Michigan Bell Telephone Co. v. Climax Telephone Co.

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

ELECTRONIC CITATION: 2000 FED App. 0025A (6th Cir.)

File Name: 00a0025a.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

_________________

;



MICHIGAN BELL TELEPHONE



COMPANY, d/b/a Ameritech



Michigan,



No. 98-1315

Plaintiff-Appellee,



>

v. 







CLIMAX TELEPHONE

Defendant, 

COMPANY,









JOHN G. STRAND, JOHN C.



SHEA, and DAVID A.



SVANDA, Commissioners of



the Michigan Public Service



Commission (In Their

Official Capacities and not as 



Defendants-Appellants, 

Individuals),



UNITED STATES OF AMERICA, 



FEDERAL COMMUNICATIONS 



Intervenors. 

COMMISSION,

1

1

2 Michigan Bell Telephone v. Climax No. 98-1315

Telephone Co., et al.

Appeal from the United States District Court

for the Western District of Michigan at Grand Rapids.

No. 97-00197—Gordon J. Quist, District Judge.

Argued: April 29, 1999

Decided and Filed: January 18, 2000

Before: JONES, BOGGS, and COLE, Circuit Judges.

_________________

COUNSEL

ARGUED: David A. Voges, OFFICE OF THE ATTORNEY

GENERAL, PUBLIC SERVICE DIVISION, Lansing,

Michigan, for Appellants. John E. Muench, MAYER,

BROWN & PLATT, Chicago, Illinois, for Appellee. Susan

Pacholski, U.S. DEPARTMENT OF JUSTICE, CIVIL

DIVISION, APPELLATE STAFF, Washington, D.C., for

Intervenors. ON BRIEF: David A. Voges, David M.

Gadaleto, OFFICE OF THE ATTORNEY GENERAL,

PUBLIC SERVICE DIVISION, Lansing, Michigan, for

Appellants. John E. Muench, Robert M. Dow, Jr., Theodore

A. Livingston, MAYER, BROWN & PLATT, Chicago,

Illinois, Jeffrey V. Stuckey, Joseph A. Fink, John M.

Dempsey, Edward R. Becker, DICKINSON WRIGHT,

Lansing, Michigan, for Appellee. Susan Pacholski, Mark B.

Stern, U.S. DEPARTMENT OF JUSTICE, CIVIL

DIVISION, APPELLATE STAFF, Washington, D.C., for

Intervenors.

BOGGS, J., delivered the opinion of the court, in which

JONES, J., joined. COLE, J. (p. 13), delivered a separate

opinion concurring in part and dissenting in part.

No. 98-1315 Michigan Bell Telephone v. Climax 3

Telephone Co., et al.

______________________

AMENDED OPINION

______________________

BOGGS, Circuit Judge. Climax Telephone Company

expanded its local exchange service into the service territory

of Michigan Bell Telephone Company, d/b/a/ Ameritech

Michigan (“Ameritech”). Climax petitioned the Michigan

Public Service Commission (the “PSC”) for arbitration of the

terms, conditions, and prices for interconnection and related

arrangements from Ameritech, under Section 252 of the

federal Telecommunications Act of 1996 (the “FTA” or the

“Act”), 47 U.S.C. § 252, and “the procedure adopted by the

[PSC’s] Order dated July 16, 1996, in Case No. U-11134.”

An arbitration panel rendered its decision, to which both

parties objected. The PSC rejected the objections, adopted

the arbitration panel’s decision, and approved an

interconnection agreement between the parties based on the

arbitration panel’s decision.

Ameritech sued Climax and the Commissioners of the PSC

in their official capacities, seeking declaratory and injunctive

relief against enforcement of the interconnection agreement.

The Commissioners moved to dismiss the complaint against

them, citing provisions of the Act, the doctrine of sovereign

immunity, and the Tenth and Eleventh Amendments. The

district court denied the motion, and the Commissioners

appeal its decision. We granted the Federal Communications

Commission (“FCC”) intervenor status, and now affirm the

judgment of the district court. Only the interlocutory appeal

is before us—the merits of the case have not yet been

considered below.

I

Climax is an established local exchange carrier (“LEC”)

serving the Climax, Michigan area. On July 30, 1996, Climax

filed an application with the PSC to provide local exchange

service in the greater Battle Creek and Kalamazoo, Michigan

4 Michigan Bell Telephone v. Climax No. 98-1315 No. 98-1315 Michigan Bell Telephone v. Climax 13

Telephone Co., et al. Telephone Co., et al.

area, where Ameritech is the incumbent provider. The _____________________________________________

application showed that Climax intended to establish a local

calling area covering the geographical area served by four CONCURRING IN PART, DISSENTING IN PART

Ameritech local calling areas. In late 1996, Climax and _____________________________________________

Ameritech began negotiating an interconnection agreement

and reached resolution on all but seven issues.

