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Kellerman v. Mci Telecommunications Corp.





Appeal from the Circuit Court of Cook County; the Hon. Albert Green, Judge, presiding.


In four separate but now consolidated actions, plaintiffs brought State law challenges to certain advertising practices of MCI Telecommunications Corporation (MCI), alleging violations of Illinois' Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1983, ch. 121 1/2, par. 261 et seq.), the Uniform Deceptive Trade Practices Act (Ill. Rev. Stat. 1983, ch. 121 1/2, par. 311 et seq.), common law fraud, and breach of contract. MCI moved to stay or dismiss the actions pursuant to section 2-619 of the Illinois Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2-619), arguing the actions were preempted by Federal law and, in the alternative, that the trial court should defer to the Federal Communications Commission or to ongoing Federal cases "between the same parties for the same cause." The trial court denied the motion to dismiss on Federal preemption and primary jurisdiction grounds and refused to stay proceedings. MCI perfected an interlocutory appeal from the denial of the stay order pursuant to Supreme Court Rule 307. (87 Ill.2d R. 307.) MCI also sought to have the preemption issue certified for review pursuant to Supreme Court Rule 308 but the trial court denied this motion. (87 Ill.2d R. 308.) We affirm.

The record reveals that all plaintiffs are subscribers of MCI's long-distance telephone service. The complaints allege that defendant engaged in a practice of billing its customers for long-distance calls which were initiated but never completed because the recipient failed to answer or the caller aborted the call before it was completed. The complaints further allege that defendant billed its customers an extra minute or more in additional to actual communication time where the phone rang six or more times before it was answered. Finally, one of the complaints alleges that MCI customers must pay a local call charge to the local telephone company servicing the location in addition to the charges paid to MCI for a long-distance call and that MCI lacked the "capacity" to provide service of comparable quality to AT&T. Plaintiffs do not challenge defendant's practice of imposing these charges or their reasonableness or amount. Rather, plaintiffs allege that MCI's failure to disclose these billing practices, when coupled with the fact of a longstanding industry practice of not imposing such charges, amounts to a fraudulent misrepresentation of material fact sounding in tort as well as a violation of Illinois' Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1983, ch. 121 1/2, par. 261 et seq.). Plaintiffs seek damages and an accounting on behalf of themselves and others similarly situated.

• 1 A threshold issue of appellate jurisdiction and scope of review is raised by this interlocutory appeal. Case law has clearly established that a denial of a motion to stay is appealable as of right under Supreme Court Rule 307(a)(1). (Metropolitan Sanitary District v. United States Steel Corp. (1975), 30 Ill. App.3d 360, 361, 332 N.E.2d 426.) However, in an interlocutory appeal, the scope of review is normally limited to an examination of whether or not the trial court abused its discretion in granting or refusing the requested interlocutory relief. (See Peoples Gas Light & Coke Co. v. City of Chicago (1983), 117 Ill. App.3d 353, 358, 453 N.E.2d 740.) MCI contends that the issue of Federal preemption of these State law claims is properly before us even though the issue was not certified for review by the trial court pursuant to Supreme Court Rule 308. We agree, finding the resolution of this issue controlled by the result in May Department Stores Co. v. Teamsters Union Local No. 743 (1976), 64 Ill.2d 153, 355 N.E.2d 7. There, the trial court had issued a temporary injunction and, as in the present case, the defendant perfected an interlocutory appeal arguing that Federal law "preempted the authority of the circuit court * * * to issue an injunction." (64 Ill.2d 153, 157.) Our supreme court found that the question of preemption constituted a challenge to the jurisdiction of the trial court to enter the order appealed from and was therefore properly addressed on interlocutory review. Similarly, defendant's preemption argument in the present appeal challenges the trial court's jurisdiction to hear the causes pending before it and may therefore be properly considered on interlocutory appeal from a trial court order refusing to stay its own proceedings. (Cf. Eastern v. Canty (1979), 75 Ill.2d 566, 389 N.E.2d 1160 (where the trial court's jurisdiction to proceed in a case after a petition for removal was filed in Federal district court was addressed on appeal).) Accordingly, we reject plaintiffs' contentions to the contrary and deny their motions to strike those portions of defendant's brief addressing the Federal preemption issue.

• 2 It is well established that there are three separate and independent grounds for Federal preemption of State law:

"[F]irst, when Congress, in enacting a federal statute, has expressed a clear intent to preempt state law [citation]; second, when it is clear, despite the absence of explicit pre-emptive language, that Congress has intended, by legislating comprehensively, to occupy an entire field of regulation and has thereby `left no room for the States to supplement' federal law [citation]; and, finally, when compliance with both state and federal law is impossible [citation] or when the state law `stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'" (Capital Cities Cable, Inc. v. Crisp (1984), 467 U.S. 691, 699, 81 L.Ed.2d 580, 588-89, 104 S.Ct. 2694, 2700.)

MCI bases its preemption argument on the second ground, where Congress has intended, by legislating comprehensively, to occupy an entire field of regulation. However, little aid can be derived from the vague and illusory but often repeated formula that Congress "by occupying the field" has excluded from it all State legislation. Every act of Congress may occupy some field to a greater or lesser extent, but we must know the boundaries of that field before we can say it has precluded State regulation.

