MCI Telecomm. v. IL Bell Telephone

• Decision Date: 24 July 2000
• Docket Number: 99-2806,99-2811,99-2873,No. 98-2127,99-2805,99-2992,98-2127
• Citation: 222 F.3d 323
• Parties: (7th Cir. 2000) MCI TELECOMMUNICATIONS CORPORATION, a Delaware Corporation, and MCI METRO ACCESS TRANSMISSION SERVICES, INCORPORATED, a Delaware Corporation, Plaintiffs-Appellees, and UNITED STATES OF AMERICA and FEDERAL COMMUNICATIONS COMMISSION, Intervenors-Appellees, v. ILLINOIS BELL TELEPHONE COMPANY, doing business as Ameritech Illinois, Incorporated, Defendant-Appellee, and ILLINOIS COMMERCE COMMISSION, TERRY HARVILL, RUTH K. KRETSCHMER, in their official capacities as Commissioners of the Illinois Commerce Commission and not as individuals, et al., Defendants-Appellants. WISCONSIN BELL, INCORPORATED, doing business as AMERITECH WISCONSIN, Plaintiff-Appellant, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, CHERYL L. PARRINO, in her official capacity as a member of the Commission, DANIEL J. EASTMAN, in his official capacity as a member of the Commission, et al., Defendants-Appellees. WISCONSIN BELL, INCORPORATED, doing business as AMERITECH WISCONSIN, Plaintiff-Appellant, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, CHERYL L. PARRINO and JOSEPH P. METTNER, Commissioners of the Public Service Commission of Wisconsin, Defendants-Appellees. WISCONSIN BELL, INCORPORATED, doing business as Ameritech Wisconsin, Plaintiff-Appellant, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, CHERYL L. PARRINO, DANIEL J. EASTMAN, et al., Defendants-Appellees. MCI METRO ACCESS TRANSMISSION SERVICES, INCORPORATED, and MCI TELECOMMUNICATIONS CORPORATION, Plaintiffs-Appellants, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, CHERYL L. PARRINO, DANIEL J. EASTMAN, in their official capacities as members of the Commission, et al., Defendants-Appellees. WISCONSIN BELL, INCORPORATED, doing business as Ameritech Wisconsin, Plaintiff, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, CHERYL L. PARRINO, DANIEL J. EASTMAN, et al., Defendants-Appellees, and UNITED STATES OF AMERICA, Intervenor-Appellant
• Court: U.S. Court of Appeals — Seventh Circuit

Page 323

222 F.3d 323 (7th Cir. 2000)

MCI TELECOMMUNICATIONS CORPORATION, a Delaware Corporation, and MCI METRO ACCESS TRANSMISSION SERVICES, INCORPORATED, a Delaware Corporation, Plaintiffs-Appellees and UNITED STATES OF AMERICA and FEDERAL COMMUNICATIONS COMMISSION, Intervenors-Appellees, v. ILLINOIS BELL TELEPHONE COMPANY, doing business as Ameritech Illinois, Incorporated, Defendant-Appellee and ILLINOIS COMMERCE COMMISSION, TERRY HARVILL, RUTH K. KRETSCHMER, in their official capacities as Commissioners of the Illinois Commerce Commission and not as individuals, et al., Defendants-Appellants.

WISCONSIN BELL, INCORPORATED, doing business as AMERITECH WISCONSIN, Plaintiff-Appellant, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, CHERYL L. PARRINO, in her official capacity as a member of the Commission, DANIEL J. EASTMAN, in his official capacity as a member of the Commission, et al., Defendants-Appellees.

WISCONSIN BELL, INCORPORATED, doing business as AMERITECH WISCONSIN, Plaintiff-Appellant, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, CHERYL L. PARRINO and JOSEPH P. METTNER, Commissioners of the Public Service Commission of Wisconsin, Defendants-Appellees.

WISCONSIN BELL, INCORPORATED, doing business as Ameritech Wisconsin, Plaintiff-Appellant, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, CHERYL L. PARRINO, DANIEL J. EASTMAN, et al., Defendants-Appellees.

