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Donaldson v. Sprint Corporation

United States District Court, S.D. Illinois
Feb 27, 2001
No. 00-CV-0763-DRH (S.D. Ill. Feb. 27, 2001)

Opinion

No. 00-CV-0763-DRH.

February 27, 2001.


MEMORANDUM AND ORDER


I. Introduction

Plaintiffs Melinda K. Donaldson, D.R. Haneklau, and James A. Cark filed a class action complaint in the Circuit Court of Madison County, Illinois against Defendants Sprint Corporation, Sprint Communications Company, L.P., d/b/a Sprint Communications, L.P., U.S. Telecom, Inc., Sprintcom Inc., d/b/a Sprint PCS, a wholly owned subsidiary of Sprint Corporation, and Sprint Spectrum, L.P. Before Defendants were served a copy of the original complaint, Plaintiffs filed an amended complaint in the Madison County Circuit Court on August 25, 2000 (Doc. 2). Subsequently, Plaintiffs filed a second amended complaint on December 15, 2000 (Doc. 30). On behalf of themselves and other similarly situated persons, Plaintiffs allege that Defendants, providers of telecommunications services, have engaged in the practice of deceptively and fraudulently marketing other terms and conditions of the long distance service by failing to disclose adequately or at all that it would require Plaintiffs to pay unusual, extra fees to reimburse itself for certain expenses; by failing to reveal adequately or at all other terms and conditions; and by switching them without their knowledge or consent from the low rate plans to the casual caller plan. Plaintiffs bring this case pursuant to the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq. Plaintiffs seek compensatory damages, punitive damages, attorney's fees, penalties authorized by the Act and injunctive relief.

On September 26, 2000, Defendants removed the action to this Court, asserting that subject matter jurisdiction lies under both the federal question statute, 28 U.S.C. § 1331 and the federal diversity statute, 28 U.S.C. § 1332 (Doc. 1). On November 18, 2000, Plaintiffs moved to remand the case to state court based on lack of subject matter jurisdiction (Doc. 18). Defendants object to the remand motion. Having reviewed the pleadings and the applicable case law, the Court finds that it lacks subject matter jurisdiction and grants Plaintiffs' motion to remand.

II. Analysis

Here, Defendants assert that both federal question jurisdiction and diversity jurisdiction exists. Therefore, the Court must ascertain whether it has subject matter jurisdiction under either federal question jurisdiction or diversity jurisdiction. The Court notes that the removal statute, 28 U.S.C. § 1441, is construed narrowly, and doubts concerning removal are resolved in favor of remand. Doe v. Allied Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993). First, the Court turns to address the issue of federal question jurisdiction.

28 U.S.C. § 1331 vests the federal district courts with original jurisdiction of all civil actions arising under the Constitution, laws or treaties of the United States. Here, Plaintiffs' second amended complaint contains one count brought pursuant to the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1, et seq. Defendants argue that Plaintiffs' claims are preempted because Plaintiffs' claims would invalidate Defendants' tariffs for long distance service pursuant to the Federal Communications Act, 407 U.S.C. § 203(a). Specifically, Defendants argue that Plaintiffs have artfully pled to avoid any mention of the rate setting and the rate charging mechanism for long distance telephone calls mandated by Congress. The Court rejects Defendants' argument.

Section 203 of the Federal Communications Act requires every common carrier to file with the Federal Communications Commission ("FCC") tariffs showing all charges and all classifications, practices and regulations affecting such charges. American Telephone Telegraph Company v. Central Office Telephone, Inc., 524 U.S. 214, 118 S.Ct. 1956, 1962 (1998). The section makes it unlawful for a carrier to provide to any person any privilege or facility or employ or enforce any classification, regulation or practices affecting such charges except as provided in the tariff. Id. Hence, it is unlawful for a carrier to charge consumers any rate other than which is provided in its tariff filed with the FCC.

Because the Federal Communications Act is modeled on the Interstate Commerce Act, the "filed rate" doctrine associated with that act's tariff provisions applies. Id. Under the filed rate doctrine, deviation from the filed charge is not permitted upon any pretext, and carriers and customers are charged with notice of it and must abide by it unless the FCC finds it unreasonable. Ignorance or misquotations of rates is not an excuse for paying or charging less or more than the rate filed. Id. at 1962-63. "Thus, even if a carrier intentionally misrepresents its rate and the customer relies on the misrepresentation, the carrier cannot be held to the promised rate if it conflicts with the published tariff." Id. The tariff filed is the equivalent of a federal regulation, a suit to enforce it or to invalidate it is as unreasonable arises under federal law, and any contractual claim is preempted by federal law. Cahnmann v. Sprint Corporation, 133 F.3d 484, 489 (7th Cir. 1998).

However, the Federal Communications Act has a saving clause which provides:

"Nothing in this chapter contained shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this chapter are in addition to such remedies." 47 U.S.C. § 414.

