Shively v. Carrier IQ, Inc.

• Decision Date: 24 July 2012
• Docket Number: Case No. C-12-0290 EMC
• Parties: RODNEY SHIVELY, individually and on behalf of others similarly situated, Plaintiff, v. CARRIER IQ, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of California

RODNEY SHIVELY, individually and on behalf of others similarly situated, Plaintiff,

v.CARRIER IQ, INC., et al., Defendants.

Case No. C-12-0290 EMC

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

Dated: July 24, 2012

Related Case C-11-5774 EMC

MDL Case No. C-12-md-2330 EMC, In Re

Carrier IQ, Inc.

ORDER RE PLAINTIFF SHIVELY'S

MOTION TO REMAND

(Docket No. 10)

Plaintiff Rodney Shively initiated this lawsuit against Defendant Carrier IQ, Inc. in state court. In his complaint, Mr. Shively asserted claims under state law only, including the California Invasion of Privacy Act ("CIPA"). See Cal. Pen. Code §§ 631, 637.2. Carrier IQ subsequently removed the action to federal court on the ground that the CIPA claims are completely preempted by the Federal Wiretap Act (also known as Title III of the Omnibus Crime Control and Safe Streets Actof 1968), as amended by the Electronic Communications Privacy Act of 1986 ("ECPA").¹ Currently pending before the Court is Mr. Shively's motion to remand.

I. FACTUAL & PROCEDURAL BACKGROUND

Mr. Shively filed suit against Carrier IQ, claiming that the company developed, sold, and distributed a software program that secretly tracks, records, and distributes a smartphone customer's private information (e.g., location data, keystrokes, contacts, passwords) without his or her consent. Based on this allegation, Mr. Shively has asserted various state law claims for relief, including one for violation of CIPA. Under CIPA, one may be held civilly liable if he or she

intentionally taps, or makes any unauthorized connection, . . . with any telegraph or telephone wire, line, cable, or instrument, . . . or willfully and without the consent of all parties to the communication, or in any unauthorized manner, reads, or attempts to read, or to learn the contents or meaning of any message, report, or communication while the same is in transit or passing over any wire, line, or cable, or is being sent from, or received at any place within this state; or . . . uses, or attempts to use, in any manner, or for any purpose, or to communicate in any way, any information so obtained, or who aids, agrees with, employs, or conspires with any person or persons to unlawfully do, or permit, or cause to be done any of the acts or things mentioned above . . . .

Cal. Pen. Code § 631; see also id. § 632.7 (providing for civil liability).

Although Mr. Shively pled only state law claims in his complaint, Carrier IQ nonetheless removed the lawsuit to federal court, arguing that the CIPA claims asserted are completely preempted by the Federal Wiretap Act. Mr. Shively now moves to remand on the basis that there is no complete preemption.

II. DISCUSSION

A. Legal Standard

A defendant may remove a civil action filed in state court to federal district court so long as the district court could have exercised original jurisdiction over the matter. See 28 U.S.C. § 1441(a).

However, [i]t is to be presumed that a cause lies outside [the] limited jurisdiction [of the federal courts] and the burden of establishing the contrary rests upon the party asserting jurisdiction. The strong presumption against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper, and that the court resolves all ambiguity in favor of remand to state court.

Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (internal quotation marks omitted).

B. Complete Preemption

There is no dispute that, in his complaint, Mr. Shively has asserted only state law claims for relief. But

[t]he jurisdictional doctrine of complete preemption serves as an exception to the well-pleaded complaint rule. It provides that, in some instances, "the preemptive force of [federal statutes] is so strong that they completely preempt an area of state law. In such instances, any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law." "[C]omplete preemption occurs only when Congress intends not merely to preempt a certain amount of state law, but also intends to transfer jurisdiction of the subject matter from state to federal court."

Ansley v. Ameriquest Mortg. Co., 340 F.3d 858, 861-62 (9th Cir. 2003); see also K2 Am. Corp. v. Roland Oil & Gas, 653 F.3d 1024, 1029 n.6 (9th Cir. 2011) (noting that "'[t]he general rule is that a defense of federal preemption of a state-law claim, even conflict preemption under [a federal statute], is an insufficient basis for original federal question jurisdiction under § 1331(a) and removal jurisdiction under § 1441(a)'"). The Ninth Circuit has emphasized that "[c]omplete preemption . . . arises only in 'extraordinary' situations. 'The test is whether Congress clearly manifested an intent to convert state law claims into federal-question claims.'" Ansley, 340 F.3d at 862 (emphasis added).

