Bell Atlantic-Pennsylvania v. Penn. Public Utility

• Decision Date: 03 August 2000
• Docket Number: No. CIV. A. 99-5391.,CIV. A. 99-5391.
• Citation: 107 F.Supp.2d 653
• Parties: BELL ATLANTIC-PENNSYLVANIA, INC., Plaintiff, v. The PENNSYLVANIA PUBLIC UTILITY COMMISSION, et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

Page 653

107 F.Supp.2d 653

BELL ATLANTIC-PENNSYLVANIA, INC., Plaintiff, v. The PENNSYLVANIA PUBLIC UTILITY COMMISSION, et al., Defendants.

No. CIV. A. 99-5391.

United States District Court, E.D. Pennsylvania.

August 3, 2000.

Henry F. Siedzikowski, John M. Elliott, Elliott, Rihner, Siedzikowsky and Egan, P.C., Blue Bell, PA, Samuel L. Feder, Geoffrey M. Klineberg, Mark L. Evans, Kellogg Huber Hansen Todd & Evans, Washington, DC, for plaintiff.

Maryanne R. Martin, Harrisburg, PA, Elisabeth H. Ross, Harvey A. Levin, Birch, Horton, Bittner and Cherot, Washington, DC, for Pennsylvania Public Utility Com'n, John M. Quain, Robert K. Bloom, Nora Mead Brownell, Aaron Wilson, Jr., defendants.

Albert G. Bisler, Eckert Seamans Cherin & Mellott, Philadelphia, PA, for Vincent J. Fumo, Roger A. Madigan, Mary Jo White, defendants.

Virginia H. Miller, Virginia Hinrichs McMichael, Dilworth Paxson, LLP, Philadelphia, PA, Thomas, Dilworth, Paxson, Kalish and Kauffman, Philadelphia, PA, Jeffrey A. Rackow, Washington, DC, Michael B. DeSanctis, Jenner & Block, Washington, DC, Matthew B. Pachman, Washington DC, for MCI Worldcom Network Services, Inc., MCIMetro Access Transmission Services, LLC, intervenor-defendants.

Joseph C. Crawford, Wold, Block, Schorr and Solis-Cohen, Philadelphia, PA, for AT&T Communications of Pennsylvania, Inc., TCG Pittsburgh, TCG Delaware Valley, Inc., intervenor-defendants.

Michael D. Klein, LeBoeuf, lamb, Greene & MacRae, L.L.P., Harrisburg, PA, Jan L. Fox, LeBoeuf, Lamb, Greene & MacRae, Pittsburgh, PA, for Sprint Communications Co., L.P., United Telephone Co. of Pennsylvania, intervenor-defendants.

David Zaring, U.S. Atty's Office, Washington, DC, for U.S., intervenor-plaintiff.

MEMORANDUM AND ORDER

KATZ, Senior District Judge.

Now before the court is the motion to dismiss submitted by defendants the Pennsylvania Public Utility Commission (PUC) and Commissioners John M. Quain, Robert K. Bloom, Nora Mead Brownell, and Aaron Wilson, Jr., as well as the motion for judgment on the pleadings submitted by intervening state senators Vincent J. Fumo, Roger A. Madigan, and Mary Jo White. The motions seek dismissal of this action on the grounds of Eleventh Amendment immunity or, in the alternative, abstention in light of ongoing state court proceedings. In addition, the motions seek to dismiss as untimely the crossclaims of intervenors MCI WorldCom Network Services, Inc. and MCImetro Access Transmission Services, LLC (collectively, Worldcom), and the crossclaims of intervenors AT & T Communications of Pennsylvania, Inc., TCG Pittsburgh, and TCG Delaware Valley, Inc. (collectively, AT & T). Finally, the motions seek dismissal of counts four and five of plaintiff Bell Atlantic-Pennsylvania's (Bell) complaint, as well as part of Worldcom & AT & T's claims, for failure to state a claim upon which relief can be granted.¹

Additional intervenors in this action are Sprint Communications Company and the United Telephone Company of Pennsylvania (collectively, Sprint), and the United States. Sprint did not take a position on either motion. The United States intervened for the purpose of defending the constitutionality of the Telecommunications Act of 1996(TCA).

I. Background

A. Telecommunications Act of 1996

This case involves the provisions of TCA that seek to foster competition in local telecommunications services.² See 47 U.S.C. §§ 251-52.

Until the 1990s, local phone service was thought to be a natural monopoly. States typically granted an exclusive franchise in each local service area to a local exchange carrier (LEC), which owned, among other things, the local loops (wires connecting telephones to switches), the switches (equipment directing calls to their destinations), and the transport trunks (wires carrying calls between switches) that constitute a local exchange network.

AT & T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 371, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999). Bell, the plaintiff, is an incumbent LEC.

