Mci Telecommunications Corp. v. Gte Northwest, Civil No. 97-1687-JE.

Citation41 F.Supp.2d 1157
Decision Date17 March 1999
Docket NumberCivil No. 97-1687-JE.
PartiesMCI TELECOMMUNICATIONS CORP., and MCImetro Access Transmission Services, Inc., Plaintiffs, v. GTE NORTHWEST, INC., The Public Utility Commission of Oregon and Roger Hamilton, Ron Eachus and Joan H. Smith, in their official capacities as Commissioners of the Public Utility Commission, Defendants.
CourtUnited States District Courts. 9th Circuit. United States District Court (Oregon)

Lisa F. Rackner, Roy Pulvers, Lindsay Hart Neil & Weigler, Portland, OR, Mark B. Ehrlich, Thomas F. O'Neil, III, MCI WorldCom Inc., Washington, DC, Jodie L. Kelley, Maureen F. Del Duca, Donald B. Verrilli, Douglas H. Hsiao, Jenner & Block, Washington, DC, for MCI.

James M. Brown, Enfield Brown Collins & Knivila, Salem, OR, Thomas M. Riordan, Charles C. Read, O'Melveny & Myers, Los Angeles, CA, Patrick F. Philbin, Kirkland & Ellis, Washington, DC, for GTE Northwest.

W. Benny Won, Michael T. Weirich, Timothy M. Wood, Department of Justice, General Counsel, Salem, OR, for Roger Hamilton, Ron Eachus, Joan H. Smith, and Oregon Public Utility Commission.


JELDERKS, United States Magistrate Judge.

Plaintiffs MCI Telecommunications Corp. and MCImetro Access Transmission Services, Inc. (collectively "MCI"), bring this action under 47 U.S.C. § 252(e)(6) against GTE Northwest, Inc. ("GTE"), the Oregon Public Utility Commission ("PUC"), and PUC Commissioners Roger Hamilton, Ron Eachus, and Joan Smith ("the Commissioners"). GTE has asserted counter-claims against MCI and cross-claims against the PUC.

At issue are the terms of an interconnection agreement ("Agreement") between MCI and GTE, which is intended to facilitate competition in local telephone service. Each party has moved for summary judgment. GTE also has moved to stay the proceedings and for leave to dismiss its state law claims without prejudice.


The Telecommunications Act of 1996 ("the Act"), Pub.L. No. 104-104, 110 Stat. 56, 47 U.S.C. § 153 et seq., requires each incumbent local exchange carrier ("ILEC") to negotiate an interconnection agreement with any prospective competitive local exchange carrier ("CLEC") that wishes to provide local telephone service in the ILEC's service territory. 47 U.S.C. §§ 251 and 252. The Act contemplates that the ILEC and CLEC will first attempt to negotiate an Agreement. 47 U.S.C. §§ 251(c)(1) and 252(a)(1). Any remaining disputes may be submitted to an arbitrator, whose decision can be appealed to the state public utility commission. 47 U.S.C. § 252(b), (c), and (e).

Finally, "any party aggrieved" by a decision of a state public utility commission concerning such an agreement "may bring an action in an appropriate Federal district court to determine whether the Agreement ... meets the requirements of the Act." 47 U.S.C. § 252(e)(6).

Although the Act does not specify either the standard or scope of review, there is general agreement that review under § 252(e)(6) is confined to the administrative record. With regard to the standard of review, it is neither desirable nor practical for this court to sit as a surrogate public utilities commission to second-guess the decisions made by the state agency to which Congress has committed primary responsibility for implementing the Act in Oregon. Rather, this court's principal task is to determine whether the PUC properly interpreted and applied the Act, which is a question of federal law that is reviewed de novo.

In all other respects, review will be under the arbitrary and capricious standard.

1. Effect of the Recent Supreme Court Decision

The court requested supplemental briefing regarding the effect upon this case of the Supreme Court's recent decision in AT & T Corp. v. Iowa Util. Bd., ___ U.S. ___, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999).

At issue in AT & T was the validity of numerous regulations that the Federal Communications Commission ("FCC") promulgated in 1996 to implement the Act. The regulations were to take effect on September 30, 1996. See 61 Fed.Reg. 45,476 (1996). On September 27, 1996, the Eighth Circuit temporarily stayed "the effective date" of all of the regulations. Iowa Util. Bd. v. Federal Communications Comm'n, 96 F.3d 1116, 1118 (8th Cir.1996). On October 15, 1996, the Eighth Circuit allowed some of the regulations to go into effect, but continued to stay the FCC's pricing regulations (47 C.F.R. §§ 51.501-51.515, 51.601-51.611, 51.701-51.717) and the "pick-and-choose rule" (§ 51.809).1 Iowa Utilities v. F.C.C., 109 F.3d 418, 427 (8th Cir.1996). The Supreme Court rejected several requests (from the FCC and others) to vacate the stay.2

On July 18, 1997, the Eighth Circuit vacated many of the stayed FCC regulations on the ground that the FCC lacked jurisdiction to issue them. Iowa Util. Bd. v. FCC, 120 F.3d 753 (8th Cir.1997). The Eighth Circuit also vacated several other regulations on the merits (including at least one that had not been stayed), while affirming still others. Id. The stay expired once that order became effective. Id. at 820.

