Petition for Writ of Certiorari — Old Dominion Electric Cooperative, Petitioner v. PJM Interconnection, LLC

No. ______

In The

Supreme Court of the United States

OLD DOMINION ELECTRIC COOPERATIVE,

Petitioner,

v.

PJM INTERCONNECTION, LLC,

Respondent.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Fourth Circuit

PETITION FOR WRIT OF CERTIORARI

THOMAS M. WOLF

Counsel of Record

JOSEPH M. RAINSBURY

MILES & STOCKBRIDGE P.C.

919 East Main Street, Suite 1100

Richmond, VA 23219

(804) 905-6900

jrainsbury@milesstockbridge.com

Counsel for Petitioner

LANTAGNE LEGAL PRINTING

801 East Main Street Suite 100 Richmond, Virginia 23219 (800) 847-0477

i

QUESTION PRESENTED

In this case, Petitioner asks the Court to

resolve lower-court confusion arising from the

intersection of two Court-created principles: the

“substantial federal question” doctrine and the “filed

rate” doctrine.

Under the substantial-federal-question

doctrine, a federal court has “arising under”

jurisdiction over state-law claims that necessarily

depend on a substantial issue of federal law. It is an

exception to the general rule that only federal claims

create arising-under jurisdiction. The federal filedrate doctrine, in turn, bars state-law claims that

conflict with “tariffs” on file with a federal regulatory

agency to whom Congress has given exclusive ratemaking authority. It is a form of preemption,

deriving its force from the Supremacy Clause.

Plaintiff, an electricity generator, filed a statecourt action against Defendant, a grid operator, for

breach of contract, unjust enrichment, and fraud.

Defendant removed the state-court action to federal

court, arguing that Plaintiff’s state-law claims were

inconsistent with the tariff that Defendant had filed

with FERC. The question presented is:

Do state-law claims that allegedly conflict

with federally filed tariffs involve a substantial

federal question; or does the filed-rate doctrine

merely operate as a federal preemption defense that,

under the well-pleaded-complaint rule, does not

confer arising-under jurisdiction?

ii

PARTIES TO THE PROCEEDINGS

Petitioner, Old Dominion Electric Cooperative

(“ODEC”), was the appellant in the Court of Appeals.

Respondent, PJM Interconnection, LLC (“PJM”), was

the appellee.

STATEMENT OF RELATED PROCEEDINGS

United States District Court (E.D. Va.):

Old Dominion Elec. Coop. v. PJM

Interconnection, LLC, No. 3:19CV233, 2020 WL

1545882 (E.D. Va. Mar. 31, 2020).

United States Court of Appeals (4th Cir.):

Old Dominion Elec. Coop. v. PJM

Interconnection, LLC, 24 F.4th 271 (4th Cir. 2022).

iii

TABLE OF CONTENTS

QUESTION PRESENTED .............................................. i

PARTIES TO THE PROCEEDINGS ............................... ii

STATEMENT OF RELATED PROCEEDINGS................. ii

TABLE OF AUTHORITIES ............................................v

OPINIONS BELOW ....................................................... 1

JURISDICTION ............................................................ 1

STATUTORY PROVISION INVOLVED ........................... 1

STATEMENT OF THE CASE .......................................... 1

REASONS FOR GRANTING THE PETITION .................. 7

I.

The Fourth Circuit’s analysis conflicts

with rulings in the Seventh Circuit and

the Ninth Circuit................................................ 7

A. With only two “extremely rare

exceptions,” state-law claims do not

give rise to federal-question

jurisdiction. ................................................... 7

B. The lower courts have split on

whether the existence of a federal

tariff transforms state-law claims

into claims presenting a substantial

federal question. ......................................... 10

iv

II.

The Fourth Circuit’s analysis conflicts

with this Court’s substantial-federalquestion test, as articulated in Gunn

and Grable. ....................................................... 16

III. The filed-rate doctrine is a preemption

defense that does not create arisingunder jurisdiction............................................. 19

CONCLUSION ............................................................20

APPENDIX

Opinion of the United States Court of Appeals

for the Fourth Circuit, filed January 19, 2022 ....... A1

Opinion of the United States District Court for

the Eastern District of Virginia, Richmond

Division, filed March 31, 2020 ............................... A35

Notice of Removal, filed April 3, 2019 ................... A70

Amended Complaint, filed February 22, 2019 ...... A85

v

TABLE OF AUTHORITIES

Cases

Arkansas Louisiana Gas Co. v. Hall, 453 U.S.

