PHILIP J. CHARVAT, Plaintiff-Appellant, v. ECHOSTAR SATELLITE, LLC, Defendant-Appellee.
No. 09-4525
United States Court of Appeals for the Sixth Circuit
December 30, 2010
10a0397p.06
Before: SUTTON and GRIFFIN, Circuit Judges; BERTELSMAN, District Judge.
RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206. Appeal from the United States District Court for the Southern District of Ohio at Columbus. No. 07-01000—Mark R. Abel, Magistrate Judge, John D. Holschuh, District Judge. Argued: December 8, 2010.
ARGUED: John W. Ferron, FERRON & ASSOCIATES, Columbus, Ohio, for Appellant. Eric Larson Zalud, BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP, Cleveland, Ohio, for Appellee. ON BRIEF: John W. Ferron, Lisa A. Wafer, FERRON & ASSOCIATES, Columbus, Ohio, Jessica G. Fallon, Columbus, Ohio, for Appellant. Eric Larson Zalud, BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP, Cleveland, Ohio, Benjamen E. Kern, LAW OFFICE OF BENJAMEN E. KERN, LLC, Columbus, Ohio, for Appellee.
SUTTON, Circuit Judge. Philip Charvat has not been shy in taking on the role of a private attorney general under the Telephone Consumer Protection Act. Since 1998, he has filed claims against at least twelve defendants in at least thirteen lawsuits under the Act. See Charvat v. GVN Mich., Inc., 561 F.3d 623 (6th Cir. 2009); Charvat v. NMP, LLC, 703 F. Supp. 2d 735 (S.D. Ohio 2010); State ex rel. Charvat v. Frye, 868 N.E.2d 270 (Ohio 2007); Charvat v. Ryan, 857 N.E.2d 1228 (Ohio 2006) (table opinion); Charvat v. Dispatch Consumer Servs., Inc., 769 N.E.2d 829 (Ohio 2002); Charvat v. GVN Mich., Inc., No. 09AP-1075, 2010 WL 2706163 (Ohio Ct. App. July 8, 2010); Charvat v. Credit Found. of Am., No. 08AP-477, 2008 WL 5381935 (Ohio Ct. App. Dec. 23, 2008); Charvat v. Farmers Ins. Columbus, Inc., 897 N.E.2d 167 (Ohio Ct. App. 2008); Charvat v. Telelytics, LLC, No. 05AP-1279, 2006 WL 2574019 (Ohio Ct. App. Aug. 31, 2006); Charvat v. Crawford, 799 N.E.2d 661 (Ohio Ct. App. 2003); Charvat v. Colo. Prime, Inc., No. 97APG09-1277, 1998 WL 634922 (Ohio Ct. App. 1998); Charvat v. ATW, Inc., 712 N.E.2d 805 (Ohio Ct. App. 1998); Charvat v. Cont‘l Mortg. Servs., Inc., No. 99CVH12-10225, 2002 WL 1270183 (Ohio Ct. Com. Pl. June 1, 2000).
In his most recent lawsuit, Charvat sued EchoStar Satellite under the Act as well as under several regulations promulgated by the Federal Communications Commission (FCC) and Ohio law. The district court dismissed four of Charvat‘s claims and granted EchoStar‘s motion for summary judgment on the remaining claims. In considering Charvat‘s appeal, we invited the FCC, the agency that administers the Act, to express its views on several issues presented by the case. The FCC answered several questions, demurred on others and suggested we refer the matter to the agency under the doctrine of primary jurisdiction. For reasons elaborated below, we will refer the matter to the agency.
EchoStar delivers DISH Network brand satellite television products. Between June 2004 and August 2007, Charvat received thirty calls from telemarketers attempting to sell DISH Network brand satellite television programming. Most of the calls consisted of pre-recorded messages. On several occasions, Charvat asked to be placed on the do-not-call list.
Charvat tracked the calls to several companies, including Dish TV Now, Inc., Marrik Dish Co., Marketing Guru, Inc. dba SatelliteSales.com, JSR Enterprises and Dish Pronto, Inc. All of the companies have signed retailer agreements with EchoStar, authorizing them to advertise, promote and solicit orders for DISH Network programming and to install and activate the equipment.
Claiming several violations per phone call, Charvat sued EchoStar for 307 violations of the Telephone Act and its accompanying regulations. He also brought claims under the Ohio consumer protection statute,
II.