In Cahnmann, the Seventh Circuit agreed with the Sixth Circuit's application of the savings clause as illustrated in In re Long Distance Telecommunications Litigation, 831 F.2d 627, 633-34 (6th Cir. 1987), on which a carrier was accused of representing that its rates were lower than the competitors without revealing that, unlike the competitor, it charged it customers for uncompleted calls. Cahnmann, 133 F.3d at 488.

As noted by the well respected jurist, the Honorable Rebecca R. Pallmeyer, of the Northern District of Illinois, "not every challenge to business practices of a telecommunications provider implicates issues expressly and exclusively regulated under the FCA." Funeral Financial Services, Ltd. v. NOS Communications, Inc., 1999 U.S. Dist. LEXIS 2453, * 5 (N.D.Ill. 1999) (citations omitted). "Plaintiffs seeking relief for `misrepresentational torts," where exercise of the court's authority would not conflict with the statutorily-prescribed administrative scheme, are not preempted by the FCA." Id. (citing In re Long Distance Telecommunications Litig., 831 F.2d at 633 (analogizing to Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 299 (1976)).

Here, Plaintiffs' second amended complaint seeks compensation "as a result of Sprint's fraudulent advertising and an amount reflecting the difference in cost between the low flat rate or low per minute rate plans and the casual caller plan to which Plaintiffs were switched without their knowledge and consent as a result of Sprint's deceptive and fraudulent marketing practices." Plaintiffs are not challenging the reasonableness of the rate charges or seeking compensation for overcharging of telecommunications services. The Court finds that Plaintiffs' claims allege state law fraud claims that are not preempted by the Federal Communications Act. Therefore, the Court does not have federal question jurisdiction over Plaintiffs' claims.

Next, the Court must determine whether diversity jurisdiction exists. In response to whether the Court has diversity jurisdiction, Defendants incorrectly argue that Plaintiffs' waived this issue because Plaintiffs filed their motion to remand thirty-eight days after the filing of the notice of removal. Specifically, Defendants maintain that pursuant to 28 U.S.C. § 1447(c) and Hurley v. Motor Coach Indus., Inc., 222 F.3d 377, 380 (7th Cir. 2000), an objection to removal based on lack of diversity must be raised within thirty days from the filing of the notice of removal, or the objection is waived. To the contrary, neither 28 U.S.C. § 1447(c) nor Hurley states, holds or even implies what Defendants purport that they do. 28 U.S.C. § 1447(c) provides in part:

This begs the questions of whether Defendants actually read the statute and Hurley (because if they had, Defendants obviously would not have cited this in their response) or whether Defendants were trying to mislead the Court. Regardless, the Court finds this misrepresentation an example of care less lawyering and may constitute a violation of FEDERAL RULE OF CIVIL PROCEDURE 11(b)(2).

A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.

In Hurley, the Seventh Circuit held that the "forum defendant" rule is nonjurisdictional which can be waived and that true jurisdictional flaws are nonwaivable and can be raised at any time. Hurley, 222 F.3d at 379-380. Thus, waiver applies only where there are procedural defects in the removal process. See 28 U.S.C. § 1447(c); Harmon v. Oki Systems, 115 F.3d 447, 479 (7th Cir. 1997) ("§ 1447(c) covers any defects which do not go to the `question of whether the case could have been brought in federal court.'") (citations omitted). Under § 1447(c), diversity jurisdiction does not have to be raised within thirty days of removal. Therefore, Plaintiffs have not waived this issue.

28 U.S.C. § 1441(b), which is some times called the "forum defendant" rule provides that a non-federal question case "shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." 28 U.S.C. § 1441(b).

As to whether subject matter jurisdiction under the federal diversity statute exists, 28 U.S.C. § 1332, there must be (a) complete diversity, which means that "none of the parties on either side of the litigation may be a citizen of a state on which a party on the other side is a citizen," Howell v. Tribune Entertainment Co., 106 F.3d 215, 217 (7th Cir. 1997), and (b) an amount in controversy which exceeds $75,000, exclusive of interests and costs. To remove an action based on federal diversity jurisdiction, a defendant must establish the elements by competent proof showing a reasonable probability that such jurisdiction exists. Chase v. Shop `N Save Warehouse Foods, Inc., 110 F.3d 424, 427 (7th Cir. 1997).

Here, the second amended complaint alleges that Plaintiffs Donaldson and Clark are "residents" of Illinois, that Plaintiff Haneklau is a "resident" of the state of Missouri and that Defendants Sprint Corporation, U.S. Telecom, Inc., and Sprint Spectrum, L.P., have their principal places of business in Missouri (thus rendering them Missouri citizens) (Doc. 30, ps. 2-3). In addition, the Notice of Removal alleges that "Plaintiffs have not plead their state of residence in their Amended Complaint, but in their original complaint, Plaintiff Donaldson pled that she is a resident of Madison County, Illinois. Defendants are not Illinois corporations or limited partnerships (nor are their partners residents of Illinois) and they do not have their principal place of business in the state of Illinois." (Doc. 1, p. 3). Two obvious problems appear as to diversity between the parties.

