At&T Communications v. BellSouth Telecommunications Inc.

UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 99-30421

AT&T COMMUNICATIONS

Plaintiff - Appellant

v.

BELLSOUTH TELECOMMUNICATIONS INC; LOUISIANA PUBLIC SERVICE

COMMISSION; DON OWEN; IRMA MUSE DIXON; DALE SITTIG; JAMES M

FIELD; JACK A BLOSSMAN; COMMISSIONER OF LOUISIANA PUBLIC SERVICE

COMMISSION, in their official capacities

Defendants - Appellees

_________________________________________________________________

AT&T COMMUNICATIONS OF THE SOUTH CENTRAL STATES, INC, also known

as AT&T

Plaintiff - Appellant

v.

BELLSOUTH TELECOMMUNICATIONS INC; LOUISIANA PUBLIC SERVICE

COMMISSION; DON OWEN, The Commissioners of the Louisiana Public

Service Commissioners in their Official Capacity; IRMA MUSE

DIXON, The Commissioners of the Louisiana Public Service

Commissioners in their Official Capacity; DALE SITTIG, The

Commissioners of the Louisiana Public Service Commissioners in

their Official Capacity; JAMES M. FIELD, The Commissioners of the

Louisiana Public Service Commissioners in their Official

Capacity; JACK A. BLOSSMAN JR, The Commissioners of the Louisiana

Public Service Commissioners in their Official Capacity

Defendants - Appellees

_________________________________________________________________

AMERICAN COMMUNICATION SERVICES OF LOUISIANA, INC; AMERICAN

COMMUNICATION SERVICES OF BATON ROUGE, INC; AMERICAN

1

COMMUNICATION SERVICES OF SHREVEPORT, INC

Plaintiffs - Appellants

v.

BELLSOUTH TELECOMMUNICATIONS INC; THE LOUISIANA PUBLIC SERVICE

COMMISSION; DON OWEN; IRMA MUSE DIXON; DALE SITTIG; JAMES M.

FIELD; JACK A. BLOSSMAN also known as Jay Blossom; COMMISSIONERS

OF THE LOUISIANA PUBLIC SERVICE COMMISSION, in their official

capacities

Defendants - Appellees

Appeals from the United States District Court

For the Middle District of Louisiana

January 16, 2001

Before POLITZ, SMITH, and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:

The issues in this case are (1) whether a telecommunications

carrier is barred by the Eleventh Amendment from bringing suit in

federal district court against a state public service commission

under Section 252 (e)(6) of the Telecommunications Act of 1996, 47

U.S.C. § 151, et seq. (1996 Act or Act), for judicial review of

whether the commission’s arbitration determination with respect to

an interconnection agreement meets the requirements of § 151 of the

Act and applicable FCC regulations; and (2) whether the carrier may

bring an action under the Ex parte Young doctrine in federal court

against the individual members of a state public service commission

in their official capacities for prospective relief from their

2

arbitration determination contrary to the requirements of § 251 of

the Act and its implementing regulations.1 The district court held

that the plaintiff telecommunications carriers were barred by

Eleventh Amendment immunity from bringing such actions and

dismissed their suits. We reverse and remand the case for further

proceedings in accordance with the 1996 Act and the Ex parte Young

doctrine.

In the 1996 Act Congress pre-empted the states in the

regulation of local telecommunications competition with regard to

all matters addressed by the Act. The Act offers state public

service commissions the option, however, of approving or rejecting,

pursuant to §§ 251 and 252 of the Act, any interconnection

agreement between carriers adopted by negotiation or arbitration.

If the state public service commission declines such offer in any

proceeding under the Act, the FCC is required to assume the

1

AT&T also contends that the Eleventh Amendment is not applicable

because the present case involves mere judicial review of the

record and is not a suit in law or equity against the Louisiana

Public Service Commission (“LPSC”) for purposes of the Eleventh

Amendment. We do not accept this argument. In the present case

AT&T Communications named the LPSC as a defendant, process was

served on it, and it was required to suffer the indignity of being

compelled to appear before a federal court.

A “suit in law or equity” exists against a sovereign state for

purposes of the Eleventh Amendment when a plaintiff has served

compulsory process upon that state as defendant in a matter. See

Missouri v. Fiske, 290 U.S. 18, 28 (1833); Cohens v. Virginia, 19

U.S. 264, 407-408 (1821). See also Puerto Rico Aqueduct and Sewer

Authority v. Metcalf & Eddy, Inc., 506 U.S. 139, 146 (1993) (“The

very object and purpose of the 11th Amendment were to prevent the

indignity of subjecting a State to the coercive process of judicial

tribunals at the instance of private parties.”) (citing In re

Ayers, 123 U.S. 443, 505 (1887)) (emphasis added).

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responsibility of acting upon that matter. In a case in which the

state public service commission accepts the responsibility offered

and makes a determination under the Act, any party aggrieved by

such determination may bring an action in an appropriate federal

district court to determine whether the agreement meets the

requirements of §§ 251 and 252. The 1996 Act provides that no

state court shall have jurisdiction to review the action of a state

commission in approving or rejecting an agreement under the Act.

When the Louisiana Public Service Commission (LPSC) accepted

Congress’s offer to function as an arbitrator under the Act in

determining and approving the interconnection agreement in the

present case, the regulation of local telecommunications

competition and related interconnection agreements was no longer a

permissible or lawful activity within the states’ own powers. When

Congress bestows a gift or gratuity upon a state of a benefit which

cannot be obtained by the state’s own power, Congress may attach to

the gratuity the condition of a voluntary waiver by the state of

its Eleventh Amendment immunity. Consequently, the LPSC

voluntarily waived its state immunity when it accepted the

Congressional offer of a gratuity that was clearly conditioned upon

the LPSC’s amenability to federal suits by private parties under

the Act and arbitrated the interconnection dispute in the present

case.2

2

In this opinion, for convenience and hopefully some clarity,

we refer to all of the parties and non-parties which have adopted

4

The LPSC commissioners allegedly determined and approved an

interconnection agreement that violates the requirements of the

1996 Act, and the aggrieved carriers bound by the determination

seek prospective injunctive relief against the commissioners in

their official capacities to terminate further operation of the

agreement against them; therefore, the doctrine of Ex parte Young

permits the suit to proceed against the commissioners.

I. The Telecommunications Act of 1996

A. Background; Preemption of State Regulatory Jurisdiction

In AT&T Corp. v. Iowa Utilities Board, 525 U.S. 366, 371-373

(1999), the Supreme Court succinctly described the context and

content of the 1996 Act:

Until the 1990s, local phone service was thought to

be a natural monopoly. States typically granted an

exclusive franchise in each local service area to a local

exchange carrier (LEC), which owned, among other things,

the local loops (wires connecting telephones to

switches), the switches (equipment directing calls to

their destinations), and the transport trunks (wires

carrying calls between switches) that constitute a local

exchange network. Technological advances, however, have

the position on appeal of plaintiff-appellant AT&T Communications

collectively as “AT&T.” This includes plaintiff-appellant American

Communications of Louisiana; defendant-appellant BellSouth; the

United States and the Federal Communications Commission (“FCC”),

intervenors; and Amicus Curiae Sprint Communications Company. In

certain instances we refer to AT&T Communications and American

Communications of Louisiana jointly as “AT&T Communications.”

AT&T Communications and American Communication Services of

Louisiana also appeal from the district court’s determination that

the LPSC is an indispensable party to this litigation. Our

reversal of the district court’s judgment moots the indispensable

party issue.

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made competition among multiple providers of local

service seem possible, and Congress recently ended the

longstanding regime of state-sanctioned monopolies.

[The 1996 Act] fundamentally restructures local

telephone markets. States may no longer enforce laws

that impede competition, and incumbent LECs are subject

to a host of duties intended to facilitate market entry.

Foremost among these duties is the LEC’s obligation under

47 U.S.C. § 251(c) (1994 ed., Supp. II) to share its

network with competitors. Under this provision, a

requesting carrier can obtain access to an incumbent’s

network in three ways: It can purchase local telephone

services at wholesale rates for resale to end users; it

can lease elements of the incumbent’s network “on an

unbundled basis”; and it can interconnect its own

facilities with the incumbent’s network. When an entrant

seeks access through any of these routes, the incumbent

can negotiate an agreement without regard to the duties

it would otherwise have under § 251(b) or (c). See §

252(a)(1). But if private negotiation fails, either

party can petition the state commission that regulates

local phone service to arbitrate open issues, which

arbitration is subject to § 251 and the FCC regulations

promulgated thereunder.

(footnotes omitted).

The FCC issued its First Report and Order implementing local

competition provisions under the 1996 Act six months after its

passage. In Re Implementation of the Local Competiton Provisions

in the Telecommunications Act of 1996, 11 FCC Rcd 15499 (1996)

(First Report & Order). Numerous challenges to the FCC’s

rulemaking by incumbent LECs and state utility commissions were

consolidated in the Eighth Circuit. The Court of Appeals vacated

the FCC’s pricing rules and several other aspects of the First

Report and Order, as reaching beyond the Commission’s jurisdiction.

Iowa Utilities Board v. FCC, 120 F.3d 753, 800, 804, 805-806 (8th

Cir. 1997). It held that the general rulemaking authority

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conferred upon the FCC by the Communications Act of 1934 extended

only to interstate matters, and that the FCC therefore lacked the

specific congressional authorization it needed for implementing

provisions of the 1996 Act addressing intrastate communications.

