Michigan Bell Tele. Co. v. Mfs Intelenet of Mich.

Citation16 F.Supp.2d 817
Decision Date21 July 1998
Docket NumberNo. 5:98 CV 18.,5:98 CV 18.
PartiesMICHIGAN BELL TELEPHONE CO., d/b/a Ameritech Michigan, Inc., Plaintiff, v. MFS INTELENET OF MICHIGAN, INC., TCG Detroit, Brooks Fiber Communications of Michigan, Inc., MCI Telecommunications Corp., MCIMetro Access Transmission Services, Inc., AT & T Communications of Michigan, Inc., BRE Communications, LLC, and John G. Strand, John C. Shea, and David A. Svanda, Commissioners of the Michigan Public Service Commission, in their official capacities, Defendants.
CourtU.S. District Court — Western District of Michigan
16 F.Supp.2d 817
MICHIGAN BELL TELEPHONE CO., d/b/a Ameritech Michigan, Inc., Plaintiff,
MFS INTELENET OF MICHIGAN, INC., TCG Detroit, Brooks Fiber Communications of Michigan, Inc., MCI Telecommunications Corp., MCIMetro Access Transmission Services, Inc., AT & T Communications of Michigan, Inc., BRE Communications, LLC, and John G. Strand, John C. Shea, and David A. Svanda, Commissioners of the Michigan Public Service Commission, in their official capacities, Defendants.
No. 5:98 CV 18.
United States District Court, W.D. Michigan, Southern Division.
July 21, 1998.

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Theodore A. Livingston, Mayer, Brown & Platt, Chicago, IL, Michael A. Holmes, Ameritech Michigan, Detroit, MI, Edward R. Becker, John M. Dempsey, Dickinson Wright P.L.L.C., Lansing, MI, for Plaintiff.

Richard M. Rindler, Swidler & Berlin, Washington, DC, William R. Ralls, Butzel Long, Norman C. Witte, Lansing, MI, for Defendant MFS Intelenet of Michigan, Inc.

Douglas W. Trabaris, Teleport Communications Group, Inc., Chicago, IL, Roderick S. Coy, Stephen J. Videto, Clark, Hill, P.L.C., Lansing, MI, for Defendant TCG Detroit.

Lori M. Silsbury, Dykema Gossett, PLLC, Detroit, MI, Lori M. Silsbury, Albert Ernst, Dykema Gossett, Lansing, MI, for Defendants MCI Telecommunications Corp., MCIMetro Access Transmission Services, Inc.

Arthur J. LeVasseur, George Hogg, Jr., Sidney M. Berman, Fischer, Franklin & Ford, Detroit, MI, for AT&T Communications of Michigan, Inc.

Richard C. Gould, Grandville, MI, for Defendant BRE Communications, L.L.C.

David M. Gadaleto, Asst. Atty. General, Frank J. Kelley, Attorney General, Lansing, MI, Don L. Keskey, Asst. Atty. General, David A. Voges, Asst. Atty. Gen., Frank J. Kelley, Attorney General, Lansing, MI, for Defendants John G. Strand, John C. Shea, David A. Svanda.


ENSLEN, Chief Judge.

This matter is before the Court on Defendant John Strand, John Shea and David Svanda's Motion to Dismiss filed pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Plaintiff Michigan Bell Telephone Company, d/b/a Ameritech Michigan, Inc. [hereinafter Ameritech], filed this action against the Commissioners of the Michigan Public Service Commission (MPSC) and competing local telecommunications carriers pursuant to the federal Telecommunications Act of 1996. Alleging violations of both state and federal law, Plaintiff seeks declaratory and injunctive relief to prevent enforcement of an Order issued by the Defendant Commissioners interpreting interconnection agreements entered into by Plaintiff Ameritech and the Defendant telecommunications carriers. The Defendant Commissioners argue that: 1) the Court lacks jurisdiction to proceed; 2) the Eleventh Amendment bars suit against them as state officials; 3) whether or not jurisdiction exists, the Court must abstain from rendering judgment; and 4) the Johnson Act prohibits the Court from enjoining the agency. Both the Plaintiff and Defendant telecommunications carriers oppose the Commissioners' contentions. Upon review, the Motion to Dismiss is denied.


The Telecommunications Act of 1996, Pub.L. 104-104, 1996 U.S.C.C.A.N. (110 Stat. 56) 10 (codified as amended in scattered sections of Title 47 of the United States Code),1 was designed "to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies" by promoting competition and reducing regulation of the telecommunications industry. 1996 U.S.C.C.A.N. at 11. One way in which the Act seeks to accomplish these goals is by the forced deregulation of state-sanctioned local telecommunications monopolies. 47 U.S.C. ch. 5, subch. II, Pt. II (entitled "Development of Competitive Markets"). "In providing local telephone service, telephone companies have historically been protected from competition by State and local government barriers to entry." 1996 U.S.C.C.A.N. at 13. As a result, until passage of Act, the providers of local telephone service (referred to as local exchange companies or LECs) "maintain[ed] bottleneck control over the essential facilities

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needed for the provision of local telephone service." Id. The Act seeks to break that control by requiring existing LECs to interconnect with competing LECs. Id.; Iowa Utils. Bd. v. FCC, 120 F.3d 753 (8th Cir. 1997).

