City of Creve Coeur v. DirecTV LLC

United States Court of Appeals
For the Eighth Circuit
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No. 21-3090
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City of Creve Coeur, Missouri, on behalf of
itself and all others similarly situated
lllllllllllllllllllllPlaintiff - Appellee
v.
DirecTV LLC
lllllllllllllllllllllDefendant - Appellant
DISH Network Corporation; DISH Network, L.L.C.
lllllllllllllllllllllDefendants
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Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
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Submitted: September 22, 2022
Filed: January 26, 2023
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Before LOKEN, BENTON, and KOBES, Circuit Judges.
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LOKEN, Circuit Judge.
A Missouri statute, the Video Services Providers Act (“VSPA”), allows local
governments to impose fees on video service providers such as cable companies. See
Mo. Ann. Stat. § 67.2675. The statute predates the now-popular internet-based
streaming services. DirecTV and Dish Network (“Defendants”) provide video
services in part through the Internet. The City of Creve Coeur filed this class action
in Missouri state court on behalf of local government authorities, seeking a
declaratory judgment that Defendants are liable under the VSPA and implementing
local ordinances, plus injunctive relief, an accounting of unpaid fees, and damages.
Defendants removed the action based on diversity jurisdiction and the Class Action
Fairness Act (CAFA). See 28 U.S.C. §§ 1441(a), 1332(a), (d)(2). The district court1
remanded the action to state court. After the state court entered an interlocutory order
declaring that VSPA payments are fees, rather than taxes, DirecTV filed a second
notice of removal, arguing this order established the required federal jurisdiction.
The district court2 granted Creve Coeur’s motion to remand. City of Creve Couer v.
DirecTV, LLC, No. 4-21-CV-0122-AGF, 2021 WL 3674065, at *2-5 (E.D. Mo. Aug.
17, 2021). DirecTV appeals. We affirm, though on somewhat different grounds.
After this action was filed, Defendants promptly removed in August 2018,
claiming the district court had “original jurisdiction,” § 1441(a), because there was
§ 1332(a) complete diversity, and § 1332(d)(2) diversity jurisdiction as expanded by
CAFA. Creve Coeur moved to remand, arguing (i) defendants failed to demonstrate
the jurisdictional prerequisites for removal, either complete diversity or CAFA
diversity; (ii) the Tax Injunction Act (TIA), 28 U.S.C. § 1341, prohibited the court
from exercising jurisdiction; and (iii) the doctrine of comity supported remand. The
district court granted the motion and remanded based on the Supreme Court’s
decision in Levin v. Commerce Energy, Inc., 560 U.S. 413 (2010):
1
The Honorable Ronnie L. White, United States District Judge for the Eastern
District of Missouri.
2
The Honorable Audrey G. Fleissig, United States District Judge for the
Eastern District of Missouri.
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Assuming arguendo that the jurisdictional requirements for removal
under CAFA are satisfied, the Court nevertheless declines to exercise
jurisdiction here pursuant to the reasoning of the Supreme Court in
Levin . . . . [I]n addition to the principles evident in the doctrine of
comity, the strong preference for the litigation of state tax issues in state
courts rather than in federal courts is reflected in the TIA. Because the
Court concludes the doctrine of comity justifies remanding the case to
state court, it declines to rule on Defendants’ separate pending motions
to dismiss. See Levin . . . (reserving judgment on the TIA’s application
where comity precluded suit).”
City of Creve Coeur v. DIRECTV, LLC, 2019 WL 3604631, at *5 (E.D. Mo. Aug.
6, 2019) (cleaned up), leave to appeal denied, 2019 WL 7945996 (8th Cir. Sept. 12,
2019).
Back in state court, Defendants moved to dismiss, arguing in part that, under
Missouri law, “VSPA fees [are] pure taxes,” and therefore applying VSPA to
streaming video service would violate the Hancock Amendment to the Missouri
Constitution, which prohibits political subdivisions from levying taxes without prior
voter approval. See Mo. Const. art. X, § 22. Plaintiff’s January 2020 Consolidated
Memorandum in Opposition countered that the Hancock Amendment does not apply
“because the VSP fees are charged in exchange for a specific privilege enjoyed by
Defendants - - the right to provide video programming through the public right-of-
way.” The state court’s December 30, 2020 Order denying the motion to dismiss
concluded that Defendants’ Hancock Amendment argument “is not sufficiently
persuasive to support a Motion to Dismiss” because “the legal standard at this stage
dictates that the Plaintiff receives the benefit of the doubt in factual questions.” The
court noted that, “while the Plaintiff argues the Fee is not a tax to avoid the Hancock
Amendment’s application, the Plaintiff argued the opposite in order to escape federal
jurisdiction.”
