Tomi White Bryan, Individually and on Behalf of All Others Similarly Situated v. Bellsouth Communications, Incorporated

377 F.3d 424, 33 Communications Reg. (P&F) 429, 2004 U.S. App. LEXIS 15538

• Court: Court of Appeals for the Fourth Circuit
• Decided: July 28, 2004
• Docket: 03-1316
• Status: Published

Opinions

Vacated and remanded by published opinion. Judge KING wrote the opinion, in which Judge GREGORY joined. Judge LUTTIG wrote a dissenting opinion.

OPINION

KING, Circuit Judge:

Defendant BellSouth appeals from the portion of a decision of the Middle District of North Carolina denying dismissal and remanding one of plaintiff Tomi Bryan’s three claims to state court. Bryan v. Bellsouth Telecomms., Inc., No. 1:02CV00228, 2003 WL 262333 (M.D.N.C. Feb.6, 2003). The court concluded that certain of Bryan’s claims arose under federal law and were subject to dismissal under the “filed-rate doctrine.” It declined to exercise supplemental jurisdiction and remanded to state court a single claim that it determined did not raise a federal question. BellSouth maintains that the court erred in failing to conclude that all of Bryan’s claims posed federal questions and were barred by the filed-rate doctrine. For the reasons explained below, we vacate and remand.

I.

A.

BellSouth, as a provider of interstate public telecommunications services, is required by law to contribute a portion of its revenues to the federal Universal Service Fund (“USF”) to ensure affordable telecommunications services to rural and low-income areas, schools, hospitals, and the like. See 47 U.S.C. § 254; 47 C.F.R. § 54.706(a). The percentage of its revenues that a carrier must contribute to the USF is established by the Federal Communications Commission (“FCC”) and is adjusted on a quarterly basis to ensure sufficient funding of the USF. See 47 C.F.R. § 54.709(a).

The FCC permits telecommunications carriers such as BellSouth to recover the costs of their contributions to the USF from their customers, either through increased rates or through a separate line item on the customers’ bills. See In the Matter of Federal-State Joint Board on Universal Service, 17 F.C.C.R. 24952, ¶ 42 (2002). Prior to April 1, 2003, certain carriers who recovered their USF contributions through line items would charge customers significantly more than the contribution required based on their bills. /¿¶ 46. These carriers attributed the need for such “marking up” to “the lag between the reporting and assessment of revenues, uncollectibles, and administrative costs.” Id. In an effort to “address consumer concerns regarding disparate contributor recovery practices,” id. ¶ 40, the FCC forbade marking up the line-item charge, effective April 1, 2003. Id. ¶ 45.

Billing practices such as recovery of USF contributions are established in a carrier’s “Schedule of Charges,” see 47 U.S.C. § 203, also known as its “tariff.” A carrier’s tariff must be filed with the FCC and kept open for public inspection.¹ Id. § 203(a). In addition, a carrier may not charge more or less than the rates set forth in its tariff, and it may not refund or remit to a customer any of the charges contained in the tariff. Id. § 203(c).

As reflected in its tariff, BellSouth chooses to recover its USF contribution from its customers through a line item on the customers’ bills, which it denotes as the “Federal Universal Service Charge” (“FUSC”). The applicable tariff establishes the portion of BellSouth’s USF contribution that will be recovered from customers, and it calculates, based on the number of telephone lines and the amount sought to be recovered, that the end user of each line will be charged an FUSC of $0.53 per month.

B.

On February 22, 2002, Bryan filed suit against BellSouth in the Superior Court of Guilford County, North Carolina, seeking to represent a class of individuals who are BellSouth customers and who paid the FUSC. Bryan alleged that the FUSC was excessive and that Bell-South had failed to disclose certain information pertaining to the FUSC, in violation of North Carolina’s unfair trade practices law.

On March 26, 2002, BellSouth removed the suit to the Middle District of North Carolina, pursuant to 28 U.S.C. §§ 1441 and 1446, on the basis that Bryan’s claims raised federal questions by challenging BellSouth’s tariff. On June 4, 2002, Bryan filed her First Amended Complaint (the “Complaint”) in federal court, seeking to sue on behalf of all North Carolina Bell-South customers who paid the FUSC. The Complaint alleged that BellSouth imposes an FUSC that exceeds its required contribution to the USF, that BellSouth does not disclose how it calculates the FUSC, and that BellSouth’s use of the term “Federal Universal Service Charge” is misleading.

