240 F.3d 279 (4th Cir. 2001), 99-2459, Bell Atlantic Maryland v. MCI WorldCom

Docket Nº:99-2459 No. 99-2616.
Citation:240 F.3d 279
Party Name:BELL ATLANTIC MARYLAND, INCORPORATED, Plaintiff-Appellant, v. MCI WORLDCOM, INCORPORATED; AMERICAN COMMUNICATIONS SERVICES OF MARYLAND, INCORPORATED; RCN TELECOM SERVICES OF MARYLAND, INCORPORATED; STARPOWER COMMUNICATIONS, LLC; TCG MARYLAND; MCIMETRO ACCESS TRANSMISSION SERVICES, INCORPORATED; THE PUBLIC SERVICE COMMISSION OF MARYLAND; GLENN F. IV
Case Date:February 14, 2001
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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Page 279

240 F.3d 279 (4th Cir. 2001)

BELL ATLANTIC MARYLAND, INCORPORATED, Plaintiff-Appellant,

v.

MCI WORLDCOM, INCORPORATED; AMERICAN COMMUNICATIONS SERVICES OF MARYLAND, INCORPORATED; RCN TELECOM SERVICES OF MARYLAND, INCORPORATED; STARPOWER COMMUNICATIONS, LLC; TCG MARYLAND; MCIMETRO ACCESS TRANSMISSION SERVICES, INCORPORATED; THE PUBLIC SERVICE COMMISSION OF MARYLAND; GLENN F. IVEY, in his official capacity as Chairman of the Public Service Commission of Maryland; CLAUDE M. LIGON, in his official capacity as Commissioner of the Public Service Commission of Maryland; E. MASON HENDRICKSON, in his official capacity as Commissioner of the Public Service Commission of Maryland; SUSAN BROGAN, in her official capacity as Commissioner of the Public Service Commission of Maryland; CATHERINE

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I. RILEY, in her official capacity as Commissioner of the Public Service Commission of Maryland, Defendants-Appellees,

UNITED STATES OF AMERICA, Intervenor/Defendant-Appellee,

MARYLAND OFFICE OF PEOPLE'S COUNSEL, Defendant.

BELL ATLANTIC MARYLAND, INCORPORATED, Plaintiff,

and

UNITED STATES OF AMERICA, Intervenor/ Defendant Appellant,

v.

THE PUBLIC SERVICE COMMISSION OF MARYLAND; GLENN F. IVEY, in his official capacity as Chairman of the Public Service Commission of Maryland; CLAUDE M. LIGON, in his official capacity as Commissioner of the Public Service Commission of Maryland; E. MASON HENDRICKSON, in his official capacity as Commissioner of the Public Service Commission of Maryland; SUSAN BROGAN, in her official capacity as Commissioner of the Public Service Commission of Maryland; CATHERINE I. RILEY, in her official capacity as Commissioner of the Public Service Commission of Maryland, Defendants-Appellees,

and

AMERICAN COMMUNICATIONS SERVICES OF MARYLAND, INCORPORATED; RCN TELECOM SERVICES OF MARYLAND, INCORPORATED; STARPOWER COMMUNICATIONS, LLC; TCGMARYLAND; MCIMETRO ACCESS TRANSMISSION SERVICES, INCORPORATED; MARYLAND OFFICE OF PEOPLE'S COUNSEL; MCI WORLDCOM, INCORPORATED, Defendants.

No. 99-2459 No. 99-2616.

United States Court of Appeals, Fourth Circuit

February 14, 2001

Argued: May 1, 2000.

Appeals from the United States District Court for the District of Maryland, at Baltimore.

Frederic N. Smalkin, District Judge. (CA-99-2061-S)

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COUNSEL: ARGUED: Sean Abram Lev, KELLOGG, HUBER, HANSEN, TODD & EVANS, P.L.L.C., Washington, D.C.; Mark Bernard Stern, Appellate Staff, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellants. Susan Stevens Miller, General Counsel, PUBLIC SERVICE COMMISSION OF MARYLAND, Baltimore, Maryland, for Appellees. ON BRIEF: Mark L. Evans, Aaron M. Panner, KELLOGG, HUBER, HANSEN, TODD & EVANS, P.L.L.C., Washington, D.C.; James P. Garland, MILES & STOCKBRIDGE, P.C., Baltimore, Maryland; David K. Hall, Vice President & General Counsel, BELL ATLANTIC MARYLAND, INC., Baltimore, Maryland; William Schultz, Acting Assistant Attorney General, Lynne A. Battaglia, United States Attorney, Christopher J. Wright, General Counsel, John E. Ingle, Deputy Associate General Counsel, Susan L. Launer, Deputy Associate General Counsel, Charles W. Scarborough, Appellate Staff, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellants. Paul M. Smith, Darryl M. Bradford, John R. Harrington, Daniel J. Weiss, JENNER & BLOCK, Chicago, Illinois; Adam H. Charnes, Mark B. Ehrlich, MCI WORLDCOM, INC., Washington, D.C.; David L. Lawson, Michael D. Warden, Stephen B. Kinnaird, SIDLEY & AUSTIN, Washington, D.C.; Matthew W. Naden, Kelly Culp Hoelzer, OBER, KALER, GRIMES & SHRIVER, P.C., Baltimore, Maryland; Michael A. McRae, AT&T;, Oakton, Virginia; Glen K. Allen, Carville B. Collins, PIPER, MARBURY, RUDNICK & WOLFE, Baltimore, Maryland; James C. Falvey, E. SPIRE COMMUNICATIONS, INC., Annapolis Junction, Maryland, for Appellees.