Id. at 795.

The Supreme Court in Iowa Utilities reversed on the main

point, holding that the FCC has general jurisdiction to implement

the 1996 Act’s local-competition provisions. The Court concluded

that since Congress expressly directed that the 1996 Act be

inserted into the Communications Act of 1934, and since the 1934

Act already provides that the FCC “may prescribe such rules and

regulations as may be necessary in the public interest to carry out

the provisions of this Act,” 47 U.S.C. § 201(b), the FCC’s

rulemaking authority extends to implementation of §§ 251 and 252.

“We think that the grant in § 201(b) means what it says: The FCC

has rulemaking authority to carry out the ‘provisions of this Act,’

which include §§ 251 and 252, added by the Telecommunications Act

of 1996.” Id. at 378. Furthermore, the Court held that section

152(b) of the Communications Act of 1934, which provides that

“nothing in this chapter shall be construed to apply or to give the

[FCC] jurisdiction with respect to . . . intrastate communications

service . . .” does not change this conclusion because the 1996 Act

clearly applies to intrastate matters. Id. at 379-380.

Significantly for purposes of deciding the Eleventh Amendment

issues in the present case, the Court in Iowa Utilities, in answer

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to arguments of the dissenters relying on the presumption against

preemption of state regulatory power, responded that the 1996 Act

clearly manifested Congress’s intent to supplant traditional state

police power regulation of local telecommunications competition:

But the question in this case is not whether the Federal

Government has taken the regulation of local

telecommunications competition away from the States.

With regard to matters addressed by the 1996 Act, it

unquestionably has. The question is whether the state

commissions’ participation in the administration of the

new federal regime is to be guided by federal-agency

regulations. If there is any “presumption” applicable

to this question, it should arise from the fact that a

federal program administered by 50 independent state

agencies is surpassing strange. The appeals by both

Justice THOMAS and Justice BREYER to what might loosely

be called “States’ rights” are most peculiar, since there

is no doubt, even under their view, that if the federal

courts believe a state commission is not regulating in

accordance with federal policy they may bring it to heel.

This is, at bottom, a debate not about whether the States

will be allowed to do their own thing, but about whether

it will be the FCC or the federal courts that draw the

lines to which they must hew. To be sure, the FCC’s

lines can be even more restrictive than those drawn by

the courts–but it is hard to spark a passionate “States’

rights” debate over that detail.

Id. at 378 n.6 (emphasis added). “After the 1996 Act, § 152(b) [§

2(b) of the 1934 Act, which excluded intrastate communications from

the FCC’s jurisdiction] may have less practical effect. But that

is because Congress, by extending the Communications Act into local

competition, has removed a significant area from the States’

exclusive control.” Id. at 381 n.8 (emphasis added). See also

Texas Office of Pub. Util. Counsel v. FCC, 183 F.3d 393, 423-24 (5th

Cir. 1999), cert granted, 120 S.Ct. 2214 (2000)(recognizing Iowa

Utilities’ holding that state regulation of intrastate

8

telecommunications competition is preempted under §§ 251 and 252

but refusing to extend that holding to § 254 of the Act).

B. Procedures Under the 1996 Act; Optional Role Of

State Commissions; FCC Preemption; Federal Judicial Review

Upon receiving a request for interconnection, services, or

network elements pursuant to Section 251 of the Act, an incumbent

LEC may negotiate and enter into a binding agreement with the

requesting carrier which must be submitted to the state commission.

§ 252(a)(1). During negotiations, any party may ask the state

commission to mediate differences. § 252(a)(2). Any party to the

negotiation may petition a state commission to arbitrate any open

issues during the period from the 135th to the 160th day after the

initial request for negotiation. § 252(b)(1). The state

commission resolving open issues by arbitration must ensure that

its resolution and imposition of conditions meets the requirements

of § 251 and FCC regulations. § 252(c). The state commission may

only reject an agreement adopted by negotiation if it discriminates

against a non-party carrier; is not consistent with the public

interest, convenience, and necessity; or does not meet the

requirements of §§ 251 and 252(d) and FCC regulations. §

252(e)(2). Subject to § 253, the state commission may also

establish or enforce other requirements of state law in its review

of an agreement. § 252(e)(3). No state court shall have

jurisdiction to review the action of the state commission in

approving or rejecting an agreement under this section. Id. If

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the state commission fails to act or to carry out its

responsibility under § 252(e), the FCC shall issue an order

preempting the state commission’s jurisdiction of that proceeding

or matter, assume the responsibility offered to the commission with

respect to that matter, and perform the functions that had been

offered to the state commission. § 252(e)(5). “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.” § 252(e)(6).

II. Facts and Procedural History

In 1997 AT&T Communications attempted to negotiate an

interconnection agreement under §§ 251 and 252 of the 1996 Act with

BellSouth, the local exchange carrier in Louisiana. When the

parties failed to reach an agreement on several elements of the

interconnection agreement, AT&T Communications petitioned the LPSC

to arbitrate the issues pursuant to § 252(b). LPSC accepted the

responsibility as arbitrator under § 252(e)(4) and resolved the

issues substantially in BellSouth’s favor. AT&T Communications

brought this action against BellSouth, the LPSC, and the individual

commissioners of the LPSC in the Middle District of Louisiana

pursuant to § 252(e)(6), contending that the LPSC arbitration

determination does not meet the requirements of §§ 251 and 252 and

10

the FCC regulations. The defendants answered on the merits. The

district court, however, requested that the parties brief whether

the suits against the LPSC and its officers were barred by the

Eleventh Amendment. After briefing, the district court dismissed

the actions as to all defendants, holding that suit against the

LPSC was barred by the Eleventh Amendment, and that suit against

the individual commissioners could not be maintained under Ex parte

Young. AT&T Communications of the South Central States, Inc. v.

BellSouth Telecommunications, Inc., 43 F. Supp. 2d 593 (M.D.La.

1999). AT&T filed timely notices of appeal.

III. Discussion

AT&T presents two principal arguments for reversal of the

district court’s interpretation and application of the Eleventh

Amendment and Ex parte Young: (1) the LPSC waived its Eleventh

Amendment immunity by voluntarily accepting and performing its

assigned role in the federal regulation of local competition under

the 1996 Act; and (2) AT&T’s suit, in any event, may proceed

against the individual commissioners under the doctrine of Ex parte

Young.

Whether a state is entitled to Eleventh Amendment immunity is

a question of law that this court reviews de novo. Hudson v. City

of New Orleans, 174 F.3d 677, 682 (5th Cir. 1999); United States ex

rel. Foulds v. Texas Tech Univ., 171 F.3d 279, 288 (5th Cir. 1999),

cert. denied, 120 S.Ct. 2194 (2000).

11

A. State Sovereign Immunity Generally

The Eleventh Amendment to the Constitution of the United

States provides: “The judicial power of the United States shall

not be construed to extend to any suit in law or equity commenced

or prosecuted against one of the United States by Citizens of

another State, or by Citizens or Subjects of any Foreign State.”

Further, as long construed by the Supreme Court, federal judicial

power does not extend to suits brought against a state or its

agencies by its own citizens. See, e.g., Puerto Rico Aqueduct &

Sewer Auth. V. Metcalf & Eddy, 506 U.S. 139 (1993); Edelman v.

Jordan, 415 U.S. 651 (1974); Hans v. Louisiana, 134 U.S. 1 (1890).

The Eleventh Amendment also bars federal jurisdiction over suits

against state officials acting in their official capacities when

the state is the real party in interest. See, e.g., Pennhurst

State School & Hospital v. Halderman, 465 U.S. 89 (1984).

Eleventh Amendment immunity from suit is not absolute.

College Savings Bank v. Florida Prepaid Postsecondary Education

Expense Board, 527 U.S. 666, 670 (1999). Congress may authorize a

private party to bring a federal court suit against unconsenting

states in the exercise of its power to enforce the Fourteenth

Amendment. Kimel v. Florida Bd. of Regents, 528 U.S. 62, 80

(2000); College Savings, 527 U.S. at 670 (citing Fitzpatrick v.

Bitzer, 427 U.S. 445 (1976)). A state may waive its sovereign

immunity by consenting to suit. College Savings, 527 U.S. at 670

(citing Clark v. Barnard, 108 U.S. 436, 447-448 (1883)).

12

Additionally, the Supreme Court has for nearly a century allowed

suits against state officials for prospective injunctive relief to

end a continuing violation of federal law under the doctrine of Ex

parte Young, 209 U.S. 123 (1908).

In Seminole Tribe v. Florida, 517 U.S. 44, 72 (1996), the

Supreme Court held that Congress cannot abrogate Eleventh Amendment

immunity through the exercise of its Article I powers. “Even when

the Constitution vests in Congress complete lawmaking authority

over a particular area, the Eleventh Amendment prevents

congressional authorization of suits by private parties against

unconsenting States.” Id. at 72; see College Savings, 527 U.S. at

672. Consequently, AT&T correctly does not contend that Congress

abrogated the states’ Eleventh Amendment immunity by enactment of

the 1996 Act under its Article I power to regulate interstate

commerce. Instead, this case turns on waiver and Ex parte Young.

B. Waiver

The Supreme Court has “long recognized that a State’s

sovereign immunity is ‘a personal privilege which it may waive at

[its] pleasure.’” College Savings, 527 U.S. at 675 (quoting Clark,

108 U.S. at 447). “The decision to waive that immunity, however,

‘is altogether voluntary on the part of the sovereignty.’” Id.