MCI METRO ACCESS TRANSMISSION SERVICES, INCORPORATED, and MCI TELECOMMUNICATIONS CORPORATION, Plaintiffs-Appellants, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, CHERYL L. PARRINO, DANIEL J. EASTMAN, in their official capacities as members of the Commission, et al., Defendants-Appellees.

WISCONSIN BELL, INCORPORATED, doing business as Ameritech Wisconsin, Plaintiff, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, CHERYL L. PARRINO, DANIEL J. EASTMAN, et al., Defendants-Appellees and UNITED STATES OF AMERICA, Intervenor-Appellant.

No. 98-2127, 99-2811, 99-2805, 99-2873, 99-2806, 99-2992

In the United States Court of Appeals For the Seventh Circuit

Argued November 6, 1998

Reargued December 2, 1999

Decided July 24, 2000

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 97 C 2225--David H. Coar, Judge.

Appeals from the United States District Court for the Western District of Wisconsin. Nos. 97 C 566; 98 C 11; 98 C 153; 98 C 366--Barbara B. Crabb, Judge. [Copyrighted Material Omitted] Darryl M. Bradford, Jenner & Block, Chicago, IL, Paul M. Smith, Jenner & Block, Washington, DC, for plaintiff-appellee.

John P. Kelliher, Office of the Attorney General, Thomas R. Stanton (argued), Illinois Commerce Commission, Theodore A Livingston, Chicago, IL, defendant-appellant.

Mark Stern (argued), Susan L. Pacholski, Department of Justice, Civil Division, Appellate Section, Washington, DC, for intervenor-appellee.

Lawrence G. Malone, Public Service Commission of The State of New York, Albany, NY, Jeff E. Parker, Public Utilities Commission of Nevada, Carson City, NV, Dennis R. Yamada, State of Hawaii Public Utilities Commission Department of Budget and Finance, Honolulu, HI, for amicus curiae.

Before RIPPLE, KANNE and DIANE P. WOOD, Circuit Judges.

RIPPLE, Circuit Judge.

These consolidated appeals challenge determinations made by state regulatory commissions exercising their authority under the Telecommunications Act of 1996 ("the 1996 Telecommunications Act" or "the Act"), Pub. L. No. 104-104, 110 Stat. 56 (1996) (codified in scattered sections of Title 47 of the United States Code). We must decide whether private carriers may sue state commissions and their commissioners in federal court for alleged violations of sec.sec. 251 and 252 of the Act. These sections set forth the process by which Congress sought to bring competition to local telephone exchange markets through interconnection agreements between incumbent and new carriers. See 47 U.S.C. sec.sec. 251 & 252 (Supp. II 1996).

One of the consolidated cases, 98-2127, is before us on rehearing. In this case, Illinois Bell, Inc. (doing business as Ameritech Illinois) ("Ameritech Illinois") and MCI Telecommunications and MCI Metro Access Transmission Services, Inc. (collectively "MCI") claim that the Illinois Commerce Commission ("the ICC") and various individual Commissioners ("the ICC Commissioners") violated the Act with respect to the ICC's arbitration and approval of the carriers' interconnection agreement. The ICC and the ICC Commissioners filed motions to dismiss on Eleventh Amendment immunity grounds. The district court denied those motions, see MCI Telecomms. Corp. v. Illinois Bell Tel. Co., No. 97 C 2225, 1998 WL 156678 (N.D. Ill. 1998), and the ICC and the ICC Commissioners have appealed.

