The opinion of the court was delivered by: JOAN GOTTSCHALL, District Judge
MEMORANDUM OPINION AND ORDER
Before this court is plaintiff Susan Schad's motion to remand
the present case to the Circuit Court of Cook County, Illinois.
For the reasons set forth herein, Schad's motion is granted.
Defendant Z-Tel Communications, Inc. ("Z-Tel") provides
telecommunications services for businesses and individuals.
Beginning in October 2002, Susan Schad, a resident of Cook
County, Illinois, subscribed to Z-Tel's local and long-distance
telephone services. On May 13, 2004, Schad filed a putative class
action against Z-Tel in Illinois state court, Schad v. Z-Tel
Communications Inc., No. 04 CH 07882 (Cir. Ct. Cook Cty. 2004),
alleging that Z-Tel overcharged its customers for
telecommunications services by deceptively labeling various
line-item charges appearing on its phone bills as being
government-mandated when they were not. Specifically, Schad
alleges that Z-Tel deceptively billed her and others by means of
the following line-item charges: an "E911 Tax," a "Utility Users
Tax," a "Communications Service Tax," an "Interstate Recovery
Fee" and a "Federal Regulatory Compliance Fee." Schad's state
court complaint pled one cause of action, violation of the
Illinois Consumer Fraud and Deceptive Business Practices Act,
815 ILCS 505/1, et seq.
Z-Tel subsequently removed the action to this court, claiming
that Schad's fraud claim is actually a direct challenge to Z-Tel's rates (a federal claim),
and that even on its face the claim is preempted by the Federal
Communications Act ("FCA"), 47 U.S.C. § 151 et seq.,
regulations promulgated under the FCA and accompanying federal
common law. Z-Tel also maintains that even if Schad's complaint
states a non-preempted state law claim, her complaint would
require the court to adjudicate substantial questions of federal
law, making supplemental jurisdiction over the state law claim
appropriate under 28 U.S.C. § 1367(a). Schad responds that her
complaint sounds only in state law and has not been preempted,
and asks this court to remand her case to the Circuit Court of
Cook County and award her attorneys fees and costs arising out of
Z-Tel's alleged wrongful removal pursuant to 28 U.S.C. § 1447(c).
28 U.S.C. § 1441 provides that "any civil action brought in a
State court of which the district courts of the United States
have original jurisdiction, may be removed by the defendant or
the defendants, to the district court of the United States for
the district and division embracing the place where such action
is pending." 28 U.S.C. § 1441(a). Removal in this case is proper
if the court has "federal question" jurisdiction, meaning that
the case "aris[es] under the Constitution, laws, or treaties of
the United States." 28 U.S.C. § 1331. The party seeking removal
carries the burden of establishing jurisdiction. Shaw v. Dow
Brands, Inc., 994 F.3d 364, 366 (7th Cir. 1993). When deciding
whether a case warrants removal, trial courts should presume that
the plaintiff chose a valid and proper forum and resolve all
doubts about jurisdiction in favor of remand. Doe v.
Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993).
Z-Tel first argues that Schad's claim is a direct challenge to
Z-Tel's rates that is completely preempted by federal law.*fn1 Removal of a case on the basis
of federal question jurisdiction is appropriate "only when the
plaintiff's well-pleaded complaint raises issues of federal law."
Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987).
In most cases, a plaintiff may avoid the federal court by
choosing to plead only state law claims. Bastien v. AT&T
Wireless Services, Inc., 205 F.3d 983, 986 (7th Cir. 2000).
Although a defendant may raise federal preemption as defense to a
state law action, it is usually not a proper basis for removal
from state court. Taylor, 481 U.S. at 63.
In certain "extraordinary" cases, however, courts have found
that Congress intended to provide an exclusive federal remedy for
a particular claim, thus converting "an ordinary state common law
complaint into one stating a federal claim for purposes of the
well-pleaded complaint rule." Id. at 65. The Seventh Circuit
has held that Sections 201(b) and 202(a) of the FCA demonstrate
congressional intent to preempt state law claims relating to
rates and terms and conditions of long distance
telecommunications service. Boomer v. AT&T Corp., 309 F.3d 404
418 (7th Cir. 2002). Section 201(b) of the FCA provides:
All charges, practices, classifications, and
regulations for and in connection with such
communication service, shall be just and reasonable,
and any such charge, practice, classification or
regulation that is unjust or unreasonable is declared
to be unlawful.