Before WIDENER, NIEMEYER, and KING, Circuit Judges.

Affirmed by published opinion. Judge Niemeyer wrote the opinion, in which Judge Widener joined. Judge King wrote a dissenting opinion.

OPINION

NIEMEYER, Circuit Judge:

Seeking review of a decision made by the Maryland Public Service Commission on reciprocal-compensation rights under telecommunications interconnection agreements within its jurisdiction, Bell Atlantic Maryland, Inc. ("Bell Atlantic") filed this action in federal court against the commission, its individual members in their official capacity, and the parties to the interconnection agreements. Bell Atlantic relied on the Telecommunications Act of 1996 as authority for naming the Public Service Commission and its members as defendants and for filing in federal court.

The district court dismissed the action against the State parties under the Eleventh Amendment. Then, concluding that these State parties were indispensable parties under Federal Rule of Civil Procedure 19, it dismissed the action against the private parties on jurisdictional grounds.

While we agree with much of the reasoning in the district court's opinion, we adopt a different rationale on the jurisdictional issues and affirm.

I. Background

Congress enacted the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) (codified at 47 U.S.C. SS 151-614) (sometimes the "1996 Act") with the purpose of reducing regulation in the telecommunications industry and promoting competition. As part of that effort, the 1996 Act enables local exchange carriers ("LECs") to use each other's local exchange networks by requiring them to enter into interconnection agreements or be subject to arbitration to impose interconnection agreements. In particular, the 1996 Act requires, among other things, that each LEC, through such an interconnection

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agreement, "afford access" to its facilities and local network exchange to "any requesting telecommunications carrier," "provide interconnection" to that network, and"establish reciprocal compensation arrangements for the transport and termination of telecommunications." 47 U.S.C. S 251(b)(4), (b)(5), (c)(2). Through such reciprocal compensation arrangements, LECs compensate each other for intercarrier calls. Thus, if a subscriber of carrier A calls a subscriber of carrier B, then carrier A must share with carrier B some of the revenues collected from the calling-subscriber to compensate carrier B for use of its facilities. Under regulatory authority conferred by the 1996 Act, the Federal Communications Commission ("FCC") has construed the scope of the reciprocal compensation obligation to apply to the "transport and termination of local telecommunications traffic." 47 C.F.R. S 51.701(a) (emphasis added). The interconnection agreements, whether reached through voluntary negotiation or through arbitration, are subject to review by State public service commissions and thereafter, in circumstances specified by the 1996 Act, by federal courts and in other circumstances, by State courts.

Bell Atlantic, the incumbent LEC in Maryland, entered into an interconnection agreement with a competing LEC, MFS Intelnet of Maryland, Inc., later succeeded by MCI WorldCom, Inc. ("MCI"), and the Maryland Public Service Commission approved that agreement in October 1996. Shortly thereafter, the parties found themselves in a dispute over whether Bell Atlantic had to pay reciprocal compensation for its subscribers' telephone calls made to Internet Service Providers ("ISPs") that have local telephone numbers but provide access to interstate destinations through the Internet. Bell Atlantic maintained that ISP-bound telephone calls are not "local traffic" and therefore do not trigger reciprocal compensation obligations either under the 1996 Act or under the parties' interconnection agreement. MCI, on the other hand, took the position that ISP-bound calls are local traffic subject to reciprocal compensation because the calls to the ISP numbers are local. The parties agree that this issue involves substantial sums of money.

To resolve the dispute, MCI filed a complaint against Bell Atlantic before the Maryland Public Service Commission, alleging that Bell Atlantic was in breach of its interconnection agreement with MCI and requesting relief in the form of a cease-and-desist order. The Public Service Commission issued an order on August 13, 1997, finding in favor of MCI and directing Bell Atlantic "to timely forward all future interconnection payments owed [MCI] for telephone calls placed to an ISP" and to pay MCI any reciprocal compensation that it had withheld pending resolution of the dispute. The Public Service Commission based its decision on the terms of the parties' interconnection agreement. It noted, however, that the issue of whether ISP-bound calls are properly characterized as local traffic was pending before the FCC and invited the parties to return "[i]n the event that the FCC issues a decision that requires revision to the directives announced herein." Bell Atlantic appealed the Public Service Commission's order to the Circuit Court for Montgomery County, Maryland, and that court upheld the Public Service Commission decision. See Bell Atlantic Maryland, Inc. v. Maryland PSC, Civil Action No. 178260, Docket Entry # 36, March 26, 1998. Bell Atlantic took no further appeal to higher Maryland courts.

Almost a year later, on February 26, 1999, the FCC issued a ruling (since vacated by the United States Court of Appeals for the D.C. Circuit) that declared ISP-bound traffic to be non-local. See In the Matter of Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP Bound Traffic, 14 FCC Rcd 3689, 3690 (P 1)...

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