We affirmed the district court's judgment in a previous opinion. See MCI Telecomms. Corp. v. Illinois Commerce Comm'n, 168 F.3d 315, amended by 183 F.3d 558 (7th Cir. 1999). Thereafter, however, the Supreme Court issued a trio of opinions addressing the scope of Eleventh Amendment immunity. See Alden v. Maine, 527 U.S. 706 (1999); College Savings Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666 (1999); Florida Prepaid Postsecondary Educ. Expense Bd. v. College Savings Bank, 527 U.S. 627 (1999). We therefore granted rehearing, restored 98-2127 to our calendar for oral argument, and requested that the parties file supplemental briefs addressing the impact of the Supreme Court's decisions on this case. See 183 F.3d 567, 567-68 (7th Cir. 1999).

The other cases, all from Wisconsin, are before us for the first time. Although aligned in various ways, the parties involved in the disputes include Wisconsin Bell, Inc. (doing business as Ameritech Wisconsin) ("Ameritech Wisconsin"), MCI,¹ the Public Service Commission of Wisconsin ("the PSCW") and various members of that commission ("the PSCW Commissioners"). In each case, the PSCW or the PSCW Commissioners or both were named as defendants, and they filed motions to dismiss the lawsuits against them on Eleventh Amendment grounds. The district court granted the motions, see Wisconsin Bell, Inc. v. Public Serv. Comm'n, 57 F. Supp.2d 710 (W.D. Wis. 1999), and the carriers now appeal the district court's judgment.

For the reasons that follow, we hold that the Eleventh Amendment does not bar these suits against the state commissions and their commissioners because, in the particular circumstances present in these cases, the states have waived their Eleventh Amendment immunity by participating in the regulatory scheme created by the Act. We also hold, as an independent basis for decision, that the carriers may proceed with their respective federal claims for equitable relief against the individual commissioners under the Ex parte Young doctrine.

I BACKGROUND

A. The Statutory Scheme

Congress enacted the 1996 Telecommunications Act "[t]o promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies." Pub. L. No. 104-104, 110 Stat. 56, 56 (1996). The Act "fundamentally restructures local telephone markets" by transforming the "long-standing regime of state-sanctioned monopolies" into a competitive market. AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 371 (1999). Congress recognized that, even after the removal of regulatory restrictions on competition, significant economic barriers would remain to block entry into local telephone markets. Prospective market entrants would face the cost of duplicating an incumbent provider's local network infrastructure. To remove this economic barrier, the Act essentially requires incumbent local exchange carriers ("LECs") to share their networks with competitors. Section 251 of the Act requires incumbent LECs to allow new entrants to interconnect with existing local networks, to lease elements of existing local networks at reasonable rates, and to purchase the incumbents' services at wholesale rates and resell those services to retail customers. See 47 U.S.C. sec. 251 (Supp. II 1996).

Section 252 sets out the process by which incumbent LECs and prospective carriers establish interconnection agreements. First, incumbent LECs and prospective carriers must negotiate in good faith to reach voluntary interconnection agreements. At any time during the negotiations, a party may ask the appropriate state commission to participate as a mediator in the negotiations. See id. sec. 252(a)(2). If negotiations prove unsuccessful, subsection 252(b) provides for compulsory arbitration of any open issues. During the period from the 135th to the 160th day after an incumbent LEC receives a request for negotiation, any party to the negotiation may petition the state commission to arbitrate any open issues. See id. sec. 252(b)(1). Sections 251 and 252 establish certain standards that the state commission must follow in resolving open issues by arbitration and in imposing conditions on the parties. The state commission is also bound by Federal Communications Commission ("FCC") regulations issued pursuant to sec. 251.

Subsection 252(e) requires any interconnection agreement reached by negotiation or arbitration to be submitted to the state commission for approval and specifies the grounds on which a state commission can reject an agreement. Specifically, state commissions may reject negotiated interconnection agreements only if the commission finds (1) that the agreement discriminates against a carrier that is not a party to the agreement or (2) that implementation of the agreement (or a part thereof) would be inconsistent with "the public interest, convenience, and necessity." Id. sec. 252(e)(2)(A). A state commission may reject an arbitrated interconnection agreement only if the agreement (or part thereof) (1) does not meet the requirements of sec. 251 and its implementing regulations or (2) fails to meet the pricing standards set forth...