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No doubt spurred by this dicta, DirecTV returned to federal court, filing a
second Notice of Removal on January 29, 2021. The Notice argued the district court
has diversity jurisdiction under CAFA and that a second removal is proper under 28
U.S.C. § 1446(b)(3). In the first motion to remand, the Notice explained, Plaintiff
“argued for the application of the TIA and comity-based abstention by characterizing
the VSP fees as taxes. . . . The Court manifested its acceptance of Plaintiff’s
characterization of the VSP fees as common-law taxes through its numerous
references to ‘tax,’ ‘taxes,’ ‘taxation,’ or the ‘TIA’ nearly two dozen times in the
remand decision.” Therefore, when Plaintiff “changed course” after remand to avoid
the Hancock Amendment, and the state court ruled that “VSP fees did not constitute
common-law taxes, at least not as a matter of law,” that Order for the first time made
it “‘unambiguously ascertainable’ that the Creve Coeur action was removable despite
any state-tax based comity concerns.”
Though creative, the argument is without merit for multiple reasons. First, the
district court’s above-quoted remand order plainly stated that the remand was based
on comity principles as articulated in Levin, not on “state-tax based comity concerns.”
Comity as a basis to remand was raised and fully argued in the first remand
proceeding. Federal courts have long precluded two bites at this apple. “When the
[district] court first remanded the cause . . . the state court was reinvested with
jurisdiction, which could not be defeated by another removal upon the same grounds,
and by the same party.” St. Paul & C. Ry. v. McLean, 108 U.S. 212, 217 (1883).
Second, the Supreme Court in Levin emphatically stated that the century-old
comity doctrine is not limited to the state-tax-interference concerns that later led
Congress to enact the TIA:
[T]his Court wrote more than a century ago . . . that a proper reluctance
to interfere by prevention with the fiscal operations of the state
governments has caused us to refrain from so doing in all cases where
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the Federal rights of the persons could otherwise be preserved
unimpaired. . . . [A] proper reluctance to interfere by injunction with
[state government] fiscal operations, require[s] that such relief should
be denied in every case where the asserted federal right may be
preserved without it.
* * * * *
Our post-[TIA] decisions . . . confirm the continuing sway of
comity considerations, independent of the Act.
Levin, 560 U.S. at 422-23 (emphasis added; cleaned up); see DIRECTV, Inc. v.
Tolson, 513 F.3d 119, 125 (4th Cir. 2008). Indeed, as the district court noted, in
Levin the Court concluded that because “the comity doctrine justifies dismissal of
respondents’ federal court action, we need not decide whether the TIA would itself
block the suit.” Id. at 432.
Third, the state court’s December 2020 Order addressed, preliminarily, only the
VSPA fee-or-tax issue under state law. It did not address the broader considerations
comity addresses, as confirmed in Levin -- “fiscal operations,” not just tax collection.
The state court order in no way overruled or even undermined the basis for the district
court’s first remand order. Therefore, DirecTV failed to establish the essential basis
for a second removal under 28 U.S.C. § 1446(b)(3) -- an “order or other paper from
which it may first be ascertained that the case is one which is or has become
removable” (emphasis added). A second removal under § 1446(b)(3) requires a
“different factual basis” underlying a new theory for removal. S.W.S. Erectors, Inc.
v. Infax, Inc., 72 F.3d 489, 493 (5th Cir. 1996). Whatever else may be ascertained
from the state court’s December 2020 Order, it did not affect removability.
“[T]he party seeking removal has the burden to establish federal subject matter
jurisdiction.” Baker v. Martin Marietta Materials, Inc., 745 F.3d 919, 923 (8th Cir.
2014). For the foregoing reasons, we conclude DirecTV failed to meet that burden.
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Accordingly, we need not consider the other issues addressed by the district court.
Nor do we express any view as to the merits of Creve Coeur’s class action claims.
See City of Ashdown v. Netflix, Inc., 52 F.4th 1025 (8th Cir. Nov. 8, 2022), a
putative class action under the Arkansas Video Service Act of 2013.
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