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BOYLE v. MTV NETWORKS

April 22, 1991

RITA BOYLE, on behalf of the general public, Plaintiff(s),
v.
MTV NETWORKS, INC., a Delaware corporation, AT&T INC., a New York corporation, PACIFIC BELL, INC., a California corporation, and DOES I-XX, Defendant(s)



The opinion of the court was delivered by: SMITH

 FERN M. SMITH, United States District Judge.

 This matter is before the Court on Plaintiff's motion for remand. Plaintiff filed suit in state court seeking relief based on California law. Defendants removed to this Court, claiming that federal law pre-empts Plaintiff's state law causes of action and that Plaintiff had "artfully pleaded" around her true federal basis for relief. For the reasons discussed in this Order, Defendants' removal was inappropriate because this Court lacks subject matter jurisdiction; Plaintiff's motion to remand is therefore GRANTED.

 FACTS

 On August 23, 1990, Plaintiff filed her first amended complaint in San Mateo Superior Court. She purports to bring her action on behalf of the general public and seeks injunctive relief and restitution for violation of California Business and Professions Code section 17200. The named Defendants are MTV Networks, Inc., a Delaware corporation ("MTV"); AT&T, Inc., a New York corporation ("AT&T"); and Pacific Bell, Inc., a California corporation ("PACBELL").

 On September 19, 1990, Defendants timely removed the action to this Court. On October 3, 1990, Plaintiff filed her motion for remand.

 The gravamen of the complaint is that Defendants have participated in games of chance, which are allegedly illegal under California Penal Code sections 319, 320, and 322. Specifically, Plaintiff alleges that defendant MTV has conducted lotteries on two nationwide television channels, and that defendant AT&T has provided 900 phone service for call-in entries to these lotteries. Fees earned from "900" calls are divided between defendants MTV and AT&T. Plaintiff alleges that Defendants AT&T, PACBELL, and various Does bill for these calls.

 Plaintiff seeks restitution to callers billed for calls from California. In addition, she asks the Court to enjoin MTV from continuing its practice unless the following requirements are satisfied: (1) MTV must give equal publicity about the free mail-in method of entry to the games of chance when advertising the paid phone-in method; (2) Defendants must provide something of value for phone-in (paid) entries; and (3) Defendants must provide publicity about the minimum age requirement when advertising the game. Finally, Plaintiff seeks costs and attorney's fees, under California Code of Civil Procedure section 1021.5.

 DISCUSSION

 The United States Code provides that in a case removed to the federal district court, "if at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C.A. § 1447(c) (West Supp. 1990) (emphasis added). This Court's inquiry, therefore, is whether subject matter jurisdiction exists in this case. The burden of establishing jurisdiction falls on Defendants, as the party seeking removal. Sullivan v. First Affiliated Securities, Inc., 813 F.2d 1368, 1371 (9th Cir.), cert. denied, 484 U.S. 850, 98 L. Ed. 2d 106, 108 S. Ct. 150 (1987). Moreover, the Court must strictly construe the statute against finding removal. Salveson v. Western States Bankcard Ass'n, 731 F.2d 1423, 1426 (9th Cir. 1984). Finally, considerations of judicial economy, coordination of complex litigation, or convenience of the parties cannot be used to support removal jurisdiction. Sullivan, 813 F.2d at 1377.

 I. SUBJECT MATTER JURISDICTION.

 The United States Code confers subject matter jurisdiction on federal district court only in limited circumstances. The two provisions pertinent to this case are federal question and diversity of citizenship. 28 U.S.C.A. §§ 1331, 1332. The requirements for jurisdiction under diversity of citizenship are not satisfied because the parties are not completely diverse -- both Plaintiff and Defendant PACBELL are citizens of California. 28 U.S.C.A. § 1332(a)(1), (c)(1). Additionally the amount in controversy is not satisfied. Id.

 The federal question statute, section 1331, provides, on the other hand, that "district courts shall have original jurisdiction of all civil actions arising under the . . . laws . . . of the United States." 28 U.S.C.A. § 1331 (emphasis added). The pertinent inquiry, therefore, is whether Plaintiff's state law action is one "arising under" federal law. To determine whether a case meets this criterion, the federal courts examine the face of the complaint. The "well-pleaded" complaint rule "provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar, Inc. v. Williams, 482 U.S. 386, 393, 96 L. Ed. 2d 318, 107 S. Ct. 2425 (1987). This rule applies equally "to the original jurisdiction of the district courts as well as to their removal jurisdiction." Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 10 n. 9, 77 L. Ed. 2d 420, 103 S. Ct. 2841 (1983).

 Plaintiff's complaint does not state a claim "arising under" federal law for three separate and independent reasons: (1) the "well-pleaded" complaint does not allege a federal claim; (2) Plaintiff does not have standing to sue in federal court; and (3) federal law does not "completely pre-empt" state law in this area. This Court does not, therefore, have subject matter jurisdiction and must remand this case to the state court under 28 U.S.C.A. section 1447(c).

 A. The "Well-Pleaded" Complaint Rule.

 The underlying premise of the "well-pleaded" complaint rule is that a plaintiff is the master of his or her case and has the right to choose whether to rely on state or federal law. Redwood Theatres, Inc. v. Festival Enterprises, Inc., 908 F.2d 477, 479 (9th Cir. 1990), citing The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 57 L. Ed. 716, 33 S. Ct. 410 (1913). If a plaintiff "can maintain his claim on both state and federal grounds, he may ignore the federal question and assert only a state law claim and defeat removal." Sullivan, 813 F.2d at 1371-72.

 Moreover, the Supreme Court has repeatedly stated that "'whether a case is one arising under . . . a law . . . of the United States, in the sense of the jurisdictional statute, . . . must be determined from what necessarily appears in the plaintiff's . . . [complaint], unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant may interpose.' . . . For better or worse, . . . a defendant may not remove a case to federal court unless the plaintiff's complaint establishes that the case 'arises under' federal law." Franchise Tax Bd., 463 U.S. at 10 (emphasis in original), quoting Taylor v. Anderson, 234 U.S. 74, 75-76, 58 L. Ed. 1218, 34 S. Ct. 724 (1914). Furthermore, it is "settled law that a case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption. . . ." Id. at 14.

 In Franchise Tax Board, the Supreme Court applied these principles to a state law suit to enforce a levy. The defendant removed to the federal district court, claiming that ERISA pre-empted the State's power to levy under the state statute. In a unanimous decision, the Supreme Court held that "a straightforward application of the well-pleaded complaint rule precludes original federal-court jurisdiction. California law establishes a set of conditions, without reference to federal law, under which a tax levy may be enforced; federal law becomes relevant only by way of a defense to an obligation created entirely by state law, and then only if appellant has made out a valid claim for relief under state law." Id. at 13.

 The California statutes under which Plaintiff sues establish a set of conditions, without reference to federal law, under which liability attaches. Defendants claim that if they are forced to comply with these state laws, they will violate federal law prohibiting discrimination under the Federal Communications Act ("FCA") section 202, 47 U.S.C. § 202. Defendants argue that federal law therefore pre-empts Plaintiff's state law causes of action. This argument is asserted only as a defense to Plaintiff's state law cause of action; as a defense, it becomes relevant only after Plaintiff has made out a valid claim under state law. Franchise Tax Bd., 463 U.S. at 13. This defense is insufficient to support removal. Id. ...


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