FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
KENNITH SHROYER,
Plaintiff-Appellant, No. 08-55028
v.
D.C. No.
CV-06-01792-R
NEW CINGULAR WIRELESS SERVICES,
INC.; AT&T CORPORATION, OPINION
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Manuel L. Real, District Judge, Presiding
Argued and Submitted
April 13, 2009—Pasadena, California
Filed May 26, 2010
Before: William C. Canby, Jr., Johnnie B. Rawlinson and
N. Randy Smith, Circuit Judges.
Opinion by Judge Canby
7605
7608 SHROYER v. NEW CINGULAR WIRELESS SERVICES
COUNSEL
Robert K. Friedl, Kirtland & Packard LLP, El Segundo, Cali-
fornia; William R. Weinstein, Sanford, Wittels & Heisler,
LLP, New York, New York; for the plaintiff-appellant.
Steven P. Rice, Crowell & Moring LLP, Irvine, California, for
the defendants-appellees.
OPINION
CANBY, Circuit Judge:
Appellant Kennith Shroyer filed a class action against New
SHROYER v. NEW CINGULAR WIRELESS SERVICES 7609
Cingular Wireless Services, Inc., a corporation resulting from
the merger of AT&T Wireless Services, Inc., and Cingular
Wireless Corporation. At the time of the merger in 2004,
Shroyer had a contract for wireless telephone services with
AT&T. He alleged that, immediately following the merger,
his cellular phone service was severely degraded. He claimed
that New Cingular disregarded its obligations under the exist-
ing AT&T contract by failing to provide adequate service
coverage and requiring Shroyer to sign a different contract
with New Cingular if he desired to get the service that AT&T
had contracted to provide under the first agreement. He also
claimed that New Cingular misrepresented and omitted key
facts about the consequence of the merger to the Federal
Communications Commission (“FCC”), and that the FCC
would not have approved the merger if it had known that New
Cingular planned to ignore the obligations of existing AT&T
contracts. On these allegations, he made claims for 1) breach
of contract; 2) fraud and deceit; 3) unfair competition under
Cal. Bus. & Prof. Code §§ 17200-210; and 4) a demand for
a declaratory judgment.1
The district court granted New Cingular’s 12(b)(6) motion
to dismiss each of the claims, and Shroyer appeals. We affirm
the denial of the declaratory judgment and the dismissal of the
fraud and unfair competition claims, but we reverse the dis-
missal of the breach of contract claim.
I. Federal Preemption
[1] New Cingular argues that Shroyer’s claims are pre-
empted by 47 U.S.C. § 332(c)(3)(A) because the claims chal-
lenge the quality and rates of service, and those areas are
reserved exclusively to the FCC. We reject this contention
with regard to Shroyer’s breach of contract claim and his mis-
representation claim. In the main, Shroyer is challenging New
1
Shroyer had made additional claims against New Cingular, but did not
include them in his first amended complaint and does not urge them here.
7610 SHROYER v. NEW CINGULAR WIRELESS SERVICES
Cingular’s rates and quality of service only insofar as they are
contrary to the ones to which he had contractual rights or
were misrepresented; he is not asking the court to rule on the
reasonableness of a particular rate, and the quality of service
is an issue only as it relates to, or was misrepresented as satis-
fying, the contract on which he sues. The claims are state law
claims that do not tread on the FCC’s exclusive power to reg-
ulate rates and market entry. To the degree, however, that
Shroyer’s unfair competition claim alleges unfairness result-
ing from the merger itself or its approval by the FCC, it is pre-
empted.
Section 332 provides: “[N]o State or local government shall
have any authority to regulate the entry of or the rates charged
by any commercial mobile service or any private mobile ser-
vice, except that this paragraph shall not prohibit a State from
regulating the other terms and conditions of commercial
mobile services.” 47 U.S.C. § 332(c)(3)(A). The FCC has
stated that § 332 does not prevent states from deciding
“whether under state law, there was a difference between
promise and performance” of “the terms and conditions of a
contract.” In re Wireless Consumers Alliance, Inc., 15
F.C.C.R. 17021, 17035 (2000). In that opinion, the FCC “re-
ject[ed] arguments by [cellular phone service providers] that
non-disclosure and consumer fraud claims are in fact dis-
guised attacks on the reasonableness of the rate charged for
the service.”2 Id. New Cingular would have this court rely on
Bastien v. AT&T Wireless Servs., Inc., 205 F.3d 983 (7th Cir.