571 (1981) .................................................................10, 19

Beneficial Nat. Bank v. Anderson, 539 U.S. 1

(2003) ................................................................................9

Bryan v. BellSouth Commc’ns, Inc., 377 F.3d

424 (4th Cir. 2004) .................................................. passim

Cahnmann v. Sprint Corp., 133 F.3d 484 (7th

Cir. 1998) .........................................................................10

Caterpillar Inc. v. Williams, 482 U.S. 386

(1987) ..........................................................................8, 20

Chick Kam Choo v. Exxon Corp., 486 U.S.

140 (1988) .......................................................................15

Entergy Louisiana, Inc. v. Louisiana Pub.

Serv. Comm’n, 539 U.S. 39 (2003) ...........................10, 19

Franchise Tax Board v. Constr. Laborers

Vacation Tr., 463 U.S. 1 (1983) .............................. passim

Grable & Sons Metal Prods., Inc. v. Darue

Engineering and Mfg., 545 U.S. 308

(2005) ..............................................................9, 16, 17, 18

Gunn v. Minton, 568 U.S. 251 (2013) .......................... passim

Hendricks v. Dynegy Power Mktg., Inc., 160

F. Supp. 2d 1155 (S.D. Cal. 2001) ..................................15

Hill v. BellSouth Telecommunications, Inc.,

364 F.3d 1308 (11th Cir. 2004) .................................13, 14

Holmes Grp., Inc. v. Vornado Air Circulation

Sys., Inc., 535 U.S. 826 (2002) ..........................................8

vi

Keogh v. Chicago & N.W. Ry. Co., 260 U.S.

156 (1922) .........................................................................2

Lehmann v. Brown, 230 F.3d 916 (7th Cir.

2000) ..................................................................................9

Louisville & Nashville R. Co. v. Mottley, 211

U.S. 149 (1908) .................................................................8

Metro. Edison Co. v. Pennsylvania Pub. Util.

Comm'n, 767 F.3d 335 (3d Cir. 2014) .............................15

Nantahala Power & Light Co. v. Thornburg,

476 U.S. 953 (1986) ........................................................19

Northeastern Rural Elec. Membership Corp.

v. Wabash Valley Power Ass'n, Inc., 707

F.3d 883 (7th Cir. 2013) ............................................14, 15

Old Dominion Elec. Coop. v. FERC, 892 F.3d

1223 (D.C. Cir. 2018) ..................................................5, 10

Old Dominion Elec. Coop. v. PJM

Interconnection, LLC, 24 F.4th 271 (4th

Cir. 2022) ...................................................................... ii, 1

Old Dominion Elec. Coop. v. PJM

Interconnection, LLC, No. 3:19CV233,

2020 WL 1545882 (E.D. Va. Mar. 31,

2020) ............................................................................. ii, 1

Patrickson v. Dole Food Co., 251 F.3d 795

(9th Cir.2001) ..................................................................16

Rivet v. Regions Bank of Louisiana, 522 U.S.

470 (1998) .........................................................................8

Vaden v. Discover Bank, 556 U.S. 49 (2009) ........................8

Statutes

16 U.S.C. § 824d(a) .........................................................2, 10

28 U.S. § 1254(1) ...................................................................1

vii

28 U.S.C. § 1331 ............................................................1, 7, 8

Administrative Materials

18 C.F.R. § 35.34 ...................................................................2

Old Dominion Elec. Coop., 151 FERC ¶

61,207 (2015) ....................................................................5

Constitutional Provisions

U.S. Const. art VI, § 2 ..........................................................19

Other Materials

Ivan Penn, Texas Shows How Utilities Aren’t

Ready for Extremes, N.Y. Times, Feb. 19,

2021 ...................................................................................4

1

PETITION FOR A WRIT OF CERTIORARI

OPINIONS BELOW

United States District Court (E.D. Va.):

Old Dominion Elec. Coop. v. PJM

Interconnection, LLC, No. 3:19CV233, 2020 WL

1545882 (E.D. Va. Mar. 31, 2020).

United States Court of Appeals (4th Cir.):

Old Dominion Elec. Coop. v. PJM

Interconnection, LLC, 24 F.4th 271 (4th Cir. 2022).

JURISDICTION

The Fourth Circuit entered its judgment on

January 19, 2022. This Court has jurisdiction under

28 U.S. § 1254(1).

STATUTORY PROVISION INVOLVED

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.

STATEMENT OF THE CASE

1. In January 2014, the mid-Atlantic region

experienced a cold-weather event known as a polar

vortex (“Polar Vortex”). (App. 88a.) The Polar Vortex

caused historically low temperatures and placed

heavy demands on the area’s electrical grid. (Id.)