(quoting Beers v. Arkansas, 61 U.S. 527, 529 (1858)). Generally,

the Court will find a waiver either if the state voluntarily

invokes its jurisdiction, Gunter v. Atlantic Coast Line R.R. Co.,

200 U.S. 273, 284 (1906), or if the state makes a “clear

13

declaration” that it intends to submit itself to the court’s

jurisdiction. College Savings, 527 U.S. at 675-76 (quoting Great

Northern Life Ins. Co. v. Read, 322 U.S. 47, 54 (1944)).

In College Savings, the Court held that the Eleventh Amendment

immunity of the state education expense board (“the Board”), an arm

of the State of Florida, had not been voluntarily waived by the

Board’s alleged false advertising in interstate commerce. 527 U.S.

at 680-81. The petitioner, a New Jersey bank, had brought suit

against the Board alleging unfair competition under the Lanham Act

based on the Board’s alleged false advertising of its tuition

savings plans in its brochures and annual reports. The pertinent

federal statutes, the Trademark Remedy Clarification Act and the

Lanham Act, expressly subjected the states to suits brought under

them for false and misleading advertising.

The New Jersey bank relied upon Parden v. Terminal Railway of

Alabama Docks Department, 377 U.S. 184 (1964), in which the Supreme

Court had recognized a not altogether volitional “constructive-

waiver” theory, when it permitted employees of a railroad owned and

operated by Alabama to bring an action under the FELA against the

State as their employer. Although the FELA did not refer to the

states, the Parden Court held that, under the facts of that case,

the Act authorized the FELA action against Alabama as a “common

carrier by railroad . . . engaging in commerce between . . . the

several States,” 45 U.S.C. § 51 (1940 ed.). See College Savings,

527 U.S. at 666-67. Even though Alabama law expressly disavowed

14

any such waiver, the Parden majority held that “[b]y enacting the

[FELA] . . . Congress conditioned the right to operate a railroad

in interstate commerce upon amenability to suit in federal court as

provided by the Act; by thereafter operating a railroad in

interstate commerce, Alabama must be taken to have accepted that

condition and thus to have consented to suit.” Parden, 377 U.S. at

192.

The Supreme Court in College Savings, however, expressly

overruled Parden and its “constructive-waiver experiment [as] ill

conceived.” 527 U.S. at 680. The Court stated that “there is

little reason to assume actual consent based upon the State’s mere

presence in a field subject to congressional regulation[;] . . .

the most that can be said . . . is that the State has been put on

notice that Congress intends to subject it to suits brought by

individuals[,] . . . [and][t]hat is very far from concluding that

the State made an ‘altogether voluntary’ decision to waive its

immunity.” Id. at 680-681 (quoting Beers, 61 U.S. at 529). More

is required as a reasonable basis for inferring that the state, by

engaging in a federally-regulated activity, voluntarily consented

to being sued by individuals in federal court based on the federal

law. See id.

Consequently, the College Savings Court concluded that a state

voluntarily waives its Eleventh Amendment immunity by engaging in

activity subject to congressional regulation only if (1) the state

has been put on notice clearly and unambiguously by the federal

15

statute that the state’s particular conduct or transaction will

subject it to federal court suits brought by individuals; (2) the

state may refrain from engaging in the particular actions without

excluding itself from activities otherwise lawfully within its

powers; and (3) the state elects to engage in the conduct or

transaction after such legal notice has been given. See 527 U.S.

at 675-87. These waiver requirements are most clearly illustrated

by the Court’s discussion of the fundamental differences between

College Savings and two prior cases involving constitutionally

permissible conditions attached to gratuities offered to the states

by Congress.

In Petty v. Tennessee-Missouri Bridge Commission, 359 U.S. 275

(1959), the Court had held “that a bistate commission which had

been created pursuant to an interstate compact (and which we

assumed partook of state sovereign immunity) had consented to suit

by reason of a suability provision attached to the congressional

approval of the compact.” College Savings, 527 U.S. at 686. And

in such cases as South Dakota v. Dole, 483 U.S. 203 (1987), the

Court had held “that Congress may, in the exercise of its spending

power, condition its grant of funds to the States upon their taking

certain actions that Congress could not require them to take, and

that acceptance of the funds entails an agreement to the action.”

College Savings, 527 U.S. at 686.

The fundamental difference between the College Savings case

and the Petty and Dole cases, as the Court cogently pointed out,

16

lies in the distinction between the types of Congressional acts

involved. In the statutes involved in the latter cases, Congress

had obtained the states’ voluntary consent to conditions attached

to gratuities–a voluntary waiver of sovereign immunity for an

interstate compact in Petty, and an increase in the drinking age

for federal highway funds in Dole. Neither gratuity was attainable

by the state through lawful activities within the state’s own

powers. In contrast, College Savings involved federal statutes

that forced a state’s not “altogether voluntary” waiver by threat

of exclusion from otherwise lawful activity within its power. The

Court explained:

These cases seem to us fundamentally different from the

present one. Under the Compact Clause, U.S. Const., Art.

I, § 10, cl. 3, States cannot form an interstate compact

without first obtaining the express consent of Congress;

the granting of such consent is a gratuity. So also,

Congress has no obligation to use its Spending Clause

power to disburse funds to the States; such funds are

gifts. In the present case, however, what Congress

threatens if the State refuses to agree to its condition

is not the denial of a gift or gratuity, but a sanction:

exclusion of the State from otherwise permissible

activity. Justice BREYER’s dissent acknowledges the

intuitive difference between the two, but asserts that it

disappears when the gift that is threatened to be

withheld is substantial enough. Perhaps so, which is

why, in cases involving conditions attached to federal

funding, we have acknowledged that “the financial

inducement offered by Congress might be so coercive as to

pass the point at which ‘pressure turns into

compulsion.’” Dole, supra, at 211, 107 S.Ct. 2793,

quoting from Steward Machine Co. v. Davis, 301 U.S. 548,

590, 57 S.Ct. 883, 81 L.Ed. 1279 (1937). In any event,

we think where the constitutionally guaranteed protection

of the States’ sovereign immunity is involved, the point

of coercion is automatically passed–and the voluntariness

of waiver destroyed–when what is attached to the refusal

to waive is the exclusion of the State from otherwise

17

lawful activity.

527 U.S. at 686-87.

For these reasons, we agree with the Tenth and Seventh

Circuits’ conclusion that, after College Savings, Congress may

still obtain a non-verbal voluntary waiver of a state’s Eleventh

Amendment immunity, if the waiver can be inferred from the state’s

conduct in accepting a gratuity after being given clear and

unambiguous statutory notice that it was conditioned on waiver of

immunity. See MCI Telecommunications Corp. v. Illinois Bell Tel.

Co., 222 F.3d 323, 339 (7th Cir. 2000) (In College Savings, 527 U.S.

at 687, “the Court simply held that states cannot ‘constructively’

waive their immunity by being forced by Congress to choose between

preserving their sovereign immunity and engaging in an ‘otherwise

lawful activity.’”); MCI Telecommunications Corp. v. Pub. Serv.

Comm’n of Utah, 216 F.3d 929, 937 (10th Cir. 2000) (“A constructive

waiver is voluntary only where Congress threatens a state with the

denial of a ‘gift or gratuity’ if the state refuses to consent to

suit in federal court. Where Congress threatens a state with a

‘sanction’ if it refuses to consent to suit, then the waiver is no

longer freely given.”) (citation omitted). A state’s voluntary

waiver of immunity, inferred from the state’s acceptance of a

Congressional gratuity that it was free to decline without loss of

any sovereign prerogative, was distinguished by the Supreme Court

in College Savings from “the type of ‘forced waiver’ exacted by

Congress under Parden, whereby the state is threatened with the

18

sanction of waiving its immunity if it engages in a regulated

enterprise, [as] really an abrogation of the state’s immunity

prohibited by Seminole Tribe.” Illinois Bell, 222 F.3d at 340

(citing College Savings, 527 U.S. at 690 as “noting that forced

waiver and abrogation are ‘the same side of the same coin’”);

(citing also Chavez v. Arte Publico Press, 204 F.3d 601, 604 n.5

(5th Cir. 2000) (“College Savings expressly overruled Parden and its

implied waiver theory. That theory is no longer available to

support an Article I abrogation of Eleventh Amendment Immunity.”)).

We also join the Seventh and Tenth Circuits in concluding that

the 1996 Act does not potentiate the exaction of a “forced waiver”

of Eleventh Amendment immunity from the states. See Illinois Bell,

222 F.3d at 342-44; Pub. Serv. Comm’n, 216 F.3d at 938-39, 939 n.6.

The Act only establishes a basis for a voluntary gratuity induced

waiver that states may accept or reject, and it does not require

the states as a condition of accepting the gratuity to abandon any

lawful activity currently within their powers. Illinois Bell, 222

F.3d at 343-344; Pub. Serv. Comm’n, 216 F.3d at 938.

After passage of the 1996 Act, regulation of competition among

providers of local phone service is no longer within the province

of states’ inherent authority. Congress, by enacting the 1996 Act

pursuant to its commerce power, validly preempted the states’ power

to regulate local telecommunications competition. Iowa Utilities,

525 U.S. 366, 378 n.6 (1999) (“With regard to the matters addressed

by the 1996 Act, [the Federal Government] unquestionably has [taken

19

the regulation of local telecommunications competition away from

the States].”); see also FERC v. Mississippi, 456 U.S. 742, 764

(1982) (“[T]he commerce power permits Congress to pre-empt the

States entirely in the regulation of private utilities.”).