To that end, we must first examine the provisions of the Federal statute claiming to preempt State regulation. Congress enacted the Federal Communications Act of 1934 (47 U.S.C. § 151 et seq. (1982)) "[f]or the purpose of regulating interstate and foreign commerce in communication by wire and radio so as to make available * * * a rapid efficient * * * communication service with adequate facilities at reasonable charges." (47 U.S.C. § 151 (1982).) The Communications Act specifies that MCI's "charges, practices, classifications, and regulations for and in connection with [its] communication service, shall be just and reasonable." (47 U.S.C. § 201(b) (1982).) The Communications Act also establishes a procedure under which complaints arising under the Act may be brought before the Federal Communications Commission (FCC) and adjudicated or, in the alternative, an action may be filed in Federal district court. (47 U.S.C. § 206 through 209 (1982).) Moreover, the Act confers regulatory jurisdiction over tariffs on the FCC. (47 U.S.C. § 203 (1982).) Finally, section 414 of the Act provides that "[n]othing 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 (1982).

Defendant cites Ivy Broadcasting Co. v. American Telephone & Telegraph Co. (2d Cir. 1968), 391 F.2d 486, for the proposition that "the establishment of this broad scheme for the regulation of interstate service by communications carriers indicates an intent on the part of Congress to occupy the field to the exclusion of state law." (391 F.2d 468, 490.) However, it is clear that the Communications Act does not preempt every State law cause of action which can be brought against a carrier regulated by the FCC. (See Ashley v. Southwestern Bell Telephone Co. (W.D. Tex. 1976), 410 F. Supp. 1389.) For example, even MCI concedes that a party may sue it in State court for injuries negligently caused by the actions of one of its truck drivers. Moreover, the savings clause contained in section 414 of the Act would be rendered meaningless if all actions against carriers were preempted. The problem, then, is not resolved by citing cases which hold that Congress has "occupied the field." It is the precise contours of that field which must be determined.

We believe the facts surrounding Ivy Broadcasting, a case heavily relied upon by defendant, are particularly instructive. There, plaintiff brought a State law action against several telephone companies for negligence and breach of contract in the rendition of interstate telephone service. Specifically, plaintiff, a broadcasting network of six radio stations, alleged that it had engaged the defendant telephone companies to provide telephone hookups used in connection with the plaintiff's broadcasts of several football games and political conventions. The complaint further alleged grossly negligent and unreasonably delayed installation and operation of these special telephone lines, resulting in noisy broadcasts, interruptions and the transmission of wrong material. After thoroughly examining prior precedent to determine whether State law claims could be brought against the defendant communications carriers, the court held:

"These cases lead us to conclude that questions concerning the duties, charges and liabilities of telegraph or telephone companies with respect to interstate communications service are to be governed solely by federal law and that the states are precluded from acting in this area. Where neither the Communications Act itself nor the tariffs filed pursuant to the Act deals with a particular question, the courts are to apply a uniform rule of federal common law." (Emphasis added.) (391 F.2d 486, 491.)

Thus, it is only a carrier's duties and liabilities with respect to the rendition of interstate communications service that are governed excusively by Federal law. The rationale advanced in Ivy Broadcasting was that, in order to implement the congressional purpose of uniform rates and services, nationwide standards for the actual rendition of telecommunications service were necessary and could only be achieved through the application of uniform Federal law to these disputes. 391 F.2d 486, 491.

The other cases cited by defendant support our conclusion above. In virtually every case, the plaintiff brought a State law action against a communications carrier complaining of some practice engaged in by the carrier with respect to the rendition of communications service. (Western Union Telegraph Co. v. Boegli (1920), 251 U.S. 315, 64 L.Ed. 281, 40 S.Ct. 167 (negligent failure to promptly deliver a telegram); Postal Telegraph-Cable Co. v. Warren Godwin Lumber Co. (1919), 251 U.S. 27, 64 L.Ed. 118, 40 S.Ct. 69 (negligence with respect to unrepeated messages); O'Brien v. Western Union Telegraph Co. (1st Cir. 1940), 113 F.2d 539 (transmission of a libelous message); Komatz Construction, Inc. v. Western Union Telegraph Co. (1971), 186 N.W.2d 691, cert. denied (1971), 404 U.S. 856, 30 L.Ed.2d 98, 92 S.Ct. 102 (delayed transmission of a telegram).) In each instance, the court found that the application of State law to these types of disputes would result in carriers having different obligations to their customers in different States with respect to the rendition of communications service. In effect, allowing these State law claims would result in individual States controlling the manner in which communications service would be provided to the public. All the courts addressing this issue held that the need for uniform service standards required rejection of these State law claims based upon Federal preemption.

• 3 In the present cases, the question of Federal preemption is then reduced to an examination of whether or not plaintiffs' lawsuits seek to determine MCI's duties and liabilities with respect to rendition of interstate telecommunications service. Here, we do not believe plaintiffs' State law claims seek to regulate the manner in which defendant provides communications service to the public. Rather, they seek to regulate defendant's advertising practices in the solicitation of customers and ask that damages be awarded for past abuses. Nowhere in plaintiffs' complaints do they attack the lawfulness of MCI's billing practices per se. Indeed, such an attack on State law grounds would be preempted by Federal law under Ivy Broadcasting as an attempt to regulate a common carrier in the rendition of interstate communications service. Specifically conceding, for purposes of this litigation, that MCI may render service in the manner that it does, plaintiffs' complaints address MCI's practice of favorably comparing its rates to those of American Telephone & Telegraph (AT&T) through various advertising media, ...

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