2

2. Defendant PJM is a “regional transmission

organization.” (Id. at 86a.) As such, it has broad

responsibilities concerning the purchase and sale of

wholesale electrical power throughout its region,

which encompasses 13 states in the mid-Atlantic

area. (Id. at 86a-87a.) Among other things, PJM

operates a transparent market for wholesale

electricity and determines the mix of generators that

will run at any given time. See generally William L.

Thompson, LIVING ON THE GRID: THE

FUNDAMENTALS OF THE NORTH AMERICAN

ELECTRIC GRID, Ch. 4 (2016). PJM must ensure

at all times that there is a sufficient supply of

electricity to balance customer load. (App. 87a.) To

carry out those responsibilities, PJM controls

transmission facilities owned by its member utilities,

including ODEC. See 18 C.F.R. § 35.34(j), (k).

The Federal Energy Regulatory Commission

(“FERC”) regulates PJM’s relationship with its

member utilities. The Federal Power Act mandates

that all “rates and charges made, demanded, or

received by any public utility for or in connection

with the transmission or sale of electric energy” be

“just and reasonable.” See 16 U.S.C. § 824d(a).

Accordingly, FERC requires regional transmission

organizations like PJM to file schedules of proposed

electricity transmission rates with the agency for its

approval. Once authorized by FERC, rates are set

forth in tariffs. Those tariffs define the “legal rate”

and “[c]arry the force of federal law.” See Keogh v.

Chicago & N.W. Ry. Co., 260 U.S. 156, 163 (1922);

Bryan v. BellSouth Commc’ns, Inc., 377 F.3d 424,

429 (4th Cir. 2004).

3

PJM’s FERC-approved tariffs include (1) its

Open Access Transmission Tariff (the “PJM Tariff,”

or simply “the Tariff”) and (2) its Amended and

Restated Operating Agreement (the “Operating

Agreement”). (App. 73a.) Rather than fix specific

prices, the PJM Tariff prescribes detailed rules for

power generators to auction off power and capacity

to distributors. (Id. at 74a.) At the time of the Polar

Vortex, one of those rules capped the price at which

generators could bid into electricity auctions,

limiting such bids to $1000 per megawatt-hour. (Id.

at 7a.)

Plaintiff ODEC is a not-for-profit electric

cooperative that generates wholesale electrical

power. (App. 85a-86a.) At the time of the Polar

Vortex, it operated three gas-powered combustionturbine facilities within PJM’s region. (Id.)

The Polar Vortex required PJM to undertake

extraordinary measures to ensure that electrical

supply would meet the heavy demands placed on the

grid. (Id. at 88a.) Compounding PJM’s difficulties,

natural gas prices had spiked to levels 30 times

higher than usual. (Id. at 92a.) This caused the

marginal cost of gas-produced electricity to exceed

the $1000-per-megawatt-hour maximum price at

which generators could bid into the energy action.

(Id. at 5a.) Generators who purchased gas at the

then-astronomical prices were guaranteed to lose

money in any such sale of electricity. This was a

strong disincentive to purchase the needed gas,

which would render generators unable to supply

power at critical moments. The resulting imbalance

between power supply and demand could have led to

a grid imbalance that would necessitate rolling

4

blackouts or even damage the grid. As recent events

in Texas illustrate, power failures during severe cold

snaps can have catastrophic, even fatal, effects. See,

e.g., Ivan Penn, Texas Shows How Utilities Aren’t

Ready for Extremes, N.Y. Times, Feb. 19, 2021, at B1

(discussing effect of cold snaps on the grid, including

the Texas event and the 2014 Polar Vortex).

3. These extreme circumstances led ODEC

and PJM to enter into a side transaction that was

“outside of the requirements, restrictions, and

protections set forth in any tariff or other regulated

PJM policy or process.” (App. 88a-92a.) In

particular, PJM agreed that if ODEC procured

sufficient gas to enable ODEC’s generators to

provide the desperately needed power, then PJM

would “make ODEC whole for its fuel and other costs

associated with purchasing the natural gas.” (Id. at

92a-93a.)

4. Relying on PJM’s promises, ODEC

incurred substantial costs in purchasing the gas and

in making its combustion plants available to provide

electrical power during the Polar Vortex. (Id. at 93a97a.) ODEC would not have incurred those

extraordinary costs but for PJM’s assurances that

PJM would reimburse ODEC for them. (Id. at 92a.)

After the Polar Vortex event, ODEC asked

PJM to reimburse it in accordance with PJM’s

earlier promises and representations. Although

PJM initially said that it would do so, it later refused

5

to reimburse ODEC, claiming that this would violate

its Tariff on file with FERC. (Id. at 89a.)1

5. ODEC commenced the present action in

the Circuit Court for the County of Henrico,

Virginia. Before serving the Complaint on PJM,

ODEC filed an Amended Complaint. (App. 85a-98a.)