Accordingly, Congress established a federal system headed by the

FCC to regulate local telecommunications competition. The Act

permissibly offers state regulatory agencies a limited mission,

which they may accept or decline: to apply federal law and

regulations as arbitrators and ancillary regulators within the

federal system and on behalf of Congress. 42 U.S.C. § 252. Cf.

Hodel v. Virginia Surface Mining & Reclamation Assn., 452 U.S. 264,

290 (1981) (“Thus, Congress could constitutionally have enacted a

statute prohibiting any state regulation of surface coal mining.

We fail to see why the Surface Mining Act should become

constitutionally suspect simply because Congress chose to allow the

States a regulatory role.”).

Section 252(e)(6) of the Act plainly states that “any party

aggrieved by” a state commission’s determination, which necessarily

will include private individuals, may bring an action in an

appropriate federal district court, and § 252(e)(4) provides that

no state court shall have jurisdiction to review the action of a

state commission in approving or rejecting an agreement under this

section. We agree with the Seventh Circuit that “Congress has

expressed unmistakably that, under [the Act], states could

participate in the federal regulatory function delegated to them by

20

the federal government on the condition that their participation be

reviewed in federal court” and that the “Act satisfies the

requirement that Congress clearly state that participation by the

state in the regulatory scheme entails a waiver of immunity from

suit in federal court.” Illinois Bell, 222 F.3d at 341; see also

Pub. Serv. Comm’n, 216 F.3d at 938.

When the LPSC accepted Congress’s offer under the 1996 Act to

delegate federal authority to the state commission to act as an

arbitrator in the present case, the regulation of interconnection

agreements covered by the 1996 Act was no longer a permissible or

lawful activity within the power of the states. As in Petty and

Dole, Congress was under no obligation to offer states something

they could not obtain on their own, viz., participation in the 1996

Act’s federal regulation of local telecommunications competition.

Also, as in those cases, the state was free to accept or reject

such participation as a gratuity without abstaining from any lawful

activity within its power. College Savings made clear that when

Congress bestows a gift or gratuity, it may attach the condition of

a waiver of Eleventh Amendment immunity to a state’s acceptance.

527 U.S. at 686-87. Consequently, the LPSC voluntarily waived its

state immunity when it accepted the Congressional offer of a

gratuity and arbitrated the interconnection dispute in this case.

C. Application of Ex parte Young

We agree with the Sixth, Seventh, and Tenth Circuits that a

21

suit such as this one, brought by AT&T Communications for

injunctive relief against the individual members of the LPSC

because a determination made by the commissioners is allegedly

contrary to the 1996 Act, is a “straight forward” Ex parte Young

case. Illinois Bell, 222 F.3d at 345; Pub. Serv. Comm’n, 216 F.3d

at 939; Michigan Bell Tel. Co. v. Climax Tel. Co., 202 F.3d 862,

867 (6th Cir. 2000), cert. denied, 121 S.Ct. 54 (2000). Therefore,

even if Plaintiffs’ suit against the LPSC were barred by the

Eleventh Amendment, the suit for prospective injunctive relief

could proceed against the individual commissioners in their

official capacities.

Under the Ex parte Young doctrine, a private party may sue

individual state officers in federal court to obtain prospective

relief from an ongoing violation of federal law. See Ex parte

Young, 209 U.S. 123 (1908); Idaho v. Coeur d’Alene Tribe, 521 U.S.

261, 294 (1997) (O’Connor, J., concurring); id. at 298-99 (Souter,

J. dissenting); Ysleta Del Sur Pueblo v. Laney, 199 F.3d 281, 289

(5th Cir. 2000), cert. denied, 120 S.Ct. 2007 (2000); Earles v.

State Bd. of Certified Public Accountants of Louisiana, 139 F.3d

1033, 1039 (5th Cir. 1998). The purpose of the doctrine is to

enable federal courts to “vindicate federal rights and hold state

officials responsible to ‘the supreme authority of the United

States.’” Pennhurst, 465 U.S. at 105 (quoting Ex parte Young, 209

U.S. at 160). In the present case, AT&T Communications filed suit

against the individual LPSC commissioners in their official, rather

22

than personal, capacities. AT&T Communications alleges that the

arbitral determination of the interconnection agreement by the

commissioners violates the 1996 Act, a federal law. As the

interconnection agreement determination binds present and future

relations between AT&T Communications and BellSouth, the alleged

violation of federal law is on-going. Finally, an order preventing

the commissioners from enforcing provisions of the agreement which

fail to meet the requirements of the 1996 Act will be purely

prospective.

The LPSC commissioners counter that the present case fits

within the exception to Ex parte Young recognized by the Supreme

Court in Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996).

The Court in Seminole Tribe held that suits against individual

state officers in their official capacities for on-going violations

of federal law are not available when Congress has enacted a

comprehensive remedial scheme intended to be the sole remedy for

violations of federal law. Id. at 74. Because the remedial scheme

prescribed by Congress under the 1996 Act is significantly

different from the congressional plan considered by the Court in

Seminole Tribe, and does not manifest an intent to exclude Ex parte

Young suits, we disagree with the commissioners’ contention that

Seminole Tribe precludes application of the Ex parte Young

exception in this case.

In Seminole Tribe, the Supreme Court noted that the Indian

Gaming Regulatory Act (“IGRA”) provided that the sole judicial

23

remedy available under the act upon failed negotiations between the

State and the plaintiffs was a court order requiring mediation

between the parties. Id. If such mediation failed, the result

under IGRA’s elaborate remedial scheme was preemption of any

proposed agreement between the parties by regulations issued by the

Secretary of the Interior. Id. at 74-75. The Court thus noted

that the powers of the federal district court under IGRA were

limited “significantly,” id. at 76; in comparison, the Court

recognized that “an action brought against a state official under

Ex parte Young would expose that official to the full remedial

powers of a federal court, including, presumably, contempt

sanctions.” Id. at 75. The Court stated that “the fact that

Congress [under IGRA] chose to impose upon the State a liability

that is significantly more limited than would be the liability

imposed upon the state officer under Ex parte Young strongly

indicates that Congress had no wish to create the latter under

[IGRA].” Seminole Tribe, 517 U.S. at 75-76.

The 1996 Act, however, does not severely limit relief

available to an aggrieved party as does the IGRA. Section

252(e)(6) of the 1996 Act simply provides that, if the state

commission makes a determination under that section, any aggrieved

party may bring suit in federal court to determine whether the

determination meets the Act’s requirements. The 1996 Act does not

limit jurisdiction of federal courts to entertain suits in law or

equity for prospective relief from on-going violations of federal

24

law by state officials acting in their official capacities. It

thus cannot be said that Congress intended in the 1996 Act to limit

significantly the federal judicial remedies available to an

aggrieved party authorized to bring suit in an appropriate federal

court.3 See Illinois Bell, 222 F.3d at 346 (“The power of the

court under subsection 252(e)(6) stands in stark contrast with the

court’s powers to impose what the Supreme Court called a ‘modest

set of sanctions’ under the statute at issue in Seminole

Tribe.”)(citing Seminole Tribe, 517 U.S. at 75).

Appellees also argue that the Supreme Court’s decision in

Idaho v. Coeur d’Alene Tribe, 521 U.S. 261 (1997), precludes

applicability of Ex parte Young to the present case. However, this

circuit has rejected the idea that Coeur d’Alene affects the

traditional application of Ex parte Young:

We concur with the consensus among other courts that

although the principal opinion in Coeur d’Alene suggests

a case-by-case (rather than rule-based) approach to the

application of Ex parte Young, see Coeur d’Alene, 521

U.S. 261, 276-282 , 117 S.Ct. at 2038-2040 (opinion of

Kennedy, J.), this part of the opinion did not muster a

majority, and a majority of the Court would continue to

apply the rule of Ex parte Young as it has been

3

The LPSC and its commissioners contend that because review under

section 252 (e)(6) is limited in subject matter to a determination

of “whether the agreement or statement [as determined by the state

commission] meets the requirements of section 251,” the remedial

scheme created by the 1996 Act is more limited than traditional Ex

parte Young suits, and therefore such suits with respect to the Act

are precluded under Seminole Tribe. However, this limitation

defines the courts’ subject matter jurisdiction in all suits

brought to enforce the provisions of the 1996 Act rather than the

relief available in such a suit. Therefore, the Act does not

prohibit the application of the Ex parte Young doctrine.

25

traditionally understood, see id. at 296, 117 S.Ct. at

2047 (O’Connor, J., concurring in part and concurring in

the judgment(joined by Scalia and Thomas, JJ.)); id. at

297, 117 S.Ct. at 2048 (Souter, J., dissenting (joined by

Stevens, Ginsburg, and Breyer, JJ.)).

Earles v. State Bd. of Certified Public Accountants of Louisiana,

139 F.3d 1033, 1039 (5th Cir. 1998).

Accordingly, the application of Ex parte Young to suits

against state commissioners under section 252(e)(6) of the 1996 Act

remains unaffected by either Seminole Tribe or Coeur d’Alene. See

Illinois Bell, 222 F.3d 323, 347 (7th Cir. 2000); Pub. Serv. Comm’n,

216 F.3d 929, 940 (10th Cir. 2000); and Michigan Bell Tel. Co. v.

Climax Tel. Co., 202 F.3d 862, 867 (6th Cir. 1999).

