Verizon North, Inc. v. Strand

Decision Date06 December 2000
Docket NumberNo. 5:98CV38.,5:98CV38.
Citation140 F.Supp.2d 803
PartiesVERIZON NORTH, INCORPORATED, Plaintiff, v. John G. STRAND, Chairman; John C. Shea, Commissioner; and David A. Svanda, Commissioner (In Their Official Capacities as Commissioners of the Michigan Public Service Commission), Defendants.
CourtU.S. District Court — Western District of Michigan

David A. Voges, Jennifer M. Granholm, Attorney General, Public Service Division, Lansing, MI, for John G. Strand, John C. Shea, David A. Svanda, defendants.



Verizon North Incorporated, formerly known as GTE North Incorporated ("Verizon") is an incumbent local telecommunications carrier in Michigan. In this action Verizon has sued John G. Strand, John C. Shea,1 and David A. Svanda, Commissioners of the Michigan Public Service Commission ("MPSC"), seeking declaratory and injunctive relief from the February 25, 1998, order of the MPSC. Verizon contests two provisions of the order: the provision that Verizon offer network elements and services for sale through published tariffs, and the provision that Verizon combine unbundled network elements for its competitors at their behest. Verizon brings this action under the Supremacy Clause, arguing that these provisions are in conflict with and are preempted by the Federal Telecommunications Act of 1996 (the "FTA" or the "Act"), Pub.L. No. 104-104, 56 Stat. 110 (codified in various sections of 47 U.S.C.). Verizon also brings a separate and independent claim that enforcement of the order infringes its statutory rights in violation of 42 U.S.C. § 1983. This matter is currently before the Court on Verizon's affirmative motion for summary judgment.2


Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. In evaluating a motion for summary judgment the Court must look beyond the pleadings and assess the proof to determine whether there is a genuine need for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). If the moving party carries its burden of showing there is an absence of evidence to support a claim then the non-moving party must demonstrate by affidavits, depositions, answers to interrogatories, and admissions on file, that there is a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The mere existence of a scintilla of evidence in support of the non-moving party's position is not sufficient to create a genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The proper inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52, 106 S.Ct. 2505.


Because the Court is limited by Article III, § 2 of the United States Constitution to the adjudication of actual cases or controversies, the Court's first consideration is whether this case is ripe for review.3 Dixie Fuel Co. v. Commissioner of Social Security, 171 F.3d 1052, 1057 (6th Cir.1999). The basic rationale of the ripeness doctrine "is to prevent the courts, through premature adjudication, from entangling themselves in abstract disagreements." Thomas v. Union Carbide Agricultural Products Co., 473 U.S. 568, 580, 105 S.Ct. 3325, 87 L.Ed.2d 409 (1985) (quoted in National Rifle Ass'n of America v. Magaw, 132 F.3d 272, 284 (6th Cir. 1997)). The ripeness inquiry requires the court to consider "whether the issues are fit for judicial decision as well as the hardship to the challenging party resulting from potential delay in obtaining judicial decision." Dixie Fuel, 171 F.3d at 1058 (citing Thomas, 473 U.S. at 581, 105 S.Ct. 3325). See also Kardules v. City of Columbus, 95 F.3d 1335, 1344 (6th Cir.1996). A case is "fit for judicial decision" where the issues raised are purely legal ones and where the agency rule or action giving rise to the controversy is final and not contingent upon future uncertainties or intervening agency action. GTE North, Inc. v. Strand, 209 F.3d 909, 923 n. 7 (6th Cir. 2000) (citing Abbott Laboratories v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), overruled on other grounds by Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977)).

Defendants contend this case is not ripe for decision because Verizon does not have on file any enforceable tariffs as directed by Case No. U-11281.

