Opposition Brief — Bryan v. BellSouth Telecommunications, Inc.
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Supreme Court, U.S
“et omg
No. 04-705 JAN 26 2005 |
1, | OFFICE OF THE CLERK |
IN THE i ai aeeaits
|
i
|
Supreme Court of the United States
TOMI WHITE BRYAN,
Petitioner,
V.
BELLSOUTH TELECOMMUNICATIONS, INC.,
Respondent.
On Writ of Certiorari to the United States
Court of Appeals for the Fourth Circuit
BRIEF OF RESPONDENT IN OPPOSITION
ASHLEY B. WATSON JAMES H. KELLY, JR.
BELLSOUTH CORPORATION ADAM H. CHARNES
1155 Peachtree Street, N.E. Counsel of Record
Suite 1700 RICHARD S. GOTTLIEB
Atlanta, GA 30309 JAMES J. HEFFERAN, JR.
(404) 249-2720 KILPATRICK STOCKTON LLP
1001 West Fourth Street
Winston-Salem, NC 27101
(336) 607-7300
Counsel for Respondent BellSouth Telecommunications, Inc.
se SCRE A ARAN SI IRE EITM ANMELDEN OS OTL IES I BR NOLIE, EET IE ST LLL LT ARETE NET LATE EL ALOE,
QUESTIONS PRESENTED
|. _Whether—consistent with the decision of every other
circuit to address the question—the Fourth Circuit correctly
determined that it had appellate jurisdiction to review the
district court’s order, pursuant to 28 U.S.C. § 1367(c)(3),
declining to exercise supplemental jurisdiction over a state-
law claim after it dismissed federal claims.
pa Whether the district court had federal-question
jurisdiction because petitioner’s state-law claim for unfair and
deceptive trade practices, which challenged BellSouth’s
assessment of a charge set forth in its federal tariff.
necessarily would require resolution of a substantial question
of federal law.
3. Whether petitioner’s state-law claim for unfair and
deceptive trade practices, which seeks a refund of amounts
paid pursuant to a charge set forth in BellSouth’s federal
tariff, is barred by the filed-rate doctrine.
(1)
:
RULE 29.6 STATEMENT
The parent corporation of BellSouth Telecommunications,
Inc., 1s BellSouth Corporation, which 1s publicly held.
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED...........:::sceeesseseesseseseeeeseeeenenees i
RULE 29.6 STATEMENT. ...................scssccssescessssssesessossees il
TABLE OF AUTHORITIES .....................cccccccssesssssseeeseees Vv
RE TY osississinsdnnsessncsnsrssnnccsanensernvsessesasansanansenen l
STATEMENT OF THE CASE................csccccsseeeeeeseeeeseesees l
A. Regulatory Background ...........:.:::csceeeseereeeees l
B. BellSouth’s FCC Tariff Discloses its
FUSC Methodology and Terminology............ 3
C. District Court Proceedings..................scssseeeeeee 3
D. The Fourth Circuit’s Decision...............:0+ 5
REASONS FOR DENYING THE PETITION................. 7
I. CONSISTENT WITH THE DECISIONS OF
THE OTHER CIRCUITS, THE FOURTH
CIRCUIT HAD JURISDICTION OVER
Pe ie eksacicessersnnessisernsssnacesssamnacinsannssasnncsssnons 8
Il. REVIEW OF THE FOURTH CIRCUIT'S
HOLDING THAT THE DISTRICT COURT
HAD SUBJECT-MATTER JURISDICTION
IS NOT WARRANTED ...................ccccsssssseeseeceseoes 11
A. Because The Fourth Circuit Did Not
Base Its Decision On Complete
Preemption, Petitioner’s —_ Purported
Circuit Split Is Illusory .............:.:eeseeeeeeeeees 12
(im)
IV
Table of Contents—continued
Page
B. The Fourth Circuit Correctly Found
Jurisdiction Because The Complaint
Required Determination Of A
Substantial Federal Question........0.0..0000000 13
lil. THERE IS NO CONFLICT AMONG THE
CIRCUITS OR OTHER GROUNDS
WARRANTING REVIEW OF — THE
FOURTH CIRCUIT’S DETERMINATION
THAT PETITIONER’S = CLAIM iS
BARRED BY THE FILED-RATE
aL IY Sialic ttice ee aaa Leeta nena nae 18
A. The Fourth Circuit’s Decision Is
Consistent With Central Office «0.000.000.0000 18
B. The Fourth Circuit’s Decision Does
Not Conflict With Other Court Of
POI TCI sicsicca beiciscciceceticnstsorincnainncs 21
C. Petitioner’s Claim Is Barred By The
PE TRG TOUS aici ovcistrrecenicoicudsecacnascdease 24
Eee iat cts svntecte seas ateieeiaceceenaneane ce 26
Vv
TABLE OF AUTHORITIES
CASES Page
AT&T Co. v. Central Office Telephone, Inc.,
$34 U.S. 2E6 (BFF inc iccccerteeroticnccasmiasnn passim
Bell v. Hood, 327 U.S. 678 (1946).........:ssccssccesseeeeseerens 10
Beneficial Nat'l Bank v. Anderson, 539 U.S.
E (QBS) anc cncsnissicsnissardsnsennnonicnnntetenais pienennanteoie 12, 13, 14
Boomer v. AT&T Corp., 309 F.3d 404 (7th
Cit, 2OGZ)...cncrcrscncccnesscaredarcasqiiicctaneangnesantbatennansnacinne’ 23
Brown v. Lucky Stores, Inc., 246 F.3d 1182
(Sth Cir. ZOOL) ........ssscceesssrscsssecercesncsnaasecencasenssssssasees 9
C.A.R. Transp. Brokerage Co. v. Darden
Rests., Inc., 213 F.3d 474 (9th Cir. 2000).............06+ 15
Cahnmann v. Sprint Corp., 133 F.3d 484 (7th
Cir.), cert. denied, 524 U.S. 952 (1998) ...........+ 15, 24
Caterpillar, Inc. v. Williams, 482 U.S. 386
(ROBT) oo cincinesccsacecsesnasnsinsneneistaasmcecaiansinnshalaninenncnain 12
Del. & Hudson Ry. Co. v. Offset Paperback
Mfrs., Inc., 126 F.3d 426 (2d Cir. 1997).......ccceeeee 15
Evanns v. AT&T Corp., 229 F.3d 837 (9th
Cir. 2900), cert. denied, 533 U.S. 911
CQO). accicncescniinsnssinasssexasanquinncsiuenactacseneieencenais 22, 23, 24
Fax Telecommunicaciones Inc. v. AT&T, 138
F.3d 479 (2d Cit. 19GB) 2......cnccssanccese 12, 13, 22, 23, 24
Franchise Tax Bd. v. Constr. Laborers
Vacation Trust, 463 U.S. 1 (1983).........6+ 5, 13, 14, 17
Freeman v. Burlington Broadcasters, Inc.,
204 F.3d 311 (2d Cir. 2000) ..............cccccesereeceseees 3, 20
Gaming Corp. of Am. v. Dorsey & Whitney,
SS F.3d 536 (th Civ, 1GGG) .....cscrcserccccrscrssines cacanaaiae 9
Grable & Sons Metal Prods., Inc. v. Darue
Eng’g & Mfg., 377 F.3d 592 (6th Cir.
2004), cert. granted, NO. 04-603 ........ceseseseseeseeeees 14
Grable & Sons Metal Prods., Inc. v. Darue
Engg & Mfg., NO. 04-603......cccceeeeeseeseeeeseteesenensenes 14
vl
Table of Authonities—continued
Page
Grupo Dataflux v. Atlas Global Group, L.P.,
1246'S. Ch. EGR Ce i cosnscasccerccscisecctimnaeiaaiaens 10
Hill v. Bellsouth Telecomms., Inc., 364 F.3d
1306 (i 1 CO, BRO coterie 9, 15, 17, 23
ICOM Holding, Inc. v. MCI Worldcom, Inc..,
236 F.36 ZED (OE GU, SOG Socancnta eee 20, 26
In re Long Distance Telecomms. Litig., 831
F 2k G27 (GG Ct: SSI B ccsxinicsssecctacsceamenananceaee 13, 21
In re U.S. Healthcare, Inc., 193 F.3d 151 (3d
Cir. 1999), cert. denied, 530 U.S. 1242
(BOD) issassicescevineessamnieuqetatneeanaien nee 9
In re Wireless Tel. Radio Frequency
Emissions Prods. Liab. Litig., 327 F. Supp.