IV. Conclusion

Because the LPSC voluntarily waived the state’s Eleventh

Amendment immunity in the present case, we REVERSE the decision of

the district court dismissing AT&T Communication’s suit against

LPSC. Because the Ex parte Young doctrine applies, we also REVERSE

the decision of the district court dismissing AT&T Communication’s

suit against the individual commissioners. The case is REMANDED

for further proceedings consistent with this opinion.

ENDRECORD

26

JERRY E. SMITH, Circuit Judge, dissenting:

I respectfully dissent and would affirm the dismissal. The

district court correctly opined that defendants are immune under

the Eleventh Amendment.

When a state commission elects to arbitrate an interconnection

agreement or approve a Statement of Generally Available Terms

(“SGAT”), the Telecommunications Act of 1996 (the “1996 Act” or the

“Act”) vests jurisdiction in the federal courts for any aggrieved

party to challenge state actions inconsistent with the requirements

of the Act.4 That jurisdiction is exclusive.5 Pursuant to the

Eleventh Amendment, however, federal courts may not entertain suits

by citizens against states arising out of congressional legisla-

tion, such as the 1996 Act, enacted under the Commerce Clause.6

Under the Eleventh Amendment, states enjoy broad sovereign

4

“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.” 47 U.S.C. §

252(e)(6).

5

“If the State commission does not act to approve or reject the

agreement within 90 days after submission by the parties of an

agreement adopted by negotiation under subsection (a) of this

section, or within 30 days after submission by the parties of an

agreement adopted by arbitration under subsection (b) of this

section, the agreement shall be deemed approved. No State court

shall have jurisdiction to review the action of a State commission

in approving or rejecting an agreement under this section.” Id. §

252(e)(4).

6

See Seminole Tribe v. Florida, 517 U.S. 44, 54 (1996).

27 27

immunity from suit in federal court:

The Judicial power of the United States shall not be con-

strued to extend to any suit in law or equity, commenced

or prosecuted against one of the United States by Citi-

zens of another State, or by Citizens or Subjects of any

Foreign State.

U.S. CONST. amend. XI. Though the amendment’s text most reasonably

applies only to suits in diversity, the Supreme Court has consis-

tently looked to the principle underlying the amendment to bar

suits on federal causes of action as well.7 Thus, individuals may

not sue states in federal court on causes of action arising out of

Article I legislation such as the 1996 Act.8

This immunity extends not only to states but to their agen-

cies, as well.9 The Eleventh Amendment thus immunizes the Louisi-

ana Commission from suit in federal court. Under certain, limited

circumstances, however, state officialsSSlike the commissionersSSmay

be subjected to suit, notwithstanding the Eleventh Amendment, under

Ex parte Young, 209 U.S. 123, 158-59 (1908).

7

See id. at 69-70 (rejecting blind reliance on the text of the

Eleventh Amendment because it dealt only with particular problem of

diversity jurisdiction created by an incorrect decision in Chisolm

v. Georgia, 2 U.S. (2 Dall.) 419 (1793)); Hans v. Louisiana, 134

U.S. 1 (1890) (same).

8

See, e.g., Hans, 134 U.S. at 18-19; Seminole Tribe, 517 U.S.

at 72-73. Of course, federal legislation enacted pursuant to

Section 5 of the Fourteenth Amendment may constitutionally abrogate

state sovereign immunity. See Fitzpatrick v. Bitzer, 427 U.S. 445

(1976).

9

See P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, 506 U.S.

139, 146 (1993).

28 28

Whether the 1996 Act violates the Eleventh Amendment is res

nova in this Circuit.10 On appeal, the telephone carriers present

three unconvincing theories to avoid sovereign immunity.

First, the carriers assert the application of the doctrine an-

nounced in Young to allow suit against the commissioners. Second,

they assert that the commission effectively waived its state sov-

ereign immunity by electing to arbitrate the interconnection agree-

ment and approve BellSouth’s SGAT under powers granted by the 1996

Act. Third, AT&T claims that the Act contemplates only appellate-

style judicial review and thus does not fall within the Eleventh

Amendment’s prohibition of “suit[s] in law or equity.”11

The Supreme Court recently addressed the Young and waiver is-

sues in, respectively, Seminole Tribe and College Savings Bank v.

Florida Prepaid Postsecondary Educational Expense Board, 527 U.S.

666 (1999), recognizing a broad Eleventh Amendment immunity suffi-

ciently capacious to bar suit here under the 1996 Act. In seeking

reversal, the telephone carriers urge, and the majority adopts, an

unduly narrow interpretation of those rulings. They would look to

the facts, circumstances, and rationales of each holding as somehow

exhaustive of the proper scope of the Eleventh Amendment jurisdic-

10

The majority relies substantially on AT&T Corp. v. Iowa

Utilities Board, 525 U.S. 366 (1999), but the Eleventh Amendment

issue was neither presented nor addressed in that case.

11

The majority summarily rejects this argument, and I agree.

29 29

tional bar, rather than merely illustrative of the immunity states

enjoy from suit in federal court.

I.

In Seminole Tribe, the Court breathed new life into Eleventh

Amendment immunity. That holding not only expanded the scope of

the amendment to cover all federal causes of action arising out

Congress’s Article I powers12SSthereby barring suit under the 1996

Act against a State commissionSSbut also narrowed the fictional ex-

ception to state sovereign immunity first established in

YoungSSthereby barring suit under the Act against state commission-

ers as well.13 The majority therefore errs in accepting the tele-

phone carriers’ argument that AT&T’s suit should be permitted to

12

See Seminole Tribe, 517 U.S. at 72-73 (“The Eleventh Amendment

restricts the judicial power under Article III, and Article I

cannot be used to circumvent the constitutional limitations placed

upon federal jurisdiction.”). Seminole Tribe specifically involved

the Indian Commerce Clause and explicitly overruled Pennsylvania v.

Union Gas Co., 491 U.S. 1 (1989), which had addressed the Inter-

state Commerce Clause, see Seminole Tribe, 517 U.S. at

66SSprovisions both found within Congress’s legislative powers

enumerated in Article I, Section 8. But a state’s sovereign

immunity is not restricted to that section, for Hans itself dealt

with the Contracts Clause, a constitutional restriction on the

states located within Article I, Section 10. See Hans.

13

See Seminole Tribe, 517 U.S. at 74 (stating that “where

Congress has prescribed a detailed remedial scheme for the

enforcement against a State of a statutorily created right, a court

should hesitate before casting aside those limitations and

permitting an action against a state officer based upon Ex parte

Young.”).

30 30

proceed against the member commissioners under Young.

In Young, the Court fashioned a judicial remedy to provide

prospective relief against state officials to redress ongoing vio-

lations of federal law, as a special exception to the Eleventh

Amendment bar to suit. Under Seminole Tribe, however, judicial re-

lief pursuant to Young is not available to redress violations of

the 1996 Act, because the Act provides a limited statutory remedial

scheme that supplants the relief otherwise alternatively available

under Young.

A.

It is not enough that the Eleventh Amendment permits judicial

application of Young to the 1996 Act. Under Seminole Tribe, courts

additionally must determine whether, in enacting that bill, Con-

gress acted to supplant that judicial remedy by substituting a

statute-based remedial scheme. See Seminole Tribe, 517 U.S.

at 74-76.

1.

As a judicially-crafted exception to the Eleventh Amendment,

the Young doctrine is not a fiction in which courts ought to engage

lightly.14 It was created in Young to give relief against state of

14

See Seminole Tribe, 517 U.S. at 74-76 (noting that Young is a

(continued...)

31 31

ficials to vindicate constitutional rights.15 Young since has been

extended to vindicate federal statutory rights.16

Nevertheless, it is Congress that creates federal statutory

rights, so it is also Congress that dictates the remedies available

to enforce statutory violations.17 Thus, “where Congress has pre-

scribed a detailed remedial scheme for the enforcement against a

State of a statutorily created right, a court should hesitate be-

fore casting aside those limitations and permitting an action

against a state officer based upon Ex parte Young.” Seminole

14

(...continued)

“narrow exception to the Eleventh Amendment”).

15

See Young, 209 U.S. at 159-60 (“The act to be enforced is

alleged to be unconstitutional; and if it be so, the use of the

name of the state to enforce an unconstitutional act to the injury

of complainants is a proceeding without the authority of, and one

which does not affect, the state in its sovereign or governmental

capacity. It is simply an illegal act upon the part of a state

official in attempting, by the use of the name of the state, to

enforce a legislative enactment which is void because

unconstitutional. If the act which the state attorney general

seeks to enforce be a violation of the Federal Constitution, the

officer, in proceeding under such enactment, comes into conflict

with the superior authority of that Constitution, and he is in that

case stripped of his official or representative character and is

subjected in his person to the consequences of his individual

conduct.”).

16

See Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89,

105-06 (1984) (recognizing that the Young remedy is available to

address violations of federal but not state law).

17

See David P. Currie, Ex Parte Young After Seminole Tribe, 72

N.Y.U. L. REV. 547, 549 (1997) (“Congress is perfectly free to

abolish the remedy recognized by Ex parte Young.”); id. at 551

(“Seminole Tribe will have its most significant effect on actions

involving statutory, not constitutional rights.”)