2000), to hold that the substance of Shroyer’s claims is really
an attack on the post-merger service, and that deciding the
case would necessarily involve regulating the modes and con-
ditions under which New Cingular may begin offering ser-
2
Because the FCC is authorized to issue binding legal rules, an order
issued under that authority is entitled to Chevron deference. Metrophones
Telecomms., Inc. v. Global Crossing Telecomms., Inc., 423 F.3d 1056,
1065-66 (9th Cir. 2005).
SHROYER v. NEW CINGULAR WIRELESS SERVICES 7611
vice. But the FCC rejected this per se argument in In re
Wireless Consumers Alliance, and so do we.3
Bastien dealt with a pre-merger AT&T wireless consumer
who was dissatisfied with the signal he was receiving on his
cellular phone. He alleged that AT&T breached its contract
and violated a state consumer protection statute by failing to
build sufficient cell towers and misrepresenting the quality of
its services. Bastien, 205 F.3d at 985. The Seventh Circuit
held that although some of the claims sounded in traditional
state law, they were all “founded on the fact that AT&T Wire-
less had not built more towers and more fully developed its
network at the time Bastien tried to use the system.” Id. at
989. The FCC has interpreted Bastien to hold that it is the
substance of the claim, not its form, that determines preemp-
tion. In re Wireless Consumers Alliance, Inc., 15 F.C.C.R. at
17036-37. New Cingular correctly asserts that in both that
case and here, the plaintiffs challenged the level of service
they received as wireless customers. But the important differ-
ence lies in the theories on which they based their challenges.
The plaintiff in Bastien was asking the court to decide the req-
uisite number of cellular towers needed to support service.
Here, on the other hand, Shroyer is asking the court to decide
whether New Cingular has performed its promise in a contract
and whether it misrepresented the level of service it would
provide. The latter inquiries are ones that § 332, as interpreted
in Wireless, leaves open to state adjudication.4
3
New Cingular attempts to distinguish In re Wireless Consumers Alli-
ance by observing that there the FCC was deciding whether an award of
damages based on state law breach of contract and fraud claims was pre-
empted by § 332. Here, New Cingular argues, we are confronted with
whether the contract and fraud claims themselves are preempted. This dif-
ference does not affect our conclusion; if damages are not preempted, nei-
ther are the claims under which they are awarded.
4
New Cingular relies on Aubrey v. Ameritech Mobile Commc’ns., Inc.,
No. 00-75080, 2002 WL 32521813 (E.D. Mich. 2002), which held a claim
of breach of contract similar to Shroyer’s preempted because “a decision
7612 SHROYER v. NEW CINGULAR WIRELESS SERVICES
Similarly, a court does not have to determine the reason-
ableness of rates to decide Shroyer’s fraud claim, for “[a] car-
rier may charge whatever price it wishes and provide the level
of service it wishes, as long as it does not misrepresent either
the price or the quality of service.” In re Wireless Consumers
Alliance, Inc., 15 F.C.C.R. at 17035. Consequently, the fraud
claim, like Shroyer’s other claims, is not preempted by § 332.
Furthermore, Bastien dealt with market entry, which the
states are expressly excluded from regulating by § 332.
Shroyer’s breach of contract claim does not. Shroyer claims
that New Cingular broke the terms of the contract when the
service, support, and cellular phone reception significantly
decreased. This breach of contract claim does not depend on
whether New Cingular’s service is above or below the proper
standard for cell phone service; its claim is that the level of
service is other than that promised in Shroyer’s cell phone
contract. Shroyer may or may not be able to prove his breach
of contract claim, but the claim as stated is not preempted by
§ 332.5 Although the Bastien panel uses broad language to
describe the type of claims that would be preempted, it is not
persuasive here because Bastien relied on authority that has
been expressly rejected by the FCC.
The Bastien panel stated that “[t]here can be no doubt that
Congress intended complete preemption” as to suits regarding
rates and entry. Bastien, 205 F.3d at 986-87. “[A] complaint
that service quality is poor is really an attack on the rates
charged for the service . . . . The act makes the FCC responsi-
in the Plaintiff’s favor would require a determination as to the type and
adequacy of the technology that a wireless service provider . . . must use
in order to enter or serve a particular market.” Id. at *3. We do not accept
Aubrey’s general conclusion. Shroyer can succeed on his breach of con-
tract claim if he can show that New Cingular did not perform their prom-
ises, regardless of the relative adequacy of various technologies.