The Amended Complaint asserts four counts. (Id. at

94a-97a.) All four counts assert state-law causes of

action. Counts I & II assert claims for breach of

contract. (Id. at 94a-95a.) Count III asserts a claim

for unjust enrichment. (Id. at 95a-96a.) And Count

IV asserts a claim for negligent misrepresentation

(i.e., constructive fraud). (Id. at 96a-97a.) None of

the claims derives from, challenges, or seeks to alter

the PJM Tariff. Instead, the claims are based on the

promises and representations that PJM made to

ODEC and its agents during the unique

circumstances of the Polar Vortex.

6. After being served with the Amended

Complaint, PJM removed the action to the Richmond

Division of the Eastern District of Virginia. (App.

70a-84a.) The Notice of Removal asserts that the

District Court had federal jurisdiction under 28

U.S.C. § 1331. (Id. at 70a.) In particular, it claims

1 In a separate administrative proceeding,

ODEC asked FERC to amend the Tariff to permit

reimbursement. In a split decision, FERC refused to

do so. See Old Dominion Elec. Coop., 151 FERC ¶

61,207, 62,284 (2015), aff’d, Old Dominion Elec.

Coop. v. FERC, 892 F.3d 1223, 1231 (D.C. Cir. 2018),

cert. denied, 139 S. Ct. 794 (2019).

6

that ODEC’s state-law claims are preempted by the

Federal Power Act because “Congress has assigned

the wholesale energy space to the federal system”

and has “foreclosed state-law claims like ODEC’s in

favor of exclusive federal ones.” (Id. at 82a.) The

Notice of Removal claims—despite the Amended

Complaint’s express statement to the contrary (Id. at

92a)—that ODEC’s request for reimbursement is

“‘an action seeking to alter’ or to challenge as unfair

the maximum rates permitted by the Tariff.” (Id. at

81a) (internal quotations omitted).

7. ODEC moved to remand, arguing that its

state-law claims had not asserted any federal causes

of action, were not completely preempted, and did

not present a substantial federal question.

Meanwhile, PJM had filed a motion to dismiss under

Rule 12(b)(6) arguing, among other things, that

ODEC’s claims were barred by the “filed rate

doctrine.”

8. The District Court denied ODEC’s motion

to remand. (App. 35a-69a.) Although it did not

accept PJM’s argument that ODEC’s state-law

claims were “completely preempted,” the District

Court held that the Amended Complaint presented a

“substantial federal question.” (Id. at 54a-62a.) This

was so, it held, because ODEC’s claims “effectively

challenged” PJM’s FERC-filed Tariff, a tariff that

had the force of a federal regulation. (Id. at 60a-62a)

(citing Bryan, 377 F.3d at 430). Finding that it had

subject-matter jurisdiction, the District Court then

granted PJM’s motion to dismiss, ruling that all of

ODEC’s claims were barred by the filed-rate

doctrine. (App. 68a-69a.)

7

9. ODEC appealed the District Court’s

jurisdictional holding, arguing that there was no

federal-question jurisdiction and so the case should

have been remanded to state court. It claimed that

the existence of a federal tariff provided, at most, a

federal defense to ODEC’s claims and that, under

the well-pleaded-complaint rule, a federal defense

could not create federal-question jurisdiction.

The Fourth Circuit rejected this argument.

Citing its 2004 decision in Bryan, the Fourth Circuit

held that there was federal-question jurisdiction

because “the type of relief sought here is

incontrovertibly barred by the governing regulatory

tariff.” (App. at 22a) Claiming that “no court can

award the damages that Old Dominion seeks

without finding some way around the terms of the

PJM Tariff,” it held that “‘the plaintiff’s right to

relief necessarily depends on resolution of a

substantial question of federal law.’” (App. 23a)

(quoting Bryan, 377 F.3d at 430) (quoting Franchise

Tax Bd. v. Constr. Laborers Vacation Tr., 463 U.S. 1,

28 (1983))).

REASONS FOR GRANTING THE PETITION

I.

THE FOURTH CIRCUIT’S ANALYSIS CONFLICTS

WITH RULINGS IN THE SEVENTH CIRCUIT AND

THE NINTH CIRCUIT.

A. With only two “extremely rare exceptions,”

state-law claims do not give rise to federalquestion jurisdiction.

Section 1331 of Title 28 gives district courts

subject-matter jurisdiction over “civil actions arising

8

under the Constitution, laws, or treaties of the

United States.” When evaluating “arising under”

jurisdiction under § 1331, federal courts adhere to

the “well-pleaded complaint rule.” That is, they look

only to the plaintiff’s statement of its claims. Vaden

v. Discover Bank, 556 U.S. 49, 60 (2009) (“Under the

longstanding well-pleaded complaint rule . . . a suit

‘arises under’ federal law ‘only when the plaintiff’s

statement of his own cause of action shows that it is

based upon [federal law]’”) (quoting Louisville &

Nashville R. Co. v. Mottley, 211 U.S. 149, 152 (1908)

(brackets in original)).