The TCA attacks the regulatory protections that sheltered local telephone monopolies by "preempt[ing] all state and local legal barriers to entry into the local telephone market," including the state-sanctioned exclusive franchises formerly enjoyed by incumbent LECs. Bell Atlantic-Delaware, Inc. v. McMahon, 80 F.Supp.2d 218, 222 (D.Del.2000) (citing 47 U.S.C. § 253(a)). Through sections 251 and 252, TCA also attempts to alleviate economic barriers, recognizing that an incumbent LEC's network provides it with a competitive advantage because the cost of constructing a new, wholly redundant network is generally prohibitive. See, e.g., id.; MCI Telecomm. Corp. v. Illinois Bell Tel. Co., 222 F.3d 323, 328 (7th Cir.2000). To that end, the TCA subjects incumbent LECs to "a host of duties intended to facilitate market entry" including "the LEC's obligation under 47 U.S.C. § 251(c) ... to share its network with competitors." Iowa Utils. Bd., 525 U.S. at 371, 119 S.Ct. 721. Section 251(c) provides three ways a competitor can gain access to an incumbent LEC's network: "It can purchase local telephone services at wholesale rates for resale to end users; it can lease elements of the incumbent's network `on an unbundled basis'³; and it can interconnect its own facilities with the incumbent's network."⁴ Id. The TCA also requires an incumbent LEC to allow a competitor to collocate "equipment necessary for interconnection or access to unbundled network elements." 47 U.S.C. § 251(c)(6).

The Act requires that an incumbent LEC and any competitor negotiate an agreement in good faith. See 47 U.S.C. § 251(c)(1). During these negotiations, any party may request the state commission that regulates telephone services to mediate. See id. § 252(a)(2). In the event that the negotiations fail, the TCA provides that either party may petition the state commission to arbitrate any open issues. See id. § 252(b). An agreement encompassing the access methods detailed in section 251(c), whether arrived at privately or through compulsory arbitration, must be approved by the state commission. See id. § 252(e)(1). The TCA limits the grounds under which a commission may reject an agreement under federal law and regulations, see id. § 252(e)(2), while preserving a state's authority to impose additional conditions that do not conflict with federal law. See id. § 252(e)(3) (stating that, notwithstanding section 252(e)(2) but subject to 47 U.S.C. § 253, "nothing in this section shall prohibit a State commission from establishing or enforcing other requirements of State law in its review of an agreement[.]"). If a state commission fails to act under section 252, the Federal Communications Commission (FCC) will preempt the state commission's jurisdiction and responsibilities over the access agreements.⁵ See id. § 252(e)(5); see generally Illinois Bell, 222 F.3d at 328-29 (detailing section 252's procedural scheme); MCI Telecomm. Corp. v. Public Serv. Comm'n, 216 F.3d 929, 933 (10th Cir.2000) (same).

"In any case in which a State commission makes a determination under ... [section 252], any party aggrieved by such determination may bring an action in an appropriate Federal district court to determine whether the agreement or statement meets the requirements" of sections 251 and 252. 47 U.S.C. § 252(e)(6). Moreover, "[n]o State court shall have jurisdiction to review the action of a State commission in approving or rejecting an agreement" under section 252. Id. § 252(e)(4).

B. The Parties' Challenges to the PUC's Global Order

At the heart of this action is an Opinion and Order entered by the PUC on September 30, 1999 (Global Order). In the Global Order, the PUC addressed the "several interrelated dockets implementing state and federal telecommunications policy in the Commonwealth of Pennsylvania." Global Order at 2 (Compl.Ex.1). The PUC undertook the proceedings that culminated in its Global Order upon concluding that its previous system of separately adjudicating individual telecommunications cases did not lead to "satisfactory and prompt resolution" of the morass of issues raised by federal and state law mandates to provide consumers with competitive local telecommunications services. Id.

The PUC first attempted to settle the outstanding issues by negotiation, but this method failed. Two competing petitions were then filed before the Commission — one supported by Bell and others, and the second supported by Worldcom; A & T; Senators Fumo, Madigan, and White; and others. The Global Order resolved the issues raised by the two petitions, as well as the pending interrelated dockets that were consolidated for that purpose.

The action before this court alleges that several aspects of the Global Order violate federal law.⁶ Bell, Worldcom, and AT & T all contend that rates for unbundled network elements (UNE) set by the Global Order violate the TCA.⁷ An order entered by the PUC on August 7, 1997, first set permanent rates for access to Bell's UNEs after a proceeding before the Commission commonly referred to as MFS-Phase III. "[N]umerous, subsequent agreements" incorporated the rates set by the MFS-Phase III Order. Compl. ¶ 22. The Global Order rates replace the MFS-Phase III rates.

Bell also challenges the PUC's authority under federal law to require it to provide unbundled access to switching throughout Pennsylvania and to provide unbundled access to digital subscriber line access multiplexers (DSLAMs).⁸ Bell contends it should not be required, under federal law and regulations, to make these network elements available because failure to provide them would not impair a competitor's ability to provide services and because they are not necessary for a competitor to provide service. In addition, it contends that the PUC failed to engage in the analysis required by the TCA in determining that Bell make these elements available on an unbundled basis.

Finally, Bell challenges the discount wholesale rates for retail services set by the...