Salveson v. Western States Bankcard Ass'n

• Decision Date: 22 October 1981
• Docket Number: No. C-81-1707-WWS,C-81-3157-WWS.,C-81-1707-WWS
• Citation: 525 F. Supp. 566
• Court: U.S. District Court — Northern District of California
• Parties: Melvin E. SALVESON, an individual, and Electronic Currency Corporation, a corporation, Plaintiffs, v. WESTERN STATES BANKCARD ASSOCIATION, et al., Defendants. R. C. I. A. LOCAL 1288 CREDIT UNION, et al., Plaintiffs, v. ALLIED FINANCE ADJUSTERS CONFERENCE, INC., et al., Defendants.

525 F. Supp. 566

Melvin E. SALVESON, an individual, and Electronic Currency Corporation, a corporation, Plaintiffs, v. WESTERN STATES BANKCARD ASSOCIATION, et al., Defendants.

R. C. I. A. LOCAL 1288 CREDIT UNION, et al., Plaintiffs, v. ALLIED FINANCE ADJUSTERS CONFERENCE, INC., et al., Defendants.

Nos. C-81-1707-WWS, C-81-3157-WWS.

United States District Court, N. D. California.

October 22, 1981.

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Joseph M. Alioto, Lawrence John Appel, Alioto & Alioto, San Francisco, Cal., for plaintiffs Salveson etc.

Francis O. Scarpulla, Stephen V. Scarpulla, Scarpulla & Scarpulla, Philip Paul Bowe, Davis, Cowell & Bowe, San Francisco, Cal., for plaintiffs R.C.I.A. Local.

Lasky, Haas, Cohler & Munter, Richard Haas, R. Stewart Baird, Jr., San Francisco, Cal., for Western States Bankcard Association.

Debevoise, Plimpton, Lyons & Gates, Andrew C. Hartzell, Jr., Paul E. Konney, James A. Reaves, Adrienne Hale, Mitchell A. Karlan, New York City, and Steinhart, Falconer & Morgenstein, James T. Fousekis, Gordon P. Erspamer, San Francisco, Cal., for MasterCard International, Incorporated (formerly Interbank Card Association).

Brobeck, Phleger & Harrison, Malcolm T. Dungan, Michael B. Flesch, San Francisco, Cal., for Wells Fargo Bank.

Heller, Ehrman, White & McAuliffe, M. Laurence Popofsky, Paul Alexander, Terry E. Sikes, San Francisco, Cal., for Crocker National Bank, N. A.

Severson, Werson, Berke & Melchior, Robert L. Lofts, Steven W. Waldo, San Francisco, Cal., for United California Bank.

Pillsbury, Madison & Sutro, John B. Bates, Terrence A. Callan, James A. DiBoise, San Francisco, Cal., for Bank of California, N. A.

Broad, Khourie & Schulz, Royce H. Schulz, Timothy F. Perry, San Francisco, Cal., for Visa, Inc.

Richard E. Neuman, San Francisco, Cal., for David Kikkert & Associates, Inc., U. S. Recovery Service, Inc., Affiliated Recovery Services, National Auto Recovery Bureau, L. A. Walker Co. of California, Inc. and National Finance Adjusters, Inc.

MEMORANDUM OF OPINION AND ORDER

SCHWARZER, District Judge.

A. Introduction

These actions bring before the Court issues concerning the removal from state to federal court of actions asserting antitrust claims. The increasing frequency with which these issues arise in the district court, their complexity, and the confusion which they tend to generate warrant giving them comprehensive consideration here. Although these two actions are not otherwise related, the jurisdictional issues they raise overlap and to some extent dovetail. Both cases raise the issue whether and under what circumstances an antitrust claim asserted in the state court presents a federal question. The Salveson case in addition raises the follow-on set of issues of how the federal court should dispose of properly removed federal and state claims. It therefore seems appropriate to consolidate the pending motions for disposition.

B. Factual Background

1. The Allied Finance Adjusters Case

Plaintiffs R.C.I.A. Local 1288 Credit Union and Hotel & Restaurant Employees and Bartender Union, Local 28, brought this action on behalf of all California credit lenders against defendant companies and associations of companies which provide repossession services to banks, credit unions, and other lenders. Plaintiffs allege that defendants engaged in a combination and conspiracy in unreasonable restraint of trade and commerce in violation of California's Cartwright Act (Calif. Bus. & Prof. Code §§ 16700 et seq. (West 1964 and Supp. 1981)) and Unfair Trade Practices Act (Calif.Bus. & Prof.Code §§ 17000 et seq. (West 1964 and Supp.1981)). Plaintiffs filed their complaint and first amended complaint in the San Francisco Superior Court. No federal claim was expressly pleaded. Upon receiving plaintiff R.C.I.A.'s answers to defendants' first set of interrogatories, disclosing plaintiff's reliance on federal antitrust claims asserted by the government in other actions against the same defendants as well as interstate activities by defendants, thirteen defendants filed a petition for removal to this Court, claiming that the answers disclosed the federal nature of the action, and hence its removability under 28 U.S.C. §§ 1441(a) and (b) (1976). Plaintiffs have moved to remand the action to the state court, contending that federal subject matter jurisdiction is lacking and that defendants' petition was not timely filed.¹

