In re Microsoft Corp. Antitrust Litigation
| Decision Date | 31 December 2002 |
| Docket Number | No. CIV. JFM-02-2091.,No. MDL 1332.,MDL 1332.,CIV. JFM-02-2091. |
| Citation | 274 F.Supp.2d 736 |
| Parties | In re MICROSOFT CORP. ANTITRUST LITIGATION. This document relates to: State of West Virginia, ex rel. Darrell V. McGraw, Jr., Attorney General, v. Microsoft Corporation. |
| Court | U.S. District Court — District of Maryland |
Plaintiff, State of West Virginia ex rel Darrell V. McGraw, Jr., Attorney General ("the State" or "West Virginia"), moves to remand this action to the Circuit Court of Boone County, West Virginia. The motion will be granted. The motion for attorneys' fees and costs will, however, be denied.
On May 18, 1998, West Virginia filed an action against Microsoft in the District of Columbia alleging violations of federal antitrust law, the West Virginia Antitrust Act, and the West Virginia Consumer Credit and Protection Act. The district court subsequently held a bench trial and entered judgment. See United States v. Microsoft Corp., 97 F.Supp.2d 59 (D.D.C. 2000); United States v. Microsoft Corp., 87 F.Supp.2d 30 (D.D.C.2000); United States v. Microsoft Corp., 84 F.Supp.2d 9 (D.D.C. 1999). On appeal, the D.C. Circuit Court of Appeals affirmed in part, reversed in part, and vacated the district court's judgment. United States v. Microsoft Corp., 253 F.3d 34 (D.C.Cir.) (en banc), cert. denied, 534 U.S. 952, 122 S.Ct. 350, 151 L.Ed.2d 264 (2001). Following remand, the United States and nine States agreed to a settlement of their claims against Microsoft and proposed a Revised Proposed Final Judgment ("RPFJ") to the district court. Nine other States, including West Virginia, and the District of Columbia opposed the settlement and sought more extensive remedies. On November 1, 2002, Judge Kollar-Kotelly of the district court issued several rulings. Judge Kollar-Kotelly conditionally approved the RPFJ. United States v. Microsoft, 231 F.Supp.2d 144 (D.D.C.2002). Additionally, Judge Kollar-Kotelly denied the requests of West Virginia and the other so-called "dissenting" States for more extensive remedies than those sought in the RPFJ. New York v. Microsoft Corp., 224 F.Supp.2d 76 (D.D.C.2002).
On December 3, 2001, West Virginia filed this action in the Circuit Court of Boone County, West Virginia, alleging only state law claims that Microsoft violated West Virginia's Antitrust Act, West Virginia's Consumer Credit and Protection Act, and West Virginia's Unfair Practices Act. After Microsoft removed the action to the Southern District of West Virginia, the State filed this motion to remand. The motion was pending when the action was transferred to this court on June 17, 2002 by the Judicial Panel on Multidistrict Litigation ("MDL").
In its motion, the State argues that remand is appropriate because none of the claims it has asserted arise under federal law. Microsoft, in response, points to the enigmatic "footnote two" in Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 397 n. 2, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981), as the basis for removal.
Microsoft's removal to federal court is premised on federal question jurisdiction. "The well-pleaded complaint rule requires that federal question jurisdiction not exist unless a federal question appears on the face of a plaintiffs properly pleaded complaint." Columbia Gas Transmission Corp. v. Drain, 237 F.3d 366, 370 (4th Cir.2001) (citing Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804, 808, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986)). There is, however, an exception to the well-pleaded complaint rule known as artful pleading.
"Under the doctrine of `artful pleading,' a court is permitted to look behind a complaint to determine whether a plaintiff is attempting to conceal the federal nature of his claim by fraud or obfuscation." In re Wireless Tel. Radio Frequency Emissions Prod. Liab. Litigation, 216 F.Supp.2d 474, 492 (D.Md.2002) (citation omitted). Artful pleading is best described as "the manner in which some plaintiffs ... manage to plead claims that are actually federal ... under state law." Id.
Two categories of artful pleading cases are firmly established: cases involving complete preemption of state law by federal law, see, e.g., Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 475, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998), and cases involving substantial questions of federal law. See, e.g., Merrell Dow, 478 U.S. at 807 n. 2, 106 S.Ct. 3229; Franchise Tax Board v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 27-28, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). The parties agree that neither of these categories applies in this case.