2G S54 GD. MG: FO oscssccicentien 14
Kansas City S. Ry. Co. v. Carl, 227 U.S. 639
CED ES )...csconsonecanacsaciiedbsanassatastenmueeenanseaaeeeee 22
Keogh v. Chicago & Northwestern R. Co.,
BOO US. UG CET cicicosscstesncosmccatnennermanneties 15
Louisville & Nashville R. Co. v. Maxwell,
£3? US: POG eiice nee 19, 25
Louisville & Nashville R. Co. v. Rice, 247
US. TR CEB r a iianisicinsioniarseonanadnaeneas 14, 15
Mansfield, C. & L.M. Ry. Co. v. Swan, 111
CLS. S79 (1B... <cckidomearsnaneanaaae 9
Marco Supply Co. v. AT&T Communications,
Inc, STS F 2G 454 CG CW, TDG) vcs cecigestsnsesensasersarans 24
Marcus v. AT&T Corp., 138 F.3d 46 (2d Cir.
UDI P . <sxvassinyespussisineavadeseaeniadeauaaenadeiiadeoneaeaeaaaiade 15, 24
MCI Telecomms. Corp. v. Garden State Inv.
Corp., 981 F.2d 385 (8th Cir. 1992) ................. 15, 16
MCI Telecomms. Corp. v. Graham, 7 F.3d
S77 (6 OW. FOE vccccssicncieinbdntaicaamenns 15
MCI Telecomms. Corp. v. Teleconcepts, Inc.,
71 F.3d 1086 (3d Cir. 1995), cert. denied,
SEF UB. GES Cnc nvcineapiaeeamennneas 15
Pe ee ne ee “
ee ee ee ee ee ee
vu
Table of Authorities—continued
Page
MCI WorldCom, Inc. v. FCC, 209 F.3d 760
ER Gs ihc hesideccscrconabebicinrsak sane skannanesiusesuansconeninaneines 4
Metheny v. Becker, 352 F.3d 458 (Ist Cir.
i savacincicbioncnasbaanamipcceiandescnisiieatnibmsassuselbanacaapinkat 14
Miller Aviation v. Milwaukee County Bd. of
Supervisors, 273 F.3d 722 (7th Cir. 2001) ............. 9
Nethersole v. Bulger, 287 F.3d 15 (ist Cir.
PM uctntesissrisdlasniaiccd bith hembinmundiidiclaicumasadasticaioblnabledeas 9
New Rock Asset Partners v. Preferred Entity
Advancements, Inc., 101 F.3d 1492 (3d
Oe, Ba vinetiecsticcincssecinsetaminneeaembunienasaninnatiiiinntaca 11
Noble v. White, 996 F.2d 797 (Sth Cir. 1993) ............00 9
Orloff v. FCC, 352 F.3d 415 (D.C. Cr.
2003), cert. denied, 124 S. Ct. 290 (2004) ............... 22
Pacificare of Okla., Inc. v. Burrage, 59 F.3d
BR CRE, FI cittecrerstenicsnsercsntcenicntnapnsenion 9
Quackenbush v. Allstate Ins. Co., 517 U.S.
Pe srctitcnintcnsasenipcdsvncicmsnniseneaianenanes 7,9, 10, 11
Roche v. John Hancock Mut. Life Ins. Co., 81
Fe Ce Gr Canis dctetaeisonstiepancentesctnancaton 11
Russell v. Sprint Corp., 264 F. Supp. 2d 955
ER, A, BD istincoacarctsnencatsidntandicersanmientannasbiecanssnioanss 13
Seinfeld v. Austen, 39 F.3d 761 (7th Cir.
1994), cert. denied, 514 U.S. 1126 (1995) ............. 14
State ex rel. Nixon v. Nextel West Corp., 248
F. Supp. 24 865 (E.D. Mo. 2003) ......:..<acenncorsrereensenee 22
Taffett v. Southern Co., 967 F.2d 1483 (11th
Cir.), cert denied, 506 U.S. 1021 (1992)... ee. 17
Telecom Int'l Am. Ltd. v. AT&T Corp., 280
Oe i, BEE i cterceeneaep cieescaieenncss 20
Thermtron Prods., Inc. v. Hermansdorfer,
er Se CO icacsacascccentehciessupmooactanantnaplinsnntiges 10
Things Remembered, Inc. v. Petrarca, 516
Te Oe IN cscs daseecssscascasipetenesip cnenadneininarentaeiecmmeniaces 9
Thurston Motor Lines, Inc. v. Jordan K.
Rand, Ltd., 460 U.S. 533 (1983) .........eeeseeeeeees 14,15
Vill
Table of Authonties—continued
Page
United Int'l Holdings, Inc. v. The Wharf
(Holdings) Ltd., 210 F.3d 1207 (10th Cir.
2000), aff'd on other grounds, 532 U.S.
Re crac titanssteactacseiiiasrenaceicianmemamacenitciieces 11
United Mine Workers of Am. v. Gibbs, 383
Oe Fee er caieh deasdeniiercentaaiebiacutpiaismmtasmedeccisseus 10
W. Union Int'l, Inc. vy. Data Dev., Inc., 41
Fe BAe CR ERs FO de nectsaricinnsdsecasinssorsesaradiarss 15
Weeks v. Portage County Exec. Offices, 235
Fe Ee RE: BN ss cerstacincnciasscadsiacivasainiestaxgisansion 9
Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17
Se Bi siainiéientencanie sna tcmieeneediersniolasardes 17
STATUTES, REGULATIONS, AND ADMINISTRATIVE
ORDERS
OF a Dat act ash arksdcataasancntapsanninnaaensnacaniian 22
Ae ee eS fididlctace neces ecsabaae 2
ee es Ne Sica einedcetaaaincens 2
Fa ns i ciloa dite toccadicsid Paaks lobulsesatanesaumeatsdameion 4
ac I IS Fs B chcadpeseasasiien nian ancsonannsanacoansancn 4
pCR Sea @ 1 1 | Nene re ren 3, 10
yo Gin 7 tae eX 7. | | Sennen ITER Salada ideale 10
ee RE iiaiccttetentetisabuatie aie cetecaares 5,9
ee Rs BOD en cciectinleceiinaceacan passim
emis PE iakter adases akencasreinnsciaoaneaeied 3
a ee. te NE ais dtocie ctuan teat eecaeueee passim
Se A We PPI is Sensvansnicccpiernannionaiangs 9,10, 11
OE eas ee We I ashes cancer esd aden l
Es i reran ts ediactan etna lagcmaadbnedis 25
ko Le P| ReRE ae Io enn eon TO Ror OM MeorE 19
AE es IE siiccddelousicea niacin s cacnrereaee l
Oe li ers Oe ances asasess eadesdetataeenciamuionneccantng 14, 25
nF BP BF ks buclandidonanmenaaen. 14, 25
Fe es aba caciscscs sta nae acadesetda todd alae ed shana l
OF SE es Oecd abana hanoaes 24
IX
Table of Authonties—continued
In re Federal-State Joint Bd. on Universal
Serv., Report & Order & Second Notice of
Proposed Rulemaking, 17 F.C.C.R. 24952
Page
SE Fee eee AE A 5.
In re Federal-State Joint Bd. on Universal
Serv., Report & Order, 12 F.C.C.R. 8776
(May 8, 1997)
In re Policy and Rules Concerning the
Interstate, Interexchange Marketplace, 14
F.C.C.R. 6004 (Mar. 31, 1999)
In re Truth-in-Billing and Billing Format,
First Report & Order & Further Notice of
Proposed Rulemaking, 14 F.C.C.R. 7492
(May 11, 1999) vooecccccccccssecsseccssecssee ee ee
eee ee eee eee eee eee eee
INTRODUCTION
None of the three questions presented in the petition
warrant review by this Court. Petitioner asserts that the
Fourth Circuit erred in holding that it had appellate
jurisdiction to review the district court’s remand order, issued
pursuant to 28 U.S.C. §1367(c)(3), but every other circuit to
address the question has adopted the Fourth Circuit’s
position. Petitioner claims that the decision below created a
circuit split with respect to the applicability of the complete
preemption doctrine to the Federal Communications Act, but
the Fourth Circuit expressly declined to rely on that doctrine,
instead finding federalquestion junsdiction on _ other
grounds—grounds not even challenged in_ the petition.