A word about jurisdiction is in order. The district court held that it had diversity jurisdiction over the case because the parties came from different States and because Charvat‘s 307 causes of action each requested between $500 and $1500 in damages, well over the $75,000 amount-in-controversy requirement. See
Although courts gauge jurisdiction over a complaint from the time of filing, St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938), the “[l]ack of the jurisdictional amount from the outset—although not recognized until later—is not a subsequent change that can be ignored.” GVN Mich., 561 F.3d at 628 (internal quotation marks and citation omitted) (affirming determination that Charvat did not satisfy amount-in-controversy requirement once district court determined he could recover on per-call rather than per-violation basis). At the time Charvat filed his complaint, he did not satisfy the amount-in-controversy requirement because the Act did not allow him to recover the amount he claimed. Id.; see also Jones v. Knox Exploration Corp., 2 F.3d 181, 183 (6th Cir. 1993). In light of the district court‘s unchallenged per-call ruling, it was a “legal certainty” at the time Charvat filed his complaint that he could recover at most $45,000 (30x $1500) for the statutory and regulatory claims. See St. Paul Mercury Indem. Co., 303 U.S. at 289.
That is not the end of the matter. Charvat also requested “punitive damages” in connection with his common-law claims. And punitive damages may be aggregated with other damages to satisfy the amount-in-controversy requirement. Hayes v. Equitable Energy Res. Co., 266 F.3d 560, 572–73 (6th Cir. 2001). But as the party invoking federal jurisdiction, Charvat bore the burden of satisfying the requirements of federal jurisdiction, see Cleveland Hous. Renewal Project v. Deutsche Bank Trust Co., 621 F.3d 554, 559 (6th Cir. 2010), including as here where punitive damages account for a significant portion of the amount-in-controversy requirement, LM Ins. Corp. v. Spaulding Enters. Inc., 533 F.3d 542, 551 (7th Cir. 2008). Under Ohio tort law, claimants may obtain punitive damages only when they have suffered actual harm and actual damages, see, e.g., Moskovitz v. Mt. Sinai Med. Ctr., 635 N.E.2d 331, 342 (Ohio 1994), and “[t]he actions or omissions of [the] defendant demonstrate malice or aggravated or egregious fraud,”
We need not resolve the point, however, because the district court had federal-question jurisdiction over the claims under the Telephone Act and pendent jurisdiction over the rest of the claims. See
Grable resolved a dispute then percolating in the courts of appeals over whether federal-question jurisdiction exists when the underlying statute does not contain a private right of action. The Court clarified that the existence of a private right of action in a federal statute, while sufficient to establish federal-question jurisdiction, is not indispensable. Instead, Grable explained, the issue turns on whether the state-law claim (1) depends on (2) a substantial federal issue (3) that is in dispute and whether (4) exercising jurisdiction would not disturb the congressionally approved balance of federal and state court jurisdiction. Id. at 314.
The first three Grable factors favor jurisdiction. Charvat‘s claim depends on the interpretation of federal law, because it turns on a violation of a federal statute. The issue at hand, whether EchoStar violated several provisions of federal law, is substantial. See Empire HealthChoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 700–01 (2006); Mikulski v. Centerior Energy Corp., 501 F.3d 555, 570 (6th Cir. 2007) (en banc). And the issue is disputed: Charvat says that EchoStar violated the Telephone Act, while EchoStar says it did not.
That leaves the fourth consideration, whether exercising jurisdiction comports with the roles of the state and federal courts in interpreting this statute. Strange as it may
“A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State–
(A) an action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation,
(B) an action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater, or
(C) both such actions.
If the court finds that the defendant willfully or knowingly violated this subsection or the regulations prescribed under this subsection, the court may, in its discretion, increase the amount of the award to an amount equal to not more than 3 times the amount available under subparagraph (B) of this paragraph.
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, see
When Congress enacted this legislation, the possibility of creating exclusive jurisdiction was not beyond the legislature‘s sight. Elsewhere in the Telephone Act, § 227(f)(2) creates exclusive federal jurisdiction over Telephone Act claims brought by state attorneys general: “The district courts of the United States . . . shall have exclusive jurisdiction” over such actions.
The removal statute points in the same direction. Section 1441(a) authorizes a defendant to remove to federal court any claim “arising under” federal law, “[e]xcept as otherwise expressly provided by Act of Congress.”
Tafflin v. Levitt, 493 U.S. 455 (1990), illustrates the point. It construed a provision expressly giving litigants permission to bring RICO claims in federal court not to divest state courts of concurrent jurisdiction over private RICO actions. The statute‘s “grant of federal jurisdiction,” the Court explained, “is plainly permissive, not mandatory, for the statute does not state nor even suggest that such jurisdiction shall be exclusive. It provides that suits of the kind described ‘may’ be brought in the federal district courts, not that they must be.” 493 U.S. at 460–61 (internal quotation marks and citation omitted). Although Tafflin asked whether the provision divested state courts (courts of general jurisdiction) of jurisdiction, not whether the provision divested federal courts (courts of limited jurisdiction) of jurisdiction, that distinction makes no difference. The idea is not “that the [Telephone Act] authorizes federal jurisdiction by implication . . . [but] that the [Telephone Act] does not divest district courts of the federal question jurisdiction they already possess under
Nor does this interpretation make pointless Congress‘s express provision of a cause of action in state court. Even in the absence of this language, it may be true, claimants generally could have filed this action in state courts of general jurisdiction. But saying so serves the function of foreclosing litigation over whether federal jurisdiction over Telephone Act claims is exclusive. See Yellow Freight Sys., Inc. v. Donnelly, 494 U.S. 820 (1990); Tafflin, 493 U.S. 455; Brill, 427 F.3d at 451. Federal-question jurisdiction exists.