Based on these allegations, Bryan asserted three separate causes of action. In Count A, she claimed that BellSouth committed unfair and deceptive trade practices, in violation of North Carolina General Stat-ute section 75-1.1, by failing to disclose: (1) how it calculates the FUSC; (2) that it charges customers an amount well in excess of its contribution to the USF for North Carolina services; and (3) that the FUSC includes administrative expenses, costs, and profits.² Count A further alleged that BellSouth’s use of the term “Federal Universal Service Charge” is unfair or deceptive, as is its representation to customers that the FUSC is paid to the USF. In Count B, Bryan brought a claim for unjust enrichment/restitution, contending that BellSouth unjustly enriched itself by imposing an excessive and unlawful FUSC. In Count C, Bryan alleged breach of the covenant of good faith and fair dealing based on BellSouth’s charging an excessive FUSC and failing to make the disclosures described in Count A. Based on these claims, the Complaint sought damages in an amount exceeding $10,000 but less than $74,999 per class member.³

On June 10, 2002, Bryan filed a motion to remand the Complaint to state court, see 28 U.S.C. § 1447, and, on July 3, 2002, BellSouth filed a motion, pursuant to Federal Rule of Civil Procedure 12(b)(6), to dismiss the Complaint for failure to state a claim upon which relief can be granted. In support of its motion to dismiss and in opposition to Bryan’s motion to remand, BellSouth maintained that all of Bryan’s claims were barred by the “filed-rate doctrine” in that they challenged BellSouth’s filed tariff or, in the alternative, that they should be heard first by the FCC under the doctrine of primary jurisdiction.

On February 6, 2003, the court issued its Memorandum Opinion addressing the parties’ contentions. Bryan, 2003 WL 262333 (the “Opinion”). On that same date, the court entered the Order from which this appeal is taken (the “Order”). In its Opinion, the court first concluded that removal was proper because Bryan presented a federal question by directly challenging the terms of a tariff in her allegations that BellSouth’s FUSC was excessive. Opinion at 11. The court then turned to Bell-South’s motion to dismiss, explaining that the filed-rate doctrine, also known as the “filed-tariff doctrine,” prohibits suits that would have the effect of altering the rates set forth in a carrier’s filed tariff. Id. at 11-12. Based on this doctrine, the court dismissed those claims that it concluded arose under federal law by challenging the tariff. Id. at 13. The court then declined to exercise supplemental jurisdiction and remanded to state court those “remaining claims” that did not challenge the tariff and thus did not present federal questions.⁴ Id. at 13-14. BellSouth appeals from the portion of the court’s Order denying dismissal of Count A and remanding it to state court, maintaining that Count A, like Bryan’s other two claims, challenged the tariff, arose under federal law, and should have been dismissed.

II.

We turn first to Bryan’s assertion that we lack jurisdiction over this appeal. Bryan maintains that jurisdiction is lacking because the Order was “non-final,” in that one of her claims was not dismissed. See generally 28 U.S.C. § 1291 (“The courts of appeals ... shall have jurisdiction of appeals from all final decisions of the district courts of the United States .... ”). For this proposition, Bryan relies on Federal Rule of Civil Procedure 54(b), which provides that, “[w]hen more than one claim for relief is presented in an action, ... the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment.” Fed. R. -Civ. P. 54(b) (emphasis added). Bryan maintains that, as the court made no such express determination, its Order was not final and is not appealable.

Bryan’s assertion does not withstand scrutiny. Admittedly, 28 U.S.C. § 1447(d) provides that “[a]n order remanding a case to the State court from which it was- removed is not reviewable on appeal or otherwise .... ” However, as the Supreme Court explained in Quackenbush v. Allstate Insurance Co., 517 U.S. 706, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996), § 1447(d) refers only to those situations in which a court has directed a remand for the reasons set forth in -§ 1447(c); that is, a defect in removal or lack of subject matter jurisdiction. Quackenbush, 517 U.S. at 711-12, 116 S.Ct. 1712. The Court went on to explain that, where a district court has remanded a lawsuit to state court based on abstention principles, the remand is considered a final order appealable under 28 U.S.C. § 1291. Id. at 712-13.

In this situation, the district court explicitly based its remand of Count A on abstention principles, relying on' 28 U.S.C. § 1367(c)(3). Opinion at 14. That section provides, “The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) [providing for supplemental jurisdiction over all claims forming the same case or controversy] if— the district court has dismissed all claims over which it has original jurisdiction.... ” 28 U.S.C. § 1367(c)(3). And we have recognized that a remand order based on § 1367(c) is appealable as a final order pursuant to § 1291. See Battle v. Seibels Bruce Ins. Co., 288 F.3d 596, 606 n. 16 (4th Cir.2002) (explaining that, under “well-settled precedent,” remands based on § 1367(c) are appealable final orders under § 1291); see also Hinson v. Norwest Fin. S.C., Inc., 239 F.3d 611, 614-15 (4th Cir.2001). Because the court remanded Count A pursuant to § 1367(c), its decision constitutes an appealable final order, and we possess jurisdiction pursuant to 28 U.S.C. § 1291.