First, the second amended complaint improperly alleges residence rather than citizenship of the three named Plaintiffs and Defendants' notice of removal improperly alleges residence rather than citizenship. The Seventh Circuit has clearly declared what must be done when a complaint or notice of removal alleges residence:

[T]he parties have ignored the fact that the notice of removal was ineffective in terms of properly alleging diversity because allegations of residence are insufficient to establish diversity jurisdiction. See Guaranty Nat'l Title Co. v. J.E.G. Assocs., 101 F.3d 57, 58 (7th Cir. 1996) (It is well settled that "[w]hen the parties allege residence but not citizenship, the court must dismiss the suit.").

Tylka v. Gerber Products Company, 211 F.3d 445, 448 (7th Cir. 2000).

Second, even assuming that the second amended complaint and the notice of removal alleged all parties' citizenship, the allegations do not establish complete diversity. Plaintiff Hankelau and Defendants Sprint Corporation, U.S. Telecom, Inc., and Sprint Spectrum, L.P., are alleged to be citizens of Missouri. Therefore, diversity between the parties does not exist.

Lastly, Defendants have not established that the amount in controversy is met. In addition to diversity between the parties, a defendant must show that at least one of the named plaintiffs has a claim that exceeds the $75,000 threshold. In re brand Prescription Drugs Antitrust Litigation, 123 F.3d 599, 607 (7th Cir. 1997), cert. denied, 522 U.S. 1153 (1998); Garbie v. Daimler Chrysler Corp., 211 F.3d 407, 409 (7th Cir. 2000). If one named plaintiff exceeds that amount, any other named plaintiffs "and the unnamed class members can, by virtue of supplemental jurisdiction conferred on federal district courts by 28 U.S.C. § 1367, piggbyback on that plaintiff's claim." Brand Name Prescription, 123 F.3d at 607. In a class action, claims may be aggregated to satisfy the jurisdictional amount in controversy of plaintiffs are seeking to enforce a single title or tight in which they have a common and undivided interest. Id.at 608 (citing Synder v. Harris, 394 U.S. 332, 335 (1969)). A single title or right exists for the purposes of aggregation if the amount in controversy in an action is an aggregate in which each plaintiff has an undivided share so that the absence of any plaintiff from the action would serve to increase the recovery of all other plaintiffs. Id. (citing Shields v. Thomas, 58 U.S. (17 How.) 3, 5 (1854)). Further, the Seventh Circuit recently held that in class actions "[w]hatever the form of relief sought, each plaintiff's claim must be held separate from each other plaintiff's claim from both the plaintiff's and the defendant's standpoint." Del Vecchio v. Conseco, Inc., 230 F.3d 974, 978 (7th Cir. 2000) (emphasis added) (quoting Brand Name Prescription, 123 F.3d at 610). Hence, the amount in controversy from a defendant's point of view is the amount the defendant risks paying the named plaintiff, not the amount the defendant may have to pay the entire class. Id.

In response to the motion to remand, Defendants did not address the amount in controversy issue.

Evaluating the amount in controversy from Defendants' viewpoint, the Court finds that Defendants failed to show by competent proof a reasonable probability that an amount in controversy exceeding $75,000, exclusive of interest and costs is in controversy. Here, no single title or right in which the class members have a common and undivided interest is at issue in this case for the purpose of aggregation. This is not a case where there is one res at issue, such as an estate. See Del Vecchio 230 F.3d at 978. Instead, the class members are seeking relief which any one of them could pursue individually, and no class member's recovery depends upon or is affected by the presence of any other class member in this action. The Court finds that each of the class members are entitled to his or her own separate recovery.

Further, Defendants have not demonstrated with reasonable probability that it risks paying any of the named Plaintiffs more than $75,000 needed to confer subject matter jurisdiction on this Court. See Brand Name Prescription, 123 F.3d at 607. The Court agrees with the Seventh Circuit's succinct assessment in a recent class action suit: "None of the plaintiffs is apt to recover anything close to $75,000." Garbie, 211 F.3d at 410. The requirements of the federal diversity statute have not been satisfied. Stated simply, subject matter jurisdiction does not lie here.

III. Conclusion

Because the Court lacks subject matter jurisdiction, the Court GRANTS Plaintiffs' motion to remand (Doc. 18). The Court REMANDS this case to the Circuit Court of Madison County, Illinois. Further, the Court DENIES as moot the remaining pending motions to dismiss (Docs. 36 38).

IT IS SO ORDERED.


Summaries of

Donaldson v. Sprint Corporation

United States District Court, S.D. Illinois
Feb 27, 2001
No. 00-CV-0763-DRH (S.D. Ill. Feb. 27, 2001)
Case details for

Donaldson v. Sprint Corporation

Case Details

Full title:Melinda K. DONALDSON, D.R. HANEKLAU, James A. CLARK, and all other…

Court:United States District Court, S.D. Illinois

Date published: Feb 27, 2001

Citations

No. 00-CV-0763-DRH (S.D. Ill. Feb. 27, 2001)