Finally, petitioner contends that the Fourth Circuit improperly
applied the filed-rate doctrine, but its decision is consistent
both with this Court’s precedents and with the decisions of
the other circuits. Accordingly, the petition should be denied.
STATEMENT OF THE CASE
A. Regulatory Background.
As a provider of interstate telecommunications services,
respondent BellSouth Telecommunications, Inc.
(“BellSouth”), is subject to federal regulation as a common
carrier under the Federal Communications Act (“FCA”), 47
U.S.C. § 151 et seg. With respect to the services at issue in
this case, the FCA requires BellSouth to file with the Federal
Communications Commission (“FCC”) publicly available
schedules, or “tariffs,” setting forth all of its charges and the
classifications, practices, and regulations affecting them. /d.
§ 203(a).
Moreover, the FCA mandates, among other things, that
carriers contribute to the preservation and advancement of
federal universal service support mechanisms, id. § 254,
through the required payment of a percentage of their
revenues to the federal Universal Service Fund (“USF”). See
2
In re Federal-State Joint Bd. on Universal Serv., Report &
Order, 12 F.C.C.R. 8776, 4] 842-44 (May 8, 1997). The
purpose of the USF is_ to subsidize the cost of
telecommunications _services_ to _ schools, healthcare
providers, libraries, and rural and low-income customers. See
47 C.F.R. § 54.706(c). The percentage of revenues that a
carrier must contribute to the USF is established by the FCC
and adjusted on a quarterly basis to ensure sufficient funding
of the USF. /d. § 54.709(a).
The FCC has authorized carriers to recover the costs of
their contributions to the USF from their customers through
the rates they charge for telecommunications services or as a
separate itemized charge. See Jn re Federal-State Joint Bd. on
Universal Serv., Report & Order & Second Notice of
Proposed Rulemaking, 17 F.C.C.R. 24952, 4] 42 (Dec. 13,
2002) (“Dec. 2002 Order”); Pet. App. 3a. BellSouth has
always recovered its costs related to its contributions to the
USF as a separate line-item placed on its customers’ monthly
phone bills and delineated as the “Federal Universal Service
Charge” (“FUSC”).' 4th Cir. J.A. at 159.
In an order released in December 2002, the FCC adopted
rules, to be effective on April 1, 2003, that prohibited carriers
from “marking up” their USF line items and charging
customers more than their pro rata assessment amount. Dec.
2002 Order, {| 51-52. Although BellSouth has never
“marked up” its charge to recover an amount in excess of its
contribution, prior to this date the practice of marking up USF
line items was permitted by the FCC and did not render such
charges unjust or unreasonable. Specifically, before the
' The FCC indicated that it does not “mandate a specific label for
federal universal service line items pursuant to our Truth-in-Billing rules,”
Dec. 2002 Order, {| 65, although it tentatively approved use of BellSouth’s
term. See Jn re Truth-in-Billing and Billing Format, First Report & Order
& Further Notice of Proposed Rulemaking, 14 F.C.C.R. 7492, 472 (May
11, 1999) (“Truth-in-Billing Order’).
TT
3
December 2002 Order, “[t]he Commission required only that
contributors not shift more than an equitable share of their
contributions to any customer or group of customers, and that
contributors provided accurate, truthful, and complete
information regarding the nature of the charge.” Jd. ¥ 10.
B. BellSouth’s FCC Tariff Discloses its F USC
Methodology and Terminology.
The amount of BellSouth’s FUSC, how the charge is
calculated, and how it appears on customers’ bills are detailed
in BellSouth’s federal tariff, duly filed with the FCC. 4th Cir.
J.A. at 159. BellSouth’s March 18, 2002 tanff, for instance,
contains a page headed, “CALCULATION OF 2nd
QUARTER 2002 BELLSOUTH UNIVERSAL SERVICE
FUND (USF) CONTRIBUTION.” /d at 165. The page
describes each step in calculating the amount that BellSouth
coatributes to the USF. /d The following page in the tariff is
titled, “CALCULATION OF 2nd QUARTER 2002
BELLSOUTH FEDERAL UNIVERSAL SERVICE
CHARGE.” /d. at 166. This page explains step-by-step how
BellSouth arrives at the FUSC it charges to its customers and
also provides BellSouth’s annualized contribution to the USF.
Id.
C. District Court Proceedings.
Petitioner Tomi White Bryan filed this putative class action
against BellSouth on February 22, 2002, in the General Court
of Justice, Superior Court Division, Guilford County, North
Carolina. Pet. App. 28a. Pursuant to 28 U.S.C. § 1331 and
§ 1441, BellSouth removed the case to the United States
District Court for the Middle District of North Carolina on the
ground that, despite their state-law labels, petitioner’s claims
arose under federal law because petitioner was in actuality
challenging the terms of BellSouth’s federal tariff Pet. App.
32a. BellSouth filed its answer on Apnil 2, 2002.
On June 4, 2002, petitioner filed her first amended
complaint (“complaint”). On behalf of a chss of persons and
4
entities that paid the FUSC,? she asserted purported state-law
causes of action for violation of the North Carolina Unfair
and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1,
unjust enrichment/estitution, and breach of contract
(including the covenant of good faith and fair dealing) in
connection with the FUSC charges on her monthly phone bill.
Pet. App. 30a. Petitioner claimed that BeilSouth’s FUSC was
excessive because it exceeded BellSouth’s required
contributions to the USF. /d. at 4a, 33a-35a. Petitioner
further alleged that BellSouth did not disclose how it
calculated the FUSC, and that BellSouth misled its customers
into believing that the government mandated that BellSouth
collect the FUSC from its customers. /d. at 35a.
On June 10, 2002, petitioner filed a motion to remand
pursuant to 28 U.S.C. § 1447(c). Pet. App. 29a. On July 3,
2002, BellSouth filed a motion to dismiss all claims in the
complaint on several grounds, including the fact that the
claims were barred by the filed-rate doctrine. /d. at 37a.
On February 6, 2003, the district court denied petitioner’s
motion to remand under 28 U.S.C. § 1447(c) and granted in
part BellSouth’s motion to dismiss. Pet. App. 40a-41a. The
court found removal proper because petitioner’s claim that the
FUSC was excessive presented a federal question by directly
challenging the terms of BellSouth’s filed tanff. Jd at 33a-
35a. The court then dismissed the claims it concluded arose
under federal law pursuant to the filed-rate doctrine. /d. at
* Specifically, the complaint defined the class as: “All persons or
entities in North Carolina who were billed for and paid a Federal
Universal Service Charge to BellSouth after detariffing went into effect.”
4th Cir. J.A. at 19. The FCC, however, has not detariffed the “access”
services at issue in this action, see 47 C.F.R. § 69.3, and at all relevant
times the FUSC has been included in BellSouth’s filed FCC tariff. See
supra, at 3. By contrast, the FCC has detariffed other services, including
(for example) long-distance services. See MCI WorldCom, Inc. v. FCC,
‘209 F.3d 760 (D.C. Cir. 2000).
5
37a-38a. The court, however, found that petitioner’s claim
for unfair and deceptive trade practices (count A of the
complaint) arose under state law. Jd. at 38a. The court
declined to exercise supplemental jurisdiction over the
remaining state-law claim and remanded that claim to state
court pursuant to 28 U.S.C. § 1367(c)(3)2 Id at 39a.
BellSouth appealed the district - court’s ruling to the Fourth
Circuit.
D. The Fourth Circuit’s Decision.
On July 28, 2004, a divided panel of the Fourth Circuit
vacated the district court’s decision. The court first rejected
petitioner’s argument that it had no jurisdiction to hear the
appeal, finding that the district court’s remand order under 28
U.S.C. § 1367(c) constituted an appealable final order. Pet.
App. 8a. Tuming to the merits of BellSouth’s appeal, the
court concluded that, read in the light most favorable to
petitioner, the complaint seeks a refund of a portion of the
FUSC petitioner has paid to BellSouth. Jd. at 14a. Because
the FUSC is set forth in the tariff BellSouth filed with the
FCC, which carries the force of federal law, the Fourth
Circuit held that an action to alter that rate necessarily
requires resolution of a ““substantial question of federal law”
and therefore presents a federal question. Jd. at 9a, 16a
(quoting Franchise Tax Bd. v. Constr. Laborers Vacation
Trust, 463 U.S. 1, 27-28 (1983)). Moreover, because granting
* The district court did not explicitly state which claims arose under
federal law, and therefore were subject to dismissal, and which claim
arose under state law. Rather, the court simply stated that petitioner’s
“remaining state law claims” should be remanded to state court. Pet. App.
