Bell Atl PA v. PA Pub Util Comm

Opinions of the United

2001 Decisions States Court of Appeals

for the Third Circuit

11-7-2001

Bell Atl PA v. PA Pub Util Comm

Precedential or Non-Precedential:

Docket 00-2619

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"Bell Atl PA v. PA Pub Util Comm" (2001). 2001 Decisions. Paper 257.

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Filed November 2, 2001

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 00-2619/2620

BELL ATLANTIC-PENNSYLVANIA, INC.

v.

THE PENNSYLVANIA PUBLIC UTILITY COMMISSION;

JOHN M. QUAIN, Chairman of the Pennsylvania Public

Utility Commission, in his individual and official

capacities; ROBERT K. BLOOM, Vice-Chairman of the

Pennsylvania Public Utility Commission, in his individual

and official capacities; NORA MEAD BROWNELL,

Commissioner of the Pennsylvania Public Utility

Commission, in her individual and official capacities;

AARON WILSON, JR., Commissioner of the Pennsylvania

Public Utility Commission, in his individual and official

capacities; VINCENT J. FUMO, State Senator Vincent J.

Fumo; ROGER A. MADIGAN, State Senator Roger A.

Madigan; MARY JO WHITE, State Senator Mary Jo White

UNITED STATES OF AMERICA

(Intervenor-Plaintiff in D.C.)

MCI WORLDCOM NETWORK SERVICES, INC.;

MCIMETRO ACCESS TRANSMISSION SERVICES, LLC;

AT&T COMMUNICATIONS OF PENNSYLVANIA, INC.; TCG

PITTSBURGH; TCG DELAWARE VALLEY; SPRINT

COMMUNICATIONS COMPANY, L.P.; THE UNITED

TELEPHONE COMPANY OF PENNSYLVANIA

(Intervenors-Defendants in D.C.)

Vincent J. Fumo; Roger A. Madigan,

Mary Jo White,

Appellants (00-2619)

The Pennsylvania Public Utility Commission;

John M. Quain; Robert K. Bloom;

Nora Mead Brownell; Aaron Wilson, Jr.,

Appellants (00-2620)

Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. Civil Action No. 99-cv-05391)

District Judge: Honorable Marvin Katz

Argued June 21, 2001

Before: ROTH, AMBRO and FUENTES, Circuit Judge s

(Opinion filed: November 2, 2001)

Julia A. Conover, Esquire

Suzan DeBusk Paiva, Esquire

Verizon Pennsylvania Inc.

1717 Arch Street, Floor 32N

Philadelphia, PA 19103

John M. Elliott, Esquire

Henry F. Siedzikowski, Esquire

Elliott, Reihner, Siedzikowski

& Egan

925 Harvest Drive, Suite 300

Blue Bell, PA 19422

Mark L. Evans, Esquire

Geoffrey M. Klineberg, Esquire

Kellogg, Huber, Hansen, Todd

& Evans

1615 M Street, N.W., Suite 400

Washington, D.C. 20036

Attorneys for Appellee

Bell Atlantic-Pennsylvania, Inc.

2

Michael R. Stiles

United States Attorney

Stuart E. Schiffer

Acting Assistant Attorney General

Mark B. Stern, Esquire

Charles W. Scarborough, Esquire

Kathleen A. Kane, Esquire

United States Department of Justice

Civil Division, Appellate Staff

601 D Street, N.W.

Washington, D.C. 20530

Attorneys for Appellee

United States of America

Albert G. Bixler, Esquire

Eckert, Seamans, Cherin & Mellott

1515 Market Street, Suite 900

Philadelphia, PA 19102

Attorney for Appellants

Vincent J. Fumo; Roger A.

Madigan, Mary Jo White

Bohdan R. Pankiw, Chief Counsel

Robert J. Longwell, Deputy Chief

Counsel

Maryanne R. Martin (Argued)

Assistant Counsel

Pennsylvania Public Utility

Commission

P.O. Box 3265

Harrisburg, PA 17105-3265

Attorneys for Appellants

The Pennsylvania Public Utility

Commission; John M. Quain;

Robert K. Bloom; Nora Mead

Brownell; Aaron Wilson

3

Maureen F. Del Duca, Esquire

Jenner & Block

601 13th Street, N.W., 12th Floor

Washington, D.C. 20005

Jeffrey A. Rackow, Esquire (Argued)

MCI Worldcom, Inc.

1133 19th Street, N.W.

Washington, D.C. 20036

Attorneys for Appellees

MCI Telecom Corp. and

MCIMETRO Access Transmission

Services, Inc.

