United Artists Theatre Circuit, Inc. v. F.C.C.

Decision Date17 August 2000
Docket NumberNo. Civ 00-274-PHX-RCB.,Civ 00-274-PHX-RCB.
Citation147 F.Supp.2d 965
PartiesUNITED ARTISTS THEATRE CIRCUIT, INC., a Maryland corporation, Plaintiff, v. The FEDERAL COMMUNICATIONS COMMISSION; William E. Kennard, an individual, in his capacity as Chairman of the Federal Communications Commission; ESI Ergonomic Solutions, L.L.C., an Arizona limited liability corporation, Defendants.
CourtU.S. District Court — District of Arizona

Mary Ellen Simonson, Keith Beauchamp, Robert Gerald Schaffer, Lewis & Roca LLP, Phoenix, AZ, for United Artists Theatre Circuit.

Theodore C. Hirt, Karyn A. Temple, Washington, DC, for Federal Communications Commission and William E. Kennard.

Edward Moomjian, II, Chandler, Tullar, Udall & Redhair, Tucson, AZ, Christopher Alan LaVoy, LaVoy & Chernoff, PC, Phoenix, AZ, for ESI Ergonomic Solutions LLC.

ORDER

BROOMFIELD, Senior District Judge.

Defendant ESI Ergonomic Solutions, L.L.C. (ESI), has moved the court to dismiss the complaint against it. ESI contends that the court lacks subject matter jurisdiction to adjudicate the claims of United Artists Theatre Circuit, Inc. (United Artists) for declaratory relief. Alternatively, in the event that the court has subject matter jurisdiction, ESI urges the court to abstain from exercising it in light of parallel proceedings between ESI and United Artists in the Superior Court in Maricopa County. The federal Defendants answered the complaint with a request that the court dismiss it, but they have not submitted a motion to dismiss or joined in ESI's motion. The court heard oral argument on ESI's motion on June 26, 2000. Having carefully considered the matter, the court now rules.

BACKGROUND

United Artists petitions the court for a declaration that certain provisions of the Telephone Consumer Protection Act (TCPA) violate the First Amendment. As United Artists explains, the TCPA was enacted in 1991 and is codified at 47 U.S.C. § 227. Among other restrictions on the commercial use of telephone equipment, the statute makes it unlawful "to use any telephone facsimile machine, computer, or other device to send an unsolicited advertisement to a telephone facsimile machine." 47 U.S.C.A. § 227(b)(1)(C) (West Supp. 1999). An unsolicited advertisement is "any material advertising the commercial availability or quality of any property, goods or services which is transmitted to any person without that person's prior express invitation or permission." Id. § 227(a)(4). The statute contemplates a variety of actions, including a private right of action in state courts for recipients of unsolicited faxes. Id. § 227(b)(3).

A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State —

(A) an action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation,

(B) an action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater, or

(C) both such actions.

If the court finds that the defendant willfully or knowingly violated this section or the regulations prescribed under this subsection, the court may, in its discretion, increase the amount of the award to an amount equal to not more than 3 times the amount available under subparagraph (B) of this paragraph.

Id. § 227(b)(3). Actions by state attorneys general are also authorized. See id. § 227(f).

United Artists contends that it learned of the statute only recently. In 1999, unaware of the TCPA, United Artists hired American Blast Fax, Inc. (Blast Fax) to send 90,000 one-page advertisements to businesses in the Phoenix area. Compl. ¶¶ 7, 9. The advertisement offered movie tickets at discount prices. Response at 2-3. About 179 businesses responded and bought tickets, another 89,820-odd businesses did not respond, and one, ESI, filed suit in the Superior Court in Maricopa County against United Artists and Blast Fax for violating the TCPA. ESI seeks to incorporate the other 89,999 recipients as members of a plaintiff class; if the statutory penalty of $500 per fax were imposed, statutory damages would amount to $45 million. If the penalty were tripled upon a finding that United Artists' violation was willful — something that United Artists denies — United Artists' liability would inflate to $135 million.

While in the midst of litigating the state court action, on February 14, 2000, United Artists filed a complaint in this court seeking a declaration that 47 U.S.C. § 227(b) is unconstitutional, and a permanent injunction against efforts by the FCC and private parties to enforce the statute against "purely intrastate faxing." Compl. at 6. In moving to dismiss the federal complaint, ESI contends that United Artists' complaint reveals no justiciable controversy between United Artists and a private party like itself, nor is there an independent basis for federal jurisdiction. It also argues that comity requires federal abstention.