39a. Before the Fourth Circuit, the parties agreed that the court’s order
had the effect of dismissing petitioner’s unjust enrichment/restitution and
breach of contract claims, while remanding the unfair and deceptive trade
practices claim. /d. at 6a n.4.
* Petitioner did not appeal the district court’s dismissal of her claims for
unjust enrichment/restitution and breach of contract. Pet. App. 6a n.4.
6
petitioner relief on her claim would require the court to order
a refund of a portion of the tanffed rate and to determine a
reasonable rate for the FUSC different from that set forth in
the tarnff, the court concluded that the claim should be
dismissed pursuant to the filed-rate doctrine. /d at 16a.
Accordingly, the Fourth Circuit “‘vacate[d] the district court’s
Order with respect to Count A and remand{ed] for that count
to be dismissed.”® Jd.
In dissent, Judge Luttig agreed with the majority that
“clams requiring the court to second-guess the
reasonableness” of the rate set forth in the tanff “are properly
said to require the court to resolve a substantial federal
question,” permitting exercise of federalquestion jurisdiction.
Id. at 23a. Judge Luttig, however, asserted that petitioner’s
damages could be measured without implicating — the
reasonableness of the tariffed rate. Jd. at 24a. The dissent
thought that petitioner’s complaint could plausibly be read to
assert a theory of recovery not implicating the filed tanff by
measuring damages as the difference between BellSouth’s
FUSC and the FUSC for the carrer petitioner would have
chosen but for BellSouth’s alleged misrepresentations. /d. at
25a. Therefore, according to the dissent, the claim did not
necessarily depend on a substantia! saan of federal law
and was properly remanded.
On August 24, 2004, the Fourth Circuit denied petitioner’s
motion for rehearing and rehearing en banc, with no recorded
dissent. Jd. at 42a.
> Because the Fourth Circuit ordered petitioner’s state-law claim
dismissed on the basis that it challenged BellSouth's filed tariff, it did not
address BellSouth’s alternative arguments that (1) her non-disclosure
allegations were barred by the filed-rate doctrine for the additional reason
that, under that doctrine, she is presumed to know the contents of the
tariff, and (2) the FCC had primary jurisdiction over the allegations in the
complaint. Pet. App. 16a n.11.
petition. First, she asserts that the Fourth Circuit incorrectly
determined it had appellate jurisdiction to review a remand
order entered pursuant to the supplemental Jurisdiction
Statute, 28 U.S.C. § 1367(c)(3). However, petitioner does not
(and cannot) claim there is a cirmuit split on this question.
Indeed, those circuits which have addressed the issue all agree
with the Fourth Circuit's conclusion that a court of appeals
may review such an order. Moreover, petitioner’s argument
that 28 U.S.C. §1447(c) applies and bars appellate review is
inconsistent with this Court’s decision in Quackenbush v.
Allstate Ins. Co., 517 U.S. 706 (1996).
Second, petitioner asserts that this Court should review the
“important question{]” of “[t]he scope of federal question
jurisdiction based on a preemption defense.” Pet. 7.
Specifically, petitioner contends that the Fourth Circuit's
ruling is in conflict with the decisions of other circuits, which
reject application of the complete preemption doctrine in the
telecommunications context. However, the Fourth Circuit did
not base its conclusion that the district court had subject-
matter jurisdiction on complete preemption, but instead on the
existence of a substantial question of federal law. The court’s
ruling is consistent with the decisions of this Court and the
other circuits. At most, therefore, petitioner seeks review of
the Fourth Circuit’s fact-bound decision that resolution of
petitioner’s complaint would in fact require determination of
a substantial federal claim. That question, involving
consideration of this petitioner’s particular complaint, plainly
does not warrant this Court’s review. The Fourth Circuit,
moreover, correctly found that the complaint necessarily
raises an important federal question.
Third, petitioner asserts that the Fourth Circuit improperly
expanded the filed-rate doctrine. Petitioner, however,
8
fundamentally misconstrues this Court’s opinion in AT&T Co.
v. Central Office Telephone, Inc., 524 U.S. 214 (1998), on
which she bases her argument. Both Central Office and cases
from other circuits are fully consistent with the Fourth
Circuit’s conclusion that petitioner’s claim is barred by the
filed-rate doctrine.
For these reasons, as explained more fully below, the
petition should be denied.
I. CONSISTENT WITH THE DECISIONS OF THE
OTHER CIRCUITS, THE FOURTH CIRCUIT
HAD JURISDICTION OVER THE APPEAL.
Petitioner first seeks review of the Fourth Circuit’s holding
that it had appellate jurisdiction. Pet. 9-10. As explained
above, the district court’s decision to remand to state court
petitioner’s state-law claim was based on the supplemental
jurisdiction statute, 28 U.S.C. § 1367(c)(3), not 28 U.S.C.
§ 1447(c).© Petitioner presents no reason justifying this
Court’s review of the Fourth Circuit’s jurisdictional holding.
Nor does she demonstrate that the Fourth Circuit’s decision
was erroneous.
Petitioner does not claim that there is a circuit split on the
question whether a court of appeals has jurisdiction to review
a remand order entered pursuant to 28 U.S.C. § 1367(c)(3).
Indeed, the Fourth Circuit’s decision below is consistent with
that of every other circuit that has addressed this question.
Four other circuits have expressly held that a district court’s
order, pursuant to 28 U.S.C. § 1367(c)(3), remanding state
© Section 1367(c)(3) provides the district court with discretion to
decline to exercise supplemental jurisdiction over state-law claims after it
dismisses all federal claims. That provision governs actions removed to
federal court from state court as well as actions initially filed in federal
court. Section 1447(c), which applies only to removed cases, directs that
“{i]f at any time before final judgment it appears that the district court
lacks subject matter jurisdiction, the case shall be remanded.”
iii
9
law claims after dismissal of all federal claims is reviewable
on appeal. See Hill v. Bellsouth Telecomms., Inc., 364 F.3d
1308, 1314 (11th Cir. 2004); In re U.S. Healthcare, Ine., 193
F.3d,151, 159 (3d Cir. 1999), cert. denied, 530 U.S. 1242
(2000): Gaming Corp. of Am. v. Dorsey & Whitney, 88 F.3d
536, 542 (8th Cir. 1996); Pacificare of Okla., Inc. v. Burrage,
59 F.3d 151, 152-53 (10th Cir. 1995). Five additional
circuits, while not expressly addressing the jurisdictional
question, have heard appeals of remand orders without
commenting on their own jurisdiction and thus implicitly held
that a district court’s remand pursuant to 28 U.S.C. § 1367(c)
is reviewable.’ See Nethersole v. Bulger, 287 F.3d 15, 17 (1st
Cir. 2002); Miller Aviation v. Milwaukee County Bd. of
Supervisors, 273 F.3d 722, 727-28 (7th Cir. 2001); Brown v.
Lucky Stores, Inc., 246 F.3d 1182, 1187 (9th Cir. 2001);
Weeks v. Portage County Exec. Offices, 235 F.3d 275, 279-80
) (6th Cir. 2000); Noble v. White, 996 F.2d 797, 800 (Sth Cir.
1993). Given the overwhelming uniformity in the circuits,
review by this Court plainly is not warranted.
Moreover, the Fourth Circuit’s holding is perfectly
consistent with this Court’s precedents. Petitioner claims that
28 U.S.C. § 1447(d) barred appellate review in these
circumstances.” Pet. 9-10. But as this Court explained in
Quackenbush, ““only remands based on grounds specified in
§ 1447(c) are immune from review under § 1447(d).’” 517
U.S. at 712 (quoting Things Remembered. Inc. v. Petrarca,
516 U.S. 124, 127 (1995), and Thermtron Prods., Inc. v.
’ The federal courts of appeals are under an obligation to ensure that
they have subject matter jurisdiction over an appeal and to raise their lack
of jurisdiction sua sponte, if necessary. See Things Remembered, Inc. v.
Petrarca, 516 US. 124, 131 nl (1995) (Ginsburg, J., concurring);
Mansfield, C. & L.M. Ry. Co. v. Swan, 111 US. 379, 384 (1884).
* Section 1447(d) provides: “An order remanding a case to the State
court from which it was removed is not reviewable on appeal or
otherwise. ...”
