Braco v. Mci Worldcom Communications, Inc.

138 F.Supp.2d 1260

Ann Marie BRACO, Plaintiff, v. MCI WORLDCOM COMMUNICATIONS, INC.; and Does 1-25, Defendants.

No. CV01-00496ABC(SHx).

United States District Court, C.D. California.

April 3, 2001.

Michael Linfield, Law Offices of Michael Linfield, Pasadena, CA, for Plaintiff.

Jeffrey A. Rosenfeld, Sean A. Marks, Piper, Marbury, Rudnick & Wolfe, Los Angeles, CA, for Defendants.

ORDER GRANTING PLAINTIFF'S MOTION TO REMAND CASE TO STATE COURT

COLLINS, District Judge.

This case involves Plaintiffs challenge, under California unfair competition law, to Defendant's alleged practice of using misleading advertising to sell pre-paid calling card(s) to California consumers. Defendant removed to this Court, alleging complete preemption of the state law claims. Plaintiff has filed a Motion to Remand; conversely Defendant has filed a Motion to Dismiss. The Court finds both Motions appropriate for submission without oral argument. See Fed. R. Civ. Pro. 78; Local Rule 7.11. Accordingly, the noticed hearing date of April 9, 2001 is hereby VACATED. For the reasons indicated below, the Court finds that removal was improper, and GRANTS Plaintiff's Motion to Remand. The Court DENIES Defendant's Motion to Dismiss, as moot. The Court ORDERS Defendant to pay attorneys' fees, totaling $7,500.00.

I. PROCEDURAL HISTORY

On December 19, 2000, Plaintiff ANN MARIE BRACO ("Plaintiff," or "Braco") filed the operative Complaint in this case in Los Angeles County Superior Court against Defendant MCI WORLDCOM COMMUNICATIONS, INC. ("Defendant," or "MCI").¹ The Complaint asserts two Causes of Action under California statutes: (1) for False Advertising, under Section 17500 (et seq.) of the Business and Professions Code; and (2) for Unfair Business Practices, under Section 17200 (et seq.) of this same chapter (collectively, the "Unfair Competition Act," or "UCA"). The Complaint seeks damages in the form of disgorgement of Defendant's profits/restitution to customers, and either or both preliminary and permanent injunctive relief against Defendant MCI.²

On January 17, 2001, Defendant MCI filed a Notice of Removal, in which Defendant removed to this Court on alleged grounds of federal question jurisdiction (28 U.S.C. §§ 1331 and/or 1337). In its Notice of Removal, Defendant contends that plaintiff's claims necessarily arise under the Federal Communications Act (47 U.S.C. § 151 et. seq.) ("FCA," or the "Act"), in that they "involve a challenge to [MCI's] rates for telecommunications services, which is governed exclusively by federal law." Notice of Removal, Introduction ¶ 4. The Notice of Removal asserts that "federal law extinguishes" state law claims for disgorgement of profits or restitution, as little more than "artfully pled" challenges to FCA tariffs. See id., Original Jurisdiction ¶ 2.

On January 24, 2001, the parties submitted, and the Court signed, a Stipulation and Order extending time for Defendant to respond to the Complaint to February 5, 2001, to allow the parties additional time for settlement talks, and to discuss their respective legal positions so as "to avoid the expense and burden of bringing and opposing an unnecessary motion to dismiss." Then on February 7, 2001, the parties submitted, and the Court signed, a second Stipulation and Order, which again indicated the parties were discussing settlement, referenced an anticipated motion to remand by Plaintiff and a motion to dismiss by Defendant, and gave Defendant until February 19, 2001 to respond to the Complaint (with its motion to dismiss) and Plaintiff until March 2, 2001 to file a motion to remand. Again, the parties stated a "desire to avoid the expense and burden of bringing and opposing an unnecessary Motion to Dismiss and an unnecessary Motion to Remand."

A third Stipulation and Order was submitted by the parties, and signed by the Court, on February 21, 2001. This Stipulation, like the others, indicated ongoing settlement talks, referenced the anticipated motions, and expressed a desire to "avoid the expense and burden" of these motions if possible. Defendant's time for response was extended to March 5, 2001, while Plaintiff was given until March 16, 2001 to file the anticipated motion to remand the case to state court.

On March 5, 2001, Defendant filed its Motion to Dismiss ("MTD"), seeking dismissal under Rule 12(b)(6) on grounds that: (1) Plaintiff's claims seek to challenge a tariff filed pursuant to the FCA, and as such are barred by the filed tariff doctrine; and/or (2) that in any case the Complaint fails to state a claim under the Business and Professions Code because no member of the public could possibly be "likely to be deceived" by the calling card promotion. See MTD at 2.