32 32

Tribe, 517 U.S. at 74.18

The question, then, is whether the judicial review provisions

of the 1996 Act establish a “detailed remedial scheme for the en-

forcement . . . of a statutorily created right,” id., sufficient

under Seminole Tribe to supplant the judicially-made Young remedy

that otherwise would be alternatively available to AT&T. See

Seminole Tribe, 517 U.S. at 74. In other words, we must determine

whether AT&T may pursue relief exclusively through the Act or

whether, alternatively, Young is also available.

In concluding that an Indian gaming act supplanted Young, the

Seminole Tribe Court explained:

Here, Congress intended [the rights conferred by the

act] to be enforced against the State in an action

brought under [25 U.S.C. § 2710(d)(7)]; the intricate

procedures set forth in that provision show that Congress

intended therein not only to define, but also to limit

significantly, the duty imposed by § 2710(d)(3). For

example, where the court finds that the State has failed

to negotiate in good faith, the only remedy prescribed is

an order directing the State and the Indian tribe to con-

clude a compact within 60 days. And if the parties dis-

regard the court’s order and fail to conclude a compact

within the 60-day period, the only sanction is that each

party then must submit a proposed compact to a mediator

who selects the one which best embodies the terms of the

Act. Finally, if the State fails to accept the compact

selected by the mediator, the only sanction against it is

that the mediator shall notify the Secretary of the In-

terior who then must prescribe regulations governing

class III gaming on the tribal lands at issue. By con-

trast with this quite modest set of sanctions, an action

brought against a state official under Ex parte Young

18

See also Currie, 72 N.Y.U. L. REV. at 551 (“Seminole Tribe may

well preclude the use of Ex parte Young in additional cases

involving statutory rights.”).

33 33

would expose that official to the full remedial powers of

a federal court, including, presumably, contempt sanc-

tions. If § 2710(d)(3) could be enforced in a suit under

Ex parte Young, § 2710(d)(7) would have been superfluous;

it is difficult to see why an Indian tribe would suffer

through the intricate scheme of § 2710(d)(7) when more

complete and more immediate relief would be available

under Ex parte Young.

Id. at 74-75 (footnote omitted).

In other words, to supplant Young, a statute must provide a

detailed and limited remedial legislative scheme, narrower in scope

than what would be available under Young. Otherwise, to invoke

Young would be to render the judicial review provisions of a stat-

ute superfluous.

Under the 1996 Act, an aggrieved party may seek judicial

review only under certain conditions: “In any case in which a

State commission makes a determination under this section, any par-

ty aggrieved by such determination may bring an action in an appro-

priate Federal district court to determine whether the agreement or

statement meets the requirements of section 251 . . . .” 47 U.S.C.

§ 252(e)(6) (emphasis added). The Act thus limits the timing of

access to federal courts, the scope of commission conduct subject

to judicial review, and the defendants vulnerable to suit.

First, with respect to access to suit and the scope of review-

able commission conduct, aggrieved parties have a right to judicial

relief under the Act, but only after the State commission has made

34 34

a determination.19 This is not unlike the requirement of a final

agency action to trigger Administrative Procedure Act judicial re-

view, see 5 U.S.C. §§ 702, 704, and it is available only to review

the validity of a commission agreement or statement under the Act

and not its process. The 1996 Act thus imposes a number of stat-

utory duties on State commissions that are either not effectively

or only partially effectively reviewable under this judicial review

provision, including the duty to arbitrate open issues brought to

the commission, see 47 U.S.C. § 252(a)(2); the duty to provide an

opportunity to respond to the party against whom another party has

petitioned for arbitration, see id. § 252(b)(3); the duty to arbi-

trate only those issues raised by a petition, see id. § 252(b)-

(4)(A); the duty to conclude the resolution of unresolved issues

within nine months of the initial request, see id. § 252(b)(4)(C);

and, with respect to SGAT’s, the duty to complete review within

sixty days of submission, see id. § 252(f)(3).

To delay judicial review until the state commission actually

makes a determination (rather than before), and then to limit that

review only to ensuring that any agreement or statement (as opposed

19

See GTE Southwest, Inc. v. Graves, 989 F. Supp. 1148, 1150

(W.D. Okla. 1997); GTE N. Inc. v. Glazer, 989 F. Supp. 922 (N.D.

Ohio 1997); GTE Northwest, Inc. v. Nelson, 969 F. Supp. 654 (D.

Wash. 1997); GTE Fla., Inc. v. Johnson, 964 F. Supp. 333 (N.D. Fla.

1997); GTE S. Inc. v. Breathitt, 963 F. Supp. 610 (E.D. Ky. 1997);

GTE S. Inc. v. Morrison, 957 F. Supp. 800 (E.D. Va. 1997); Contel,

Inc. v. Jacobs, 1997 WL 809628 (D. Minn. 1997).

35 35

to the arbitration process itself) complies with the Act, is to

“limit significantly . . . the dut[ies] imposed by”20 the Act and

thus to supplant relief under Young. A plaintiff might prefer to

seek the immediate injunctive relief offered by Young to redress

ongoing violations of the Act,21 but the Act requires the aggrieved

party to wait for a determination by the state commission before

filing suit, even if it means that some violations, such as com-

pliance with the statutory deadlines, might never be redressed.

The Act therefore provides a remedial scheme that supplants relief

otherwise offered by Young.

Second, the Act refers only to cases involving “a State com-

mission.” Id. § 252(e)(6). No reference is made to state commis-

sioners. As Seminole Tribe teaches, courts should not lightly

construe Congressional intent to “expose [a state] official to the

full remedial powers of a federal court, including, presumably,

contempt sanctions,” where the statute seems to suggest otherwise

by providing alternative remedies. Seminole Tribe, 517 U.S. at

20

Seminole Tribe, 517 U.S. at 74.

21

That an on-going violation is the result of a past wrong does

not transform the remedy from a prospective to a retrospective one.

Relief under Young is still available in these cases. See CSX

Transp., Inc. v. Bd. of Pub. Works, 138 F.3d 537, 541 (4th Cir.

1998) (stating that “a future injunction is not made retrospective

merely because it recognizes that an ongoing violation of law is

the result of a past wrong.”).

36 36

75.22 Given that only parties “aggrieved by such determination may

bring an action” and that such actions are limited “to determin-

[ing] whether the agreement or statement” complies with the Act,

§ 252(e)(6), the most reasonable construction is to limit the scope

of judicial review to the only parties able to trigger itSSstate

commissions.23

Notwithstanding the availability of injunctive relief, the ju-

dicial review provisions are sufficiently limited to supplant re-

lief under Young. That the limited statutory remedy under the Act

22

See id. at 75 n.17 (distinguishing between statutes expressly

permitting suit against specific state officials and those allowing

suit only against “the State”).

23

The state defendants additionally argue that the Act’s judi-

cial review provision does not provide for injunctive relief,

thereby further enlarging the gap between relief under the Act and

that provided by Young. The Act simply authorizes federal courts

to review only to ensure that any “agreement or statement meets the

requirements of” the 1996 Act. Id. Although the only case in this

circuit to have construed the Act’s judicial review provision,

Southwestern Bell Telephone Co. v. Public Utility Commission, 208

F.3d 475 (5th Cir. 2000), did not involve the Eleventh Amendment,

we did indicate an inclination to adopt a “broader view” of the

provision. See id. at 481-82 (construing the Act to permit review

of state commissions for compliance with state law, under the

arbitrary-and-capricious standard, in addition to de novo review of

compliance with Act). A natural reading of the text is that it

defines merely the scope of state conduct subject to judicial

review, rather than the available remedies, and that our authority

to enforce compliance reasonably includes the availability of

injunctive reliefSSalbeit only against the state commission and not

its commissioners. See Franklin v. Gwinnett County Pub. Schs., 503

U.S. 60, 66 (1992) (stating that “although we examine the text and

history of a statute to determine whether Congress intended to

create a right of action, we presume the availability of all ap-

propriate remedies unless Congress has expressly indicated

otherwise”) (citation omitted).

37 37

against state commissions is actually not available because it is

unconstitutional under the Eleventh Amendment does not alter the

determination that the Act supplants Young relief against state

commissioners. The Supreme Court directly confronted this issue in

Seminole Tribe, concluding that the Court could consider the alter-

native remedy provided by Congress sufficient to supplant relief

under Young, notwithstanding the fact that that remedy was uncon-

stitutional. This result struck some commentators as absurd,24 but

the Court unhesitatingly concluded that it is for Congress, and not

the courts, to rewrite defective statutes.25

24

See Currie, 72 N.Y.U. L. REV. at 550 (“That said, the

application of [this] principle in Seminole Tribe makes no sense.

The majority held Ex parte Young precluded by a provision it had

just declared unconstitutionalSSthe section authorizing suit

against the state itself. One of the essential characteristics of

unconstitutional provisions is that they have no effect. Moreover,

the inability to make the state suable removes the only plausible

basis for believing that Congress would have wanted to forbid suit

against the Governor under Ex parte Young . . . . [T]he last thing

that Congress would have wanted was to leave the offended party

with no remedy at all.”).

25

See Seminole Tribe, 517 U.S. at 75-76 (“Here, of course, we

have found that Congress does not have authority under the

Constitution to make the State suable in federal court under §

2710(d)(7). Nevertheless, the fact that Congress chose to impose

upon the State a liability that is significantly more limited than

would be the liability imposed upon the state officer under Ex

parte Young strongly indicates that Congress had no wish to create

the latter under § 2710(d)(3). Nor are we free to rewrite the

statutory scheme in order to approximate what we think Congress

might have wanted had it known that § 2710(d)(7) was beyond its

authority. If that effort is to be made, it should be made by Con-

gress, and not by the federal courts. We hold that Ex parte Young

is inapplicable to petitioner’s suit against the Governor of

Florida, and therefore that suit is barred by the Eleventh

(continued...)