David M. Levy, Esquire

Stephen B. Kinnaird, Esquire

Michael L. Post, Esquire

Sidley & Austin

1722 Eye Street, N.W.

Washington, D.C. 20006

Daniel Clearfield, Esquire

Alan C. Kohler, Esquire

Joseph C. Crawford, Esquire

Wolf, Block, Schorr & Solis-Cohen

1650 Arch Street, 22nd Floor

Philadelphia, PA 19103-2097

Mark A. Keffer, Esquire

Robert C. Barber, Esquire

AT&T Communications

3033 Chain Bridge Road

Oakton, VA 22185

Attorneys for Appellees

AT&T Communications of PA, Inc.;

TCG Pittsburgh; and

TCG Delaware Valley, Inc.

Counsel on Sovereign Immunity

Issues Exclusively

Albert G. Bixler, Esquire (Argued

for Appellants)

Susan D. Paiva, Esquire (Argued

for Appellees)

4

OPINION OF THE COURT

ROTH, Circuit Judge:

The Pennsylvania Public Utility Commission (PUC),

several PUC Commissioners, and several Pennsylvania

State Senators appeal the District Court's denial of their

motions to dismiss the claims and cross-claims brought

against them under the Telecommunications Act of 1996 by

Bell Atlantic (now known as Verizon), MCI/Worldcom

(Worldcom), and AT&T. The PUC and the Commissioners

argue that under the Eleventh Amendment they are

immune from suit in federal court and that the claims and

cross-claims against them are untimely and barred by res

judicata.

For the reasons stated in our decision in MCI Telecomm.

Corp. v. Verizon Pennsylvania, Inc., [Nos. 00-2257, 00-2258,

November 2, 2001] ___ F.3d ___ (3d Cir. 2001), decided this

day, we will affirm the District Court's denial of the defense

of sovereign immunity under the Eleventh Amendment to

the United States Constitution. We further hold that we

have no jurisdiction to hear the PUC's remaining claims on

appeal; we will dismiss them for want of jurisdiction and

remand the case to the District Court.

I. Background

The statutory background of the Telecommunications Act

of 1996 and a discussion of its operation is set out in our

companion opinion in MCI Telecomm. The Act essentially

requires incumbent local exchange carriers (ILECs) to share

their networks and services with competitive local exchange

carriers (CLECs) seeking entry into the local service market.

Verizon, an ILEC, was involved in negotiations with

Worldcom, a CLEC, to provide local service in Pennsylvania.

These talks were part of several ongoing negotiations for

interconnection agreements proceeding before the PUC. In

1998, the PUC initiated discussions aimed at a global

settlement of a variety of pending and anticipated issues

arising in several different dockets. Competing petitions

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were filed with the PUC by two groups, one consisting of

Verizon and other companies, the other consisting of AT&T,

Worldcom, the State Senators, and others who had opposed

Verizon in various PUC proceedings.

In September 1999, the PUC issued a Global Order,

resolving the issues before it and ordering that the

decisions be incorporated into interconnection agreements.

Verizon appealed the Global Order to the Commonwealth

Court of Pennsylvania, primarily challenging it on state law

grounds. Verizon did assert its federal claims under the

1996 Act in the Commonwealth Court although Verizon

claims that this was done solely for the purpose of making

a reservation of the federal issues, pursuant to England v.

Louisiana State Bd. of Med. Exam'rs, 375 U.S. 411, 421

(1964) (holding that plaintiff may preserve federal claims by

presenting them to state court only for the purpose of

informing the state court of their existence and nature).

Verizon then brought suit in federal district court against

the PUC and individual PUC Commissioners under

S 252(e)(6), challenging terms of the Global Order as being

inconsistent with the 1996 Act.1 Worldcom and AT&T

intervened as defendants and counterclaimed and cross-

claimed to challenge other aspects of the Global Order.

Several Pennsylvania Senators intervened as defendants.

The United States intervened as plaintiff to defend the

constitutionality of S 252(e).

The Senators, the PUC, and the Commissioners moved to

dismiss the suit on grounds, among others, that the PUC

and the Commissioners were immune from suit in federal

court under the Eleventh Amendment, that Worldcom's and

AT&T's cross-claims were untimely, and that the remainder

of the claims should be dismissed for failure to state a

claim. The District Court denied the motions in all respects.2

_________________________________________________________________

1. During the pendency of the instant appeal, Verizon notified this Court

that it was withdrawing its underlying claims in the District Court.

Because the cross-claims and counterclaims remain, the case has not

been rendered moot.

2. The District Court also considered and rejected arguments that it

should abstain from hearing the case, pursuant to a variety of federal

abstention doctrines. The abstention issues have not been appealed and

are not before us.