10
Hermansdorfer, 423 U.S. 336, 345-46 (1976)). The district
court below did not remand count A to state court based on
§ 1447(c), but based on § 1367(c)(3). Pet. App. 8a. For this
reason, Quackenbush establishes that the bar on appellate
review in § 1447(d) does not apply.
Petitioner’s confused effort to demonstrate that the district
court’s dismissal was in fact based on § 1447(c) should be
rejected. Section 1447(c) requires a remand whenever “‘it
appears that the district court lacks subject matter
jurisdiction.” Petitioner seems to suggest that, after dismissal
of her federal claim, the district court below lacked subject
matter jurisdiction over her remaining state claim. Petitioner
is wrong. The district court’s subject matter jurisdiction, of
course, was determined at the time the complaint was filed.
See, e.g., Grupo Dataflux v. Atlas Global Group, L.P., 124 S.
Ct. 1920, 1924 (2004). The district court held, in a
determination petitioner has not challenged on appeal, that
two of her claims arose under federal law. Pet. App. 33a-35a.
That court, therefore, had federalquestion jurisdiction over
petitioner’s federal claims and supplemental jurisdiction over
her state-law claim. See 28 U.S.C. §§ 1331, 1367(a); United
Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725 (1966).
Contrary to petitioner’s implication, the district court did not
lose subject matter jurisdiction over the state-law claim upon
dismissal of the federal claims. As the courts of appeals
uniformly have held, a district court retains Ariicle Ill
junsdicton over nondiverse, supplemental state-law claims
* To be sure, “[t]he federal claim must have substance sufficient to
confer subject matter jurisdiction on the court.” Gibbs, 383 U.S. at 725.
Although petitioner's federal claims ultimately were dismissed, neither
petitioner nor either court below has suggested that they were so
insubstantial that they could not support the district court’s federal
question jurisdiction. See Bell v. Hood, 327 U.S. 678, 682-83 (1946)
(“[A] suit may sometimes be dismissed for want of jurisdiction where the
alleged claim . . . is wholly insubstantial and frivolous.”).
11
even after federalquestion claims are dismissed. See, e.g.,
United Int'l Holdings, Inc. v. The Wharf (Holdings) Ltd., 210
F.3d 1207, 1220 (10th Cir. 2000), aff'd on other grounds, 532
U.S. 588 (2001); Roche v. John Hancock Mut. Life Ins. Co.,
81 F.3d 249, 256-57 (1st Cir. 1996); New Rock Asset Partners
v. Preferred Entity Advancements, Inc., 101 F.3d 1492, 1505
(3d Cir. 1996).
Finally, petitioner claims (Pet. 10) that the “Congressional
intent and policy reasons” underlying the bar on appellate
review of remand orders in § 1447(d) apply as well to
appellate review of remand orders pursuant to § 1367(c)(3).
That argument, however, is directly contrary to Quackenbush,
which held that Congress specifically limited § 1447(d) to
remands pursuant to § 1447(c), and did not intend to subject
any other remand orders to § 1447(d). See 517 USS. at 711-
12.
ll. REVIEW OF THE FOURTH’ CIRCUIT’S
HOLDING THAT THE DISTRICT COURT HAD
SUBJECT-MATTER JURISDICTION IS NOT
WARRANTED.
Petitioner asserts that the Fourth Circuit permitted
BellSouth to remove the complaint “based on an ordinary
preemption defense,” and its decision therefore conflicts with
court of appeals cases rejecting application of the complete
preemption doctrine to claims related to the FCA. Pet. 8, 10-
15. Contrary to petitioner’s surprising argument, the Fourth
Circuit expressly disclaimed reliance on _ the complete
preemption doctrine, and found the existence of federal-
question jurisdiction because petitioner’s claim required
resolution of a substantial federal question. Thus, the Fourth
Circuit's decision is wholly consistent with applicable
precedent. At most, therefore, petitioner merely quarrels with
the Fourth Circuit’s reading of the complaint.
12
A. Because The Fourth Circuit Did Not Base Its
Decision On Complete Preemption, Petitioner’s
Purported Circuit Split Is Illusory.
Petitioner asserts that certiorari should be granted because
the Fourth Circuit’s opinion conflicts with the decisions of
other circuits finding that there is no _ federalquestion
jurisdiction based on complete preemption of deception
claims regarding the billing practices cf telecommunications
providers. Pet. 8, 10-15.. Complete preemption exists where
the preemptive force of a statute is so powerful that even if a
claim is pleaded solely in terms of state law, it in reality will
be deemed based in federal law and subject to federal
jurisdiction. See, e.g., Beneficial Nat'l Bank v. Anderson, 539
U.S. 1, 68 (2003); Fax Telecommunicaciones Inc. v. AT&T,
138 F.3d 479, 486 (2d Cir. 1998). BellSouth does not dispute
petitioner’s assertion that ““a case may not be removed to
federal court on the basis of a federal defense, including the
defense of pre-emption, even if the defense is anticipated in
the plaintiffs complaint ....”’ Pet. 11 (quoting Caterpillar,
Inc. v. Williams, 482 U.S. 386, 393 (1987) (emphasis in
original)). Likewise, BellSouth has no quarrel with
petitioner’s contention that “[t]he majority of courts that have
addressed preemption in the wire-line context have held that
Congress did not intend the FCA to completely preempt state
law claims so as to make them removable.” /d. at 12.
Petitioner’s entire discussion is beside the point, however,
because the Fourth Circuit did not base its decision on the
complete preemption doctrine. Indeed, the court explained
that “[bJecause . . . Bryan’s cause of action presents a
substantial question of federal law, we need not determine
whether the doctrine of complete preemption applies.”’° Pet.
'° See also Pet. App. 18a (Luttig, J., dissenting) (“Because the majority
finds jurisdiction [based on a substantial question of federal law], it does
not address the question of whether complete preemption is present.”).
13
App. 10a n.S5 (emphasis added); see also id at 10a n6.
Petitioner therefore simply errs in asserting that “{t]he Court
of Appeals found federal question jurisdiction based on a
preemption defense.” Pet. 10. Thus, the conflict among the
circuits claimed by petitioner (Pet. 7, 12) is wholly illusory.
The cases on which she relies merely hold that federal
jurisdiction over claims of deception conceming a telephone
company’s billing practices cannot be based on complete
preemption. See Freeman v. Burlington Broadcasters, Inc.,
204 F.3d 311, 317 (2d Cir. 2000); Fax T. elecommunicaciones,
138 F.3d at 486; Russell v. Sprint Corp., 264 F. Supp. 2d 955,
960 n.1 (D. Kan. 2003).'' None of these cases addressed the
actual basis on which the Fourth Circuit found federal-
question jurisdiction.
B. The Fourth Circuit Correctly Found Jurisdiction
Because The Complaint Required Determination
Of A Substantial Federal Question.
I. As this Court has held, quite apart from complete
preemption, federal subject-matter jurisdiction exists when “a
well-pleaded complaint establishes . . . that the plaintiff's
nght to relief necessarily depends on resolution of a
substantial question of federal law.”'* Franchise Tax Bd. v.
'' In re Long Distance Telecomms. Litig., 831 F.2d 627, 633 (6th Cir.
1987), on which petitioner also relies (Pet. 7, 12), involved ordinary
preemption, and did not discuss complete preemption or any other
jurisdictional doctrine.
” Citing Beneficial National Bank v. Anderson, supra, petitioner asserts
that the “viability” of this basis for federal jurisdiction “is tenuous at
best.” Pet. 12. Anderson provides no basis for questioning the
longstanding principle that there is federal-question jurisdiction when a
State-law claim necessarily “depends on resolution of a substantial
question of federal law.” Franchise Tax Bd., 463 U.S. at 28. Anderson
involved the complete preemption doctrine and did not discuss the
alternative basis for federal jurisdiction found by the Fourth Circuit below.
Nor has petitioner cited any authority for her Suggestion that Anderson
14
Constr. Laborers Vacation Trust, 463 U.S. 1, 27-28 (1983).