R. GUY COLE, JR., concurring in part and dissenting in

On March 10, 1997, just before the end of the statutory part. I am in complete agreement with the majority’s

period for timely filing of petitions for arbitration, see 47 disposition of the Commissioners’ Eleventh Amendment

U.S.C. § 252(b)(1), Climax petitioned for arbitration. claim. I write separately because I do not believe that this

Pursuant to the procedures established in its opinion in case court has jurisdiction to consider the interlocutory appeal of

number U-11134, the PSC assigned the matter to an the Commissioners’ other claims.

arbitration panel composed of two technical staff people and

one administrative law judge. See Case No. U-11134, 1996 The Commissioners’ Eleventh Amendment claim is clearly

WL 467772 (Mich. P.S.C. July 16, 1996). The panel appealable under the collateral order exception. See Sault Ste.

addressed the five open issues; on May 21, 1997, it adopted Marie Tribe of Chippewa Indians v. Michigan, 5 F.3d 147,

Climax’s proposed resolution as to three issues, Ameritech’s 149 (6th Cir. 1993). However, the Commissioners’ Tenth

proposed resolution as to one issue, and found that the fifth Amendment and § 252 claims are not appealable collateral

issue was not properly raised. orders because those claims are not “effectively unreviewable

on appeal from a final judgment.” See Coopers & Lybrand v.

On June 25, 1997, the PSC adopted the decision of the Livesay, 437 U.S. 463, 468-69 (1978). In addition, those

arbitration panel and ordered the parties to file the claims do not fall under the doctrine of pendent appellate

interconnection agreement.1 One commissioner dissented. jurisdiction because they are not “inextricably intertwined”

On July 11, 1997, the parties filed the agreement. On July with the Eleventh Amendment claim, such that the Eleventh

25, 1997, Ameritech moved for a rehearing, which the PSC Amendment claim could not be determined without first

denied on August 13. addressing the nonappealable claims. See Chambers v. Ohio

Dep’t of Human Servs., 145 F.3d 793, 797 (6th Cir.), cert.

On September 12, 1997, Ameritech filed a complaint in denied, 119 S. Ct. 408 (1998).

federal district court against Climax and the PSC

Commissioners in their official capacity. Ameritech seeks Accordingly, I would affirm the district court’s denial of the

declaratory determinations that (1) certain sections of the Commissioners’ motion to dismiss based on the Eleventh

Amendment, but dismiss the Commissioners’ other claims for

lack of jurisdiction.

1

The terms of the agreement are not important for purposes of the case

now before us. The primary dispute in the case underlying the present

appeal involves a term of the agreement that requires Ameritech to charge

Climax local rates to terminate calls originating within Climax’s large

local area (but outside Ameritech’s smaller local area), for which

Ameritech would otherwise charge toll rates. Ameritech argues that this

term is contrary to §§ 251 and 252 of the Act.

12 Michigan Bell Telephone v. Climax No. 98-1315 No. 98-1315 Michigan Bell Telephone v. Climax 5

Telephone Co., et al. Telephone Co., et al.

the scope of a federal court’s inquiry, but it does not limit the agreement violate the Act, the implementing regulations, state

proper parties for suit. law, and the United States Constitution, and (2) the PSC lacks

jurisdiction to decide one of the issues. Ameritech also seeks

III to enjoin enforcement of those sections of the agreement, and

to reform the agreement.

On de novo review, the Commissioners’ claims in this

interlocutory appeal lack merit as a matter of law. The On November 24, 1997, the Commissioners moved to be

Eleventh Amendment does not bar Ameritech’s suit because dismissed as defendants, on grounds that (1) the district court

Ameritech is seeking injunctive relief against an ongoing lacked personal jurisdiction over them and (2) Ameritech

violation of federal law. The Tenth Amendment does not bar failed to state a claim on which relief can be granted. The

the suit because the federal government did not commandeer district court heard oral argument and denied the motion. The

state resources. Michigan chose to regulate interconnection Commissioners appeal the denial of their motion to dismiss.

agreements. Finally, the Act does not jurisdictionally bar the This court ordered the Commissioners to show cause why the

suit. Accordingly, the district court’s denial of the appeal should not be dismissed for lack of jurisdiction. See

Commissioners’ motion to dismiss is AFFIRMED and the 6th Circuit Docket, Case No. 98-1315, March 25, 1998. On

case is REMANDED for trial. the Commissioners’ further showing, the order was

withdrawn on the ground that district court orders denying

dismissal on Eleventh Amendment grounds are appealable

collateral orders. See Order, Case No. 98-1315, April 16,

1998.