Meanwhile, the Agreement at issue here was approved by the PUC, and signed by the parties, after various disputes were resolved through arbitration. The arbitrator issued his decision on January 3, 1997, and the PUC affirmed it, with minor modifications, on February 3, 1997. MCI's petition for reconsideration was denied on May 30, 1997. All of these events occurred after the FCC regulations had been stayed, but before the Eighth Circuit issued its decision on the merits. The PUC treated the stayed regulations as persuasive authority that the PUC could, but was not required to, follow.

On July 18, 1997, the arbitrator resolved a few lingering disputes over the contract language and directed the parties to execute and file the final agreement. As luck would have it, that was the same day the Eighth Circuit issued its decision on the merits in Iowa Utilities. The PUC withdrew its order and, after supplemental briefing, directed the parties to modify the contract to comply with the Eighth Circuit's decision. On October 3, 1997, the PUC approved the revised agreement. On October 14, 1997, the Eighth Circuit clarified its prior decision and order in response to a petition for rehearing. Iowa Utilities, 120 F.3d 753.

On November 26, 1997, MCI asked this court to review certain disputed portions of the Agreement. On January 7, 1998, GTE asked the PUC to amend the Agreement to comply with the Eighth Circuit's October 14th decision. On January 13, 1998, GTE filed counterclaims and cross-claims asking this court to review disputed portions of the Agreement.

On January 26, 1998, the Supreme Court granted certiorari to review portions of the Eighth Circuit's decision. On November 13, 1998, the PUC granted (in part) GTE's request to amend the Agreement to comply with the Eighth Circuit's October 14th decision.

On January 25, 1999, shortly before oral argument in this case, the Supreme Court issued its decision in AT & T, ___ U.S. ___, 119 S.Ct. 721. The Supreme Court reversed the Eighth Circuit's decision regarding jurisdiction and held that the FCC did have jurisdiction to promulgate the regulations in question. It remanded that case to the Eighth Circuit to consider various challenges to the merits of those regulations. The Supreme Court affirmed several other regulations on the merits, while vacating at least one (and probably two) additional regulations. This court must now determine how the Supreme Court's decision affects the instant case and, in particular, how it affects the interconnection agreement that was approved by the PUC and signed by the parties more than a year before the Supreme Court issued its decision.

To the extent the Supreme Court simply explained what the Act or the FCC's implementing regulations mean, this court must apply that interpretation when reviewing the challenged provisions in the MCI-GTE interconnection Agreement. When a federal court interprets a law — whether it be a statute, a regulation, the common law, or the Constitution itself — the court is not creating new law but merely declaring what that law has always meant, even if this interpretation had not previously been acknowledged or conflicts with an earlier interpretation. See Rivers v. Roadway Express, Inc., 511 U.S. 298, 312-13, 114 S.Ct. 1510, 128 L.Ed.2d 274 (1994) ("A judicial construction of a statute is an authoritative statement of what the statute meant before as well as after the decision of the case giving rise to that construction"); Harper v. Virginia Dept. of Taxation, 509 U.S. 86, 107, 113 S.Ct 2510, 125 L.Ed.2d 74 (1993) (Scalia, J., concurring) (when overruling prior precedent a judge does "not pretend to make a new law, but to vindicate the old one from misrepresentation").

The regulations that had been vacated by the Eighth Circuit are a different matter, however. The Eighth Circuit stayed those regulations (with limited exceptions) before they ever went into effect, postponing their effective date. See Iowa Utilities, 96 F.3d at 1118 (staying "effective date"). See also 5 U.S.C. § 705 (expressly authorizing reviewing court to "postpone the effective date of an agency action ... pending conclusion of the review proceedings"). Ultimately, the Eighth Circuit vacated the regulations. The term "vacate" means "to annul; to cancel or rescind; to declare, to make, or to render, void; to defeat; to deprive of force; to make of no authority or validity; to set aside." Action on Smoking & Health v. Civil Aeronautics Board, 713 F.2d 795, 797 (D.C.Cir. 1983).

As the PUC acknowledges, "[t]he upshot is that [these] regulations were not effective at the time the interconnection agreement at issue was crafted." As of this writing, it is unclear whether the Eighth Circuit will stay those regulations anew while it considers various challenges to the merits of...

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