Mich. Bell Tel. Co. v. Eubanks
Decision Date | 10 July 2017 |
Docket Number | No. 1:14-cv-416,1:14-cv-416 |
Parties | MICHIGAN BELL TELEPHONE COMPANY, Plaintiff/Cross-Defendant, v. RACHEL EUBANKS, NORMAN J. SAARI, AND SALLY A. TALBERG, MICHIGAN PUBLIC SERVICE COMMISSIONERS, Defendants/Counter-Defendants, and SPRINT SPECTRUM, L.P., Cross-Defendant/Counter-Plaintiff |
Court | U.S. District Court — Western District of Michigan |
HONORABLE PAUL L. MALONEY
This matter is before the Court for a review of administrative actions taken by the Michigan Public Service Commission. For the reasons stated below, the Commission's determination must be affirmed in part and reversed and remanded in part.
Congress enacted the Telecommunications Act of 1996, 47 U.S.C. § 152 et seq., to mandate "that local service, which was previously operated as a monopoly overseen by the several states, be opened to competition." MCI Telecomm. Corp. v. Bell Atl., 271 F.3d 491, 497 (3d Cir. 2001). Congress required the incumbent local exchange carriers to cooperate with competitive local exchange carriers to allow the CLECs to enter the market, either by connecting their equipment to the ILEC's existing network or by purchasing or leasing existing network elements and services. Id. The ILECs and CLECs, through negotiation or arbitration, enter into "interconnection agreements," which set out the appropriate terms, rates, and conditions. Id. Congress directed the Federal Communications Commission (FCC) to promulgate implementing regulations, but gave oversight of the interconnection agreements to the state public-utility commissions. Id.
A party aggrieved by a determination in an interconnection arbitration may bring an action "in an appropriate Federal district court." 47 U.S.C. § 252(e)(6). Accordingly, there is "no doubt that federal courts have jurisdiction under § 1331 to entertain" claims that a state commission violated federal law in resolving issues under the Act. Verizon Md., Inc. v. Pub. Serv. Comm'n of Md., 535 U.S. 635, 642 (2002).
"When reviewing state public service commission orders under the Act, this [C]ourt is 'limited to determining whether the order is consistent with sections 251 and 252 of the Act.'" Mich. Bell Tel. Co. v. MCI Metro Access Transmission Servs., Inc., 323 F.3d 348, 354 (6th Cir. 2003) ). This Court must "review the Commission's interpretation of the Act de novo . . ., according little deference to the Commission's interpretation of the Act." Id. However, "[w]ith respect to the Commission's findings of fact, [this Court] appl[ies] the arbitrary and capricious standard." Id. "The arbitrary and capricious standard is the most deferential standard of judicial review of agency action, upholding those outcomes supported by a reasoned explanation, based upon the evidence in the record as a whole." Id.
The Michigan Public Service Commission (hereinafter the Commission) erred when it prematurely rejected the agreement between Sprint and Michigan Bell Telephone (hereinafter AT&T Michigan), and instead ordered those companies to submit an interconnection agreement that included the IP interconnection language the Commission preferred.
The Third Circuit has provided a helpful summary framework for 47 U.S.C. § 252:
Section 252 sets out the process by which interconnection agreements between ILECs and CLECs are to be established. See MCI, 222 F.3d at 328; GTE South, 199 F.3d at 737. An incumbent and a requesting carrier may "negotiate and enter into a binding agreement." 47 U.S.C. § 252(a)(1). Such negotiations generally will begin with a request for interconnection by the CLEC. 47 U.S.C. § 252(a)(1). At any time during negotiations, either party may ask the state utility commission to participate in negotiations and mediate any differences. 47 U.S.C. § 252(a)(2). The Act's clear preference is for such negotiated agreements.See Iowa Utils. I, 525 U.S. at 405, 119 S. Ct. 721 (Thomas, J., concurring in part and dissenting in part). An agreement reached through negotiation need not conform to all the detailed, specific requirements of § 251; negotiation consequently bestows a benefit to those carriers able to resolve issues through negotiation and compromise. See MCI Telecomm. Corp. v. U.S. West Commc'ns, 204 F.3d 1262, 1266 (9th Cir. 2000); 47 U.S.C. § 252(a)(1). A negotiated agreement must merely be nondiscriminatory to a carrier not a party to the agreement and also be consistent with the public interest. See 47 U.S.C. § 252(e)(2)(A).
MCI Telecomm. Corp., 271 F.3d at 500 (emphasis added).
Put simply, "[p]rivate negotiation . . . is the centerpiece of the Act." Verizon North v. Strand, 309 F.3d 935, 940 (6th Cir. 2002) (internal citation and quotation marks omitted).
When a dispute goes to arbitration, the Commission has a duty to make sure the requirements of § 251 are satisfied. See 47 U.S.C. § 252(e)(2)(B). However, the Act allows parties to negotiate binding terms "without regard to the standards set forth in subsections (b) and (c) of section 251." 47 U.S.C. § 252(a); see § 252(e)(2)(A) ( ).
The procedural context in which this case arises is fairly complex.
After unsuccessful initial negotiations, several unresolved issues between the parties were submitted for binding arbitration. The Commission facilitates so-called "baseball arbitration," where both parties submit proposals, and the Commission chooses one.
The Commission preliminarily adopted Sprint's proposal for mandatory IP interconnection, the primary disputed issue in this case. Accordingly, the Commission ordered the parties to file a final ICA that reflected the terms as arbitrated.
However, after several extensions of time to file a final proposed interconnection agreement, the parties negotiated different terms with respect to TDM and IP interconnection, and filed a joint submission in a new docket number.
The filing included the following relevant language:
(ECF No. 23-7 at PageID.2290-91.)
The Commission issued an order rejecting the proposed agreement on March 18, 2014. (See ECF No. 23-27 at PageID.2484.) The Commission took issue with the proposedlanguage on "Issue 1" above, which was the only language to stray from the arbitration order.1 The Commission's order is not a model of clarity, but the Court distills two reasons that the Commission rejected the language. Both were legally erroneous.
First, the Commission held, at least implicitly, that because it had already favored Sprint's language in arbitration and believed that § 251 required IP interconnection, the parties were not free to negotiate otherwise. (See id. at PageID.2487 ( ).)
However, the Act contemplates that parties may and should "participate further in the negotiations," even after arbitration. See § 252(b)(5). Indeed, the failure "to continue to negotiate in good faith," even after unresolved issues are submitted to arbitration, is forbidden by the Act. See id. To hold that parties may not subsequently negotiate afterarbitration, but before the final approval stage, would be...
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