In re National Sec. Agency Telecomm. Records

• Decision Date: 18 January 2007
• Docket Number: MDL Docket No. 06-1791 VRW.
• Parties: In re NATIONAL SECURITY AGENCY TELECOMMUNICATIONS RECORDS LITIGATION. This Document Relates To: 06-3574; 06-3596.
• Court: U.S. District Court — Northern District of California

483 F.Supp.2d 934

In re NATIONAL SECURITY AGENCY TELECOMMUNICATIONS RECORDS LITIGATION.

This Document Relates To: 06-3574; 06-3596.

MDL Docket No. 06-1791 VRW.

United States District Court, N.D. California.

January 18, 2007.

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ORDER

WALKER, Chief Judge.

On May 26, 2006, plaintiffs brought suit against Verizon Communications, Inc in San Francisco superior court to enjoin Verizon's alleged disclosure to the National Security Agency (NSA) of telephone calling records of its California residential customers. Doc # 1, 06-3574. Plaintiffs allege these disclosures violate their privacy rights under (i) the California Constitution and (ii) California Public Utilities Code § 2891. Id. A similar suit was brought against AT & T Corporation in San Francisco superior court on May 26, 2006. Doc # 1, 06-3596.

Verizon and AT & T removed these actions to this court on June 5 and 6, 2006, respectively, relying on 28 USC §§ 1441 and 1442. Doc # 1, 06-3574; Doc # 1, 06-3596. Plaintiffs in both actions dispute the propriety of removal and have moved to remand these actions to state court, asserting that none of defendants' bases for removal creates jurisdiction in this court. Doc # 20, 06-3574; Doc # 14, 06-3596. On August 4, 2006, the United States filed a "statement of interest" in opposition to plaintiffs' motions to remand. Doc # 44, 06-3574; Doc # 46, 06-3596. For reasons discussed below, the court DENIES plaintiffs' motions to remand.

I

On a motion to remand to state court, a defendant bears the burden of showing that a federal court would have jurisdiction from the outset; in other words, that removal was proper. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). To meet this burden, a defendant must overcome a "strong presumption" against removal. Id. Courts "strictly construe the removal statute against removal jurisdiction[, and] federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Id. See also Plute v. Roadway Package Sys., Inc., 141 F.Supp.2d 1005, 1008 (N.D.Cal. 2001) ("any doubt is resolved in favor of remand").

Plaintiffs move to remand the case for lack of subject matter jurisdiction. See 28 USC § 1447(c) ("If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded."). In their removal papers, defendants assert a number of bases for removal including that (1) plaintiffs' claims are completely preempted by, inter alia, the Foreign Intelligence Surveillance Act, 50 USC § 1801 et seq, Title III of the Omnibus Crime Control and Safe Streets Act of 1968 and the Electronic Communications Privacy Act, codified as amended 18 USC § 2510 et seq, as well as federal common law principles relating to national security affairs, see, e g, Tenet v. Doe, 544 U.S. 1, 7-11, 125 S.Ct. 1230, 161 L.Ed.2d 82 (2005); (2) adjudication of plaintiffs' claims will require resolution of substantial, disputed issues of federal law, see, e g, Grable & Sons Metal Prods. Inc. v. Darue Eng'g and Mfg., 545 U.S. 308, 125 S.Ct. 2363, 2368, 162 L.Ed.2d 257 (2005); and (3) removal is proper pursuant to 28 USC § 1442(a)(1). Notice Removal (Doc # 1). Additionally, the government argues that remand would be futile because it would intervene under state law and remove pursuant to § 1442(a)(1). The court addresses these arguments in turn.

II

A

Federal jurisdiction is normally measured by the yardstick of the well-pleaded complaint rule. "Under this rule, `a cause of action arises under federal law only when the plaintiffs' well-pleaded complaint raises issues of federal law.' For removal to be appropriate, a federal question must appear on the face of the complaint." Toumajian v. Frailey, 135 F.3d 648, 653 (9th Cir.1998) (quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) and citing Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 9-10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)). A corollary to the well-pleaded complaint rule — one that gives content to "well-pleaded" — is the doctrine of complete preemption.

The jurisdictional doctrine of complete preemption provides that, in some instances, "the preemptive force of [federal statutes] is so strong that they completely preempt an area of state law. In such instances, any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law." Ansley v. Ameriquest Mortg. Co., 340 F.3d 858, 862 (9th Cir.2003) (citing Balcorta v. Twentieth Century-Fox Film Corp., 208 F.3d 1102, 1107 (9th Cir.2000)). See also Wayne v. DHL Worldwide Express, 294 F.3d 1179, 1183 (9th Cir.2002). Put simply, the test for complete preemption "is whether Congress clearly manifested an intent to convert state law claims into federal-question claims." Ansley v. Ameriquest Mortg. Co., 340 F.3d 858, 862 (9th Cir.2003) (citing DHL Worldwide Express, 294 F.3d at 1184).