6

The PUC, the Commissioners, and the Senators

immediately appealed the District Court's decision, not only

the Eleventh Amendment immunity ruling but also the

denial of the bar of the statute of limitations and res

judicata.

II. Collateral Order Doctrine

With certain exceptions not applicable here, we may take

jurisdiction of appeals only from the entry of a final

judgment by a District Court. See 28 U.S.C.S 1291;

Cunningham v. Hamilton County, 527 U.S. 198, 200 (1999).

A decision ordinarily is final when it ends the litigation and

leaves nothing for the court to do but execute the

judgment. See id. at 204 (quoting Van Cauwenberghe v.

Biard, 486 U.S. 517, 521-22 (1988)).

The Supreme Court has interpreted the phrase "final

decision" in S 1291 to include a narrow class of orders that

do not terminate the litigation but are conclusive of a

disputed legal question apart from the merits and are

effectively unreviewable on appeal from a final judgment in

the underlying action. See Cunningham, 527 U.S. at 204;

Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863,

867-68 (1994). The collateral order doctrine of Cohen v.

Beneficial Indus. Loan Corp., 337 U.S. 541 (1949), is a

practical construction of the final decision rule ofS 1291,

applicable to a narrow class of decisions that are

considered final in the interest of achieving a healthy and

efficient legal system. See Digital, 511 U.S. at 867. An order

is immediately reviewable under Cohen if it 1) conclusively

determines a disputed legal question, 2) resolves an

important issue completely separable from the merits of the

action, and 3) is effectively unreviewable on appeal from a

final judgment. See Bines v. Kulayat, 215 F.3d 381, 384-85

(3d Cir. 2000) (quoting Transtech Indus., Inc. v. A&Z Septic

Clean., 5 F.3d 51, 55 (3d Cir. 1993)).

Importantly, the collateral order doctrine is narrow and

limited to a small class of cases. See Digital , 511 U.S. at

868 ("[T]he `narrow' exception should stay that way and

never be allowed to swallow the general rule."); see also

Bines, 215 F.3d at 384; Transtech, 5 F.3d at 57. The

7

application of the doctrine does not turn on whether the

litigation will be speeded along by immediate review. See

Digital, 511 U.S. at 868. The fact that an erroneous ruling

may result in additional litigation expenses is not alone

sufficient to justify immediate review. See Transtech, 5 F.3d

at 56; see also 15A Charles A. Wright, Arthur R. Miller, &

Edward H. Cooper, Federal Practice and Procedure S 3914.6,

529 (recognizing that "much time and money are spent on

trial court proceedings that ultimately prove abortive," but

stating that the "cost is tolerated because of the

fundamental calculus of the final judgment rule").

The District Court denied motions to dismiss the

complaint and cross-claims by the PUC, the

Commissioners, and the Senators. The denial of a motion to

dismiss does not end the litigation and ordinarily is not a

final order for S 1291 purposes. See 15A Wright, Miller, &

Cooper, Federal Practice and Procedure S 3914.6 at 526

("Orders refusing to dismiss an action almost always are

not final."). We may assert appellate jurisdiction over the

issues before us only if they are the types of claims which

fall within the narrow class of decisions immediately

reviewable under the collateral order doctrine of Cohen.

A. Sovereign Immunity

We have jurisdiction over the Eleventh Amendment

issues because the denial of a defense of sovereign

immunity is immediately appealable under the collateral

order doctrine. See Puerto Rico Aqueduct and Sewer Auth. v.

Metcalf & Eddy, Inc., 506 U.S. 139, 147 (1993).

The sovereign immunity issue in the instant case was

consolidated for oral argument with the immunity issue in

MCI Telecomm., ___ F.3d ___, decided this day. The legal

issues and arguments in both cases are substantially

identical and we need not repeat them in the instant

opinion. The result on the merits is also the same: Neither

the PUC nor the Commissioners have Eleventh Amendment

immunity from an action under S 252(e)(6). For the reasons

stated in our opinion in MCI Telecomm, we will affirm the

District Court's conclusion that the Eleventh Amendment

does not bar the actions against the PUC and the

Commissioners.

8

B. Res Judicata and Statute of Limitations

We turn now to the two remaining issues on appeal: the

PUC's argument that the claims and cross-claims against it

are untimely and are barred by res judicata.

The PUC suggested at oral argument that, because we

have collateral order doctrine jurisdiction over the sovereign

immunity issue, we had the discretion to reach and decide

the remaining issues in the interest of judicial economy,

regardless of whether those issues are themselves

immediately reviewable under the collateral order doctrine.