The Fourth Circuit plainly based its finding of federal
question jurisdiction on this principle. Pet. App. 12a (“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 federai
law ...”). Petitioner has Suggested no reason why this issue ~
is worthy of this Court’s review. °
Indeed, the Fourth Circuit’s holding is consistent with
decisions of other courts of appeals. The circuits uniformly
recognize that tariffs filed pursuant io federal statutes carry
the force of federal law and are not mere contracts. See, e.g.,
undermined this alternative basis for federal jurisdiction. Indeed, since
Anderson, federal courts have continued to base jurisdiction on the
presence of a substantial federal question. See, e.g., Metheny v. Becker,
352 F.3d 458, 460 (Ist Cir. 2003); Jn re Wireless Tel. Radio Frequency
Emissions Prods. Liab. Litig., 327 F.Supp. 2d 554, 567 n.18 (D. Md.
2004).
'3 The Court should not hold the petition pending the decision in Grable
& Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, No.
04-603. In Grable, this Court presumably granted certiorari to resolve a
circuit split on the question whether removal jurisdiction under Franchise
Tax Board could be premised on a federal statute that did not provide an
applicable private right of action. Compare Grable & Sons Metal Prods.,
Inc. v. Darue Eng'g & Mfg., 377 F.3d 592 (6th Cir. 2004), cert. granted,
No. 04-603, with Seinfeld v. Austen, 39 F.3d 761 (7th Cir. 1994), cert.
denied, 514 U.S. 1126 (1995). There are two reasons why this case does
not involve the question at issue in Grable. First, the FCA indisputably
grants petitioner a private right of action for the state-law violation alleged
in count A of her complaint. See 47 U.S.C. §$§ 206-207. Thus, the Fourth
Circuit’s decision is correct no matter how Grable is decided. Second,
this is not a case (such as Grable and Seinfeld) where the court merely
would be required to interpret and apply federal law. Rather, because a
federal tariff tas the force and effect of federal law (see infra, at 14-15),
petitioner in effect seeks to invalidate federal law. Federal-question
jurisdiction clearly lies with respect to such a claim. See Thurston Motor
Lines, Inc. v. Jordan K. Rand, Ltd. 460 U.S. 533, 53435 (1983);
Louisville & Nashville R. Co. v. Rice, 247 U.S. 201, 203 (1918).
15
Marcus v. AT&T Corp., 138 F.3d 46, 56 (2d Cir. 1998);
Cahnmann vy. Sprint Corp., 133 F.3d 484, 488 (7th 1r.), cert.
denied, 524 U.S. 952 (1998); W. Union Int’l, Inc. v. Data
Dev., Inc., 41 F.3d 1494, 1496 (11th Cir. 1995); MCI
Telecomms. Corp. v. Garden State Inv. Corp., 981 F.2d 385,
387 (8th Cir. 1992); see also Central Office, 524 U.S. at 227
(“The rights as defined by the tariff cannot be varied or
enlarged by either contract or tort of the carrier.””) (quoting
Keogh v. Chicago & Northwestern R. Co., 260 U.S. 156, 163
(1922)). This Court has found that suits to enforce or
invalidate as unreasonable a federal tariff arise under federal
law. Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460
U.S. 533, 534-35 (1983); Louisville & Nashville R. Co. v.
Rice, 247 U.S. 201, 203 (1918). Applying this principle, the
courts of appeals repeatedly have found federal- question
jurisdiction with respect to state-law claims challenging or
involving tanffed rates, particularly in the
telecommunications context. See, e.g., Hill, 364 F.3d at
1315-17 (finding state law causes of action for fraud and
unfair trade practices raised substantial questions of federal
law pursuant to a filed tariff and therefore federal question
jurisdiction attached); C.A.R. Ti ransp. Brokerage Co. v.
Darden Rests., Inc., 213 F.3d 474, 478 (9th Cir. 2000) (any
action arising from filed tariff presents federal question);
Marcus, 138 F.3d at 56 (claim based on filed tariff arises
under federal law); Cahnmann, 133 F.3d at 486, 488-89
(finding claim challenging tariff provision arose under federal
law, even though complaint did not allege any violation of
federal law); Del. & Hudson Ry. Co. v. Offset Paperback
Mfrs., Inc., 126 F.3d 426, 427 (2d Cir. 1997) (actions to
enforce filed rates in tariff may be brought in federal court
because tariffs have force and effect of federal Statute); MC]
Telecomms. Corp. v. Teleconcepts, Inc., 71 F.3d 1086, 1093-
94 (3d Cir. 1995) (claims relying on tariff filed with FCC are
subject to federal jurisdiction), cert. denied, 519 U.S. 815
(1996); MCI Telecomms. Corp. v. Graham, 7 F.3d 477, 479
(6th Cir. 1993) (claim to enforce provisions of tariff are
16
premised on federal law); Garden State, 981 F.2d at 386, 388
(finding federal subject matter jurisdiction existed over claim
arising under tariff required by FCA, even though complaint
did not allege specific violation of Act).
2. The Fourth Circuit’s decision is correct under these
cases. Petitioner seeks damages for the alleged
misrepresentations made by _ BellSouth regarding its
assessment of the FUSC. The Fourth Circuit concluded that
“the only plausible reading of the Complaint is that Count A
... seeks a refund of a portion of the FUSC.” Pet. App. 16a.
As a result, the court reasoned, petitioner’s claim necessarily
would “require the court to determine a reasonable rate for the
FUSC, thereby presenting a substantial question of federal
law.” Id. at 12a.
Petitioner asserts that the Fourth Circuit’s holding “enables
all state law claims to be removed based on an ordinary
preemption defense.” Pet. 8. That assertion is plainly wrong.
The Fourth Circuit’s holding by its terms applies only when a
state-law claim necessarily seeks a refund of a payment
required by a federal tariff, which is the equivalent of federal
law. This holding simply has no application in_ other
circumstances.
Petitioner also contends that the Fourth Circuit erred
because the complaint does not in fact seek a refund of the
tariffed rate, and that, for there to be federal jurisdiction, this
remedy must be sought “on the face of the complaint itself.”
Pet. 12-13. But with this argument petitioner seeks mere
correction of error that does not justify this Court’s review.
She also is wrong. The Fourth Circuit explained why the
complaint seeks a refund of the tariffed rate:
“the Complaint—read in the light most favorable to the
plainiff—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
” Sia
Bilan nalts
17
from any injury other than paying the FUSC.”
Pet. App. 14a. Put simply, a plain reading of the complaint
makes clear that petitioner seeks the precise relief she now
disclaims. Moreover, even if the complaint by its terms does
not demand a refund of the tariffed rate, any damages
awarded to petitioner would effectively lower the tariffed rate
in a manner inconsistent with federal law. See, e.g., Pet. App.
lla; Hill, 364 F.3d at 1316; Wegoland Ltd. v. NYNEX Corp.,
27 F.3d 17, 21 (2d Cir. 1994); Taffett v. Southern Co., 967
F.2d 1483, 1499-92 (11th Cir.), cert denied, 506 U.S. 1021
(1992).
3. In his dissent, Judge Luttig agreed that, under Franchise
Tax Board, “a state law claim can ‘arise under’ federal law
.. ‘if a well-pleaded complaint establishe[s] ... that [the
plaintiff's] right to relief under state law necessarily depends
on resolution of a substantial question of federal law.” Pet.
Anp. 17a-18a (quoting Franchise Tax Bd., 463 U.S. at 27-28).
He also acknowledged that BellSouth’s tariffs “represent a
judgment by the government that the FUSC rates included
therein are reasonable,” and therefore “claims requiring the
court to second-guess the reasonableness of _ this
determination are properly said to require the court to resolve
a substantial federal question.” Jd. at 23a. Where Judge
Luttig parted company with the majority was his
interpretation of the complaint. In particular, he believed that
the complaint could be read as setting forth a “theory of
liability” that “does not require resort to any concept of
federal law.” Jd. at 26a. Resolution of the cispute between
the panel majority and the dissent on the factual question of
the meaning of the complaint manifestly does not require this
Court’s review. '4
'* To the extent that Judge Luttig (Pet. App. 23a-24a) also disagreed
with the majority’s holding that a state-law claim seeking a refund of a
18
lil. THERE IS NO CONFLICT AMONG ' THE
CIRCUITS OR OTHER GROUNDS
WARRANTING REVIEW OF THE FOURTH
CIRCUIT’S DETERMINATION THAT
PETITIONER’S CLAIM IS BARRED BY THE
FILED-RATE DOCTRINE.
