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Class Action Defense Cases-Lindstrom v. City of Des Moines: Court Rejects Defense Effort To Remove Class Action To Federal Court Holding Class Action Claims Not Preempted By Federal Cable Act

Iowa Federal Court Remands to State Court Class Action Lawsuits Challenging Cable Television Franchise Fees Holding that Class Action Claims were not Preempted by Federal Cable Communications Policy Act and that Class Action Complaints did not “Arise Under” Federal Law

Seven putative class action lawsuits were filed in state court against various Iowa cities challenging as illegal a cable television franchise fee tax, and defense attorneys removed the class action to federal court arguing that the claims for damages in the class action complaints are preempted by the Federal Cable Communications Policy Act, 47 U.S.C. § 521 et seq. (Federal Cable Act). Lindstrom v. City of Des Moines, Iowa, 470 F.Supp.2d 1002, 1004-05 (S.D. Iowa 2007). Plaintiffs moved to remand the class action to state court, arguing that their class action lawsuits did not contain any federal claims. Id., at 1005. The district court summarized the class action complaints as follows: “Plaintiffs have stated only a single claim that arises under state law, i.e., whether the Cities can collect the cable franchise fees, in amounts exceeding the reasonable costs of regulating the activity, without express authorization by the Iowa Legislature.” Id. The district court granted the motion and remanded the class action to state court.

The district court recognized that the defense bore the burden of establishing subject matter jurisdiction, Lindstrom, at 1006. While the class action did not state federal claims, defense attorneys argued that the claims were preempted by the Federal Cable Act, id. The federal court stated that “nothing on the face of [the class action complaints] raises a federal question,” id., so the issue was whether the Federal Cable Act completely preempts the state law cause of action in the class actions, id., at 1007. After a detailed analysis, see id., at 1007-10, the court held that the class action claims were not preempted by the Federal Cable Act because the cities were charging less than the maximum tax allowed by federal law and that this would further, not undermine, the intent of the Act, id., at 1010. The court rejected also a defense argument that the class action is preempted because it conflicts with the Act’s definition of “franchise fees,” id., at 1010-11, and that removal was proper because the class action claims “arise under” federal law, id., at 1011-12.

NOTE: Defense attorneys also argued that 47 U.S.C. § 555a(a) provided immunity to the cities against claims challenging the collection of franchise fees, but the federal court rejected the argument. Lindstrom, at 1012-13. The court held at page 1013: “The federal statute in question clearly permits injunctive and declaratory relief. While Plaintiffs seek a refund of illegally imposed franchise fees and attorney’s fees, they also seek a declaration that the franchise fees collected are illegal and void, as well as an injunction prohibiting Defendants from enforcing and/or collecting illegal franchise fees in the future. These types of relief are clearly permitted by § 555a(a).”

Download PDF file of Lindstrom v. City of Des Moines, Iowa