5
His misrepresentation claim also is not preempted, but as we will
explain, there are other deficiencies that support its dismissal.
SHROYER v. NEW CINGULAR WIRELESS SERVICES 7613
ble for determining the number, placement and operation of
the cellular towers and other infrastructure.” Id. at 988. Bas-
tien cites the Supreme Court case of AT&T Co. v. Central
Office Telephone, 524 U.S. 214, 223 (1998) as authority for
the proposition that “most consumer complaints will involve
the rates charged by telephone companies or their quality of
service.” Bastien, 205 F.3d at 988. However, Central Office
Telephone found preemption based on the federal filed rate
requirements of the Communications Act; the FCC has stated
that the filed rate doctrine does not apply to § 332(c)(3) pre-
emption questions. 15 F.C.C.R. at 17029.
Rather, the FCC ruled that the award of monetary damages
based on state contract or tort causes of action is not necessar-
ily equivalent to rate regulation and thus is not generally pre-
empted by § 332. See id. at 17036. We agree that the breach
of contract and misrepresentation claims of Shroyer are not
preempted.
Elements of Shroyer’s unfair competitition claim, however,
depend on the assessment of the public benefit of the merger.
That determination has already been made by the FCC, and
reexamination of that issue under state law is preempted
either by § 332 or by the ordinary principles of conflict pre-
emption.
II. Failure to State a Claim
We review de novo an order granting a motion to dismiss
under Federal Rule of Civil Procedure 12(b)(6).6 Gibson v.
6
It appears, by statements made in the dismissal order, that the district
court considered materials outside of the pleadings, such as the
Shroyer/AT&T contract, a press release regarding the AT&T/Cingular
merger, and the FCC’s merger order. When this is the case, the 12(b)(6)
motion should be converted into one for summary judgment, and the par-
ties should be given an opportunity to present related materials. Lee v. City
of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). The district court did
not decide the motion under the summary judgment standard, and the par-
ties do not challenge this choice. Therefore, we analyze the claims under
a 12(b)(6) standard.
7614 SHROYER v. NEW CINGULAR WIRELESS SERVICES
Office of Attorney Gen., 561 F.3d 920, 925 (9th Cir. 2009).
We have held that dismissal for failure to state a claim is
“proper only where there is no cognizable legal theory or an
absence of sufficient facts alleged to support a cognizable
legal theory.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir.
2001). In addition, to survive a motion to dismiss, a complaint
must contain sufficient factual matter to state a facially plausi-
ble claim to relief. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949
(2009).
A. Breach of Contract
[2] Shroyer sufficiently states a claim that New Cingular
breached its contract with him. He alleges that his service
degraded after the merger, in violation of AT&T’s promise in
the contract. He also alleges that, by requiring Shroyer to sign
up for a different contract with the merged company and pay
additional expenses in order to maintain the former quality of
service, New Cingular required additional consideration from
Shroyer before it would perform its preexisting contractual
duty. Finally, he alleges that this conduct was in violation of
the implied covenant of good faith and fair dealing.
[3] The first amended complaint does not point to the spe-
cific provisions in the AT&T contract that Shroyer alleges
were violated, but he directed the district court to them in his
opposition to the motion to dismiss and he asked for the
opportunity to add the provisions to the complaint if necessary.7
Those provisions are: “Service rates and other charges and
conditions for each Number or Device are described in your
Sales Information”; and “Service is normally available to your
Device when it is within the operating range of our system.”
7
Shroyer’s complaint could easily be amended to refer specifically to
the contract provisions, but the lack of such an amendment thus far does
not affect our analysis. The contract is in the record and the district court
considered it when ruling. Moreover, Shroyer’s complaint clearly sets out
the facts and legal theory under which he seeks relief.
SHROYER v. NEW CINGULAR WIRELESS SERVICES 7615
The contract also provided that “[s]ervice may be . . . tempo-
rarily limited or interrupted due to system . . . modifications,”
and New Cingular argues that this provision defeats Shroyer’s
breach of contract claim. New Cingular is wrong, at least
from a Rule 12(b)(6) standpoint. Shroyer alleges that service
was not “normally available” within the system’s range, and
that this failure was neither temporary nor caused by the
excepted conditions. Whether the service interruption provi-
sion in the contract covered the types of problems that
Shroyer alleges is to be decided on summary judgment or
beyond.8 Shroyer successfully stated a claim for breach of
contract, and thus it was error to dismiss it.