Defendants' assertion that there are no enforceable tariffs on file in Case No. U-11281, while technically correct, is factually irrelevant, as the lack of a tariff in Case No. U-11281 does not mean that there are no enforceable tariffs on file. Pursuant to the February 25, 1998, order in Case No. U-11281, Verizon was required to file a tariff. The tariffs Verizon filed under U-11281 were rejected by the MPSC. The MPSC has not required Verizon to submit corrected tariffs in Case No. U-11281. As Defendants themselves noted, the MPSC has "moved past" Case No. U-11281 and has conducted new cost proceedings in Case No. U-11832. The tariffs filed under the new cost proceedings implement the very same tariff filing requirement entered in Case No. U-11281, but are based upon updated cost studies. Verizon filed tariffs in Case No. U-11832 on August 2, 2000. Accordingly, there are enforceable tariffs on file that would currently enable a competitor to actually request access at the tariff rate.

The relevant inquiry in this case is "whether the ripeness inquiry demands that one of [Verizon's] competitors actually request access at the tariff rate before deciding the case, or whether the order itself gives rise to a justiciable claim because it imposes an immediate obligation on [Verizon] to sell network elements at predetermined rates." GTE North, 209 F.3d at 923 n. 7.

Because Verizon is challenging the MPSC's authority under the FTA to require the filing of a tariff, this suit raises a purely legal issue. Burlington N. R.R. Co. v. Surface Transp. Bd., 75 F.3d 685, 691 (D.C.Cir.1996). The legal question presented is ripe for review because the filing of a tariff has "immediate effects on legal rights relating directly" to Verizon's primary conduct. Id. at 690. This is so because once filed, a tariff binds the filing party "with the force of law." Id. Thus, the order itself gives rise to a justiciable claim because it imposes an immediate obligation on Verizon to sell network elements at predetermined rates. The legal issue raised in this case would not be clarified by withholding review until a competitor actually requested access at the tariff rate and Verizon came into court requesting a temporary restraining order.

This case does not present an abstract disagreement. Because the Defendant's authority to order the tariff requirement presents a purely legal question and because the February 25, 1998, order imposes an immediate obligation to file a tariff that has a binding effect on Verizon, this Court is satisfied that this matter is ripe for review.


The MPSC's February 25 order requires Verizon to submit tariffs setting forth "the rates, terms and conditions for [Verizon] to provide access to unbundled network elements and interconnection services." MPSC 2/25/98 Order at 9-10. Verizon seeks a declaration that the tariffing requirement violates the FTA because it bypasses the party-specific negotiation and arbitration process crafted by Congress as the means for implementing the duties imposed by the Act. Verizon contends that pursuant to the Supremacy Clause, the State law must yield to contrary federal law.

Congress passed the Telecommunications Act of 1996, Pub.L. No. 104-104, 56 Stat. 110 (codified in 47 U.S.C.), in an effort to promote competition in local telephone markets by ending regulated monopolies previously enjoyed by incumbent local exchange carriers ("LECs") such as Verizon. GTE North, 209 F.3d at 912. Under the FTA incumbent LECs are required to resell their telecommunications systems. 47 U.S.C. § 251(b)(1). This obligation is accomplished through the negotiation of interconnection agreements. If there is a request of interconnection, services, or network elements, "an incumbent local exchange carrier may negotiate and enter into a binding agreement." 47 U.S.C. § 252(a)(1). The incumbent LEC and the requesting telecommunications carrier have the duty to negotiate in good faith. 47 U.S.C. § 251(c)(1). If the parties are unable to negotiate an agreement, either party can petition for binding arbitration before the state commission under a set timetable. 47 U.S.C. § 252(b). The FTA sets the standards to be applied by the state commissions during the compulsory arbitration proceedings. 47 U.S.C. § 252(c) & (d).

Defendants dispute Verizon's contention that negotiation and arbitration are required to satisfy the FTA. Unless the State law is inconsistent with the FTA or FCC regulations, states are free to impose their own requirements that foster competition. State commissions can impose their own rules "in fulfilling the requirements of this part, if such regulations are not inconsistent with the provisions of [the FTA]." 47 U.S.C. § 261. State commissions can also impose additional requirements "that are necessary to further competition in the provisions of telephone exchange service or exchange access, so long as the State's requirements are not inconsistent with" the FTA or the FCC's regulations to implement the FTA. 47 U.S.C. § 261(b) & (c)....

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