Precision Pay Phones v. Qwest Communications Corp.

Decision Date31 May 2002
Docket NumberNo. C-02-0213 EMC.,No. C-02-0215 EMC.,C-02-0213 EMC.,C-02-0215 EMC.
CourtU.S. District Court — Northern District of California
PartiesPRECISION PAY PHONES, Plaintiff, v. QWEST COMMUNICATIONS CORPORATION, Defendant.

Joseph Lisha, San Francisco, CA, for plaintiff.

Richard W. Davis, Shigeru Watanabe, Kelley Drye & Warren, LLP, Los Angeles, CA, Theodore G. Spanos, Wilfredo Hernandez, Jr., Morgan Lewis & Bockius LLP, Los Angeles, CA, for defendant.

ORDER GRANTING PLAINTIFF'S MOTIONS TO REMAND

CHEN, United States Magistrate Judge.

I. INTRODUCTION

The Court, having reviewed the briefs, supporting documentation and record in this case, as well as having heard the argument of counsel, hereby grants the plaintiff's motions to remand these actions to state court pursuant to 28 U.S.C. § 1447.

II. BACKGROUND

Plaintiff Precision Pay Phones ("Plaintiff") owns payphones and is a "payphone service provider" ("PSP"). PSPs generally receive compensation for use of their telephones in two ways. First, they collect coins directly deposited into their payphones. Illinois Public Telecommunications Ass'n v. F.C.C., 117 F.3d 555, 558-59 (D.C.Cir.1997). Second, they are compensated through contracts with particular "interexchange carriers" ("IXC"s) which provide long distance telephone communications services for e.g., collect calls or calls billed to a calling card or third party.1 Id.

However, as to payphones calls utilizing access codes (800 numbers or 10XXX numbers that the caller uses to reach a desired long-distance carrier) and subscriber 800 numbers from which an IXC (with whom the PSP does not have a contract) derives revenues, independent PSPs receive no compensation from such calls. See id. at 559. IXCs utilize a "dial-around" system permitting the payphone user to make such calls without depositing coins or using the PSP's contracted IXC. Id. "Dial-around" calls bypass the normal (or default) local and long distance services provided to the payphones. Upon receipt of a call from a payphone using a toll-free prefix, the call is routed through a LEC which accesses a database of all toll-free prefixed numbers, identifies the particular IXC and routes the call accordingly.

Defendant Qwest Communications Corporation ("Defendant") is an IXC. No express contact or agreement exists between Plaintiff and Defendant. Thus, no contractual provision was made between the parties regarding compensation for these "dial-around" calls made from Plaintiff's payphones. There is no dispute, however, that Defendant obtains a financial benefit from these calls originating from Plaintiff's payphones.

Previously, PSPs could block callers' attempts to dial around a contracted IXC, but in 1990, Congress passed legislation prohibiting PSPs from blocking such calls. Id., citing, 47 U.S.C. § 226(c)(1)(B). To promote competition among PSPs and to ensure that PSPs would get paid for use of their payphones for "dial-around" calls to non-contracted IXCs, Congress enacted Section 276 of the Telecommunications Act of 1996. Section 276 provided for establishment by the Federal Communications Commission (FCC) of "a per call compensation plan to ensure that all payphone service providers are fairly compensated for each and every completed intrastate and interstate call using their payphone." 47 U.S.C. § 276(b)(1)(A).

Pursuant to that charge, the FCC established rules requiring that IXCs compensate PSPs for use of the payphones. Title 47 of Code of Federal Regulations, § 64.1300(a) provides that the "first facilities-based interexchange carrier to which a completed coinless access code or subscriber toll-free payphone call is delivered by the local exchange carrier shall compensate the payphone service provider for the call at a rate agreed upon by the parties by contract." Additionally, "[i]n absence of an agreement as required by paragraph (a) of this section, the carrier is obligated to compensate the payphone service provider at a per-call rate of $0.24." 47 C.F.R. § 64.1300(c).

Plaintiff filed two separate, but similar, small-claims complaints against Defendant which differ only with regard to the time period and amounts claimed due. These complaints were filed in the Small Claims Division of the Superior Court of California in San Francisco County. Plaintiff seeks to recover compensation for Defendant's "dial-around" calls originating from Plaintiff's payphones. Plaintiff's complaints consist of the following claim: "Defendant owes me the sum of ($1,828.14 and $2,055.63, respectively), not including court costs, because: Underpayment of ... Dial Around Compensation." Small Claims Compl. No. 793996 ¶ 1; Small Claims Compl. No. 793998 ¶ 1.

