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 Franchise Tax Board Court went on, however, to state that "even though state law creates appellant's causes of action, its case might still 'arise under' the laws of the United States if a well-pleaded complaint established that its right to relief under state law requires resolution of substantial question of federal law in dispute between the parties." Id. at 13. The Court applied this reasoning to a declaratory judgment action brought to establish the rights and duties of the parties. Since the only questions in that claim concerned the parties' legal rights and duties under ERISA, the question of federal pre-emption was a necessary element of the declaratory judgment claim; therefore, it had to be part of the well-pleaded complaint, which thereby raised a question of federal law. Id. at 14. This is not the case here, however, because Plaintiff does not seek a declaration of rights under federal law. Indeed, she has scrupulously avoided federal claims.
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. Under the "well-pleaded" complaint rule, Plaintiff's claim does not "arise under" federal law. This Court does not have subject matter jurisdiction and remand is therefore appropriate.
B. " Complete" Federal Pre-emption.
Although the Plaintiff's first amended complaint does not disclose a federal claim, the federal courts have nonetheless developed exceptions to the "well-pleaded" rule, which limit a plaintiff's power to be master of his or her case. These doctrines authorize a court, in certain circumstances, to "look beyond the face of a plaintiff's complaint." Redwood Theatres, 908 F.2d at 479. They are referred to as the "artful pleading" doctrine and the "complete pre-emption" [or "complete displacement"] doctrine. Although distinguishable, these doctrines are applied in similar situations and both require a court to look behind the face of the complaint.
1. The "Artful Pleading" Doctrine.
The "artful pleading" doctrine stands for the proposition that a plaintiff cannot defeat removal of a federal claim by disguising it as a state claim. If the only claim involved is one "arising under" federal law, then a federal court must recharacterize it as such and allow removal. Federated Dept. Stores, Inc. v. Moitie, 452 U.S. 394, 397 n. 2, 69 L. Ed. 2d 103, 101 S. Ct. 2424 (1981); Redwood Theatres, 908 F.2d at 479. The "artful pleading" doctrine is rarely applied, however, except in cases in which federal law: (1) "completely pre-empts" state law, such as claims relating to collective bargaining agreements (LMRA § 301) and certain ERISA claims; and (2) supplants state law with a federal remedy. Chmiel v. Beverly Wilshire Hotel Co., 873 F.2d 1283, 1285 (9th Cir. 1989); Young v. Anthony's Fish Grottos, Inc., 830 F.2d 993, 997 (9th Cir. 1987); Sullivan, 813 F.2d at 1372; Federal Civil Procedure Before Trial para. 2:714 (Rutter Group 1990).
The Ninth Circuit describes the "artful pleading" doctrine as "a narrow exception to the straightforward rules of removal jurisdiction, . . . [in which] a court may recharacterize a plaintiff's claims as federal if 'the particular conduct complained of [is] governed exclusively by federal law.'" Redwood Theatres, 908 F.2d at 479 (emphasis added) (citations omitted). This doctrine may be invoked "'only in exceptional circumstances,' because doing so 'raises difficult issues of state and federal relationships and often yields unsatisfactory results.'" Redwood Theatres, 908 F.2d at 479 (citations omitted) (emphasis in original). The propriety of invoking the "artful pleading" doctrine depends on whether federal law has "completely pre-empted" Plaintiff's state law cause of action.
2. The "Complete Pre-emption" Doctrine.
The "complete pre-emption" doctrine provides that, in certain circumstances, the pre-emptive force of a federal 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. Once an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim." Stikes v. Chevron USA, Inc., 914 F.2d 1265, 1267 (9th Cir. 1990), (quoting Caterpillar, Inc. v. Williams, 482 U.S. 386, 393, 96 L. Ed. 2d 318, 107 S. Ct. 2425 (1987) and Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 95 L. Ed. 2d 55, 107 S. Ct. 1542 (1987)).
In the kingdom of federal-state relations, there exists more than one species of pre-emption. The more common type of pre-emption dictates whether federal or state law is applicable to a particular case. See West v. Northwest Airlines, Inc., 923 F.2d 657, 659-61 (9th Cir. 1990) (explaining when federal law applies under explicit, implicit, and conflict pre-emption). This type of pre-emption has no effect on a federal court's removal analysis. See Caterpillar, 482 U.S. at 393.