On March 5, 2001, along with the MTD, Defendant MCI also filed a Request for Judicial Notice, seeking notice pursuant to Federal Rule of Evidence 201 of the prepaid calling card(s) at issue, along with the promotional materials which were apparently sent to customers, and of the Tariff that it has on file pursuant to the FCA.³ On March 16, 2001, the parties filed, and the Court signed, a fourth Stipulation and Order. This agreement, referencing Defendant's already-filed MTD, and Plaintiff's anticipated Motion to Remand ("MTR"), expressed the parties' desire to have the motions heard on the same date. Thus, the parties agreed to move the hearing date for the MTD, noticed for April 2, 2001, to its current setting of April 9, 2001 at 10:00 a.m., and to pre-set the hearing date for the MTR to be that same date and time.

On March 16, 2001, Plaintiff filed the MTR, noticed for a hearing on April 8, 2001. In the MTR, Plaintiff seeks an award of attorneys' fees for costs incurred in having to seek remand due to Defendant's improper removal. On March 23, 2001, Plaintiff filed an Opposition to the MTD ("MTD Opp."). Defendant filed an Opposition to the MTR ("MTR Opp.") on March 26, 2001. Each moving party has also filed a Reply with regard to its own motion ("MTD Reply," and "MTR Reply").

II. FACTUAL ALLEGATIONS⁴

The Complaint alleges that Defendant MCI is a company that sells long distance phone service and pre-paid phone cards to residents of California. See Complaint ¶ 8. Plaintiff claims that for at least the past year, Defendant has engaged in an advertising or direct mail campaign wherein it sends mailings to California consumers urging them to "[s]ign up for MCI WorldCom^SM today and enjoy a $75 prepaid calling card absolutely FREE." See id. ¶ 10. The mailing allegedly contains instructions on how to sign up for MCI, and encloses a pre-paid phone card which the consumer can activate by calling MCI to sign up for its services. On the pre-paid phone card is allegedly printed, in "big letters," the words "$75 FREE Prepaid Card." See id. ¶ 11. The card gives the caller 215 minutes of domestic calling. See id. ¶ 13.

Plaintiff asserts that this advertising/direct mail is deceptive and misleading, in that the value of the pre-paid calling card which consumers receive is substantially less than the $75.00 advertised, and is actually likely to be less than $25.00. See id. ¶¶ 9, 12, 14 (noting that MCI sells a pre-paid phone card with 250 domestic minutes for $25.00, and that MCI sells prepaid phone cards for as little as 5.9¢/minute, at which rate the "$75.00" card is worth $12.69). Thus, Plaintiff asserts: "the `value' of the pre-paid phone cards advertised by defendant was never $75.00, and ... this is a false, deceptive and misleading statement to illegally convince California consumers that they are purchasing a product at a discount." Id. ¶ 15. On this basis, Plaintiff seeks disgorgement/restitution, and an injunction.

III. LEGAL STANDARDS

A. Standard for Removal on the Basis of Complete Preemption

Generally, a state civil action is removable to federal court only if it might have been brought originally in federal court. See 28 U.S.C. § 1441. This "original jurisdiction" may be based either on diversity of the parties, or on the presence of a federal question in the state court complaint. On removal, the removing defendant bears the burden of proving the existence of jurisdictional facts. See Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). There is also a "`strong presumption'" against removal jurisdiction. Id. Because courts must "strictly construe the removal statute against removal jurisdiction," "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Id.

Federal question jurisdiction is governed by the "well-pleaded complaint rule."⁵ This provides that subject matter jurisdiction is proper only when a federal question appears on the face of a proper complaint. See, e.g., Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). As a result, a plaintiff — as master of the complaint — "may avoid federal jurisdiction by exclusive reliance on state law." Id. Further, a defendant cannot remove solely "on the basis of a federal defense, including the defense of pre-emption, even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue" in the case. Id. at 393, 107 S.Ct. 2425. Thus, the federal question must appear on the face of the complaint, as alleged and controlled by the plaintiff.

"Put simply, the existence of federal jurisdiction depends solely on the plaintiff's claims for relief and not on anticipated defenses to those claims." ARCO Environmental Remediation, L.L.C. v. Dept. of Health & Environmental Quality of the State of Montana, 213 F.3d 1108, 1113 (9th Cir.2000); see also Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 478, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998); Franchise Tax Bd. of California v. Construction Laborers Vacation Trust for S. California, 463 U.S. 1, 14, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). A plaintiff may defeat an anticipated removal by choosing not to...