In other words, the “federal question must

appear on the face of the complaint.” Caterpillar

Inc. v. Williams, 482 U.S. 386, 399 (1987). Because

the plaintiff is the “‘the master of the complaint,’” he

can keep a case in state court “‘by eschewing claims

based on federal law.’” Holmes Grp., Inc. v. Vornado

Air Circulation Sys., Inc., 535 U.S. 826, 831 (2002)

(quoting Caterpillar Inc. v. Williams, 482 U.S. 386,

398–99 (1987)). A defendant cannot divest a

plaintiff of his mastery over the complaint by

asserting a federal defense or a federal counterclaim;

neither is sufficient for “arising under” jurisdiction.

See, e.g., Rivet v. Regions Bank of Louisiana, 522

U.S. 470, 478 (1998) (holding that res judicata

defense based on prior federal judgment does not

create arising-under jurisdiction); Holmes, 535 U.S.

at 830–31 (2002) (holding that a federal

counterclaim does not create arising-under

jurisdiction).

As a general rule, a claim “arises under”

federal law only where federal law creates the cause

of action being asserted. Gunn v. Minton, 568 U.S.

9

251, 257 (2013) (“Most directly, a case arises under

federal law when federal law creates the cause of

action asserted”). This Court has carved out two

“extremely rare exceptions” to that rule. Gunn, 568

U.S. at 257 (2013). In some areas of the law,

Congress has expressed its intent that “the federal

statutes at issue provide[] the exclusive cause of

action for the claim asserted.” Beneficial Nat. Bank

v. Anderson, 539 U.S. 1, 8 (2003). This is known,

somewhat confusingly, as “complete preemption.”2

The other exception is where the state-law claims

themselves require the court to resolve a

“substantial” question of federal law. Gunn, 568

U.S. at 258 (citing Grable & Sons Metal Prods., Inc.

v. Darue Engineering and Mfg., 545 U.S. 308 (2005)).

The “substantial federal question” doctrine “captures

the commonsense notion that a federal court ought

to be able to hear claims recognized under state law

that nonetheless turn on substantial questions of

federal law.” Grable, 545 U.S. at 312.

2 Complete preemption differs fundamentally from ordinary

preemption. The former is a jurisdictional doctrine, specifying

the tribunal where the issue must be heard. The latter is a

matter of substantive law, specifying which law—state or

federal—a court should apply. Although they sound similar,

they have very different functions. Lehmann v. Brown, 230

F.3d 916, 919 (7th Cir. 2000) (Easterbrook, J.) (“[T]he phrase

‘complete preemption’ has caused confusion—evident in this

case—by implying that preemption sometimes permits

removal. Unfortunately ‘complete preemption’ is a misnomer,

having nothing to do with preemption and everything to do

with federal occupation of a field”).

10

B. The lower courts have split on whether the

existence of a federal tariff transforms

state-law claims into claims presenting a

substantial federal question.

The lower courts are divided on whether—

and, if so, when—a tariff filed with a federal

regulatory agency confers federal-court jurisdiction

over state-law claims. The issue usually comes up in

the context of the “filed-rate doctrine.” Under this

doctrine, certain federally regulated entities are

forbidden from charging a rate for their goods or

services that varies from what is specified in a

“tariff” required to be filed with the federal agency.

See, e.g., Arkansas Louisiana Gas Co. v. Hall, 453

U.S. 571, 576 (1981).

As noted above, regulations promulgated

under the Federal Power Act required PJM to file a

tariff specifying the terms pursuant to which

wholesale power could be bought and sold in its

region. ODEC, 892 F.3d at 1226 (citing 16 U.S.C. §

824d). That tariff has the force of a federal

regulation. Cahnmann v. Sprint Corp., 133 F.3d 484,

488 (7th Cir. 1998) (“A tariff filed with a federal

agency is the equivalent of a federal regulation”).

The federal filed-rate doctrine bars state law claims

that seek to enforce “rates” that differ from those

specified by a FERC-filed tariff. It operates as a

form of preemption, deriving its force from the

Supremacy Clause. Entergy Louisiana, Inc. v.

Louisiana Pub. Serv. Comm’n, 539 U.S. 39, 47

(2003).