On the other hand, the rare type of "complete pre-emption" exists only in the realm of removal jurisdiction and remand. The Supreme Court has repeatedly stated that "a case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption. . . ." Caterpillar, 482 U.S. at 393; accord Metropolitan Life, 481 U.S. at 63-64; Franchise Tax, 463 U.S. at 12. In cases of "complete pre-emption," however, removal is appropriate. Id. The relevant inquiry, therefore, is whether federal law "completely pre-empts" Plaintiff's state law claims.
The Supreme Court has found "complete pre-emption" only in limited circumstances. This concept "is applied primarily in cases raising claims pre-empted by § 301 of the [Labor Management Relations Act, 29 U.S.C. § 185]," id., and certain claims under ERISA, Metropolitan Life, 481 U.S. at 65-66. This Court is aware of no case law which either applies the "complete pre-emption" doctrine to claims involving the FCA, or which sets out an analytical framework in which to apply the "complete pre-emption" doctrine to areas of law other than labor.
In determining whether removal jurisdiction is appropriate in this instance, this Court must apply the teachings of Metropolitan Life and Caterpillar. Removal is appropriate under the "complete pre-emption" doctrine when three conditions are satisfied: (1) the federal statute contains a jurisdictional statute similar to section 301 of the LMRA, Metropolitan Life, 481 U.S. at 65; (2) "Congress has clearly manifested an intent to make causes of action within the scope . . . [of that statute] removable to federal court"; id. at 65-66; and (3) the state law claim falls within the scope of the civil enforcement statute, Caterpillar, 482 U.S. at 394-95.
The federal statute at issue here is the Federal Communications Act ("FCA"). Defendants assert that either section 202, 47 U.S.C. § 202(a) or the federal common law associated with the FCA pre-empts Plaintiff's state law causes of action for unfair business practices. Furthermore, Defendants claim that, because Plaintiff's state law causes of action are pre-empted, she has "artfully pleaded" around the appropriate federal claim. Section 202(a) makes it unlawful for a
common carrier to make any unjust or unreasonable discrimination in . . . practices . . . or services . . . or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage.
47 U.S.C.A. § 202(a) (West 1962).
Plaintiff's state law causes of action against Defendants are all premised on Defendants' participation in unfair business practices as defined by the California Business and Professions Code, not on Defendants' discrimination, whether unreasonable or otherwise. After applying the Metropolitan Life-Caterpillar test, this Court finds that neither the FCA nor federal common law "completely pre-empts" California's statutes prohibiting unfair business practices.
The FCA's jurisdictional statute, Section 207, reads:
Any person claiming to be damaged by any common carrier subject to the provisions of this chapter may . . . bring suit for the recovery of the damages for which such common carrier may be liable under the provisions of this chapter in any district court of the United States of competent jurisdiction. . . .
47 U.S.C.A. § 207 (West 1962). Although the language of this statute parallels that of LMRA section 301, it is not a labor statute and therefore does not enjoy the same presumption of similarity that 29 U.S.C. § 1132(f) did. The Court expresses no opinion on whether this statute is sufficiently similar to the language of section 301 of the LMRA because the two remaining prongs of the test are not satisfied.
Although jurisdiction for a suit under FCA section 202 is arguably contemplated by section 207, Defendants have not pointed to and the Court is not aware of any language in the statute or its legislative history to support the proposition that Congress has clearly manifested an intent to make such causes of action removable to federal court. As a matter of fact, it would be impossible for Congress to have done this in the manner described in Metropolitan Life, i.e., by referring to the federal courts' interpretation of section 301 of the LMRA, because the FCA was enacted before the Supreme Court decided Metropolitan Life and before the legislative history the Court cited was written.
Finally, Plaintiff's state law causes of action for unfair business practices based on illegal gambling do not fall within the scope of FCA sections 207 and 202. Plaintiff's action seeks restitution and an injunction against Defendants' allegedly unfair business practices, which are mostly based on illegal gambling; she does not seek to recover damages for discrimination. Accordingly, sections 207 and 202 of the FCA do not "completely pre-empt" Plaintiff's state law causes of action.