II

Where the district court bases its denial of a motion to

dismiss for failure to state a claim purely on the legal

sufficiency of the plaintiff’s case, we review the decision de

novo. See Barrett v. Harrington, 130 F.3d 246, 251 (6th Cir.

1997) (citing RMI Titanium v. Westinghouse Electric Corp.,

78 F.3d 1125, 1134 (6th Cir. 1996)). All factual allegations

in the complaint are accepted as true. Nishiyama v. Dickson

County, 814 F.2d 277, 279 (6th Cir. 1987) (en banc).

“Where a trial court’s ruling on jurisdiction is based in part

on the resolution of factual disputes, a reviewing court must

accept the district court’s factual findings unless they are

clearly erroneous. However, review of the district court’s

application of the law to the facts is de novo.” RMI Titanium

v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir.

6 Michigan Bell Telephone v. Climax No. 98-1315 No. 98-1315 Michigan Bell Telephone v. Climax 11

Telephone Co., et al. Telephone Co., et al.

1996) (internal citations removed) (citing Ynclan v. Dep’t of The Commissioners’ Tenth Amendment argument is also

the Air Force, 943 F.2d 1388, 1390 (5th Cir. 1991)). unavailing. The Commissioners argue that the doctrine of

New York v. United States, 505 U.S. 144 (1992), and Printz

Questions of statutory interpretation, like all matters of law, v. United States, 521 U.S. 98 (1997), prohibits Ameritech’s

are reviewed de novo. See United States v. Brown, 915 F.2d suit as a “commandeering” of state resources. Michigan

219, 223 (6th Cir. 1990). chose to regulate interconnection agreements under the Act.

It could have chosen not to participate, in which case it would

A. The Telecommunications Act of 1996 not have arbitrated and reviewed the agreement between

Ameritech and Climax. Michigan did, in fact, arbitrate and

Congress enacted the FTA to promote competition in all review the agreement, precisely the action complained of.

telecommunications markets, including the local service The state cannot have it both ways. The United States did not

market. See H.R. Conf. Rep. No. 104-458, at 113 (1996), compel its actions and, consequently, the Tenth Amendment

reprinted in 1996 U.S.C.C.A.N. 124. Title I, Part II of the does not bar Ameritech’s suit. See, e.g., New York, 505 U.S.

Act provides standards and procedures to allow startup at 167, 179 (Congress may offer the states a choice of

carriers to interconnect their networks to the incumbent regulating activity); FERC v. Mississippi, 456 U.S. 742, 768

carrier’s network, to access the incumbent carrier’s network (1982).

elements piece-by-piece, to purchase the incumbent carrier’s

retail services “at wholesale rates” for resale, and to access Finally, the Commissioners argue that they are not proper

the incumbent carrier’s physical infrastructure and facilities parties under § 252(e)(6). They point out that § 252(e)(6)

for connection purposes. 47 U.S.C. §§ 251(b)(4) and provides that “[i]n any case in which a State commission

251(c)(6). The Act contemplates that state public utility makes a determination . . . , any party aggrieved by such

commissions will assume regulatory authority over determination may bring an action in an appropriate Federal

interconnection agreements; if a state chooses not to do so “in district court to determine whether the agreement . . . meets

any proceeding or other matter under this section,” the FCC the requirements of section 251 [and 252],” arguing that the

will assume regulatory authority “with respect to the other party to the agreement is the only proper parties for suit.

proceeding or matter.” 47 U.S.C. § 252(e)(5). This argument misses the point. The heading of subsection

(e)(6) is “Review of State commission actions” (emphasis

The Act requires incumbent providers to negotiate in good added). It is the PSC’s duty, if it chooses to regulate, not the

faith with new entrants; if the parties cannot resolve their other party’s, to ensure that the agreement meets the

differences, either party may petition the regulatory authority requirements of the Act both at the time of arbitration, 47

for arbitration of the unresolved issues. See 47 U.S.C. U.S.C. § 252(c), and at the time of approval, 47 U.S.C.

