MI Bell Telephone Co. v. Climax Telephone Co.

• Decision Date: 29 April 1999
• Docket Number: DEFENDANTS-APPELLANTS,PLAINTIFF-APPELLEE,No. 98-1315,98-1315
• Citation: 186 F.3d 726
• Parties: (6th Cir. 1999) MICHIGAN BELL TELEPHONE COMPANY, D/B/A AMERITECH MICHIGAN,, v. CLIMAX TELEPHONE COMPANY, DEFENDANT, JOHN G. STRAND, JOHN C. SHEA, AND DAVID A. SVANDA, COMMISSIONERS OF THE MICHIGAN PUBLIC SERVICE COMMISSION (IN THEIR OFFICIAL CAPACITIES AND NOT AS INDIVIDUALS),, UNITED STATES OF AMERICA, FEDERAL COMMUNICATIONS COMMISSION, INTERVENORS. Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 726

186 F.3d 726 (6th Cir. 1999)

MICHIGAN BELL TELEPHONE COMPANY, D/B/A AMERITECH MICHIGAN, PLAINTIFF-APPELLEE, v. CLIMAX TELEPHONE COMPANY, DEFENDANT, JOHN G. STRAND, JOHN C. SHEA, AND DAVID A. SVANDA, COMMISSIONERS OF THE MICHIGAN PUBLIC SERVICE COMMISSION (IN THEIR OFFICIAL CAPACITIES AND NOT AS INDIVIDUALS), DEFENDANTS-APPELLANTS, UNITED STATES OF AMERICA, FEDERAL COMMUNICATIONS COMMISSION, INTERVENORS.

No. 98-1315

U.S. Court of Appeals, Sixth Circuit

Argued: April 29, 1999

Decided: July 28, 1999

Appeal from the United States District Court for the Western District of Michigan at Grand Rapids. No. 97-00197--Gordon J. Quist, District Judge. [Copyrighted Material Omitted] Robert M. Dow, Jr. (briefed), John E. Muench (argued and briefed). Theodore A. Livingston (briefed), Mayer, Brown & Platt, Chicago, IL; Jeffrey V. Stuckey (briefed), Joseph A. Fink (briefed), John M. Dempsey (briefed), Edward R. Becker (briefed), Dickinson, Wright, Moon, Van Dusen & Freeman, Lansing, MI, for Plaintiff-Appellee.

Harvey J. Messing, Gary L. Field, Loomis, Ewert, Parsley, Davis & Gotting, Lansing, MI, for Defendant.

David A. Voges (argued and briefed), Asst. Attorney Gen., Henry J. Boynton, Asst. Attorney Gen., Office of the Attorney General Public Service Division, Lansing MI; Steven D. Hughey, Donald L. Keskey, Asst. Attorney Gen., David M. Gadaleto (briefed), Public Service Division, Michigan Attorney General, Lansing, MI, for Defendants-Appellants.

Mark B. Stern (briefed), Susan Pacholski (argued and briefed), U.S. Department of Justice, Civil Division, Appellate Staff, Washington, D.C., for Intervenors.

Before: Jones, Boggs, and Cole, Circuit Judges.

Boggs, J., delivered the opinion of the court, in which Jones, J., joined. Cole, J. (p. 733), delivered a separate opinion Concurring in part and Dissenting in part.

OPINION

Boggs, Circuit Judge.

Climax Telephone Company expanded its local exchange service into the service territory of Michigan Bell Telephone Company, d/b/a/ Ameritech Michigan ("Ameritech"). Climax petitioned the Michigan Public Service Commission (the "PSC") for arbitration of the terms, conditions, and prices for interconnection and related arrangements from Ameritech, under Section 252 of the federal Telecommunications Act of 1996 (the "FTA" or the "Act"), 47 U.S.C. § 252, and "the procedure adopted by the [PSC's] Order dated July 16, 1996, in Case No. U-11134." An arbitration panel rendered its decision, to which both parties objected. The PSC rejected the objections, adopted the arbitration panel's decision, and approved an interconnection agreement between the parties based on the arbitration panel's decision.

Ameritech sued Climax and the Commissioners of the PSC in their official capacities, seeking declaratory and injunctive relief against enforcement of the interconnection agreement. The Commissioners moved to dismiss the complaint against them, citing provisions of the Act, the doctrine of sovereign immunity, and the Tenth and Eleventh Amendments. The district court denied the motion, and the Commissioners appeal its decision. We granted the Federal Communications Commission ("FCC") intervenor status, and now affirm the judgment of the district court. Only the interlocutory appeal is before us--the merits of the case have not yet been considered below.

I.

Climax is an established local exchange carrier ("LEC") serving the Climax, Michigan area. On July 30, 1996, Climax filed an application with the PSC to provide local exchange service in the greater Battle Creek and Kalamazoo, Michigan area, where Ameritech is the incumbent provider. The application showed that Climax intended to establish a local calling area covering the geographical area served by four Ameritech local calling areas. In late 1996, Climax and Ameritech began negotiating an interconnection agreement and reached resolution on all but seven issues.

