Michigan Bell v. Mfs Intelenet of Michigan

• Decision Date: 20 May 2003
• Docket Number: No. 99-1996.,99-1996.
• Citation: 339 F.3d 428
• Parties: MICHIGAN BELL TELEPHONE COMPANY, d/b/a Ameritech Michigan, Inc., Plaintiff-Appellant, v. MFS INTELENET OF MICHIGAN, INC.; TCG Detroit; Brooks Fiber Communications of Michigan, Inc.; MCI Telecommunications Corporation; MCIMetro Access Transmission Services, Inc.; AT & T Communications of Michigan, Inc.; BRE Communications, L.L.C.; and 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-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

339 F.3d 428

MICHIGAN BELL TELEPHONE COMPANY, d/b/a Ameritech Michigan, Inc., Plaintiff-Appellant, v. MFS INTELENET OF MICHIGAN, INC.; TCG Detroit; Brooks Fiber Communications of Michigan, Inc.; MCI Telecommunications Corporation; MCIMetro Access Transmission Services, Inc.; AT & T Communications of Michigan, Inc.; BRE Communications, L.L.C.; and 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-Appellees.

No. 99-1996.

United States Court of Appeals, Sixth Circuit.

Argued: November 30, 2000.

Decided and Filed: May 20, 2003.

Petition for Rehearing Denied En Banc: August 14, 2003. Pursuant to Sixth Circuit Rule 206

ARGUED:

Theodore A. Livingston, MAYER, BROWN, ROWE & MAW, Chicago, Illinois, for Appellant.

Darryl M. Bradford, JENNER & BLOCK, Chicago, Illinois, Michael A. Nickerson, OFFICE OF THE ATTORNEY GENERAL, Lansing, Michigan, for Appellees.

ON BRIEF:

Theodore A. Livingston, Robert M. Dow, Jr., John E. Muench, Demetrios G. Metropoulos, MAYER, BROWN, ROWE & MAW, Chicago, Illinois, Jeffery V. Stuckey, John M. Dempsey, DICKINSON, WRIGHT, Lansing, Michigan, Michael A. Holmes, Detroit, Michigan, for Appellant.

Darryl M. Bradford, John R. Harrington, JENNER & BLOCK, Chicago, Illinois, Michael A. Nickerson, David A. Voges, Henry J. Boynton, OFFICE OF THE ATTORNEY GENERAL, Lansing, Michigan, Arthur J. LeVasseur, FISCHER, FRANKLIN & FORD, Detroit, Michigan, for Appellees.

Before: DAUGHTREY and MOORE, Circuit Judges; CARR, District Judge.^*

OPINION

MARTHA CRAIG DAUGHTREY, Circuit Judge.

The plaintiff, Michigan Bell Telephone Company, doing business as Ameritech Michigan, Inc., filed a federal lawsuit pursuant to the Telecommunications Act of 1996, 47 U.S.C. §§ 151-615b, seeking a declaratory judgment and injunctive relief against several competing local telecommunications carriers and the Michigan Public Service Commission. The state commission had earlier rendered an order declaring that Ameritech owed the competing carriers reciprocal compensation for calls to internet service providers that originated at Ameritech and terminated with the competing carriers. After first denying the commission's motion to dismiss the case on jurisdictional grounds, the district court granted summary judgment to the defendants. Finding no error in that final determination, we now affirm.

FACTUAL AND PROCEDURAL BACKGROUND

I. Telecommunications Act Framework

The Telecommunications Act of 1996, Pub.L. No. 104-104, 110 Stat. 56, 47 U.S.C. §§ 151-615b, endeavors to inject competition into the market for local telephone service. See AT & T Corp. v. Ia. Utils. Bd., 525 U.S. 366, 371, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999). In order to do so, the Act requires all telecommunications carriers to interconnect their networks so that customers of different carriers can call one another. See 47 U.S.C. § 251(a)(1). Incumbent local exchange carriers (or rather, owners of a local telephone network) must provide network access to competing local exchange carriers, see 47 U.S.C § 251(c)(2), and all local exchange carriers must "establish reciprocal compensation arrangements for the transport and termination of telecommunications." 47 U.S.C. § 251(b)(5). Thus, for example, when a customer of Carrier A calls a customer of Carrier B, Carrier A must pay Carrier B for completing the call, a cost usually paid on a per-minute basis. Although § 251(b)(5) purports to extend reciprocal compensation to all "telecommunications," the Federal Communications Commission, the executive agency charged with the duty of implementing the Act, has construed the reciprocal compensation requirement to apply only to local telecommunications traffic. See 47 C.F.R. § 51.701(a) ("The provisions of this subpart apply to reciprocal compensation for transport and termination of telecommunications traffic between [local exchange carriers] and other telecommunications carriers.").