The issue in the present appeal is whether the

presence of a federally filed tariff means that state-

11

law claims that potentially conflict with that tariff

raise a “substantial federal question” or whether,

instead, the filed-rate doctrine simply affords a

substantive preemption defense to those state-law

claims. The lower courts have split on this issue.

1. The Fourth Circuit and the Eleventh

Circuit deem state-law claims that

implicate a federal tariff to present a

substantial federal question.

In both the present case and Bryan v.

BellSouth, supra, the Fourth Circuit has held that

the existence of a federally filed tariff means that

any state-law claim that potentially conflicts with

this tariff presents a substantial federal question.

The Fourth Circuit bases those holdings on its view

that any state-law claim that conflicts with a

federally-filed tariff is a claim that “effectively

challenges” the tariffed rate. Because the tariff has

the effect of federal law, the Fourth Circuit deems

state-law claims that “effectively challenge” a filed

tariff as claims that raise a substantial federal

question.

In Bryan, the plaintiff brought a state-law

class-action suit against BellSouth, asserting that

the company had injured her and others by assessing

an excessive “Federal Usage Service Charge” in their

monthly phone bills and by failing to disclose how

the company computed that charge. 377 F.3d at 427.

The plaintiff filed suit in North Carolina state court,

but BellSouth removed to federal court. The plaintiff

moved to remand, noting that her complaint did not

assert any federal causes of action. The district court

denied this motion, observing that the amount of the

12

Federal Usage Service Charge was dictated by a

tariff filed with the FCC, which carries the force of

federal law. Because the plaintiff’s suit directly

challenged an aspect of that tariff—i.e., the Federal

Usage Service Charge—the district court concluded

that the case presented a federal question sufficient

for jurisdiction under § 1331.

A divided panel of the Fourth Circuit

affirmed. The majority agreed with the district court

that the suit was an “effective challenge” to an FCCfiled tariff, and agreed that the FCC-filed tariff had

the force of federal law. Accordingly, it concluded

that the case presented a federal question.

Judge Luttig dissented. He acknowledged that

“the filed-rate doctrine may be raised as a federal

defense to a state-law claim.” Id. at 434 (emphasis

added). But he pointed out that state courts were

just as capable of adjudicating such a defense.

[T]hat a federal court may not have

jurisdiction over a claim that would be

barred by the filed-rate doctrine is not

problematic in the least; the filed-rate

doctrine may be raised as a federal defense

to a state law claim before a state court just

as easily as before a federal court

Id. Judge Luttig also faulted the majority’s

“effective challenge” formulation as having “no basis

in the Supreme Court’s precedent for determining

whether statutory ‘arising under’ jurisdiction exists,”

noting that “neither the plaintiff’s right to relief nor

the remedy that the plaintiff has requested entails

resolution of any question of federal law, much less

13

‘necessarily depend[s] on the resolution of’ such a

question.” Id. at 432.

Finally, Judge Luttig pointed out that the

“effective challenge” standard adopted by the

majority was unworkable, observing that “a claim

can easily be characterized as an effective challenge

to rates set in a tariff with a federal agency, even

though the adjudication of the claim itself would

require the court to decide no federal issues

whatsoever.” Id. at 434. He concluded that the

majority had deviated from Supreme Court

precedent by “adopting a standard drawn from a

possible federal defense to plaintiff’s claim, rather

than from whether plaintiff’s right to relief, as set

forth in her Complaint, ‘necessarily depends on a

question of federal law.’” Id. at 437.

The majority in Bryan had relied on the

Eleventh Circuit’s decision in Hill v. BellSouth

Telecommunications, Inc., 364 F.3d 1308, 1317 (11th

Cir. 2004). In Hill, another split decision, the

plaintiff likewise argued that BellSouth had

overcharged its customers in the Federal Usage

Service Charge line-item of its bills. She claimed

that this violated Georgia’s Unfair Trade Practices

Act and also amounted to common-law fraud. The

defendant removed to federal court, but the district

court remanded these claims to state court. On

appeal, the Eleventh Circuit reversed, finding that

the district court should have retained jurisdiction

because the claims “implicate the filed-rate doctrine”

inasmuch as the plaintiff sought monetary relief.

From this, and without further discussion, it

concluded that “these two claims raise substantial

questions of federal law.” Id. at 1317. Chief Judge

14

Edmondson dissented, opining that “today’s court

extends the judge-made filed-rate doctrine too far.”

Id.

2. The Third and Seventh and Circuits treat

the filed-rate doctrine as a substantive

preemption defense that does not create

federal-question jurisdiction.

In contrast with the Fourth and Eleventh

Circuits, the Third and Seventh Circuits treat the

filed-rate doctrine as a substantive preemption

defense having no jurisdictional effect on a plaintiff’s

claims.