§§ 251(c), 252(b). The arbitration panel “shall limit its § 252(e)(2)(B). Furthermore, it is the PSC’s function, not the

consideration of any petition [for arbitration] (and any other party’s, to enforce the agreement. Lacking power to

response thereto) to the issues set forth in the petition and in enjoin the PSC from enforcing the approved agreement,

the response, if any . . . .” 47 U.S.C. § 252(b)(4)(A). The federal courts would have little effective remedy for aggrieved

arbitration panel must ensure that its resolution meets the plaintiffs, or would subject companies to the intolerable

requirements of § 251 and the FCC regulations implementing prospect of conflicting commands from federal courts and

§ 251, see 47 U.S.C. § 252(c)(1), and the regulatory authority state regulatory agencies. The language quoted above limits

may reject an arbitrated resolution only if it does not meet

10 Michigan Bell Telephone v. Climax No. 98-1315 No. 98-1315 Michigan Bell Telephone v. Climax 7

Telephone Co., et al. Telephone Co., et al.

The Ex parte Young doctrine operates as an exception to the those requirements, see 47 U.S.C. § 252(e)(2)(B). When a

general rule of sovereign immunity that states may only be state acts as the regulatory authority, “any party aggrieved by

sued with their consent. Under Ex parte Young, suits against [its] determination may bring an action in an appropriate

state officials seeking equitable relief for ongoing violations Federal district court to determine whether the agreement or

of federal law are not barred by the Eleventh Amendment. Ex statement meets the requirements of section 251 of this title

parte Young, 209 U.S. at 159-60. The PSC not only approved and this section [252].” 47 U.S.C. § 252(e)(6). The Act

the interconnection agreement, it is responsible for ongoing expressly deprives state courts of jurisdiction to review the

enforcement of the agreement. Ameritech alleges that the approval or rejection of an agreement by state regulatory

agreement violates federal law, and is seeking equitable relief. authorities. See 47 U.S.C. § 252(e)(4).

Taking the alleged facts as true, as we are required to do when

reviewing a dismissal for failure to state a claim, Ameritech B. Issues Presented on Appeal

has stated a claim against the Commissioners, and thus

against the state of Ohio, for equitable relief from an ongoing The Commissioners raise four issues: (1) whether they are

violation of federal law. Under Ex parte Young, Ameritech proper parties in a federal court action filed pursuant to 47

is entitled to proceed. U.S.C. § 252(e); (2) whether the Eleventh Amendment bars

naming the Commissioners in this suit; (3) whether the PSC,

Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996) in arbitrating the agreement, waived sovereign immunity; and

and Idaho v. Coeur d’Alene Tribe, 521 U.S. 261 (1997), do (4) whether the Tenth Amendment bars naming the

not affect the application of Ex parte Young to § 252 cases. Commissioners in this suit. Ameritech raises the issue of

Recently, the Supreme Court once again affirmed the vitality whether this court has jurisdiction to conduct interlocutory

of Ex parte Young, even while strongly reaffirming states’ review of the Commissioners’ “proper parties” and Tenth

rights against suit. See Alden v. Maine, ___ U.S. ___, 119 S. Amendment claims.

Ct. 2240, 2266-68 (1999) (sovereign immunity does not bar

certain actions against state officers for injunctive or Ameritech and the FCC both cite numerous district court

declaratory relief) (contrasting Ex parte Young with Seminole cases, twenty-three altogether, each of which denies the state

Tribe and Coeur d’Alene Tribe). regulatory agency’s motion to dismiss. Recently, the Seventh

Circuit became the first appellate court to consider the issue.

If Ameritech is correct in its claim that the agreement MCI Telecommunications Corp. v. Illinois Commerce

violates federal law, the PSC’s ongoing enforcement of the Comm’n, 168 F.3d 315 (7th Cir. 1999). The panel rejected

interconnection agreement constitutes an ongoing violation of the Commissioners’ Eleventh Amendment argument and

federal law, against which Ameritech seeks injunctive relief. affirmed the district court’s denial of their motion to dismiss.

Therefore, under Ex parte Young, the Eleventh Amendment

does not bar Ameritech’s suit against the Commissioners. C. Jurisdiction to Decide the Appeal

“Ordinarily, appellate jurisdiction is lacking to hear an

appeal from an order denying a Rule 12(b)(6) motion to

dismiss since such an order is interlocutory in nature.” Suarez

v. Arte Publico Press, 157 F. 3d 282 (5th Cir. 1998)). Accord Bell Corp. Indus. v. McGraw, 125 F.3d 222, 225 (4th Cir. 1997);

Atlantic-Md., Inc., v. MFS Intelenet of Md., Inc., Civil Case No. S 99- see also Hill v. New York, 45 F.3d 653, 659 (2d Cir. 1995) (“a

2061 (D. Md. Oct. 29, 1999).

