MI Bell Telephone Co. v. Engler

Decision Date04 May 2001
Docket NumberNos. 00-2087,00-2088,00-2174,00-2173,s. 00-2087
Parties(6th Cir. 2001) Michigan Bell Telephone Company, d/b/a Ameritech Michigan, Plaintiff-Appellant/Cross-Appellee, v. John Engler, in his Official Capacity as Governor of the State of Michigan; David A. Svanda, in his Official Capacity as Commissioner of the Michigan Public Service Commission; Robert B. Nelson, in his Official Capacity as Commissioner of the Michigan Public Service Commission; John G. Strand, in his Official Capacity as Chairman of the Michigan Public Service Commission, Defendants-Appellees/Cross-Appellants. Verizon North Incorporated and Contel of the South, Incorporated, d/b/a GTE Systems of Michigan, Plaintiffs-Appellants/Cross-Appellees, v. John Engler, in his Official Capacity as Governor of the State of Michigan; David A. Svanda, in his Official Capacity as Commissioner of the Michigan Public Service Commission; Robert B. Nelson, in his Official Capacity as Commissioner of the Michigan Public Service Commission; John G. Strand, in his Official Capacity as Chairman of the Michigan Public Service Commission; Jennifer M. Granholm, in her Official Capacity as Attorney General of the State of Michigan (00-2174), Defendants-Appellees/Cross-Appellants. Argued:
CourtU.S. Court of Appeals — Sixth Circuit

Appeal from the United States District Court for the Eastern District of Michigan at Detroit, Nos. 00-73207; 00-73208, Paul D. Borman, District Judge.

Jeffery V. Stuckey, Peter H. Ellsworth, DICKINSON, WRIGHT, MOON, VAN DUSEN & FREEMAN, Lansing, Michael G. Vartanian, Dickinson, Wright, Moon, Van Dusen & Freeman, Detroit, MI, Sean A. Lev., Michael K. Kellogg, KELLOGG, HUBER, HANSEN, TODD & EVANS, Washington, D.C.for Michigan Bell Telephone Co.

David A. Voges, OFFICE OF THE ATTORNEY GENERAL, Patricia S. Barone

ATTORNEY GENERAL, PUBLIC SERVICE DIVISION, for John Engler, David A. Svanda, Robert B. Nelson and John G. Strand.

Robert J. Franzinger, Dykema Gossett, Detroit, MI, for Worldcom Inc.

Roderick S. Coy, Thomas E. Maier, Clark Hill PLC, Okemos, MI, for American Association of Retired Persons.

Patrick F. Philbin, Aandrew B. Clubbock, Matthew T. Henderson, Kirkland & Ellis Washington, DC, Seth D. Gould, Feeney, Kellet, Wienner & Bush, Bloomifield Hills, MI, for Verizon North Inc.

Seth D. Gould, Feeney, Kellett, Wienner & Bush, Bloomfield Hills, MI, for Contel of the South, Inc.

Before: JONES and DAUGHTREY, Circuit Judges; ECONOMUS, District Judge. *

OPINION

ECONOMUS, District Judge.

Plaintiffs, Michigan Bell Telephone Company, d/b/a Ameritech Michigan and Verizon North, Incorporated (collectively "plaintiffs"), appeal the district court's order denying their request for a preliminary injunction of §310(7) of the Michigan Telecommunications Act of 2000 ("MTA"). MTA §310(7) abolished a fee imposed upon customers known as the end user common line charge ("EUCL"). Defendants, John Engler, Governor of the State of Michigan, and David A. Svanda, Robert B. Nelson and John G. Strand, Commissioners of the Michigan Public Service Commission ("MPSC"), cross-appeal the district court's order enjoining another provision of the MTA, §710, which froze regulated telephone rates at their May 1, 2000 level until December 31, 2003, except for services the MPSC deemed competitive. The provisions of the MTA at issue applied only to telephone service providers with more than 250,000 subscribers - namely the plaintiffs.

For the following reasons, we AFFIRM the district court's order preliminarily enjoining MTA §701, and REVERSE the district court's denial of the plaintiffs' motion for enjoinment of MTA §310(7).

I. FACTS AND PROCEDURAL BACKGROUND

Plaintiffs each provide local telephone service to over 250,000 customers in the State of Michigan. Together, the plaintiffs supply over 90% of the local telephone service in the State. Thirty-six other companies account for the remainder of local telephone service, but none of them has more than 250,000 subscribers.

The plaintiffs charge their Michigan customers a monthly fee for "local exchange service." This service includes a certain number of "local" telephone calls which originate and terminate within a defined calling area. The plaintiffs also offer "local toll service," which covers calls not defined as either local or long distance. The plaintiffs charge customers on a per-minute basis for local toll calls.

