Jones v. Havens
| Decision Date | 19 June 2012 |
| Docket Number | Case No.: C-12-01606 JCS |
| Parties | CHANNING JONES, Plaintiff, v. WARREN HAVENS, Defendant. |
| Court | U.S. District Court — Northern District of California |
This action arises out of a business dispute between Plaintiff Channing Jones and Defendant Warren Havens. Defendant removed this case from state to federal court pursuant to 28 U.S.C. §§ 1441 and 1446. Presently before the Court are Plaintiff's Motion for Remand ("Motion for Remand") and Defendant's Motion to Strike Plaintiff's Reply ("Motion to Strike"). The Court finds that the Motions are suitable for determination without oral argument pursuant to Civil Local Rule 7-1(b). Accordingly, the hearing on the Motion set for June 22, 2012 at 9:30 a.m. is VACATED.For the reasons stated below, the Court GRANTS Plaintiff's Motion for Remand and DENIES Defendant's Motion to Strike.1
On October 6, 2011, Plaintiff filed a complaint in Alameda County Superior Court alleging various fraud claims. Complaint at *4. Plaintiff alleges that he invested heavily in Defendant's limited liability companies ("LLCs") but, due to Defendant's fraudulent conduct, Plaintiff's interest in the companies has been substantially diluted and reduced. Id. at *7. The business venture run through the LLCs was designed for the purchase, management, and sale of telecommunications spectrum under license from the Federal Communications Commission ("FCC"). Id. at *6. Plaintiff alleges, inter alia, that Defendant "transferred interests in [LLCs] in which [P]laintiff had substantial interests to other [LLCs] in which Plaintiff had little or no interest thereby substantially diluting Plaintiff's interests and lessening the share of any profits to which Plaintiff would be entitled." Id. The Complaint alleges damages due to Plaintiff having "not received the shares to which he was entitled of proceeds of sales or leases of spectrum controlled by [LLCs] managed by Defendant in which Plaintiff has invested and the interest in such [LLCs] to which Plaintiff is entitled based on his investments in an amount in excess of $41,000,000." Id. at *7.
On March 30, 2012, Defendant removed this action to the United States District Court for the Northern District of California, asserting that a March 26, 2012 filing by Plaintiff established grounds for removal. Notice of Removal ¶ 3. Specifically, Plaintiff's Case Management Conference Statement (the "CMC Statement") attaches Plaintiff's Demand for Arbitration and states that the relief sought in the state court action is described in that document. Id. at ¶¶ 3-4 (citing CMC Statement ¶ 4(b)). Defendant asserts that the Demand for Arbitration seeks a declaration of Plaintiff's alleged rights to FCC licenses held by Defendant's LLCs, and an order compelling the transfer to Plaintiff of certain FCC licenses held by Defendant's LLCs. From the CMC Statement,Defendant contends he "first ascertained that the State Court Action asserts control over, challenges, and seeks transfer of one or more FCC licenses, and therefore is subject to the exclusive jurisdiction of the FCC and the federal courts." Id. at ¶¶ 6, 10 (citing 47 U.S.C. §§ 151, 201 & 301 et seq.).
On April 25, 2012, Plaintiff filed his Motion in which he argues that Defendant's removal was both untimely and substantively deficient. Motion for Remand, 1. Regarding timeliness, Plaintiff contends that any FCC issue that exists in this case was revealed in his Complaint. Id. at 5. The 30-day time limit to remove the case began upon filing the Complaint, rendering the removal untimely, and mandating remand. Id.