III.

In this matter, the district court remanded Count A to state court because it determined that Count A did not give rise to federal question jurisdiction, and the court declined to exercise supplemental jurisdiction. A district court’s determination that it lacks subject matter jurisdiction is a question of law that we review de novo. Yarnevic v. Brink’s, Inc., 102 F.3d 753, 754 (4th Cir.1996).

IV.

Turning to the issues on appeal, our task is twofold. First, we - must determine whether Bryan’s North Carolina unfair trade practices claim arises under federal law, in which .event the court erred in remanding it. See Battle v. Seibels Bruce Ins. Co., 288 F.3d 596, 609 (4th Cir.2002) (concluding that “the district court erred when it remanded the Remaining Claims ... based upon its mistaken belief that it had otherwise dismissed all claims over which it had ‘original jurisdiction’ ”). And if remand was error, we must determine whether Count A is barred by the filed-rate doctrine.

First, with respect to the existence of federal jurisdiction, we recognize that when, as here, state law creates the plaintiffs cause of action, the lower federal courts possess jurisdiction to hear “only those cases in which a well-pleaded complaint establishes ... that the plaintiffs right to relief necessarily depends on resolution of a substantial question of federal law.” Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 27-28, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983); see also Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir.1994).⁵ And we are further cognizant that a filed tariff carries the force of federal law. See MCI Telecomms. Corp. v. Garden State Inv. Corp., 981 F.2d 385, 387 (8th Cir.1992) (observing that “federal tariffs are the law, not mere contracts”). As one of our sister circuits has explained, “[a] tariff filed with a federal agency is the equivalent of a federal regulation, and so a suit to enforce it, and even more clearly a suit to invalidate it as unreasonable under federal law ... arise[s] under federal law.” Cahnmann v. Sprint Corp., 133 F.3d 484, 488 (7th Cir.1998) (internal citations omitted).⁶ A claim that seeks to alter the terms of the relationship between carrier and consumer set forth in a filed tariff therefore presents a federal question. See Fax Telecommunicaciones Inc. v. AT & T, 138 F.3d 479, 488 (2d Cir.1998) (explaining that a claim “seeking to enforce the filed tariff provides a basis for federal question jurisdiction”).

Additionally, the filed-rate doctrine mandates that “the rate of the carrier duly filed is the only lawful charge.” AT & T v. Cent. Office Tel, Inc., 524 U.S. 214, 222, 118 S.Ct. 1956, 141 L.Ed.2d 222 (1998) (quoting Louisville & Nashville R.R. v. Maxwell, 237 U.S. 94, 97, 35 S.Ct. 494, 59 L.Ed. 853 (1915)). The doctrine’s purpose is twofold: to prevent discrimination among consumers and to preserve the rate-making authority of federal agencies.⁷ See Hill v. BellSouth Telecomms., Inc., 364 F.3d 1308, 1316 (11th Cir.2004); Marcus v. AT&T Corp., 138 F.3d 46, 58 (2d Cir.1998). As the Eleventh Circuit recently observed, the filed-rate doctrine serves the purpose of non-discrimination by prohibiting a court from entering a judgment that would serve to alter the rate paid by a plaintiff. Hill, 364 F.3d at 1316. “Even if such a challenge does not, in theory, attack the filed rate,” the court explained, “an award of damages to the customer-plaintiff would, effectively, change the rate paid by the customer to one below the filed rate paid by other customers.” Id. We therefore cannot permit any claim to go forward that, if successful, would require an award of damages that would have the effect of imposing different rates upon different consumers. See Marco Supply Co., Inc. v. AT & T Communications, Inc., 875 F.2d 434, 436 (4th Cir.1989) (“[A] regulated carrier must charge the tariff rate established with the appropriate regulatory agency.... To do otherwise would be giving a preference to and discriminating in favor of the customer in question.”) Similarly, authorizing a court to award damages that would effectively impose a rate different from that dictated by the tariff would usurp the FCC’s authority to determine what rate is reasonable. See Hill, 364 F.3d at 1317. In sum, we must determine whether Count A of the Complaint would require the court to determine a reasonable rate for the FUSC, thereby presenting a substantial question of federal law and contravening the filed-rate doctrine.⁸