B. Fraud and Deceit
[4] Shroyer claims that New Cingular misrepresented: 1)
to AT&T customers that they would be fully supported by the
newly merged company, providing “all the advantages only
the nation’s largest wireless company can provide”; 2) to the
FCC that the merger would improve service quality and cov-
erage; and 3) to AT&T customers the reasons why their ser-
vice was degraded. All three of these claims were properly
dismissed, albeit for different reasons.
1. Particularity
[5] New Cingular first argues that all three counts fail the
particularity requirement of Federal Rule of Civil Procedure
9(b). In order to plead fraud with particularity, the complaint
must allege the time, place, and content of the fraudulent rep-
resentation; conclusory allegations do not suffice. Moore v.
8
New Cingular also cites to a 2004 press release and In re Applications
of AT&T Wireless Servs., 19 F.C.C.R. 21522 (2004), in responding to
Shroyer’s breach of contract claim. In both of these documents there is
discussion that the AT&T/Cingular merger could cause service interrup-
tions. Neither of these documents were part of the contract, however, and
both came after the contract’s formation, so any disclosures or warnings
that New Cingular made in them are irrelevant to the contract claim.
7616 SHROYER v. NEW CINGULAR WIRELESS SERVICES
Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir.
1989). Claims made on information and belief are not usually
sufficiently particular, unless they accompany a statement of
facts on which the belief is founded. Id. Here, Shroyer’s alle-
gations of fraud concern a relatively definite time frame,
beginning with the merger application to the FCC and ending
with New Cingular’s refusal to disclose to its customers why
they were experiencing service degradations. Moreover, while
the claims are made on information and belief, Shroyer
explains exactly what it is that he believes constituted the
fraudulent statements: New Cingular telling the FCC that it
would honor its pre-existing contracts. Thus, the fraud claims
have been pleaded with particularity sufficient to allow New
Cingular to prepare an answer.
2. Reliance
New Cingular next argues that the fraud claims cannot
stand because Shroyer cannot prove both actual and justifiable
reliance. See OCM Principal Opportunities Fund v. CIBC
World Mkts. Corp., 157 Cal. App. 4th 835, 864 (Cal. Ct. App.
2007) (holding that in fraud and nondisclosure claims, a plain-
tiff must show actual and justifiable reliance). Shroyer count-
ers that reliance can be presumed because New Cingular
misrepresented its plans to the FCC, and omitted information
from Shroyer.
[6] The first count was properly dismissed because it is
mere commercial “ ‘puffery’ upon which a reasonable con-
sumer could not rely.” Glen Holly Entm’t, Inc. v. Tektronix,
Inc., 343 F.3d 1000, 1015 (9th Cir. 2003) (affirming dismissal
of fraud claims that were based on assurances that a system’s
development was “high priority”). “[A]ll the advantages that
only the nation’s largest wireless company can provide” is a
vague statement and provides nothing concrete upon which
Shroyer could reasonably rely.
[7] Shroyer depends on the fraud-on-the-regulator theory
to prove actual reliance in his second and third fraud claims.
SHROYER v. NEW CINGULAR WIRELESS SERVICES 7617
See Mirkin v. Wasserman, 5 Cal. 4th 1082, 1095-96 (Cal.
1993) (where defendant has reason to know that a third party
will communicate the defendant’s misrepresentation to plain-
tiff, and the third party in fact does so communicate, defen-
dant is liable to plaintiff). As to the second fraud claim, for
Shroyer successfully to argue that New Cingular misrepre-
sented facts to the FCC, there must have been some commu-
nication between the FCC and Shroyer to the effect that New
Cingular was planning on maintaining compliance with its
preexisting contracts. Mirkin, 5 Cal. 4th at 1089-1108 (indi-
rect communication principle inapplicable to plaintiff class of
company stock purchasers because they could not “allege that
they actually read or heard the alleged misrepresentations”
about the company’s prospects and financial status).
Shroyer’s complaint does not allege any such communication.
Therefore, the dismissal of the second claim was proper.