47 U.S.C. § 201(b). Section 202(a) states:
It shall be unlawful for any common carrier to make
any unjust or unreasonable discrimination in charges,
practices, classifications, regulations, facilities,
or services for or in connection with like communication service,
directly or indirectly, by any means or device, or to
make or give any undue or unreasonable preference of
advantage to any particular person, class of persons,
or locality or to subject any particular person,
class of persons, or locality to any undue or
unreasonable prejudice or disadvantage.
47 U.S.C. § 202(a). Although the Seventh Circuit recognizes a
potential role for state law in actions against long distance
carriers, state law "cannot operate to invalidate the rates,
terms or conditions of a long-distance service contract." Id.
In the similar context of wireless telecommunications services,
the Seventh Circuit has found that challenges to wireless
telecommunications rates are completely preempted and upheld
denial of remand of state law fraud claims against wireless
service providers that were determined to be rate challenges.
Bastien, 205 F.3d at 987. Z-Tel cites two cases in this
district denying remand to Illinois state court for similar
billing fraud claims against wireless service providers. See
Franczyk v. Cingular Wireless, LLC, No. 03 C 6473, 2004 WL
178395 (N.D. Ill. Jan. 21, 2004) (ICFA claim regarding a
"Regulatory Cost Recovery Fee" line-item on a bill); Alport v.
Sprint Corp., No. 03 C 6246, 2003 WL 22872134 (N.D. Ill. Dec. 3,
2003) (ICFA challenge to "Federal E911" line item). Z-Tel
maintains that Schad's challenge to Z-Tel's line-item charges,
like those in Franczyk and Alport, should be characterized as
a rate challenge and therefore preempted.
Although the reasoning in Franczyk and Alport appears to
support the denial of remand in this case, subsequent case law
developments militate against a finding of complete preemption.
First, after these cases were decided, the Seventh Circuit
clarified its holding in Bastien. In Fedor v. Cingular
Wireless Corp., 355 F.3d 1069 (7th Cir. 2004), the Seventh
Circuit rejected the argument that "any claims related to the
billing amount are automatically preempted." Fedor,
355 F.3d at 1074. Rather, courts "must examine whether the claims require the
state court to assess the reasonableness of the rates charged, or
impact market entry." Id. At issue in Fedor were state law claims which alleged that wireless telecommunications provider
Cingular had inappropriately attributed calls made in one billing
period to a different billing period. Id. The Fedor court
concluded that the claims would require the state law court to
refer to the rates charged, but would not require the court to
assess the reasonableness of the rates. Id. Fedor relied in
part on the Sixth Circuit's decision in Long Distance
Telecommunications Litig., 831 F.2d 627 (6th Cir. 1987), which
held that state law fraud claims against long-distance telephone
companies for failing to inform customers of the practice of
billing for uncompleted calls were not preempted. Id. at 1072.
Second, after the parties finished briefing the present remand
motion, Franczyk and Alport were ordered remanded to Illinois
state court as part of a set of cases transferred to the Judicial
Panel on Multidistrict Litigation. See, generally, In re
Wireless Telephone Federal Cost Recovery Fees Litigation, MDL
1559, ___ F. Supp. 2d ___, 2004 WL 2496052 (W.D. Mo. 2004). The
MDL transferee court specifically considered the facts of
Franczyk and Alport under Seventh Circuit law in light of
Fedor, and found that the plaintiffs in those cases were not
challenging the reasonableness of the disputed fees, but rather
the defendants' description and placement of fees on their bills.
Id. at *11. Accordingly, that court held that the line-item
disputes in Franczyk and Alport were not rate challenges
warranting preemption. Id.
Z-Tel responds that Fedor is distinguishable in that wireless
telecommunications providers are exempt from certain provisions
of Federal Communications Commission ("FCC") truth-in-billing
requirements generally applicable to common carriers. See
47 C.F.R. §§ 64.2400, 64.2401. However, the FCC appears to have made
clear that at least some federal truth-in-billing requirements
are applicable to both wireline and wireless carriers. In re
Truth in Billing Format, 14 F.C.C.R. 7492, ¶ 13 (1999) ("We
believe that the broad principles we adopt to promote
truth-in-billing should apply to all telecommunications carriers,
both wireline and wireless. . . . Like wireline carriers, wireless carriers also should be fair, clear, and truthful in
their billing practices.") Moreover, as Z-Tel concedes, the very
regulation it ...