In Northeastern Rural Elec. Membership Corp.

v. Wabash Valley Power Ass’n, Inc., 707 F.3d 883

(7th Cir. 2013), a member of an electric cooperative

brought a state-court contract action against the

cooperative. The cooperative removed to federal

court, claiming that the contract action related to a

FERC-filed tariff. The Seventh Circuit held that

there was no federal-question jurisdiction because

the plaintiff did not actually base its contract claim

on the FERC-filed tariff.

Relevant here, the Seventh Circuit observed

that—to the extent the filed-rate doctrine applied—it

did so only as an affirmative defense and so could

not afford the jurisdictional basis for removal. Id. at

896 (holding that the filed-rate doctrine is “properly

treated as a federal defense rather than an

affirmative basis for jurisdiction”). It noted

confusion in the cases on point—confusion that “may

arise from the faulty premise that the filed-rate

doctrine is a jurisdictional doctrine as opposed to a

15

substantive one.” Id. It said that this confusion was

understandable, because “decisions that find

jurisdiction on the basis of a federal tariff that

creates the liability in the suit and that also find a

suit preempted by the filed-rate doctrine may be

over-read to suggest that the filed-rate doctrine

creates the source of jurisdiction through complete

preemption.” Id. But it held that this over-reading

was faulty because subject-matter jurisdiction in

those cases was “based on rights created by a federal

tariff itself . . . not by the fact that the suit pertains

to the same subject matter as a filed rate.” Id.

In Metro. Edison Co. v. Pennsylvania Pub.

Util. Comm’n, 767 F.3d 335, 367 (3d Cir. 2014), the

Third Circuit likewise rejected the argument that

the filed-rate doctrine was a jurisdictional principle,

stating that “we are compelled to reject the

Companies’ efforts to pose their merits-based

preemption arguments—the same ones that were

rejected in the State Decision—as jurisdictional

arguments.” Quoting Chick Kam Choo v. Exxon

Corp., 486 U.S. 140, 149-50 (1988), it stated that

“[b]inding precedent instructs that, ‘when a state

proceeding presents . . . a preemption issue, the

proper course is to seek resolution of that issue by

the state court.’” Metro. Edison, 767 F.3d at 364

(ellipsis added).

These circuit court opinions are echoed by the

well-reasoned district court opinion in Hendricks v.

Dynegy Power Mktg., Inc., 160 F. Supp. 2d 1155,

1165 (S.D. Cal. 2001). The court in that case

observed, correctly, that “[t]he fact that the filed rate

defense may be central to this action or an absolute

defense is of no moment to the removal and remand

16

inquiry since ‘[e]ven if the case turns entirely on the

validity of a federal defense, federal courts may not

assert jurisdiction unless a federal right or immunity

is “an element, and an essential one, of the plaintiff's

cause of action.”’” Id. at 1165 (quoting Patrickson v.

Dole Food Co., 251 F.3d 795, 799 (9th Cir. 2001)

(quoting Franchise Tax Bd., 463 U.S. at 11)).

*

*

*

This Court should grant certiorari to resolve

the lower-court disagreement and confusion about

whether (1) state-law claims that allegedly conflict

with federally filed tariffs present a substantial

federal question; or whether (2) the filed-rate

doctrine merely operates as a federal preemption

defense that, under the well-pleaded-complaint rule,

does not create arising-under jurisdiction.

II.

THE FOURTH CIRCUIT’S ANALYSIS CONFLICTS

WITH THIS COURT’S SUBSTANTIAL-FEDERALQUESTION TEST, AS ARTICULATED IN GUNN

AND GRABLE.

The Court also should grant certiorari because

the Fourth Circuit’s opinion misapplies this Court’s

standard for determining substantial-federalquestion jurisdiction. Among other things, the

Fourth Circuit ignored this Court’s clear standard

for determining when a state-law claim “necessarily

raises” a federal issue.

A claim presents a substantial federal

question where the federal issue is: (1) necessarily

raised, (2) actually disputed, (3) substantial, and (4)

capable of resolution in federal court without

disrupting the federal-state balance approved by

17

Congress. Gunn, 568 U.S. at 258 (citing Grable, 545

U.S. at 314). Such claims represent a “special and

small category” of federal-question jurisdiction.