On January 11, 2002, Defendant removed these actions to federal court on the basis of federal question jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337, and 1441(b). On February 5, 2002, Plaintiff filed a motion to remand each case back to state court and the Court held argument on these motions on April 24, 2002.

III. ANALYSIS

An action may be removed from state court if it is one over which the federal district courts has "original jurisdiction." 28 U.S.C. § 1441(a). Defendant asserts there is federal question jurisdiction over Plaintiff's claims under 28 U.S.C. § 1331 which confers jurisdiction over civil actions "arising under" federal law.

Pursuant to 28 U.S.C. § 1447(c), the Court must remand a removed action where "[i]f at any time before final judgment it appears that [the Court] lacks subject matter jurisdiction over the case." "Because of the Congressional purpose to restrict the jurisdiction of the federal courts on removal, the statute is strictly construed, and federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir.1996) (internal quotations omitted).

Because Defendant opposes remanding these actions, it has the burden of establishing that removal was proper in the first place. Roskind v. Morgan Stanley Dean Witter & Company, 165 F.Supp.2d 1059, 1063 (N.D.Cal.2001), citing, Ethridge v. Harbor House Restaurant, 861 F.2d 1389, 1393 (9th Cir.1988). The issue here is whether Defendant has met this burden by demonstrating the Court's original jurisdiction over Plaintiff's claims.

IV. WELL-PLEADED COMPLAINT RULE

The determination of the existence of original jurisdiction of the district court (here based solely on federal question jurisdiction) is governed in the first instance by the "well-pleaded complaint" rule. "[A] case `arises under' federal law within the meaning of the general federal question statute only if the federal question appears on the face of [the] plaintiff's well-pleaded complaint; if not, original jurisdiction is lacking even if the defense is based on federal law." Hunter v. United Van Lines, 746 F.2d 635, 639 (9th Cir. 1984), cert. denied, 474 U.S. 863, 106 S.Ct. 180, 88 L.Ed.2d 150 (1985). Under the well-pleaded complaint rule, the Court must look only to the face of the plaintiff's complaint to determine whether the plaintiff has presented a federal question. See Franchise Tax Board of State of California v. Construction Laborers Vacation Trust for Southern California, 463 U.S. 1, 9-10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) ("Franchise Tax Board"). The plaintiff is the master of his case and may ignore federal claims and assert only state claims, and thus defeat removal. Duncan, 76 F.3d at 1485. Federal question jurisdiction may not be sustained on a theory that the plaintiff has not advanced. See Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 809 n. 9, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986); see also Taylor v. Anderson, 234 U.S. 74, 75-76, 34 S.Ct. 724, 58 L.Ed. 1218 (1914) (noting that a well-pleaded complaint for the purposes of conferring "arising under" jurisdiction is one where the court considers only what necessarily appears in the plaintiff's statement or claim, unaided by anything alleged in anticipation or avoidance or defenses which it is thought the defendant may interpose). Moreover, a case may not be removed to federal court solely on the basis of a federal defense. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987).

Thus, the general rule in situations where removal is based on federal question jurisdiction is that, unless a federal claim appears on the face of a well-pleaded complaint, removal is improper. Redwood Theatres v. Festival Enterprises, Inc., 908 F.2d 477, 479 (9th Cir.1990); see Taylor v. Sun Reporter Publ'g Co., No. C98-2044 VRW, 1999 WL 782393, *1 (N.D.Cal. Sept.29, 1999) (remanding a case to state court where a small claims court complaint did not allege on its face any federal cause of action or any other reference to federal law).

Here, Plaintiff's small claims complaints simply contain boilerplate language typical of small claims actions. Plaintiff asserts, inter alia, that "Defendant owes me the sum of ($1,828.14 and $2,055.63, respectively), not including court costs, because: Underpayment of ... Dial Around Compensation." Small Claims Compl. No. 793996 ¶ 1; Small Claims Compl. No. 793998 ¶ 1. The complaints further assert that Plaintiff requested payment and Defendant refused to pay. Small Claims Compl. No. 793996 ¶ 3; Small Claims Compl. No. 793998 ¶ 3. Plaintiff does not indicate the precise legal basis for this claim, but Plaintiff is not required to do so because of the "non-technical" nature of the small claims court complaint form. Cal.Civ.Proc.Code § 116.320(b) (West 2002). The simple pleading requirements, not requiring any additional argument or articulation of legal theory for compensation, is consistent with the small claims court organic statute. Cal.Civ.Proc.Code § 116.120(b) (West 2002) ("[i]n order to resolve minor civil disputes expeditiously, inexpensively, and fairly, it is essential to provide a judicial forum accessible to all parties directly...

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