Bryceland v. At & T Corp.

122 F.Supp.2d 703

Charles BRYCELAND, et al., Plaintiffs, v. AT & T CORPORATION, et al., Defendants.

No. 3-99-CV-2279-L.

No. 3-00-CV-0084-L.

United States District Court, N.D. Texas, Dallas Division.

November 27, 2000.

Robert Scott, Jonathan Scott, Dallas, TX, for Plaintiffs.

R. Laurence Macon, Akin, Gump, Struass, Hauer & Feld, San Antonio, TX, John Hendricks, Akin, Gump, Strauss, Hauer & Feld, Dallas, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

KAPLAN, United States Magistrate Judge.

Plaintiffs filed two class action lawsuits against AT & T Corporation and AT & T Wireless Services, Inc. ("AT & T"). One case was filed in federal court. The other was filed in state court. AT & T removed the state court action to federal court and the cases were consolidated. Plaintiffs now move to remand the state case. AT & T has filed a motion to dismiss both class action complaints. For the reasons stated herein, plaintiffs' motion to remand the state case is granted and the federal case is dismissed sua sponte for lack of subject matter jurisdiction.¹

I.

AT & T Wireless Services, Inc., a wholly owned subsidiary of AT & T Corporation is the largest digital wireless phone service carrier in the United States. (Plf.Compl.¶ 5). Digital wireless service allows telecommunications carriers to reach more customers at a lower cost than was possible with earlier analog wireless technology. (Id. ¶¶ 9, 25). AT & T began offering Digital PCS wireless service to customers in major metropolitan areas throughout the United States, including Dallas, in October 1996. According to plaintiffs, "AT & T encouraged its current wireless customers and new customers to switch to digital wireless service, although it knew, and did not disclose, the serious deficiencies of its digital wireless service." (Id.).

In May 1998, AT & T launched a new billing plan called Digital One Rate ("DOR"). Under this plan, customers could purchase a set block of air time for a flat monthly fee instead of paying for phone calls on a per-minute basis. Long distance and roaming charges were eliminated for calls made to or from anywhere in the United States within the allotted airtime. However, subscribers were required to purchase a specially designed digital wireless phone in order to access the DOR network. The plan has been wildly successful, attracting roughly 100,000 new customers each month since its inception. (Id. ¶¶ 10, 26). Plaintiffs are among the tens of thousands of Texas residents who enrolled in the DOR plan and purchased expensive, multi-network wireless phones required for use with the service. (Id. ¶¶ 14, 18).

This huge influx of new subscribers and corresponding increase in the volume of calls has apparently overtaxed the capabilities of the AT & T digital wireless network. (Id. ¶ 11). Among these problems are: (1) repeated involuntary disconnections, or "dropped" calls; (2) fast busy signals when attempting to connect with the service, or "blocked" calls; (3) lengthy waits before reestablishing connections; and (4) garbled and static-filled calls. (Id. ¶ 12). Plaintiffs allege that AT & T knew or should have known, and failed to disclose, that its digital wireless network was not sufficiently developed to accommodate DOR subscribers. (Id. ¶ 13). As a result of these inadequacies, plaintiffs contend that the digital wireless service provided by AT & T is "grossly unreliable and frequently useless." (Id. ¶ 12).

On October 6, 1999, plaintiff filed a class action in federal district court on behalf of "all persons residing in Texas who subscribe or have subscribed to the digital wireless calling service offered by [AT & T] from October 2, 1996 to the present." (Id. ¶ 7). Plaintiffs assert claims for breach of contract, fraud, breach of warranty, and negligent misrepresentation. (Id. ¶¶ 8, 44-49, 50-56, 57-58, 59-64). They seek damages totaling $100 million and injunctive relief. (Id. ¶ 65). Two months after this lawsuit was filed, the same plaintiffs initiated a separate proceeding in state court. The state court action is virtually identical to the federal court suit, except for an additional claim under the Texas Deceptive Trade Practices Act. (Plf.Orig.Pet.¶¶ 68-81). AT & T timely removed the state action to federal court and the two cases were consolidated. See ORDER, 3/6/00.

AT & T now moves to dismiss both cases on the ground that plaintiffs' state law claims are preempted by the Federal Communications Act of 1934, 47 U.S.C. § 151, et seq. Alternatively, AT & T contends that plaintiffs have failed to state a claim upon which relief can be granted. Plaintiffs have filed a motion to remand the state court action because the amount in controversy is insufficient to satisfy the requirements of federal diversity jurisdiction and there is no basis for federal question jurisdiction. The parties have briefed the motions and presented arguments at a hearing on November 17, 2000. These matters are ripe for determination. Because the issue of subject matter jurisdiction must be determined at the outset of a case, the Court will consider plaintiffs motion to remand first. See Steel Co. v Citizens for a Better Environment, 523 U.S. 83, 101, 118 S.Ct. 1003, 1016, 140 L.Ed.2d 210 (1998) (federal court may not resolve contested issues of law when its jurisdiction is in doubt).