The plaintiffs also charge their customers other fees, two of which are the interstate end user common line charge (presently $4.35) and the intrastate end user common line charge. Verizon imposes an intrastate EUCL monthly charge of $3.50, and Ameritech imposes a $3.28 monthly intrastate EUCL charge. Further, prior to the enactment of MTA §310(7), the plaintiffs could impose, or increase at any time, the intrastate EUCL charge without prior approval of the MPSC, or a hearing before that body. The only limitation on the intrastate EUCL charge is that it must remain below the interstate EUCL rate set by the Federal Communications Commission ("FCC").

On July 17, 2000, Act 295 of the Public Acts of the State of Michigan for 2000 was signed by Governor John Engler, and took immediate effect. Act 295 amended the MTA to ensure that "every person has access to just, reasonable, and affordable basic residential telecommunication service," and to "allow and encourage competition [in] providing telecommunication services." Mich. Comp. Laws §484.2101(2)(a), (b). As stated previously, two provisions of Act 295 are at issue herein - §310(7) and §701: §310(7) abolishes the intrastate EUCL; and, §701 freezes telephone rates for service providers with more than 250,000 subscribers until December 31, 2001, unless a provider's services are deemed competitive by the MPSC in various circumstances.

In the proceedings before the district court, the plaintiffs argued, inter alia, that MTA §§310(7) and 701(1) violate the Due Process Clause of the Fourteenth Amendment. The plaintiffs assert that these provisions are facially unconstitutional because they do not provide a mechanism through which telephone service providers may ensure that they receive a just and reasonable rate of return on their investment. As noted above, the district court denied the plaintiffs' motion for preliminary injunction with respect to MTA §310(7), and granted it with respect to §701. On September 22, 2000, the plaintiffs filed a notice of appeal of the district court's order and simultaneously moved this court for an emergency injunction of MTA §310(7). On September 28, 2000, Chief Judge Martin granted the plaintiffs' emergency motion.

II. LAW
A. Severability

As an initial matter, the court must determine whether MTA §701, the rate freeze provision, may be severed from §310(7) which abolishes the EUCL. The plaintiffs argue that the two provisions may not be severed, and, therefore, the district court should have enjoined both statutory provisions. Michigan's severability statute provides:

If any portion of an act or the application thereof to any person or circumstances shall be found to be invalid by a court, such invalidity shall not affect the remaining portions or applications of the act which can be given effect without the invalid portion or application, provided such remaining portions are not determined by the court to be inoperable, and to this end acts are declared to be severable.

Mich. Comp. Laws §8.5. The Michigan Supreme Court explained the operation of an identical provision in another statute as follows:

Relying on the Act's severability clause, §18, defendants maintain that the Legislature expressly intended to preserve as much of the Act as possible. This clause provides: 'Sec. 18. If any portion of this act or the application of this act to any person or circumstance is found to be invalid by a court, the invalidity shall not affect the remaining portions or applications of this act which can be given effect without the invalid portion or application, if the remaining portions are not determined by the court to be inoperable.' The doctrine of severability holds that statutes should be interpreted to sustain their constitutionality when it is possible to do so. Whenever a reviewing court may sustain an enactment by proper construction, it will uphold the parts which are separable from the repugnant provisions. To be capable of separate enforcement, the valid portion of the statute must be independent of the invalid sections, forming a complete act within itself. After separation of the valid parts of the enactment, the law enforced must be reasonable in view of the Act as originally drafted. One test applied is whether the law-making body would have passed the statute had it been aware that portions therein would be declared to be invalid and, consequently, excised from the Act.

Pletz v. Austin, 336 N.W.2d 789, 809 (Mich.1983) (footnotes omitted). The plaintiffs contend that the Michigan Legislature coupled the EUCL abolishment with the rate freeze to give subscribers rate relief, and thus, severing one from the other will defeat the purpose of enacting two provisions. Contrary to the plaintiffs' position, enjoinment of MTA §701 does not render the remainder of the statute inoperable. Severance will give the statute its intended purpose - rate relief in the form of EUCL abolishment - although to a lesser extent. Telephone service providers must still apply for a rate increase, and the relevant authorities may treat such applications with the intention of protecting consumers from excessive rates. Accordingly, the plaintiffs' argument lacks merit, and MTA §701 may be enjoined with no affect on §310(7).

B. Standard of Review

The court reviews the grant or denial of a preliminary injunction for an abuse of discretion. Accordingly, this court will not disturb a district court's findings of fact unless clearly erroneous, but reviews a district court's...

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