For purposes of the substantial-federalquestion analysis, “[a] federal issue is ‘necessarily

raised’ . . . only if it is a ‘necessary element of one

of the well-pleaded state claims.’” Franchise Tax

Bd., 463 U.S. at 13 (emphasis added). Grable, 545

U.S. at 314 (finding that federal issue was

“necessarily raised” where resolving the federal issue

was an “essential element of its quiet title claim”);

Gunn, 568 U.S. at 259 (same). If a plaintiff can

establish “all of the necessary elements entirely

independently of federal law,” then a federal

question is not “necessarily raised.” Franchise Tax

Bd., 463 U.S. at 13. When evaluating this question,

courts must “look only to the necessary elements of

the [plaintiff’s] causes of action.” Id. That there may

be a federal defense—even an obvious and

potentially dispositive one—does not mean that the

claim “necessarily raises” a federal question. Id.

at 14

In its briefing to the Fourth Circuit on the

issue, ODEC pointed out that none of the elements of

its state-law causes of action—common-law claims

for breach of contract, unjust enrichment, and

fraud—hinged on a question of federal law. [4th Cir.

ECF No. 19, at 18-22; ECF No. 25, at 18-23.] In its

opinion, however, the Fourth Circuit ignored these

arguments. (App. 32a-33a.) Instead of examining

the elements of ODEC’s state-law claims, as

Franchise Tax Board, Gunn, and Grable require, the

Fourth Circuit applied its own standard, opining

that a federal issue is necessarily raised where a

18

claim “effectively challenges” a federal law. (Id.)

Finding that ODEC’s claims “effectively challenge[]”

the PJM tariff, and observing that the tariff has the

effect of federal law, the Fourth Circuit concluded

that the claims necessarily raised a federal issue.

(Id.)

The Fourth Circuit’s opinion violates this

Court’s clear precedent in Franchise Tax Board,

Gunn and Grable. Worse, the “effectively

challenges” test that the Fourth Circuit adopted in

Bryan3 and applied in the present case is exactly the

sort of nebulous standard that had led to so much

confusion before this Court’s clarifying decisions in

Gunn and Grable. As Judge Luttig noted in his

dissent in Bryan: “a claim can easily be

characterized as an effective challenge to rates set in

a tariff with a federal agency, even though the

adjudication of the claim itself would require the

court to decide no federal issues whatsoever.” Bryan,

377 F.3d at 434. Left uncorrected, the Fourth

Circuit’s “effectively challenges” standard will

enlarge the lower courts’ assertion of substantialfederal-question jurisdiction in cases involving

tariffs filed with federal agencies. Such expansion

conflicts with this Court’s admonition that the

substantial-federal-question doctrine is an

“extremely rare” exception to the rule that state-law

claims do not support arising-under jurisdiction.

3 A case that preceded Gunn and Grable.

19

III.

THE FILED-RATE DOCTRINE IS A PREEMPTION

DEFENSE THAT DOES NOT CREATE ARISINGUNDER JURISDICTION.

The Fourth Circuit’s ruling also conflicts with

this Court’s precedents stating that: (1) the filed-rate

doctrine is a federal preemption defense, and

(2) federal preemption defenses do not create

arising-under jurisdiction.

As noted above, the filed-rate doctrine bars

state-law claims that seek to enforce rates that differ

from those specified by a federally-filed tariff. As

this Court has made clear, the doctrine derives its

legal force from the Supremacy Clause, and operates

as a species of federal preemption. Entergy

Louisiana, 539 U.S. at 47 (“When the filed rate

doctrine applies to state regulators, it does so as a

matter of federal preemption through the Supremacy

Clause, U.S. Const. art VI, § 2.”). See also

Nantahala Power & Light Co. v. Thornburg, 476

U.S. 953, 953 (1986) (noting that, as applied to state

law, the filed-rate doctrine is “a matter of enforcing

the Supremacy Clause”) (citing Arkansas Louisiana

Gas, 453 U.S. 571).

Preemption, however, is a federal defense, not

part of the plaintiff’s claim. Accordingly, it is not a

proper ground for removal:

[I]t is now settled law that a case may not be

removed to federal court on the basis of a

federal defense, including the defense of

preemption, 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.

20

Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987)

(citing Franchise Tax Bd., 463 U.S. at 12).

The Fourth Circuit’s “effectively challenges”

standard incorrectly treats the filed-rate doctrine as

if it were part of the plaintiff’s state-law claim. It

ignores the doctrine’s status as a preemption defense

undergirded by the Supremacy Clause. The Court

should grant certiorari to correct this error and to

clarify that the filed-rate doctrine is a preemption

defense that cannot ground jurisdiction under

§ 1331.

CONCLUSION

For the foregoing reasons, ODEC respectfully

requests that this Court grant its Petition for Writ of

Certiorari.

Respectfully submitted,

THOMAS M. WOLF (VSB No. 18234)

Counsel of Record

JOSEPH M. RAINSBURY (VSB No. 45782)

MILES & STOCKBRIDGE PC

919 East Main Street, Suite 1100

Richmond, VA 23219

(804) 905-6900

Counsel for Petitioners

April 19, 2022