Russell v. Sprint Corp.

• Decision Date: 22 May 2003
• Docket Number: No. 02-2598-KHV.,02-2598-KHV.
• Citation: 264 F.Supp.2d 955
• Parties: Steve RUSSELL, et al., Plaintiffs, v. SPRINT CORP., et al., Defendants.
• Court: U.S. District Court — District of Kansas

264 F.Supp.2d 955

Steve RUSSELL, et al., Plaintiffs, v. SPRINT CORP., et al., Defendants.

No. 02-2598-KHV.

United States District Court, D. Kansas.

May 22, 2003.

COPYRIGHT MATERIAL OMITTED

Charles F. Speer, Payne & Jones, Chtd., Overland Park, KS, for Plaintiffs.

John W. Cowden, David M Eisenberg, Elizabeth Raines, Baker, Sterchi, Cowden & Rice, L.L.C, Kansas City, MO, for Defendants.

MEMORANDUM AND ORDER

VRATIL, District Judge.

Steve Russell and Tom Lundberg filed this class action suit in state court against Sprint Corporation and Does 1 through 20, alleging state law claims for unfair business practices, consumer fraud, declaratory relief and injunctive relief. Defendant Sprint Spectrum LP ("Sprint") removed the case to federal court, asserting Section 332 of the Federal Communications Act of 1934, 47 U.S.C. § 332 as the basis for federal jurisdiction. This matter is before the Court on Plaintiffs' Motion To Remand (Doc. # 7) filed December 23, 2002 and Defendant Sprint Spectrum LP's Motion For Leave To File Second Supplemental Memorandum In Opposition to Remand (Doc. # 23) filed April 16, 2003. For reasons set forth below, the Court sustains plaintiffs' motion and overrules defendant's motion.

Standard For Removal

A civil action is removable only if plaintiffs could have originally brought the action in federal court. See 28 U.S.C. § 1441(a). The Court is required to remand "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c). Because federal courts are courts of limited jurisdiction, the law imposes a presumption against federal jurisdiction. See Frederick & Warinner v. Lundgren, 962 F.Supp. 1580, 1582 (D.Kan. 1997) (citing Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir. 1974)). The rule is inflexible and without exception, and requires a court to deny its jurisdiction in all cases where such jurisdiction does not affirmatively appear in the record. See Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982). Accordingly, the Court must strictly construe the federal removal statute. See Fajen v. Foundation Reserve Ins. Co., 683 F.2d 331, 333 (10th Cir. 1982). The burden is on the party requesting removal to demonstrate that the Court has jurisdiction. See Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir. 1995). The Court must resolve any doubts concerning removability in favor of remand. See J.W. Petroleum. Inc. v. R.W. Lange, 787 F.Supp. 975, 977 (D.Kan. 1992).

Factual And Procedural Background

On October 30, 2002, plaintiffs filed a class action petition against Sprint Corporation ("Sprint") and twenty unnamed individuals in the District Court of Wyandotte County, Kansas. Plaintiffs assert claims for violation of the Kansas Unfair Trade And Consumer Protection Act, ("KUTCPA"), K.S.A §§ 50-626 and 50-627. Plaintiffs seek restitution, punitive damages (no amount specified), declaratory relief, injunctive relief, attorneys' fees and costs. Briefly summarized, plaintiffs' state court petition alleges the following facts:

Sprint PCS, a Sprint entity, provides wireless telephone services to plaintiffs. Before March 7, 2002, Sprint charged plaintiffs $.99 per call for directory assistance calls. After March 7, 2002, Sprint charged $1.25 for directory assistance calls. Sprint's billing statements list "Additional Usage Charges" with a subhead titled "Voice Other Usage Charges (see explanation on back of pg. 1)." The explanation on the back of page 1 states: "helpful information about your Invoice and Sprint PCS Service: `Other Charges' — Charges that are not included in the Monthly Service Charges section will appear here if applicable." Plaintiffs allege that Sprint deliberately uses this vague language to describe the directory assistance calls to minimize the likelihood that customers will discover (1) the fact that Sprint charges for directory assistance and (2) the amount which Sprint charges. The billing statement does not set forth the rate for directory assistance calls. Plaintiffs allege that Sprint's billing practices regarding directory assistance calls constitute consumer fraud and violate the KUTCPA. Plaintiffs seek restitution of the amount that Sprint has collected for directory assistance and declaratory and injunctive relief regarding the billing language for directory assistance charges.

