Wisconsin Bell, Inc. v. Tcg Milwaukee, Inc., 98-C-0366-C.

Citation301 F.Supp.2d 893
Decision Date30 August 2002
Docket NumberNo. 98-C-0366-C.,98-C-0366-C.
PartiesWISCONSIN BELL INC., d/b/a Ameritech Wisconsin, Plaintiff, v. TCG MILWAUKEE, INC., Public Service Commission of Wisconsin, Ave M. Bie, Robert M. Garvin and Joseph P. Mettner,<SMALL><SUP>1</SUP></SMALL> Defendants.
CourtUnited States District Courts. 7th Circuit. Western District of Wisconsin

David J. Hanson, for Plaintiff.

Douglas Travaris, Chicago, IL, Michael Varda, Public Service Commission, Assistant General Counsel, Madison, WI, Michael L. Shor, Swidler & Berlin, Washington, DC, for Defendants.

OPINION AND ORDER

CRABB, District Judge.

This is a civil action brought pursuant to the Telecommunications Act of 1996, 47 U.S.C. §§ 251 and 252, to challenge a determination by defendant Public Service Commission of Wisconsin regarding the enforcement and interpretation of an interconnection agreement between plaintiff Wisconsin Bell, Inc., d/b/a Ameritech Wisconsin and defendant TCG Milwaukee, Inc. In an order dated March 14, 2001, I stayed proceedings in this case pending a decision in Mathias v. WorldCom Technologies, Inc., No. 00-878, anticipating that the Supreme Court would address issues that might be dispositive of this case. However, the Court dismissed the writ of certiorari as improvidently granted with regard to three issues that were addressed in Verizon Maryland Inc. v. Public Service Commission of Maryland, 535 U.S. 635, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002). See Mathias v. WorldCom Technologies, Inc., 535 U.S. 682, 122 S.Ct. 1780, 152 L.Ed.2d 911 (2002). The Court then denied certiorari on the cross-appeal. Illinois Bell Telephone Co. v. WorldCom Technologies, Inc., 535 U.S. 1107, 122 S.Ct. 2318, 152 L.Ed.2d 1071 (2002).

Plaintiff has moved for voluntary dismissal under Fed.R.Civ.P. 41(a)(2), conceding that the Court's refusal to hear Mathias leaves standing the holding in Illinois Bell Telephone Co. v. Worldcom Technologies, Inc., 179 F.3d 566 (7th Cir.1999). In Illinois Bell, the Court of Appeals for the Seventh Circuit held that the Illinois Commerce Commission did not violate the Telecommunications Act of 1996 or other federal law when the commission ruled that Illinois Bell was required under several interconnection agreements to pay other local carriers "reciprocal compensation" for calls made to internet service providers. Id. at 569, 574. The court concluded that it could not review the correctness of the commission's application of principles of state contract law in interpreting the agreement, id. at 572, and that Illinois Bell would have to seek resolution of that issue in state court. Id. at 574.

(The parties have drawn my attention to the fact that the court made a reference to state court remedies in an amendment to the order entered on August 19, 1999. Although the amended opinion is available on Westlaw and Lexis, the Federal Reporter does not include the following two paragraphs that were added to the opinion at the end:

Lest there be any misunderstanding about what this conclusion means, we add that any issues of state law remain open for determination in the proper forum. Section 252(e)(6) authorizes a federal court to determine whether the agency's decision departs from federal law. A decision "interpreting" an agreement contrary to its terms creates a different kind of problem — one under the law of contracts, and therefore one for which a state forum can supply a remedy.

This allocation of authority has a potential to cause problems. Federal jurisdiction under § 252(e)(6) is exclusive when it exists. Thus every time a carrier complains about a state agency's action concerning an agreement, it must start in federal court (to find out whether there has been a violation of federal law) and then may move to state court if the first suit yields the answer "no." This system may not have much to recommend it, but, as the Supreme Court observed in Iowa Utilities Board, the 1996 Act has its share of glitches, and if this is another, then the legislature can provide a repair.)

Relying on Illinois Bell, plaintiff has chosen to seek dismissal with prejudice of its claims that the commission's order violates federal law. It concedes that its agreement with defendant TCG is indistinguishable from the agreements at issue in Illinois Bell. However, it asks that its claims regarding the correct interpretation of the interconnection agreement be dismissed without prejudice for lack of subject matter jurisdiction so that it may pursue a remedy in state court.