The question of whether federal law is the law to apply is separate from the question of whether removal is appropriate. Unless there is exclusive federal jurisdiction, an argument Defendants have not made, state courts are equally competent to apply federal law.
Defendants cite two Second Circuit cases for the proposition that Plaintiff's state law cause of action is pre-empted by the FCA. These cases, however, were decided before Metropolitan Life and Caterpillar. Additionally, Nordlicht v. New York Tel. Co., 799 F.2d 859, 862-63 (2d Cir. 1986), held that federal common law, rather than section 207 of the FCA, pre-empted the state law causes of action for fraud and for money had and received. In Nordlicht, the Second Circuit did not discuss the Supreme Court's "complete pre-emption" analysis, but instead followed its prior decision in Ivy Broadcasting Co. v. AT&T, 391 F.2d 486, 489-91 (2d Cir. 1968). To the extent that the Second Circuit cases are inconsistent with the Supreme Court's analysis of "complete pre-emption," this Court respectfully declines to follow them.
Under the "well-pleaded complaint" rule, this Court does not have subject matter jurisdiction and remand is therefore appropriate.
As an independent basis for remand, Plaintiff asserts that she lacks standing to sue in federal court because she has not alleged personal injury. Standing is an integral component of subject matter jurisdiction. Bender v. Williamsport Area School District, 475 U.S. 534, 541-43, 89 L. Ed. 2d 501, 106 S. Ct. 1326 (1986) (party sued in official capacity has no standing to appeal in individual capacity). If Plaintiff lacks standing, this Court has no subject matter jurisdiction and must remand the case to state court. 28 U.S.C.A. § 1447(c); accord Maine Ass'n of Interdependent Neighborhoods v. Commissioner, Maine Dept. of Human Services, 876 F.2d 1051, 1054 (1st Cir. 1989) (citing Supreme Court decisions).
The parties spend considerable effort arguing this point. Defendants make three meritless arguments in support of the proposition that Plaintiff does have standing in federal court and has "artfully pleaded" around it: (1) Plaintiff has standing under the FCA as a representative of the public interest; (2) where the relief requested is equitable in nature, standing rules are interpreted liberally to allow representational standing where individuals might not otherwise be allowed to proceed; and (3) Plaintiff has standing under the qui tam statute, 31 U.S.C. § 3730(b)(1), to sue on behalf of the United States Government.
With respect to Defendants' first argument, Defendants fail to mention that the cases they cite, Scripps-Howard Radio, Inc. v. FCC, 316 U.S. 4, 14, 86 L. Ed. 1229, 62 S. Ct. 875 (1942) and Maier v. FCC, 735 F.2d 220, 229 (7th Cir. 1984), apply only to section 402(b)(6) of the FCA, which is not at issue in this case. The Supreme Court's opinion in Sierra Club v. Morton, 405 U.S. 727, 736-38, 31 L. Ed. 2d 636, 92 S. Ct. 1361 (1972), clarifies this position. The Sierra Club Court also explained that the phrase "private attorney general" is used to describe "the function performed by persons upon whom Congress has conferred the right to seek judicial review of agency action." Id. at 737-38. The deprivation of a right conferred by the statute creates the injury required for standing. Id. Once review is properly invoked, however, the "private attorney general" may argue the public interest in support of his or her claim. Id.
With respect to Defendants' second argument, the Court merely notes that two key requirements of the two cases Defendants cite are not present here. Defendants have identified no federal statute purporting to create standing for Plaintiff. Greater Los Angeles Council on Deafness v. Baldrige, 827 F.2d 1353, 1358 (9th Cir. 1987). Nor is Plaintiff an organization seeking to protect actually injured members. Alaska Fish and Wildlife Federation v. Dunkle, 829 F.2d 933, 938 (9th Cir. 1987), cert. denied, 485 U.S. 988, 99 L. Ed. 2d 501, 108 S. Ct. 1290 (1988).
With respect to Defendants' third argument, Plaintiff did not sue under the qui tam statute and Defendants have not explained how Plaintiff's claim fits into its scheme.
Defendants' arguments are all inapposite. The Supreme Court has repeatedly held that
"at an irreducible minimum, Art. III requires the party who invokes the court's authority to 'show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant,' and that the injury 'fairly can be traced to the challenged action' and 'is likely to be redressed by a favorable decision. . . .'