Kansas ex rel. Stovall v. Home Cable Inc.

• Decision Date: 11 August 1998
• Docket Number: No. 97-4108-SAC.,97-4108-SAC.
• Citation: 35 F.Supp.2d 783
• Parties: State of KANSAS, ex rel., Carla J. STOVALL, Attorney General, Plaintiff, v. HOME CABLE INCORPORATED, d/b/a Home Cable Concepts, Defendant.
• Court: U.S. District Court — District of Kansas

35 F.Supp.2d 783

State of KANSAS, ex rel., Carla J. STOVALL, Attorney General, Plaintiff, v. HOME CABLE INCORPORATED, d/b/a Home Cable Concepts, Defendant.

No. 97-4108-SAC.

United States District Court, D. Kansas.

August 11, 1998.

Terry A. Iles, Office of Attorney General, Topeka, KS, Carla J. Stovall, Kansas Attorney General, Topeka, KS, for State of Kansas, plaintiff.

Harold S. Youngentob, Goodell, Stratton, Edmonds & Palmer, Topeka, KS, Rex A Wolfgang, Barron, Peck & Bennie, Cincinnati, OH, for Home Cable Incorporated, dba Home Cable Concepts, defendant.

MEMORANDUM AND ORDER

CROW, Senior District Judge.

On May 14, 1997, the State of Kansas, ex rel., Carla J. Stovall, Attorney General, filed a petition in the District Court of Shawnee County, Kansas, against Home Cable Incorporated, d/b/a Home Cable Concepts (HCC). The petition essentially alleges that the HCC, a corporation organized under the laws of the State of Ohio, has committed deceptive acts and practices in violation of the Kansas Consumer Protection Act (KCPA), K.S.A. 50-626(a) and (b). Specifically, the petition alleges that HCC's representatives materially misrepresented the quality of its television satellite systems, the consumer's ability to view and/or the costs associated with viewing certain programs (like Kansas City Chiefs' football games) and/or "premium" channels when using the system, and the costs of maintaining or upgrading the system. The petition also alleges certain other unconscionable and deceptive acts.

On June 2, 1997, HCC filed a petition for removal pursuant to 28 U.S.C. § 1441. The petition alleges that "[j]urisdiction is proper pursuant to 28 U.S.C. § 1332(a) and (c) [diversity of citizenship]".

This case comes before the court upon the State of Kansas' "Motion to Remand for Lack of Subject Matter Jurisdiction" (Dk.6). In that motion, the State of Kansas argues that this case must be remanded to state court. First, the State of Kansas argues that it is not a "citizen" for purposes of diversity of citizenship, and therefore diversity jurisdiction cannot exist. Second, the State of Kansas argues that HCC has failed to show in its petition for removal that the amount in controversy exceeds the statutory minimum.¹ Finally, and apparently in the alternative, the State of Kansas argues that it is entitled to Eleventh Amendment immunity and therefore it cannot be sued in federal court — necessarily requiring remand of this case to state court.

In its spartan five page response brief, HCC argues that the State of Kansas is not a party to this case. Instead, HCC contends that Carla J. Stovall, the Attorney General, is the plaintiff and is bringing it on behalf of seventeen Kansas citizens believing themselves aggrieved and therefore diversity does exist. HCC does not respond to the State of Kansas' contention that the requisite amount in controversy is not implicated in this case. HCC does argue, however, that the plaintiff is attempting to regulate an area it contends is preempted by the Telecommunications Act of 1996 — satellite transmissions systems. "Therefore, if Plaintiff is claiming that the real basis of her action is to prevent ongoing or future violations of the Kansas statute, then we are stuck with the realization that there is a substantial federal question, i.e., the preemption of a Federal law over the Kansas Consumer Statute." Defendant's "Memorandum in Opposition to Plaintiffs' Motion to Remand" (Dk.8).

The State of Kansas replies, arguing that the state is the real party interest in this action under the Kansas Consumer Protection Act (KCPA) and therefore diversity does not exist. As to HCC's contention that this case involves a federal question, the State of Kansas argues that under the "well plead complaint rule" the defendant's federal question defense does not confer jurisdiction. The State of Kansas also contends that this case does not fall within the "complete preemption doctrine" exception to the well plead complaint rule as the KCPA is not preempted by the Telecommunications Act of 1996.

Legal Standards Governing Removal

"`Removal statutes are strictly construed to limit the federal court's authority to that expressly provided by Congress and to protect the states' judicial powers.'" First Nat. Bank & Trust Co. v. Nicholas, 768 F.Supp. 788, 790 (D.Kan.1991) (quoting Cohen v. Hoard, 696 F.Supp. 564, 565 (D.Kan.1988)). "The burden of showing the propriety of removal always rests with the removing party." Id. All doubts about the propriety of removal are resolved in favor of remand. Fajen v. Foundation Reserve Ins. Co., Inc., 683 F.2d 331, 333 (10th Cir.1982).

