Landsman & Funk PC v. Skinder-Strauss Associates

McKEE, C.J.,

concurring:

The lead opinion persuasively explains why federal courts have diversity jurisdiction over claims arising from the private cause of action created under the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227(b), and it relies on our prior decision in ErieNet v. Velocity Net Inc., 156 F.3d 513 (3d Cir.1998), to explain why the same is not true for federal question jurisdiction. I write separately because, although I agree that we have diversity jurisdiction to decide § 227(b) claims, I believe the very same rationale that leads to that result should lead us to conclude that we also have federal question jurisdiction over TCPA claims. See Lead Op. 85-90.

The ErieNet majority concluded that we do not have federal question jurisdiction over the private cause of action in § 227(b). Our former colleague, now-Justice Alito,1 dissented. He argued that the text of the TCPA is insufficient to support the conclusion that Congress intended to deprive us of the federal question jurisdic*96tion over the TCPA’s private cause of action that we would otherwise have pursuant to 28 U.S.C. § 1331. He explained:

[SJection 227(b)(3) says nothing about the jurisdiction of the federal district courts; instead, it says merely that an action under that provision “may” be brought in an appropriate state court “if otherwise permitted by the laws or rules of a court of’ that state. More than this ... is needed to divest a federal district court of its jurisdiction under section 1331.

ErieNet, 156 F.3d at 521 (Alito, J., dissenting).

Judge Alito believed that the ErieNet majority erred by focusing on whether the text of the TCPA reflected an intent to allow federal courts to exercise federal question jurisdiction over suits brought under that statute. He reasoned that the proper inquiry must start with the preexisting grant of federal question jurisdiction in § 1331 and then proceed to an examination of the pertinent text of the TCPA. Then, and only then, can we determine if that text is sufficiently explicit to negate the longstanding grant of jurisdiction contained in § 1331.

The Supreme Court has since vindicated Judge Alito’s analytical approach. The Court has clarified that the jurisdictional inquiry must begin and end by examining whether the statutory text at issue is sufficient to reflect Congress’s intent to abrogate § 1331’s broad grant of federal question jurisdiction. The inquiry cannot begin by focusing on whether the Act in question confers federal jurisdiction. The lead opinion here notes that in ErieNet, “[w]e noted that subject matter jurisdiction must be conferred by statute and that the TCPA did not expressly do that.” Lead Op. at 77. I agree that the TCPA does not confer jurisdiction. However, 28 U.S.C. § 1331 clearly does.

Today, we adopt Judge Alito’s approach in inquiring into our diversity jurisdiction, but we leave ErieNet’s holding as to federal question jurisdiction in place. The lead opinion reminds us that, “[i]n ErieNet we asked whether Congress conferred subject-matter jurisdiction in the TCPA; here we ask whether Congress intended state courts to have exclusive jurisdiction over TCPA claims and, thus, stripped away diversity jurisdiction.” See Lead Op. at 78.

I see no way we can ask that latter question when inquiring into our diversity jurisdiction while asking a very different question when inquiring into federal question jurisdiction. The issue remains the same, subject matter jurisdiction, and the same question should be asked regarding federal question jurisdiction that we are asking about our diversity jurisdiction.

When the ErieNet majority posed the jurisdictional question there, it did not have the advantage of several subsequent Supreme Court decisions that undermine the majority’s analysis. We now have the benefit of those decisions and they undermine the holding of ErieNet.

A.

Since ErieNet, the Supreme Court has decided three cases that illuminate the appropriate inquiry for determining when federal courts have jurisdiction.

In Verizon Md., Inc. v. PSC, 535 U.S. 635, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002), the Supreme Court held that the Telecommunications Act of 1996 (the “TCA”) did not remove federal question jurisdiction conferred under § 1331. A provision of the TCA required internet service providers (“ISPs”) to enter into reciprocal compensation agreements by which their networks were open to competing ISPs. The regulatory scheme required state utility commissions to approve *97the terms of the agreements and contemplated that the agreements would require compensation being paid for non local or out-of-network calls. However, an issue arose over whether a new entrant into the market (WorldCom) had to pay reciprocal compensation to Verizon for local telephone calls that Verizon’s customers placed to access the internet. Verizon claimed that WorldCom had to pay compensation because calls that connected a local customer to the internet were not “local” calls under the TCA. WorldCom disputed Verizon’s claim and filed a complaint with the state utilities commission claiming that it was not obligated to compensate Verizon because the disputed calls were “nonlocal for purposes of reciprocal compensation,” Id. at 640, 122 S.Ct. 1753, and therefore not subject to the reciprocal compensation agreement between the two ISPs. The state commission ruled in favor of WorldCom and ordered Verizon to pay WorldCom the reciprocal compensation owed under its reciprocal compensation agreement with Verizon.

