State v. Oncor Communications, Inc.

166 F.R.D. 313, 1996 U.S. Dist. LEXIS 1641, 1996 WL 192010
CourtDistrict Court, D. Vermont
DecidedFebruary 8, 1996
DocketCivil No. 2:95-cv-211
StatusPublished
Cited by21 cases

This text of 166 F.R.D. 313 (State v. Oncor Communications, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Vermont primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State v. Oncor Communications, Inc., 166 F.R.D. 313, 1996 U.S. Dist. LEXIS 1641, 1996 WL 192010 (D. Vt. 1996).

Opinion

OPINION AND ORDER

SESSIONS, District Judge.

Defendant Oncor Communications, Inc. [Oncor] has removed this action from Chittenden Superior Court to the United States District Court for the District of Vermont pursuant to 28 U.S.C. § 1441. Plaintiff State of Vermont has timely filed a motion to remand the case pursuant to 28 U.S.C. § 1447(c) on the ground that this Court lacks federal question jurisdiction over the complaint. Oncor has opposed the motion to remand, and has moved to dismiss the complaint on the ground that pervasive federal regulation of interstate telecommunications [316]*316preempts the State of Vermont’s state law action. For the reasons stated below, plaintiffs motion to remand and defendant’s motion to dismiss are DENIED.

Background

Oncor provides long-distance telephone service to owners of pay telephones, and is therefore the primary interexchange carrier (“PIC”) for those telephones. Pay telephone owners choose their PIC through a process known as presubscription. Charges for long-distance calls made by users of pay telephones are usually billed by the user’s local telephone exchange company (“LEC”). For most Vermont residents this company is NYNEX. Thus, a Vermont resident who makes a call from a pay phone which is presubscribed to Oncor will see a charge for that call, with a reference to Oncor, on his or her NYNEX telephone bill.

The State of Vermont claims that Oncor and its agent, Defendant New England Payphone (“NEP”) switched long distance service for some pay telephones to Oncor without adequate authorization from the telephone owner, a practice known as “slamming.” It contends that in some cases the PIC was switched to Oncor without any authorization whatsoever.' In other cases it is alleged that Oncor obtained authorization by sending prospective customers a “commission check.” Above the endorsement line on the reverse side of the check, in fine print, the prospective customer is advised that by endorsing the check, he or she is authorizing Oncor to provide operator services for not less than one year, authorizing Oncor to notify the LEC of the switch, and acknowledging that a fee for the switch may be charged to the customer.

The State of Vermont filed suit against Oncor and NEP in state court, claiming that these practices violate its Consumer Fraud Act, 9 V.S.A. § 2451 et seq., and are in violation of Federal Communication Commission (“FCC”) guidelines. Oncor removed the case to this Court, claiming that removal is proper under 28 U.S.C. § 1441 because this Court has original jurisdiction under 28 U.S.C. § 1331 of a case arising under the laws of the United States. It asserts that the suit actually involves a violation of federal law in an area in which federal regulation occupies the field and precludes state interference.

The State of Vermont has moved to remand, urging that its suit is not preempted. Oncor in turn has moved to dismiss the action in this Court, on preemption grounds.

Discussion

The removal jurisdiction of the federal courts over cases involving a federal question is set forth at 28 U.S.C. § 1441(b): “Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties.”

Removal is proper when the case falls within the original “federal question” jurisdiction of the United States district courts set forth at 28 U.S.C. § 1331: “The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.”

Under the “well-pleaded complaint” rule, “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 Board of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 10, 103 S.Ct. 2841, 2846, 77 L.Ed.2d 420 (1983) (emphasis omitted).

It is, however, “an independent corollary of the well-pleaded complaint rule that a plaintiff may not defeat removal by omitting to plead necessary federal questions in a complaint.” Id. at 22, 103 S.Ct. at 2853. Thus, “if a federal cause of action completely preempts a state cause of action any complaint that comes within the scope of the federal cause of action necessarily ‘arises under" federal law.” Id. at 24, 103 S.Ct. at 2854.

The “complete preemption” doctrine has been applied in cases involving the Labor Management Relations Act, 29 U.S.C. § 185, (Avco Corp. v. Machinists, 390 U.S. 557, 88 [317]*317S.Ct. 1235, 20 L.Ed.2d 126 (1968)); and the Employee Retirement Income Security Act, 29 U.S.C. § 1001, (Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)).

Oncor argues first that the State of Vermont’s complaint sets forth on its face a claim that the Federal Communications Act of 1934 (47 U.S.C. § 151 et seq.) [FCA] has been violated. In support it argues that this case, like that of State of New York v. Citibank, N.A., 537 F.Supp. 1192 (S.D.N.Y.1982), explicitly pleads a violation of federal law.

In Citibank, the Attorney General of the State of New York brought suit against CitiBank in state court under his authority to seek injunctive relief, restitution and damages for fraud or illegality in the transaction of business. The complaint explicitly pleaded violations of the Electronic Fund Transfers Act (“EFTA”), 15 U.S.C. § 1693 et seq. and Regulation E, promulgated by the Federal Reserve Board. The federal elements of the case appeared on the face of the complaint. In this case, if no violation of the EFTA were found, then no violation of state law could be found.

Since Citibank was decided, the United States Supreme Court has discussed statutory “arising under” jurisdiction and the well-pleaded complaint rule in at least four cases: Franchise Tax Board, Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S.

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Bluebook (online)
166 F.R.D. 313, 1996 U.S. Dist. LEXIS 1641, 1996 WL 192010, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-v-oncor-communications-inc-vtd-1996.