In its papers, Carrier IQ argues that Congress has explicitly expressed an intent to preclude state laws from regulating in this field and state courts from adjudicating such matters in 18 U.S.C. § 2518(10)(c), a provision of the Federal Wiretap Act that was added in 1986 when the Act was amended by the ECPA. Carrier IQ further argues that such an intent may be inferred because the Federal Wiretap Act has a detailed regulatory scheme which implicitly leaves no room for supplementary state regulation. See generally Jacobs v. ABN-Amro Bank N.V., No. 03-CV-4125 (NGG), 2004 U.S. Dist. LEXIS 6888, at *9-10 (E.D.N.Y. April 21, 2004) (noting that there is complete preemption "(1) when Congress explicitly provides that a certain kind of claim may only be litigated in federal court, even if the claim is made under state law" or "(2) when the Supreme Court determines that in enacting a federal law Congress implicitly intended the statute to have the effect of 'not only preempting state law but also authorizing removal of actions that sought relief only under state law'"). Each argument, addressed below, is problematic.

C. Express Complete Preemption

Carrier IQ takes the position that Congress expressly provided for complete preemption of state law claims in 18 U.S.C. § 2518 – more specifically, subsection (10)(c). Section 2518 is titled "Procedure for interception of wire, oral, or electronic communications." Subsections (1)-(9) basically deal with law enforcement applications for orders authorizing interception of wire, oral, or electronic communications and orders authorizing such. Subsection (10) goes on to provide in as follows:

(a) Any aggrieved person in any trial, hearing, or proceeding in or before any court, department, officer, agency, regulatory body, or other authority of the United States, a State, or a political subdivision thereof, may move to suppress the contents of any wire or oral communication intercepted pursuant to this chapter [18 U.S.C. §§ 2510 et seq.], or evidence derived therefrom, on the grounds that –

(i) the communication was unlawfully intercepted;

(ii) the order of authorization or approval under which it was intercepted is insufficient on its face; or

(iii) the interception was not made in conformity with the order of authorization or approval.

(b) In addition to any other right to appeal, the United States shall have the right to appeal from an order granting a motion to suppress made under paragraph (a) of this subsection, or the denial of an application for an order of approval, if the United States attorney shall certify to the judge or other official granting such motion or denying such application that the appeal is not taken for purposes of delay. . . .

(c) The remedies and sanctions described in this chapter [18 U.S.C. §§ 2510 et seq.] with respect to the interception of electronic communications are the only judicial remedies and sanctions for nonconstitutional violations of this chapter involving such communications.

18 U.S.C. § 2518(10) (emphasis added). Carrier IQ relies upon subsection (10)(c) – the language italicized above – in support of its express preemption argument.

The Court finds Carrier IQ's argument unconvincing. First, the plain language of § 2518(10)(c) simply states that a violation of the chapter has limited remedies and sanctions. That does not mean that violations of other laws (such as the CIPA) cannot provide for other remedies and sanctions. Congress easily have said that the remedies and sanctions provided for are the only remedies for an interception of electronic communications, but it did not do so.

Second, taking § 2518(10)(c) into context weighs against inferring complete preemption. Rather than standing alone as a clear preemption provision, compare 12 C.F.R. § 560.2(a) (HOLA regulation addressing only preemption), the relevant provision is buried as a subsection of § 2518; § 2518 has nothing to do with preemption. As discussed above, subsections (1) through (9) of § 2518 essentially deal with law enforcement applications for orders authorizing interception of wire, oral, or electronic communications and judicial orders authorizing such. Not only do these topics have nothing to do with preemption, § 2518 does not even address private, non-law enforcement applications to intercept communications. Moreover, subsections (10)(a) and (b) which precede (10)(c) concern motions to suppress intercepted communications. In this context, it would make little sense for subsection (10)(c) to be treated as a complete preemption provision applicable to all state law claims (including those involving private parties only).

At the very least, the above establishes that there is ambiguity as to whether § 2518(10)(c) effectuates complete preemption and, therefore, it is appropriate for the Court to consider the legislative history behind the statute. That history underscores that subsection (10)(c) is not acomplete preemption provision but rather was intended to insure that interception of electronic communications (in contrast to oral and wire communications) are not subject to the...