[8] As to the third claim, Shroyer erroneously argues that
actual reliance need not be proven when the fraud is based on
omissions of communication by New Cingular to its custom-
ers. The non-precedential cases on which Shroyer relies have
not been adopted by California. Id. at 1093. Moreover,
Shroyer does not allege that, if New Cingular had included
the omitted information on why service was degraded, he
would have acted differently. Id. (“One need only prove that,
had the omitted information been disclosed, one would have
been aware of it and behaved differently.”). He merely states
that the nondisclosure was fraudulent. This allegation is insuf-
ficient under California law, and the third claim for fraud
based on omissions to Shroyer was also properly dismissed.
C. Unfair Competition
[9] Shroyer alleges that New Cingular’s business practices
have been “unlawful, unfair and deceptive” to the general
public, in violation of California Business and Professions
Code §§ 17200-210. Section 17200 defines unfair competition
as “any unlawful, unfair or fraudulent business act or practice
7618 SHROYER v. NEW CINGULAR WIRELESS SERVICES
. . . .” It is written in the disjunctive, establishing “three varie-
ties of unfair competition.” People ex rel. Lockyer v. Fremont
Life Ins. Co., 104 Cal. App. 4th 508, 515 (Cal. Ct. App.
2002).
[10] In his complaint, Shroyer alleged that New Cingular
violated the common law of unfair competition and breached
his contract. These practices alone do not amount to a viola-
tion of the “unlawful” prong of § 17200; Shroyer must also
allege that New Cingular engaged in a business practice “for-
bidden by law, be it civil or criminal, federal, state, or munici-
pal, statutory, regulatory, or court-made.” Saunders v.
Superior Court, 27 Cal. App. 4th 832, 838-39 (Cal. Ct. App.
1994). In other words, a common law violation such as breach
of contract is insufficient. See Allied Grape Growers v.
Bronco Wine Co., 203 Cal. App. 3d 432, 450-54 (Cal. Ct.
App. 1988) (finding a § 17200 violation only after finding
three violations of the California Food and Agriculture Code);
see also Nat’l Rural Telecomms. Coop. v. DIRECTV, Inc.,
319 F. Supp. 2d 1059, 1074-75 (C.D. Cal. 2003) (holding that
a violation of common law can support a § 17200 claim, pro-
vided that the conduct is also unlawful, unfair, or fraudulent).
Because Shroyer does not go beyond alleging a violation of
common law, he fails to state a claim under the unlawful
prong of § 17200.
[11] Shroyer’s amended complaint also fails to allege facts
that support the unfair and fraudulent prongs of § 17200.
“ ‘Unfair’ simply means any practice whose harm to the vic-
tim outweighs its benefits.” Saunders, 27 Cal. App. 4th at
839. And “fraudulent” conduct “requires a showing [that]
members of the public ‘are likely to be deceived.’ ” Id. (quot-
ing Bank of the West v. Superior Court, 2 Cal. 4th 1254, 1267
(Cal. 1992)). New Cingular is alleged to have misrepresented
its intentions in the merger to the FCC and customers, and
then misled customers concerning the quality of the new ser-
vice. To the extent that these allegations concern merger
negotiations between New Cingular and the FCC, they are
SHROYER v. NEW CINGULAR WIRELESS SERVICES 7619
preempted by 47 U.S.C. § 332(c)(3)(A). What remains are
conclusory allegations about fraud and the unfair treatment of
New Cingular’s customers, and the court cannot determine
from Shroyer’s barebone allegations that he has stated a plau-
sible claim. See Iqbal, 129 S. Ct. at 1949 (“To survive a
motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is plausi-
ble on its face.”) (internal quotation marks omitted).
III. Declaratory Relief
[12] Under California law, declaratory relief is improper
where claims are based only on prior wrongs and no continu-
ing relationship exists between the parties. Baldwin v. Marina
City Props., Inc., 79 Cal. App. 3d 393, 407-08 (Cal. Ct. App.
1978). Shroyer is no longer a customer of New Cingular and
is suing for prior wrongs only. Therefore, the district court
was correct to deny him a declaratory judgment.
IV. Conclusion
For the reasons stated above, we affirm the dismissal of
Shroyer’s common law fraud and unfair competition claims
and the denial of declaratory relief, and reverse the dismissal
of Shroyer’s breach of contract claim. The parties will bear
their own costs on appeal.
AFFIRMED in part; REVERSED in part; and
REMANDED.