III.
Charvat appeals the district court‘s dismissal of four counts of the complaint. The district court dismissed these counts, all predicated on the first telephone call allegedly made in violation of
IV.
At the heart of this case (and of Charvat‘s appeal) is the question whether the Telephone Act and its accompanying regulations permit Charvat to recover damages from EchoStar, an entity that did not place any illegal calls to him but whose independent contractors did. The answer turns on the meaning of several provisions of the Telephone Act and its regulations. Start with the interrelation of
The answers to these questions implicate the FCC‘s statutory authority to interpret the Act, to say nothing of its own regulations, all of which prompted us to invite the agency to file an amicus brief offering its views about the case. The agency filed a brief, suggesting answers to some but not most of these questions. “In order for the agency to offer an interpretation that goes beyond its limited prior statements on the subject,” it explained, “a referral under the primary jurisdiction doctrine would be necessary.” FCC Br. at 15.
The doctrine of primary jurisdiction allows courts to refer a matter to the relevant agency “whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an
Uniformity. Telemarketers generally peddle their services nationally, creating the possibility of conflicting decisions in different state and federal jurisdictions. More than just that possibility exists here. In interpreting the Telephone Act and its regulations, courts have reached different conclusions about whether an entity on whose behalf a call is made can be liable under the Act, announcing different measures for determining whether an independent contractor or an agent acts on behalf of a company. See Lary v. VSB Fin. Consulting, Inc., 910 So. 2d 1280 (Ala. Civ. App. 2005); Hooters of Augusta, Inc. v. Nicholson, 245 Ga. App. 363 (2000); Worsham v. Nationwide Ins. Co., 772 A.2d 868 (Md. Ct. Spec. App. 2001); Farmers Ins. Columbus, Inc., 897 N.E.2d 167. The volume of these lawsuits heightens the risk that individuals and companies will be subject to decisions pointing in opposite directions, which has already happened to Charvat, see, e.g., ATW, Inc., 712 N.E.2d 805; GVN Mich., Inc., 561 F.3d 623; Charvat v. EchoStar Satellite, LLC, 676 F. Supp. 2d 668 (S.D. Ohio 2009), and is apt to happen to EchoStar, see In re Long Distance Telecomm. Litig., 831 F.2d 627 (6th Cir. 1987); EchoStar Satellite, 676 F. Supp. 2d 668. Although a decision by the FCC would not guarantee nationwide uniformity, it would narrow the scope of judicial inquiry to whether the agency reasonably interpreted the statute. See, e.g., AT&T Corp. v. FCC, 349 F.3d 692, 698–99 (D.C. Cir. 2003) (applying Chevron and arbitrary-and-capricious review after referral to agency).
Discretion. Congress vested the FCC with considerable authority to implement the Telephone Act. The Act gives the agency power to “prescribe regulations to implement” the legislation,
Expertise. The agency also has comparative expertise on the matter. The agency, no surprise, is familiar with the regulations it prescribed, see Auer, 519 U.S. at 461, and possesses expertise over the statute it implements, see Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 651–52 (1990), whether that expertise comes in the form of technical experts, agency lawyers or agency staff in a position to obtain input from the relevant stakeholders. Courts too have expertise when it comes to interpretive legal questions, but this is not just an interpretive dispute, as there are “fact[s] . . . in controversy,” Great N. Ry. Co. v. Merchs. Elevator Co., 259 U.S. 285, 294 (1922), including whether DISH Network made any of the calls and the degree of control EchoStar exercised over its retailers. Even to the extent some of these questions implicate only interpretive disputes, that does not preclude a referral. The questions “turn[] on the 199[1] Act and its implementing regulations,” all of which come within “the bailiwick of the FCC[.]” In re StarNet, Inc., 355 F.3d 634, 639 (7th Cir. 2004). “Only the FCC can disambiguate the word[s] [on behalf of]; all we could do would be
Nader v. Allegheny Airlines, Inc., 426 U.S. 290 (1976), does not suggest a contrary approach. The Supreme Court reversed a court of appeals’ decision to refer a case to an agency when the plaintiff had sued only for violations of common law duties. The common law claims, the Court explained, did not depend on the meaning of a statute the agency administered, and the statute contained a “savings clause,” demonstrating it did not displace common law remedies. Id. at 298–99. Today‘s case is the inverse of Nader, as Charvat has abandoned his common law claims and now pursues only claims that depend on the meaning of a federal statute that the FCC administers.
The FCC has agreed to issue a prompt ruling if the parties seek a decision from the agency.
V.
We refer this matter to the FCC. Within 60 days of the agency‘s ruling, the parties may file briefs in this court advising the court about the agency‘s action and its significance to this appeal.