Thereafter, Verizon brought an action in district court against the state commission, WorldCom, and other telecommunications carriers, arguing that the state commission’s ruling that it must pay reciprocal compensation to World Com violated the TCA and a ruling of the FCC.2 Verizon cited 47 U.S.C. § 252(e)(6) and 28 U.S.C. § 1331 as the basis of the court’s jurisdiction.

Section 252(e)(6) of the TCA provides in part: “[i]n any case in which a State commission makes a determination under this section, any party aggrieved ... may bring an action in an appropriate Federal district court to determine whether the agreement .. meets the requirements of ... this [Act].” 47 U.S.C. § 252(e)(6). However, Verizon’s suit involved “neither the approval or disapproval of a[n agreement] nor the approval or disapproval of ... terms.” Id. Accordingly, the district court dismissed the case for lack of federal jurisdiction, and a divided Court of Appeals for the Fourth Circuit affirmed.

The Supreme Court reversed, holding “even if § 252(e)(6) does not confer jurisdiction, it at least does not divest the district courts of their authority under 28 U.S.C. § 1331 to review the Commission’s order for compliance with federal law.” Id. at 642, 122 S.Ct. 1753 (emphasis in original). The Court began its analysis by determining that “Verizon’s claim [of federal preemption] ... falls within 28 U.S.C. § 1331’s general grant of jurisdiction.... ” Id. at 643, 122 S.Ct. 1753. It then determined that “nothing in 47 U.S.C. § 252(e)(6) purports to strip this jurisdiction.” Id. Rather, the Court found that § 252(e)(6) “merely makes some other actions by state commissions renewable in federal court. This is not enough to eliminate jurisdiction under § 1331.” Id. (emphasis in original). The Court also found “none of the other provisions of the Act evince any intent to preclude federal review of a commission determination. If anything, they reinforce the conclusion that § 252(e)(6)’s silence on the subject leaves the jurisdictional grant of § 1331 untouched.” Id. at 644, 122 S.Ct. 1753 (emphasis added).

The Court’s decision in Breuer v. Jim’s Concrete of Brevard, Inc., 538 U.S. 691, 123 S.Ct. 1882, 155 L.Ed.2d 923 (2003), is even more to the point. There, Bruer sued his former employer, Jim’s Concrete, *98under the Fair Labor Standards Act of 1938. A section of that Act states that a suit under the Act “may be maintain[ed] ... in any Federal or State court of competent jurisdiction.” 29 U.S.C. § 216(b). Bruer originally filed the case in state court, but Jim’s Concrete attempted to remove the case to federal court. Bruer objected, arguing that the Act’s provision that the suit “may be ... maintain[ed] ... in any federal or State court” deprived federal courts of removal jurisdiction.

A unanimous Supreme Court rejected the notion that removal was improper under the text of the statute. The Court again began by assuming federal removal jurisdiction existed and noting that “[njothing on the face of [29 U.S.C.] § 216(b) looks like an express prohibition of removal [jurisdiction].... ” Breuer, 538 U.S. at 694, 123 S.Ct. 1882. It noted that Congress’s use of “maintain” was ambiguous and the fact that Congress stated that an action under the Act could be maintained in either federal or state court was therefore not sufficient to unambiguously establish congressional intent to divest federal removal jurisdiction. See id. at 695-96, 123 S.Ct. 1882.

Most recently, in Whitman v. Dept. of Transportation, 547 U.S. 512, 126 S.Ct. 2014, 164 L.Ed.2d 771 (2006), the Supreme Court, in a per curiam opinion, explicitly rejected the Ninth Circuit Court of Appeal’s approach to determining whether federal courts have jurisdiction over cases arising from the Civil Service Reform Act (“CSRA”). The Court noted that “[t]he Court of Appeals was correct in concluding that 5 U.S.C. § 7121(a)(1) does not confer jurisdiction.” However, that fact was not determinative because “[a]nother statute, ... — a very familiar one — grants jurisdiction to the federal courts over ‘all civil actions arising under the Constitution, laws, or treaties of the United States.’ ” Id. at 513-514, 126 S.Ct. 2014 (quoting 28 U.S.C. § 1331). The Court continued: “The question, then, is not whether 5 U.S.C. § 7121(a)(1) confers jurisdiction, but whether 5 U.S.C. § 7121 (or the CSRA as a whole) removes the jurisdiction given to the federal courts.” Id. (citing Verizon Md., Inc., 535 U.S at 642, 122 S.Ct. 1753).