Finally, petitioner also asks this Court to review the Fourth
Circuit’s determination that count A of her complaint 1s
barred by the filed-rate doctrine. She asserts that the decision
below conflicts with Central Office (Pet. 8, 15-16) and with
lower-court decisions (id. at 17-18). Petitioner’s asserted
justifications for this Court’s review are without merit, as the
Fourth Circuit’s opinion is wholly consistent with Central
Office and there is no conflict among the circuits about the
application of the filed-rate doctrine in circumstances such as
those here. Moreover, the Fourth Circuit’s holding that
petitioner’s claim was barred by the filed-rate doctrine is
manifestly correct.
A. The Fourth Circuit’s Decision Is Consistent With
Central Office.
- Petitioner first contends that the Fourth Circuit’s filed-rate
doctrine holding is inconsistent with Central Office. The
petition, however, is essentially devoid of explanation for why
petitioner believes that this is so. Her discussion consists of a
scant two paragraphs, one summarizing the facts of the case
and this Court’s holding, and the other containing a long
quotation from the Chief Justice’s concurring opinion in the
case. Pet. 15-16. In his concurring opinion, the Chief Justice
simply noted that the filed-rate doctrine “pre-empt[s] only
those suits that seek to alter the terms and conditions provided
for in the tanff.” Central Office, 524 U.S. at 229 (Rehnquist,
C.J., concurring).
federally tariffed rate would raise a federal question, the courts of appeals
uniformly disagree with him. See supra, at 15-16.
pS
19
Whatever petitioner’s argument might be, the decision
below is perfectly consistent with Central Office. In Central
Office, a reseller of long-distance telephone services sued
AT&T on a state-law breach of contract claim. 524 U.S. 4
216. According to the reseller, AT&T had promised it certain
service and billing options in addition to those set forth in
AT&T’s federal tariff. /d. at 220. This Court found the claim
barred by the filed-rate doctrine. The Court explained that,
under the doctrine, “‘the rate of the carrier duly filed is the
only lawful charge.” Jd. at 222 (quoting Louisville &
Nashville R. Co. v. Maxwell, 237 U.S. 94, 97 (1915)). “Thus,
even if a carrier intentionally misrepresents its rate and a
customer relies on the misrepresentation, the carrier cannot be
held to the promised rate if it conflicts with the published
tariff” Jd. The filed-rate doctrine applies whether the
customer seeks to vary the tariffed rate via a claim sounding
in contract or in tort. Jd. at 227.
The plaintiff in Central Office sought to avoid the filed-rate
doctrine by arguing that its claims related not to the rates
charged but to billing and the provisioning of services. Jd. at
223. Rejecting this argument, the Court noted that rates “do
not exist in isolation” and “have meaning only when one
knows the services to which they are attached.” Jd. The FCA
recognizes this reality by requiring the filed tariff to show not
only charges but also ““the classifications, practices, and
regulations affecting such charges” and by making it
unlawful to ““extend to any person any privileges or facilities
in such communication, or employ or enforce any
classifications, regulations, or practices affecting such
charges’ except those set forth in the tariff” Jd. at 223-24
(quoting 47 U.S.C. § 203). The Court found that “privileges”
barred by the FCA “come in many guises, and are not limited
to discounted rates.” /d. at 224. Thus, plaintiffs claims
relating to additional service and billing options, even though
couched in state-law terms and not directly challenging the
tariffed rate, in fact pertained to subjects specifically
20
addressed by the filed tanff and involved privileges not
included in the tanff. /d. at 224-26. The claims were
therefore barred.
Applying these very principles (see Pet. App. Ila), the
Fourth Circuit found petitioner’s claim barred by the filed-
rate doctrine. According to the court, petitioner’s complaint
sought a refund of a portion of the FUSC, which was a charge
included in BellSouth’s filed tanff. /d at 14a-l6a. The
Fourth Circuit also concluded that her claim, “if successful,
would require an award of damages that would have the effect
of imposing different rates upon different customers,” thereby
representing the very preference barred by the filed-rate
doctrine. /d. at lla. Nothing in these conclusions is even
remotely inconsistent with Central Office. Nor are they
inconsistent with the Chief Justice’s concurrence, which
recognized that the doctrine bars claims—such as
petitioner’s—that “seek to alter the terms and conditions
provided for in the tariff’° 524 U.S. at 229 (Rehnquist, C.J.,
concurring).
'> Petitioner asserts (Pet. 16) that the FUSC “is not a charge for any
service provided by BellSouth to that customer.” That claim is both
wrong and beside the point. It is incorrect because, although a separate
line item, it is a charge assessed on particular services BellSouth provides
to its customers, as set forth in its tariff. Her claim is irrelevant because,
as Central Office held, the filed-rate doctrine applies to all aspects of a
carrier’s tariff, not just its rate for a particular service. 524 U.S. at 223-26;
see also ICOM Holding, Inc. v. MCI Worldcom, Inc., 238 F.3d 219, 222
(2d Cir. 2001) (“In Central Office, the Court held that the filed-rate
doctrine bars state-law claims not only that pertain directly to the price of
telecommunications services subject to an FCC filing, but also state-law
claims that concern various nonprice aspects . . . .”) (emphasis in the
original); Telecom Int’l Am. Lid. v. AT&T Corp., 280 F.3d 175, 193 (2d
Cir. 2001) (“For purposes of the filed rate doctrine, discounted rates are
not the only discriminatory and illegal ‘privileges.’”’).
21
B. The Fourth Circuit’s Decision Does Not Conflict
With Other Court Of Appeals Decisions.
Petitioner asserts (Pet. 17) that the Fourth Circuit’s decision
conflicts with “a plethora of recent federal decisions holding
that the filed-rate doctrine does not preempt state law claims
for deception and misrepresentation which do not directly
attack the amount of a filed rate” (emphasis in the original).
But of the ten “recent federal decisions” cited by petitioner
that supposedly conflict with the decision below, eight are
district court cases. Of the two court of appeals cases cited by
petitioner, Freeman v. Burlington Broadcasters, Inc., supra,
unlike the present matter, involved “claims that concern
technical aspects of electronic transmissions,’ and simply
noted that the complete preemption doctrine was inapplicable
to state-law billing claims. 204 F.3d at 317. As explained
above, jurisdiction in this case tums not on complete
preemption, but on the existence of a substantial question of
federal law. Moreover, as both the panel majority and the
dissent agreed, the jurisdictional question is distinct from the
application of the filed-rate doctrine. See Pet. App. 12a n.8;
id. at 21a-22a (Luttig, J., dissenting).
The second court of appeals decision on which petitioner
relies is In re Long Distance Telecomms. Litig., 831 F.2d 627
(6th Cir. 1987)}—a decision that pre-dated Central Office by
more than a decade. Long Distance involved allegations that
a phone service provider misrepresented its rates as lower
than a competitor’s without informing customers that, unlike
its a it charged them for uncompleted calls, ring
time, and holding time—information not disclosed in the
carrier’s tariff. Jd. at 628. The filed-rate doctrine obviously
is irrelevant with respect to information not contained in the
provider’s tariff. Here, by contrast, petitioner’s claim attacks
ee
22
BellSouth’s FUSC, which is explicitly set forth and described
in the filed tariff. '°
In fact, the court of appeals cases decided after Central
Office consistently hold that a claim is barred by the filed-rate
doctrine, even where it does not directly attack a filed rate,
when an award of damages would effectively result in a
judicial determination of the reasonableness of that rate. In
Evanns v. AT&T Corp., 229 F.3d 837 (9th Cir. 2000), cert.
denied, 533 U.S. 911 (2001), for example, plaintiff brought a
state-law claim asserting that AT&T made misrepresentations
regarding the FUSC by failing to disclose that it was
“pass[ing] through” its own assessment to its customers and
that the charge was not required by the federal government.
Id. at 840-41. The Ninth Circuit found that “(tJhe filed-rate
doctrine bars any claim, whether couched in terms of federal
or state law, attacking . . . collection of the [FUSC]
assessment in compliance with the terms of the filed tariffs.”
Id. at 841 (emphasis in onginal). Citing Central Office, the
Evanns court held that since the FUSC was contained in the
tariff, and plaintiff was charged with notice of the tariff,'’
plaintiffs claim that AT&T had an obligation to him beyond
that set out in the filed tariff, such as disclosing that the FUSC
was a pass-through charge, sought a “privilege” not provided
™ Despite the importance petitioner places on it (Pet. 18), State ex rel.