Against this backdrop, we now assess whether Count A of the Complaint effectively challenges the reasonableness of BellSouth’s filed rate, giving rise to federal question jurisdiction and requiring dismissal pursuant to the filed-rate doctrine. Because only the FCC may decide what charge is lawful, it is beyond dispute that the court was correct to exercise jurisdiction and dismiss Bryan’s claims complaining that the FUSC was excessive. The parties disagree, however, as to whether Count A also presents a forbidden challenge to Bell-South’s tariff. BellSouth maintains that it does, asserting that, because Count A seeks damages, the court, were Bryan successful, would be put in the position of effectively refunding a portion of the FUSC to Bryan. In the circumstances presented, we are constrained to agree.

In Count A, Bryan alleges that Bell-South’s charging and collecting of the FUSC and its failure to make certain disclosures in connection therewith constitute unfair or deceptive acts or practices under North Carolina General Statute section 75-1.1. In Part V of her Complaint, titled “DAMAGES,” Bryan alleges, “BellSouth’s actions and omissions have been an actual, producing, direct and proximate cause of damages to Plaintiff and to BellSouth’s other North Carolina customers in an amount exceeding $10,000.” Complaint 31. Bryan’s prayer for damages draws no distinction between her separate counts. With no indication to the contrary, we must view Part V as seeking monetary damages for the acts alleged in Count A.

BellSouth asserts that the monetary remedy Bryan seeks is “a refund of that portion of the FUSC that she considers she was wrongfully induced to pay” and that, in seeking such a remedy, Bryan runs afoul of the filed-rate doctrine. In actuality, Bryan does not specify the nature of her damages in Count A. Nonetheless, BellSouth maintains that any award of damages flowing from BellSouth to Bryan, no matter how calculated, would violate the filed-rate doctrine by refunding a portion of the FUSC to some consumers but not to others and by requiring the court to determine a reasonable rate. Certainly, this proposition finds support in the decisions of our sister circuits. See, e.g., Hill, 364 F.3d at 1317 (“Hill’s two remaining claims implicate the filed rate doctrine because she seeks purely monetary damages as relief.”); Marcus, 138 F.3d at 60-62 (barring claim for compensatory damages because plaintiffs would effectively receive discounted rate and because award would undermine authority of FCC, which had approved billing practice in question). In the circumstances presented here, we need not — and do not — decide whether every award of compensatory damages would serve to challenge a carrier’s tariff.

In our view, the Complaint — read in the light most favorable to the plaintiff — nowhere purports to seek any form of damages other than a refund of some portion of the FUSC. And it pleads no facts that would put BellSouth on notice that Bryan intends to seek damages resulting from any injury other than paying the FUSC. In the “FACTS” section of the Complaint, Bryan alleges only that she is a BellSouth customer who was charged and paid the FUSC, that Bell-South charged an FUSC that was excessive, that it failed to disclose how the FUSC was calculated, and that its use -of the term “FUSC” was misleading. Complaint ¶¶ 4-8.⁹

At argument, Bryan asserted that one could envision an award of damages that would not challenge the filed tariff. She posited that if BellSouth had fully disclosed all information pertaining to its FUSC, she might have chosen a different carrier that would have charged a lower FUSC, and therefore she would have been damaged in the amount of the difference between the two carriers’ FUSCs. Such an award of damages, Bryan maintained, would not require the court to determine the reasonableness of BellSouth’s FUSC and therefore would neither present a federal question nor be barred by the filed-rate doctrine. This example is purely hypothetical, however, and nothing in the Complaint suggests such an injury.¹⁰

In sum, we conclude that the only plausible reading of the Complaint is that Count A, like the other counts, seeks a refund of a portion of the FUSC.¹¹ Because the amount of the FUSC is determinatively set forth in BellSouth’s tariff, which carries the force of federal law, an action seeking to alter that rate presents a federal question. The district court therefore erred in remanding Count A to state court. And because Count A would require the court to determine a reasonable rate for the FUSC, that claim must be dismissed pursuant to the filed-rate doctrine.

V.

Pursuant to the foregoing, we vacate the district court’s Order with respect to Count A and remand for that count to be dismissed.

VACATED AND REMANDED

1 . The Federal Communications Act provides that each common telecommunications carrier "shall ... file with the [FCC] and print and keep open for public inspection schedules showing all charges for itself and its connecting carriers for interstate and foreign wire or radio communication ... and showing the classifications, practices, and regulations affecting such charges." 47 U.S.C. § 203(a).