On March 10, 1997, just before the end of the statutory period for timely filing of petitions for arbitration, see 47 U.S.C. § 252(b)(1), Climax petitioned for arbitration. Pursuant to the procedures established in its opinion in case number U-11134, the PSC assigned the matter to an arbitration panel composed of two technical staff people and one administrative law Judge. See Case No. U-11134, 1996 WL 467772 (Mich. P.S.C. July 16, 1996). The panel addressed five open issues; on May 21, 1997, it adopted Climax's proposed resolution as to three issues, Ameritech's proposed resolution as to one issue, and found that the fifth issue was not properly raised.

On June 25, 1997, the PSC adopted the decision of the arbitration panel and ordered the parties to file the interconnection agreement.¹ One commissioner Dissented. On July 11, 1997, the parties filed the agreement. On July 25, 1997, Ameritech moved for a rehearing, which the PSC denied on August 13.

On September 12, 1997, Ameritech filed a complaint in federal district court against Climax and the PSC Commissioners in their official capacity. Ameritech seeks declaratory determinations that (1) certain sections of the agreement violate the Act, the implementing regulations, state law, and the United States Constitution, and (2) the PSC lacks jurisdiction to decide one of the issues. Ameritech also seeks to enjoin enforcement of those sections of the agreement, and to reform the agreement.

On November 24, 1997, the Commissioners moved to be dismissed as defendants, on grounds that (1) the district court lacked personal jurisdiction over them and (2) Ameritech failed to state a claim on which relief can be granted. The district court heard oral argument and denied the motion. The Commissioners appeal the denial of their motion to dismiss. This court ordered the Commissioners to show cause why the appeal should not be dismissed for lack of jurisdiction. See 6th Circuit Docket, Case No. 98-1315, March 25, 1998. On the Commissioners' further showing, the order was withdrawn on the ground that district court orders denying dismissal on Eleventh Amendment grounds are appealable collateral orders. See Order, Case No. 98-1315, April 16, 1998.

II.

Where the district court bases its denial of a motion to dismiss for failure to state a claim purely on the legal sufficiency of the plaintiff's case, we review the decision de novo. See Barrett v. Harrington, 130 F.3d 246, 251 (6th Cir. 1997) (citing RMI Titanium v. Westinghouse Electric Corp., 78 F.3d 1125, 1134 (6th Cir. 1996)). All factual allegations in the complaint are accepted as true. Nishiyama v. Dickson County, 814 F.2d 277, 279 (6th Cir. 1987) (en banc).

"Where a trial court's ruling on jurisdiction is based in part on the resolution of factual disputes, a reviewing court must accept the district court's factual findings unless they are clearly erroneous. However, review of the district court's application of the law to the facts is de novo." RMI Titanium v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996) (internal citations omitted) (citing Ynclan v. Dep't of the Air Force, 943 F.2d 1388, 1390 (5th Cir. 1991)).

Questions of statutory interpretation, like all matters of law, are reviewed de novo. See United States v. Brown, 915 F.2d 219, 223 (6th Cir. 1990).

A. The Telecommunications Act of 1996

Congress enacted the FTA to promote competition in all telecommunications markets, including the local service market. See H.R. Conf. Rep. No. 104-458, at 113 (1996), reprinted in 1996 U.S.C.C.A.N. 124. Title I, Part II of the Act provides standards and procedures to allow startup carriers to interconnect their networks to the incumbent carrier's network, to access the incumbent carrier's network elements piece-by-piece, to purchase the incumbent carrier's retail services "at wholesale rates" for resale, and to access the incumbent carrier's physical infrastructure and facilities for connection purposes. 47 U.S.C. §§ 251(b)(4) and 251(c)(6). The Act contemplates that state public utility commissions will assume regulatory authority over interconnection agreements; if a state chooses not to do so "in any proceeding or other matter under this section," the FCC will assume regulatory authority "with respect to the proceeding or matter." 47 U.S.C. § 252(e)(5).

The Act requires incumbent providers to negotiate in good faith with new entrants; if the parties cannot resolve their differences, either party may petition the regulatory authority for arbitration of the unresolved issues. See 47 U.S.C. §§ 251(c), 252(b). The arbitration panel "shall limit its consideration of any petition [for arbitration] (and any response thereto) to the issues set forth in the petition and in the response, if any...." 47 U.S.C. § 252(b)(4)(A). The arbitration panel must ensure that its resolution meets the requirements of § 251 and the FCC regulations implementing § 251, see 47 U.S.C. § 252(c)(1), and the regulatory authority may reject an arbitrated resolution only if it does not meet those requirements, see 47 U.S.C. § 252(e)(2)(B). When a state acts as the regulatory authority, "any party aggrieved by [its] determination may bring an action in an appropriate Federal district court to determine whether the agreement or statement meets the requirements of section 251 of this title and this section [252]." 47 U.S.C. § 252(e)(6). The Act expressly deprives state courts of jurisdiction to review the approval or rejection of an agreement by state regulatory authorities. See 47 U.S.C. § 252(e)(4).

B. Issues Presented on Appeal

The Commissioners raise four issues: (1) whether they are proper parties in a federal court action filed pursuant to 47 U.S.C. § 252(e); (2) whether the Eleventh Amendment bars naming the Commissioners in this suit; (3) whether the PSC, in arbitrating the agreement, waived sovereign immunity; and (4) whether the Tenth Amendment bars naming the Commissioners in this suit. Ameritech raises the issue of whether this court has jurisdiction to conduct interlocutory...