Complete preemption arises only in "extraordinary" situations. DHL Worldwide Express, 294 F.3d at 1184. Indeed, the Supreme Court presently has identified three federal statutes that preempt state law completely: (1) § 301 of the Labor-Management Relations Act, 29 USC § 185; (2) § 502 of the Employee Retirement Income Security Act of 1974, 29 USC § 1132; and (3) the usury provisions of the National Bank Act, 12 USC §§ 85, 86. Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 7-8, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003).

In its most recent treatment of the complete-preemption doctrine, the Supreme Court concluded that two provisions of the National Bank Act — those that (1) permitted national banks to charge certain interest rates and (2) provided a cause of action against banks that charge an interest rate greater than permitted under the Act — completely preempted state-law claims challenging the validity of interest rates charged by the defendant bank. Beneficial Nat'l Bank, 539 U.S. at 9-11, 123 S.Ct. 2058. Although the statutory text did not expressly preclude the operation of state law, the Court concluded that the Act provided the "exclusive" cause of action for usury challenges. See id. at 11, 123 S.Ct. 2058.

Defendants contend that federal law governing national security matters "leaves no room for plaintiffs' state-law privacy claims." Doc # 29 at 7, 06-3574. Safeguarding national security is said to fall squarely within the federal government's "supreme sphere of action." Id. (citing Murphy v. Waterfront Comm'n of N.Y. Harbor, 378 U.S. 52, 76, n. 16, 84 S.Ct. 1594, 12 L.Ed.2d 678 (1964)). See also id. ("The Founders recognized that among the `principal purposes to be answered by [the] union' are `[t]he common defence of the members' and the preservation of the public peace, as well against internal convulsions as external attacks.'" (citing "The Federalist No 23, at 126, Alexander Hamilton")). But defendants' repeated invocation of the "sweeping authority of Congress and the Executive" to protect national security misses the mark. Doc # 29 at 7-9, 06-3574. Under the doctrine of complete preemption, the question is not whether Congressional authority exists, it is instead whether that authority has been exercised to its fullest extent.

If a federal statute lacks express statutory exclusivity language, as here, the analysis focuses upon factors such as the "structure and purpose" of the relevant statutes; whether they contain "complex, detailed, and comprehensive provisions" that "create a whole system under federal control" and whether there exist "extensive federal remedies." In re Miles, 430 F.3d 1083, 1088 (9th Cir.2005) (internal citations omitted).

To support complete preemption, defendants first cite the Stored Communications Act ("SCA"), 18 USC § 2701 et seq, which was enacted as part of the Electronic Communications Privacy Act of 1986 ("ECPA"), Pub L No 99-508, 100 Stat 1848 (1986). The SCA regulates disclosure of non-content "record[s] or other information pertaining to a subscriber." 18 USC § 2702(c). The SCA specifies that "[t]he remedies and sanctions described in this chapter are the only judicial remedies and sanctions for nonconstitutional violations of this chapter." Id § 2708.

Plaintiffs dispute the import of § 2708, contending that it is the counterpart to 18 USC § 2518(10)(c), both of which were added to the ECPA for a limited purpose: to prevent criminal defendants from suppressing evidence based on electronic communications or customer records obtained in violation of ECPA's provisions. Doc # 43 at 6, 06-3596. To support this interpretation, plaintiffs first cite the legislative history of § 2518(10)(c). See S. REP. No. 99-541, U.S.Code Cong. & Admin.News 1986, p. 3555, 3577; H R REP No 99-647 at 75 (1986) ("The purpose of this provision is to underscore that * * * the Electronic Communications Privacy Act does not apply the statutory exclusionary rule contained in title III of the Omnibus Crime Control and Safe Streets Act of 1968 to the interception of electronic communications."). Next, plaintiffs note that § 2708's legislative history adopts § 2518(10)(c)'s discussion by reference. See H R REP No 99-647 at 75 (1986). Doc # 43 at 6, 06-3596. In view of the similarity of the language between the two provisions, and given the House Report's express reference back to the discussion of § 2518(10)(c), the court agrees with plaintiffs' interpretation of the statute. See also United States v. Smith, 155 F.3d 1051, 1056 (9th Cir.1998) (finding that § 2708 precludes suppression as a remedy for violation of SCA). Accordingly, the court concludes that the SCA does not completely preempt suits under state law.

Alternatively, defendants argue that the Foreign Intelligence Surveillance Act ("FISA") completely preempts plaintiffs' state law claims. According to defendants, FISA constitutes a set of "complex,...