We reject that suggestion. Our appellate jurisdiction is

established by statute. We can exercise no jurisdiction

other than as provided by statute. The fact that we have

jurisdiction over one issue on an appeal does not grant us

discretion to decide unrelated issues which lack an

independent basis for jurisdiction. See Triad Assocs., Inc. v.

Robinson, 10 F.3d 492, 496-97 n.2 (7th Cir. 1993) (stating

that the fact that court had collateral order jurisdiction to

review denial of immunity defense "is not sufficient to

confer on us jurisdiction to review other claims presented to

the district court" because "[o]therwise nonappealable

issues cannot be bootstrapped to an appealable question").

Nor are concerns for judicial economy alone a sufficient

consideration to create jurisdiction. See Digital, 511 U.S. at

868.

We reach the merits of the two remaining issues only if

they are subject to immediate review under Cohen . We

conclude that neither the denial of a motion to dismiss on

res judicata grounds nor the denial of a motion to dismiss

on statute of limitations grounds is immediately appealable

under the collateral order doctrine. We lack jurisdiction to

address either of these issues on their merits and for the

reasons that follow we will dismiss the appeal of these

claims for want of appellate jurisdiction.

Not only is it generally recognized that the denial of a

motion to dismiss on res judicata, or claim preclusion,

grounds should not be immediately appealable, see, e.g.,

Digital, 511 U.S. at 873; Transtech, 5 F.3d at 58; see also

15A Wright, Miller, Cooper, Federal Practice and Procedure

S 3911.4 at 424-26, but more particularly the defense of

9

claim preclusion in the instant case fails the first and third

prongs of the Cohen standard. First, the District Court's

decision did not conclusively resolve the claim preclusion

issue because the District Court never addressed or

resolved it. The Pennsylvania Commonwealth Court

decision to which the PUC seeks to accord preclusive effect

did not issue until after the District Court had rendered its

decision. Although the District Court took explicit notice of

the pendency of the state court action, there was no state

court decision for it to consider at the time. The court never

had an opportunity to address the res judicata effect of the

state court judgment and cannot be deemed to have

conclusively resolved that legal issue for purposes of

collateral order doctrine jurisdiction.3

Second, the denial of a defense of claim preclusion is not

effectively unreviewable on appeal from final judgment. We

have recognized two distinct categories of affirmative

defensive immunities: those that provide immunity from

suit and those that provide only a defense against liability.

See Puerto Rico Aqueduct, 506 U.S. at 143-44 (discussing

Mitchell v. Forsyth, 472 U.S. 511 (1985)) (distinguishing

immunities from suit from defenses to liability); see also 15

A Wright, Miller, Cooper, Federal Practice and Procedure

S 3914.6 at 529 ("[S]ome rights are intended to protect

against the burdens of trial, not just the burden of a

judgment that, if erroneous, can be reversed on appeal.").

An immunity from suit generally is grounded in the need

to free parties from the costs, burdens, and consequences

of having to be party to an action and to defend one's self.

Such a right will be forfeited if not vindicated prior to trial,

see Transtech, 5 F.3d at 56; 15A Wright, Miller, Cooper,

_________________________________________________________________

3. We also could decline to address the res judicata issue for a second,

unrelated reason: the argument was not raised in the District Court. Our

general practice is not to address legal issues not raised below, absent

exceptional circumstances. See Berda v. CBS, Inc., 881 F.2d 20, 28 (3d

Cir. 1989). No such exceptional circumstances are present and neither

the PUC nor the Senators point to any such circumstances. Moreover,

Verizon argues that its England reservation in the Commonwealth Court

preserved its federal claims and avoids the preclusive effect of the state

court decision. The sufficiency and effect of that reservation is in

dispute

and should be addressed by the District Court in the first instance.

10

Federal Practice and Procedure S 3914.6 at 529-30; and its

denial should be subject to immediate review. See, e.g.,

Puerto Rico Aqueduct, 506 U.S. at 144 (state sovereign

immunity immediately appealable); Mitchell, 472 U.S. at

526 (qualified executive immunity immediately appealable);

Larsen v. Senate of Commonwealth of Pennsylvania, 152

F.3d 240, 245 (3d Cir. 1998) (legislative immunity

immediately appealable). Defenses to ultimate liability

should not be subject to immediate review. See We, Inc. v.

City of Philadelphia, 174 F.3d 322, 326 (3d Cir. 1999)

(concluding that Noerr-Pennington immunity was defense to

liability and not immediately appealable); Transtech, 5 F.3d

at 58 (holding that defense that suit barred by prior

settlement or release is not immediately appealable).

