civ. No. 86 71767.

United States District Court, E.D. Michigan, S.D.

July 29, 1986.

Richard Gray, for defendants Jenner & Block, Chicago, Ill., for defendants.

Fay Clayton, Schnoff Weaver & Rubernstein, LTD., Chicago, Ill., Larry Drury, Chicago, Ill., for plaintiff.

Howard Kristol, New York City, for GTE Sprint.

MEMORANDUM OPINION AND ORDER

ANNA DIGGS TAYLOR, District Judge.

This is a class action which was filed in an Illinois state court claiming breach of contract and fraud and requesting an accounting as well as injunctive relief against MCI Telecommunications Corporation (MCI) and GTE Sprint Communications Corporation (Sprint). This court has removal jurisdiction pursuant to 28 U.S.C. § 1441(b) (1973), and 47 U.S.C. § 151, et seq. (1962), the Federal Communications Act of 1934.

The corporate defendants provide long distance telecommunications services to the public, nationwide. They utilize the United States mail and the media to advertise and contract for their services. Plaintiff, a resident of Skokie, Illinois, entered into contracts with defendants which he contends represented that charges would be made to his account only for calls completed by an answer at the number called. Contrary to the alleged agreements, MCI has charged plaintiff for a call on the basis of certain programmed sounds which activated the billing system and Sprint has charged plaintiff for a call based upon the number of times the destination telephone rang. Those charges were made, allegedly, regardless of whether the calls were ever actually completed and without notice to the customer of the practice. Plaintiff alleges that defendants intentionally conducted a deceitful and fraudulent concealment of this charging practice. Plaintiff further alleges that defendants' fraudulent acts have resulted in their unjust enrichment and that they have ignored plaintiff's request for a refund.

Plaintiff filed this complaint in the Circuit Court of Cook County, Illinois. In addition to the breach of contract and fraud claims, plaintiff alleges that defendants' misconduct constitutes unfair competition and unfair conduct of trade or commerce in violation of the Illinois Consumer Fraud and Deceptive Practices Act, Ill.Rev. Stat. ch. 121½, § 262, and the Illinois Uniform Deceptive Trade Practices Act, Ill. Rev.Stat. ch. 121½, § 2 (12).

Plaintiff seeks an accounting and refund of all illegal charges, a declaratory judgment, and an injunction ordering the defendants to refrain from charging, collecting and retaining funds from incompleted calls, and damages.

On defendants' petition, the matter was removed to the United States District Court for the Northern District of Illinois on the basis of that court's federal question jurisdiction. 28 U.S.C. 1441. Plaintiff has filed a motion for remand to the Circuit Court.

In the interim, the Judicial Panel on Multidistrict Litigation transferred the case to this district pursuant to the provision of 28 U.S.C. § 1407(a) (1968), that civil actions involving common factual questions but pending in several judicial districts may be transferred to one district for consolidated pretrial proceedings. Several cases involving common questions of fact concerning the alleged unlawful billing, advertising and disclosure practices of these defendants have been filed throughout the United States and previously have been transferred to this court for pretrial proceedings. Ultimately, those cases have been dismissed in deference to the jurisdiction of the United States Federal Communications Commission over the substantive questions presented.

Plaintiff requests an order of remand to the Illinois Circuit Court because his complaint, on its face, presents only state claims. He argues that the federal question presented must be an essential and substantial element of the complaint, on its face, to establish federal jurisdiction. See, e.g., Urban Renewal Auth. of City of Trinidad, Colo. v. Daugherty, 271 F.Supp. 729 (D.C.Colo.1967).

Defendants' responsive arguments are very similar. They each argue that pursuant to the "artful pleading" doctrine, plaintiff's alleged state law claims are in actuality a course of action viable only under and pre-empted by the Communications Act; and, that the federal statute provides a complete remedy for plaintiff. Alternatively, defendants argue that this court has jurisdiction pursuant to federal common law.

To determine whether the true nature of plaintiff's claims is federal, notwithstanding any labels affixed, the court must examine the complaint. Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 13, 103 S.Ct. 2841, 2848, 77 L.Ed.2d 420 (1983). Defendants assert that a close reading of plaintiff's complaint requires the finding that plaintiff has attempted to disguise his federal claim in Illinois state law.

It is apparent that plaintiff does contest Sprint's and MCI's charging practices. The language of the Communications Act indicates that it was intended to govern the actions of "all interstate and foreign communications by wire and radio ... and all persons engaged within the United States in such communication ..." 47 U.S.C. § 152(a)(1964). Congress' stated objective at section 151 of the Act is to provide "a rapid, efficient, nationwide and worldwide wire and radio communications service with adequate facilities at reasonable charges ..." These sections of the Act give the Commission "broad responsibilities" to regulate interstate communications. United States v. Southwestern Cable Co., 392 U.S. 157, 177-78, 88 S.Ct. 1994, 2005, 20 L.Ed.2d 1001 (1968).

Plaintiff alleges that the defendants have billed him, and numerous other members of the class, for incompleted calls. This conduct is expressly prohibited by section 201(b) of the Act: "all charges, practices, classifications, and regulations for and in connection with a carrier's communications services shall be just and reasonable."

The Court of Appeals for the Ninth Circuit has held that the court may even look beyond the complaint to discover facts which would appear in the complaint if it had been well pleaded. Olquin v. Inspiration Consolidated Copper Co., 740 F.2d 1468, 1473 (9th Cir.1984). But it is evident from this plaintiff's complaint itself that he is alleging a federal cause of action.

MCI has cited other cases in which the plaintiffs had attempted, unsuccessfully to camouflage their federal law claims with accusations of state law violations. Indeed, this court has already decided that complaints resembling this one, which were based on alleged state law violations, were pre-empted by the Communications Act and properly removed to the federal court. Lazar v. MCI Communications Corp., 598 F.Supp. 951 (E.D.Mich.1984), Sandler v. GTE Sprint Communications Corp., 622 F.Supp. 282 (E.D.Mich.1985). The motion to remand was denied in each instance because the court found that the plaintiffs had couched their complaints, which were essentially federal law claims, in artfully pleaded state law disguises.

The Communications Act does pre-empt plaintiff Solomon's state law claims and it affords plaintiff a remedy. Whenever a plaintiff's state law claims are pre-empted by federal law and that federal law also provides a complete remedy for plaintiff, removal is proper and the federal court may recharacterize plaintiff's allegations as federal under the "artful pleading doctrine." Reid v. United States, 715 F.2d 1148, 1153 (7th Cir.1983).

The courts have recognized the significance of uniform federal jurisdiction over matters concerning regulation of interstate telecommunications, and the necessary preemption of state law. State regulation or interference is disfavored: "The Act must be construed in light of the needs for comprehensive regulation and the practical difficulties inhering in state by state regulation of parts of an organic whole." General Tele. Co. of Cal. v. FCC, 413 F.2d 390, 398 (D.C.Cir.), cert. denied, 396 U.S. 888, 90 S.Ct. 173, 24 L.Ed.2d 163 (1969). Accord, Lazar, ...