Federal district courts have original jurisdiction of civil actions where complete diversity of citizenship and an amount in excess of $75,000 (exclusive of interest and costs) in controversy exist. 28 U.S.C. § 1332; see Carden v. Arkoma Associates, 494 U.S. 185, 187, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990) ("Since its enactment, [the Supreme Court] has interpreted the diversity statute to require `complete diversity' of citizenship."); Strawbridge v. Curtiss, 3 Cranch (7 U.S.) 267, 2 L.Ed 435 (1806); State Farm Mutual Automobile Ins. Co. v. Narvaez, 149 F.3d 1269 (10th Cir.1998) (sua sponte dismissing case for lack of diversity jurisdiction when amount in controversy was exactly $50,000 and therefore did not exceed the requisite amount in controversy of $50,000). "Since an action is not removable from a state to federal court unless it might have been brought originally in a federal court, the basic principles of diversity jurisdiction, such as the requirement of complete diversity between plaintiffs and defendants and the amount in controversy requirement are fully applicable to Section 1441(b)." 14A Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3723 at p. 306-307 (1985).

"This jurisdictional prerequisite to removal is an absolute, non-waivable requirement." Brown v. Francis, 75 F.3d 860, 864 (3rd Cir.1996).

"`A court lacking jurisdiction ... must dismiss the cause at any stage of the proceedings in which it becomes apparent that jurisdiction is lacking.'" Tuck v. United Services Auto. Ass'n, 859 F.2d 842, 844 (10th Cir.1988) (quoting Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir.1974)), cert. denied, 489 U.S. 1080, 109 S.Ct. 1534, 103 L.Ed.2d 839 (1989). Subject matter jurisdiction cannot be conferred or waived by consent, estoppel, or failure to challenge jurisdiction early in the proceedings. See Ins. Corp. v. Compagnie des Bauxites, 456 U.S. 694, 702, 102 S.Ct. 2099, 2104, 72 L.Ed.2d 492 (1982).

Laughlin v. Kmart Corp., 50 F.3d 871 (10th Cir.), cert denied, 516 U.S. 863, 116 S.Ct. 174, 133 L.Ed.2d 114 (1995).

Diversity of Citizenship

The State of Kansas is not a "citizen" for purposes of diversity jurisdiction. "More than one hundred years ago, the United States Supreme Court ruled that a state cannot be considered a citizen for purposes of establishing diversity of citizenship jurisdiction in federal court." Brown, 75 F.3d at 865 (citing Postal Telegraph Cable Co. v. State of Alabama, 155 U.S. 482, 487, 15 S.Ct. 192, 194, 39 L.Ed. 231 (1894)). See Moor v. County of Alameda, 411 U.S. 693, 717, 93 S.Ct. 1785, 36 L.Ed.2d 596 (1973) ("There is no question that a State is not a `citizen' for purposes of the diversity jurisdiction."); Gable v. Commonwealth of Pennsylvania, 521 F.Supp. 43, 43-44 (E.D.Pa.1981) ("The rule that a state is not a `citizen' for diversity purposes is a long-standing one; it enjoys a history of acceptance, which remains undiluted by the passage of time.") (citations omitted). Consequently, if the State of Kansas is the real party interest bringing this action then diversity jurisdiction cannot exist.

In State ex rel. Stephan v. Brotherhood Bank and Trust Co., 8 Kan.App.2d 57, Syl. ¶ 5, 649 P.2d 419 (1982), rev. denied, 232 Kan. 876 (1982), the Kansas Court of Appeals that "[i]n an action brought by the attorney general to enforce the provisions of the Kansas Consumer Protection Act (KCPA), the State is a real party in interest and not just a nominal party." In this case the State of Kansas is the plaintiff and brings this action to seek redress for alleged violations of the KCPA. The fact that one of the remedies sought by the State of Kansas is restitution to the allegedly aggrieved Kansas consumers does not transform the State of Kansas into a "citizen" for purposes of establishing diversity jurisdiction. Cf. Brotherhood Bank, 8 Kan.App.2d at 61-62, 649 P.2d 419 ("[T]he availability of various remedies, one of which would recompense an aggrieved consumer, does not necessarily diminish the authority or interest of the State in prosecuting the action.").

In short, HCC has not carried its burden of demonstrating that diversity of citizenship exists in this case. This court therefore lacks jurisdiction to consider this case on that basis alone.

Amount in Controversy

"Both the requisite amount in controversy and the existence of diversity must be affirmatively established on the face of either the petition or the removal notice." Laughlin, 50 F.3d at 873.

As noted above, HCC does not respond to the State of Kansas' argument that the requisite amount is not in controversy. The requisite amount in controversy is not established by either the plaintiff's petition or the defendant's removal notice. Consequently, diversity jurisdiction cannot exist for this reason as well. This case must therefore be remanded to state court. See Laughlin, 50 F.3d at 873-74.

Federal Question and Preemption²

Federal district courts have original federal question jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331; see also 28 U.S.C. § 1441(b). The Supreme court has

long held that "[t]he presence or absence of federal-question jurisdiction is governed by the `well-pleaded complaint rule,' which...