The fact, however, that a defense may warrant pre-trial

dismissal is not dispositive of whether it is immediately

appealable. See Digital, 511 U.S. at 873 (rejecting notion

that every right that could be enforced by pretrial dismissal

can be understood as conferring a right not to stand trial);

We, Inc., 174 F.3d at 325 ("Not all defenses that warrant a

pretrial dismissal entail a right not to stand trial."). We

must determine the essential nature of the right to be

protected to decide whether it is an immunity from trial or

merely a defense to liability.

An examination of the doctrine res judicata or claim

preclusion reveals that it is better understood as a defense

against liability, not an absolute guarantee against having

to face a suit. Claim preclusion entitles a party to rely on

prior judicial decisions and not to be held liable on claims

on which that party previously has prevailed. Claim

preclusion is based on concerns of fairness, on reliance on

the finality of prior judicial determinations, and on the

expectation of not having to conform primary conduct to

inconsistent decisions and inconsistent legal obligations.

See E.E.O.C. v. United States Steel Corp., 921 F.2d 489, 492

(3d Cir. 1990) (stating that claim preclusion fosters reliance

on prior judicial decisions by minimizing the possibility of

inconsistent judgments). It is not, however, an explicit

guarantee that trial will not occur. Unlike qualified

immunity or Eleventh Amendment sovereign immunity,

claim preclusion is not based on a right to be free from all

11

the costs and burdens of having to be a party to a case in

the first instance or from having to defend oneself.

The interests protected by claim preclusion will not be

irretrievably forfeited if the PUC must wait until after trial

to appeal an erroneous res judicata determination. Perhaps

that vindication will come after a delay and at a higher

cost, but such cost is insufficient to establish collateral

order doctrine jurisdiction.

We turn now to the denial of the statute of limitations

defense. A statute of limitations defense is considered to be

of the same mold as claim preclusion. A denial of both is

similarly unsuitable for immediate review. See , e.g., Digital,

511 U.S. at 873 (discussing statute of limitations as same

type of defense as claim preclusion, both presumptively not

immediately appealable as part of a right not to stand trial);

Transtech, 5 F.3d at 58 (rejecting immediate appealability of

denial of defense that suit barred by settlement because

recognizing immediate appeal in that circumstance would

require recognizing immediate appeal for litigants asserting

affirmative and dispositive defense of statute of limitations).

The statute of limitations defense fails the third prong of

the Cohen standard because it is not effectively

unreviewable on appeal from final judgment. See Brown v.

United States, 881 F.2d 615, 619 (3d Cir. 1988); see also

Parmar v. Jeetish Imp., Inc., 180 F.3d 401, 402 (2d Cir.

1999) ("[T]he denial of a statute-of-limitations defense may

effectively be reviewed on appeal from a final judgment.");

Triad, 10 F.3d at 496 n.2 ("Limitations issues fail the last

prong of this test."). In Powers v. Southland Corp., 4 F.3d

223, 237 (3d Cir. 1993), we held that an order joining a

party to a lawsuit despite the lapse of the limitations period

was not appealable under the collateral order doctrine. We

based that decision on our view that the statute of

limitations provided only a right to repose that would not

be irreparably lost if appeal must await final judgment. See

id. at 232-33 (citing United States v. Levine, 658 F.2d 113

(3d Cir. 1981)).

Statutes of limitations are not guarantees that suit and

trial will not occur on untimely claims. Limitations periods

are designed to foreclose the potential for inaccuracies and

12

unfairness brought about by a finding of liability based on

stale evidence. See Powers, 4 F.3d at 233 (quoting Levine,

658 F.2d at 127). This interest is not in defending against

an old claim, but an interest in not being held ultimately

liable on that old claim based on old, less reliable evidence.

Such an interest is not irretrievably lost if a party must

wait until after final judgment to appeal the adverse ruling

and to vindicate the right to be free from liability. Again, the

litigation costs may be increased by the delay, but that

alone is insufficient to establish jurisdiction.

III. Conclusion

We will affirm the District Court's denial of the claims of

Eleventh Amendment sovereign immunity. We lack

appellate jurisdiction of the remainder of the issues on

appeal; we will dismiss that portion of the appeal and

remand this case to the District Court for further

proceedings consistent with this opinion.

13

AMBRO, Circuit Judge, concurring in part:

I concur in Judge Roth's excellent opinion for the same

reasons set out in my concurrence in the companion

opinion issued today in MCI Telecommunications Corp., et

al. v. Bell Atlantic-Pennsylvania, Inc., et al., Nos. 00-

2257/58.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

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