Section 252 of the Act describes the procedure local exchange carriers must utilize in negotiating the reciprocal compensation arrangements and interconnection agreements by which they will compensate each other for the use of another network. First, the carriers must attempt to reach an agreement through negotiation. At any time in the discussions, however, a party may ask the appropriate state regulatory commission to participate as a mediator. See 47 U.S.C. §§ 252(a)(1) and (2). If no agreement can be reached voluntarily, the Act provides for compulsory arbitration by the state commission. See 47 U.S.C. § 252(b). Once an agreement has been executed, it must then be submitted to the state commission for approval. See 47 U.S.C. § 252(e). The state commission possesses the authority to reject agreements under limited circumstances, see 47 U.S.C. § 252(e)(2), and if a state commission fails to carry out its responsibilities, the Federal Communications Commission will preempt the state commission's jurisdiction and act in its stead. See 47 U.S.C. § 252(e)(5). A party aggrieved by a "determination" of a state commission under § 252 may bring an action in federal district court. See 47 U.S.C. § 252(e)(6). State courts, however, do not have jurisdiction to review decisions of state commissions "approving or rejecting an agreement" under § 252. See 47 U.S.C. § 252(e)(4).

II. History of Present Dispute

The plaintiff, an incumbent local exchange carrier, entered into a number of interconnection agreements with defendants MFS Intelenet of Michigan, Inc.; Brooks Fiber Communications of Michigan, Inc.; MCI Telecommunications Corporation and MCIMetro Access Transmission Services, Inc.; AT & T Communications of Michigan, Inc.; TCG Detroit; and BRE Communications, L.L.C. Those agreements included provisions requiring the parties to pay reciprocal compensation to each other. For over a year under the agreements, the parties did in fact pay reciprocal compensation for calls made to internet service providers. On July 3, 1997, however, Ameritech notified the competing carriers that it would no longer pay reciprocal compensation for local calls placed by its customers to internet service providers who were clients of the competing carriers because such calls were ultimately interstate in nature and thus not subject to the reciprocal compensation provisions of the Act.

The competing carriers either filed complaints with the Michigan Public Service Commission or intervened in such actions challenging Ameritech's decision to cease payment. The complaints were consolidated, and after reviewing the parties' interconnection agreements, the commissioners of the state regulatory body issued an order instructing Ameritech to release back compensation to the competing local exchange carriers and to resume payment of reciprocal compensation. Ameritech filed an action with the federal district court seeking a declaratory judgment and injunction against enforcement of that determination, naming as defendants the competing carriers and the commissioners of the Michigan Public Service Commission. After rendering an order that denied a motion to dismiss filed by the commissioners for lack of jurisdiction and failure to state a claim, see Mich. Bell Tel. Co. v. MFS Intelenet of Mich., Inc., 16 F.Supp.2d 817 (W.D.Mich. 1998), the district court granted summary judgment to the defendants on Ameritech's claims, leading to this appeal by the plaintiff.

We heard oral argument in this matter more than two years ago, but subsequently issued an order holding the case in abeyance pending a decision by the United States Supreme Court in another dispute that involved a jurisdictional disagreement identical to the one presented to us here. The Court released that opinion on May 20, 2002, see Verizon Md., Inc. v. Pub. Serv. Comm'n of Md., 535 U.S. 635, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002), and the parties have provided us with supplemental authorities to aid us in our decision-making. Finally, on December 4, 2002, the corporate defendants filed with this court a notice of a ruling by the United States Bankruptcy Court for the Southern District of New York that modified the automatic stay in a proceeding involving WorldCom, Inc., the successor to the corporate defendants, and recognized that there is now no impediment to our resolution of this appeal.

DISCUSSION

I. Federal Court Jurisdiction

Initially, parties to this appeal disputed the jurisdiction of the federal courts to entertain the case under the Act. Specifically, the individual members of the Michigan Public Service Commission contended that the Act itself granted federal courts jurisdiction only to review commission decisions approving or rejecting interconnection agreements, not to interpret or enforce them. Furthermore, the commissioners asserted that they were immune from suit pursuant to Eleventh Amendment sovereign immunity principles.

Through its decision in Verizon Maryland, the Supreme Court has now definitively answered these jurisdictional challenges for us. In that analogous appeal, the Court concluded, as had this circuit previously in GTE North, Inc. v. Strand, 209 F.3d 909 (6th Cir.2000), that the general federal-question jurisdiction of 28 U.S.C. § 1331 conferred upon district courts the power to resolve these disputes. As stated by the Court:

[The plaintiff's] claim thus falls within 28 U.S.C. § 1331's general grant of jurisdiction, and ... nothing in [the Act] purports to strip this jurisdiction. [The Act] provides for federal review of an agreement when a state commission "makes a determination under [47 U.S.C. § 252]." If this does not include... the interpretation or enforcement of an interconnection agreement, then [the Act] merely makes some other actions by state commissions reviewable in federal court. This is not enough to eliminate jurisdiction under § 1331.

Verizon Md., 535 U.S. at 643, 122 S.Ct. at 1759.

Moreover, the ...