38 38

2.

The telephone carriers and the majority would apply a narrower

reading of Seminole Tribe, however, limiting its scope to the par-

ticular federal statute that decision construed. The carriers ar-

gue that the 1996 Act does not limit relief nearly as dramatically

as does the statute in Seminole Tribe and that Seminole Tribe held

only that that enactment was sufficient to supplant Young. After

all, the same kind of injunctive relief to redress ongoing viola-

tions is available under the 1996 Act as is available under Young;

that was not so in Seminole Tribe. All an aggrieved party need do

under the 1996 Act is to satisfy the administrative exhaustion-like

conditions of the Act’s judicial review provision, as was done

here.

But that is precisely the problem under Seminole Tribe. Sec-

tion 252(e)(6) limits the scope of Commission conduct subject to

scrutiny by federal courts and thus supplants Young. Under Semi-

nole Tribe, 517 U.S. at 74, Young relief is unavailable when, by

enacting the statute, “Congress intended therein not only to de-

fine, but also to limit significantly, the duty imposed” by the

statute through a limited remedial scheme.

This is the carriers’ strongest argument against applying Sem-

inole Tribe, which is silent on the question, because Seminole

25

(...continued)

Amendment and must be dismissed for a lack of jurisdiction.”).

39 39

Tribe does not expressly state that a federal statute limiting de-

fendants and commission duties subject to judicial review, but not

remedies such as injunctive relief, is sufficient to supplant

Young. Nonetheless, the carriers’ attempt to distinguish between

limits on available remedies (as in Seminole Tribe) and limits on

defendants and duties (as in the instant case) finds no support in

Seminole Tribe, which, after all, describes Young relief as a “nar-

row exception to the Eleventh Amendment.” Id. at 74. Therefore,

in the face of ambiguity in Seminole Tribe as to whether it pre-

cludes Young relief only where a statute prohibits certain judicial

remedies, or also where a statute limits only defendants and du-

ties, the majority errs in resolving that ambiguity against state

sovereign immunity.

B.

Because the Act confers exclusive jurisdiction in the federal

courts,26 and, as I have shown, an action in federal court is barred

under the Eleventh Amendment, no review to enforce the commission’s

or a commissioner’s compliance with the Act is available in state

26

“If the State commission does not act to approve or reject the

agreement within 90 days after submission by the parties of an

agreement adopted by negotiation under subsection (a) of this

section, or within 30 days after submission by the parties of an

agreement adopted by arbitration under subsection (b) of this

section, the agreement shall be deemed approved. No State court

shall have jurisdiction to review the action of a State commission

in approving or rejecting an agreement under this section.” 47

U.S.C. § 252(e)(4).

40 40

or federal court. This circumstanceSSthat there is neither a state

nor a federal forum to vindicate federal rights created by the

ActSSis not alone sufficient to trigger relief under Young. Such

a rule was suggested in Idaho v. Coeur d’Alene Tribe, 521 U.S. 261

(1997), as a mere factor to support application of Young, but even

that minimal suggestion was endorsed by only two Justices27 and

expressly repudiated by three.28 The governing rule remains the

same: Relief under Young is available where prospective relief is

necessary to redress on-going violations of federal law,29 but only

if Congress has not supplanted that relief with an alternative,

limited remedial scheme. See Seminole Tribe, 517 U.S. at 74-75.

II.

It is not enough to say that the Eleventh Amendment applies

and that the narrow exception of Young has been supplanted by

Congress, for a state might be found to have waived such immunity.

There is no actual waiver in this case, and, even if constructive

27

See Coeur d’Alene Tribe, 521 U.S. at 270-74 (Kennedy, J.,

joined by Rehnquist, C.J.).

28

See id. at 291-92 (O’Connor, J., joined by Scalia and Thomas,

JJ., concurring).

29

See id. at 294 (O’Connor, J., joined by Scalia and Thomas,

JJ., concurring) (opining that “a Young suit is available where a

plaintiff alleges an ongoing violation of federal law, and where

the relief sought is prospective rather than retrospective”); id.

at 298-99 (Souter, J., joined by Stevens, Ginsburg, and Breyer,

JJ., dissenting) (same).

41 41

waiver is still available as a matter of law, the state defendants

did not waive its immunity voluntarily. They therefore have re-

tained their immunity under the Eleventh Amendment.

A.

As the majority seems to acknowledge, there was no express

waiver; Louisiana did not enact a law or otherwise express its con-

sent to suit in federal court under the 1996 Act. Instead, the

majority reasons that Louisiana effected “a voluntary gratuity

induced waiver” by participating in the regulatory scheme.

In College Savings Bank v. Florida Prepaid Postsecondary

Education Expense Board, 527 U.S. 666 (1999), the Court overruled

Parden v. Terminal Railway of Alabama Docks Department, 377 U.S.

184 (1964), and rejected the theory that a state might construc-

tively waive sovereign immunity.30 In its place, the Court adopted

“[t]he classic description of an effective waiver of a constitu-

tional right”SSthat is, “the intentional relinquishment or abandon-

ment of a known right or privilege.” College Sav. Bank, 527 U.S.

at 682. The test is a “stringent one.” Id. at 675. In any event,

the majority correctly acknowledges that a theory of constructive

waiver is no longer viable.

30

See College Sav. Bank, 527 U.S. at 680 (“We think that the

constructive-waiver experiment of Parden was ill conceived, and see

no merit in attempting to salvage any remnant of it. . . .

Whatever may remain of our decision in Parden is expressly

overruled.”).

42 42

B.

For a waiver to be effective, it must be completely voluntary

and not coerced or based on an unconstitutional condition. The ma-

jority errs in concluding that the supposed waiver here meets that

requirement.

“[W]here the constitutionally guaranteed protection of the

States’ sovereign immunity is involved, the point of coercion is

automatically passedSSand the voluntariness of waiver de-

stroyedSSwhen what is attached to the refusal to waive is the

exclusion of the State from otherwise lawful activity.” College

Sav. Bank, 527 U.S. at 687 (emphasis added). The protection of

College Savings Bank is not limited only to states that were

previously engaging in federally-regulated activity (as distin-

guished from states that were merely participating in a federal

program), as mistakenly urged by the carriers, but instead extends

to any otherwise lawful activity. For example, the Court rejected,

out of hand, any exception whatsoever for states acting as market

participants. Id. at 685-86.31

31

In College Savings Bank, however, the Court distinguished

waivers induced under the Compact and Spending Clauses on the

ground that Congressional approval of interstate compacts and

disbursement of federal funds to the states are matters of

Congressional gratuity and do not improperly interfere with a

state’s ability to conduct otherwise lawful activity. Id. at 686

(citing Petty v. Tenn.-Mo. Bridge Comm’n, 359 U.S. 275 (1959)

(Compact Clause), and South Dakota v. Dole, 483 U.S. 203 (1987)

(continued...)

43 43

The 1996 Act does not force states to waive their sovereign

immunity, but it unconstitutionally subjects to suit in federal

court any state commission that elects to arbitrate interconnection

agreements between competitors operating in local telephone service

markets within their jurisdiction or to approve SGAT’s of Bell

Operating Companies providing service to their jurisdiction. The

telephone carriers emphasize that the Act gives clear notice that

state commissions choosing to regulate will subject themselves to

suit in federal court.32 After College Savings Bank, however, clear

notice, though still necessary, is no longer sufficient to induce

waiver of Eleventh Amendment immunity.

Under College Savings Bank, even a clearly-induced waiver is

ineffective if arbitration of interconnection agreements or approv-

al of SGAT’s by a state commission constitutes “otherwise lawful

activity.” Id. at 687. The question, therefore, is whether arbi-

tration of interconnection agreements or approval of SGAT’s by a

state commission constitutes “otherwise lawful activity” for which

Congress cannot condition a waiver of sovereign immunity, or wheth-

31

(...continued)

(Spending Clause)).

32

See Dole, 483 U.S. at 207 (holding that “if Congress desires

to condition the States’ receipt of federal funds, it must do so

unambiguously, enabling the States to exercise their choice

knowingly, cognizant of the consequences of their participation”)

(citations omitted); Atascadero, 473 U.S. at 247 (holding that the

Rehabilitation Act “falls far short of manifesting a clear intent

to condition participation in the programs funded under the Act on

a State’s consent to waive its constitutional immunity”).

44 44

er, instead, the grant of such power to the states is a gift or

gratuity, which Congress may so condition. Id. at 686-87.

Before the 1996 Act, state commissions regulated local tele-

phone service markets within their jurisdiction. The Act takes

that local regulatory power from the states,33 as the telephone

carriers themselves appear to concede. Granted, the Act does not

keep such authority exclusively in the hands of Congress or the

FCC, but allows it back to the state commissions. That delegation

back to the states is permitted under the statute, however, only if

the states subject themselves to suit in federal court.

Congress was not merely conditioning a gift or a gratuity, as

the carriers insist and the majority concludes. Rather, the Act

imposes conditions on states wishing to continue to regulate local

telephone markets as they once did. This Congress cannot do.