Plaintiff also contends that subject matter jurisdiction is lacking because the issues in this case do not give rise to a federal question. Id. Plaintiff states that his claims are state law claims Id. at 6. Plaintiff denies that he is seeking to challenge any determination by the FCC or seeking relief for the improper awarding of FCC licenses. Id. at 7. Additionally, Plaintiff argues that federal jurisdiction is not established simply because the FCC regulates spectrum licenses and those licenses are involved in this business dispute. Id. (citing Fair v. Sprint Payphone Servs., 148 F. Supp. 2d 622, 625-26 (D.S.C. 2001)).2
In response, Defendant rejects Plaintiff's contention that the Complaint adequately revealed all the FCC license issues in this action, thus making removal untimely. Defendant's Opposition to Plaintffs Motion for Remand ("Opposition"), 1-5. Defendant asserts that Plaintiff's Demand for Arbitration alleges for the first time that, contrary to the formal applications filed with the FCC, Plaintiff's "'real' ownership in the LLCs involved was and is, all along, different from that represented to the FCC when the licenses were sought, and that the real party in interest is not the LLCs but an 'enterprise' or 'venture' between Jones and Havens of which Jones is a 'partner.'" Opposition at 2. Defendant contends that this "effectively challenges the FCC license grants" and isgrounds for removal. Id. Additionally, Plaintiff's forms of relief sought in connection with the state court action—detailed in the Demand for Arbitration and referenced in his CMC Statement—are:
Id. (quoting Plaintiff's Demand for Arbitration, 8). Defendant asserts that this makes it clear that Plaintiff is seeking transfer of the FCC licenses, which was not apparent in the Complaint. Id.
Defendant also argues that removal was substantively proper because federal subject matter jurisdiction exists for two reasons: 1) Plaintiff's claims are completely preempted; and 2) the claims depend on a substantial question of federal law. Id. at 6. Regarding complete preemption, Defendant argues that because Plaintiff's claims and remedies "involve" entry into the market they are preempted by 47 U.S.C. § 332(c)(3)(A). Id. (citing, inter alia, Bastien v. AT&T Wireless Servs., Inc., 205 F.3d 983 (7th Cir. 2000); Telesaurus VPC, LLC v. Power, 623 F.3d 998 (9th Cir. 2010)). Defendant also claims that the FCC has "exclusive jurisdiction" over approval of ownership of its licenses, which require disclosures "as to the ownership of the entity and control over such entity." Id. at 9. Defendant argues Plaintiff's claims are preempted because he seeks to define the ownership interest in the licenses outside of the FCC procedures. Id. Regarding a substantial question of federal law, Defendant argues that seeking to transfer ownership of FCC licenses, and claiming a majority interest in the LLCs which bid on the licenses, are substantial federal questions. Id. at 11-12 (citing Am. Bird Conservancy v. FCC, 545 F.3d 1190 (9th Cir. 2008)).3
In his reply, Plaintiff states that he does not "challenge the FCC's grant of the licenses to the LLCs or seek to transfer ownership of the licenses." Plaintiff's Reply in Support of Motion toRemand ("Reply"), 4. Plaintiff further states that "[t]o the extent that the arbitration claim refers imprecisely to transferring the licenses themselves, rather than establishing the ownership of the LLCs to reflect Mr. Jones's investments, its language can readily be amended as the arbitration claim has not advanced beyond preliminary stages." Id. at 4 n.1. Plaintiff also argues, inter alia, that there is no preemption, complete or otherwise, because such preemption is not provided in the FCC statute cited by Defendant and because Plaintiff's relief does not include transferring ownership of FCC licenses. Rather, Plaintiff seeks money damages from proceeds of sale of spectrum, and he seeks to adjust his ownership interest in the LLCs in a manner commensurate with his investment. Id. at 7.
"Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). Original jurisdiction may be based on diversity or the existence of a federal question, as set forth in 28 U.S.C. §§ 1331 and 1332. Subject matter jurisdiction under 28 U.S.C. § 1332(a)(1), based on diversity, requires complete diversity of citizenship and an amount in controversy in excess of $75,000. Subject matter jurisdiction under 28 U.S.C. § 1331, based on the existence of a federal question, requires a civil action to arise under the constitution, laws, or treaties of the United States. "If at any time before final judgment, it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).
The Ninth Circuit "strictly construe[s] the removal statute against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citations omitted). Thus, "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Id. (citation omitted). "The 'strong presumption' against removal jurisdiction means that the defendant always has the...
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