2. The Salveson Case

Plaintiffs Melvin E. Salveson and Electronic Currency Corporation filed their action in the San Francisco Superior Court against Western States Bankcard Association and several banks and other entities alleging violations of the state antitrust laws and in addition fraud, misappropriation, intentional interference, and breach of contract. Defendants removed on the basis of federal question jurisdiction, contending that the claims asserted, although pleaded under state law, were federal in nature for reasons discussed below. Plaintiffs have moved to remand. Defendants have moved to dismiss all claims pleaded in the complaint.

Two major issues are raised by these actions:

(1) Were the actions properly removed, and, if they were,

(2) What is the appropriate disposition of the properly removed federal and state claims?

C. Were the Actions Properly Removed?

1. Basis for Federal Removal Jurisdiction

Federal courts are courts of limited jurisdiction, and the authority to remove an action from state to federal court is conferred solely by statute. Martin v. Hunter's Lessee, 14 U.S. (1 Wheat.) 304, 4 L.Ed. 97 (1816). That statutory authority is found in 28 U.S.C. § 1441 (1976), which now provides in pertinent part as follows:

(a) 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.

(b) Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

The burden is on the removing party to establish federal jurisdiction. Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 42 S. 35, 66 L.Ed. 144 (1921). The removal statute is strictly construed against removal jurisdiction, doubt being resolved in favor of remand. Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979); Glucksman v. Columbia Broadcasting System, Inc., 219 F.Supp. 767, 768 (S.D.Cal. 1963). This is in accord with the Congressional policy to limit the removal jurisdiction of the federal courts. American Fire & Casualty Co. v. Finn, 341 U.S. 6, 10, 71 S.Ct. 534, 538, 95 L.Ed. 702 (1951); Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 61 S.Ct. 868, 85 L.Ed. 1214 (1941); La Chemise Lacoste v. Alligator Co., 506 F.2d 339 (3d Cir. 1974), cert. denied, 421 U.S. 937, 95 S.Ct. 1666, 44 L.Ed.2d 94 (1975). At the same time, courts must be cautious in denying defendants access to a federal forum since under 28 U.S.C. § 1447(d) remand orders are generally not reviewable.² Folts v. City of Richmond, 480 F.Supp. 621, 626-27 (E.D. Va.1979); Manas y Pineiro v. Chase Manhattan Bank, N. A., 443 F.Supp. 418, 419 (S.D.N.Y.1978); C. Wright, Law of Federal Courts 167-68 (3d ed. 1976).

The existence of federal jurisdiction on removal must be determined on the face of the plaintiff's claim. Louisville & Nashville Railroad v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908). The controlling principles were set forth by Justice Cardozo in Gully v. First National Bank In Meridian:

To bring a case within the statute, a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action. The right or immunity must be such that it will be supported if the Constitution or laws of the United States are given one construction or effect, and defeated if they receive another. A genuine and present controversy, not merely a possible or conjectural one, must exist with reference thereto, and the controversy must be disclosed upon the face of the complaint, unaided by the answer or by the petition for removal.

299 U.S. 109, 112-113, 57 S.Ct. 96, 97-98, 81 L.Ed. 70 (1936) (citations omitted). The rationale behind these principles is the well established rule that plaintiff is master of his claim, and may choose what law to rely on. The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 33 S.Ct. 410, 411, 57 L.Ed. 716 (1913), accord, Pan American Petroleum Corp. v. Superior Court, 366 U.S. 656, 662-63, 81 S.Ct. 1303, 1307, 6 L.Ed.2d 584 (1961); Sheeran v. General Electric Co., 593 F.2d 93, 96 (9th Cir.), cert. denied, 444 U.S. 868, 100 S.Ct. 143, 62 L.Ed.2d 93 (1979). "The plaintiff may by the allegations of his complaint determine the status with respect to removability of a case ... when it is commenced," and whether a case is removable depends "solely upon the form which the plaintiff by his voluntary action shall give to the pleadings in the case." Great Northern Railway v. Alexander, 246 U.S. 276, 282, 38 S.Ct. 237, 240, 62 L.Ed. 713 (1918). As Professor Moore has stated, "where plaintiff's claim involves both a federal ground and a state ground, the plaintiff is free to ignore the federal question and pitch his claim on the state ground." 1A Moore's Federal Practice ¶ 0.160, at 185 (2d ed. 1979); accord, Vitarroz Corp. v. Borden, Inc., 644 F.2d 960, 964 (2d Cir. 1981); La Chemise Lacoste v. Alligator Co., supra, 506 F.2d 346; Billy Jack for...