Although these cases do not directly overturn ErieNet, they do clearly explain that our jurisdictional inquiry must begin with the general grant of federal jurisdiction found in Title 28 and then proceed to determining whether Congress has used language sufficiently specific to express an intent to divest federal courts of that preexisting jurisdiction.

B.

In examining our diversity jurisdiction here, the lead opinion quite correctly notes, “Here, the specific provision granting subject matter jurisdiction to the federal courts is 28 U.S.C. § 1332(d).... ” Lead Op. at 78-79. It then proceeds to find that “[fjederal courts only lack diversity jurisdiction where Congress has explicitly expressed an intent to strip federal courts of this jurisdiction ... or where such jurisdiction is found to be irreconcilable with a congressional statute....” Id.3 (citations omitted). Then, because the *99lead opinion finds that the TCPA is completely silent on the issue of federal jurisdiction, it quite correctly concludes that diversity jurisdiction must exist. I agree.

However, I depart from the lead opinion’s decision to reaffirm the holding of ErieNet. The lead opinion concludes that the TCPA is one of those “rare” congressional acts that deprives federal courts of federal question jurisdiction but not federal diversity jurisdiction. Lead Op. at 82. (citing Gottlieb, 436 F.3d at 342 n. 8). Indeed, the Supreme Court has recently noted that federally created causes of actions that do not result in federal question jurisdiction are “extremely rare,” citing a more than 110-year-old case as an example. Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg., 545 U.S. 308, 317 n. 5, 125 S.Ct. 2363, 2370 n. 5, 162 L.Ed.2d 257 (2005) (citing Shoshone Mining Co. v. Rutter, 177 U.S. 505, 20 S.Ct. 726, 44 L.Ed. 864 (1900)).4

In justifying its differing analysis here and reaffirming the holding in ErieNet, the lead opinion attempts to distinguish federal question jurisdiction from diversity jurisdiction by insisting that “as our focus in ErieNet demonstrates, congressional intent is a touchstone of federal question jurisdiction analysis.” Lead Op. at 83. Indeed it is, but it is the touchstone for determining both our diversity jurisdiction and federal question jurisdiction.

The real reason that the lead opinion finds that we have diversity jurisdiction here while preserving ErieNet’s conclusion that we lack subject matter jurisdiction is its analysis of diversity jurisdiction rests upon a very different foundation than the ErieNet conclusion regarding federal question jurisdiction. Here, the lead opinion correctly asks whether the TCPA abrogates jurisdiction already conferred by § 1332, yet it preserves ErieNet, which improperly asked whether the TCPA confers jurisdiction itself, ignoring the grant of jurisdiction under § 1331. The opposing analytical approaches are outcome determinative, just as Judge Alito suggested in his ErieNet dissent. See 156 F.3d at 521-22. Moreover, “ [i]t is true ... of journeys in the law that the place you reach depends on the direction you are taking. And so, where one comes out on a case depends on where one goes in.’ ” United States v. Sigal, 341 F.2d 837, 844 & n. 24 (3d Cir.1965) (quoting United States v. Rabinowitz, 339 U.S. 56, 69, 70 S.Ct. 430, 94 L.Ed. 653 (1950) (Frankfurter, J. dissenting)).

If we begin our analysis at the correct starting point, we would come out exactly where Judge Alito argued that we should in his ErieNet dissent. The private right *100of action under the TCPA unquestionably falls within § 1331’s general grant of federal question jurisdiction. There is nothing in the TCPA that purports to strip that jurisdiction away, and the lead opinion here alludes to nothing that would accomplish that result. As the ErieNet majority recognized, neither the text of the statute nor the legislative history of the TCPA refers to federal courts at all. 156 F.3d at 516. This complete absence of expression simply cannot be woven into the clear expression of congressional intent required to entirely remove federal jurisdiction. See Verizon, 535 U.S. at 644, 122 S.Ct. 1753.

C.

I am not alone in concluding that intervening Supreme Court decisions have undermined ErieNet’s analytical framework. The Court of Appeals for the Seventh Circuit has noted that ErieNet and other decisions in the other Courts of Appeals that have found that federal courts do not have jurisdiction over cases involving the TCPA, “cannot be reconciled with” recent Supreme Court decisions, including Breuer. Brill, 427 F.3d at 450.