II.

AT & T removed plaintiffs' state court action on the grounds of diversity of citizenship and federal question jurisdiction. Although plaintiffs did not plead a specific amount of damages in their state court petition, AT & T maintains that the amount in controversy clearly exceeds $75,000 because plaintiffs seek "$100 million in compensatory, nominal and punitive damages in their virtually identical, previously filed Federal Complaint." (Notice of Removal ¶ 10).² AT & T further contends that plaintiffs' state law claims are preempted by the Federal Communications Act and, as such, can be removed to federal court. (Id. ¶ 14). Plaintiff argues that removal is not proper under either theory and seeks an order remanding this case to state court.

A.

A case may be removed to federal court if it is "founded on a claim or right arising under the Constitution, treaties or laws of the United States ..." 28 U.S.C. § 1441(b). The analysis of this statute is controlled by the well-pleaded complaint rule. This rule provides that a "properly pleaded complaint governs the jurisdictional determination and if, on its face, such a complaint contains no issue of federal law, then there is no federal question jurisdiction." Aaron v. National Union Fire Insurance Co., 876 F.2d 1157, 1160-61 (5th Cir.1989), cert. denied, 493 U.S. 1074, 110 S.Ct. 1121, 107 L.Ed.2d 1028 (1990); Flowerette v. Heartland Healthcare Center, 903 F.Supp. 1042, 1044 (N.D.Tex.1995). Stated differently, removal if proper is the complaint establishes: (1) that federal law creates the cause of action; or (2) that the case necessarily depends on a substantial question of federal law in that federal law is a necessary element of one of the wellpleaded claims. Franchise Tax Board of State of California v. Construction Laborers Vacation Trust of Southern California, 463 U.S. 1, 27-28, 103 S.Ct. 2841, 2856, 77 L.Ed.2d 420 (1983); see also Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 808-09, 108 S.Ct. 2166, 2173-74, 100 L.Ed.2d 811 (1988). This determination must be based on the claims asserted by the plaintiff, "unaided by anything alleged in anticipation or avoidance of defenses which it is thought the defendant may interpose." Franchise Tax Board, 103 S.Ct. at 2846.

AT & T maintains that the state court action was properly removed to federal court because the claims asserted therein are preempted by the Federal Communications Act of 1934 ("FCA"), 47 U.S.C. § 151, et seq. The FCA governs the licensing and regulation of "commercial mobile radio service providers" such as AT & T Wireless See Connecticut Department of Public Utility Control v. FCC, 78 F.3d 842, 845 (2d Cir.1996). In 1993, Congress revised the statutory system of licensing and regulating wireless telecommunications services in order "to promote rapid deployment of a wireless telecommunications infrastructure." In re Petition of the Connecticut Department Public Utility Control to Retain Regulatory Control of the Rates of Wholesale Cellular Service Providers in the State of Connecticut, 10 F.C.C. Red. 7025 ¶¶ 2, 10 (1995), review denied, 78 F.3d 842 (2d Cir.1996). To that end, Section 332 of the FCA was amended to expressly prohibit state and local governments from "regulat[ing] the entry of or the rates charged by any commercial mobile service or any private mobile service ..." Omnibus Budget Reconciliation Act of 1993, Pub. L No. 103-66, § 6002(b)(2)(A), 107 Stat. 312, 394 (1993), codified at 47 U.S.C. § 332(c)(3)(A). The plain language of this legislation manifests a clear Congressional intent to preempt the field with respect to rates and market entry.³

However, the mere fact that plaintiffs' claims may be preempted by federal law does not create federal removal jurisdiction. Ordinary or "conflict" preemption is nothing more than a defense to a plaintiff's state law claims and will not support removal under the well-pleaded complaint rule. See McClelland v. Gronwaldt, 155 F.3d 507, 516 (5th Cir.1998). Removal is proper only where a state law claim is completely preempted by federal law. Complete preemption exists when "Congress ... so completely preempt[s] a particular area, that any civil complaint raising that select group of claims is necessarily federal in character." Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 1546, 95 L.Ed.2d 55 (1987). In such cases, "any complaint that comes within the scope of the federal cause of action [created by the federal statute] necessarily `arises under' federal law" for purposes of removal based on federal question jurisdiction. Franchise Tax Board, 103 S.Ct. at...