Nixon v. Nextel West Corp., 248 F. Supp. 2d 885 (E.D. Mb. 2003), is
wholly inapposite. That district court case involved a suit by the Missouri
attorney general against two cellular telephone service providers for
deceptive advertising practices. /d. at 886. Unlike the services at issue
here, cellular services are not governed by a federal tariff, see 47 C.F.R.
§ 20.15(ck Orloff v. FCC, 352 F.3d 415, 418-19 (D.C. Cir. 2003), cert.
denied, 124 S. Ct. 290 (2004), and the district court’s decision therefore
does not involve the filed-rate doctrine.
F oes - sos =:
'” Customers are conclusively presumed’” to have constructive
knowledge of the terms of the filed tariff under which they receive
telephone service. Fax Telecommunicaciones, 138 F.3d at 489 (quoting
Kansas City S. Ry. Co. v. Carl, 227 U.S. 639, 653 (1913)).
23
to other AT&T customers and thus was barred as
discriminatory pursuant to the filed-rate doctrine. Jd. at 841
& n.21.
The Eleventh Circuit recently reached a similar holding in
Hill, supra. In Hill, plaintiff brought claims seeking damages
for BellSouth’s alleged misrepresentations of the FUSC to its
customers. 364 F.3d at 1312. The court found the claims
violated the non-discrimination principles of the filed-rate
doctrine. The court reasoned that even though plaintiffs
claims did not attack the filed rate in so many words, she
sought “‘recovery of BellSouth’s undisclosed charges in
excess of its contributions to the [USF].’” Jd. at 1316. Such
an award of damages would in effect retroactively reduce the
rate paid by plaintiff for telephone services to me below that
paid by other BellSouth customers. Echoing Evanns and
Central Office, the court found that the FUSC was part of the
filed tanff, plaintiff was charged with notice of it, and
allowing plaintiff to recover damages on a claim _ that
BellSouth had a disclosure obligation beyond the disclosures
already made in the tariff would award plaintiff the
discriminatory “privilege” of receiving a discounted rate for
telephone services compared to other BellSouth customers.
See id. at 1316-17. Thus, even though the claims in effect
challenged BellSouth’s representations of the FUSC rather
than the FUSC itself, granting plaintiff relief would
effectively result in a finding that the original tariff rate was
unreasonable, which is impermissible under the _filed-rate
doctrine. /d. at 1317.'*
'8 See also, e.g., Boomer v. AT&T Corp., 309 F.3d 404, 420 (7th Cir.
2002) (finding state-law claims challenging arbitration clause barred by
filed-rate doctrine where some customers would be bound by clause and
some would not be); Fax Telecommunicaciones, 138 F.3d at 491 (claim
for damages based on misrepresentation of rates is barred by filed-rate
doctrine, because such an award would lead to discrimination among
customers and improperly undermine the regulatory authority of the
24
C. Petitioner’s Claim Is Barred By The Filed-Rate
Doctrine.
The Fourth Circuit correctly held that petitioner’s claim is
barred by the filed-rate doctrine. As the cases discussed
above demonstrate (supra, at 22-23), any damages petitioner
might recover necessarily would have the effect of reducing
the tariffed rate petitioner paid for tariffed services, thereby
constituting the very preference that the filed-rate doctrine
prohibits. | Moreover, BellSouth’s tariff discusses in detail
how BellSouth calculated its obligations to the USF and how
it arrived at the amount of the FUSC charged to its customers.
4th Cir. J.A. at 165-66. Petitioner’s claim that she was
deceived fails under the filed-rate doctrine because customers
are conclusively presumed to know the contents of the tariff.'?
See Fax Telecommunicaciones, 138 F.3d at 489; Marco
Supply Co. v. AT&T Communications, Inc., 875 F.2d 434,
436 (4th Cir. 1989).
Petitioner seeks to avoid the Fourth Circuit’s holding by
suggesting three reasons why her claim would not usurp the
FCC), Marcus, 138 F.3d at 51, 60-63 (claims against long-distance carrier
for false and misleading billing practices in not disclosing that it rounded
up length of calls to next full minute were barred by filed-rate doctrine,
because monetary damages requested would have the effect of challenging
the filed rate).
'? The FCA’s savings clause does not exempt petitioner’s claim from
the filed-rate doctrine. That provision states that “[n]Jothing 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. This Court has found that
the savings clause “preserves only those rights that are not inconsistent
with the statutory filed-tariff requirements.” Central Office, 524 US. at
227. Thus, this Court explained that claims “directly conflict{ing] with
the tariff . . . cannot be ‘saved’ under § 414.” /d.; see also Evanns, 229
F.3d at 840; Cahnmann, 133 F.3d at 488.
nth as reteiltioaes
25
FCC’s authority.2° Relying on the FCC’s December 2002
Order, she first claims that “[t]he FCC has already determined
that USF mark-ups such as those imposed by BellSouth are
unreasonable.” Pet. 19; see also id. at 5, 14. This assertion is
wrong. In the December 2002 Order, the FCC did not find
that mark-ups on USF charges were “unreasonable” under 47
U.S.C. § 201(b). To the contrary, the FCC explained that it
decided to prohibit mark-ups prospectively “in light of the
modifications to the contribution methodology adopted”
elsewhere in the December 2002 Order, and it specifically
noted “the flexibility provided under our current rules” with
respect to mark-ups. December 2002 Order, $45, 48.
Moreover, petitioner’s implication from the text of the order
is contradicted by the fact that the FCC determined that the
prohibition of mark-ups would take effect on April 1, 2003,
almost five months after the December 2002 Order was
issued. /d. It is inconceivable that the FCC would have
permitted carriers to continue for five months a practice it
“necessarily” found to be “unreasonable” and, as a result, a
violation of § 201{b). Pet. 5.
Second, petitioner suggests that the FCC has indicated that
“the filed-rate doctrine does not apply to [a carrier’s] public
disclosure requirements because those requirements are not
part of the filed rate.” Pet. 22 (citing Jn re Policy and Rules
Concerning the Interstate, Interexchange Marketplace, 14
F.C.C.R. 6004, 417 (Mar. 31, 1999) (“March 1999 Order”)).
?° Petitioner also suggests that the Fourth Circuit's application of the
filed-rate doctrine leaves consumers without a remedy for claims of
deception by carriers. Pet. 7. Federal law, however, provides an ample
remedy for carrier's unjust and unreasonable acts, including those related
to disclosure and billing practices. See 47 U.S.C. §§ 206-207. In any
event, as this Court has recognized, “the filed-rate doctrine may seem
harsh in some circumstances,” but “‘it embodies the policy which has
been adopted by Congress.’” Central Office, 524 U.S. at 222-23 (quoting
Maxwell, 237 U.S. at 97).
26
Petitioner, however, misunderstands the FCC order on which
she relies. Contrary to her suggestion, “public disclosure
requirements” as used in that order refers not to information
contained in tanffs filed with the FCC, but to documents filed
by carriers who no longer file tariffs after the FCC
“detariffed” long-distance service. See March 1999 Order,
q§| 1-3 & n.2. Moreover, petitioner’s argument that the filed-
rate doctrine applies only to “the amount to be charged, not
the ancillary disclosures necessary to prevent deception of
consumers” (Pet. 14) is refuted by the central holding of
Central Office. See 524 U.S. at 221-26; see also ICOM, 238
F.3d at 222.
Third, petitioner implies that the FCC has determined that
BellSouth’s label for the charge it imposes on customers to
recover its USF contributions —‘Federal Universal Service
Charge’—1is misleading. Pet. 21-22. To the contrary, the
FCC specifically approved this language. The FCC stated:
“We tentatively conclude that the following labels would be
appropriate: ... ‘Federal Universal Service’ to describe line
items seeking to recover from customers carriers’ universal
service contributions.” Truthm-Billing Order, 4972. The
FCC authorities cited by petitioner contain only the agency’s
general standards, not a ruling on the language used by
BellSouth.
CONCLUSION
For the foregoing reasons, the petition should be denied.
ASHLEY B. WATSON
BELLSOUTH CORPORATION
1155 Peachtree Street, N.E.
Suite 1700
Atlanta, GA 30309
(404) 249-2720
27
Respectfully submitted,
JAMES H. KELLY, JR.
ADAM H. CHARNES
Counsel of Record
RICHARD S. GOTTLIEB
JAMES J. HEFFERAN, JR.
KILPATRICK STOCKTON LLP
1001 West Fourth Street
Winston-Salem, NC 27101
(336) 607-7300
Counsel for Respondent BellSouth Telecommunications, Inc.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.