More recently, in Charvat v. EchoStar Satellite, LLC, 630 F.3d 459 (6th Cir.2010), the Court of Appeals for the Sixth Circuit reversed its previous stance that there was no federal question jurisdiction under the TCPA, and concluded that intervening Supreme Court decisions undermined its previous analysis. The court noted that Congress had elsewhere in the TCPA created “exclusive federal jurisdiction over Telephone Act claims brought by state attorneys general.” 630 F.3d at 464 (citing 47 U.S.C. § 227(f)(2)). The court reasoned that Congress therefore clearly knew how to use language that would create exclusive jurisdiction in a given forum, yet it had not otherwise done so. Rather, Congress had merely stated that the private cause of action created in § 227 could be brought in state courts.5 The court examined provisions of the statute that permit suits to be brought in state courts and concluded that they were not sufficient to divest federal question jurisdiction: “These provisions may suggest that Congress anticipated that the Act would be privately enforced primarily in state court. But they do not establish that such claims may proceed only in state court — that state court jurisdiction is exclusive. Otherwise, the Act would preclude even federal — diversity jurisdiction.” Id. at 464 (citing 28 U.S.C. § 1332).

Conclusion

Today, we correctly hold that the TCPA does not preclude diversity jurisdiction. However, by allowing our decision in ErieNet to stand, we create two anomalies: First, we create an anomaly in our subject matter jurisdiction jurisprudence by using different analyses when determining whether there is diversity jurisdiction and federal question jurisdiction. Second, we create a situation whereby individual plaintiffs can bring a claim under a federally created cause of action in federal court only when the requirements of diversity jurisdiction are satisfied, but plaintiffs who cannot satisfy those requirements must sue under a federal statute in state court.

*101I believe that our analysis with regard to diversity jurisdiction is equally applicable to federal question jurisdiction. We should have used this opportunity to correct the mistake we make in our analysis in ErieNet, and I regret that we are not taking this opportunity to say so.

. Inasmuch as he wrote his dissent in ErieNet while a member of this court, I will refer to Justice Alito as "Judge Alito” throughout my discussion of his analysis in ErieNet.

. The FCC had ruled that the disputed calls were nonlocal "for purposes of reciprocal compensation but concluded that, absent a federal compensation mechanism for those calls state commissions could construe interconnection agreements as requiring compensation." Id. at 640, 122 S.Ct. 1753

. Judge Garth relies on statements of Senator Hollings to support his conclusion that Congress intended TCPA claims to be brought only in state courts. See Dissent at 97 & n. 2. I believe that the statements made by the bill's sponsor were best addressed by Judge Alto in his dissent in ErieNet. See ErieNet, 156 F.3d at 522 ("I do not believe that one speech given by one senator is sufficient to demonstrate the 'unmistakable' intent of Congress. Moreover, even if Senator Hollings's statement were given controlling weight, it merely indicates that the TCPA was designed to ‘allow consumers to bring an action in State court.’ " (emphasis in original)).

. Shoshone was a 1900 suit involving disputed title to a mine. 177 U.S. 505, 20 S.Ct. 726. The Court held that there was no federal question jurisdiction even though the suit in support of an adverse claim to a mine arose out of a federal statute. The Court reasoned that Congress designed the federal system in such a way that "the great bulk of litigation respecting rights to property, although those rights may ... go back to some law of the United States, is in fact carried on in the courts of the several states.” Id. at 507, 20 S.Ct. 726.

However, suits under the TCPA do not involve the kind of local interests that have historically been left to the states. Rather, the TCPA is an attempt to regulate an instrumentality of interstate commerce. As the lead opinion notes, the legislative history of that Act refers to "the need for federal regulation to fill the gaps between individual states' regulatory efforts, since [s]tates do not have the jurisdiction to protect their citizens against those who use [automated dialing] machines to place interstate telephone calls.” Lead Op. at 76 (quoting S. Re. No. 102-178, at 5) (internal quotation marks omitted, brackets in original).

. In his dissenting opinion, Judge Garth reasons that Congress’s use of "may” in the TCPA simply reflects the fact that "a litigant is not required to bring an action, but if he chooses to do so, he must comply with certain requirements.” Dissent at 105. However, no aggrieved party is ever required to bring a lawsuit, and I am therefore not convinced that the permissive wording of the TCPA can be explained as Judge Garth suggests. I do not believe that Congress thought it necessary to tell aggrieved parties that they need not bring a lawsuit unless they want to.