8 Michigan Bell Telephone v. Climax No. 98-1315 No. 98-1315 Michigan Bell Telephone v. Climax 9

Telephone Co., et al. Telephone Co., et al.

denial of a motion to dismiss is ordinarily considered non- . . . only may be exercised when the appealable issue at hand

final, and therefore not immediately appealable”). cannot be resolved without addressing the nonappealable

collateral issue”). Clearly, the Eleventh Amendment claim

The Commissioners invoke the jurisdiction of this court can be resolved without resolving either of the other claims.

pursuant to 28 U.S.C. § 1291 and the collateral order doctrine

of Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, All of the Commissioners’ claims are separate and

545–46 (1949). “The courts of appeals . . . shall have independent of the issue of whether the agreement is

jurisdiction of appeals from all final decisions of the district consistent with federal law, have been conclusively decided

courts of the United States.” 28 U.S.C. § 1291. To be below, and would be effectively unreviewable on appeal from

appealable as a collateral order, a district court’s order must a final judgment. We must decide the Eleventh Amendment

1) conclusively decide the disputed issue; 2) resolve an claim in any event, and it would be a waste of judicial

important issue separate and independent from the merits of resources not to hear the other claims now. Finally, all of the

the action; and 3) be effectively unreviewable on appeal from Commissioners’ claims are unavailing.

a final judgment. Coopers & Lybrand v. Livesay, 437 U.S.

463, 468–69 (1978). The Commissioners assert that their D. Discussion

Tenth and Eleventh Amendment claims were conclusively

determined by the district court, that they are completely Although the Commissioners disagree, the case before this

separate from Ameritech’s claim that the agreement is court is a straightforward Ex parte Young case. See Ex parte

inconsistent with federal law, and that they would be Young, 209 U.S. 123 (1908). Most district courts that have

effectively unreviewable on appeal from a final judgment. addressed this issue have applied the Ex parte Young doctrine

The Commissioners also argue that the Tenth Amendment and denied the state regulatory authorities’ motions to

claim is “inextricably intertwined” with their other claims, dismiss.2 We now do the same.

and assert jurisdiction under the doctrine of “pendent

appellate jurisdiction.” See Chambers v. Ohio Dep’t of

Human Servs., 145 F.3d 793, 797 (6th Cir. 1998). 2

Similarly, the Seventh Circuit recently decided MCI

Telecommunications Corp. v. Illinois Commerce Comm’n, 168 F.3d 315

Ameritech concedes that this court has jurisdiction to hear (7th Cir. 1999), against the Illinois Commissioners. Although we agree

the Commissioners’ Eleventh Amendment claim. See Puerto with the result, we do not base our decision on the reasoning in that case

Rico Aqueduct and Sewer Authority v. Metcalf & Eddy, Inc., because the court reached its decision by applying the constructive waiver

506 U.S. 139, 142–48 (1993); Sault Ste. Marie Tribe of doctrine, which has since been limited by the Supreme Court in College

Savings Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 119

Chippewa Indians v. Michigan, 5 F.3d 147, 149 (6th Cir. S. Ct. 2219 (1999), and did not reach the Ex parte Young issue. See MCI,

1993). Ameritech argues that this court does not have 168 F.3d at 320-23, amended 183 F.3d 558, 564-67. The Seventh Circuit

jurisdiction to hear the claim that the Commissioners are not has subsequently granted rehearing en banc on this opinion. 183 F.3d

proper parties, nor the claim that the Act violates the Tenth 567-68.

Amendment. The district court’s order is not a proper

collateral order with respect to either claim, Ameritech On March 29, 1999, the Middle District of Louisiana apparently

became the first court to grant immunity to a state regulatory body. See

contends, nor is either claim “inextricably intertwined” with AT&T Communications of South Central States v. Bellsouth

the Eleventh Amendment claim to confer jurisdiction. See Telecommunications, Inc., 43 F. Supp. 2d 593 (M.D. La. 1999). The

Chambers, 145 F.3d at 797 (“pendent appellate jurisdiction court considered itself bound by Fifth Circuit precedent interpreting

Seminole Tribe as extinguishing waiver. See id. at 600-01 (citing Chavez