After plaintiffs filed suit in state court, Sprint filed a notice of removal, asserting that this Court has federal removal jurisdiction because (1) the Federal Communications Act of 1934 ("FCA") as amended, particularly 47 U.S.C. § 332, preempts plaintiffs' claims, and (2) plaintiffs' claims raise a substantial question of federal law. On December 23, 2002, plaintiffs filed their Motion To Remand (Doc. # 7). Plaintiffs argue that removal is improper because the FCA does not preempt state law claims and because their petition does not raise a substantial question of federal law. Plaintiffs also request costs and expenses under 28 U.S.C § 1447(C).

Analysis

I. Federal Jurisdiction

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 28 U.S.C. § 1441(b). "The presence or absence of federal-question jurisdiction is governed by the `well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintifff[s'] properly pleaded complaint." Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). Plaintiffs are the "master of the[ir] claim" and "may avoid federal jurisdiction by exclusive reliance on state law." Id; see Garley v. Sandia Corp., 236 F.3d 1200, 1207 (10th Cir. 2001). To support federal jurisdiction, Sprint invokes two independent corollaries to the well-pleaded complaint rule: the "complete preemption" doctrine and the "substantial federal question" doctrine.

A. Complete Preemption

The United States Supreme Court has acknowledged the "complete preemption doctrine" as an independent corollary to the well-pleaded complaint rule. Caterpillar, 482 U.S. at 392, 107 S.Ct. 2425. "[I]f a federal cause of action completely preempts a state cause of action any complaint that comes within the scope of the federal cause of action necessarily `arises under' federal law." Franchise Tax Bd. of State of Ca. v. Constr. Laborers Vacation Trust for So. Ca., 463 U.S. 1, 24, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). Sprint maintains that the Federal Communications Act ("FCA") completely preempts plaintiffs' state law claims, so as to convert their state law petition to one stating a federal claim for purposes of removal. Sprint relies upon 47 U.S.C. § 332, as amended by the Telecommunications Act of 1996, which provides that:

no State or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service, except that this paragraph shall not prohibit a State from regulating the other terms and conditions of commercial mobile service.

47 U.S.C. § 332(c)(3)(A).

In analyzing Sprint's complete preemption argument, the Court must distinguish between ordinary conflict preemption and complete preemption. Under ordinary conflict preemption, state laws that conflict with federal laws are preempted, and defendants assert preemption as a federal defense to plaintiffs' suit. Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). A defense which implicates a federal question is not considered part of plaintiffs' properly pleaded complaint. Id.; see also Warner Bros. Records, Inc. v. R.A. Ridges Distrib. Co. Inc., 475 F.2d 262, 262 (10th Cir. 1973). Accordingly, "a case may not be removed to federal court on the basis of a federal defense, ... even if the defense is anticipated in the plaintiffs complaint, and even if both parties admit that the defense is the only question truly at issue in the case." Franchise Tax Board 463 U.S. at 14, 103 S.Ct. 2841; see Garley, 236 F.3d at 1207. In contrast, the complete preemption doctrine operates as follows:

On occasion, ... the pre-emptive force of a statute is so "extraordinary" that it "converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well pleaded complaint rule." Metropolitan Life Insurance Co., [481 U.S.] at 65, 107 S.Ct. at 1547. Once an area of state law has been completely preempted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law. See Franchise Tax Board, [ ] 463 U.S., at 24, 103 S.Ct., at 2854.

Caterpillar, 482 U.S. at 392, 107 S.Ct. 2425 (footnote omitted). Complete preemption is a narrow doctrine. See, e.g., Marcus v. AT&T Corp., 138 F.3d 46, 54 (2d Cir. 1998); see generally 14B Wright & Miller § 3722.1, at 517 (courts have limited application of the complete preemption doctrine because of the "obvious federalism implications," applying it principally to actions under the LMRA and ERISA.)

The FCA expressly preempts any state regulation of rates or market entry into telecommunications. See 47 U.S.C. § 332(c)(3)(A). The FCA includes a savings clause, which provides that "[n]othing in this chapter shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this chapter are in addition to such remedies." 47 U.S.C. § 414.

Sprint correctly points out that the Seventh Circuit has ruled that Congress has specifically found complete preemption of claims that involve the "entry of or rates charged by any commercial mobile service," Bastien v. AT&T Wireless Servs., Inc., 205 F.3d 983, 986-87 (7th Cir. 2000), and therefore such claims necessarily "arise under" federal law for purposes of removal....