Specifically, the Act forces an incumbent LEC (1) to permit a requesting new entrant in the incumbent LEC's local market to interconnect with the incumbent LEC's existing local network ... (interconnection); (2) to provide its competing telecommunications carriers with access to individual elements of the incumbent LECs network on an unbundled basis (unbundled access); and (3) to sell to its competing telecommunications carriers, at wholesale rates, any telecommunications service that the incumbent LEC provides to its customers at retail rates, in order to allow the competing carriers to resell their services (resale).

Iowa Utils. Bd., 120 F.3d at 791 (citing 47 U.S.C. § 251(c)(2)-(4)). The Act also requires that the incumbent and competing LECs enter into interconnection agreements fulfilling the duties described in section 251 by following the procedures set forth in section 252. § 251(c)(1).

Section 252 articulates a four-step process to guide the parties toward an interconnection agreement which adheres to the requirements of the Act. First, section 252(a)(1) provides for the parties to attempt to reach an agreement through negotiation or mediation. If no agreement can be reached voluntarily, section 252(b) and (c) set out the specific standards and procedures by which either party may request that the state commission arbitrate any open issues. Once an agreement has been executed, it must be submitted to the state commission for approval pursuant to section 252(e). The state commission may only reject an agreement under certain limited circumstances delineated in section 252(e)(2). Finally, review of any determination made by the state commission approving or rejecting an agreement under this section lies exclusively within the jurisdiction of the federal district court. § 252(e)(4) & (6). If, however, the state commission elects not to participate in this process or fails to act within 90 days to resolve a matter arising under section 252, the Federal Communications Commission (FCC) is granted preemptive jurisdiction by section 252(e)(5).

Ameritech brings this suit pursuant to section 252(e)(6), alleging in part that the Order issued by the Commissioners interprets the interconnection agreements between itself and the Defendant competing LECs in a manner which violates federal law. The case arose when Ameritech ceased paying reciprocal compensation2 to the Defendant competing LECs for calls made to Internet Service Providers (ISPs).3 Contending that calls made to ISPs are not local calls, Ameritech asserted that it was not required to pay such compensation under either the terms of the agreements or under federal law. Several of the competing LECs then filed complaints with the state commission4 seeking an Order requiring Ameritech to pay both past and future charges for calls made to the ISPs. On January 28, 1998, interpreting the terms of the various interconnection agreements, the MPSC issued an Order ruling in favor of the competing LECs and requiring, among other things, that Ameritech pay more than $6 million in back charges within 10 days, and pay all future reciprocal compensation for the disputed calls.

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On February 2, 1998, Ameritech filed a motion to stay further proceedings with the MPSC while it sought judicial review of the January 28 Order. Ameritech then filed this action on February 6, 1998, nine days after the MPSC Order was issued, against both the competing LECs and the MPSC Commissioners who entered the Order. Plaintiff alleges that: 1) the MPSC Commissioners incorrectly interpreted the terms of the interconnection agreements in light of federal law; 2) the interconnection agreements as interpreted by the MPSC in the January 28 Order violate the federal regulations enacted pursuant to section 251; 3) the MPSC has no jurisdiction to regulate the calls in question because they are interstate calls and therefore can only be regulated by the FCC; 4) the MPSC award of attorney's fees is without statutory basis; and 5) the MPSC Order is in violation of Michigan law. In the instant Motion to Dismiss, the Defendant Commissioners argue that this Court does not have jurisdiction to review the January 28 Order issued by the MPSC under either section 252(e)(6) or 28 United States Code section 1331. Furthermore, the Defendant Commissioners argue that, if the Court finds that it does have subject matter jurisdiction over this action, the suit is barred by either: 1) the Eleventh Amendment; 2) the Abstention doctrines articulated in Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), and Burford v. Sun Oil Company, 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943); or 3) the Johnson Act, 28 U.S.C. § 1342. Both Plaintiff Ameritech and the Defendant competing LECs respond that, because this action questions whether an interconnection agreement entered into pursuant to the Telecommunications Act is in violation of federal law, this Court does in fact have jurisdiction under both section 252(e)(6) and 28 U.S.C. § 1331. Indeed, it has exclusive jurisdiction under the Act to review at least one of the claims and none of the grounds presented serve as a basis for dismissal of this case.


A. Rule 12(b)(1)

The Sixth Circuit has adopted two standards of dismissal for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). See Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir.1990). A facial attack merely questions the sufficiency of the...

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