2 . North Carolina General Statute section 75-1.1(a) provides that "[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful.”

3 . Although Bryan seeks, in her Complaint, to represent a class of similarly situated customers, no determination has been made regarding the class status of this dispute.

4 . The court did not specify which claims it viewed as "remaining state law claims.” On appeal, the parties agreed at oral argument that the court’s Order had the effect of dismissing Count B, the unjust enrichmenl/resti-tution claim, and Count C, the breach of contract claim, and remanding to state court Count A, the North Carolina unfair trade practices claim. Bryan has not appealed the dismissal of Counts B and C.

5 . Additionally, federal jurisdiction exists in those rare instances in which state law claims are completely preempted. See Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 6-9, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003) (explaining doctrine of complete preemption). Because we conclude that Bryan's cause of action presents a substantial question of federal law, we need not determine whether the doctrine of complete preemption applies.

6 . Although the Cahnmann decision was rendered on the basis of complete preemption, which we need not reach, its statement that suits to enforce or invalidate tariffs arise under federal law is beyond dispute and does not depend on any preemption theory, nor do the authorities Cahnmann relies upon for this proposition. See, e.g., Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533, 534-35, 103 S.Ct. 1343, 75 L.Ed.2d 260 (1983) (concluding that suit to collect charges due under tariff gives rise to federal jurisdiction), Louisville & Nashville R.R. v. Rice, 247 U.S. 201, 203, 38 S.Ct. 429, 62 L.Ed. 1071 (1918) (same).

7 .In fact, the Federal Communications Act itself explicitly serves these purposes, providing that "no carrier shall (1) charge, demand, collect, or receive a greater or less or different compensation ... than the charges specified in the schedule then in effect, or (2) refund or remit by any means or device any portion of the charges so specified...." 47 U.S.C. § 203(c).

8 . We do not imply, as the dissent suggests, that the filed-rate doctrine is "coterminous with the scope of federal question jurisdiction.” See infra p. 16. Pax Telecommunicaciones indeed provides an instance in which a claim did not raise a federal question but was barred by the filed-rate doctrine. Fax Telecommunicaciones, 138 F.3d at 486-90 (holding that claim alleging breach of contract in which carrier agreed to charge plaintiff different rate than that set forth in tariff did not raise substantial federal question, but contract could not be enforced due to filed-rate doctrine). In certain circumstances, however, the inquiries merge. As the dissent recognizes, "claims requiring the court to second-guess the reasonableness of [the FCC's rate] determination are properly said to require the court to resolve a substantial question.” Infra p. 17. And claims requiring a court to make that assessment also run afoul of the filed-rate doctrine, such that both questions can be resolved by the same inquiry.

9 . At oral argument, BellSouth placed significant weight on the fact that Bryan’s class action allegations identify only one issue of law or fact common to the class: ''[wjhether BellSouth charges an excessive Federal Universal Service Charge to its North Carolina customers.” Complaint ¶ 11. The question of whether Bryan has pleaded facts sufficient to support class certification, however, is distinct from that of whether her Complaint as a whole seeks an impermissible form of damages.

10 . Our dissenting colleague asserts that our analysis disregards the rule explained in Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816-17 (4th Cir.2004), that federal jurisdiction is lacking if there exists any legal theory by which the plaintiff can sustain his claim without raising a substantial question of federal law. We recognize this rule, of course, but it has no application in this situation. In Dixon, as in the decisions on which it relies, Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988), and Mulcahey, 29 F.3d 148, the courts found alternative theories of recovery on the face of the complaint itself. See Dixon, 369 F.3d at 817-18 (concluding, "[ajfter considering Dixon’s complaint as a whole," that "Dixon's complaint could support a finding of liability ... under any of the following three theories ...”); Christianson, 486 U.S. at 810, 108 S.Ct. 2166 ("[A] claim supported by alternative theories in the complaint may not form the basis for § 1338(a) jurisdiction unless patent law is essential to each of those theories.”); Mulcahey, 29 F.3d at 153 ("Examination of the complaint ... reveals that the negligence per se claim citing the federal environmental statutes was only an alternative theory of liability.... ”). None of these courts sought to conjure out of whole cloth an alternative theory of liability without some support in the allegations of the complaint, and we decline to do so here.

11 . Because Count A seeks a damage award that presents a challenge to BellSouth's tariff, we need not reach BellSouth’s other contentions; i.e., that Bryan’s non-disclosure allegations challenge the tariff because Bryan is presumed to know the contents of the tariff, and that Count A is barred by the doctrine of primaiy jurisdiction.