During briefing on ESI's motion to dismiss in this court, proceedings in the Superior Court have gone forward. As a defendant in the state court action, United Artists filed a series of dispositive motions, notably two motions for summary judgment challenging the constitutionality of the TCPA.1 Based on the papers submitted to that point, Judge Norman J. Davis was not persuaded that the TCPA is unconstitutional. "Nor does this Court find that the TCPA embodies apparent constitutional violations of either the United States Constitution or the Arizona Constitution at this point." He denied the summary judgment motions, as well as the other pending dispositive motions. See Reply, Ex. 1 (Order of May 5, 2000).

From the order, the nature of the constitutional theories advanced by United Artists and rejected by Judge Davis is not clear. According to United Artists, summary judgment was sought on the ground that TCPA suits are not "permitted" under Arizona law because they violate the free speech and due process clauses of the Arizona Constitution. Response at 3. Writing before Judge Davis's order issued, United Artists here maintained that the federal constitutional issues raised in this action have not been presented to the state court. See id. In reply, ESI was advantaged by having the order, from which it argues that United Artists' position is not tenable:

Every constitutional issue that United Artists has raised in this action either has been, or can be, raised in the state court proceeding. Nor can it be determined at this point what defenses, constitutional or otherwise, United Artists will actually raise in the state court proceeding because it has yet to file an answer in that action framing its defenses. Moreover, the First Amendment and Due Process defenses it asserts here are analytically subsumed within the parallel provisions of the Arizona Constitution that it has already asserted by motion in the state court proceeding (by virtue of the Supremacy Clause, and decisional law in Arizona, these provisions of the Arizona Constitution are necessarily as broad as their federal counterparts). Recognizing this, in his recent ruling denying United Artists' constitutional motions, Judge Davis analyzed both the state and federal constitutions....

Reply at 4-5. It is at this juncture that the court confronts ESI's challenge to federal subject matter jurisdiction and its suggestion to abstain.

DISCUSSION

When presented with a motion to dismiss for lack of subject matter jurisdiction and on other grounds, courts generally take up the subject matter jurisdiction issue first, because its disposition may moot other issues. "Questions of jurisdiction, of course, should be given priority — since if there is no jurisdiction there is no authority to sit in judgment of anything else." Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 120 S.Ct. 1858, 1865, 146 L.Ed.2d 836 (2000); see generally 5A Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1350 (2d ed.1990 and Supp.1999). Subject matter jurisdiction is an issue logically prior to the propriety of abstention. "Only after a court is satisfied that standing and the other jurisdictional prerequisites are met may it determine, within its discretion, whether to abstain." City of South Lake Tahoe v. Cal. Regional Planning Agency, 625 F.2d 231, 233 (9th Cir.1980).

A. Subject Matter Jurisdiction

A motion to dismiss for lack of subject matter jurisdiction is analyzed under Fed.R.Civ.P. 12(b)(1). Like other motions to dismiss, complaints are construed broadly and the non-moving party is entitled to all reasonable inferences that can be drawn in its favor. Smith v. Gross, 604 F.2d 639, 641 n. 1 (9th Cir.1979). All uncontested factual allegations are accepted as true. Doe v. Schachter, 804 F.Supp. 53, 57 (N.D.Cal.1992). The court's review is not restricted to the scope of the pleadings, but may extend to evidence offered by the parties to resolve factual disputes going to the jurisdictional issue. McCarthy v. United States, 850 F.2d 558, 560 (9th Cir.1988). The burden of proof on a Rule 12(b)(1) motion is on the party asserting jurisdiction. Ashoff v. City of Ukiah, 130 F.3d 409, 410 (9th Cir.1997).

The Declaratory Judgment Act, 28 U.S.C. § 2201, is not a jurisdictional statute. See Fiedler v. Clark, 714 F.2d 77, 79 (9th Cir.1983). Federal jurisdiction must exist independently. To establish jurisdiction, federal declaratory judgment actions must satisfy the well-pleaded complaint rule, which screens complaints that anticipate defenses based on federal law. See Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 673-74, 70 S.Ct. 876, 94 L.Ed. 1194 (1950). Since declaratory actions invert actions to enforce rights, the well-pleaded complaint analysis ascertains whether the declaratory judgment defendant could have brought a coercive action arising...

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