Instead, Microsoft attempts to rely on a third potential category of artful pleading cases: those falling within Moitie's footnote two. Moitie began as an antitrust suit brought by the United States against various department stores in which it was alleged that the stores had violated section 1 of the Sherman Act, 15 U.S.C. § 1 by agreeing to fix the retail price of women's clothing sold in northern California. Moitie, 452 U.S. at 395, 101 S.Ct. 2424. Subsequently, various private plaintiffs filed seven parallel actions. Six plaintiffs, including Brown (Brown I), brought suit in the United States District Court for the Northern District of California. See id.; see also Arthur R. Miller, Artful Pleading: A Doctrine in Search of Definition, 76 Tex. L.Rev. 1781, 1801 (1998). Moitie brought a separate parallel action in state court (Moitie I). Each of the complaints tracked, almost identically, the language of the Government's complaint, although the Moitie I complaint referred solely to state law. Moitie, 452 U.S. at 396, 101 S.Ct. 2424. All of the actions originally filed in federal district court were consolidated before one judge and the Moitie I case was removed there on the basis of diversity and federal question jurisdiction. Id. Moitie did not challenge removal. See Miller, supra, at 1801. The District Court then dismissed all of the actions in their entirety because the plaintiffs had failed to plead an injury actionable under the Clayton Act, 15 U.S.C. § 15.
Of the seven suits, plaintiffs in five of the suits appealed the dismissal. Moitie, 452 U.S. at 396, 101 S.Ct. 2424. The lawyer for Brown and Moitie, however, reified the two actions in state court (Brown II and Moitie II). The complaints in both cases purported to raise solely state law claims. Both complaints, however, made allegations similar to those made in their previous complaints and in the Government's complaint. The defendants removed the case to federal court on the grounds that the complaints were artfully plead federal claims. The defendants also moved to have the claims dismissed. Id.
Subsequently, the district judge denied Moitie and Brown's motion to remand, holding that the complaints, though artfully couched in terms of state law, were "in many respects identical" with the previous complaints and were properly removed because they raised "essentially federal law" claims. Id. The district court also held that under the doctrine of res judicata, Moitie II and Brown II were dismissed. On appeal, the Ninth Circuit affirmed the district court's ruling on removal; however, it also created a "novel exception to the doctrine of res judicata" and reversed the district's court's dismissal of Moitie II and Brown II. Id. at 397-98, 101 S.Ct. 2424.
The Supreme Court granted certiorari to consider the validity of the Ninth Circuit's holding on res judicata. Id. at 398, 101 S.Ct. 2424. In its opinion, the Supreme Court paid little attention to the issue of removal and focused almost entirely on the res judicata issues. The Court addressed the issue of removal in one footnote that reads in its entirety:
The Court of Appeals also affirmed the District Court's conclusion that Brown II was properly removed to federal court, reasoning that the claims presented were `federal in nature.' We agree that at least some of the claims had a sufficient federal character to support removal. As one treatise puts it, courts `will not permit plaintiff to use artful pleading to close off defendant's right to a federal forum ... [and] occasionally the removal court will seek to determine whether the real nature of the claim is federal, regardless of plaintiff's characterization.' 14 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure §§ 3722, pp. 564-566 (1976) (citing cases) (footnote omitted). The District Court applied that settled principle to the facts of this case. After `an extensive review and analysis of the origins and substance of the two Brown complaints, it found, and the Court of Appeals expressly agreed, that respondents had attempted to avoid removal jurisdiction by `artful[ly]' casting their `essentially federal law claims' as state-law claims. We will not question here that factual finding. See Prospect Dairy, Inc. v. Dellwood Dairy Co., 237 F.Supp. 176 (N.D.N.Y.1964); In re Wiring Device Antitrust Litigation, 498 F.Supp. 79 (E.D.N.Y.1980); Three J Farms, Inc. v. Alton Box Board Co., 1978 WL 1459, 1979-1 Trade Cases ¶¶ 62,423 (D.S.C. 1978), rev'd on other grounds, 609 F.2d 112 (C.A.4 1979), cert. denied, 445 U.S. 911, 100 S.Ct. 1090, 63 L.Ed.2d 327 (1980).
Following the Moitie decision, different courts of appeals took two different approaches in interpreting its footnote two.1 In Travelers Indent. Co. v. Sarkisian, 794 F.2d 754 (2d Cir.1986), the Second Circuit developed a "forum election" interpretation of Moitie. See N.A.A.C.P. v. Metro. Council, 144 F.3d 1168, 1171 (8th Cir. 1998). The. Second Circuit identified two conditions that must be met for removal to be appropriate under Moitie: (1) the elements of the state law claims are virtually identical to those of a claim expressly grounded on federal law; and (2) the plaintiff previously elected to proceed in federal court. Sarkisian, 794 F.2d at 760. Specifically, the Sarkisian court noted that:
Brown had an...
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In re Sd Microsoft Antitrust Litigation, 23506.
...that could not be removed to federal court remained in their respective jurisdictions. See also In re Microsoft Corp. Antitrust Litigation, 274 F.Supp.2d 736 (D.Md.2002) (Microsoft IV). [¶ 4.] In March 2000, four antitrust class actions were filed in South Dakota state courts against Micros......