It is understandable that plaintiff believes that this court lacks subject matter jurisdiction to consider state law issues arising out of disputes over interconnection agreements. However, I am not persuaded that to the extent the court of appeals held that it could not hear claims regarding interpretations of agreements, that holding remains valid in light of the Supreme Court's decision in Verizon Maryland, Inc., 535 U.S. 635, 122 S.Ct. 1753, 152 L.Ed.2d 871, in which the Court held that 28 U.S.C. § 1331 provides jurisdiction to review orders of state commissions for compliance with federal law. If § 1331 applies, § 1367(a) should apply as well, providing federal courts with jurisdiction to hear state law claims that arise out of the same transaction as claims alleging violations of the Telecommunications Act. However, because I conclude that the unusual circumstances of this case make it inappropriate to exercise supplemental jurisdiction, I will grant plaintiff's motion for voluntary dismissal.

Because I am not addressing the merits of the parties' dispute, it is unnecessary to set forth all the relevant facts. For the purpose of this discussion, it is sufficient to provide a brief summary of the undisputed facts.

FACTS

Both plaintiff Wisconsin Bell, Inc. and defendant TCG Milwaukee, Inc. provide various telecommunications services in the state of Wisconsin. In 1997, plaintiff and defendant TCG entered into an "interconnection agreement," pursuant to the Telecommunications Act of 1996, in which defendant TCG gained access to plaintiff's equipment and services. Under the agreement, both plaintiff and TCG are required to compensate each other for customer calls that begin on one company's network but are terminated on the other so that both companies receive payment (because only the company that initiates the call bills the customer). However, the parties are required to pay only what is referred to as "reciprocal compensation" for "local traffic."

After the agreement was approved by the Public Service Commission, a dispute arose between plaintiff and defendant TCG over whether customer calls to internet service providers should be classified as local traffic. The dispute came before the Public Service Commission, which concluded that calls made to internet service providers were local traffic under the agreement. Plaintiff then filed an action in this court, alleging that the commission's order misinterpreted the agreement and violated state and federal law.

OPINION

Although the parties agree that this court lacks subject matter jurisdiction to consider whether the defendant commission applied state law correctly in interpreting the interconnection agreement, their agreement does not relieve the court of the need to conduct an independent analysis of the jurisdictional question. Beerly v. Department of Treasury, 768 F.2d 942, 944 (7th Cir.1985). The parties read Illinois Bell as holding that federal courts do not have jurisdiction to consider state law. They derive this from the court's statement in its amended order that "any issues of state law remain open for determination in the proper forum." Illinois Bell, 179 F.3d at 574. The court's holding was based on its previous conclusion in MCI Telecommunications Corp. v. Illinois Commerce Commission, 168 F.3d 315 (7th Cir.1999), that "federal courts may review a state commission's actions with respect to an agreement only for compliance with § 251 and § 252 of the Telecommunications Act, and not for compliance with state law." Id. at 320.

This conclusion seems to flow from an unexamined assumption that the Telecommunications Act provides the sole basis for federal court jurisdiction over the review of state commissions' enforcement of interconnection agreements. See id. In determining the scope of review, the court referred only to § 252(e)(4) and (6). Section 252(e)(6) provides:

In any case in which a State commission makes a determination under this section, any party aggrieved by such determination may bring an action in an appropriate Federal district court to determine whether the agreement or statement meets the requirements of section 251 of this title and this section.

Section 252(e)(4) provides: "No State court shall have jurisdiction to review the action of a State commission in approving or rejecting an agreement under this section." See also Illinois Bell, 179 F.3d at 574 (citing § 252(e)(6) as the source of jurisdiction). In neither Illinois Bell nor MCI did the court consider the applicability of other statutory grants of jurisdiction. However, in Verizon Maryland Inc., 122 S.Ct. at 1758, the Supreme Court looked at other sources of jurisdiction over questions regarding a state commission's compliance with the Telecommunications Act and concluded that those sources were not limited to those granted explicitly by the act itself. Id. at 1758. Rather, the Court held, because the issue was whether the commission complied with federal law, "Verizon's claim thus falls within 28 U.S.C. § 1331's general grant of jurisdiction, and contrary to the Fourth Circuit's conclusion, nothing in 47 U.S.C. § 252(e)(6) purports to strip this jurisdiction." Id. at 1759. (The Court of Appeals for the Fourth Circuit had held that neither § 252(e)(6) nor § 1331 provided a basis for jurisdiction over Verizon's claims against its competitors. Bell Atlantic Maryland, Inc. v. MCI Worldcom, Inc., 240 F.3d 279, 301-09 (4th Cir.2001)). Although the Court acknowledged that § 252...

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    ...nothing in what the ICC said violates federal law in existence at this time."). 81. Id. at 574. Bit see Wisconsin Bell Inc. v. TCG Milwaukee, Ire., 301 F.Supp.2d 893, 898 (W.D.Wis.2002) (anticipating that the Seventh Circuit would "repudiate its view that federal courts may never review sta......
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