In essence, the Act requires state commissions to sacrifice

either policy preference or sovereign immunity. A state commission

may wish to intervene and make its policy preferences known, but

doing so subjects it to federal jurisdiction. To avoid federal

jurisdiction, a state commission must abdicate its regulatory goals

and hope that the private parties and the FCC will come to a solu-

tion it would endorse. This hardly rises to a voluntary waiver of

33

See AT&T Corp., 525 U.S. at 379 n.6 (“But the question in

these cases is not whether the Federal Government has taken the

regulation of local telecommunications competition away from the

States. With regard to the matters addressed by the 1996 Act, it

unquestionably has.”).

45 45

a state’s constitutional right to sovereign immunity in federal

court.

The telephone carriers would re-characterize state commission

powers under the Act as “federal regulatory authority,” and thus

the kind of activity in which a state may not lawfully engage

without congressional authorization. They and the panel majority

would analogize the Act to congressional exercises of its powers

under the Compact and Spending Clauses, under which Congress is

constitutionally authorized under College Savings Bank to require

waiver.

The regulatory powers enjoyed by state commissions under the

1996 Act are indeed “federal” in the sense that Congress, and not

a particular state, has articulated the governing standards. But

the underlying subject matter nevertheless remains within the in-

disputable (if non-exclusive) domain of the states. Like other

matters of commerce, local telephony is a matter both within the

jurisdiction of state regulators and subject to federal preemption.

As the majority observes, “[T]he question in this case is not

whether the Federal Government has taken the regulation of local

telecommunications competition away from the states. With regard

to the matters addressed by the 1996 Act, it unquestionably has.”

Iowa Utils. Bd., 525 U.S. at 379 n.6.

To be sure, Congress could have preempted state regulation of

46 46

all telephony.34 And Congress may give the states the option of

providing their own regulations or facing preemption by federal

law.35 But the greater does not always include the lesser, and it

certainly does not when state sovereigntySSas opposed to mere

policy preferenceSSis at issue.

In pursuit of legitimate ends such as telephony regulation,

Congress may not offend state sovereignty. This was so in the com-

mandeering cases36 and is no less so here with respect to the

Eleventh Amendment. Congress may ask states to choose either to

regulate or to stand back and let federal law take over. But just

as it cannot commandeer states to conduct federal regulation on be-

half of the United States, it cannot condition, on submission to

suits in federal court, state participation in those regulatory af-

34

See FERC v. Mississippi, 456 U.S. 742, 764 (1982) (noting that

“the commerce power permits Congress to pre-empt the States

entirely in the regulation of private utilities”); Hodel v. Va.

Surface Mining & Reclamation Ass’n, 452 U.S. 264, 290 (1981) (“A

wealth of precedent attests to congressional authority to displace

or pre-empt state laws regulating private activity affecting

interstate commerce”).

35

See FERC, 456 U.S. at 765 (stating that, because “Congress

could have pre-empted the field,” statutes “should not be invalid

simply because, out of deference to state authority, Congress

adopted a less intrusive scheme and allowed the States to continue

regulating in the area on the condition that they consider the

suggested federal standards”); New York v. United States, 505 U.S.

144, 167 (1992) (observing that “[w]e have recognized Congress’

power to offer States the choice of regulating [commercial]

activity according to federal standards or having state law pre-

empted by federal regulation”).

36

See Printz v. United States, 521 U.S. 898 (1997); New York v.

United States.

47 47

fairs in which states once freely engaged.

Thus, the telephone carriers’ argument that state commissions

enjoy the option whether to regulate may solve Tenth Amendment

problems raised in Printz or New York but does not address the

concern of coerced waiver of state sovereignty under the Eleventh

Amendment. Giving states the choice whether to be preempted by

federal law represents a permissible form of “cooperative federal-

ism,” Hodel, 452 U.S. at 289, but the conscription of state offi-

cials to execute federal regulatory programs or the subjection of

state officers to suit in federal court diminishes the “accounta-

bility of state [and] federal officials” and thereby violates con-

stitutional principles of federalism, Printz, 521 U.S. at 929-30.

III.

The Eleventh Amendment bars AT&T from suing the state defen-

dants but not from suing BellSouth. AT&T thus argues that the dis-

trict court abused its discretion when it dismissed the entire

case, even as to BellSouth.37

Authority to dismiss an entire case because of the unavail-

ability of one particular party is governed by FED. R. CIV. P. 19,

which “requires that if, as a matter of equity the court finds that

the lawsuit cannot proceed without the absent party, then that par-

37

The majority's erroneous disposition of the other issues on

appeal rendered unnecessary a discussion by the majority of this

indispensable-party issue.

48 48

ty be considered indispensable and the case dismissed.” Shelton,

843 F.2d at 216 (emphasis added) We review the district court’s

exercise of its equitable powers for abuse of discretion. See In

re Nikoloutsos, 199 F.3d at 236.

To determine whether a party is indispensable, courts look to

rule 19(b), which states:

[T]he court shall determine whether in equity and good

conscience the action should proceed among the parties

before it, or should be dismissed, the absent person be-

ing thus regarded as indispensable. The factors to be

considered by the court include: first, to what extent a

judgment rendered in the person’s absence might be preju-

dicial to the person or those already parties; second,

the extent to which, by protective provisions in the

judgment, by the shaping of relief, or other measures,

the prejudice can be lessened or avoided; third, whether

a judgment rendered in the person’s absence will be ade-

quate; fourth, whether the plaintiff will have an ade-

quate remedy if the action is dismissed for nonjoinder.

The determination of whether a party is “indispensable” is thus a

pragmatic one.38 “The distilled essence” of the four factors “is

the attempt to balance the rights of all concerned.” Schutten, 421

F.2d at 873. In other words,

[t]he plaintiff has the right to “control” his own liti-

gation and to choose his own forum. This “right” is, how-

ever, like all other rights, “defined” by the rights of

others. Thus the defendant has the right to be safe from

38

See Fernandes v. Limmer, 663 F.2d 619, 636 (Former 5th Cir.

Dec. 1981) (“Courts confronted with motions to dismiss a suit for

failure to join purportedly 'indispensable parties' properly

approach the problem pragmatically.”); Schutten v. Shell Oil Co.,

421 F.2d 869, 873 (5th Cir. 1970) (“The 1966 amendment of Rule 19

attempts to remedy this situation by conditioning a finding of

'indispensability' upon 'pragmatic considerations.'”) (citation

omitted).

49 49

needless multiple litigation and from incurring avoidable

inconsistent obligations. Likewise the interests of the

outsider who cannot be joined must be considered. Final-

ly there is the public interest and the interest the

court has in seeing that insofar as possible the litiga-

tion will be both effective and expeditious.

Id.

The district court did not abuse its equitable powers, under

rule 19, to dismiss the entire case. It fairly reasoned that it

“lacks the power [under Seminole Tribe] to create a remedy under

the 1996 Act. The congressional choice of remedy must be respect-

ed. Therefore, the plaintiffs can no longer obtain the relief that

they requested in their complaints against the Public Service Com-

mission.” AT&T Communications, 43 F. Supp. 2d at 604.

Imagine if it were otherwise: The 1996 Act cannot constitu-

tionally subject state commissions to suit. For a federal court

then to rule on the validity of an agreementSSonly as against the

other carrier, and not against the state defendants as wellSSis

potentially to expose the carriers to conflicting orders. AT&T’s

suggestion that the Act allows the FCC to take over regulatory au-

thority from the state commission “[i]f a State commission fails to

act to carry out its responsibility under this section in any pro-

ceeding or other matter under this section,” § 252(e)(5), is of

little help, for the very problem at hand is not the commission’s

failure to act, but the validity of those acts under federal law,

and the Act permits FCC jurisdiction only in cases of the former.

Thus, in rejecting the argument that, under § 252(e)(6), the

50 50

other party to the agreement (here, BellSouth) was the “only proper

part[y] for suit,” one court opined:

It is the [Commission’s] duty, if it chooses to regulate,

not the other party’s, to ensure that the agreement meets

the requirements of the Act . . . . Furthermore, it is

the [Commission’s] function, not the other party’s, to

enforce the agreement. Lacking power to enjoin the [Com-

mission] from enforcing the approved agreement, federal

courts would have little effective remedy for aggrieved

plaintiffs, or would subject companies to the intolerable

prospect of conflicting commands from federal courts and

state regulatory agencies.

Michigan Bell Tel. Co. v. Climax Tel. Co., 202 F.3d 862, 868 (6th

Cir.) (emphasis added), cert. denied, 121 S. Ct. 54 (2000).

To allow suit here against BellSouth potentially either would

expose the carriers to conflicting commands or would prejudice the

state defendants by putting their policy preferences at risk of

reversal notwithstanding their immunity under the Eleventh Amend-

ment from interference by federal courts. Thus, AT&T’s argument

that rule 19(b) ought not bar suit against BellSouth because no

adequate remedy is otherwise available directly confronts another

rule 19(b) factorSSthat is, that any adequate remedy inevitably and

simultaneously would prejudice the Louisiana Commission’s immunity

from interference of the federal courts.

Finally, AT&T complains that “an equitable doctrine cannot be

invoked to defeat the statutory mandate that aggrieved parties have

the right of review of the legality of commission-approved inter-

connection agreement [sic] in federal court.” As I have explained,

however, the statute is unconstitutional, and it is up to Congress

51 51

to fix it.

I respectfully dissent.

52 52